Apollo Pipes Limited — Q1 FY26

Apollo Pipes Ltd Q1 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=mF8reNv21EU Published: 9 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Q1 FI26 earnings content skull of Apollo Pipes Limited hosted by 0:09 9 seconds systematic institutional equities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask 0:18 18 seconds questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0:26 26 seconds zero on attached phone. Please note that this conference has been recorded. I now hand the conference over to Miss Anika 0:33 33 seconds Patnayak from Systematic Institutional Equities. Thank you and over to you ma'am. 0:39 39 seconds Thank you Muskan. On behalf of systematics institutional equities, we welcome you all to the Q1 FI26 conference call of Apollo Pipes Limited. 0:51 51 seconds From the management side, we have Mr. 0:53 53 seconds Samir Gupta, chairman and managing director. Mr. Mr. Arun Agarwal, Joint Managing Director, Mr. Ajay Kumar Jen, 1:03 1 minute, 3 seconds Chief Financial Officer, Mr. Anubhav Gupta, Group Chief Strategy Officer. I will now hand over the call to CMD sir, Mr. Samir Gupta for opening remarks. 1:14 1 minute, 14 seconds Over to you, sir. 1:17 1 minute, 17 seconds Thank you. Good afternoon everyone. This is Samir Gupta, CMD of Apollo Pipes. I have joined today with Mr. Arunar, JMD. 1:25 1 minute, 25 seconds Mr. AJ Jan CFO and Mr. Anub Gupta Group CSO. I would like to extend a warm 1:32 1 minute, 32 seconds welcome to all of you to our Q1 FI26 earnings call. As I had shared in our pre previous interactions, FI25 was one 1:41 1 minute, 41 seconds of the most challenging years for the PVC pipe industry. The sector faced significant headwinds due to weak end 1:48 1 minute, 48 seconds user demand and heightened volatility in raw material price. Unfortunately, these pressures continued the first quarter of 1:57 1 minute, 57 seconds FI26 was impacted primaryly due to in both the private real estate sector and 2:05 2 minutes, 5 seconds government infrastructure spendings. On top of this, the frequent and sharp fluctuation in PBC resin prices 2:12 2 minutes, 12 seconds triggered cautious behavior and continuous deto partners. 2:19 2 minutes, 19 seconds As a result, Apollo pipes experienced a flat year-on-year performance in consolidated sales volume and our 2:26 2 minutes, 26 seconds margins were under pressure due to low capacity utilization and heightened competition across the sector. 2:33 2 minutes, 33 seconds Despite this, we remain focused on our long-term growth strategy and are actively executing a fourpronged 2:40 2 minutes, 40 seconds strategy to navigate the current environment. One, product portfolio expansion. And recently we expanded our 2:48 2 minutes, 48 seconds product range with the addition of PLV ducts, DWC pipe, PE gas pipe and PVCO pipe in the piping segment. In addition, 2:56 2 minutes, 56 seconds we have fored into the UPVC doors and windows category further strengthening our presence in the building material 3:02 3 minutes, 2 seconds space. These strategic additions align with our vision to diversify into adjacent high growth and cater to the 3:12 3 minutes, 12 seconds evolving needs of infrastructure, real estate and utility sector. Each of these products is intended to offerience 3:21 3 minutes, 21 seconds and durability, replacing conventional materials and opening up new markets opportunities for Apollo pipes. Second, 3:29 3 minutes, 29 seconds improving product product mix. We are increasing our product focus on CPVC pipes which is currently contributing to 3:36 3 minutes, 36 seconds 15% of our volume. We are in advanced discussions with the leading flow material supplier to create a joint pitch and strengthen our presence in 3:44 3 minutes, 44 seconds this high margin category. Third, West India plant ramp up with over one year of integration. Our West India facility 3:52 3 minutes, 52 seconds acquired last year is now seeing a steady ramp up in production. This plant is playing a key role in catering to the 3:59 3 minutes, 59 seconds demand in western reserve. Both East India expansion our new plant in Bansi is on track and is expected to commence 4:07 4 minutes, 7 seconds operations in the coming months. This will significantly strengthen our presence in eastern Indian market. On the capital expenditure front, we 4:16 4 minutes, 16 seconds continue to invest in building long-term capacity. We incurred a capex of rupees 70 crores in Q1 following a spend of 166 crores in F525. 4:28 4 minutes, 28 seconds We remain committed to expanding our total installed capacity to 2 lakh 86,000 tons over the next two years without adding any debt to our books. 4:38 4 minutes, 38 seconds Our working capital cycle had remained disciplined at 38 days and we anticipate further improvement as operational 4:46 4 minutes, 46 seconds efficiency scale up. Looking ahead, we expect a more favorable demand environment stating starting from 4:53 4 minutes, 53 seconds September onwards as construction activities are likely to resume post monsoon. Additionally, increased 5:01 5 minutes, 1 second government spendings on infrastructure projects should also boost liquidity and improve cash flows across the ecosystem. 5:08 5 minutes, 8 seconds That concludes our opening remarks. Now we are glad to take questions. Thank you. 5:16 5 minutes, 16 seconds Thank you very much. 5:18 5 minutes, 18 seconds We will now begin the question and answer session. Anyone who wishes to ask question may press star and one on the 5:24 5 minutes, 24 seconds touchstone telephone. If you wish to remove yourself from question Q, you may press star and two. Participants are 5:32 5 minutes, 32 seconds requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question cube assembles. 5:54 5 minutes, 54 seconds the first question is from the line of Haramman Agarwal from Money Stories Asset Management. Please go ahead. 