Ladies and gentlemen, good day, and welcome to the Supreme Industries Q3 FY24 earnings conference call hosted by DAM Capital Advisors Limited. As a reminder, all the participants' lines will be in listen-only mode, and there will be an opportunity for you to ask a question after the presentation concludes. Should you need assistance with the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aasim Bharde from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Yeah. Thank you, Muskan, and good evening, everyone. On behalf of DAM Capital, I'm happy to welcome you to Supreme Industries' Q3 post-results call. From the management side, we have online Mr. M.P. Taparia, Managing Director, Mr. P.C. Somani, CFO, and Mr. R.J. Saboo, Company Secretary. Over to you, Mr. Taparia, for your initial comments.
Thank you very much. I am M.P. Taparia, Managing Director of Supreme Industries Limited. I, along with my colleagues, Sri P.C. Somani, CFO, and Sri R.J. Saboo, Vice President, Corporate Affairs and Company Secretary, welcome all the participants who are participating in the discussion of the unaudited stand-alone and consolidated financial results for the quarter and nine month period ended 31st December 2023. The stand-alone result and the consolidated result are already with you. I'll give brief on company product operating performance and other highlights.
The company sold 158,025 tons of plastic goods and achieved net product turnover of INR 2,429 crore during the third quarter of the current year, against sale of 338,362 tons of plastic goods, and achieved net product turnover of INR 2,284 crore in the corresponding quarter of previous year, achieving volume and product value growth of about 14% and 6% respectively.
The company sold 444,332 tons of plastic goods and achieved net product turnover of INR 7,043 crore during the nine months of the current year, against sale of 359,087 tons and net product turnover of INR 6,500 crore in the corresponding nine months of previous year, achieving volume and product value growth of around 24% and 8% respectively. The consolidated operating profit and profit after tax for the third quarter of the current year amounted to INR 400 crore and INR 256 crore, as compared to INR 331 crore and INR 210 crore respectively, for the corresponding quarter of the previous year, recording increase of 21% and 22% respectively.
The consolidated operating profit and profit after tax over nine months of the current year amounted to INR 1,123 crore and INR 716 crore, as compared to INR 824 crore and INR 506 crore respectively, for the corresponding period of the previous year, recording increase of 36% and 41% respectively. The business scenario of all the product segments of the company for the third quarter of the current year, ended 31 December 2023, as compared to the corresponding quarter in the previous year, as is under: Plastic Piping segment business grew 17% by volume and 9% in value terms. Packaging Products segment business grew 3% by volume and 4% in value terms. Industrial Products segment business grew 10% in volume and grew by 1% in value terms.
Polymer Products segment business decreased by 3% in value, volume, and value term. The overall turnover for value-added product increased to INR 853 crore during the third quarter of current year, as compared to INR 826 crore in the corresponding quarter of the previous year, achieving growth of 3%. The company had a total debt surplus of INR 586 crore as on 31 December 2023, and there is cash surplus of INR 738 crore as on 31 March 2023. Business outlook. Polymer prices have stabilized at an acceptable level. Russia conflict has disrupted normal flow of business. Supply volatility may become severe if this conflict become more widespread.
In our country, additional petrochemical plants have gone into operation, and their capacity to make polymer are expected to go into production in the country in next two to three years. This added well for further growth in the company's business. The company acquired Parvati Agro Plast at Sangli, with a capacity of 36,000 tons per annum. The additional adjoining land of 7.76 acres, which was part of the deal, is still waiting for certain government clearance to company ownership. Several balance equipment to run the plant fully are still to come. The company expects to run this unit at full capacity beginning February this year. The construction of the company's first plant at Malanpur is going in full speed.
We expected the plant will put in operation during the first quarter of this year, 2024, 2025. This plant is geared to manufacture ball valve and industrial valve. The company received BIS approval for supplying its PE pipe for carrying natural gas. The company expects to introduce this new system to the market in fourth quarter of the current year. The plant to produce acoustic polypropylene pipe is expected to go in operation during July, September 2024. The company started offering its CPVC pipe system for industrial application. Earlier, the company was catering plumbing and fire sprinkler system from CPVC raw material. The company will now be able to cater to demand for industrial piping requirement from CPVC material. The company has placed orders for 9 lines of OPVC pipe manufacturing with its supplier after entering into the business.
