Apollo Pipes Limited — Q3 FY26

Apollo Pipes Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=j9Q9a5e0zYw Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Q1 F526 earnings conference call of Apollo Pikes Limited 0:08 8 seconds hosted by systematic institutional equities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you 0:17 17 seconds to ask 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 is required. I now hand the conference over to Miss Anshika 0:33 33 seconds Patnay 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. 1:09 1 minute, 9 seconds I will now hand over the call to CMD, Sir Mr. Samir Gupta for opening remarks. Over to you, sir. 1:17 1 minute, 17 seconds Thank you. Good afternoon everyone. This is Samir Gupta, CN of Apollo Vibes. I have joined today with Mr. Arunagra, 1:25 1 minute, 25 seconds JMD. Mr. AJ Jan CFO and Mr. Anog Gupta Group CSO. I would like to extend a warm 1:32 1 minute, 32 seconds miracle to all of you to our Q1 FI26 earnings. As I had shared in our pre previous interactions, FI25 was one of 1:41 1 minute, 41 seconds 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 policy in raw material pricing. Unfortunately, these pressures continued the first quarter of 1:57 1 minute, 57 seconds FY26 was impactedly 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 four strategy to 2:41 2 minutes, 41 seconds navigate the current environment. One, product portfolio expansion. Recently we expanded our product range with the 2:49 2 minutes, 49 seconds addition of PLV ducts DWC pipe, PE gas pipe and PVCO pipe in the piping segment. In addition, we have fored into 2:57 2 minutes, 57 seconds the UPVC doors and windows category further strengthening our presence in the building material space. These 3:04 3 minutes, 4 seconds strategic additions align with our vision to diversify into adjacent high growth and cater to the evolving needs 3:13 3 minutes, 13 seconds of infrastructure, real estate and utility sector. Each of these products is easier to offer in and durability, 3:22 3 minutes, 22 seconds replacing conventional materials and opening up new markets opportunities for Apollo pipes. Second, improving product 3:30 3 minutes, 30 seconds product mix. We are increasing our product focus on CPVC pipes which is currently contributing to 15% of our 3:37 3 minutes, 37 seconds volume. We are in advanced discussions with a leading flow metal supplier to create a joint pitch and strengthen our presence in this high margin category. 3:45 3 minutes, 45 seconds Third, West India plant ramp up with over one year of integration. Our West India facility acquired last year is now seeing a steady ramp up in production. 3:56 3 minutes, 56 seconds This plant is playing a key role in catering to the demand in western regard. Fourth, east India expansion. 4:02 4 minutes, 2 seconds Our new plant in Banasi is on track and is expected to commence operations in the coming months. This will significantly strengthen our presence in 4:11 4 minutes, 11 seconds eastern Indian market. On the capital expenditure front, we continue to invest in building long-term capacity. We 4:20 4 minutes, 20 seconds 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 2 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 spending on infrastructure project 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 queue, 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 PBC industry as you could see 6:10 6 minutes, 10 seconds here throughout the industry. So 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 every good afternoon. 6:38 6 minutes, 38 seconds This is an Yes. Uh 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 uh 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 7:11 7 minutes, 11 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 uh 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 uh this we are witnessing across product verticals um not only in plumbing but also construction material 8:04 8 minutes, 4 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 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 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 um uh 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 real estate developers and large uh 10:26 10 minutes, 26 seconds projects. Um so benefits are already visible um that our CPVC sales are growing by like high double digit 10:34 10 minutes, 34 seconds already. Right? This agreement we signed in July and um and um and and it's already visible. So CPVC will uh will 10:42 10 minutes, 42 seconds contribute a lot in the in the coming months. Then OPVC where we invested heavily last year in anticipation of uh 10:51 10 minutes, 51 seconds uh good demand coming from replacement of DI pipes. So, so