Ladies and gentlemen, good day, and welcome to the Mold-Tek Packaging 3Q FY 2024 Earnings Conference Call hosted by Nirmal Bang Equities Private Limited. As a reminder, all participant clients 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Navalgund from Nirmal Bang Equities. Thank you, and over to you, sir.
Thanks, Sagar. Hello, everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you all to Mold-Tek Packaging 3Q FY 2024 Earnings Conference Call. We have with us Mr. Laxman Rao, the Chairman and Managing Director of the company, along with the entire finance team. Without further ado, I request Laxman sir to start with his opening comments. Post which, we can open the floor for question and answers. Thank you, and over to you, sir.
Good evening, Abhishek, and good evening, participants. Thank you very much for your time to participate in our Q3 press and analyst meet. As you all might have seen from the announced results, Q3 sales volumes are up by 14%. This is the first time this year that we could cross 10% in double-digit volume growth. However, the EBITDA is up by only 5.23%, and net profit due to increased depreciation and financial costs has come down by about 15%, I guess. Is it 15% or- yeah. PAT is down by 12.97%, say 13%, because there is almost 50% increase in the financial cost and 26% in depreciation due to the new machines being added in a big way.
As you all know, in the current year, already INR 105 crore of investments are made, and in the remaining two months, we hope to reach our targeted investment of about INR 120 crore in the financial year. There is further spillage of another INR 15 crore- INR 18 crore investments coming up in the Q1 and Q2 of next financial year. However, next year plans will be made in the next few months, maybe next couple of weeks, because we need to add lot of balancing equipment at all our new plants during the year 2024, 2025 also to achieve better capacity utilization. So having said that, I wish we will go through question and answer way to discuss further. Over to the operator.
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 phone. 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. Participants may press star and one to ask a question. The first question is from the line of Jaiveer Shekhawat from Ambit Capital. Please go ahead.
Sure. Thanks for taking my question, and good evening, Mr. Rao. Sir, firstly on your paint segment, what we have seen is the volumes have remained sluggish over the last six quarters or so. Even last quarter when you had indicated that some of the sales got shifted to third quarter because of late Diwali and rains. But we are still seeing almost flat volumes on the paint segment. So one, if you can explain the reason behind the sluggish volumes, especially from your top customers over the last many quarters, and then when do you expect the volumes to uptrend for your existing clients, that is ex of Grasim.
Okay. Yeah. Paint volumes are at least not dropped this quarter. As you correctly observed, last four, five quarters, there is a drop in paint volumes due to Satara plant. One of the major plants for Asian Paints was underutilized due to various maintenance and remodification work they have taken up there. Because we have only four, three and a half plants, I can say, because Vizag, Mysore and Satara are our main plants for Asian Paints, and Hyderabad happened to be one of the very old plants providing services to Patancheru here. So one of the major plants of Satara which services to Asian Paints got impacted in the last three, four quarters, and now it is back to normal, I would say. That is when we have at least not dropped in our numbers.
I also mentioned in the last quarter that we are not chasing any more new paint other than the new ABG, that is Aditya Birla Group. We are not going after the small and medium players in this field because of the tight pricing norms they are following. But I am very glad now the commercial supplies to ABG have started in the middle of January, and they are picking up pace in February, at least for Cheyyar plant for ABG. The indications are that in a month's time probably, supplies to Panipat plant also will start. So by the time we close this financial year, there will be some numbers coming from ABG, and they will very strongly improve the paint numbers in the coming quarters, starting from Q1 of next financial year.
Because their indication was about almost 4,000 tons between these two plants, keeping Mahad from October is an additional 1,000 tons. But out of 5,000 tons, even if they pick up half of it, it will be a kind of 6%-7% overall growth for the company, and that would help to 14% growth for the paint segment alone. We are very positive that the stagnation or drop-down in the paint numbers would be reversed definitely from Q1. Another news is that we also have developed a couple of new products for Asian Paints, which will be starting in February, one of them starting in February, one maybe in March, which will also be adding maybe a couple of percentage points to the overall paint numbers growth.
Going forward, we will be back to our double-digit Paint sales growth, which was a major miss in the last four to five quarters.
Sure. And sir, did I hear it right that you were saying with the addition of Grasim, you will be able to clock that mid-teens kind of a volume growth for the next year?
Yeah. Something like, see, even if we achieve 2,500 tons, our Paint sales are close to 18,000, 19,000 tons. That itself will be a 10% growth for us in terms of volume in the Paint segment. Another 2%-3% growth we are anticipating from Asian Paints because of the two new products we developed for them. We should be in the 10+ zone in the paint segment, which was negative or even below zero for the last few quarters.