6:02 6 minutes, 2 seconds Um, so in the coming year I was wondering how the volume would pick up in the PVP industry as you could see 6:10 6 minutes, 10 seconds here throughout the industry. Your voice is not audible properly. Can you just please use headset? Is it better now? 6:17 6 minutes, 17 seconds Yes. Uh go ahead. Thank you. 6:19 6 minutes, 19 seconds I was saying in the coming year, how would the volumes for PVC industry pick up looked like? Uh the previous year was a little dull for the industry and how do you expect the competition to be? 6:36 6 minutes, 36 seconds Hi everyone. Uh good afternoon. This is Anub. 6:40 6 minutes, 40 seconds Yes. So if you look at FI26 how it is panning out, Q1 was obviously um I would 6:47 6 minutes, 47 seconds say pretty much washed out. Um April started on a good note. uh it did 6:54 6 minutes, 54 seconds continue in May but then uh by the time June uh came because of the onset of early monsoons uh the the the quarter 7:02 7 minutes, 2 seconds got washed out and uh on uh Y basis our volume is lower by 4% on console basis 7:12 7 minutes, 12 seconds as we are into current quarter July August things are slightly better than 7:18 7 minutes, 18 seconds Q1 assuming that since monsoon came early it will go early as well and we are already seeing that some of the 7:25 7 minutes, 25 seconds construction sites are being cleared up which were stuck because of heavy monsoon in last 60 days. Uh so so by 7:34 7 minutes, 34 seconds like end of August early September monsoon should uh go as well right which will open up the construction sector in 7:41 7 minutes, 41 seconds a in a big way. Um so Q2 should be better than Q1 uh in that sense. Um but I think one of the one of the uh biggest 7:50 7 minutes, 50 seconds challenges what we are seeing is the overall slowdown in the government spends towards the infrastructure right 7:58 7 minutes, 58 seconds and this we are witnessing across product verticals um not only in plumbing but also construction material 8:05 8 minutes, 5 seconds as a sector if we uh look from macro perspective um I mean uh when we look at 8:11 8 minutes, 11 seconds the quarter one results from uh cement tiles um structural steel pipes um 8:18 8 minutes, 18 seconds plywood like all those sectors. So everyone is facing the heat of slowdown in the government uh spending. So FI26 8:27 8 minutes, 27 seconds how we perform or this sector performs in second half it will depend a lot on 8:34 8 minutes, 34 seconds how government spending picks up right which right now is not uh visible uh to 8:41 8 minutes, 41 seconds the great extent but uh but but yes government has lot of commitments towards the large infrastructure 8:49 8 minutes, 49 seconds projects uh some of the sectors which are critical they are they are they are on priority list. So we assume 8:57 8 minutes, 57 seconds that at some point of time um government spends should kickstart and and that's when the whole construction material 9:05 9 minutes, 5 seconds sector including plumbing pipes would see a massive uh massive uh improvement 9:12 9 minutes, 12 seconds which has been lagging for last now continuously 18 to 20 months 9:18 9 minutes, 18 seconds but uh but uh but um um like you know at micro level we are we are having lot of 9:25 9 minutes, 25 seconds levers Right. Macro is one but at micro level the new product introduction in uh for example window profiles which we 9:34 9 minutes, 34 seconds launched last month. So we are seeing a good pipeline building up for that segment and and in next 18 months uh we 9:42 9 minutes, 42 seconds will see good ramp up and quarter on quarter you will see uh the contribution from this uh um um this product line 9:51 9 minutes, 51 seconds adding up to our overall top line. Then what we have done is uh to boost our product mix in terms of CPVC 9:59 9 minutes, 59 seconds contribution which has been stagnant at around 15 16% for last 2 three years we have tied up with one of the largest raw 10:09 10 minutes, 9 seconds material manufacturers of CPVC resin wherein we're going to we are going to co-market 10:16 10 minutes, 16 seconds uh the product right uh and and that supplier is already approved with a lot of 10:23 10 minutes, 23 seconds real estate developers and large uh projects. Um so benefits are already visible um that our CPVC sales are 10:32 10 minutes, 32 seconds growing by like high double digit already right this agreement we signed in July and um and um and and it's 10:40 10 minutes, 40 seconds already visible. So CPVC will uh will contribute a lot in the in the coming months. Then OPVC where we invested 10:48 10 minutes, 48 seconds heavily last year in anticipation of uh uh good demand coming from replacement of DI pipes. So, so that has started but 10:58 10 minutes, 58 seconds because it is dependent on government spends which right now are a bit subdued but the good part what the industry is 11:05 11 minutes, 5 seconds doing is at least um like all the participants are going and making representations uh in front of the government authorities that you should 11:13 11 minutes, 13 seconds uh approve OPVC over uh over the traditional conventional product and and we are seeing good traction good 11:22 11 minutes, 22 seconds adoption from the government uh agency agencies. So whenever state governments get funds to to resume their water 11:31 11 minutes, 31 seconds infrastructure improvement projects, we will see good demand uh from OPBC 11:38 11 minutes, 38 seconds sector. Now this starts in Q3, Q4. It will depend on how government funds come up. 11:46 11 minutes, 46 seconds Then um then we have added two three new product lines like uh duct pipes, DWC 11:53 11 minutes, 53 seconds pipes and gas fitting pipes. Right. The idea is to is to is to test the waters in these product categories make small 12:02 12 minutes, 2 seconds investments and whichever product picks up