that has started but because it is dependent on government 10:59 10 minutes, 59 seconds spends which right now are a bit subdued but the good part what the industry is doing is at least um like all the 11:07 11 minutes, 7 seconds 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 uh OPVC 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 Kisan 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 uh one was for the investment what we made but then other than that the supply chain the the the distribution network lot of lot of uh 13:15 13 minutes, 15 seconds 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 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 double digit uh in terms of volume right 13:46 13 minutes, 46 seconds um now whether it is low double digit mid double digit um I think um things will be more clear uh how quarter 2 pans out. 14:00 14 minutes Nice to hear that we have so many micro levelers uh to help with the macros in Adam. 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 Deep Patel from Eyesight Fine Trade Private Limited. Please go ahead. 14:28 14 minutes, 28 seconds Yes. Good afternoon to the Apollo team and my question is specifically to Mr. 14:34 14 minutes, 34 seconds Alo Gupta. It is to Mr. 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 Apple Pipe 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 5 to 10 10 years and uh do you think uh this could possibly help Apollo 15:13 15 minutes, 13 seconds 5 position itself as uh sustainabilitydriven leader in the next uh gener management. Yes, thank you. 15:21 15 minutes, 21 seconds 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? Um 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 uh commitments to to uh to focus on this segment because what we have seen 16:33 16 minutes, 33 seconds is that unless there is a mega push from the government side right to to encourage household owners to go for 16:42 16 minutes, 42 seconds smart metering etc things uh things will not move right we saw that in the 16:48 16 minutes, 48 seconds electrical side as well correct so so so we are having our um like we are being 16:57 16 minutes, 57 seconds alert right we are alert how industry is going to shape up in terms of smart metering next 5 to 10 years yes 17:04 17 minutes, 4 seconds definitely it it it may it may become a significant portion of the house housing 17:10 17 minutes, 10 seconds plumbing industry in India but uh time is not right as of now but we are 17:17 17 minutes, 17 seconds keeping our ears like on the ground what's happening there great thank Thank you very much. So I 17:24 17 minutes, 24 seconds just uh just confirming again. So uh plumbing uh integrating smart plumbing systems is in the cards of Apollo pipes down down the line. Yes. 17:35 17 minutes, 35 seconds Definitely yes and definitely yes. And 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 insight and uh best of luck for all your future interviews. 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 Bhat Kumar from Choice Institutional Equities. Please go ahead. 18:08 18 minutes, 8 seconds Hello. Yeah. Hello. 18:11 18 minutes, 11 seconds Like what is the frequency going high from 15%. 18:19 18 minutes, 19 seconds 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 it 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 if can you please explain in Apollo pipes on a standalone basis do we have maintained 19:23 19 minutes, 23 seconds the volumes Y on Y but that realization has taken a sharp knock. So is it purely because of reason 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 20:14 20 minutes, 14 seconds that players right from the top leader to mid tier or to low tier right people 20:21 20 minutes, 21 seconds are going very very aggressive on uh reducing the selling prices uh just in order to fill their capacities um so so 20:30 20 minutes, 30 seconds yes 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 addition and whatever the b thing which is expected only from Q3 three. 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 um see I mean um NSR we don't give too much weightage 21:03 21 minutes, 3 seconds which is related to the increase or decrease in the PVC prices because that is not in our control at all. Right? Uh 21:10 21 minutes, 10 seconds so if you look at our IITA spreads also we try to protect our IITA spreads in terms of rupees per ton or rupees per 21:18 21 minutes, 18 seconds kg. Correct? So no comments on like how MSR would appear um with the movement in 21:26 21 minutes, 26 seconds the 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 uh shown by 21:41 21 minutes, 41 seconds each of the PVC pipe companies that shall uh narrow down a bit right um and 21:48 21 minutes, 48 seconds and at industry level the selling prices the NSR should in jump 21:58 21 minutes, 58 seconds got it got it and in terms of your product mix uh for the quarter or you know for the year what would be the agree non-aggree mix if you can help 22:07 22 minutes, 7 seconds with that that's it for me yeah so 60% is housing 40% is agree for this quarter right 22:14 22 minutes, 14 seconds yeah for Q1 yes thank you honorable thanks so Thank you. 22:23 22 minutes, 23 seconds The next question is from the line of Sneha from Noama Wealth. Please go ahead. 