Sure, sir. On the Pharma Packaging side, I appreciate the disclosures that you've provided with respect to stage of progress for different products. Sir, I want to understand, where would you be in your process of starting commercial supplies? Where would you be in that journey, and then what would be your revenue expectations from the segment over the next two to three years?
In Pharma Packaging, we are coming out with small USPs in all the segments. Effervescent tubes, we are the first company to establish IML, in-mold labeling. There is a company which has not so successful in developing the IML solution. Our samples and our first lots of trial samples, what we supplied to clients were well accepted. Our effervescent tubes would come not only in HTL but also in IML for the first time in the country. We definitely see a great advantage there because in pharma, label quality and clarity and its stickiness to the container is very important. In IML, we'll be giving that as a permanent skin-like kind of decoration. Definitely, there is a good interest from the pharma companies whom we have approached so far.
Having said that, in the canisters also, we have come out with a single piece canister as against two-piece canisters that are prevalent in the country. The two-piece canisters have the problem of the lid coming off during transportation or usage. Even one in a lakh of pieces have that accidental opening that could lead to a major problem in pharma. Our single-piece, completely crimpled model would certainly get better acceptance is my guess. Similarly, we are going for laser etching, which is the latest in the canister manufacturing in the world, which would give us an USP against the labeled canisters. These two are the USPs we are coming out with, and already the initial samples were well appreciated by the industry. But as you all know, that there are approval processes and stability tests for all the pharma products.
In the case of effervescent tubes, that process has already started, and that's not very long because most of them are for domestic consumption, hence stability tests could be completed in a month's time. But coming to the regulatory market where we expect it to be exported, like canisters and tablet packs, the stability tests and the cost of commercial supplies would take three to six months. That process just started. In Q1, we might see some numbers coming in from those two segments also. Iodex project, which has been long delayed, is now starting. Their assembly lines have been corrected and recent trials have proved they're ready to go for commercial production from March. If not March, at least from Q1, definitely Iodex will also be adding numbers.
With all this put together, next year, the overall capacity of the plant, if it runs at full capacity, which may not happen in the year one, would be in the tune of around INR 50 crore per annum in terms of revenue, INR 50 crore- INR 55 crore. But probably I will be very happy if we can reach around INR 20 crore, INR 20 crore- INR 25 crore turnover in the year one. That is 2024, 2025. Within three years, we should be not only covering this entire capacity, but also would be adding capacity both at Sultanpur and even at Panipat. There are a couple of clients who are asking us, "Why not you have a plant in North?" So probably our Panipat plant would also have some numbers. All these decisions we want to take once we see some traction by April, May.
Going forward, the numbers can only go up rapidly from INR 20 crore to INR 25 crore in the year one, that is 2024, 2025. They should at least cross the entire capacity of INR 50 crore-INR 60 crore within two, three years. Can be better, but I can only comment once we see the market response from sometime in June, July.
Sure. So sir, if I understand that right, you are saying your tubes, bottles, your CRC closures, almost all of those products will be up and running for commercial production by end of FY 2025. Is that understanding right?
Oh, yeah. By 2025 we will be completely, fully occupied by then, I hopefully guess so. We should aim to have all the products running by middle of Q1. If not for the regulatory market, for the domestic market, and probably in Q2 onwards for the regulatory market also. These effervescent tubes are mainly meant for Indian market, which would start as early as March in a small way and pick up speed from Q1 itself. Our canisters might start picking up in Q1. HDPE bottles and other caps like CRC caps and CT caps might start in Q2 commercial sales. So by end of the calendar year 2024 itself, all those machinery should be at peak of the production.
Understood, sir. This is very helpful. Sir, on the Food and FMCG segment also, most of the growth continues to be led by your Square Packs or Qpacks, and your Thin Wall packs are continuing to grow at mid-teens. One, given you had earlier highlighted that you are confident of growing the Thin Wall packs segment at 20%-25% each, do you stand by that, and what will be the levers for that?
The main lever for Food and FMCG going beyond the current teen level is our plant at North, that is Panipat, which is starting in [February] for ABG and March for thin wall, would also be adding to our numbers. We already identified six products to be introduced in the month of March, April, and another four more products in June, July. These 10 products would be adding numbers in the year 2024, 2025 for at least eight to nine months. Going forward, that facility also will be expanded, and by next season, we will be having entire range of which currently we have 40 to 50 SKUs in Hyderabad. Probably at least half or more than half will be produced in North, that is in Panipat. Going forward, again, we will be going into 20s for growth in Food and FMCG.
Sure. Understood, sir. Sir, the last question is in relation to your capacity. Once you are done with the capacity expansion by end of next year, FY 2025, how would your capacity stand across different segments?
