Ladies and gentlemen, good day, and welcome to q one FY twenty six, the Supreme India's earnings conference call hosted by Bank Capital Advisors 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. Please note that this conference is being recorded. I now hand the conference over to mister Asim Berde from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Yeah. Hi. Good evening to everyone who has dialed in for Supreme Industries q one FY twenty six earnings call. As usual, we have with us the senior leadership team who will discuss and talk about the quarter gone by. And after this, we can open it for all for questions. Thank you, and over to you, mister Tapali.
Good evening. Thank you, mister Asimbade. Thank you very much. I am MP Tafaria, managing director of the Supreme Industry Limited.
I, along with my colleague, chief finance officer, and chief Rajeshavu, 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 ended thirtieth June two zero two five. The stand alone results and the consolidated results are already with you. I'll give brief on company product, operating performance, and other highlights. The company sold one lakh eighty three thousand seven ninety three ton of plastic goods and achieved net profit turnover of rupees 2,579 crore during first quarter of the current year against sale of 176,835 tonnes and net product turnover of INR thousand 612 crore in the corresponding quarter of previous year, achieving volume growth of around 6% and product value degrowth of about 1%. The consolidated operating profit and profit after tax during the period under review amounted to rupee 344 crores and rupee 202 crore as compared to rupee 425 crore and rupee $2.73 crore during course corresponding quarter of previous year, resulting decrease of 1926%, respectively.
The business scenario of all the product segment of the company for the quarter ended thirty eight June twenty twenty five as compared to corresponding quarter of the previous year as in '8 and the plastic pricing system business grew by 6% in volume and grew by 4% in value truck. Packaging product segment grew by 10% in volume and 9% in value plan. Industrial product segment business grew by 2% in both volume and value plan. Tangible product segment business grew 5% in volume and 1% in value term. The overall turnover of value added product increased to rupee 933 crore during the current quarter as compared to rupee 925 crore in the corresponding quarter of previous year.
Business outlook. Polymer prices remain in affordable range at lower level. PVC prices remain in downward range. Which are a real growth in the business going forward this year and beyond. In the first quarter, plastic pricing business was affected due to 20 late early break of monsoon.
This resulted in agriculture pricing system business due to fall in price in the quarter. Also, there were inventory loss affecting profitability in the quarter. Country business in good rainfall in most of the part is always well for the economy. Going forward, the company has put good demand for housing and. The inflation is also coming down.
With government commitment to boost infrastructure spend, company believes demand for jet sector should also get revived. The company remains positive of initial volume growth with increasing value added product turnover, both for the plastic pipeline division and for the company during current financial year. The company entered into business transfer agreement with Huawei Industrial Limited and its two wholly owned subsidiary company, that is Huawei India five ten fifteen manufacturing private limited and Huawei India Holding private limited directly referred to Huawei. The acquisition is a growing concern on a slump sale basis is likely to be completed by thirty one July two year two prior subject to fulfillment of terms and conditions precedent provided for in respect to business transfer agreement that's mutually agreed between parties. The aggregate consideration for the entire transaction, including for net working capital, is about rupee 10 lakh 10 crore.
Net working capital is subject to final adjustment as in project. The company is also entering into master technology license agreement with the Warwin, Netherlands, and all the other two company to access on a strategic basis for India and other sub countries are its existing technology and other new technology to do it during the period of seven years pertaining to plastic pricing system for billing and infrastructure segment. The same similar to you, Comfort segment two zero two five. Going forward, this acquisition and matching arrangement will change the business of the flagship price with Vision to a new scale in term of capacity, market reach, and product offering. Capacity expansion at various location for plastic, pipe, and business and productivity packaging product are progressing smoothly.
Company plan to set up a new unit for material handling product as its newly acquired land in Malapur, New Guaya, to expand its footprint in Central India. Work from the same should be taken up in hand shortly. All the equipment for three piece silent press system and technical collaboration with Master Polo Plus of Asia have been installed and gas production underway. Commercial production is likely to commence next month. The company has successfully executed its first order for for gas application.
Company also has the prestigious degree GW certification for the electric field and freezing from Germany for the use in carrying water and gas. This gives the company credentials to get qualified to participate in tender for gas pipe and electrofusion feeding supply. With this product and certification, Supreme is the only company eligible to produce and supply both pipes and feeding for carrying gas. The company continues to invest and enlarge the product basket in our distribution and to remain focused on increasing the range of value added products. Construction market site for profile window project is in advanced stage of completion.
Equipment has started to arrive at the site. The company expect to commence dry production during second quarter of the current year. Initial focus of the company is to launch the product in UP, Uttarakhand, Asia region. And thereafter, the company will plan for more geographical reach within India, which is setting up of fabrication facility in other parts of the country. The company expect its outflow of about rupees 1,350 crore toward existing company commitment, acquisition of our business, and new commitment during the year.