right we increase the capacity and take it to the next level. So we assume 12:11 12 minutes, 11 seconds um we are confident that uh these small segments will start contributing meaningfully over the next like you know 12:20 12 minutes, 20 seconds few quarters and other than that we have our van vanasi plant which will start 12:27 12 minutes, 27 seconds towards end of this calendar year uh right um it's a it's a it's a it's a big plant in terms of the universe it's 12:36 12 minutes, 36 seconds going to cater to East India right we have been absent from that uh market lot of uh new construction infrastructure 12:43 12 minutes, 43 seconds spends are coming up in uh in uh eastern Uttar Pradesh and and Bihar Jarkan built. So, so, so that will give 12:51 12 minutes, 51 seconds additional volumes and uh now Kasan has been like uh almost 15 months into our 12:59 12 minutes, 59 seconds possession, 14 months to be precise and uh and u and uh we have fixed a lot of 13:06 13 minutes, 6 seconds problems there, right? One was of course the investment what we made but then other than that the supply chain the the the distribution network lot of a lot of 13:15 13 minutes, 15 seconds uh issues what the company was grappling for last 10 12 years we fixed those issues in last 13 14 months. So we will 13:23 13 minutes, 23 seconds start seeing uh the the the results um as soon as we see some um pick up in the 13:29 13 minutes, 29 seconds end demand right um um so so so we have a lot of levers um Arman right so we 13:37 13 minutes, 37 seconds believe that for FI26 we should be we should be growing at um double digit uh 13:44 13 minutes, 44 seconds in terms of volume right um now whether it is low double digit mid double digit um I think um things will be more clear 13:54 13 minutes, 54 seconds uh how quarter 2 pans out. 14:00 14 minutes Nice to hear that we have so many micro levels uh to help with the macro scenario. Thanks. Thanks. 14:08 14 minutes, 8 seconds Thank you. Thank you. 14:14 14 minutes, 14 seconds A reminder to all the participants you may press star and one to ask question. 14:20 14 minutes, 20 seconds The next question is from the line of Surit Bal from Eyesight Fine Trade Private Limited. Please go ahead. 14:28 14 minutes, 28 seconds Yes. Good afternoon to the uh Apple Pipes team and my question is specifically to Mr. Alo Gupta. It's Mr. 14:35 14 minutes, 35 seconds Alo Gupta online. Yeah, please go ahead. 14:40 14 minutes, 40 seconds Yes sir. So my I have a telescopic question for you going ahead looking looking forward. Uh how is Apollo pipes 14:47 14 minutes, 47 seconds planning to expand uh its uh its footprint into housing and infrastructure and uh are you planning 14:55 14 minutes, 55 seconds to integrate smart metering IoT enabled plumbing plumbing systems or uh recycled polymer 15:04 15 minutes, 4 seconds solutions into your product road map in the next uh 5 to 10 10 years and uh do you think uh this could possibly help 15:12 15 minutes, 12 seconds Apollo pipes position itself as uh sustainabilitydriven leader in the next uh gen management. Yes, thank you. That was my question. 15:25 15 minutes, 25 seconds Hi Sujit, good afternoon. So um so so see I mean if you look at our housing segment today, right? It contributes 15:33 15 minutes, 33 seconds around 60% to our overall revenue which used to be like 40% 5 years back then it 15:40 15 minutes, 40 seconds moved to 45 50% 2 3 years ago and now today it is at 60%. And as all the new 15:47 15 minutes, 47 seconds products what we have added to our portfolio this mix will keep on improving towards housing segment right 15:54 15 minutes, 54 seconds so eventually it should settle at around 70% 75% in next 3 4 years. Now this smart 16:02 16 minutes, 2 seconds metering yes we are hearing lot of lot of noise right from the government side. 16:09 16 minutes, 9 seconds Um so we are evaluating this segment already but nothing concrete is on um is 16:16 16 minutes, 16 seconds on drawing board as of now. Maybe in next 3 to four months we would be in position to tell you that how this uh segment is going to pan out. What are 16:24 16 minutes, 24 seconds the government commitment uh commitments to to uh to focus on this 16:31 16 minutes, 31 seconds segment? Because what we have seen is that unless there is a mega push from the government side right to to 16:39 16 minutes, 39 seconds encourage household owners to go for smart metering etc. Things uh things 16:46 16 minutes, 46 seconds will not move right. We saw that in the electrical side as well. Correct. So so so we are having our 16:56 16 minutes, 56 seconds like we are being alert right we are alert how industry is going to shape up in terms of smart metering next 5 to 10 17:03 17 minutes, 3 seconds years yes definitely it it may it may become a significant portion of the house housing plumbing industry in India 17:12 17 minutes, 12 seconds but uh time is not uh right as of now but we are keeping our ears like on the ground what's happening there. 17:22 17 minutes, 22 seconds Great. Thank you very much. So I just uh just confirming again. So uh plumbing uh integrating smart 17:30 17 minutes, 30 seconds plumbing systems is in the cards of Apollo bites down down the line. Yes, definitely. Yes. And definitely yes. And 17:38 17 minutes, 38 seconds we're talking to some international players also um that that if at all there is demand 17:45 17 minutes, 45 seconds in India, we should be ready with the technology. 17:49 17 minutes, 49 seconds Great. Great. Great. Thank you for the insights and uh best of luck for all your future end. Thank you very much. Thank you. 17:58 17 minutes, 58 seconds Thank you. 18:00 18 minutes The next question is from the line of Bat Kumar from Choice Institutional Equities. Please go ahead. 18:08 18 minutes, 8 seconds Hello. Yeah. Hello. 18:11 18 minutes, 11 seconds So sir, what is the security going from 15%? 