Ladies and gentlemen, good day and welcome to the Mold-Tek Packaging Limited Q4 FY 2025 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Bhavik Shanklesha from Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Good morning, everyone. I would like to welcome Mr. Laxman Rao, Chairman and Managing Director, and thank him for this opportunity. I shall now hand over the call to him for opening remarks. Over to you, sir.
Good afternoon, everybody. Thank you very much, Bhavik, for coordinating this call today. Thanks all participants for participating in the Q4 and annual results of Mold-Tek Packaging. I am glad to inform you that the company has closed reasonably well for the full-year, with a growth of around 11.8% in sales. In terms of volume, it is 7.3%. And the EBITDA has gone up by 7%. And due to high provision of depreciation and financial cost, the PAT has come down marginally, by about 9%. I think. Yeah. Net profit down by 9%.
However, the future looks very bright because one of the greatest news for the quarter is our pharma division, which has started just a year ago, barely a year ago, has crossed break-even in the Q4, with a shot up of turnover from meager INR 2.5 crores in Q3 to INR 6.7 crores in Q4, resulting in our company making profits for the first time in the pharma division too. This will augur well for the coming years as the traction that is created in the Q4 will continue to spread in the full financial year of current year, apart from additional new products that are being added in the pharma sector. Another positive development is a degrowth of paint industry, which was a 6.7% drop last year, has become 6.8% growth in this current financial year. Auguring well for the company's future growth.
This is all the headlines. We can have more information exchange through question and answers. Can I now give back this line to operator to organize the question and answers?
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 touchtone 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. The first question is from the line of Jaiveer Shekhawat from Ambit Capital. Please proceed.
Sure. Thanks for taking my question. Mr. Rao, congratulations on a good quarter. Sir, my first question is on your pharma division. We have seen a good pickup during the fourth quarter. One, if you could explain in terms of the approvals that you have received, where are we in that cycle? Also in terms of your revised revenue targets for possibly the next year and the year beyond that for the pharma division. That will be my first question.
Yeah. Regarding the pharma, yes. What all we discussed a couple of quarters ago, several companies have visited and passed our company audits with flying colors. Some of them, I would say, have started picking up volumes in this quarter, that is Q4, resulting in a sudden spurt in numbers to about 2.5 crores- 2.3 crores per month, which enabled us to reach a number of 6.7 crores in the Q4 compared to 2.5 or 2.6 last quarter. That will continue to improve, if not at the same pace. Definitely, this will become the base now. Going forward, we are looking at a number beyond 30 crores for the full-year. It can be better based upon some of the new products which we are launching for the pharma industry in India.
In fact, there is again a minor expansion taken up in the facilities. Apart from six, seven machines we started the business with, we are adding five more machines in injection molding category. A couple of them have already arrived and three more machines are coming in June. The corresponding molds for the same are getting ready. Hopefully by end of May or middle of June, they will also be here for production. By end of June, we will be having some more new products that will be bringing in revenues, and we are confident that the pharma division from INR 11 crores in the current financial year should be seeing 2.5x- 3x growth in the next financial year in terms of top line. That is our current update.
Two, we see much more growth coming up in couple of years down the line because this is only the beginning. Out of more than 18, 20, I do not know, I lost count, 20 companies which have given us the audit clearance, hardly four or five of them started commercial buying. We expect some more players to start buying commercially in the coming quarters, which may add up numbers more rapidly. As we meet over the quarter on quarter, definitely I will be able to update and revise the projections. But for now, we will be certainly crossing INR 30-plus crores turnover in the current financial year from pharma.
Sure.
Probably INR 50-plus in the 2026, 2027 year, that we can review as we go forward.
Sure. That is very helpful. I just wanted to touch on the capacity utilization. You mentioned in your slides that you have already achieved over 50% capacity utilization. Given that you are now seeing some traction, are you aggressively investing in expanding these capacities, or are you still in that wait and watch mode before you expand very aggressively on the pharma fronts?
I would say now the gears have changed a little bit. We are no more very cautious about the investment. We are now more confident and the results are very encouraging. Our ability to develop new molds and new products, how it is being attracted in the pharma industry is very heartening. I see a very big gap, especially in new product development in this country for packaging and pharma packaging. Mold-Tek with its tool room and product development abilities, can definitely play a major role in that. Currently the expansion is adding few more machines in the existing land and building.