Once all these lines are operational, then the company will reach a capacity of around 30,000 tons per annum of such pipe. This capacity will be operational within two year time. The company intends to start OPVC pipe production at Cuttack and Gadegaon, apart from the Shahad unit. The company achieved a volume growth of 30%+ in first nine months of the year in its Plastic Pipe Division . The company expects to achieve similar growth for the full year in this segment. The company's manufacturing facility to make window and door at Kanpur is progressing. Considering the long delivery schedule of equipment, which are of foreign origin, we expected the benefit of this business will accrue in 2025, 2026 making only.
In the cling film division, the company continued its effort to increase its range of made-up products, along with its penetration in the entire country. The company is also putting more resources to reach several international markets to sell its existing variety of cling film products. The benefit of all the initiatives will be reflected in future business growth. In the Consumer Products segment, the company had a degrowth of around 3% in the quarter. The profit level, however, was maintained compared to last year for the same quarter, due to catering to premium range of products in this segment. The premium range has superlative growth. The company's drive to increase number of showrooms and it has resulted in certain number increasing to 298 by end of December 2023, from 244 showrooms at the beginning of the year.
The Industrial Components Division continued to face weak demand scenario during the quarter. This division is more dependent on appliances and white goods, which are not sold well even during festive season. The division is continuously engaging with new customers and applications to optimally use its manufacturing capabilities. The division is hopeful of business recovery with gaining new customers and new applications. The business scenario in the Material Handling Divisio n remains robust, with good demand from fishery, fruit and vegetable, and dairy segments. The division has also received good orders from soft drink industry. The introduction of new dustbin range has received encouraging response, and the division should continue momentum growth, both in volume and value terms. Newly installed production line of composite LPG cylinder has been successfully established. Execution of all orders received from Indian Oil Corporation is near completion, and new inquiries are expected soon.
A recent introduction of promotional campaign and activities by Indian Oil Corporation has seen increased inquiry for the product. Other two oil marketing company will also likely introduce the product in the market soon. Export inquiry continued to flow, but no significant development has yet taken place, except repeat orders from existing customers and small quantity orders from new country and new customers. The Protective Packaging Division business has been able to develop a specialized and customized solution for its newly acquired customers. Necessary investments are being made to ramp up the capacity to meet the increasing demand. The division is working for more export opportunities, and extending of internal as well as distribution network is in progress. The Performance Packaging Division is exploring more export opportunity and working on new application for better profitability...
Its present capacities are optimally utilized and availability of space given a constraint for further growth plan. The company remains optimistic for business opportunity and continue to commit more CapEx in line with the growth plan. Total commitment, including acquisition of business of Parvati Agro Plast , and carry forward commitment of previous year, may exceed INR 1,000 crore. However, total cash outflow is not likely to exceed INR 750 crore for the year, and the same shall entirely be funded from internal accrual. This is a brief and overall summary for the quarter and nine-month period ended in the reference. Thank you for your patience. Now, I and my colleague, Sri P.C. Somani, and Sri R.J. Saboo, are available to reply to the various queries raised by all of you. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wish to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking the question. Ladies and gentlemen, we will wait for the moment while the question queue opens. The first question is on the line of Rahul Agarwal from InCred Equities. Please go ahead.
Thank you so much for taking my question. Sir, first question is on volume growth. I can see packaging, industrial, and consumer products obviously are going through, you know, lower growth, versus what we are seeing in pipe. When does this go to double digits? Because nine months, largely all these three segments have grown in single digits. So could you help us understand what do you see growth in this quarter or the full year, if you want to talk about fiscal 2024 or the next year, fiscal 2025?