18:19 18 minutes, 19 seconds Barat can you please repeat the question? Hello. 18:25 18 minutes, 25 seconds Yeah, go ahead. Can you please repeat your question? 18:28 18 minutes, 28 seconds Yeah, one second. Uh like what is the security contribution going ahead like current 15%. 18:36 18 minutes, 36 seconds So with all the u all the efforts what we are putting in to boost our CBBC sales uh we are highly confident that 18:46 18 minutes, 46 seconds the contribution will improve above 20% in next 1 to two years versus 15% today. 18:54 18 minutes, 54 seconds Okay. Okay. Fine. Thank you. That's from my Thank you. A reminder to all the 19:02 19 minutes, 2 seconds participants. You may press star and one to ask question. 19:07 19 minutes, 7 seconds The next question is from the line of Udit Kaji from Yes Security Limited. Please go ahead. 19:15 19 minutes, 15 seconds Yeah. Hi team, good afternoon. Thank you for taking up my question. Uh so can you please explain in Apollo pipes on a standalone basis we have maintained the 19:24 19 minutes, 24 seconds volumes Y on Y but realization has taken a sharp knob. So is it purely because of raisin or would you like to elaborate more on the comparative intensity please? 19:35 19 minutes, 35 seconds So that there are both factors. Yes. One is that raisin is down by 2 three rupees a kilo. Um if you if you look at like um 19:42 19 minutes, 42 seconds 1st April versus 30th June, right? So some decline in the NSR definitely because of uh low resin prices and yes 19:50 19 minutes, 50 seconds um the competitive intensity is high at the moment because demand is uh sluggish 19:57 19 minutes, 57 seconds and uh each of the PVC pipe companies uh uh each each of the PVC pipe company has increased the capacities in last 2 three 20:06 20 minutes, 6 seconds years. So there is a pressure on um on all of us as a sector to uh to ramp up the capacities. So so we are seeing that 20:15 20 minutes, 15 seconds players right from the top leader to mid tier or to the low tier right people are going very very aggressive on reducing 20:24 20 minutes, 24 seconds the selling prices uh just in order to fill their capacities. Um so so yes uh 20:30 20 minutes, 30 seconds it's a it's a mix of uh both the factors going ahead uh with this postponement in 20:39 20 minutes, 39 seconds adding which is expected only from Q3 how do you see specifically the standalone or Apollo pipes uh realization moving for the year and so on. 20:56 20 minutes, 56 seconds So I guess I guess um see I mean um NSR we don't give too much weightage which 21:03 21 minutes, 3 seconds is related to the increase or decrease in the PVC prices because that is not in our control at all. Right? Uh so if you 21:11 21 minutes, 11 seconds look at our IITA spreads also we try to protect our ITA spreads in terms of rupees per ton or rupees per kg. 21:19 21 minutes, 19 seconds Correct? So no comments on like how NSR would appear um with the movement in the 21:26 21 minutes, 26 seconds PVC prices but uh but we do believe that in next 2 to 3 months once the end 21:33 21 minutes, 33 seconds demand picks up right the the aggression which is being shown by each 21:41 21 minutes, 41 seconds of the PVC pipe companies that shall narrow down a bit right and and at 21:49 21 minutes, 49 seconds industry level uh the selling prices the NSR should uh inch up. 21:58 21 minutes, 58 seconds Got it. Got it. And in terms of your product mix uh for the quarter or Yeah. 22:04 22 minutes, 4 seconds for the year, what would be the agree non-aggree mix if you can help with that? That's it for me. 22:09 22 minutes, 9 seconds Yeah. So 60% is housing, 40% is agree for this quarter, right? Yeah. For Q1. Yes. Okay. 22:17 22 minutes, 17 seconds Thank you. Thank you so much. Thank you. 22:23 22 minutes, 23 seconds The next question is from the line of Sneighha from Noama Wealth. Please go ahead. 22:28 22 minutes, 28 seconds Hi, good good afternoon team and thanks a lot for the opportunity. Um just couple of questions here. Uh given there is current weakness in demand and of 22:36 22 minutes, 36 seconds course we are hopeful of government's picking uh you know spending picking up things improving. 22:42 22 minutes, 42 seconds uh would you like to give some guidance for this year in terms of uh volume growth uh uh both Kisan and you know Apollo put together along with some 22:50 22 minutes, 50 seconds margins improvement we did mention that we are looking for 22:57 22 minutes, 57 seconds double digit growth definitely now now in terms of volume now this is like low double digit mid- double digit I mean 23:05 23 minutes, 5 seconds right this will we will be more clear that how Q2 pans out right And um and what we can tell you is that 23:14 23 minutes, 14 seconds we are ready for uh high double digit growth also correct for the rest of the 23:22 23 minutes, 22 seconds 8 months. Uh but yes a lot will depend that how macro pans out but worst case 23:28 23 minutes, 28 seconds we would be growing our sales volume um by double digit low to mid double digit. 23:36 23 minutes, 36 seconds And what about the margins? Where do you see margins going uh you know up because of course we have been uh uh speaking about going to double digit margins also 23:45 23 minutes, 45 seconds uh but even this particular quarter margin seems to be slightly on the subdued side of course there is competition there is price pressure uh 23:52 23 minutes, 52 seconds but given uh let's say you know once ADD is there into place what could a margin trajectory look like 23:59 23 minutes, 59 seconds so if we um so so see in our business model we don't look at percentage basis right we look at rupees uh per uh ton 24:08 24 minutes, 8 seconds If you look at like Apollo pipes on standalone basis, it's at around 9,000 rupees a ton and Kasan is at 4,000 a ton in Q1. 