Entire CapEx should be funded from internal accrual. All other product divisions are failing well, and company in such moderate growth during the year. The productivity for the division is especially driving a growth plan by increasing product gain and offering for customized solution. The same yielding positive results and paving the way for achieving double digit volume growth and revenue target to exceed rupees 1,000 crore for the year from rupees 855 crore in the previous year. The company issued a letter of acceptance for supply of two lakh number of 10 kilograms composite LPG cylinder to Bayer Petroleum Corporation Limited, and it also issued a liquid order of 231,000 of composite equity cylinder from Indian oil corporation, which will enable the company to improve utilization of expanded capacity of the composite senior dividend to a reasonable level.
This is a plan brief and oral summary for the quarter ended under reference. Thank you for your patience. Now I and my colleague, chief Prishesh Shumani and CJ Sahu, available to reply to various queries led by all of you. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touch tone telephone. Questions. The first question is from the line of from Dollar Capital. Please go ahead.
Thank you, sir. Sir, the first question is on on the volume front. So, in the AGM, we say for two months, April and May, I think the volume has has grown by zero naught percent, but now the the volume number is just six naught percent. That means in June, we have kind of a degrowth by close to a 3.74 naught percent. So wanted to understand the two aspects.
First is for this quarter at the industry level, how do you see what kind of a growth was there? And in terms of our guidance, last time we have talked about 10 to 12% kind of our piping and overall volume growth. So what's the new revised guidance?
In the June, the previous of drastic price by effective June to Hello?
Yes, sir. Yes, sir. Good morning, sir.
What all day. Yes. And now we are going to start within the from as said, we can our staff is aware, we expect to grow
I'm sorry. I'm Your voice Hello? Yes, sir. Go ahead.
So now now after expiring, and we are going to acquire government assets from August 1 this year. Now we have revised our guideline upward. We anticipate that our classic private business volume will grow between 15 to 17% this year, though it has grown 6% in first quarter.
And for overall volume growth, how do we see for full year?
For the company Yeah.
Yeah. All the segments put together.
Yeah. Between 40 to 15% should be.
Alright.
I'll do it. Okay. So here, sir, just wanted to clarify for Wavin. Last time, we said that we are looking at close to 51,000 kind of a volume. So that number remains intact.
So so if if this is the case And now we will be having operation only for eight months.
Huawei has got installed 1,000 per annum. Hello?
Yes, sir. Yeah, sir.
So how much volume from Huawei are we looking at?
We hope that in the eight month, we may get 30,000.
Okay. So then why on what business are we so confident that in the remaining nine months period, the volume will pick up significantly given the that the the ADD has still not came, and the IS has been postponed to December.
Yeah.
Let's look at this. Last year, in the past, were destocking at a very severe level. Now because just never. So, it's going down to. So, I just the entire trade line empty. So, we don't we are very confident.
Okay. So so so broadly, we are we are now looking at kind of of 18%, 20% kind of a growth for nine months to to achieve a 15% kind of growth.
I said the number 15 to 17, you can calculate for the remaining nine months. You can calculate yourself.
Got it got it. And second on on the margin front, so this quarter obviously was on the lower side of close to 12% EBITDA margin.
How large we actually should be part of the company will be around 14 and a half percent to 15 and a half percent.
Okay. Okay.
Got it. And then what was the inventory loss in the in the q one, sir?
Like, this is 25.
Okay. Okay.
Got it. That's it from my side and all the way.
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 a question to two question per participant. Do you have follow-up question, we request you to rejoin the queue. The next question is from the line of Praveen Saha from PR Capital. Please go ahead.
Yeah. Hi, sir. Thank you for opportunity. So first question is related to the the company expecting a cash outflow of $13.50 odd crore. And I suppose it's a 310 crore of who are also included in that.
So how much of the capacity, you know, expansions in the different vertical you are expecting with the thousand odd crore of this
Net day expansion will coming in plus with division plus with division will reach 1,000,000 ton by March '26. And a new capacity of 5,000 ton of window making will also come. We are expanding capacity in material handling division and for future computing division. But major expansion will be plastic pricing division.
What level of a plastic pipe capacity do we have right now?
Our capacity at the beginning of the year was 870,000.
Yeah. So in the quarter, we we have not added anything. Right?
No. Nothing much.
No. We have much something we're going on adding every month, actually. We told you end of the year, is it 03/02/2002 Got it, sir. Okay. Go R1,000,000.
Got it, sir. Sir, second question is related to your commentary on the first order of a PE file for a gas application. Can you quantify how how is the price and also the opportunity for the rest of the year?
No, now we are qualified. So now we'll be eligible to participate in a tender because we have been successfully participated. The market of gas price next is showing around 700,000 trucks. And we are participating as of today only from in Western India. So we will be now coming.
