Ladies and gentlemen, good day and welcome to Mold-Tek Packaging Limited's earnings conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Nitin Gupta, Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Good evening, everyone. I would like to welcome management and thank them for this opportunity. We have with us today J. Lakshmana Rao, Chairman and Managing Director. I shall now hand over the call to him for his opening remarks. Over to you, sir.
Good evening, everybody. Thank you very much, Nitin. I am very happy to inform you an excellent performance in this quarter by Mold-Tek Packaging, where the revenues have shot up by 22%, and EBITDA margin has also shot up from 18 odd percentage last year to 19.7%. EBITDA per kg grew by 29%, and net profit is up by around 35%. This growth was possible due to all the sectors are doing very good in this year. Starting with the paint segment, where, thanks to ABG, the numbers have gone up considerably. Followed by pharma, which has first time last year itself crossed the break-even, has again grown by around 11% over the Q4, and started contributing handsomely to the bottom line. Food and FMCG, after a long time of several quarters, has crossed double digits and almost achieved 16% growth rate, in the current quarter.
With all the segments doing good, only lubricant has a negative growth, which was expected in this general monsoon season. Otherwise, all the segments are on a forward run, giving us almost 20%-22% growth in revenue and improved profitability in all sectors across. What is more exciting for us at Mold-Tek is the speed at which the pharma packaging is getting adopted and approved by several major players in the pharma industry. As we talk in the last quarter again, four to six audits have taken place and everybody approving our facilities, and started taking our products for trials. As you know, and as I explained in the last quarter meeting, pharma is a little long time taking, but I am pleasantly surprised that we could break in much faster than others.
Going forward, several approvals which have been received in the last three, four months, will start turning into commercial orders, improving the numbers in a better pace in the next few quarters. I still feel that our set target of INR 35 crore for the current financial year for pharma is very much achievable. In the food and FMCG also, as I said last year, printing bottlenecks have been completely removed, which enabled us to manage well with the label connectivity and IML product timely supplies. In spite of almost one month shortened summer, you all know that right from May, rain started all over India and consumption of ice cream and yogurts have fallen drastically. In spite of that, we have registered a 16% growth in food and FMCG, which I feel is a very good indicator for future growth.
Our Panipat thin wall food products is yet to start. It will be starting in the month of August, and that will also start adding to another high-value product line of operation for Mold-Tek. With all this, the future looks good and bright. We are back on high-speed track now. For the last couple of years, more of project implementation and creating the greenfield projects has taken our attention and efforts. Now it is the time that these will be put into better utilization, which will improve the margins and profitability, I sincerely hope. Now I put it back to the operator for the question and answers through which we can discuss more in detail.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Jaiveer Shekhawat from AMBIT Capital. Please go ahead.
Sure. Thank you so much. Sir, congrats on a good quarter. My first question is on your paints business. Could you quantify the amount of growth that you have seen both for Aditya Birla Group as well as for the rest of the business? That will be my first question, in terms of volumes.
See, I do not want to break up between the companies, because that would be against our non-disclosure. But Aditya Birla Group is the main contributor for our growth, is that much I can tell. However, even Asian Paints and other companies like AkzoNobel and Kansai Nerolac Paints maintained, if not a positive growth, a neutral growth, or sustained the same levels of the previous quarter. So that way, I see majority of the growth has come through on its ABG growth.
Sure. Sir, do you expect this quarterly run rate to sustain during the rest of the year? I am barring, let us say, the quarterly variation that happened because of the season demand, but otherwise, do you expect this 5,500 tons of paint containers to sort of continue for the rest of the year?
Yeah. We see that this paint will at least sustain at 5,500, 5,400 level, at least till second quarter. Because third quarter will be a little dip after Diwali. But again, fourth quarter will start picking up. So probably we may end up 21,000 tons- 22,000 tons in the paint sector this year. Can still be better, provided how the market dynamics play between the players.
Sure. Sir, on your press release, you did mention, let us say some of the newer customers for your pharma business. So I see you have mentioned Laurus Labs, let us say some of the other pharma companies as well. So are these recent approvals? Were you already in discussion with these? Given that you have already guided on the scale of the business, is there any change to that, let us say over the next two to three years in terms of the scale that you look to meet?
I am positive that what I guided last quarter will continue to happen. Inventia, MSN, Laurus Labs, Pulse, these guys have been reviewing us and monitoring our products and testing our products for the last several months. Now they started, at least a couple of them started giving commercial orders, and couple of them are yet to release. I also said some of them, there are several other companies which have either audited our premises or testing our products. All these numbers will start gradually adding to the pharma business. I foresee a better number can achieve even in this current year if things go well. Because couple of new products which have been approved and commercial orders are issued will be starting in August. So they will contribute maybe INR 1 crore of per month, in terms of turnover.
But lot of other products which have been approved are under approval by some of these clients will start adding. Each will be adding INR 25 lakh- INR 50 lakh per month. So like this, as we accumulate, the numbers can double next year probably, if not at least 50%, 60%. So if we reach INR 35 crore- INR 40 crore this year, probably assuming INR 50 crore- INR 60 crore next year as a certain possibility.
And sir, lastly, you also mentioned in your presentation you are trying to get into other non-seasonal industries as well in order to diversify away from, say, seasonal products like ice cream. Could you quantify which other segments and then the scale of those segments over the couple years? I mean, would it be sizable in the overall scheme of things?