See, the current capacities, what we are creating would take the capacities from 48,000 to almost 57,000 tons by middle of this financial year. There will be some more balancing equipment, some more extra machinery will be added at all the locations, at least at Panipat and Cheyyar based on ABG's growth and based on our traction for Food and FMCG. In fact, if you have read the press note, what we sent, we are finding very good growth in Q pack sales that is our Square Packs, and adoption by Gemini Edibles and Fats and Patanjali for their edible oil has also now increased the traction in that segment. In fact, we grew by more than 100% in that segment this year, and we expect to grow at least 30%-40% even on this increased number for the next financial year.
There are two reasons. One is the big brands are now adopting our packs, and we could push our patent rights on the Q pack and could take up suspension of activities with some of our competitors who have completely copied our concept and model. That is also going to help us in a big way, especially with organized sector companies who don't want to play with patents and IP rights. These two points and addition of capacities at Panipat and Cheyyar for Square Packs for cashews and edible oil would also sustain or probably maintain the growth in Square Packs in the current years also.
Sure, sir. Thank you so much, and wish you the best.
Thank you.
Thank you. The next question is from the line of Amnish Aggarwal from Prabhudas Lilladher Private Limited. Please go ahead.
Yeah. Hi, sir. I have a couple of questions. First, a very maintenance question.
Sorry to interrupt, Mr. Aggarwal. If you're using the speaker mode, may we request you use the handset mode, please?
Yeah.
Thank you.
Yeah. Sir, can you share with us the volume and value of various segments like Paint, Food and FMCG, Square Packs and Lubes?
Yeah. The volume wise, tonnage wise, Paint for this quarter was 3,800 tons. Lubes is 2,270 tons. Food and FMCG is 1,000 tons, and Q pack is 1,510 tons. Food and FMCG is 1,022 tons. Total it was 8,600 tons as against 7,550 tons last Q3, a growth of 14.03%. In terms of value, Paint is INR 67.5 crore, Lube is INR 40.4 crore, Food is INR 31.4 crore, Q pack is INR 26 crore. So total of INR 165 crore in terms of rupees.
Sir, how much was Square Packs volume in the same quarter last year?
The volume growth in Square Packs for this quarter is 106%. For the overall year, it is 93% so far in the nine months. So for this particular quarter, the sales in Q packs have doubled.
Okay. Sir, what is actually driving? Because Qpacks earlier were not that fast growing, so what has changed in Qpacks?
Yeah. One of the reasons is we have widened our product ranges. Currently we have 2 L, 5 L, 10 L, 15 L, and 17 L Square Packs. Multiple molds have been created and capacities are spread in Daman and Hyderabad now. In the second phase, that is by March, April itself, Cheyyar and Panipat also will have this Qpacks production set up to reach the regional players in North and further South. As I explained just now, we are also successful in pushing our patent case against some of the competitors who unscrupulously copied our patented design. Courts have given us positive powers to legally take up the issues and even close some of the supply chains of the supplier competitors who have copied our design without any permission. This is also leading to increased volume.
Adoption by cashews and fertilizer and nutrients, which started a year ago, are really picking up pace. They find this pack very useful and very attractive also in the marketplace. That is one of the reasons why there is a spurt in growth in Qpacks sales.
Okay. In next year also, you can say, not maybe this kind, but what sort of a growth you are expecting in Qpacks next year?
We are aiming around 40%. Let's see how it goes. Because now Gemini Oils, which is one of the largest in South, in Hyderabad, they have adopted our 10 L pack, and they have also taken some 5 L packs. They're indicating interest in other packs also. Patanjali has started taking for last two months in decent volumes, but compared to Gemini, it is much low. We are also having from Sunpure and other big brands inquiries for the 10 L pack. Hopefully, even edible oil will continue to give us traction. There is one leading vanaspati manufacturer in the North also is asking us.
Now the small players and middle players who have taken the plunge are getting not replaced, are added by bigger players who see the benefits of this pack in the modern trade and the preference of consumers to go for these in [spur] as against the tins, metal tins or blow-molded tins, is slowly getting into the reality. One more reason what we are now solving is most of these companies like Gemini or Adani or all these big players, they have packaging lines meant for tins. For them to adopt to plastic and change the way of filling, change the way of lidding is something resistant, which we are now solving starting with Gemini. We want to provide that solution also, which will enable them to adopt our packs in a better manner.
Okay. And sir, my next question is on the margins, because couple of years back or even last year, our EBITDA per kg used to be in the range of around, say, INR 40, INR 41, INR 42 also. Whereas in this year, three quarters, we are INR 38, INR 36, INR 35 kind of a level. So what is the outlook going forward for fourth quarter and for FY 2025?