22:28 22 minutes, 28 seconds Hi, good good afternoon Tim and thanks a lot for the opportunity. Um just couple of questions here. Uh given there is current weakness in Nean and of course 22:37 22 minutes, 37 seconds we are hopeful of governments picking uh you know spending picking up and 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 uh that we are looking for double digit growth definitely now 23:00 23 minutes now in terms of volume now this is like low double digit mid double digit uh I mean right this will we will be more 23:08 23 minutes, 8 seconds clear that how Q2 pans out right And um and what we can tell you is that we are ready for uh high double digit 23:18 23 minutes, 18 seconds growth also correct um for the rest of the 8 months. Uh but yes a lot will 23:25 23 minutes, 25 seconds depend that how macro pans out but worst case 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 subdued side of course there is competition there is PC price pressure uh but given 23:53 23 minutes, 53 seconds uh let's say you know onceD is there into place what could a margin trajectory look like so if we so so see in our business model 24:02 24 minutes, 2 seconds we don't look at percentage basis right we look at rupees uh per uh ton If you look at like Apollo pipes on standalone basis, it's at around 9,000 24:11 24 minutes, 11 seconds 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 a ton which we have been uh present at this level for many quarters now. 24:31 24 minutes, 31 seconds Correct? So we can hit 11,000 rupees per turn in pipes standalone and Kissan has 24:37 24 minutes, 37 seconds a 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 and all the best. Thank you. 24:59 24 minutes, 59 seconds A reminder to all the participants you may press start and run to ask question. 25:08 25 minutes, 8 seconds The next question is from the line of Yograani from Omega Portfolios Advisor. 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 do 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 yog if you look at u the u 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 so so it is high it is like clearly visible that I mean the competitors are reducing 26:10 26 minutes, 10 seconds their NSR and compromising on margins way too much to uh to to demonstrate 26:18 26 minutes, 18 seconds uh or to try to gain uh sales volume growth, right? So so which we at some point uh stopped, right? 26:26 26 minutes, 26 seconds bec because uh I mean we are sure that 26:33 26 minutes, 33 seconds so one is that our fixed costs are under 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 uh second is that um we are not losing confidence in the growth grow prospects of this industry, right? It's just a 26:59 26 minutes, 59 seconds kind of uh I would say a weak bad phase which will go away because this stress 27:05 27 minutes, 5 seconds in the industry and players selling below their um like uh uh cost right 27:14 27 minutes, 14 seconds they those smaller weaker players will vanish right and then um um and when with the demand coming back the supply 27:22 27 minutes, 22 seconds would be trimmed right so good days have to come back right they have to return which we are hopeful should happen from 27:30 27 minutes, 30 seconds Q3 onwards. Correct. So, so, so we are not uh too much bothered or concerned 27:36 27 minutes, 36 seconds 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 years later. 27:56 27 minutes, 56 seconds Right? So see I mean um with the revenue run rate what we are having today is around 1 1200,300 crores on full year 28:04 28 minutes, 4 seconds 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% 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 I think the capacity is 28:27 28 minutes, 27 seconds what we have put in of almost 286,000 tons. Right now it is 2230 but eventually it will move to 286,000 tons 28:35 28 minutes, 35 seconds in next 1 to 1 and a half years. Now that will give us a revenue of around 3,000 crores Q right and the industry 28:43 28 minutes, 43 seconds may um and we expect that to achieve in next uh 3 4 years. Of course it keeps on like getting uh extended because uh 28:53 28 minutes, 53 seconds macro hasn't supported us at all. So at 3,000 cr revenue with industry um um 29:01 29 minutes, 1 second size of like 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 itara capital, right? Um um the total investment is 110 cr rupees. 