24:16 24 minutes, 16 seconds Definitely once the capacities are utilized further right from Q1 levels, 24:23 24 minutes, 23 seconds Apollo will go towards 10 to 11,000 rupees a ton which we have been present at this level for many quarters now. 24:31 24 minutes, 31 seconds Correct? So we can hit 11,000 rupees per ton in pipes standalone and Kissan has a 24:38 24 minutes, 38 seconds lot of room to improve. Correct. Uh we are just waiting for sales pickup, revenue pickup. Whenever it happens, 24:46 24 minutes, 46 seconds Kissan will immediately jump towards 78,000 a time. Understood. Understood. Thanks. Thanks. 24:54 24 minutes, 54 seconds Thanks a lot and all the best. Thank you. 24:59 24 minutes, 59 seconds A reminder to all the participants. You may press star and one to ask question. 25:08 25 minutes, 8 seconds The next question is from the line of yogani from Omega portfolios advisers. Please go ahead. 25:16 25 minutes, 16 seconds Hi, thanks for taking my question. Uh so I have two questions. First being about the sales volume. So while we had a um 25:23 25 minutes, 23 seconds slightly negative sales volume y other PBC players have done would you say 25:30 25 minutes, 30 seconds flattish to you know positive growth. So is there a reason why a company has uh what you say degrown slightly? Is it 25:38 25 minutes, 38 seconds geography specific or is it just general overall? 25:46 25 minutes, 46 seconds So yoga if you look at u the um the the sales volume mild sales volume which our 25:53 25 minutes, 53 seconds competitors have delivered right uh you would also see that their margin um in terms of rupees per kg that has also 26:01 26 minutes, 1 second fallen very very sharply correct um so so it is high it is like clearly visible that um I mean the competitors are 26:10 26 minutes, 10 seconds reducing their NSR and compromising on margins way too much to uh to to demonstrate 26:18 26 minutes, 18 seconds or to try to gain sales volume growth, right? So, so which we at some point stopped right 26:27 26 minutes, 27 seconds because uh I mean we are sure that u so one is that our fixed costs are under 26:35 26 minutes, 35 seconds control right um it's not that we have too much of uh high fixed cost right so that we have 26:42 26 minutes, 42 seconds to push our volumes uh way too much where we keep on compromising on our selling price and and and margins second 26:51 26 minutes, 51 seconds is that um we are not losing confidence in the growth prospects of this industry right it's just a kind of uh I would say 27:00 27 minutes a weak bad phase which will go away because this stress in the industry and 27:07 27 minutes, 7 seconds players selling below their like uh cost right they those smaller weaker players 27:16 27 minutes, 16 seconds will vanish right and then um and when with the demand coming back the supply would be trimmed, right? So, good days 27:24 27 minutes, 24 seconds have to come back, right? They have to return, which we are hopeful should happen from Q3 onwards, correct? So, so, 27:33 27 minutes, 33 seconds so we are not uh too much bothered or concerned about uh having like um mild volume growth and further compromise our uh spreads. 27:46 27 minutes, 46 seconds Fair enough because historically we've always gained market share. So along those lines they wanted to understand what is our market share today and what is our goal for market share couple of 27:54 27 minutes, 54 seconds years later right so see I mean um with the revenue run rate what we are having today is 28:01 28 minutes, 1 second around 1 1200 1300 crores on full year basis right and the industry should be like around 40 45,000 crores uh right uh 28:12 28 minutes, 12 seconds so so so that way uh our market share is around 2 and a half 3% uh yoke 28:20 28 minutes, 20 seconds And what would we be expecting as a market share say 5 years later or 3 years later right so see I mean the capacity is what 28:27 28 minutes, 27 seconds we have put in of almost 286,000 tons right now it is 22 2230 but eventually it will move to 286,000 tons in next 1 28:35 28 minutes, 35 seconds to one and a half years now that will give us a revenue of around 3,000 crores yo right and the industry may um and we 28:45 28 minutes, 45 seconds expect that to achieve in next 3 4 years of course it keeps on like getting uh extended because uh macro 28:54 28 minutes, 54 seconds hasn't supported us at all. So at 3,000 cr revenue with industry um size of like 29:02 29 minutes, 2 seconds 50,000 crores let's assume right our market share should be like 5%. 29:09 29 minutes, 9 seconds Okay brilliant. Another question about the conversion of um warrants. Um could you give us some color about what's been happening regarding that? Has more money 29:17 29 minutes, 17 seconds been taken by the company from the um from the warrants? 29:23 29 minutes, 23 seconds Yeah. Right. So we did issue warrants last quarter, right? Uh uh to an Oman based fund, Kitara Capital, right? Um um 29:32 29 minutes, 32 seconds the total investment is 110 crore rupees. 25% uh money came uh last quarter right the idea is to the because 29:41 29 minutes, 41 seconds these are tough times right but we keep but we we have been into hyper capex mode yoke right and we want to continue 29:49 29 minutes, 49 seconds to build capacities for new products to cater into new geographies um since earnings are slow right so cash 29:58 29 minutes, 58 seconds flow generation is also slow correct so we want to ensure that our balance sheet doesn't get stretched at any level to 30:06 30 minutes, 6 seconds fund this capeex. So we are happy to raise capital and uh and fund this capeex because we know that whenever 30:13 30 minutes, 13 seconds industry will turn around um um the the revenue uh I mean uh we could we would 30:21 30 minutes, 21 seconds sweat like you know these assets two and a half three time which is the average for this industry. we our our uh our uh 30:29 30 minutes, 29 seconds our return profile like in including roe it will it will boost u a lot right but 30:38 30 minutes, 38 seconds u but we don't want to strain our balance sheet at any given amount of time yes I fully agree you wanted to understand the quantum that has been 30:46 30 minutes, 46 seconds received and what what is left outstanding and when we would see that if you could just give that break up so I told you know 110 cr is a total 30:53 30 minutes, 53 seconds investment commitment Right. 