Yes. For example, you take Surf Excel, which is a detergent product. It is now contributing handsomely to our Q-Pack sales. Similarly, Horlicks, which is a more of a nutritional drink and consumed throughout the year, it started picking up numbers. We have some products from Marico, which are also completely annual. We have protein products, which are also annual consumption.
There is no much of seasonality in protein consumption. Coming to noodles, that is again a product where the consumption is there every season. So only ice cream and yogurt continue to be major players, but they are seasonal in nature. At least especially in rainy season, consumption of ice creams and yogurt come down considerably in India. So that trend will continue. But because of these agro products which are micro fertilizers, which are again required in the rainy season. So they will add numbers. Similarly, sweets.
Sweet boxes are picking up numbers very much. We have now introduced sippers, which will go more, of course, again back in summer. These sweet boxes go well in our festival season starting now. So June, July onwards, things will start picking up till end of this year, till New Year. There are several festivals and festivities, including Christmas. So until end of the calendar year, we will have demand for those boxes. We are doubling that capacity now. Restaurant packs, throughout the year, there is demand for them. So like this, the dependence on ice creams and yogurt would be coming down a lot compared to five years ago, our product mix. Today, we have much wider range. Panipat plant will be starting production in August.
It will catch up with the festival demand in North. It will catch up for the summer by March when the next summer starts. So that will be adding numbers in food and FMCG. So we are confident that 15%-16% growth, what we achieved in food and FMCG can continue.
Sure. Sir, last question is on your overall volume growth outlook, and also in terms of your capacity. What I understand is you are also expanding for ABG as well, which is set to get commissioned by second quarter. Then of course this Panipat facility which comes in from August onwards. Are there any other capacities that you have planned?
Yeah. Capacities in pharma are also gradually being increased as per the demand increase. We have even acquired a new land of 2.5 acres adjacent to our Sultanpur project. There also again there will be investments in terms of injection molding machines, molds, IBM machines. A new product range is also under final consideration. If we go for that product range, that can also require some investment. Not very huge, because it is not greenfield, but there will be reasonable investments in pharma growth. So that way, this year also, there will be investment to the tune of INR 80 crore-INR 90 crore, if not INR 130 crore-INR 140 crore, which we invested in the last three financial years.
Sure. Sir, anything on the volume outlook that you expect for this year?
Yeah, the volume outlook, we are aiming at least 45,000 tons for the full year, 43,000 tons-45,000 tons, depending upon how the other quarters go by. That's why we still hold on to the expectation of 12%-15% volume growth, or at least 18%, 20% of revenue growth. One positive point I am glad about is, if you look at the per kg sales revenue, it's shot up from INR 198 last year to INR 211. That actually contributed well to the EBITDA. That is because of the product mix is improving. We are more of pharma added and from zero to whatever, INR 9 crore, INR 7.5 crore now. And food and FMCG has grown considerably. So these two are the four factors which increased our net revenue per kg.
Sure. Thank you so much, sir, and wish you all the best.
Thank you.
Thank you. The next question is from the line of Abhishek Navalgund from Centrum Broking. Please go ahead.
Yeah, hi. Thanks for the opportunity, and congrats on a good set of numbers. Sir, first question is on Asian Paints. In your opening comments, you mentioned that large part of the growth in paints was driven by ABG, and you are saying that its EV portfolio is largely packaged. But there was talking about there is some shift of volumes happening from, let us say, non-IML to IML.
Your voice is not clear, Abhishek.
Hello. Is it better?
Yeah, better now. Yeah.
Yeah. I am saying there was a talk about shift of volumes from non-IML to IML, wherein we clearly have an edge over maybe peers. Why it is not getting reflected in the numbers as such? I am talking about Asian Paints, sir. Yeah.
No, Asian Paints are neutral. You remember last two, three years, we had actual negative growth in Asian Paints, 10%-12% drop in the last three financial years. This year we are stable. That itself is a good indicator of staying fit with Asian Paints through IML. With now IML, facilities have been created in all plants. Earlier we used to supply them from Hyderabad or part of Daman, but now we have a facility at Satara, Vizag and Mysore also ready to go with IML, where we set up robots and compatible molds. I am hoping that should improve our numbers gradually during the next few quarters. Ultimately, I hope we will end up with a positive digit of growth in Asian Paints also.
Sure. Okay. Second one on the capacity utilization. I think you mentioned that Satara was at 55%-57% in FY 2025, but we were at almost, I think, 75% utilization somewhere in April, May. Possible to share the number for the quarter in Paints overall and maybe for Satara.
Quarter capacity utilization of Satara is again, not very impressive because we have added several machines there in view of their Mahad requirement. The Satara plant utilization is still in 50s, 50%-55% only because of the extra capacity that has been created in the last six months. That is getting slowly occupied because their Mahad operations are improving at ABG. Once it takes off, hopefully in this season, their season starts from July till November. Hopefully, that number will improve to 60%- 65%.
Sure. I think we are improving our quarterly run rate for pharma, and you talked about new approvals also. What sort of annual number you are looking at this year in pharma?
We are still hoping on INR 35 crore would be a good number to reach from INR 7 crore, INR 8 crore last full year, INR 8 crore, INR 9 crore. So that will be quadrupling our numbers. From INR 9 crore or whatever last year, full year, we will be achieving at around INR 35 crore, INR 36 crore for sure. If few things will happen as per our plan, it can even exceed.