In packaging segment, we are moving toward value-added item. Value-added item, our output in market will improve. Volume may not be in double digits, but it will be a better output growth to the company.
Sir, what about industrial and consumer next year, volume growth?
Consumer segment, as we stated, we are moving more and more to premium item, so volume growth will be insignificant. Hopefully, much better than previous years. Industry product segment, which will depend how our customer business improves, so we cannot talk about the volume growth of other region. On industry segment, we cannot talk. We cannot give any promise of how much will be volume growth and value growth.
Got it, sir. Next question was, any inventory gains or loss in third quarter?
Inventory loss only.
Sir, any rough estimate of inventory loss?
No, for nine months, we can only clear today that whatever was the valuation of our stock in IP division on April 1, 2023, it has gone down by value of INR 51 crore in 9 months. The same quantum of inventory valued at INR 51 crore lower on December 2023, compared to April 1, 2023.
Got it, sir. You know, your comments on CPVC for industrial piping, how much annual volume can we do on an ideal basis?
I'm not sure. Our product is very, very accepted.
Sir, any idea of the market size?
We have entered now only market side. So after I think not only CPVC, we are supplying PPR also for industrial application. We supply plastic pipe also for industrial application. It's a market overall for industrial piping. The material is... after material used, as to the requirement of the customer and requirement of the application.
Got it, sir. Last question on OPVC. You said your capacity expansion is 40,000 tons. This is over and above Parvati's 30,000-
30,000.
Okay. Is that-
Your plant, 30,000 capacity expansion, may take 2 years time.
Got it, sir. Is it over and above Parvati's 36,000 tons?
Including, currently 3,000 tons is only OPVC. 33,000 in PVC and plumbing. Total capacity of Parvati, 36,000, out of which OPVC, 3,000.
Okay, got it, sir. Got it. Anybody else in India who does OPVC piping?
Six more customers, six more customers.
What would be roughly the capacity for OPVC?
I have no idea.
Okay, sir, no problem. Appreciate your answering all my questions. I'll come back in the queue. Thank you. All the best.
Thank you. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Good evening, sir, and congratulations on strong volume growth, especially in the plastic pipes side. Wanted to understand, you know, you have 17% this quarter, and you had earlier guided for 28% volume growth. You've further decided to upgrade it to 30%. So what's the confidence coming? Where's the confidence coming from? What are the new avenues which are driving this volume growth of 30% after a strong year already?
I will not clear, madam. Can you repeat your question, please?
... Sir, what's giving you, you know, confidence, reading your own volume guidance of 28% in 5, 36 and now?
In the first nine months, we have grown by 30.4%, and the volume price has become further approachable, and there is good demand from infrastructure and housing. Last year, in the month of January and February, demand was low. So when we say that we will grow 30% for the year, nine months we have grown by 30.4%, and the remaining three months, business conditions are looking better compared to last year. We are able to commit that we will grow 30% for the full year. Plastic piping.
Understood. And rest on segments, sir, where do you see, you know, potential? You mentioned about packaging, that, you know, you're focusing more on value add, and margins would come in, but you would say, you know, you won't go to actually double-digit volume growth. When do you see the segments then, you know, going back to double digits? Will it be single digits for next year as well?
In packaging segment, there are three divisions. Like cross laminated film, we are growing more and more into value-added product other than tarpaulin, where we are able to capture more value than what we are getting in tarpaulin. In packing, particularly packaging film, we are going into more and more material structure and more and more into a export market where we get better margin. So our capacity is restricted. We don't have capacity to produce 10,000-11,000 tons per year. Because space-constrained, we can't grow more capacity there. So what capacity we have got, we want to earn more money, even just get capacity by going into specialized product. In protective packaging product, we are now selling more and more laminates. We went with a fire substrate, and we laminate, and in that laminate product, we are getting more value addition, and we made it more profitable.
Understood, sir. Understood. Sir, also on your new product line, just wanted some clarity. You mentioned that, you know, revenues will start flowing in from FY 2026, which is phase two window profile system. Could you speak more on it? How is your distribution network? Have you started creating the same, you know, what is potential of this product line for you?