We need to put up another location also. So we're able to give you any idea how much we will get, but we are only here to inform that we have successfully participated to supply five twenty from one source, which is very unusual Indian market. That we supply five and also a lot of the energy for this huge.
Okay. Got it, sir.
Just a clarification, what you said of 14.5 to 15.5 EBITDA margin, that is for a full company level or that is Exactly. You are expecting for a plastic side?
Every company.
Thank you, sir, and all the best.
Thank you. The next question is from the line of Neha Kalvejar from Wealth Management. Please go ahead.
Good evening, sir, and thanks a lot for the opportunity. Just a couple of questions from my end.
You have mentioned that there was an inventory loss in this particular quarter. Can we quantify the same?
Let me quantify. Have you seen the margin here? Due to the inventory loss in our stock of finished goods supply, and also in the raw material part we have committed in the world market, price has fallen, so we lost money. But now we can confirm, maybe $50.60 crores.
$50.60 crores in this particular quarter. Understood. Now, sir, secondly, on the urgent front of with Huawei coming in, could we understand the margin trajectory for us? Our Huawei margins will be similar to us. Will it be better because of the product mix or because of their operating overhead being on the higher side, it will be lower in the initial time? Some sense.
Currently, the asset, what Huawei are able to produce as immediate to what we are producing. When we change that any new technology, then only when we change the technology, we allow to all our partners that this is new product group we are adding based on our own technology. That benefit may improve properly only from the beginning of next year. As of today, that I said what we purchased are making products similar to what we are already making. It only increase the volume.
Understood, sir. But on the margin guidance front, I think you've maintained your margin from 14 and a half to 15 and a half. While I understand the upgrade in the volume guidance is because of. Your margin improvement from the current levels will only be because of discontinuation of inventory loss or any other reasons to add?
Margin, we told you 14 and a half to 15 and half for your company.
And we expect that improvement coming in from which all areas because currently, the margins are much lower.
I think 5,000,000,000. There's lost money due to inventory loss now. It also will be improving, and we are increasing our business of various product. And last year, in the first quarter, we saw 926 growth. It's a very marginal growth of only 1% compared to previous year first quarter.
So, yeah, remaining nine months, we expect to sell more integrated product also. So overall, we we believe that we'll be earning between 14 and half to 15 and a half percent this year for the company.
Understood, sir. And lastly, in case I may, any clarity on the duty maybe? Recently, there was a document stating that, you know, it's got extended till September 2025. Any sense there would be an update for that?
Government Director General Trade Remedy, they announced a disclosure notice. This is the quantum of injury that each foreign exporters have got to the Indian industry. Now thereafter, the final anti dumping duty is a recommendation is going to be announced by director general chair remedies. Thereafter after the announcement, the Ministry of Finance will examine and then issue the duty in person notification. Normally, it should take between three to four months.
So now in the month of July, so we anticipate that anti Japanese duty may come October 2 or November 1. But I get more than the right idea. Ministry of Finance and that is your credit, everything they will decide.
Understood, sir. This is really helpful. Thanks thanks a lot, sir, and all the very best, sir.
Thank you. The next question is from the line of Punjin Shah from Mollikin Ventures. Please go ahead.
Hello. Lovely. Yeah. So, just wanted to understand on price hike which happened in the April and May. So, Reliance has announced the price hike of 3.5 rupees per kg in PVC.
So just wanted to understand that price has been following up to the certain level that has impacted our pricing and ultimately, it has retained to the inventory loss or what has happened in the scenario?
Well, there was no price rise in April, May. The amount of price increase, and they drop the price. So net net, the price will drop. Then what it was on April 1, the price will drop in the month of June, then they increase the price.
And, again, they gave the scheme. Then now the price would then give the scheme. So net difference in the price will come down only.
Oh, okay. Got it.
So right now, we should expect the price range should be around $67.68 rupees per kg.
You you know better. Yeah. Okay. Yeah.
And the second question would be on the okay. I'm just wondering, you know, from the last ten odd months, we have we have, Jay, the fund flow challenge has been there. So any green should be visible on that part? Do we think that that quantum of money should be flowing in in coming months? How how do you go with the trend?
But I can I can check-in?
You can follow. Can you repeat this? Yes, So so hello.
Am I audible now?
Yes, please. Yeah. So I'm talking on the GBM funds. We know that from the last ten, twelve months, the funds and the funds flow channel in the GBM.
Oh, fine. And when you come. When you have lost some.
Yeah.
They owe me 304 rupees today, and yet they are owing owing for less more than six months.
Yeah.
So that that's what I'm trying to understand. So how so what's your outlook in coming months? Do you think that this funds flow challenge will get resolved and green should be happening in coming months? Like, I'm talking in August, September?