Sure. Possible to share, I mean, which part of your portfolio, let's say your effervescent tubes or canisters vis-à-vis bottles and caps, which part is actually getting a lot more traction? Or it is equally?
I think it is effervescent tubes. If you ask me, the majority of the, more than 50% of the sale is happening in EV tubes, but caps and bottles will overtake very soon because number of approvals are pending or cleared for trial runs, applied for FDA approval, client approval. So several products, I would say, more than 20 products are at different approval stage by clients, and one by one are getting released. For example, Gravity released two, three products in the month of May, June, and now they are talking about another three product release. So those numbers will be added. MSN, Laurus, Ajanta, we have several other clients who have approved but not even started testing our products. After approval, they take the testing, and after testing, commercial trials. Commercial trial after machine trials. After machine trials, final commercial orders.
Even commercial orders won't come in millions. They first give couple of lakh and see their lines and everything. Then fourth stage, they go for giving us a major stake. If you ask me, hardly a couple of clients are adapted as one of the major suppliers, not even the most highest. We are still getting maybe 20%-25% of share from a couple of clients, whereas more than 15 clients have approved us. So once all these 15 clients take us as one of their major suppliers, the number can shoot up. That I don't want to speculate now, but I'm sure it's going to be good in the coming years.
Right. We are in the process of doubling the capacity. With this potential expansion, the peak revenue can be like INR 100 crore from pharma?
Yeah. The current capacity itself, we can reach INR 60 crore-INR 70 crore and this-
Okay
new expansion of another INR 10 crore, INR 20 crore brownfield will take it beyond INR 100 crore possibility, possible capacity. There will be a continuous growth because we have taken the land, I told last quarter-
Yes
to another 200 acres adjacent to the current land. There, probably the second phase, I would call this is the first phase expansion, what is happening during this year. Second phase expansion will happen in that land next year. That is next financial year, for sure, because the way it's going on, the facility will not be able to hold the growth. We need to construct. The whole thing is pharma buildings and interior standard specs to reach, we need at least 9-12 months for the building itself. So we are starting that blueprint now for the new land also. But probably we'll start only towards the end of this calendar year and reach into production by middle of next year. So this year production, fortunately, there's enough space in the existing building itself. There we'll be able to accommodate the current year expansion.
Future expansion will happen in the new land, probably in the next financial year.
Sure. One last thing from my side. The thin wall capacity north, which we are starting from August. Do we have any sort of visibility from existing clients, let's say a few FMCG companies, and maybe which all categories we'll be targeting to begin with?
Yeah, we have Surf Excel, for example, at Baddi.
Okay
Volumes which are now currently going all the way from Daman or Hyderabad will be molded there. We have a new client added in what is it called? Protein powder. We are supplying from Hyderabad, which will be now converted there. And we have range of new sweet boxes for the north market will be starting production. A range of ice cream products and yogurt products by February, March will start. Accordingly, their operations can reach a level of almost 1,800 to 2,000 tons per annum by next financial year. This year, it will be ramping up gradually from zero to 1,000 tons by end of this financial year, and probably 1,500 tons- 1,800 tons during the next financial year in the food and FMCG segment.
Perfect. Thank you, sir.
Thank you. The next question is from the line of Sanchit Narang from Narang Family Office. Please go ahead.
Is my voice audible?
Yes, Mr. Sanchit. Please go ahead.
My question is, like now we have reached 41.8% EBITDA. You have guided us for the last quarter, INR 42 per ton. But going forward, given Q1 is one of your strongest quarters, how would we achieve that INR 42? Or we will cross it? You are having visibility to cross it or we will fall short? I am a little confused on that.
This is again a speculative thing. I said INR 42 is our target, and we are already there at 41.6. Going forward, of course, as you said, this is the best quarter, but the better quarters might emerge if pharma takes off in a way beyond what it is in this Q1. Probably it can safeguard the bottom line, if not the top line. I am still confident we will be in the bracket of INR 41-INR 42 for the full year. I won't be surprised if it marginally crosses also.
Okay. Last quarter, you guide us for any breakthrough on the JSW to ExxonMobil?
JSW has acquired ExxonMobil. I didn't say there will be a breakthrough. I said business will continue with ExxonMobil.
Yeah. Last quarter we discussed that we might get entrance JSW to ExxonMobil.
Yeah.
Is there any talk about that?
Not yet happened. Nothing. Actually, the previous management only is still monitoring and communicating with us. There is no change has been even announced formally. I cannot comment as of now. That is not a certainty that we will get their business. Last time also, I mentioned that it may happen, may not happen. We would only know once their new management really takes over.
Thank you. That is all, sir.
Thank you. The next question is from the line of Shirish Pardeshi from Motilal Oswal. Please go ahead.
Good evening, Mr. Rao. Thank you for the opportunity, and congratulations.
Thank you.
Can you give me a breakup of INR 11,400 crore by segment?
11,400 tons, you mean?
Yeah.
Yeah. Paint is around 5,600. Lubes is 2,400. Food and Q-Pack together is 3,200. 190 pharma.