In the window line, our plan is not to sell the profile. We will make customized window as per the requirement, and we will do window fabrication, initially at five locations. These are the company, and so we have identified franchisee will make for on our specification and customize. We will offer the window to the customer based on our profile and our accessories. And initially, we'll hope to sell 5,000 tons, and later on we increase the capacity, 10,000 tons, the same site that we will come to.
Understood, sir. Understood. Thanks a lot for the guidance and all the very best.
Thank you. As a reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Shubham Aggarwal from Axis Capital. Please go ahead.
Hi, thanks for the opportunity, sir. Just, so we've seen very strong growth come in for you over the last year. I was trying to get a sense at, you know, where have you seen this growth coming from? You're also very strong in government business, you're strong in retail as well as in project side, the plumbing business, the projects business. So where have you seen the maximum growth come from during the last year, and what do you expect going forward in the next two years, sir? Where will the growth come from, governments, retail, or projects?
Our business with government is very small. Our business is mostly coming from, in plastic piping, more from housing and then from agriculture, and further lower from infrastructure, which we don't deal much with government, but we sell to contractors, and that business is the, smallest among the three segments. Number one is housing, number two, agriculture, and then the government.
I just, broadly, what would be the... In FY, in nine months, FY 2023, broadly, what percentage of your business would go to government, retail, and projects?
The problem is that what type we sell for agriculture, the agriculture type, we know that many of the types are used for housing. So difficult to divide the proper percentage between housing and agriculture. Government business is small in the company. It may be maybe, maybe less than 10%.
Okay. When you say government business, you actually mean that business which may also be supplied through contractors to the government. You mean-
We supply both of them. Directly government, we are only dealing with Maharashtra government, otherwise, all through contractors.
Yeah, sir. So, and just in this context, I think there are big play for Jal Jeevan Mission all the, all across the country. Just wanted to get a sense that, you know, the, a lot of the twenty states have already completed the Jal Jeevan Mission targets, is what we see on their website. And, you know, as they complete and a lot more are expected to complete in the next six months, what impact do you see from this, once the Jal Jeevan Mission is completed for the government, you know, once they have achieved their targets of the-
We are not told that the Jal Jeevan Mission will be over this month. But we believe that by March 2025, that most of the work should be complete. But we are now moving into gas supply system, and gas is also going to be supplied through government issuing order from the gas company, and where our pipe will be approved by BIS now, and we'll be using the same capacity to manufacture pipe suitable to carry natural gas.
Okay, got it. Got it. Very, very clear. This, this was the only question I had. Thank you so much.
Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your question to one or two per participant. Should you need a follow-up question, we will request you to rejoin the queue. The next question is from Sonali Salgaonkar from Jefferies. Please go ahead.
So thank you for the opportunity, sir. I have just one key question about your margins. Your operating margins in Q3 is at about 15.5%, which is up by more than 200 basis points year-on-year and even about 10 basis points quarter-on-quarter. So I actually would like to understand from you as to, I mean, what is the key for better margin resilience? Because this quarter we saw volatile PVC prices, especially in November, sorry, especially in October and December, when the prices were quite softer. So despite this volatility, what can lead to the margin resilience, especially because even value-added sales is just at about 35% of your overall sales this quarter. So I'd like to hear your thoughts on it.
We are increasing our range of product more and more, and our piping system, our range is now in excess of 16,000 SKUs. We are making more and more specialized products. It may not fall in the value-added product. Our criteria of value-added product is, it must earn 17%. But if are lower than 17%, they don't fall in value-added product, what we declare to us, but definitely it become higher than 15%, which enable us to enjoy a margin of around 15.5%.
Understand.
This trend will continue. We will go on working for specialized market, so that we are able to maintain our margin at a better level.
Understand. So then broadly, are we able to give any approximate estimates as to within your plastic piping system, which is about 65% of your overall top line, how much of it caters to agriculture versus construction?