25% came in last quarter. Rest 75% uh will come in within next 18 months. 31:04 31 minutes, 4 seconds Okay. All right. Thank you so much. 31:09 31 minutes, 9 seconds Thank you. A reminder to all the participants you may press star and one to ask question. The next question is 31:17 31 minutes, 17 seconds from the line of Paris Gupta from Fair Value Capital. Please go ahead. 31:28 31 minutes, 28 seconds I'm sorry to interrupt. Your voice is not clear. 31:35 31 minutes, 35 seconds So your voice isn't audible properly. Hello. 31:44 31 minutes, 44 seconds So I just request you to rejoin the queue again. 31:52 31 minutes, 52 seconds The next question is from the line of Sneha from Noama. Please go ahead. 31:57 31 minutes, 57 seconds Hi, thanks a lot for the followup opportunity. Just wanted to deep dive a bit into your capex. Uh you have been into the capex mode for quite some time 32:06 32 minutes, 6 seconds now. What is the capex which is likely to get you know completed this particular year and with a total cross block where can you see your top line? 32:15 32 minutes, 15 seconds And similarly the second part of the question would be you have been mentioning about higher combat intensity uh which is you know leading to of 32:23 32 minutes, 23 seconds course uh you know um the volumes not being achieved for a while now. Um just wanted to understand uh you know when do 32:31 32 minutes, 31 seconds you see this competency easing out? You also mentioned that you know smaller players will die up. Are you seeing any of these activities actually happening on the ground? 32:43 32 minutes, 43 seconds Thanks NA. So coming to the first part uh which is for the capeex commitments we have right um so so u today we are so 32:52 32 minutes, 52 seconds today we are at a capacity of around 230,000 tons right and uh in our current business plan we will take it to 285,000 33:01 33 minutes, 1 second tons now the residual cex to achieve this is around 100 cr rupees right um in 33:07 33 minutes, 7 seconds Q1 we already spent 68 69 cr rupees correct and in uh rest of 3 quarters we 33:15 33 minutes, 15 seconds should be another 70 80 cr rupes right and when we enter into fi26 some residual 30 40 cr may be left over okay 33:23 33 minutes, 23 seconds um so so so so one is that and then um once once industry gets uh like you know 33:31 33 minutes, 31 seconds in a in a better mode which we expect say next 6 to 9 months then we will take a call to see if uh we have to go for a 33:40 33 minutes, 40 seconds green field plant in south India which is definitely in our wish list but time is not right for now and it may 33:48 33 minutes, 48 seconds require another 150 to 100 cr kind of investment whenever we think about it but nothing on uh on drawing board as of 33:56 33 minutes, 56 seconds now and um and that will be funded from internal cash flows um um I mean you have seen that our working capital is 34:05 34 minutes, 5 seconds getting better um year on year right now we are at 35 to 40 days um this will uh 34:11 34 minutes, 11 seconds this will go towards 30 days of cycle, right? um um maybe by end of FI 26 or or 34:18 34 minutes, 18 seconds first half of FI 27 and um and um and uh it should remain between 25 to 30 days 34:26 34 minutes, 26 seconds at a sustainable rate going forward and um and coming 34:34 34 minutes, 34 seconds yeah go ahead what I actually wanted to understand is you know when I was asking about the competitive intensity and the capex what I understand is we are 34:41 34 minutes, 41 seconds already operating at the 4550% utilization That means there is immense scope of improvement here. Uh while that being there we are further adding 34:50 34 minutes, 50 seconds capacity. um is actually like a demand a problem or competitive intensity is a problem because if comp intensity is a 34:57 34 minutes, 57 seconds problem properly do we have answer to when it get eases when and you know when are we likely to you know utilize this capacity that's a broader question I'm just trying to ask 35:06 35 minutes, 6 seconds sure I mean the both are linked right why there is hyper competition in the industry today because demand has slowed 35:14 35 minutes, 14 seconds down and second in last four five years lot of capacity came up correct So, so, 35:22 35 minutes, 22 seconds so what had happened was that after co right next two three years like from 2020 to 2023 those three years demand 35:30 35 minutes, 30 seconds was very strong especially in the PVC plumbing sector right uh plus agree because government had lot of push on 35:38 35 minutes, 38 seconds the infrastructure which boosted sales for HDP pipes etc housing plumbing 35:45 35 minutes, 45 seconds you you yourself know that uh um after co the home improvement ment segment uh in India it started doing pretty well. 35:55 35 minutes, 55 seconds So each construction material performed uh pretty well including um including uh PVC pipes and then there was increase in 36:04 36 minutes, 4 seconds uh PVC resin right it from 78 rupees a kilo it moved to 170 180 rupees a a kilo 36:11 36 minutes, 11 seconds right so during that time all the all the players thought that this golden period would continue right and in 36:20 36 minutes, 20 seconds anticipation they they they increased their capacities Right. Um um the top players were having strong 36:28 36 minutes, 28 seconds balance sheet. So so so the capacities came without that smaller players they had smaller balance sheets. So they 36:35 36 minutes, 35 seconds leveraged and put up the capacities. Now last two years have been uh bad in terms 36:42 36 minutes, 42 seconds of demand right and uh and and it increased the competitive intensity now 36:49 36 minutes, 49 seconds right demand is less supply is more so each player wants to fill its capacity. 