See, as I told in the last meet also, we have the expenditure or costs which are being spent on creating the teams that are meant for all these three plants. Or rather four plants, including Mahad. So various people have been taken at various levels. They're under training, they're under getting the- in fact, the delay in pharma plant inauguration, though we inaugurated last month, commercial supplies might start now into March. So we thought initially this will be ready by October, November, but the various statutory compliances that are required in pharma, it took us longer time than what we anticipated. But the teams were recruited, and those costs and overheads have also played a part in reducing our EBITDA to some extent. Once these lines of activity becomes productive, I think we will be back to the 40 level in the as early as next financial year.
Things can start improving thereafter as Pharma and Food and FMCG sales start picking up. So currently, this year, we might end up at around INR 37 only. But for the Q1 onwards, you will see definite improvement in the EBITDA per kg also.
Okay. And sir, can you share with us what sort of a capacity utilization or new facility at Panipat and Cheyyar in Chennai is operating at?
Currently, they're hardly anything. They just started in January. Panipat is yet to start. They've taken only trial samples, and their lines are getting debugged. I think on middle of February, end of February, they have a formal inauguration of Panipat. Cheyyar started already in January. We'll be going along with them. Hopefully in these two months, before March 31st, both the plants will be up and running. As I said, I can only comment upon the numbers and the capacity utilization only seeing few months of operations sometime in the month of June, July. As for the trends at Cheyyar, they're very reasonably good. I cannot comment on the quantities and other numbers unless we see a few months.
Okay, sir. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Prathamesh Dahake from Motilal Oswal. Please go ahead.
Hi, sir. Am I audible?
Yeah.
Yeah, sir. Sir, wanted to understand the split of 1,000 tons in Food and FMCG. And what expected growth are we expecting in the next year in Food and FMCG? That is the first question.
I missed your first part.
My first part is, we have 1,000 tons in this quarter, right? In thin wall Food and FMCG.
1,000 tons of?
Of thin wall Food and FMCG.
1022 tons. Yes, correct.
Yeah. So wanted to understand the split if there are certain clients or sector which is contributing to this 1,000 tons. Second would be, across all the four products, what EBITDA per tonne are we enjoying? And third is 57,000 tons is the expected capacity installed by FY 2024. Could you also please give us capacity installed by product?
Yeah. Your question, the paints and Food and FMCG 1,000 tons is mainly contributed by ice creams, restaurant packs, sweet boxes, our Square Packs, our regular products for M2K, that is Cadbury. And now new products are yet to start, but on the anvil are Horlicks and Kissan. These all contribute to the Food and FMCG 1,000 tons. And what was-
Do we have any client contributing more than 10% of those 1,000 tons?
Oh, yeah. Hindustan Unilever Limited would be more than 10% alone. Maybe Hatsun, that is a ice cream major in South, Arun Ice Creams, they also must be around 10%. Cadbury's could be somewhere around 7%- 8%, that is M2K Lickables chocolates.
Okay.
That one is around 7%- 8%. The rest all spread over more than 500, 600 clients.
Okay. These three contribute 30% and others is long tail?
Yeah. There is a big list.
Okay.
We have dairies also. There are a couple of big dairies which will contribute 5%- 6% of our sales.
Okay.
Like [Amul] here in Hyderabad, and some of the ice cream majors like Walko.
Okay.
But they generally appear only in the months of summer, starting from February, March, they pick up till June, July. So this is a five month.
Okay.
Starting from February, we will find those companies becoming very active.
Okay. My next question was, what growth are we expecting in thin wall Food and FMCG?
Thin wall Food and FMCG, we are looking at at least 20% growth in the next financial year because we already are seeing about 14% growth in this nine months so far.
The North plant getting operative, that will be adding to at least another 5%- 6% growth. So we are aiming at 20%+ growth for Food and FMCG in the next financial year.
Okay, understood. Sir, if you could also give us some color on the EBITDA per kg in this quarter for different product lines across Paints, Lubes, Qpacks and Food and FMCG.
See, this may be very detailed study to be done.
Okay.
We have not done that for this quarter as of now. Maybe in next few days it will be ready. But roughly, as I mentioned, Paints, Lubes, and Qpacks fall in the region of INR 30- INR 35 per kg. In case of some of the paint companies, it is less than even INR 30. But in the case of Food and FMCG, it is in the region of INR 80 per kg. Going forward in our Pharma, we are aiming at INR 120- INR 150 per kg.
Okay. Sir, one last question. If you could please break down the 57,000 ton installed capacity by FY 2024, how would it look across products?
Across products, almost 50% will be for the paints because, ABG capacities have been added in a considerable way this year.
Okay.