But to be cautious, we have applied for further land just next to the existing land in Sultanpur, and preliminary approval has been issued from Telangana Government for about two and a half acres of land, which is very adjacent to the current facility in Sultanpur, Hyderabad. This will be in future uses for pharma expansion. Because—
No.
Yeah. Can you hear me?
Yes, please go ahead.
Yeah. We are now aggressively adding that land also for future expansion that is required in the pharma segment.
What kind of capacity increase are you doing there, and what would be in terms of tonnage capacity?
Yeah, around 1,500 tons per annum current capacity. That will be at least 3,000 tons during the next few months. Probably by end of December, we will have molds and machines that can produce up to 250 tons per month. So during this year, from 1,500, probably we will go to 3,000 tons capacity in terms of manufacturing capacity by end of March 2026. The land and building, which is now currently available at Sultanpur, will be more than enough to capture to this requirement. But further enhancement beyond 3,000 tons, if that is certainly required in the next financial year, 2026, 2027, would take up construction in that new land we acquired. This current plant, which we currently have on hand and what we can add in Sultanpur land, can cater to up to 3,000 tons per annum or you can say closely INR 100 crores turnover.
Sure. Very well understood. On the paint side, the quarter growth looks very tepid. It is only around 2%. If you could explain what has been happening with both Grasim and Asian Paints and other clients. You have also been talking about IML adoption increasing plus recycled polymer also increasing. What kind of a growth expectation do you have from the paint segment in the next year?
Yeah, I agree this quarter the paint segment growth is hardly 2%. But if you notice last year it was negative. That way it is a little better, in terms of, comparatively, there is a growth of around 13% over the 12 months period for the overall paint industry in this current year compared to minus 5%. It is Q3, I think. Sorry, I am talking wrongly. Year- to- year, there is a growth of 13%. In value terms it is 13%. In terms of quantity, it is 6.8%. But for the quarter in question, it is only 2.02%, 0.7%. We are foreseeing this to change, and it will get better. Our trend in April or even May is on the positive side. Growth will slowly come towards double digits is our hope. From 6.79%, hopefully we will touch about 10% growth in the next financial year.
Given the traction, two reasons. One is Aditya Birla Group has asked us to enhance our capacities, which we did by January. Those capacities have started functioning from March, April onwards, and their numbers are improving now. This is a brownfield expansion, so the delta for investment is marginal, but the numbers can start growing little more rapidly. That is one positive thing for ABG. Coming on Asian Paints' side, they are shifting more and more brands into IML. Earlier it used to be only Hyderabad and Satara has the capabilities of giving IML products. Now we have Vizag and Mysore also, robots have been installed. So now all four plants started manufacturing IML products for Asian Paints, which was not the case a year ago. We hope that will stabilize or rather improve a bit in our share from Asian Paints.
With these two positive developments, we are hoping to see a double-digit growth in paint segment in the coming financial year.
Sure. Sir, on your CapEx side, earlier you had guided that you will do INR 70 crores-INR 80 crores. But when I see the number for FY 2025, that has reached to almost INR 140 odd crores. Which is the trend that you have done over the last two years is there. Which segments have you ended up investing a lot more? Is it largely coming from the paint side, or are you investing across other businesses and why?
No, it is equal. Actually, in pharma and printing, especially in printing, we invested more than INR 25 crore in the previous financial year. Wherein, we have added two flexo machines, one offset machine, several die cutting machines, and one rotogravure machine. That has increased the printing capacity by more than 70%. That is one of the reasons why we clocked a very healthy 25% increase in the food and FMCG sales in the Q4. Because our ability to manufacture IML has enhanced from February, and that is further enhanced in May. This was the reason last year, as I told in my previous quarterly interaction, that rejection of a printing machine and further delay in printing machine acquisition has caused a drop in food and FMCG because we couldn't make IML labels in time.
Whereas in this year, we are well-equipped for that and the proof of the pudding is growth of 25% in food and FMCG in Q4. That is a good positive turnaround because going in Q1, which is ice cream and dairy product season, we are more than ready to capture the increasing demand, which we let go last year.
Sir, my last question is on your realization, given that crude oil prices have also corrected sharply. Are you already seeing adverse impact of that on your revenues, possibly in the starting quarter, on first quarter, given we have already seen April?