36:53 36 minutes, 53 seconds Correct? And that's why this uh decline in the IITA spreads for the companies in 36:59 36 minutes, 59 seconds last uh 7 8 quarters you would see right uh including um the leaders. So so so so 37:08 37 minutes, 8 seconds but what happens is that we are at a time when uh companies like you know organized players top 78 companies are 37:17 37 minutes, 17 seconds operating with margins which was like 5 6% lower than what they were operating 2 years ago 3 years ago correct so players 37:26 37 minutes, 26 seconds who were operating at 7 8% margin now they're operating at like you know they're barely breaking even so at some 37:33 37 minutes, 33 seconds point of time those players will go away. Correct. And and yes, we are 37:40 37 minutes, 40 seconds already seeing lot of deals on the table. Correct. In like weaker players capacities coming for sale. Um I mean 37:48 37 minutes, 48 seconds every day, every week a banker would show us a deal, right? So so definitely there is lot of stress, right? Um I 37:56 37 minutes, 56 seconds think it is just a matter of uh uh few quarters that we'll see lot of cleanup 38:03 38 minutes, 3 seconds um in the sector and um and um and um and and after that gets cleared up we 38:11 38 minutes, 11 seconds will be we will be like you know few of the large ones and strong uh medium ones 38:18 38 minutes, 18 seconds who will be again controlling the market. So, so, so till that time the pain may continue, right? The pain may 38:26 38 minutes, 26 seconds continue but uh but uh but yes at some point um I mean um it it will it will reverse for sure. 38:36 38 minutes, 36 seconds That was quite helpful. Thanks. Thanks. Thank you. 38:44 38 minutes, 44 seconds The next question is from the line of Paris Gupta from Fair Value Capital. Please go ahead. 38:54 38 minutes, 54 seconds Oh yes sir, but your voice is still breaking. 39:01 39 minutes, 1 second You just go ahead with a question. 39:11 39 minutes, 11 seconds No, I can't hear anything. 39:24 39 minutes, 24 seconds Hello. 39:38 39 minutes, 38 seconds Hello. Can you just go with the question please again? 39:42 39 minutes, 42 seconds Sorry, I've been trying to talk but there is some issue. Uh now it's fine. Sorry, it's a little bit fine. 39:52 39 minutes, 52 seconds Okay. So on the cross 40:04 40 minutes, 4 seconds No sir, we can't hear you properly. 40:19 40 minutes, 19 seconds Is it? 40:21 40 minutes, 21 seconds No. So, we can't hear you proper. We can't get your question. What you asking? 40:40 40 minutes, 40 seconds You can disconnect the call and again they again rejoin the call. 40:53 40 minutes, 53 seconds A reminder to all the participants you can press star and one to ask question. 41:37 41 minutes, 37 seconds The next question is down the line of Karen B from AMC. Please go ahead. Hi sir, thank you for the opportunity. 41:46 41 minutes, 46 seconds uh uh how do you see the ROC calculation now uh at at assuming that PBC prices 41:54 41 minutes, 54 seconds move up by 5 to 6 rupees even if any of these one BIS or ADD come through by the year end 42:07 42 minutes, 7 seconds available? Yeah. Yeah. Um so Karan see I mean ROC 42:14 42 minutes, 14 seconds is uh something u what we see right um optically it it is like very very low 42:21 42 minutes, 21 seconds and very concerning for us right but one thing u what makes us confident that um at least we are on right track right to 42:31 42 minutes, 31 seconds achieve the desired ROC levels upward of like above 20% right which we have always maintained so why it is low today 42:38 42 minutes, 38 seconds is that we have invested invested almost like 800 cr rupes uh in gross block today right and 200 cr is our working 42:47 42 minutes, 47 seconds capital right so 1,000 cr is what our capital employed today uh near about and um and it is generating revenue of 42:55 42 minutes, 55 seconds around 1 1200 1300 cr rupes with iita of 100 cr rupes right 9200 cr rupes so 43:03 43 minutes, 3 seconds that's why uh that's why it it it appears low single digit but this 1,000 K of working this capital employed it 43:12 43 minutes, 12 seconds can generate 200 2,500 to 3,000 K kind of revenue right and and 43:21 43 minutes, 21 seconds 250 to 300 uh kind of IITA right at same capital employed we need not hardly 150 43:28 43 minutes, 28 seconds cr rupees will be further invested from here on to achieve that 2500 to 3,000 cr of revenue so so so it happens in 2 43:38 43 minutes, 38 seconds years 3 years right and then you will see that um improvement in ROC which will be very very sharp right from 1200 43:47 43 minutes, 47 seconds we go to 14500 and then uh 2,000 2,500 3,000 so so we can promise you Karan 43:56 43 minutes, 56 seconds that that our capital employment will not increase to achieve these revenue numbers because we are already heavily invested in the business in terms of 44:04 44 minutes, 4 seconds gross block and working capital will only get better right uh in number of days. So absolute working capital will 44:12 44 minutes, 12 seconds uh may remain same even if we grow at 25 30% uh revenue for the next 3 4 years 44:21 44 minutes, 21 seconds and uh just wanted to understand uh Kisan has been delivering very strong gross margins but it has not been translated into operating profits and 44:28 44 minutes, 28 seconds net profits. So what is our role maybe in in a year's time how do we plan to have some have some profitability 44:37 44 minutes, 37 seconds uh the epida and the pat levels so karan um like you rightly pointed out 44:44 44 minutes, 44 seconds that yes gross