I don't expect. My money will is going to come, I'm sure.
Okay. Okay. Got it. So full project JVM is expected not not yet. Not soon.
Money will come.
Okay. Okay. Okay.
Got it. Got it. Thank you. Thank you so much.
Thank you. The next question is from the line of from Jefferies India. Please go ahead.
Sir, thank you for the opportunity. So my question is if I actually look at segmental volume growth, packaging volume growth has been quite strong at about 10%.
So that despite again the PVC volatility. So can you help us understand exactly what we did at this point in time? And also secondly, what is the channel inventory right now? You did mention in your media interview remarks that you are seeing no destocking now. So how is the channel inventory now versus what it was in March?
There are two questions you are asking. So when you are asking packaging division, packaging division definitely made a good business growth, and there were no inventory loss in packaging division. And the demand for our gross laminated product and our packaging product, both segment and the the one is quite strong. In packaging film, we don't have a share capacity. What your capacity we have, we are already selling.
So this is the same packaging film. On plastic packaging system, we as I told we told earlier that they we don't see any more price erosion around the price. And we and we have already indicated that we may grow between 15 to 17% new volume in plastic pricing division this year.
Got it, sir. That's it from my side. Thank you.
Thank you. The next question is from the line of Kesha from HDFC Securities. Please go ahead.
Hi. Thank you for the opportunity. So firstly, I want to understand your volume growth guidance for, you know, plastic five premium, which was 12 to 14%. In spite of strain of muted quarter, you have raised your guidance to 15 to 17%. What is the thought process for the same?
Last year, the business was first started from November, when the prices started falling, and they continuously fell up to March '25. This year, we don't do that. So lot of destocking took place. Now there's no possible destocking. Now the people have a proper stock.
But now people have no concern about project price erosion. So and the demand from going forward is a range of quite bountiful demand for and we said that and demand for housing both is going to remain very robust. And we have added several new range of product. We have added several new several additional distributor. We have added several additional SKU.
Now, actually, we have more than 15,000 number, and we have a 45 system. And all the system are well accepted. So we are quite optimistic that the growth number in volume what we told you will achieve.
Okay, understood. Got it.
And what sort of volume for Huawei you're looking for this year as well as for next year?
Volume actually they will capture 71,000 ton. It will come in our hand only from first August. So this year, we hope that we may be able to sell 30,000 ton out of the volume volume capacity. Next year, we will start in the month of April next year.
Understood, got it. Sir, lastly, what is the progress on the OPEC files? What sort of capacity you are adding when you need to come and what sort of volume you are looking for this year?
We we have a two line, the capacity around 500 ton per month and we are getting orders.
Okay.
What sort of capacity you plan to add? Earlier, you had a plan to add, you know, to go till 32,000 KMT by '28.
And we had the plan remain good even today. We have to come to our longer period by 2028.
Okay. Got it. Thank you.
Thank you. The next question is from the line of from. Please go ahead.
Hi, sir. Thank you for the opportunity. First one is on our CPEC business. So we are ramping So in our pipeline of CapEx from up to 1,000,000 ton, how much will be your part of CPVC or CPVC expansion has been done already?
Although 1,000,000 tons, CPVC will be quite large, but that that should that remains classified information.
Okay. Okay. No worries, sir. And on the for the good on the demand side, like, of our growth estimate in the plastic packaging system, to which segment or or what gives you confidence of such a high growth if there is no destocking?
And where which demand set or segment wise pocket do you see the demand coming in from? Like, in every residential, I can put some light on that.
Our biggest combination, we are larger player in housing than agriculture. In strategy, are very small portion of our business. Our sync demand is going to be quite good, and we were missing the silent pipe made from polypropylene.
We are making silent pipe from PVC. Now from next month, we are going to launch on 18 letters our silent five based on polypropylene. So let's and and which admission also will be available. Our third five system also are very, accepted. Our polypropylene five system are also very, very accepted.
So so many new system that we have launched, we anticipate that there'll be good growth in the housing segment also. So combined number, what we told you, that we will grow between 15 to 17% by volume in this year.
Okay. Okay. And on on the lastly, this PTMT process, so any color on that, how that segment is doing more in terms of testing and launch launches?
Yeah. I think several new variety of parts heating and based on PTMT. They are very well accepted. They are going to launch a range of sour sauce, our sauce will be very large range, which is going to be launched in next one, two months.
Okay. Launched in another two months?
One, two months. Maybe One to month. In the last. Yeah, please.
Okay. Okay. Thank you so much, sir.
Thank you. The next question is from the line of S Ramesh from Nembong Equities. Please go ahead.