Back to 50% in Paint. Lubes, maybe around 22%- 23%. Food and FMCG should be in the region of 14%- 15%. Q pack also will be region of 15%- 17% or 18% of the capacities. These are fungible. The beauty of injection molding process is, sometimes, let us say the paint industry does not grow as per our anticipation. We can use the same machines and robots also for big Qpacks. Similarly, some of the smaller machines of the paint manufacturing can also be used for Food and FMCG. That fungibility is there across the capacities. There is no worry that, let us say if I aimed at 20% growth in Food and FMCG, but there is a growth of 30%, we can still handle it.
Okay. Understood, sir.
Yeah.
That is all from my side.
Thanks.
Thank you. The next question is from the line of Manan Narang from Marcellus Investment Managers. Please go ahead.
Sir, am I audible ?
Yeah.
Sir, Hitech's volume growth in the paint segment has been around mid-teens in Q3, whereas our volume growth in the Paints segment has been a bit lower than that. This variance has been there for the last three quarters as well, which has created a variance in our share of business with Asian Paints. If the Satara plant is now online, do you expect we will see one large uptick on volumes so that the share of business is what it used to be earlier? If not, then why?
What I understand from you is while the paint industry was growing, we didn't find this growth in the last few quarters. Am I correct?
Mm-hmm. Yep.
That's what I explained in the beginning. One of our major plants for Asian Paints at Satara was underutilized for quite some time, that's almost for a period of three, four quarters. Now it's started getting back on track because it is completely dependent on Asian Paints. In that region, we don't have any other clients. So when Asian Paints help those volumes corrected in that particular plant, we were having a setback. Now it's getting normal. That's why we have come back to zero. As the endeavor to improve or keep up our margins, we are letting go of some of the small players which we used to service in the past. At least in the last one year, we are not aggressively following up or even letting go of some of the paint companies whom we used to service in the past.
These are the two major reasons for stagnation in the paint segment for us. Going forward, two things I explained a few minutes ago. One is the ABG, two plants are going into commercial production. One plant already started in January. We started supplies and decent numbers are projected in February. For the second plant at Panipat, probably it will pick up speed from March. Definitely in the Q1, you will see those two plants contributing significantly or reasonably well to our growth in paint segment. Coming back to our major client, Asian Paints, they have given us the opportunity in two new product segments. I can't reveal the details. Those two, one of them started in February, other one will start mid-March. So those two also will be contributing to reasonable numbers to our growth in paint segment.
That's why I'm hoping that next financial year, we should be seeing a double-digit growth in our overall paint business.
Sir, but as you mentioned earlier, the Satara plant is back online now. Do you see-
Your voice is not clear.
Yeah. Is it better now?
Sir, it is a bit muffled. If you are using the speaker mode, may we request you use the handset mode, please.
Hello.
Yeah, better.
Yeah. As you mentioned earlier that now the Satara plant is back online. Are you seeing a reversion to the share of business that you used to enjoy with Asian Paints?
Yes. We are now getting back to normal levels of Asian Paints' requirements in that Satara plant now.
Okay, sir. Thank you.
Thank you. The next question is from the line of Kunal Ochiramani from Kitara Capital. Please go ahead.
I just wanted to know your take on realization side. How do you see it going for next two to three years? Realization for Food and FMCG and Paints to be specific.
See, Paints would improve because we have a good understanding with ABG and even Asian Paints where we are consolidating for our growth in the next financial year, where our EBITDAs are protected definitely, or even improved. Coming to the Food and FMCG, by expanding our presence in North and widening our product range. Every year, we are adding three, four new products. This year also, no exception. These things will continue to give us a 20% volume growth at least for the next two, three years, and that will be at a much better EBITDA of close to INR 80 per kg. Having said that, my main growth in EBITDA per kg would be coming from Pharma in the next couple of years. Probably in the year 2024- 2025 itself, you will see progressively Pharma contributing to the bottom line in a handsome manner.
But it might take a full year to really reflect on a substantial basis. My first target is to come back to INR 40 in the next financial year, 2024- 2025, and then probably improve beyond that. But as I said, I would need at least a couple of quarters of experience in testing the Pharma success.
Okay. Thank you so much.
Thank you. The next question is from the line of Sandeep Modi, who is an individual investor. Please go ahead.
Yes, sir. Good evening, sir. How are you, fine?
Fine, sir.
Yes. I am very happy to talk to you. Sir, two, three questions I have to ask you. Sir, what is the total pending order book of Mold-Tek Packaging? What happened to the pump business? What happened to the Dough container export business? Is the Gemini Oil started production?
Third question. Pump and third one is what?
What happened to the Dough container business? Gemini Oil started production?
Yes.