Okay. The second question I have is the Cheyyar facility which came up first. What is the capacity utilization there, and is it significantly helping to improve our EBITDA because
Yeah. Cheyyar capacity utilization has improved a bit. It is now close to 68%. It will certainly, once it crosses 60%-65%, its contribution to the bottom line will be reasonable, if not great. We are now shifting Gulf production from Vizag to Cheyyar. Most of the molds are ready, and we are setting up one set of pail manufacturing at Cheyyar to meet the lubricant demand. Because lubricant molds are different, paint molds are different. Once that starts, probably in August, the Cheyyar capacity utilization will further improve.
Okay. The other thing I wanted to check in food and FMCG, this kind of growth, I mean, you have given a lot of commentary, but top 2 customer or top 3 customers, are they giving indication that the throughput will improve and the products basket will also improve?
The throughput improvement depends upon their product performance. But the basket improvement I can see definitely will happen because more and more food and FMCG products are seeking IML containers now. We are in talks with couple of MNCs for products which can involve reasonable number of quantities of products, which can add significantly to the numbers. Even HUL last year growth was This quarter growth compared to last year was very considerable. I don't want to quote the percentage, but it is definitely a big jump. Going forward now, we added a What is that? Not Emami. Marico. We added Nestlé and Horlicks, that is GSK, who have started taking their products in IML containers. Once they see the traction happening in the market, there will be a lot of interest in the other competitive products.
We see that FMCG, there's a long way to go in growth. Even the sippers we have introduced for the first time in India with IML. Those are yet to take off in a big way. But we are in talks with couple of, if not huge players, medium players. Generally, it is always the midsize players take a faster call on packaging change, and then the biggies follow. We hope that sippers market will establish over the next few quarters. That is where we are also putting our fingers into. And we hope that will contribute to the growth in food and FMCG.
Okay. Just last question on Panipat. Is Panipat is now fully operational and will be commercialized for most of the products?
Panipat is also currently running at around 78% in this quarter. That's a pretty good percentage to achieve within one and a half year. And there, we have already started the Q-Pack production. Some of the Q-Packs for Surf Excel detergent and some of the edible oil suppliers we have started giving from Panipat itself. Going forward, again, we are adding some more machines there in this year. The current capacity of 5,000 tons probably would shoot up to somewhere around 6,500 to 7,000, including food and FMCG. In food and FMCG, there currently is maybe 400, 500, 600 tons. Another 1,000 tons we'll be adding now. And maybe another 700 tons-800 tons in the pail business that is meant for ABG growth.
Panipat will continue to have good traction because of the product mix of both Q-Pack, food, and pails, almost like its Hyderabad unit. That's another focus unit for us, and probably it will continue to enjoy better capacity utilization.
Okay. Just last follow-up on the overall volume growth that you have delivered this quarter is very good. But if you have to maintain 15%, which are the top two segments which will drive in the rest of year? Of course, paint will be one.
Paint will continue to be there because of ABG numbers are growing up compared to the last year in a big way. So paint will continue to be adding good numbers. Food and FMCG, and in a bigger way, though it is small number, is pharma. In terms of EBITDA addition, are improving the EBITDA. Pharma will play a major role. Whereas for the volumes growth, food and FMCG and paint will continue to be rising.
Okay. Thank you and all the best, sir.
Thank you.
Thank you. The next question is from the line of Pratyush, an individual investor. Please go ahead.
Hello.
Yes, Pratyush.
Am I audible, sir?
Yes.
Thank you. Sir, I have three questions mainly. Firstly, what is the lead time for procurement of goods from any customer in each of the segments, paints and FMCG and pharma?
What do you mean by receiving the goods? You mean supplying the goods?
Sir, I mean like, for example, if Asian Paints requires 1,000 extra containers in December, they want it to be sold to the distributor by December. Then considering the time they will require to manufacture the paint and then supply it, in which month would they probably place the order for the 1,000 containers with you? Would it be like September or October? How many months in advance would it typically be?
Couple of weeks. Two, three weeks in advance.
Okay. It is similar for all the sectors?
Mostly.
Okay.
Most of them, nobody keeps a huge stock of packaging materials, Rajesh.
Okay.
They definitely take the packaging material just few days in advance, and the moment they fill it is the time for distribution.
Okay
In my opinion, most of the clients will move out the goods within 2-3 weeks from the day they procure from us.
Okay. Sir, second question, I see that there is a lot. For example, they are turning hydrogen. So there is a company, Time Technoplast, which uses polymers to make the container for hydrogen, CNG, et cetera. So I wanted to understand if that is something you will also, in the future, and if not, is there a very big difference between plastic packaging and polymer packaging, because of which you would not enter the segment?
Yes. I have to study that, what you are talking about hydrogen packing and other-
Okay
If it is made of-
Okay
multilayer film or tubes, that is different from injection molding. Injection molding is always like containers, where, especially in injection molding, you get only wide mouth containers, so very gaseous products will be difficult to handle in containers. You need only tubular or multilayer film packing for that. You can't do it.
Okay. And sir, last-
Not effervescent. Yeah.
Okay. Sir, last question. Basically, there was some that started manufacturing their own packaging. What kind of reasons are there for which, for example, Asian Paints or any big packaging might not backward integrate and start manufacturing their own tubs? Just a customer concentration-based question.