Thank you, and good evening. So when you talk about the pipes for the gas sector, what is the kind of annual revenue you can expect from that and when will you start delivering those pipelines? And secondly, in terms of the margins compared to agriculture and housing segment, is there any improvement in margins in the gas pipeline sector?
No. The gas pipe, we just started, so we can't talk most much more detail about the margin or not for the volume.
This is even first educational order, and we supplied, and we cannot give any quantum idea about how much business you will get this year. We cannot do. And between housing, agriculture, housing definitely is a better market. Agriculture is busy with a low margin.
Okay.
So if you look at your results and the gross margin in the 33% range, do you see any levers to improve the gross margin and the share of the higher margin products improving in the next two to three years? And secondly, in terms of the fixed cost, would you be able to get some operating leverage once you improve gross margin? What is the thought process then?
Basically, we tried this year when we told you 14 and a half percent to 15 and a half percent. Either blessing the virtue we are tracking, we will succeed.
Okay. And finally, in terms of the variety of plastics, including polyethylene, polypropylene, and PVC, which will possibly see an increase in supply based on the various petrochemical projects. How do you see the increase in supply helping the plastic processing industry including your company? And what are the areas you're working on including, you know, new applications in safety, for PP? And your sister company has ABS project coming up. Any thoughts there?
Because the new ABS should be exported in the next two to three years. Unfortunately, India, the I'm just afraid for it, but then, So there is no concern about not getting it on TV, except. But, we see, we're allowing in course, so there is no issue. Anyway, other than material, abundantly available in our country.
Okay. Thank you very much, miss.
Thank you. The next question is from the line of from. Please go ahead.
Hi.
Sir, for this quarter, for our industry, is it fair that the 6% growth that we have seen for plastic pipes, have you done better than the industry growth?
I get it. Yeah. I think because we were We are a player in agriculture, housing both. There are some player in our plastic pricing who are more premium prominent in in agriculture, and some players who are more prominent only in housing. So I can't give proper comparison to anybody else.
But but for for for average, if you if one has to look at for fourth quarter, how much industry would have grown?
I know a number with me, so I cannot give any number. But I perfect there. Large in the industry.
Okay. And then for full year FY '26, how do we see industry would be growing at what rate?
We'll be growing better than the industry. Industry may grow by around nine to 10%.
Okay.
And and then there in terms of CPVC, that would definitely would be a more than 10% kind of a growth would be there in CPVC? Okay. Okay. Okay. Got it, sir. Thank you.
That's enough.
Thank you. The next question is from the line of from Fair Valley Capital. Please go ahead.
Thank you very much for the opportunity. My first question is on the PVC resin price. You mentioned that the June as well as July month has observed a price decline from Reliance. However, the numbers posted for k six seven zero one grade, there has actually been an increment. On May 1, the price was around 71, averaged around the country, which is now around 75.6.
Can you please tell me if there is some mistake in my understanding here?
You may be judging the discount, right, then you may not be doing the discount, but they give but they give some, like, 15 quantities, discounts, so I don't think you know the best pricing.
Understood.
So Right. And they give the monthly thing.
If we use so much, then so much discount. If we use so much, then so much discount.
No.
That's not net net. So you may not be running out. And there were different pricing for different customers.
Okay. Understood. And just structurally, sir, if the prices, because of either antidumping or maybe further supply demand scenario goes further up for PVC resin, wouldn't that hurt margins for players such as ourselves? I know that the quantum of pass through to customers will also matter here.
But, you know, given upward trend in pricing, wouldn't that hurt the margins?
As of today, there is no upward trend. I only say there is no more downward trend. And upward trend, we don't know where the we don't know when the MTJPY will come. But some small increase, but they'll not affect the demand for the plastic battery system.
Because this is the best material for the given application where it is used. They know the material we can complete with PVC.
Okay. Understood. Because most of the other companies or competitors have guided at least a 6% growth of prices in this financial year.
They're no better. They're no better. They're better.
My second question, can you please tell me the split between, you know, the more commoditized pipes such as UPVC and the, you know, more value added products, for example, CPVC, OPVC? And how do you see that split going forward?
Major market will remain always with UPVC and larger volume.
For Supreme, how much was the split? What was the share of UPVC in the the last quarter?
That is classified information. Thank you very much.
Okay, sir. Thank you.
Thank you for answering my questions.
Thank you. A reminder to all the participants, you may press star and one to ask question. The next question is from the line of Punjin Shah from Molecular Ventures. Please go ahead.
I have a follow-up opportunity. Opportunity. In terms of OTC, you said that we are receiving some orders and we are also seeing the markets like Gujarat is also clear. So in terms of understanding right now, so one side, we are suffering from the vision issue. Secondly, we are getting orders.
So so can you just broadly help us to understand how we are getting this from the POC and how we are selling out? Do we try we are trying to type in new type of opportunities for POC? Can you can you repeat?