In fact, on the contrary, we are more positive about improving the EBITDA per kg, which we have crossed INR 40 after long several quarters. Last seven, eight quarters, we were below INR 40 EBITDA per kg. In Q4, thanks to increase in food and FMCG sales and pharma sales, the number has shot up to INR 40.15, which indicates that a better margin scenario is going to emerge in Q1. Because in Q1, we will be having much better capacity utilization and higher sales of food and FMCG, which will be always there in the Q1, due to summer consumption of ice creams and dairy will reach peak. This time we are ready with our capacities and we saw very good improvement in April. If the trend continues, we might have a positive Q1 growth.
Sure, sir. Thank you so much. Sir, wish you all the best.
Thank you.
Thank you. The next question is from the line of Shirish Pardeshi from Motilal Oswal. Please proceed.
Hello. Good afternoon, Mr. Rao. Thanks for the opportunity. I have a few questions. First is, hearty congratulations for food and FMCG. Just wanted to understand the growth what you have delivered in FY 2025. What are the top two, three things you have done right? Can similar growth come in FY 2026?
Yes. One major thing we did is, our pharma has got into breakeven right in the fourth quarter, which was not really expected. I was confident, but I was a little skeptical till we did it. In the Q4, our team did a fantastic job achieving INR 6.6 crores turnover in the quarter, as against INR 2.5 crores in the Q3 or INR 2.4 crores in Q3, something like that. Almost three times turnover has been achieved in Q4, and that will be sitting as a base for the coming quarters. We are now looking at anywhere between INR 30 crores, INR 35 crores kind of top line for pharma in the next financial year, with a very healthy EBITDA margin, which will take up the overall company's EBITDA margin.
Second heartening thing is capacity utilization started improving from March onwards, especially in the new expansions we created at ABG for Cheyyar and Panipat, which started at least from March onwards. I wouldn't say in the entire Q4. From March onwards, we see good traction in ABG's numbers, which will continue during the current next financial year. We are more optimistic about 2025, 2026 because of these two factors, pharma and ABG growth. As I said, with the enhanced printing abilities and the printing volumes, we are in a position to capture Thin Wall growth into double digits again, which slipped the last year below 10%. I think it's somewhere around 5%, 6% last year. Which is now reached 11.76% overall, thanks to a big jump of 26% in the Q4. Going forward, food and FMCG also will be growing.
Another reason of my optimism is our Panipat food and FMCG production is starting in June, in a small way, but that will start adding up by end of next financial year into a reasonable number. Our Square Packs also, we have already started manufacturing at Panipat. Last three months, we have a couple of clients nearby, but now the client number has gone up to eight to 10 clients. Square Packs, the full set of product range is being created at Panipat starting from June. Already a couple of packs are being made there. Other two packs, that is 17 and 10 L, also will be starting from June onwards. Square Packs, Thin Wall, ABG, pharma. These all four are on a good run. We are more confident about next financial year as we see today.
So one follow-up. In food and FMCG, how many new customers we have added over last two, three quarters, and what is their contribution?
Several clients we add every year in the food and FMCG. Notable is Marico recently, and Mankind Pharma for their protein nutritional powder, which is a sizable number. These two are major, but there are several other small and medium clients. In fact, as I said last year, we let go a lot of clients because we couldn't service them due to lack of printing facilities and in-time supplies, which now we are overcome with the expanded printing capacity and able to retain more and more clients than what we let go last year.
Okay. In terms of paints, Asian Paints was giving us a good, strong view, saying that they are now looking at regional pack with IML printing in the regional language. I'm sure you would have been part of that journey. What kind of opportunity you see over the next two, three years?
I certainly am positive about our growth with Asian Paints because last two years we've de-grown in Asian Paints' overall numbers. But now with the kind of major brands being shifted into IML, and they've given us a clear advice to have IML facility at all four plants. In fact, including Hyderabad, there are five plants. With that initiative, I'm confident our numbers can become positive rather than dropping. It can even grow in the next financial year is our hope. If that happens, that's why I'm confident of a 10% growth in paint segment in the next financial year.
Okay. So one follow-up on FY 2026 overall paint. What would be Asian Paints and ABG volume contribution?
I can't share such details of individual clients.
But total you can say that, top two clients.
Top two clients are definitely Asian Paints will continue to be our number one client. Number two client is HUL. In terms of tonnage, Grasim comes number two. Gulf, Castrol are close number threes. Hindustan Unilever is number four.
Okay.