Yeah. None of the companies have their own packaging manufacturing projects, because it makes no sense to produce the packaging products because the volumes that you can produce on an injection molding machine are humongous. If your plant is not able to consume it, then you have to find how to utilize your capacity. Nobody want to go to the pain of manufacturing their own packaging products. Never in the history.
Okay.
Very rarely you might notice it, maybe in case of tins for edible oil. Because the tin is a cheap product and transportation eats lot of money, most of the tins are made in-house by the edible oil companies. That is the only area.
Okay
where you see packaging products are made. Whereas containers are very high-end technology and investment is huge, and nobody would venture to go into it as an in-house capacity. That fear you do not need to have.
Okay. Just one additional question, sir. Generally, in pharma or any sector, till what extent are customers willing to give any one company, for example, Mold-Tek or any other raw material area company, like to How would you be receiving? Would it be 20%-50%, or how much of their order would be given to you?
Yeah. Typically, big companies look at 20%, 25% is a comfortable share for one supplier. But you will be surprised that we have several customers, even today, we are the 100% supplier to them. That includes Hindustan Unilever, that includes even Mondelez, which are international companies.
Okay.
There are companies like Shell, Mobil, and Valvoline, where we are more than 60% supplier. Castrol, we are more than 60%- 70% supplier. So that all depends upon the reputation and credentials of the packaging.
Okay. Got it, sir. Thank you very much, sir.
Thank you.
Thank you. The next question is from the line of Chirag from Keynote Capitals. Please go ahead.
Thank you for the opportunity. Most of my questions are answered. However, I would like to know, you have mentioned about a just-in-time supply chain process for the FMCG. Could you let us know what kind of working capital improvisations are taking place because of this?
No, no. Actually, what we mean by just-in-time is, previously we used to have problems handling the label connectivity. IML label connectivity, we used to have almost three to four weeks waiting period, and then supplying to client would take another one week. We used to quote five weeks as a supply time for any new product or a new artwork development. Whereas now with the enhanced capacities both in printing and die cutting, the connectivity can be as low as 7- 10 days. When we said that improvement is, connectivity in the just-in-time means within a week, 10 days. Because as I said to the previous question, typically clients plan two to three weeks packaging material. They will be planning on first of the month, supplies to come by middle of the month.
If earlier we used to take about a month to meet such a demand or more than a month, today we brought it down to 10 days, thanks to the extra capacities we created in printing and better quality, better inventory control. In fact, in this process, inventory will not go up. Rather, inventory becomes little leaner. Because earlier we used to keep for big brands two to three months inventory. But today we don't need to because of higher capacity available and better machinery which can produce short quantities, with low rejections and low cost. This enhanced printing facilities enable us to improve our supply connectivity. Especially in main season, where the clients also cannot assess their demand. They think they can sell 1 lakh containers of 1,000 mL in April.
All of a sudden, it will become 2.5 lakh, and then they'll scamper to procure the packaging material without which they can't sell. That is when we'll be in a position to respond better now with the enhanced printing facilities. That is the meaning.
Correct. If I'm understanding it correctly, this means that the testing phase where customer requires multiple changes in their first batch of product, we can deliver it faster due to which it would be easier for us to get approval from a newer client. One. Second, the inventory days that we have today on our books is expected to reduce with the help of this, correct?
Yes or no for the second one, but surely for the first one, yes. Because of better serviceability during the summer, especially or high season like festival pack or whatever, we used to lose quite a few clients in the past. Now the connectivity has become faster and most of the clients are happy this season with our supplies in time. That is further going to improve now because of two reasons. One is Panipat being closer to north, will now service the north clients and supply within two, three days instead of 10 days from Hyderabad. Second is IML quantities can be produced quickly on the new machinery what we added, and can be brought into production faster than earlier. Instead of three to five weeks waiting, there's surges in demand can be met within 10 days. That will make them depend more on Mold-Tek.
Fair point. For my second question, could you give me the mix of IML, non-IML volume and value?
Yes, that still continue to be similar to last quarter, which is around 75% total IML and label, 25% non-IML. But in the non-IML, again, there is a pharma of 3, 4% to be removed pumps also. So it will be around 20% only screen printing and other decoration.
Got it. And value terms?
In terms of value, it is still similar, 77% up from 70% last Q1. That's in one year, there's an improvement of 70% becoming 77%. So more adoption of IML and HTL and non-IML has come down.
If I'm correct, IML products are at least 10% expensive than non-IML, right?
You can't talk in percentage because in big pails, like 20 L pail, the cost of the pail is INR 200. The delta won't be INR 20. It may be
Got it.
INR 7, INR 8. But in the case of small container, like 100 mL container, INR 4 will become INR 4.50. There it may be 10%-15%. So it is higher, but not exactly 10%.
Fair. Sir, next question is that, today, if we have a capacity of 60,000, what kind of capacity are we expected to have by end of FY 2026?
See, from whatever the machinery what we have planned already and which are expected to be added during the current financial year, we foresee that 61,500 may reach around 70,000 tons, including pharma. Currently it is 63,000, 64,000. Probably it will go beyond 70,000, 72,000 by end of this financial year.
Okay, perfect. Thank you so much, sir.
Thank you. The next question is from the line of Yash Bajaj from Lucky Capital. Please go ahead.
Yes, sir. Good evening, and congratulations on the great set of numbers. Sir, my first question is, sir, what capacity utilization are we at Panipat and Cheyyar today?