Actually, we are not very clear what you are asking. But we are asking as yeah. You said it. Thank you. Yes.
Please repeat the.
Am I am I clear now?
Yes.
Yeah. So in terms of OPBC, we we in the last in the last participant, you said that we are receiving orders for the OPBC part.
And also, there is suffering from the funds flow challenges in there from the JGN part.
So are we tapping any new opportunities for OPC which can open up new market specific and so is that is that what we are trying to do?
Or we we are getting some orders from new I I must make you clear to you. Hope you will see a limited market. It is a replacement of the iron pipe. And even today, the ductile iron pipe between 110 millimeter diameter up to three one five millimeter diameter. This only can be replaced at the current cost of the user, which I shared government or mutual corporation for.
So it is a very small market on a special segment only. You can use or PVC pipe and just open. I really would say they are all being made which are starting from 110 millimeter. PVC pipe, people are making from 20 millimeter to 90 millimeter. That is not made from OPBC.
OPBC video market is 400 millimeter to 1.2 meter. That is not meant from PVC.
Right. Right. Right.
Got it, sir. But we are seeing that the new states like Gujarat has been opening up, and so is that so just wanted to understand the order inflow in terms of OPBC. Are we seeing very green shoots in OPBC from this quarter?
I guess, yes, and when I say our KPC 1,000,000 term and OPBC, my KPC thousand term.
Right.
Animal.
Got it, sir. Got it. Got it.
So 1,026,000 very small capacity.
Right. Right. Right. Agree. Okay.
Thank you. The next question is from the line of Rahul Agarwal from Equizai Asset. Please go ahead.
Yeah. Hi, sir. Very good evening. Thank you for the opportunity. Sir, two questions, both on cost saving initiatives.
The annual report talks about the renewable energy now being 30% across the three industries in terms of power and fuel cost. I believe the intention is to have, you know, over a longer term, 100% of this coming from renewables. If I have to understand, you know, the power and fuel cost savings on a per ton basis or overall company basis, how should we understand that? That's the first question.
Yeah.
You see, going forward in every year, every month, we are looking how to increase the share of renewal energy. But with the consent of discounts, consent of the regulatory approvals, etcetera, The last year, we had a share of 21.45% of these from renewal. This year, we are targeting for the year should be 30% plus. All our plants, wherever we have this space, we are going with the solar and apart from our own plants, we are also participating to the purchase of the energy from other sources. But although it's very easy to say how we should go for 100%, but in real life, because of the various regulatory challenges, we cannot.
We have to remain dependent upon the discounts and state power. But, yes, from 21 to 30 this year and 35 next year, This how we have to make a progress.
So, Sumanji, this is this, like, the all the benefits are completely passed through in terms of pricing or do we retain something on the margin side? Like, how does it work? Is it, like, completely volume benefits on sale volumes or is it, like, cost savings?
Talking of energy or you are talking of the prices of the product?
No. I'm saying if we save money from renewable energy, do we decrease the selling price of the product?
We are saying if we will show many increased cost outs, dear friend. Yeah.
Sure. Sure. I understand that.
We we balance out the cost of village.
Okay. And sir.
But I also not English.
Okay, sir. And second question, similarly on freight and forwarding, because we have seen new state locations, new plants have been added. I think most of these savings are also getting passed through or is it some, you know, is is this saving also part of EBITDA margin?
That's on to my question.
Sorry, sir. I was you are not audible. Could you pardon me, please?
I kept the benefit of their lowest rate is passed to my customer.
Okay. Okay. Got it. So that is basically leading to higher one.
Yes, sir. Lower cost of buying price of my company.
Got it, sir. Got it. That's all from my side. So all the best for the rest of the Thank
you. The next question is from the line of S Ramesh from Nimaribam Equities. Please go ahead.
Thank you for the follow-up question. So if you're looking at your capacity utilization, it seems to be in the 60% range. So when you talk about improved performance for the rest of the year, what will be the capacity utilization by the end of the year?
Overall capitalization for the company should remain between 65 to 70%. And after FY '26 Many of the capacities come during the year.
They are not available for the full year. So we're we're to take the opening capacity and then whatever capacity has been expanded during the year, it will come gradually. So if you take the effective capacity for the year, then 65 to 70% is the reasonable number what we achieve.
Okay. And beyond that, is it assuming that the market improves?
Can you go up to eighty ninety percent in future over the next three years? Is that possible? And will that give sorry?
You No. The kind of the product may We'll we'll go on expanding our capacity.
Okay. Okay. Fair enough. Thank you very much.
Thank you.
Thank you. The next question is from the line of from BOB Capital. Please go ahead.
Yeah. Hi. Good evening, sir. Sir, my first question is on the pipe segment. So just wanted to know, like, how has been the pipe demand from housing segment in June compared to previous year?