So that way they continue to be in that same order, I guess.
Okay. Just last question. On slide 14, you have given various segmental number in terms of volume. Can you just break down each segment? What is the EBITDA view you have achieved for full-year FY 2025?
For segment wise EBITDA, you are asking?
Yes.
No, I don't think we have that data. We can't share as of now.
Okay. I'll take it from Adi separately.
Yeah, probably you can take it.
Yeah.
It will be aggregated.
Okay.
In the paints it will be close to INR 30, INR 32. In Thin Wall it will be close to INR 70. In pharma it will be close to INR 90- INR 100. But exactly pinpointed segment analysis, probably you can get later.
No, I was more interested, sir. This quarter you have delivered more than 40 and which was our target. I just was more curious which segment has driven this.
Definitely food and FMCG and pharma, because if you notice, food and FMCG has clocked a 25% growth, which is one of our high contributors. Pharma, which was zero last year, has contributed at least 2% of the sale. I would say it is more than 2%. In revenue terms, it is 3.3%, whereas weight base is only 1.8 x. That means you can understand the realization is much better in pharma. Though it is a small number, INR 600 crores, its contribution to the bottom line or EBITDA would be reasonably good. Going forward, that will become the norm.
Okay. All the best and thank you.
Thank you.
Thank you. The next question is from the line of Richa from Equitymaster. Please proceed.
Sir, thank you for the opportunity and congratulations for stellar performance in pharma and FMCG. My question is related to EBITDA margin per kg and the kind of trajectory that they could take given the volume growth guidance that you have given for different segments. I believe, what is your degree of confidence that we will be able to reach 42 per kg kind of margins, citing that you were close to a few years ago by FY 2027? Do you think that would be possible with the mix that we are moving towards?
Yes, we are aiming towards 42. If not immediately, definitely in the next one or two years, it can easily cross 42, in my opinion. Because pharma brings in at a much higher EBITDA margin, close to INR 100 or more. Food continues to be at least INR 70- INR 80. But of course, the paint and paints, Square Packs, they continue to be in the region of INR 30, INR 35. Overall, as the numbers in pharma and in food and FMCG improves, this number can move towards 42, 43 in the next coming quarters. That is internally our target too, and I don't see it very far away.
Okay. Sir, just talking about Thin Wall and FMCG, I think you suffered some kind of muted growth because of the capacity constraints. We witnessed 25% growth, but I'm assuming that could also be on the lower base. Going forward, what would be the normalized growth rate, including FMCG considering increased competition plus the kind of capacity optimization that you have done?
Yeah. In terms of printing, as we've now gone up considerably, we see a growth range in the region of 15%-20% in the next financial year, too. Because earlier we lost several clients or didn't entertain smaller clients, mainly because of a lack of printing capacity. April saw 20% growth, but how May and June or the next part of the year goes is still not clear. But we are anticipating or targeting a growth of 15%-20% in the food and FMCG segment as well.
Okay. My last question is on capacity. Maybe I missed the CapEx number that you are aspiring for in FY 2026, and I believe most of it will be for pharma capacity, right?
It will be partly for pharma for sure, because that is where we are investing again on some land and probably completing the buildings at Sultanpur area in the existing land. There will be certainly INR 20 crores-25 crores investment will happen in pharma in the current financial year. Already we have committed INR 20 crores of investment in molds and other machinery, which are yet to arrive. So I see this year CapEx in the region of INR 70 crores-INR 80 crores, because Mahad plant is yet to go on stream. It is being serviced from Satara plant. That plant construction, it is not a big plant, but it would require at least around INR 14 crores-INR 15 crores of investment there, and pharma requiring around INR 25 crores.
We are further adding a little bit more in printing, not very big investment, to the tune of around INR 7 crores-INR 8 crores. All put together, our budget for the next financial year CapEx is INR 75-INR 80. But for any sudden jump in pharma requirements, we have already factored a INR 10 crore land, which we are acquiring next to INR 10 crore worth of land next to our Sultanpur unit in Hyderabad purely for future pharma growth. Having said that, the buildings are not yet planned in that location, because there is enough space and land available in the existing Sultanpur. That will get filled in this year for sure. Probably the new land, what we acquired now, or about to acquire now, would be future, let us say from 2026, 2027 onwards, we will be investing in that facility.
Okay.
Overall CapEx, we wish to keep between INR 70 crores-INR 80 crores for the next FY.