29:35 29 minutes, 35 seconds 25% uh money came uh last quarter, right? The idea is to the because these are tough times, right? But we keep uh 29:44 29 minutes, 44 seconds but we we have been into hyper capeex mode, right? And we want to continue to build capacities for new products to 29:52 29 minutes, 52 seconds cater into new geographies. Um since earnings are slow, right? So cash flow generation is also slow. Correct. Um um 30:01 30 minutes, 1 second so we want to ensure that our balance sheet doesn't get stretched at any level to fund this capeex. So we are happy to 30:08 30 minutes, 8 seconds raise capital and uh and fund this capex because we know that whenever industry will turn around um um the the revenue 30:18 30 minutes, 18 seconds uh I mean uh we could we would sweat like you know these assets are two and a half three times which is the average 30:24 30 minutes, 24 seconds for this industry. we our our uh our uh our return profile like in including ROE 30:33 30 minutes, 33 seconds it will it will boost u a lot right but u but we don't want to strain our balance sheet at any given amount of 30:42 30 minutes, 42 seconds time yes I fully agree we wanted to understand the quantum that has been received and what what is left outstanding and when we would see that if you could just give that break up 30:51 30 minutes, 51 seconds so I told you know 110 cr is a total investment commitment Right. Uh 25% came in last quarter. Rest 75% uh will come in within next 18 months. 31:03 31 minutes, 3 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 to ask question. The next question is from 31:17 31 minutes, 17 seconds 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. The next question is from the lineup. 31:54 31 minutes, 54 seconds Mha from Noab please go ahead. 31:57 31 minutes, 57 seconds Hi, thanks so much 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 the total gross 32:13 32 minutes, 13 seconds clock where can you see your top line and similarly the second part of the question would be you have been mentioning about higher compettor 32:20 32 minutes, 20 seconds intensity uh which is you know leading to of course uh you know the volumes not being achieved for a while now. Um just 32:29 32 minutes, 29 seconds wanted to understand uh you know when do you see this competency easing out? You also mentioned that you know smaller players will ded up. Are you seeing any 32:38 32 minutes, 38 seconds of these activities actually happening on 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 capex 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 3/4 we should 33:15 33 minutes, 15 seconds be another 70 80 cr rupees right and when we enter into FI26 some residual 3040 cr may be left over okay um so so 33:24 33 minutes, 24 seconds so so one is that and then um once once uh industry gets uh like you know in a 33:32 33 minutes, 32 seconds in a better mode which we expect say in 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 require 33:49 33 minutes, 49 seconds another 150 200 cr kind of investment whenever we think about it but nothing on uh on drawing board as of now and um 33:58 33 minutes, 58 seconds and that will be funded from internal cash flows um um I mean we have seen that our working capital is getting 34:05 34 minutes, 5 seconds better um year on year right now we are at 35 to 40 days um this will uh this will go towards 30 days of cycle, right? 34:15 34 minutes, 15 seconds um um maybe by end of FI26 or or first half of FI27 and um and um and it should remain 34:23 34 minutes, 23 seconds between 25 to 30 days at a sustainable rate going forward 34:32 34 minutes, 32 seconds and yeah go ahead and what I actually wanted to understand is you know when I was asking you about the computer intensity 34:40 34 minutes, 40 seconds and the capex what I understand is we already operating at about 4550% utilization That means there is immense scope of improvement here. Uh while that 34:49 34 minutes, 49 seconds being there we are further adding capacity. Um is actually like a demand a problem or comp intensity is a problem 34:56 34 minutes, 56 seconds because if comp intensity is a 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 35:03 35 minutes, 3 seconds that's a broader question I'm just trying to ask you sure so I mean the both are linked right why there is hyper competition in the 35:11 35 minutes, 11 seconds industry today because demand has slowed down and second in last four five years 35:18 35 minutes, 18 seconds lot of capacity came up correct