Okay. Any new clients list is not updated on the website.
It was added in today's press note. If you want, I can read it for you.
Okay.
In this quarter, we added Patanjali, SciTech Specialties, Swagath Hotels, Daspalla Hotels, SN Traders , Vijaykant Dairy and Food Products Limited.
Okay. Very good. Yeah.
Yeah. Gemini Oil started not only just now, it started three months ago, I think, two, three months ago, and the numbers are picking up really well.
Yeah. Very good. Yeah.
Order book, as I said, we always have open orders with all the clients. As per their demand, they keep giving us on a monthly basis the orders. So there is nothing called order book. It will be a rolling order for most of the main clients. Smaller clients only will release orders periodically as per their needs. Because in the Food and FMCG, we have several small clients who may not buy every month. They may buy in October and again come back in December.
Yeah.
Those orders are not sizable. All the major orders, including Asian Paints and all, are open orders. The prices are revised every month based on the raw material fluctuation.
Right. Yeah.
Coming to your question on Pumps, as I said, on the Pumps side, we have not really successful. Only about 7 lakh- `8 lakh pumps per month we are selling as against our capacity of almost 12 million per month. But as I said, it's being a fungible capacity, we are using that capacity for F&F, that is Food and FMCG products. Only the molds investment is partially utilized, which is about INR 2.5 crore-INR 3 crore value.
Yeah.
What is the third one? Something you said, which I didn't understand.
Yeah. Dough container. We were planning some dough container order from U.S. or some export was going on, I heard in your same conference call.
Yeah. We have been exporting. Even today, we are exporting to U.S. for their various containers for restaurants, sweets, and some other food products.
Okay.
It's not dough, it's basic [inaudible] .
It is that- we tell that idli dosa, that dough container, yeah.
Oh, Dough. Okay. Dough.
Yeah. Dough. Sorry, dough. Yeah.
It is okay. Yeah, they are going on. We have keep sending them. That is for dough, yeah. Idli and dosa dough, yeah.
Right.
On May 2024, we are participating in the food exhibition in Chicago. Already we booked a booth and first time our real marketing effort is starting in U.S. That is middle of May 2024. Hopefully, we may be able to strike more deals.
Yeah. This is very good news. Sir, one more thing, one small question. Promoter is decreasing the stake holding. That is very painful to investors.
No, I do not think there is any change, not more than a 0.05% or 0.1%, I do not know.
Yeah.
Any long distance promoters are selling for their personal needs, but there is no change in promoter holding as far as I know.
Okay. Sir, thank you very much for your reply. Thank you, sir.
Thank you.
Thank you. The next question is from the line of [Pankaj] from Affluent Assets. Please go ahead.
Thanks for taking my question. Am I audible?
Yes. Yeah.
Well, sir, as I understand from your commentary that work is behind in terms of dealing capacity utilization, other commissioning, capacity commissioning and the IP infringement, et cetera. So when do you expect to reach the three-digit top line figure and about 20% margins? Will it be possible for us to reach in FY 2025, or will it take 2026?
Yeah. If you notice, as far as EBITDA percentage-wise, we are almost there. 18.91% is an EBITDA margin. Probably, we will attempt to cross the 20 percentile during 2024, 2025. If Pharma goes as per our plans, it should be in that region. Otherwise, it may take one more year, but we will be certainly there, is my guess, in one year or max two years. That is regarding EBITDA. Coming to the INR 1,000 crore figure in the sales, see, as you know, raw material plays a vital role in our top line. And top line growth looks to be, in this case, in this year, the number as a revenue, there is a fall, actually. It shows there is a 4% fall in the revenue. In fact, there is a 6.6% growth in the volume.
That is because raw material prices have fallen considerably during the nine months period from INR 117 last year to INR 96 average. That means almost 20%, 18% to 20% drop in raw material price. So that will impact our revenue number as such. But otherwise, if the 6% growth is there as against INR 730 crore last year, we would be reaching some INR 780 crore this year. But that is why I cannot comment about INR 1,000 crore mark. But we are aiming at, as I said in my previous commentary also, at least 15%, probably 20% volume growth for the next financial year. That is on the volume front, I can comment. How it will reflect on the revenue, it will depend upon the raw material price movements.
Well, sir, regarding capacity and capacity utilization, what is the current situation? Secondly, which sectors, which segments of our lines and our business would be driving the growth in near future?
See, Paints will continue to be a main growth factor next year also. I mean, next year, if not in the last one year, because ABG growth will be considerable. As I said, Asian Paints also given us a couple of opportunities which would take the paint growth into double digit is my strong feeling for the next financial year. Pharma packaging, though it might not be a very big number next year, from the year two onwards, it will definitely be a considerable addition, at least 5% and above, for the top line, or could be even a 7%- 8%. Going forward, in terms of share numbers, Paints segment will continue to be there. Thin Wall, that is Food and FMCG and Square Packs especially, will be shooting up at a pace much better than paint segment.