Okay. And sir, you mentioned around 3,000 tons per annum by the end of FY 2026 for pharma. May I know the revenue potential? I think you guided for INR 50 crore kind of revenue, but what is the potential of 3,000 tons per annum kind of capacity from pharma?
See, today, a pharma selling price can be somewhere around INR 300- INR 350 per kg. So given that even you take conservatively INR 300, we are aiming at, let's say INR 90 crores- INR 100 crores overall best capacity, ideal capacity by—
Okay.
—the end of this FY.
Okay.
But it will be ready for filling up probably in 2026, 2027.
Okay. Thank you so much and all the best.
Thank you.
Thank you. Before I take the next questions, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please proceed.
Sir, thank you for the opportunity. Sir, I wanted to understand regarding our pharma business. Sir, are customers currently unhappy with their current suppliers, or is it because of the demand we can see such a sharp jump over the next two to three years?
No, I can't say that whether the clients are unhappy with our competitors. I don't think so that would be a major reason, because they've been in business for quite some time. Companies like Gerresheimer and CG are in this space for more than 10 years now. What I'm saying is our ability to quickly develop new products, new features. For example, I'll just give you one example. Somebody want to develop a two-bottle holder for application. While CG or Gerresheimer take four to five months to develop such a new product, including a new concept which is not breaking the patent rules, would take them four or five months to come up, and whereas Mold-Tek could do it in one and a half to two months. So such kind of opportunity I'm seeing are plentifully coming up in pharma space also.
I was under the impression all the time that food and FMCG is the only area where dynamic packaging needs will arise. But I also, to my pleasant surprise, found pharma also requiring such agility in developing faster molds and samples. For example, I'll give one more example. There are several companies which have some standards. Let's say 200 ml bottle means it should be, let's say, 15 g weight or 18 g weight. But some particular need of a client would come due to whatever the effervescence of the tablet or more stringent rules of longevity of the product. They may ask for a 22 g bottle. Instead of 18 gr, they want a 22 g bottle. Most of our competitors might take external help to develop such a small change and might take a couple of months to submit such samples.
Whereas with our in-house tool room, we do that kind of changes within a couple of weeks. And the client want it for stability test and get his commercials done based on the stability test approval. So for him, saving a couple of months is a big deal. So such agility is what our tool room can bring to pharma, and that I feel is a big gap we are going to fill in.
Got it. And sir, how are the demand-supply dynamics in the pharma, in the three products that we are catering to currently?
Yeah, demand supply, there is adequate capacities everywhere, and the growth is also positive, but for this disruption of American tariff confusion. There is some disruption here and there, but things are all fine and we are looking at capturing a market of existing market, not looking at the growth because our numbers are hardly anything. Like say, if you talk about 30, 35 crores, it is hardly not even 1% of entire pharma packaging requirement in the country. So whether that INR 3,000, INR 4,000 crore market grows up by 2% or 10% doesn't matter much because we are looking at replacing the existing competitors or gaining market share through our innovations and faster development. So I am not much concerned as of today about the overall pharma packaging growth, because we are looking at capturing current market opportunity.
Got it. And sir, if I look at our paint segment, sir, there was a conference where the Berger CEO said that the paints volume have grown by 13% or 14% over the last five years. That is from 2018 or 2019- 2023, 2024. But sir, if I look at our paint volumes, they have grown by 9% to 10% towards FY 2019 to FY 2024. So sir, that means that we have lost either customer market share or competitors are gaining our market. The incremental volume that we should get, competitors are getting. Sir, any thoughts on that?
Yeah. As I told a couple of quarters ago, we are consciously letting go some of the low value-add opportunities in paint segment. We are not running after low value-add paint companies and letting go people who don't see value in IML or in terms of our quality. There are several clients who are settled with screen printing or settled more than enough with, what do you call it, heat transfer labels. So such companies with low value add, we are letting go. That is one of the reasons why there is a stunted growth in paint segment. Whereas in the lube segment, lube as it is not a rapidly growing segment. In terms of volumes, they are more or less stagnated. But in spite of that, for the current year, it is a minus 2%. It so happens it will vary between plus or minus 5% every year.
So lube is not a great contributor anyway. Coming to paints, yes. Now with Asian Paints moving into IML, at least for their top brands, and we created facilities at all locations. We are now all ready to capture better numbers from Asian Paints is our hope. And ABG certainly has given us an opportunity and whatever growth they clock in, it will reflect in our numbers. So overall, this year, I can say paint pails will grow at least in double digit.