spreads in kisan are very very encouraging right um now now why it doesn't translate into better ITA 44:53 44 minutes, 53 seconds spreads only because of uh of like low capacity utilization Right. Uh the I 45:01 45 minutes, 1 second mean the company has been in the range of like 280 300 cr kind of revenue right which which 45:09 45 minutes, 9 seconds it should generate like you know 5 600 cr rupes. So that's the capacity which is already there and some of the fixed costs are also aligned 45:19 45 minutes, 19 seconds as per that. Okay. So, so it it's a matter of like u a few quarters when we 45:26 45 minutes, 26 seconds see like its revenue jumping 25 30% y you'll see that translation of better 45:34 45 minutes, 34 seconds gross spreads moving down the IITA level and you mentioned of a few inorganic 45:42 45 minutes, 42 seconds opportunities which are there on the table. So are we evaluating that as well? because I believe green field capacities will take know a year and 45:51 45 minutes, 51 seconds year and a half and again 6 months to stabilize. Uh so so in case if you feel that you know PVC prices will kind of 45:59 45 minutes, 59 seconds move north so it's better for you to have a ready capacity. 46:04 46 minutes, 4 seconds So it's only south India we are wanting to have a full-fledged plant Karan right 46:10 46 minutes, 10 seconds um I mean uh we have not got any opportunity on the table which uh which 46:18 46 minutes, 18 seconds mirrors what we want in south India like full-fledged plant like Kasan in west was mirror of like you know what we 46:24 46 minutes, 24 seconds actually wanted um plant in Maharashtra but uh but so far nothing on our table 46:31 46 minutes, 31 seconds which could mirror what we want in South India All right. Got it. Thank you. Thank you for the detail explanation. 46:41 46 minutes, 41 seconds Let's prom. Thank you. 46:46 46 minutes, 46 seconds The next question Krishna is from the line of H Modi from Ashika group. Please go ahead. 46:52 46 minutes, 52 seconds Good afternoon to the team. Uh sir, could you highlight more on how our order book is panning out on the UPVC 47:00 47 minutes door and window segment? How has the response been? And secondly also on the newer products that we are looking at like especially DCW pipes or some of the 47:09 47 minutes, 9 seconds newer products that we're trying to get into. If you could elaborate a little more on that as well. 47:17 47 minutes, 17 seconds So yes UPBC we just started the commercial production right? Um I mean u 15 days ago you must have looked at our 47:25 47 minutes, 25 seconds perilies. Uh so right now we are um at a point where we are going and aggressively pitching this product to 47:33 47 minutes, 33 seconds the key stakeholders which are mainly contractors, real estate uh companies and uh and government agencies. It 47:40 47 minutes, 40 seconds requires a lot of approvals, right? Uh so so so order booking um is building up 47:50 47 minutes, 50 seconds right. for the full year we should be we should be doing uh kind of 50 cr kind of 47:56 47 minutes, 56 seconds revenue from this uh vertical but uh most of this will come in like second half right uh uh Q2 will not be a 48:06 48 minutes, 6 seconds significant number but uh but what we can tell you is that the that the response what we are getting right from 48:14 48 minutes, 14 seconds the contractors and developers today uh we are confident that uh fully Here we should close around 50 cr rupees and 48:22 48 minutes, 22 seconds which will mainly come in the second half. Got it. Got it. 48:27 48 minutes, 27 seconds And secondly on the newer products especially DC something like DCW pipe what is the thought process and how are we looking at it going forward because 48:36 48 minutes, 36 seconds the capacity that we had initially planned we would have planned did we have these newer products in mind or is it more of a case of just trying to sweat our assets more? 48:47 48 minutes, 47 seconds So see I mean uh we had uh space available in our plants right um so so it's just u installation of a machine 48:56 48 minutes, 56 seconds right which doesn't require any green field uh capeex right it's more of brownfield capex now the idea to get 49:05 49 minutes, 5 seconds into these product categories um is of course diversify our our portfolio right uh um um some of the products are sold 49:14 49 minutes, 14 seconds through same channel right U for some products we need to create new channel like for UPVC for gas pipes right we 49:21 49 minutes, 21 seconds will we are creating totally new channel um um and and any product um may click right um and and and then we can go big 49:30 49 minutes, 30 seconds on that so that's the idea right to keep on introducing new products experimenting with new product lines and uh and and 49:39 49 minutes, 39 seconds have something in our kitty which can contribute like 5 to 10% to our overall revenue Um right. Um uh so so that's how 49:48 49 minutes, 48 seconds we would be achieving 20 25% of revenue growth uh on a long-term basis. Uh yes. 49:55 49 minutes, 55 seconds Got it. Got it. All the best sir. Thank you. 50:00 50 minutes Thank you. A reminder to all the participants you may press star and one to ask question. 50:22 50 minutes, 22 seconds as that was the last question. I would now hand the conference over to Mr. Ajay Kumar Jeene, chief financial officer for the closing comments. Over to you, sir. 50:32 50 minutes, 32 seconds Thank you all for taking the time out to join us on this call. I hope we have been able to answer all your questions satisfactoryily. Should you need any 50:41 50 minutes, 41 seconds further clarifications or would like to know more about the company, please feel free to contact our team. Thank you once again. 50:50 50 minutes, 50 seconds Thank you on behalf of systematic institutional equities. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.