Very difficult, as I told the earlier, investor partner, that agriculture pipe is used for housing also, so very difficult to give percentage-wise. But as we inform you, that we are principally supplier to housing market, either through the project, construction or through resellers. We are not a big player in agriculture market. Actually, the demand also is, minimum 7%-8% in a year, and we are not very strongly active in agriculture market. We are more in housing market.
Understand. And last one from my side. Would you be, would it be possible to give us, a tier-wise distribution, very approximate, as to how much comes from urban, then how much from tier one, tier two, et cetera? Because your volume growth has been consistently very strong and outpacing peers. So we would like to understand as to where this additional growth is coming from. Thank you.
I tell you, we are going on introducing several new systems. We are going on introducing further SKUs in each system. We are going on introducing new distributors. We are using new plants also to make it more comfortable, more convenient to the consumer to get the product at lower cost. So, this combined effect of all these factors, we are quite optimistic that we will continue to enjoy reasonably better growth.
Got it, sir. Thank you, and all the best.
Thank you. Before we take the next question, a reminder to all participants that you may press star and one to ask the question. The next question is from line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Good evening, and thank you very much. If you are looking at your blended margins, and your margins on PVC pipes, there is a healthy trend in terms of margins per ton. Specific margins are varying with the top line. In terms of your own assessment of the market, how do you see the EBIT per ton for the pipe business moving, say, in the next, say, one to two years, based on the ability to grow the volumes and operating leverage, as well as the, you know, change in input costs and overall, you know, valuation?
If you base on the product mix, what we are into and we are introducing-
Yeah.
Our EBIT margin per ton-
Yeah.
Will be in the range of INR 18-INR 20 at least.
This is a blended margin. How about in the pipe segment? Because pipe segment is already at about-
I'm talking pipe only.
Okay, and what about the overall company margin?
Company margin, see different product divisions. Everything does not go on the basis of volume.
Yeah, I understand that. So, you see there is an improvement in the blended margin. If you look at the EBITDA per ton, it's about INR 24,000 roughly, right? So under $300 of, per ton. So would you be driven more by volume in terms of the overall blended EBITDA, say, over the next two years? Or we talk about value add side.
No, only in the Plastic Piping System.
... Okay,
Division in the packaging, they are not going by volume.
Okay.
They be evaluated products or the customized solution or special applications.
Okay.
Each segment has a different flexibility.
Yeah.
Not be just a very simple margin guidance of per kg.
Basically, you are saying, if you look at the next two years, we should look for most of the growth to come from the pipe, pipe business. Is that a fair assessment?
I believe the largest one, giving 65%-70% of top line.
Yeah.
Volume growth definitely will come from piping.
Yeah.
The other divisions are not capable of growing in just that field.
Mm.
Margin improvement will come from the other segment, where and particularly from packaging is doing very good now.
No, so the question is, in terms of the incremental growth in the other segments, can it move the needle in terms of your, you know, overall growth in EBITDA? That's my question. But, in pipe figure, you know, margin put on is stable, and it's driven by volume.
We are happy that we have declared this year 15.5%.
Yeah.
Obviously, we want to improve, but 15.5% is far better than what we were actually in the earlier.
So, in terms of the overall CapEx, how much is the CapEx you have or cost you have incurred on the acquisition of that Parvati's assets?
For Parvati asset, we have given INR 151 crore.
Okay.
Plus INR 21 crore for the adjoining land, which is yet to come.
Okay. So-
Total outgo will be INR 171 crore.
INR 171 crore. So that, INR 1,000 crore CapEx, does it include subsequently Supreme Petro also?
No, no.
Supreme Petrochem is their own investment.
This INR 1,000 crore CapEx, where is it going? What are you creating with it?
Because, in acquisition of Parvati, which is INR 171 crore, and also around INR 600 crore in the other piping activity.
Yeah.
And other segment also we are investing money. So overall, it is stated, we'll be committing investment, including carry forward and acquisition of Parvati, into INR 1,000 crore. And this year, we're going to end March 2023-24, we will be having cash out of INR 750 crore out of debt.