Panipat is 78%, Cheyyar is 68%.
Okay. How are we planning to increase capacity, sir, in these two plants?
Panipat, as I just answered, will be reaching almost 7,000 tons, including food.
Okay.
Gradually. in August, food will be added, about 1,800 tons-1,000 tons. It is already having a 500 tons-600 tons of Q-Pack capacity. Another 800-1,000 will be added in the next four, five months, starting from August. So by end of this financial year, we will have another 1,000 of food and maybe another 700 or 800 of pail and Q-Pack will be added, bringing it to 7,000 tons by end of the financial year.
Okay. Sir, but in this, I believe Panipat was 5,000 tons, right, in terms of capacity as of today?
Yeah.
Okay. Whatever we are increasing the capacity is not for paints, it is for food and FMCG, is it?
No. Partly paint, maybe 500 tons-800 tons will be for paints, which is also fungible with Q-Pack. That will take care of both, in case of ABG sudden spurt in demand, it can be fungible with Q-Pack. So that's about 1,000 tons and about 1,000 tons of food.
Understood. My second question is, this quarter lubes segment has grown 7%, 8%. Could you help us with, where is the growth driven from? Because it was kind of flattish or degrowing for the past one, two years.
No. If you see the volumes, it is a degrowth.
Hello, Mr. Yash.
Yeah.
It's only in the- Compared to Q4 also, it is a degrowth. Compared to Q4, it is a gain. But compared to the Q1 of last year, it's down.
Mm-hmm. Okay. Understood.
Q4 say it has improved a bit. But when compared to the Q1 of last year, because this year rains started very early.
Right from May beginning, there are rains all over south and this has impacted the lubricant sales also.
Okay.
Because-
Okay
movement of goods will come down.
Okay. Understood.
I think that is the reason for lubes negative growth. But I think it may end up with a zero-zero kind of a situation again, because lubes is a kind of stagnant industry.
Sure
in terms of volume.
Sure. My last question is regarding the pharma division. What kind of run rate would we exit at this year? What are the targets this year for us? Because we have no-
I explained-
Yeah.
We anticipate this INR 7.4 crore, INR 7.5 crore what we achieved this year-
this quarter will start ramping up in couple of quarters. Probably we will be able to reach a level of INR 10 crore plus per quarter by end of this financial year. That should put us somewhere around INR 35 crore, INR 36 crore for the full year.
35. 35 36. Got it.
Yeah. As against-
That is all from-
INR 10 crore last year.
Sure. That is all from my side. Thank you, and all the best.
Thank you. The next question is from the line of Guru Darshan from Kitara Capital. Please go ahead.
Congratulations on the good set of numbers, sir.
Thank you.
Sorry, I am repeating my question. Just want to understand what are the key drivers for FMCG growth, food and FMCG growth in the current quarter?
As I explained in my previous questions answers, food and FMCG growth has come because of our improved serviceability in terms of label connectivity and supplying in time. That is one of the key reasons, because clients were always there for us. It was our inability last year to, or not able to make supplies in time, which we have corrected by adding sufficient capacities in printing and die cutting. Now the label connectivity has improved and supplies have certainly improved. In spite of weak summer, we still have ended up with 16% growth in food, that is plain food, not adding the Q-Pack, which is a really satisfying number. It would have been more than 20% had the summer continued in May. Even though it didn't, we have reached a 16% growth.
Another adding to that is some of the clients realizing Mold-Tek's quality and consistency, and they are also coming back. I would say that our ability to connect the dots is what really improved our numbers.
All right. Got it. The second question, when you say the pharma segment has achieved breakeven, are you referring to that it's EBITDA breakeven?
No, we are talking about the bottom line.
PBT breakeven.
Yeah, PAT. Yeah.
All right. Got it. Thank you, sir. Thank you so much.
Thank you. The next question is from the line of Dipak Saha from NBI Limited. Please go ahead.
Hi. Am I audible?
Yes, Dipak. Dipak sir, please go ahead.
Hi. Sir, couple of questions. First from the food and FMCG part. Given the fact that we had this sporadic monsoons or inconsistent summer season, had we had a normal season, you said we could have done 20%. For the upcoming quarters, that kind of for the full year, I mean it might say 20%, but for the coming quarters, can 20% kind of a growth be possible for the food and FMCG side?
It should be because we are starting sweet packs manufacturing in Panipat from August, maybe middle of August, 10th or 15th, we are planning inauguration of the food and FMCG production there. Already Q-Pack production started few months ago. The sweet boxes will start from sometime in the middle of August, and that will slowly pick up over the next quarter. So in Q3 onwards, I can see the numbers moving towards 20%, if not Q2. Even in Q2 it can be decently good, but Q3 onwards I can be sure that we will be able to reach, I mean, we are aiming to reach 20% volume growth in food and FMCG.
Got it. And sir, on the, I missed the value split that you gave for IML and non-IML. Did you mention 76%- 77% on the value, in terms of value for IML split?
77% value.
Okay.
Quantity is 75%.
Okay. If I am not mistaken, the earlier commentary was that we are quite confident given the shift towards IML, we would be heading towards 80% plus. Do you stick to that kind of expectation for the full year? Or, I mean at least for the coming quarters? If not full year-
It is not for full year. In few quarters it should go to that level, and probably it will stabilize there. There will be still some people who still buy plain containers. Pharmaceutical is mostly unprinted. Like that, slowly it may stagnate at around 80%, 75%- 80%, between.
