EPL Limited — Q3 FY26

EPL Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=_DatX7xrNAs Published: 3 months ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the EPL Limited Q3 FI26 earnings conference call hosted by Systematics Shares and Stocks Limited. 0:12 12 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation 0:21 21 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star 10 0:28 28 seconds on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. 0:34 34 seconds Pratik Tolia of Systematics Shares and Stocks Limited. Thank you and over to you sir. 0:42 42 seconds Yeah, thanks Anushka. Uh good evening everyone. On behalf of systematics instit institutional equities, I would like to welcome all the participants who've logged into this conference call 0:50 50 seconds of EPL for a third quarter and 9 month ending FI26 uh earnings call. Uh from the management team we have with us Mr. 0:58 58 seconds Hman Bakshi MD and global CEO, Mr. Emma Ramasami COO, Mr. Deepak Goyel, CFO, Mr. 1:06 1 minute, 6 seconds Thomas Sifen, President Amitar region and Mr. Omar Gangur head legal comm secretary and compliance officer. At the outset, I would like to thank the 1:14 1 minute, 14 seconds management for giving us this opportunity to host this conference call. I would now like to welcome Mr. 1:19 1 minute, 19 seconds Him Dakshi and uh ask him to uh begin the proceedings of this call. Thank you and over to you sir. 1:26 1 minute, 26 seconds Yeah, good evening everyone and thank you for joining us for EPL limited quarter 3 FY26 earnings call. This is 1:34 1 minute, 34 seconds the first earnings call that I'm addressing as the CEO and I'm delighted to be here. Over the past three months, 1:42 1 minute, 42 seconds I've visited our plants in India, China, USA, Mexico, Poland, Germany, and Thailand. This has given me an 1:50 1 minute, 50 seconds opportunity to spend meaningful time with our teams, interact with our key customers, and engage with our partners. 1:58 1 minute, 58 seconds These interactions have given me deeper understanding of our operational strengths, the quality of our talent, 2:05 2 minutes, 5 seconds and the opportunities that lie ahead of us. 2:09 2 minutes, 9 seconds I'm truly excited with where we are as a business and even more so for what the future holds for us. I'm pleased to 2:18 2 minutes, 18 seconds share that we have delivered another strong cons and consistent quarter. 2:23 2 minutes, 23 seconds Revenue grew by 13.3%a grew by 12% and IDA margin stood at 20.1%. 2:32 2 minutes, 32 seconds ROC improved to 18.7% expanding by 184 basis points yearonear. 2:40 2 minutes, 40 seconds This is the third quarter of doubledigit growth clearly showing that our strategy to accelerate beauty and cosmetic growth 2:48 2 minutes, 48 seconds is working and is being executed with rigor and discipline across the organization. Our consolidated revenue 2:56 2 minutes, 56 seconds growth of 13.3% was broad-based with doubledigit growth in three of our four regions. EAP and America's delivered 3:05 3 minutes, 5 seconds particularly strong performance growing 18 and 19% respectively supported by 3:11 3 minutes, 11 seconds improved mix and customer momentum. AMSA grew 10% while India stand alone 3:18 3 minutes, 18 seconds recorded a solid growth of 8.7% aided by continued traction in beauty and cosmetic segment. Growth in Europe was lower than our expectation at 8%. 3:31 3 minutes, 31 seconds The beauty and cosmetic segment continued to outperform delivering 26% year in on-year growth in line with our 3:39 3 minutes, 39 seconds strategic focus to grow faster in this category. All regions delivered nearly 20% growth, materially outperforming the 3:48 3 minutes, 48 seconds market and highlighting accelerating market share gains. 3:53 3 minutes, 53 seconds Aida margin stood at 20.1% 20 basis points lower than last year but firmly within our target operating 4:01 4 minutes, 1 second range. Margins improved across all regions except Europe where performance was impacted by short-term operational 4:09 4 minutes, 9 seconds issues and adverse mix. We are confident of returning to targeted mid margin mid- teen margins in the coming quarters. 4:18 4 minutes, 18 seconds Profit after tax is flat versus last year due to the one-off benefit in the base. Excluding this, PAT grew by 11% in 4:28 4 minutes, 28 seconds line with IBIDA growth. The cash flow continues to be strong with net debt to IBIDA ratio at 0.65 65 while ROCE 4:36 4 minutes, 36 seconds expanded by 184 basis points versus last year and stood at 18.7%. 4:44 4 minutes, 44 seconds Sustainability and innovation remain central to our growth agenda. During the quarter, sustainable tube formats 4:51 4 minutes, 51 seconds contributed 38% of sales reflecting sustained customer adoption. We were recognized among the top 2% globally on 5:01 5 minutes, 1 second CDP climate and water A-list 2025 and received the CI sustainable packaging 5:09 5 minutes, 9 seconds excellence award underscoring our leadership in sustainability. In parallel, our focus on innovation was 5:16 5 minutes, 16 seconds recognized through multiple awards at the IFCA awards and pure beauty awards Europe for our innovative cube 5:23 5 minutes, 23 seconds solutions. Some of our most exciting innovations like tube and tube formats in China are getting to scale and 5:31 5 minutes, 31 seconds command a 8x premium over standard tubes. Now looking ahead, our pri priorities are clear to deliver 5:38 5 minutes, 38 seconds sustainable profitable double-digit growth guided by four priorities that will shape the next phase. One, 5:46 5 minutes, 46 seconds accelerating momentum in beauty and cosmetics. Our deliberate strategic shift towards beauty and cosmetics is translating into sustained performance. 