Sir, is it fair to assume that in IML segment that we cater to Asian Paints, we would be the largest vendor or supplier?
Yes. As of today, I guess so. I don't have clear information about our competitors' abilities and investment, I mean infrastructure. But today the indications are majority of those volumes we are catering.
Got it. Sir, there's a final question from me. Sir, our capacities are fungible, so suppose the lube segment is not growing a lot, sir, can we repurpose our capacity so that they can cater to pharma or any other segments? Basically pharma, where the compliance would be an issue. Can we repurpose our facilities in the segments that are not growing that much?
I'll answer you properly.
Yes, sir.
The paints machinery are fungible for Square Packs and lube packs. So between paints, lube packs, and cube packs, that is Square Packs, we have complete fungibility. They are as good as meant for that particular application. Coming to pharma, the food and FMCG machines are fungible with pharma. The smaller medium range machines with robotics are more suitable to pharma rather than a 500 ton machine meant for a 20 L pail for a paint container. So of course it can be, but with inefficiency. So the fungibility factor between pails, let it be lube or paint or Square Pack, is complete 100%. Similarly, the fungibility between food and efficiency machinery and pharma is 100% fungibility. But using a pharma small mold and a big machine of a pail doesn't suit properly.
Got it.
It's not economical.
Got it. Sir, there's a final question. Sir, what would be the volume growth that we can expect for FY 2026, and what would be the EBITDA per kg estimate? Can we expect it to move by towards INR 42 in FY 2026?
See, I don't want to make a guess now. Definitely, I will answer this question next quarter, when we meet after the Q1 result. Our internal target is that, we already said it, we wish to see percent volume growth this time, with the EBITDA also coming between INR 41 and INR 42. But I would like to save my comments till at least June, July. Once we see the Q1 numbers, I'll be able to make a better prediction.
Got it. Sir, thank you so much, and all the best.
Thank you.
Thank you. The next question is from the line of Mehul Panjwani from 40 Cents. Please proceed.
Thank you so much for the opportunity, sir. Sir, who are our competitors for the pharma segment?
CG, Gerresheimer, Leela, Prabhu Packaging. Gopaldas. Three, and Berry Global only in the cap segment. But in mainly bottle segment and other product segment, these are the major. Parekhplast in tube segment. CG, Pravesha, and Gerresheimer are the major players.
Sir, since these guys, our competition, is already established in pharma and we are a new entrant, what would be our unique selling point?
I just explained to you the speed at which we develop new products, make minor variations in the existing products due to our in-house tool room is one major positive. Second is our product mix. We have canisters, we have effervescent tubes, we have bottles and caps, child-resistant caps, and we are coming out with new variety of special purpose caps. That makes us a one-place supplier for a wider range of products. I don't think this kind of range is there with everybody. Couple of our major competitors may be having. Even CG doesn't have effervescent tubes in their portfolio or canisters. Like that, they have broken their product to limited range, whereas we are going ahead with full set of applications. That is one positive. Second, as I said, tool room and our ability to develop new products is what gives us an opportunity.
For example, if somebody want to launch a product in U.S., they have to first develop prototypes. They have to develop trial batch of 100,000 or 50,000 pieces, and then market it and wait for six months for stability and approvals across the supply chain. After six months, they come back to you and ask for commercial production of, say, five or 10 lakh pieces a month. In this kind of a cycle, Mold-Tek can be their best bet because we are in a house tool room. We'll be able to develop molds, modify molds, and quickly give them the first lot of 50,000, 30,000 pieces from the temporary molds if needed. Then once they have six months, seven months lead time to get the stability done and see the commercialization, then we quickly make the commercial molds and give them no loss of time.
That kind of advantage is what we bring to the table, and that's been well appreciated by at least three, four clients within this one year of our existence in pharma. I see that is going to be a major positive going forward also for Mold-Tek.
Thank you, sir. One follow-up question on this. What is the entry barrier for our competition to have this tool room available in their setup?