Got it. On the raw material side, sir, if you can give me some understanding about the mechanism for passing down the raw material prices to your customers, especially given the volatility in crude oil price. If you can share some color. Do you pass it immediately? It comes with a lag? Some timeline, if you can share how do you operate with passing down the raw material prices to the consumers?
Yeah, it is as usual like in the past. It is sometimes one month old price is applicable or three months average price. Very rarely the six months average price also for a couple of clients.
Mostly it is 75% of the clients go for the previous month pricing.
Got it. Lastly, sir, on the recycled content part, I think earlier we were talking 20% kind of a number for some of the industries that minimum usage of this recycled content, and we have certain margin improvement also associated with it. Currently, if you can give some color, how is that particular number? Is it going up? Because earlier we have the belief that this number should gradually go up. If you can give us some understanding there.
Yeah. In RCP, there is certainly a growth in utilization. Thanks to some of the suppliers who have established the product quality, we are in a better position to use more and more RCP. I think in this current financial year, we have crossed using 7,000, 7,500 tons of RCP already. That when you see it as a quantity on 38,264 last year, it's close to No, sorry, on this 11,400 per quarter. On 44,000, it's more than 15%. Gradually, I think we will inch towards 20% utilization in the current financial year.
Okay. That's relevant for industrial, that's paint and lubes, right? I mean, it's not relevant for your-
Yes. It is not for the food and Q-Pack, no. Pharma, no.
Got it.
So that is expected to be only for the about 70% of our volume.
Got it. As well as
Yeah.
Okay. Got it. Sir, one last thing, as well as the fungibility of these machines are concerned. Probably it is doable for pharma and food, and on the other side, lubes and paint. These are fungible, right? We can't use paint and pharma capacity to large extent. For small requirement we can, but if you can share some color with the fungibility between segments.
Yeah, it's a good question. Paints, lubes, and even Q-Pack are fungible. Q-Pack also is a kind of a paint, and even its margins are also similar to paints. So paint, lubes, and Q-Pack are kind of fungible products. Food and pharma, yes, they are fungible, because the machine size is crew size and even the robotics. Of course, robotics are not required much for pharma other than tubes. On the GMP standards, what we keep the food, allows some of the pharma products to be molded in food section. For example, EV tubes. They don't need DMF facility. So whenever there is excess capacity requirement in pharma, we can run that in food section to some extent. But most of the pharma products, which are pure pharma, we cannot run them in food. So there are limitations, but there is some scope for fungibility.
Especially food products, if the demand picks up, they can easily be run in pharma. Though it is not advisable in cost point of view. But still to meet the sudden surge in demand for food, we can make use of the machines in the pharma.
Got it, sir. That's all from my end, and all the best for rest of the year. Thank you.
Thank you.
Thank you. The next question is from the line of Deepak from Sundaram Mutual Fund. Please go ahead.
Thank you for the opportunity. Am I audible?
Yes, Mr. Deepak. Please go ahead.
Yes. I just had one question. Earlier you indicated that the volume mix between IML and non-IML has broadly remained similar, right, in Q4 of previous quarter and Q1, right? And despite similarity in the volume mix between IML and non-IML, your gross profit per kg has gone up by INR 3, right, on quarter-over-quarter basis. Correct? Now, if I look at your volume split, the only difference I could figure out is that your paints volume, which contributed around 45% in Q4, has gone up to 49%, right? So your IML, non-IML remains same, but your paint volume has gone up, and that is what is leading to your GP per kg improvement on quarter-over-quarter basis. Would it be fair to conclude that the IML mix within the paint segment has gone higher, let's say, Q1 versus Q4?
Yes. As I told you in the last quarter, Asian Paints is adopting more and more IML in their top brands, and that enabled us to set up even robotic facilities at all the five plants across India now. That has also encouraged them to go for more IML adoption. That is one of the reasons for better improvement. But these numbers of 75% and 74% in Q4 and Q1 are little kind of confusing because if you notice that food and FMCG growth is what contributed to the better EBITDA margin considerably. And of course, part of the paints moving towards IML also is one of the reasons.
Okay. But, sir, your food and FMCG, if I look at your volume mix, actually have come down by a few basis points. That should not lead to any material improvement in GP per kg, right? It has to be the IML contribution which is coming from the paint.
No. If you look at the absolute number, the 1,379 tons in Q4 has become 1,568 in Q1. So that's up by almost 14%.
Okay. But in a volume mix, sir, it hasn't made a difference. That's what I'm trying to conclude. Not on the absolute level, but the volume mix.
Oh, in the overall volume mix, it is still 13.79%, which was for
Exactly
the last year. If you're looking at that way, yes. But in terms of Q4 to Q1, that rise of 200 tons of food and FMCG contributes decently better because almost we have double the EBITDA compared to paint and lubes in the food and FMCG.
Okay. Would it be possible for you to tell what is the, let's say, IML and non-IML split between the segments, paints, lubes?
Probably that need to be divided and given to you by our team. You can write to Rambabu, he can answer.
Okay. Thank you for answering the question, sir. All the best.
Thank you.
Thank you. The next question is from the line of Pranjal Mukhija from GrowthSphere Ventures LLP. Please go ahead.