So, so, so what had happened was that after CO right next 2 three years like from 2020 35:26 35 minutes, 26 seconds to 2023 those three years demand was very strong especially in the PVC 35:33 35 minutes, 33 seconds plumbing sector right uh plus agree because government had lot of push on the infrastructure which boosted sales 35:40 35 minutes, 40 seconds for HDP pipes etc housing plumbing um you you yourself know that uh um after 35:49 35 minutes, 49 seconds 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 780 rupees a kilo it moved to 170 180 rupees a a kilo 36:11 36 minutes, 11 seconds right so during that time uh 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 balance 36:28 36 minutes, 28 seconds 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 seven eight 37:16 37 minutes, 16 seconds companies are operating with margins which was like 5 6% lower than what they were operating 2 years ago 3 years ago 37:25 37 minutes, 25 seconds correct so players who were operating at 7 8% margin now they're operating at like you know they're barely breaking 37:32 37 minutes, 32 seconds even so at some point of time those players will go away. Correct. And and 37:39 37 minutes, 39 seconds yes, we are already seeing lot of deals on the table. Correct. In like weaker players capacity coming for sale. Um I 37:48 37 minutes, 48 seconds mean every day, every week um a banker would show us a deal, right? So so definitely there is a lot of stress, 37:55 37 minutes, 55 seconds right? Um I think it is just a matter of uh few quarters that we'll see lot of 38:02 38 minutes, 2 seconds cleanup um in the sector 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 but yes at some point um I mean um it uh it will it will reverse for sure. 38:36 38 minutes, 36 seconds That was quite helpful. Thanks. Thanks. 38:42 38 minutes, 42 seconds Thank you. The next question is from the line of Paris Gupta from Fair Capital. 38:48 38 minutes, 48 seconds Please go ahead. Yes, sir. 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, can't see. 39:24 39 minutes, 24 seconds Hello. 39:26 39 minutes, 26 seconds I can 39:38 39 minutes, 38 seconds Hello. Can you just go with your question please again? 39:42 39 minutes, 42 seconds Sorry, I've been trying to talk but there is some uh No, it's fine. So it's a little bit fine. 39:52 39 minutes, 52 seconds Okay. So more on the process. 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 properly. We can't get your question. What your accent? 40:40 40 minutes, 40 seconds So 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 from the line of Karen Bi 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 PVC prices 41:53 41 minutes, 53 seconds move up by 5 to 6 rupees even if any of these one BIS or AD come through by the year end 42:06 42 minutes, 6 seconds am I audible yeah yeah so see I mean ROC is uh 42:15 42 minutes, 15 seconds something u what we see right uh um optically it it is like very very low and very concerning for us right but one 42:24 42 minutes, 24 seconds thing u what makes us confident that um at least we are on right track right to achieve the desired ROC levels upward of 42:33 42 minutes, 33 seconds like above 20% right which we have always maintained so why it is low today is that we have invested almost like 800 42:41 42 minutes, 41 seconds cr rupees uh in gross block today right and 200 cr is our working capital right 42:48 42 minutes, 48 seconds so 1,000 cr is what our capital employed today uh near about and um and it is generating revenue of around 1 1200 1300 42:57 42 minutes, 57 seconds cr rupes with iita of 100 cr rupes right 9200 cr rupees so that's why uh that's 43:04 43 minutes, 4 seconds why it it it appears low single digit but this 1,000 cr of working uh this 43:11 43 minutes, 11 seconds capital employed it can generate 200 uh 2,500 to 3,000 K kind of revenue 43:18 43 minutes, 18 seconds right and uh and 250 to 300 uh kind of IATA right at same 43:26 43 minutes, 26 seconds capital employed we need not hardly 150 cr rupees will be further invested from here on to achieve that 2500 to 3,000 cr 43:34 43 minutes, 34 seconds of revenue so so so it happens in 2 years 3 years right and then you will 43:41 43 minutes, 41 seconds see that improvement in ROC which will be very very sharp right from 1200 we go 43:47 43 minutes, 47 seconds to 14,500 and then 2,000 2,500 3,000 so so we can promise you Karan that uh that 43:57 43 minutes, 57 seconds our capital employment will not increase to achieve these uh revenue numbers because we are already heavily invested in the business in terms of gross block 44:05 44 minutes, 5 seconds and working capital will only get better right uh in number of days so absolute working capital will uh may remain