The numbers will be more favorable in Square Packs, followed by Food and FMCG and then Paints. That is the order of growth percentage. It is better to have Food and FMCG and Pharma growing. That will be adding better numbers to the bottom line. That impact, we will see in the next financial year partially and from 2025- 2026, certainly in a significant manner.
Sure, sir. Thank you. Thanks a lot.
Thank you. The next question is from the line of Jenish Karia from Antique Stock Broking. Please go ahead.
Thank you for the opportunity. Sir, I do not know if you have shared the IML, non-IML mix volume-wise and revenue-wise numbers earlier. If you can just reiterate the same on the call.
Yeah. I can do that. In fact, this is the first time there is a small drop in total labeled products from 63.74% last year to 63.63%, just a 0.1%. But the drop is basically because in Qpacks, that is our Square Packs, most of the cashew nut players or the buyers, they go for plain containers. They have only some kind of stickers because they are not branded cashew manufacturers. They produce the cashew, process the cashew, and send to big companies who brand them and sell them. So they will not spend money on the IML. So that is one reason this partial small drop of 0.1% in nine months period. But if you look at this particular quarter, 67% has become 65%. That is basically because of the same reason.
More and more cashew players have started using our Square Packs in this year, which has resulted in 100% jump in our square pack sales. So that is why it has marginally come down. In sales value terms, also 2% drop is there in Q3, and overall year it is just 0.4% up. IML is stagnated as of today in terms of overall numbers.
Sure. That's helpful, sir. Secondly, over the last two to three quarters, your paints volume has been declining and your mix has been improving more to the Food and FMCG side, but that is not reflecting in your per kg margin. Any specific commentary on that? When can we see the per kg margin improving with the mix improvement that we are doing?
Yeah. As I mentioned to you, Q pack, though it is a good growth driver, it is not a high contributor towards EBITDA. It is similar to paint segment or little better than that. Less number of players adopt IML in that. Only edible oil, some of the nutrients, and protein powder manufacturers, they go for IML. Majority of these cashews and other players go for plain containers. You all know that in IML we have much better margins. Hence, Q pack growth will not contribute handsomely to the bottom line in terms of per kg. In terms of capacity utilization and in terms of profitability, it's still good, but not as good as Food and FMCG.
Food and FMCG growth is moderated in this year. It is only 11.8% in Q3, and overall it is 14.4%, 14.3%, which used to be 20%- 25% in the past. As I explained in the previous commentary, with the North entry Panipat plant starting Food and FMCG in March, April, we will be seeing that number going beyond 20% from the next financial year. That is the driver of EBITDA. Second driver, which we are now entering is Pharma, which will be initiated during these two months, February, March. They will start contributing from Q1 in a small manner. As we progress in the year, I expect Pharma to contribute reasonably well. As I said before, our immediate target is to come close to INR 40 per kg next financial year with all these projects coming into use.
Because one of the reasons for EBITDA reduction is the overheads of staffing, people for trainees and various people have been taken for all these four plants, including Mahad, have been taken. In Pharma, we had to create entirely a team, including QA, compliance, manufacturing, filling machines, which are completely different from our lines of activity as of today. Teams have been created, and they all joined six, seven months ago. That has added some burden in terms of admin overheads. They will become productive very soon, and then we will see the contribution towards improving the EBITDA. Our next immediate target is to reach INR 40 next year and probably better based on the Pharma success.
That's very helpful, sir. Sir, next is what proportion of our volume or revenue, as you may be able to say, would have come from the new customers that we have added in the last one and a half to two years?
Sir, that's a complex question. Last one and a half to two years, we added several clients, especially in Food and FMCG and Qpacks. But their growth is definitely in double digits because for them also, this new pack is giving a good push in markets. I can't answer that very clearly.
Okay. Just a broad understanding on the same question that a lot of customers that were added in the last one and a half years are majorly Qpack customers and not the high-margin Food and FMCG customer. Is that understanding correct?
Correct. Majority of them are that, and only in paint, the major addition is Asian- ABG, that's Aditya Birla Group.
What will ITC use it? Yeah, sorry.
To begin with, the paint mix is more or less stagnant.
Sure. What will ITC be procuring from us? Will it be Qpacks or it is a different high-margin product?
I think they are procuring some Square Packs and some Food and FMCG products also.
Just one last question. What proportion of our volumes would be export, and is there any export that is poor or impacted because of the Red Sea crisis?