See, last 39 years, or maybe close to 39 years correctly, exactly, we have been in the injection molding field with tool room as our backbone and having invested in very high-end capacity machinery like five-axis CNC machines, spark erosion machines, wire cut machines, and you name anything. Whereas it is not an easy task for anybody to develop a tool room. Even a company, in my opinion, like CG, doesn't have an in-house tool room which is capable of developing complex molds. They may be having some maintenance or some kind of a tool room, I guess. It's not easy. One is machinery is not a great deal. Anybody with money can buy that. But the skill set, designing abilities are very difficult to find in our country. Very rarely you'll find people with strong capabilities in that line. That is one of the entry barriers.
Sir, this is a great thing what you have elaborated. I'm just wondering that why we were held back on not being in the pharma segment if we have this edge over the competition and because the market is also there, we have the ability and the capability. Still we were not—
That's what we are doing now. We can't make the announcements in the newspaper. People don't believe it. Our team has to go make presentations and prove this point by developing some products, which we are doing now, and then gain their confidence and orders. That's what is happening. That's why within four quarters we could cross the break-even, which generally any pharma packaging company would take two to three years.
Right. Can we say that after three years, maybe pharma will be the dominant segment for us?
I wouldn't say it will be a dominant or number one segment, but it will certainly be one of the leading segments in Mold-Tek's growth history.
Okay.
I think it can, as you said, can happen to be the dominant contributor in terms of profit.
At least in comparison to paints maybe.
Yes, it can in next three years because there is ophthalmic range, there is nasal spray range. There are other devices which can be added once we start gaining the confidence of the industry.
Yeah, because sir, when that's talking about paint industry. Hello?
Yeah.
Yeah.
Injectables.
Right. Hello?
Hello, can you hear me?
Yeah, I can hear you, sir. Yeah.
Yeah. That way there is a large scope including injectables, vials, plastic vials, diabetic pens. We have plenty of things to do. We are just at the beginning. So that way, as you said, maybe three years, if not three years, four or five years down the line, pharma could be the largest contributor of EBITDA for Mold-Tek.
Right.
If not, the revenue line also could be, but I can say in the EBITDA side, it could be one of the major segments.
Right. Because sir, I do not know, you can correct me if I am wrong, but the potential size of the pharma segment will be far significantly higher than the paint size, right?
Just in numbers, paint segment will be still bigger in terms of what paint industry can buy. Maybe higher than in terms of plastic tonnage it will be higher because of the huge size of containers they buy.
Right.
In terms of value addition, in terms of EBITDA, and the variety of products, pharma will be much bigger. The ability to, if you can export, that is another area we have now started touching upon. Within one year of our existence in pharma, we have made one supply to U.S., and we have at least three or four companies showing interest in our products for export to U.S. So that is another great opportunity we want to parallelly explore. That to become a reality, it might take few more quarters, but our direction is already set. We have taken one export manager who is only dedicated herself in trying for U.S. export opportunities. Even our office of Mold-Tek Technologies in Atlanta are also helping us wherever it is necessary to go touch base with some of the pharma companies in U.S..
Sir, once we have—
We haven't got anything from exports as of now. I'm just keeping that for future.
Right. So sir, once we taste some success in U.S., would we also look at European market?
Europe also, we are already in touch with a German company. Already our products are under stability test for last few months. If there is some positive developments there, we may get one or two opportunities there also. Even Bangladesh has a large requirement of effervescent tubes, that is effervescent tubes they buy from India. So there also, we have started knocking at the doors of some clients. Simultaneously we are looking at export opportunities, but they to become sizable, probably it may take a year or two.
Right, sir. Sir, thank you so much. It's always wonderful to have a conversation with you. Thank you.
Thank you.
Thank you. Before I take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Yash Bajaj from the Lucky Investment Managers. Please proceed.
Yeah. Thanks for the opportunity, sir. Sir, I had a question regarding the paint segment this quarter, which grew 2% in volumes. Now, taking into consideration that the Satara plant has also, the utilization has gone up upwards of 50%, and the ABG volume has also picked up, then what is the reason for a 2% kind of volume growth this quarter?
As I said, capacity of ABG utilization of the enhanced capacity started only from middle of March, and it is looking strong now in April and May. Whatever the indicated volumes, they are now able to lift from April onwards. So in the quarter of Q4, there was not much momentum, so it was only just 2%. But as I explained for the last few minutes, the numbers of paint industry growth will come into double digits starting from this quarter, that is Q1.