Okay.
If you're looking at your overall ROCE profile, what is the expectation of ROCE on the CapEx incrementally?
ROCE, our last year was 33%.
Okay.
Pre-tax.
Uh?
Pre-tax, without-
Pre-tax, yes.
You see, ultimately, when we put a greenfield plant-
Yeah.
It takes some more time to get the proper utilization of the infrastructure.
Okay.
To see from the greenfield plant later on, because we expand phase by phase, but our asset turnover ratio-
Yeah.
remains between 1-2.4, 2.5. Once the full infrastructure and the whole expansion comes into play.
In terms of overall volume growth, in terms of tonnage, once you put in the CapEx, can you give us some sense in terms of what is the potential growth in overall aggregate volume, say, in two, three years' time?
The INR 1,000 crore CapEx what we are committing this year would reach our capacity, total capacity from 800,000 opening capacity on 1 April 2023 to about 1,000,000 tons by December 2024.
Okay. Okay, sir. One last point on Supreme Petro. They have announced a huge CapEx of INR 800 crore. They are planning to invest in the capital.
That's okay, like, their own investment.
That's fine. So is it possible to give us some indicator in terms of what is the thought process in Supreme Petro in terms of the expansion in EPS? What is the CapEx on,
Supreme Petrochem, in the stock exchange, they announced that they are putting one line of polystyrene and EPS, and then they are putting a line to make 1 million square meters of 3D Panel, 12,000 tons of sheeting, and 100,000 cubic meters of extruded polystyrene foam board. They are going to put five segments of business at a new complex at Panipat, which is in Karnal District, near Panipat, Indian Oil Corporation Refinery. They acquired the land, and there they are putting this investment, which will be third complex of Supreme Petrochem.
What about the ethylene, butadiene, styrene project that also?
Ethylene, butadiene, styrene, that is ABS, is being put up at the existing plant in Maharashtra, near Nagothane. That work is going in full swing. That plant will be in operational phase by March 2025, with a capacity of 70,000 tons per annum.
What will be the CapEx on that?
That is their CapEx. It's around INR 850 crore-INR 900 crore.
INR 900 crore. Okay. All right. Thank you very much, and wish you all the best.
Thank you. The next question is from Abhishek, from DSP. Please go ahead.
Hi, sir. Thank you so much for the opportunity. Just in terms of the pipe growth that you have seen of almost about 30% in the first nine months, just wanted to understand what would be the growth of the underlying market, and would that imply you have market share gains?
The Indian market of PVC, PVC has grown up by 15% in the first nine months. The Indian market growth of CPVC has grown by 2%. Polyolefin, how that market is growing? The polyolefin, there are so many applications, so I have no idea. But PVC, which is our featured material, has grown by 15% nine months by volume, and CPVC by 2% by volume. Our company has grown by 30% and overall in piping, in which CPVC has grown by 8% and PVC has grown by more than 24%.
Okay. Okay. So you have then, that implies that you have gained significant market share, sir, in the nine months of the year.
Our company market share increased.
Okay, great. Great. And, sir, just in terms of the capacity, so Somani ji called out that you have a 800,000-ton capacity. What is the current capacity as we speak in after the Q1 FY 2024? What is the addition in the nine months of FY 2024?
So nine months, I think, yes, which is going to production is very, very limited from that perspective. So once we close March 2024, then we will be able to give precise capacities, what is going into production.
Of the segment.
By segment-wise.
Okay. But, sir-
I would see capacity, which has come into fold, but it is not yet fully operational. So any capacity giving right now will not be a right, analysis. I think March 2024, let us wait for that.
Okay. But broadly, you're saying, December 2024, you will have 200,000 tons of additional capacity, including Parvati. That's the way to look at it?
Yes.
That will include how many greenfield capacities?
greenfield, one we are putting in Malanpur. Otherwise-
Uh.
Everything is definitely from our perspective is greenfield gateway. But otherwise we are expanding capacity at Erode, Cuttack.