No. Because of resin prices, you are saying?
No, Red Sea crisis, the crisis in the Middle East.
Yes. There was some dip last two months because of the freight shot up due to the unrest in the Middle East, and the price of transport has gone up. Anyway, our exports are not major thrust area for growth. Having said that, I am also glad to take this opportunity to inform you both our effervescent tubes and canisters have very good export potential. Once we start producing them in the next few weeks, then we will be looking at export opportunities also in the next financial year, to get better realization. Anyway, those details you can only see, maybe in June, July.
Sure. Thank you so much for patiently answering all the questions and all the best.
Thank you.
Thank you. The next question is from the line of [Richa] from Equitymaster. Please go ahead.
Sir, thank you for the opportunity. Sir, I am a little confused about the capacity. My understanding was that for Grasim, we were adding 5,000 tons kind of capacity, of which 2,000 tons was Cheyyar and I think 1,000 tons was Mahad and 2,000 tons was Panipat, if I am not wrong. But in the press release that you had, it said 1,500 tons instead of 2,000 tons for Cheyyar. So could you just clarify, is it 4,000 tons between the two plants, or is it 4,000 tons between the three plants, or is it 5,000 tons incremental capacity between the three plants?
See, actually this 5,000 tons is what we need to set up as per our agreement, and we are very close to that. But as I told you, in injection molding, capacities can be added by adding molds and machines once you have the other infrastructure in place. We will be starting off with about 1,500 tons each at Cheyyar and Panipat immediately. That is starting right now in February, March. Mahad is coming up only in October, September, October. That is the smaller plant, so there the initial capacity is 1,000 tons. But another 1,000 tons of capacity for Thin wall is also being created at Panipat. Square Pack also recently we have decided to add both at Panipat and Cheyyar. That's why put together, we will be now starting with about 5,000 tons at these three plants put together.
Okay.
As I said, it is fungible machinery. In case ABG takes off faster, we would be able to service them also without giving any trouble to them. So that way we are keeping our options secured.
Okay. Because again, in your release, your existing capacity was given 47,2 90 tons. If I add 5,000 tons for Grasim and 1,500 tons for Paints, it still comes to around little less than 54, 000 tons. So what you're saying is that because of this-
No. We are adding capacity in Pharma here in Hyderabad, Sultanpur. We are adding capacities in Vizag. The existing plants are not stagnant. Vizag is also expanding. Even the old Hyderabad Unit One is also there are some machinery additions. Even Sultanpur Thin Wall is also having some machinery additions, especially in Thin Wall and Food & FMCG. So these volumes put together, the overall figure will be reaching 57,000 tons, somewhere in the middle of this financial year, 2024, 2025.
Okay. And sir, by the end of FY, this 20% kind of growth guidance that you have been giving for FY 2025, 2026. With these capacities, we would be able to get that kind of growth, or do you see the need to put further CapEx, not just for 2026 but even beyond that? If you could give me some kind of guidance for 2025, 2026 CapEx as well. If any.
I can't really look into so long into the future, but definitely in 2024- 2025 also, there'll be CapEx going on. That Mahad plant, complete plant has to be built up, which will take us at least INR 20 crore. And we need to have the balancing equipment and construction going on at Panipat and Cheyyar. That might take another INR 15 crore-INR 20 crore. And balancing equipment in other plants. So there'll be definitely a INR 50 crore-INR 60 crore CapEx for 2024, 2025 is what I can clearly see. And the volume by the time when we really complete the year 2024, 2025, we may be coming close to 60,000 tons from the current 47,000 tons. So the progressive capacitation will be going on as per the requirements. Internally, it is just a guess or an optimistic view.
We may have to restart it looking enhancing our Pharma capacities even in the middle of this financial year itself if things go well, because so far so good. Touch wood, we have good response from the pharma industry when we started just meeting them and giving our samples and telling about our business plans. If things go well, we would be thinking of expanding in the Pharma even in the middle of next financial year itself. So that capacity creation might go on for next one and a half year. So that way I foresee continuous CapEx going on. But as I said again, until June, July, I don't want to comment about Pharma and its future growth. But on these other existing segments itself, we'll be reaching 57,000 to 60,000 also by end of next financial year if there is a need. [inaudible] [Richa]? Hello?
[Richa], ma'am, do you have any further questions? As there is no response from the line of current participant, we'll move on to the next. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
I take this opportunity to thank each and everybody who has taken interest to be part of this analyst meet. I also thank Nirmal Bang, Abhishek in particular, for arranging this conference. Thanks to all the commentators, operators who helped us making this call a success. Thank you very much, everybody. Have a good day.
Thank you. On behalf of Mold-Tek Packaging Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.