same 44:14 44 minutes, 14 seconds 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 at the FPA and the patch levels so karan uh like you rightly pointed out 44:44 44 minutes, 44 seconds that yes gross spreads in Kisan are very very encouraging right 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 mean 45:01 45 minutes, 1 second the company has been in the range of like 280 300 cr kind of revenue right which which uh which it should 45:10 45 minutes, 10 seconds 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 45:18 45 minutes, 18 seconds uh as per that. Okay. So, so it's a matter of like a few quarters when we 45:26 45 minutes, 26 seconds see like its revenue jumping 25 30% YI you'll see that translation of better 45:34 45 minutes, 34 seconds gross spreadsha level. 45:39 45 minutes, 39 seconds Mhm. And you mentioned a few innovic opportunities which are there on the table. So are we evaluating that as well? 45:47 45 minutes, 47 seconds Because I believe greenfield capacities will take know a year and a year and a half and again 6 months to stabilize. Uh 45:54 45 minutes, 54 seconds so so in case if you feel that you know PVC prices will kind of move north. So it's better for you to have already capacity. 46:04 46 minutes, 4 seconds So it's only south India we are wanting to have a fullfledger plant. current right um I mean uh we have not got any 46:14 46 minutes, 14 seconds opportunity on that table which uh which mirrors what we want in south India like full-fledged plant like Kasan in west 46:23 46 minutes, 23 seconds was mirror of like you know what we 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 right got it thank you thank you for detailed explanation. 46:41 46 minutes, 41 seconds Let's prom. Thank you. 46:46 46 minutes, 46 seconds The next question 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 is the response been? And secondly also on the newer products that we are looking at like especially DCW pies 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 person. 47:27 47 minutes, 27 seconds So right now we are um at a point where we are going and aggressively pitching this product to the key stakeholders 47:34 47 minutes, 34 seconds which are mainly contractors, real estate uh companies and uh and government agencies. It requires a lot 47:40 47 minutes, 40 seconds of approvals, right? Uh so so so so order booking um um is building up right 47:50 47 minutes, 50 seconds for the full year we should be we should be doing u kind of 50 K kind of revenue 47:57 47 minutes, 57 seconds from this uh vertical but most of this will come in like second half right u uh 48:04 48 minutes, 4 seconds Q2 will not be a significant number but uh but what we can tell you is that the that the response what we are getting 48:13 48 minutes, 13 seconds right from the contractors and developers today. Uh we are confident that full year we should close around 50 48:21 48 minutes, 21 seconds cr rupees and 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 48:44 48 minutes, 44 seconds sweat our assets more so see I mean uh we had uh space available in our plants right um so so 48:52 48 minutes, 52 seconds it's just u installation of a machine right? Which doesn't require any green field uh capeex, right? It's more of 49:02 49 minutes, 2 seconds brownfield capex. Now the idea to get into these product categories um is of course diversify our our portfolio right 49:11 49 minutes, 11 seconds uh um um some of the products are sold through same channel right for some product we need to create new channel 49:19 49 minutes, 19 seconds like for UPVC for gas pipes right we will we are creating totally new channel um um and and any product um may click 49:27 49 minutes, 27 seconds right um and and and then we can go big on that so that's the idea right to keep on introducing new products, experimenting 49:36 49 minutes, 36 seconds with new product lines and uh and and have something in our kitty which can contribute like 5 to 10% to our overall 49:44 49 minutes, 44 seconds revenue. Um right um uh so so that's how we would be achieving 20 25% of revenue 49:51 49 minutes, 51 seconds growth uh on a long-term basis. Uh yes, 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 50:09 50 minutes, 9 seconds as that was the last question I would now hand the conference over to Mr. AJ Kumar Jeene chief financial officer for the closing comments over to you sir. 50:19 50 minutes, 19 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 50:26 50 minutes, 26 seconds satisfactoryily. Should you need any further clarification or would like to know more about the company, please feel free to contact our team. Thank you once again. 50:37 50 minutes, 37 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.