We said now running plants, so now they are no more greenfield.
Correct. So this is an extension of the earlier greenfields, but now brownfield expansion.
Now Cuttack has become old plant, Malanpur old plant, Guwahati old plant.
Got it.
Now, what we expand, what we are doing this year will be from brownfield. These plants have gone into operation already.
Got it. Got it. Got it. Got it. Sir, just one other thing in your press release, what we found that this time around you have spoken a lot on the export opportunities as far as the LPG cylinders, the protected packaging and the Performance Packaging Division is concerned. So is there a different way you're looking at the export opportunity now for these three categories? What can be the contribution of exports over a medium term? Any thoughts, sir? Is there a bigger opportunity there?
Started now big way into increasing our export, not only in packaging, but also in piping system. Piping system and packaging both ways is a big thrust on boosting export. We have now started participating in several exhibitions in the world, and once the outcome come, it will take some time. It can't grow overnight. So we will go and reporting to you after the year is out, how much we are growing in export business.
Okay. Got it. Got it. So just one last question from my side. In the LPG cylinder part of it, you have called out that, apart from IOC, you are also seeing the other two oil marketing companies also looking to introduce the product. If you can just give us a broad sense in terms of the capacities and would you like to-
Hope, we said hope it will come from many of the other companies. We hope.
Correct. Okay, and what is the overall market size here, sir? How should one look at it?
It's a big market size of 15 cylinders, but the buying of plastic cylinders is very small. Market size is 4,000 cylinders per year, and I don't think they are buying even 500,000 cylinders annually.
Okay. So would you need further capacity for it? Would you think that you need in the next six to 12 months, that you need to allocate more capital here?
I don't think no capacity is required. We will sell the capacity.
Okay. Got it. Okay, sir. Thank you so much for answering my questions, and wish you all the best. Thank you so much.
Thank you. And the next question is from the line of Akash from UTI Mutual Fund. Please go ahead.
Yeah. Hi, sir. Am I audible?
Yeah, audible.
Yeah. Hi, sir. Just wanted to ask, how much is the price decline in CPVC segment? I mean, what is the realization decline in CPVC?
The price has roughly gone down by around 10%. There are so many suppliers now participating in the market. So probably I can say the price has gone down by 10%. I told you that there are now several suppliers playing in the CPVC market, and the price has roughly gone down by 10%.
Sure. Sure, sir. And next year, the anti-dumping duty on CPVC segment is going to end. So any thoughts whether the anti-dumping duty will get renewed? I mean, the government will extend that anti-dumping duty. I'm referring to CPVC.
That detail is given by government only.
Sure. Yeah.
Thank you. The next question is from the line of Shubham Agarwal from Axis Capital. Please go ahead.
Yes, sir, just I think some clarification that I missed out. So mentioning about the sustainable, I think, per kg for the plastic packaging segment. So here it's right, as 18-22 is the workable range that you are working with?
Sir, INR 18-INR 20.
One of your voice cracked. Can you repeat?
INR 18-INR 20 per kg.
... The sustainable, EBIT per kg piping.
The pricing system, right? Can you on the CapEx, you said this year, FY 22-25, if you can repeat what is the CapEx guidance, 22 till 26?
FY 2024, 2025, not yet relevant. That we will talk only in the month of April.
Okay.
Right now for the 2023-2024-
Yeah.
We are committed, committing very close to INR 1,000 crore, including the carry forward.
Oh, okay. That is all. I think it's just some misclarification I missed out on the call earlier. Thank you.
Thank you. The next question is from the line of Mr. S. Ramesh from Nirmal Bang Equities . Please go ahead.
Yeah, thanks for the question. In terms of the PE pipes, so you are budgeting for the Jal Jeevan segment, what is the overall market you are budgeting? And what is the kind of size you expect to reach in the next two, three years? Because this segment, there is a lot of CapEx happening in the new geographic areas. How do you see that business growing, say, in the next two, three years?