And if you could quantify on a 65% growth for the June.
No. I'll see. Demand was good, but we can't quantify because many areas, yeah, you could apply for usual housing also. So we are not able to identify how much is going for housing, how much is going for.
But our housing, the customer who are dealing in housing, they had growth in the business. There's no big growth. Big growth came only from those customer who were doing a special pipe business Only they have business become completely very much depressed in the month of June. K.
And sir, what would be your PPBC comp volume growth for June?
In classified information.
Okay. And sir, second question is regarding the channel inventory. So if you could come provide some color, like, how is the inventory level at the dealers? Is it at normal or below normal at the June?
We we we below normal.
Okay. And so you expect the dealers to restock start doing the restocking of inventory from September onwards?
Start coming from September.
Okay. Thanks a lot, sir.
Thank you. The next question is from the line of Shiv Kumar Pradjapati from Ambit Investment Advisors. Please go ahead.
Thanks thanks for having my question. Good evening, sir. So my first question is, do we have any internal volume growth target across our product categories, say, for five percentage of packages? And if you're then what would what what's our target for the next three years?
Next three years.
Yeah.
I'm sorry to interrupt, sir. Your voice is not audible. Hello?
Okay. But, sir, do we have some separate internal targets based on the segments that we operate, or is it a control target?
Yeah. We can charge it then share.
Okay.
Okay, sir. And sir, would you be able to share the percentage of premium products as a percentage of total volumes or or say total revenue?
Right, by the way, can definitely.
Okay. Thank you, sir.
And sir, my next question is on this. Compose it to know that we are, you know, trying to upgrade. So right now, it is very minimal, but as per your assessment, how huge this opportunity can be in the current rate?
Composite cylinder. You see, we have a capacity of one.
Right? We are getting that capability fully utilized. Now this time, we have got the letter acceptance from. So let's really get the continue Okay.
So sir, on our rough estimate, I mean, as per my estimate, suppose rupees 2,700 per unit, and there are around thirty thirty two plus LTV cylinders.
And if we take a conversion ratio of, say, five to 10%, then the opportunity price comes within 4,500 to 9,000 odd growth. So what do you think, like, how far this conversion can be? I mean, in the next three years or five years down the line, do you see that the conversion would be 50 or 60% or something similar to it? And what which other players are, you know?
We wish whatever you are suggesting to an FN.
We are Mhmm. The twenty years, all the things have moved. Okay. So totally dependent upon Ministry of Petroleum and compliance. Portion plan based on that.
Got it, sir. Thank you so much. Best of luck.
Thank you. The next question is from the line of Arun from ICIC Securities. Please go ahead.
Hi, sir. So just for clarification. So when I look at your raw material cost, it is at around 68.6% against ballpark 68.1%. So, about 50% increase. So, even the the inventory loss doesn't look so big based on these numbers. Am I missing something, sir?
Yes. What you are saying is right, but you see our total inventory has increased. And when the inventory gets increased, then the inventory is valued at cost, which includes your cost, which includes your manufacturing overhead. So those get added to the inventory valuation. So that is good.
Yes yes.
So the inventory valuation gets added with the overhead also. So total material cost, what you are looking would include the part of the overhead. That's why you are not finding the difference between the raw material cost that way.
Okay.
So so do you Or come in the separate line and the value get added to the inventory. So part of We the have a substantial internal inventory in this quarter, about 157,000 rupees. Yeah, please.
Okay.
Okay. And and sir, you know, even if you look at the other expenses, they went up dramatically. So is this the way we should think this numbers should be broadly in that phase or something one off in that?
No. The expenses I mentioned to you, because of the inventory getting valued above the line and the overhead coming down the line.
Our production has increased by 14%. Although the first qualified is only 6%.
Okay. Okay.
14%.
So that's an overhead, sir, linked to the production volume.
And second thing, sir, just with regard to our guidance, you know, we had a guidance. We knew of that in acquisitions. We were expecting thirty, thirty five thousand tons even last quarter when we did the call on April 24. So is there a demand which changed so dramatically between these two months for that?
No. In the first quarter, it's been said earlier because the early breakout of month on, the June month was very bad.
No. No. No.
I appreciate that point. I'm just trying to say is when we gave our guidance on April 24, that's after q four results, we do allow an acquisition happening. Right? And 30,000 tons, you mentioned thirty, thirty five thousand tons even last quarter. So basically, your core business is going to see much better growth.
So has the market condition become so better in the last two odd months? Is that the case?
No. Our earlier guidance, we have not factored any business from Huawei at that point of time. We wanted to have the everything everything fall into place.
No. So you had mentioned clearly guidance for Huawei in the last call.
You had get that's why you are saying because you were saying industry will go at six to 8%, and we'll do a bit better with seven. That was the thing you had mentioned last year. Not without without worry.