Okay. There was an issue with, I think the Agrivar Satara plant which was catering to the Asian Paints plant, which was going through underutilization because of some maintenance issue. Has that been-
Over. All that story we completed in the last third quarter itself, and from fourth quarter onwards, as you said, the capacity utilization is 57% in the overall year, which was almost like what is the capacity utilization in Q4 in Satara? I will get you that answer. This year, currently in April, it is almost running at 75%, 80% capacity.
Okay.
Now, as we are talking now.
Okay. Got it, sir. Okay. That is all. Thank you, sir.
Thank you. The next question is from the line of Jaydeep Taparia from IDBI Capital. Please proceed.
Thank you for the opportunity. Sir, I had one question. I wanted to ask the contribution of IML in value and volume terms for this quarter.
IML capacity has shot up to 75% in Q4. IML and HTL together is 75.5% as against 64.4% last year. That is up by almost 25% in terms of tonnage. That is a sizable jump again, thanks to Asian Paints slowly coming into IML in these last few months. One by one, they are adding their grades. So the sizable numbers have moved in. And even in HTL, Asian Paints has moved even in their low-value paint segment like ABG, they also moved into HTL from screen printing. So we see a drop of screen printing by 26%, and the entire growth has moved into labels, 25.7%. So now today, out of 100%, 76% is almost labeled containers, IML and HTL.
Okay, sir. Thank you very much.
Thank you. I would like to remind participants that you may press star and one to ask a question. I repeat, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Manish Mahawar from Antique Stock Broking. Please proceed.
Yeah. Laxman, congratulations for a good set of number. Sir, just first thing, in terms of paint as a volume or a value-wise, what is the contribution RCPP at the moment?
Now the current statutory obligation of RCP for paint industry is somewhere around 20%, but I think very soon, like June or July, statutory obligation is going to go up to 30%. So in the paint industry, already major players have started using 20%, even in the lube industry. Going forward, it may even become 30% in the next couple of quarters.
But what was the contribution for R volume in RCP contribution, R volume overall on the paint volume?
Overall contribution of paint in the volume is around 44.7% of our total volume. For example, in the year of 2025, we have made 18,000 tons of paint pails, and lubricant, 9,200. So out of 38,000, 27,000 continue to come from pail business. That is 71% of our overall sale.
How much of that is RCP, sir?
RCP consumption this year is around 6,000 tons.
Okay.
Close to 6,000 tons. So out of 27,000, 6,000 means what? 20%, you can say.
20%. Okay. What I understand is that your realization of RCP is lower than your normal PP, right, sir?
RCP is now currently available in wide range of price range, depending upon the quality. Right from INR 83 , which is of very low quality. Raw material price is INR 105 , let's say. There are RCP available at INR 110 per kg. Companies like Manjushree, Sri Chakra, they make very high-end RCP, and they charge more than virgin prices. Today, our average price is somewhere around INR 95 for RCP. Some of them are bought at INR 83, some of them bought at INR 95, some of them are bought at INR 105 . Depending upon the— Sometimes client decides which one to buy, sometimes we take whatever is available or whatever is suitable. Based on that, RCP consumption is now reached 20%, and it is expected to go up in the next couple of years.
Okay. Understood. In terms of just, can you share one data point with the IML and non-IML, you shared a volume contribution for 4Q. Can you possibly share in a value term, sir?
In terms of value, yeah. 77.4% is now labels compared to 16.5% last year.
Okay. What was it for the year, sir, this year as a whole?
For the full-year, it is 74.4% in value terms compared to 68% last year.
It is the same as at Q4 and FY 2025, it remains same number, right, sir?
No, Q4 is 77.4%, 12 months is 74.4%.
Okay. Understood. Okay, sure, sir. Thanks. That's all from my side, sir.
Thanks, Manish.
Thank you. Ladies and gentlemen, I take the last question for the day and would now hand the conference over to the management for closing comments. Hello, sir.
Yep.
Are you on the call?
Yes.
I would now like to give the conference over to you for the closing comments.
Okay.
Yeah.
The questions are completed. I take this opportunity to thank each and everybody who participated in this conference. As I said in my opening remarks, the investments that have been made in the last three years started bearing fruit, and we look forward to a much better future in the coming quarters, not only in pharma but also in ABG and Thin Wall segments. I hope we will be in a position to present better performance in the coming quarters. I thank you once again for your interest in our company's details, and keep in touch. Bye. Thank you, Emkay, for organizing this conference call.
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.
Thank you.