Three years pipe will be required for maybe several years. I can't tell you what is the government plan, but definitely it will be required. And along with the pipe, we will be supplying them our electric fitting also. So we, we make the fitting also, so we'll be supplying full system. It will not be only pipe, but fitting also.
Okay. So in terms of the overall supply situation for your input materials, like PVC and polyester, how do you gauge the demand supply, say, in Asia, China? And do you see any risk of China, the kind of, dumping materials for your finished products, like packaging and pipelines, that may continue for the entire chemical sector? So the availability of PVC resin and PE resin, and on the timing situation, what are your thoughts?
I don't follow your question. Dumping of the product, we are not aware, because it is a shipping area, so we are not aware any pipe or poly pipe or PVC pipe are being dumped from China to India. We are not aware. And when China is not big supplier of poly also in Indian market, we could build capacity in India itself. PVC because we are short, so we are importing from China. The country is very short of PVC, and China is a big exporter, so definitely large volume of PVC is being imported from China.
Okay. So one last one: In terms of sustainable development to meet, you know, reduction in carbon footprint, have you seen any initiative? How do you see that moving forward for, your company and the plastic processing industry, in general?
No, I think plastic processing is very responsible business, and the scrap material being thrown is now being recycled. Actually, nowadays, very difficult to find scrap unless it's going to municipal waste. Because whenever people are throwing plastic waste, they are throwing actually waste. They should not throw it, and this should be collected. And now there are many recyclers operating in the country, so many processes, and they are finding good use of the scrap plastic. So there is no... It's fully sustainable now.
Okay, thank you very much, and wish you all the best.
Thank you. And the next question is from the line of Udit Gajiwala from YES Securities. Please go ahead.
Yeah. Hi, sir, just one follow-up question. On the television interview, you mentioned that you'll be looking at a 12%-15% growth for next year as well. So this is overall volume growth or just the pipe segment that you had mentioned?
15%, I talked about piping segment.
12% to 15%
12% to 15%. Hello?
Yeah, yeah. You heard now? It is for the piping segment.
Okay, okay, sir. Got it. Thank you so much for the clarification.
Thank you. The next question is from the line of Rahul Aggarwal from InCred Equities. Please go ahead.
Yeah, thank you for the follow-up. Tapariaji, one question on the agriculture demand. We are entering a very strong season, based on the weather outlook. How do you think where are the farmers' income moving? And, you know, your, your assessment of how does the pipe demand look like for next six months?
We believe the demand is going to be quite okay, because the pipe price has come down significantly. Fortunately, many of the products which is grown in our country, the farmers are able to get better price. There's no problem we had about credit availability. We believe now onward, up to tenth of June, the demand for pipe in the agriculture market is going to remain robust.
Got it, sir. Secondly, sir, anything from the budget we should expect any positive or negative surprises for our company and our industry? Any thoughts, sir?
With the share, this budget will be only continuing, only there nothing, no significant announcement we made, so this is a pre-election budget. The proper budget will come in the month of July, but considering the growth indicators moving in the country, we believe any budget will come, which will come with a very positive trend only. We remain quite optimistic of the growth of our economy.
Got it, sir. And last question, whenever the national elections happen, in the past, has it caused any disturbance or it's been very smooth for PVC pipe industry?
I don't see any. No, no problem. Only whenever, when the voting takes place, the movement of cash, money, there will be difficulty. But nowadays, more, most of the business is no, no cash business. Most of business in farmers level also, they've got so many bank accounts only. So business are done mostly by, like, through bank, banks only, so they do it nowadays. We don't get any effect due to election.
Got it, sir. Got it. Thank you so much for answering, and best of luck, sir, for the next 12 months.
Thank you.
Thank you. Ladies and gentlemen, you may start. Anyone to ask a question.
Okay, sure.
If there are no further questions, I would love now to hand over the conference to management for closing comments.
Thank you very much. Thank you. Thanks to all the participants for raising very, intelligent, analytical questions. Thanks. We thank all of them. Thank you very much.
On behalf of Samvardhan Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.