We said the industry will will grow better than the industry. Remember what we told? We said that classified industry grow 3% more than the GDP growth.
Yes, sir. And we will grow 3% more than the country growth.
So between now the industry That's very good.
Okay. So now the industry would look much better for us. Correct, sir? So the industry growth looks much better now compared to what you saw in Q1.
That will be better answer in our company. Are better than the industry.
Okay. Thank you, sir. Thank you very much.
Okay.
Thank you. The next question is from the line of Puneet, an individual investor. Please go ahead.
Hello? Yeah, please. So I was wondering, in terms of margin, I understand pipes is not a very margin accretive segment. So in terms of the difference between the pipes sold to AbbVie, how what is the difference in margin for the piping division and what is the prediction, what is the margin that can be for the value added division? And one more question is regarding the pipes off take in the Agri segment.
I understand June has been a little off for Agri, but how do you see the overall state and central policy affecting and in terms of rest of the, which states Oh, complete okay. The payment.
That's all. All that for the full year, we believe the demand for utility price will be better than Russia. When the prices are low and farmers, you know, there's so many problems of, you know, end of water.
They will spend money for doing a plant for any water supply to their field. So we anticipate the demand for any segment overall for the year to be better. Despite of what you have done in May and June, you might be better for the full year.
So about the margins, like, what are what can we expect to be piping segment margins compared to the value added segment margins? What could be the difference between that?
So again, segment is also part of piping system. Piping system, not only pipe, we have got more than 15,000 s t u in piping system. And out of this, piping is very small number. We will be who is the package of piping products we make, Injection mortgage, blow mortgage, fabricated, auto mortgage. I do like your product.
These are all very good item and type of system.
Uh-huh. But, like, I was wondering, like, I understand, but for the what what could be the margin that we can expect to forecast for the pipes? Because you mentioned that for the value added segment, the margin is higher for rest of them. So I was wondering, because piping contributes to majority chunk of the overall revenues, what can we do margin for that?
And incrementally, as a contribution level changes to overall revenues, how will I can't earn 14 and a half percent. Understood.
Let me say 14%, we cannot earn from my major business coming from pipeline system.
So 14% is what we can expect from pipes also.
We we don't have pipe only.
We are doing pipeline system. And pipe in system should more than 15,000.
It. Thank you.
Thank you. The next question is from the line of Anshid from CLSA. Please go ahead.
Hello. Yeah. Hi. Thank you, sir. Sir, can you repeat the value added product sales number, please?
Actually, first quarter, we sold 933 crore. Our order turnover 2,016 crore, and value added was 936 crore.
Okay, sir. And so we expect this to be better than last year on a full year basis?
Sure.
No. So that I'm asking.
Yeah. Sure. It will be better. Definitely better.
Yeah. Okay. Okay. Thank you, sir.
Thank you. A reminder to all of our participants in a press star and want to ask questions.
That's for sure.
The next question is from the line of mister Asim from Land Capital. Please go ahead.
Yeah. Hi. Sir, sir, I wanted one clarification on the or or your comment on the plastics pipes capacity. So earlier in this call, you said you'll reach 1,000,000 metric tons per annum by March. This was also your target earlier too.
But in the AGM or rather the chairman's seat, was it mentioned that you'll reach nine lakh forty by March 2026, and that included 7,000. Now you are saying 1,000,000 again. So have you high green lighted one of one of both of those greenfield pipelines you are planning? And if we have basically, what has changed in June and and now for that March, you know, this is targeted to increase to 1,000,000.
No.
That's $9.40 which was mentioned was without Huawei initially. It was you can say Okay. There is wrong mission, but total will be 1,000,000.
Okay. So basically, no change.
1,000,000 is the same number. Okay. Fine. Okay. That that's it. That's it for now.
Thank you very much.
You. The next question is from the line of Karan from. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, just wanted some clarity on the green free effect. We were referring earlier at in Jammu. So any concrete update on that?
No. As of today, we are doing nothing on Jammu land. We are in in Jammu both, their location, we are not doing anything. We will be adding five new plant this year, three from Marvin. One plant, we are putting one multi materiality system in in and one plant in rupee, where we are putting a plant to make profile for windows.
Okay. And sir, one more Five new plant will be added to our existing 30 manufacturing plants. Right. Sir, we were planning for one packaging unit near port. So so what about that?
Up up till now, we could not acquire the land.
Okay. Thank you. Thank you for the clarification. That's it for now.
Thank you. Is that for the last question for today? I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you very much. We are very thankful to all the various who made very intelligent and very enthusiastic person. We are very thankful for their time and for the guidance to us. Thank you very much.
Thank you. On behalf of the entire advisory committee, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you, ma'am. Thank you.