Hi, sir. Am I audible?
Yes, Mr. Pranjal. Please go ahead.
Hi, sir. Thank you for giving me this opportunity, and congratulations on a great set of numbers. Sir, I have a couple of questions on the pharma side. The first question is more from my clarity point of view. The Sultanpur facility that we are operating the pharma part there. Currently the production capacity is 1,500 tons, right? There.
Yeah.
In the near term, we are expecting this to reach 2,000 tons-3,000 tons, right?
Not 3,000. It will probably go to 2,000 quickly in this next six months, and probably next financial year, we will be trying to hit about 3,000-3,500. So current plan is to bring it at least up to 2,000 tons in the immediate couple of quarters.
Right. Sir, this capacity is built on what kind of land, like in acres?
This present capacity is in a building area, I can say is around 50,000 and 25,000 shed is getting ready as a warehouse. That will take a couple of months to complete. By end of September, I think, that warehouse also will be ready. So now currently it is housed in 50,000 sq ft area, and another 25,000 will be added by September. By then, these new capacities also will be added so that we will have enough space for warehousing and storage.
Sir, any-
Land wise?
Yeah.
Land wise, we acquired 2.5 acres of land.
Right.
Given the floor index, I think typically we can easily add about 2 lakh sq ft - 3 lakh sq ft in the future for pharma. Not in the immediate future, further in next few years.
From 75,000, you are saying 2 lakh- 3 lakh additional?
75,000 to another additional of 2.5 lakh sq ft- 3 lakh sq ft is possible in the new land what we acquired.
Okay.
Currently it is only 50,000. 25,000 is being added. That will be ready by September.
Right. With this new land, we can basically 5x our pharma capacity.
Yes. Another 4x- 5x is possible.
All right. Thank you, sir. That was insightful. Secondly, like you mentioned in the call that there are some 20 products under development in pharma. I just want to understand, what kind of products are these? Are these slightly more complex products in terms of how you are making them? How are the realizations on these products related to the current products that we are making, EV tubes, canisters, and caps? Just wanted some clarity on that.
I think it is a good question you ask because when I say 20 products, it is not 20 new products.
Yes.
Twenty products which are required by the industry. For example, I told last time also, there is a 300 mL jar with say 25 g weight. Some clients require thicker bottle, some people want lighter bottle because of the product. And they want same 300 mL bottle, same dimensions, but a 35 g instead of 25 g, or they want 15 g.
Right.
How you quickly develop those cores and cavities to change the weight is something I call it as a new application. Instead of saying new product, I should have said a new application for the same product. Those changes, we are doing almost 10 to 15 of them. And new products, another 3 to 4 of them, which are completely new for us in our product range, not necessarily new in the industry. That way we are widening our product range. And their value additions, if they are bottles and caps, as I said, they are medium range, somewhere around INR 80- INR 100, INR 120 per kg, maybe INR 80- INR 100. But if it is other products like caps and new products, they will be in the range of INR 150, INR 170 per kg, EBITDA.
And sir, now that you have also gotten into molded vial trays and the CRC caps, how are these products compared to the current products that you are making in terms of realization?
They will be middle order. Something around INR 120 range.
Right. And sir, finally, one last question. I just wanted some update on the exports part of the division. Like you were saying that we had supplied some trial quantities in U.S., and again, you were looking for some opportunities in Europe as well. Some update on that, sir.
Yeah. We are now actually actively pursuing exports to Bangladesh and Europe because U.S. is kind of stagnated. Clients are waiting for some clarity on the duty structure. Repeat orders are not yet received. There is one inquiry going on, but they are waiting for clarity on the duty structures before they make firm orders. But going forward, there are opportunities for exports, and we set up a team to work on it. A two-member team is working currently on export push. Things will happen. As I said, in pharma, it is always a long run process of approval, trials, and commercial orders. That process started with a couple of clients in U.S., one or two clients in Bangladesh. Europe, one client has accepted, then we have taken a small batch for filling trials. Maybe another few more months down the line, something can happen there.
And we are also participating in the European Pharma exhibition sometime in October. Is it October? November. The PharmEx. End of October. End of? End of October. End of October. So probably we will have better leads and a bigger product range to display when we go there. I do not count on big export numbers this year, but that can start adding reasonable quantities from next year.
Right. And sir, since we are sort of short on pharma capacity in terms of the demand that we are seeing in this segment, how would the management distribute the bandwidth in terms of the focus on pharma divisions in domestic versus export market? Generally, what is the realization spread like? Is the realization better in exports of pharma products compared to India?
Not necessarily. Given the transport cost and other elements of cost, even Indian and export margins are almost similar. Little better in export in especially products like canisters and small products like caps. But they will be equal in bottles and other bigger products because the transport eats away considerable cost. So I would say exports to countries like Europe and U.S. will be marginally better in terms of margins, but not so exciting.
Right. Thank you, sir. These are my questions, and all the best to the team, sir.
Thank you. Thank you.
Thank you. That was the last question for today. I now hand the conference over to the management for closing comments.
Thank you all for participating actively in the Q1 conference of Mold-Tek Packaging, and I also thank Nitin from Emkay for giving us this opportunity. Thank you, operator, for conducting the meeting in an organized manner. Thank you very much, all. Have a nice day. Bye.
Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.