5:56 5 minutes, 56 seconds We have now delivered four consecutive quarters of over 20% growth in this segment with nonoral accounting for 53% 6:05 6 minutes, 5 seconds of our total portfolio. With continued investments in innovation, extruded solutions, front-end specialization, and 6:13 6 minutes, 13 seconds new technologies, [clears throat] we see strong headroom to sustain and scale this momentum. 6:19 6 minutes, 19 seconds Number two, scaling in high growth emerging markets. Emerging markets continue to be an important growth driver. Brazil has been a consistent 6:28 6 minutes, 28 seconds outperformer. Thailand is gaining traction and we remain focused on building scale and capabilities in these 6:35 6 minutes, 35 seconds markets to drive long-term growth while also exploring other markets which remain a white space for us. Number three, sustainability as a growth 6:44 6 minutes, 44 seconds enabler. Sustainability is increasingly influencing custom choice and our capabilities are well aligned with this 6:51 6 minutes, 51 seconds shift. With 38% of our sales coming from sustainable tube formats and recognition through ecoadis platinum, we are well 7:00 7 minutes positioned to deepen relationships with global customers and win incremental share. Number four, margin expansion and capital efficiency. 7:09 7 minutes, 9 seconds Margin discipline remains a core focus. 7:12 7 minutes, 12 seconds We have delivered six consecutive quarters of 20% plus IIDA margins and we expect gradual improvement through scale 7:20 7 minutes, 20 seconds benefits. Europe margin initiatives and targeted operational initiatives. At the same time, our focus on capital 7:28 7 minutes, 28 seconds efficiencies yielding results with ROC improving to 18.7% and we remain confident in our journey 7:35 7 minutes, 35 seconds to consistently improve ROC. To sum up, this quarter demonstrates our ability to execute with discipline in a dynamic 7:44 7 minutes, 44 seconds environment. We are growing profitably, strengthening returns and building a resilient future ready business. I would 7:52 7 minutes, 52 seconds like to thank our teams for their disciplined execution, our customers for their continued trust and our shareholders for their confidence in 8:01 8 minutes, 1 second EPL. And I must end by saying the best is yet to come. With that we are now happy to take your questions. 8:12 8 minutes, 12 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 8:20 8 minutes, 20 seconds star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 8:29 8 minutes, 29 seconds requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 8:39 8 minutes, 39 seconds We take the first question from the line of Mahil Sha from Numara. Please proceed. 8:46 8 minutes, 46 seconds Uh hi team, congrats on a great set of numbers. Uh thank you for taking my question. Uh firstly just wanted to check what drove the strong Amissa 8:54 8 minutes, 54 seconds growth especially in uh BNC. Was it uh any new subcategory that uh you know you have got share from or a new clientele 9:03 9 minutes, 3 seconds or was there any element of restocking post the GST changes that happened there? Uh also an update on oral care in 9:10 9 minutes, 10 seconds Amissa on uh in India uh you know which is continued to see headwinds uh as we saw in the uh you know market leaders 9:19 9 minutes, 19 seconds results. Uh can you break up the growth of BNC and oral care for us in India? Uh that's my first question. 9:27 9 minutes, 27 seconds Yeah, I think uh firstly India continues to be a very attractive market for us with category growth. Uh we have always 9:36 9 minutes, 36 seconds maintained that India will come back to growth as soon as the impact of the earlier quarters which were due to one-off like GST. This quarter is 9:45 9 minutes, 45 seconds definitely a step in the right direction. Uh we are seeing momentum in BNC category and is gradually coming 9:52 9 minutes, 52 seconds back. We are confident of continuing and improving this growth trend even further. Uh focusing more on PNC. I 10:00 10 minutes think what we are doing is expanding our customer base, reaching more and more customers. Most of them are uh coming to 10:08 10 minutes, 8 seconds us because of the high quality products we offer and we definitely see that there is significant runway for further growth. 10:18 10 minutes, 18 seconds Got it. uh uh uh I I'll I have a further one on India but I'll probably come back for India. Moving on to uh China. Uh 10:28 10 minutes, 28 seconds despite the unit closure, the sales saw an increase. Um firstly, what was the reason for the unit closure? Uh and X of Thailand, what was the growth for EAP? 10:41 10 minutes, 41 seconds Uh next quarter also, you know, there can be a impact on because of Chinese New Year. Uh so X of that can one expect 10:50 10 minutes, 50 seconds this strong growth to sustain at these levels? uh like we saw you know when you had entered Brazil and we saw the growth 10:57 10 minutes, 57 seconds in America's took off from there. So similar trajectory can we expect for EAP from year on with Thailand getting added. 11:05 11 minutes, 5 seconds Yeah. Uh so be firstly let me address the question on the factory closure. The China factory closure was driven by 11:13 11 minutes, 13 seconds customer filling facility movement closer to another EPL plant. 11:18 11 minutes, 18 seconds Accordingly, we moved our equipment from one facility to the ex another existing facility we had. Uh however, it did mean 11:27 11 minutes, 27 seconds that we had to pay severance cost here and that has been shown in our uh results as well. So this was purely because of a customer initiated action. 11:37 11 minutes, 37 seconds As far as EAP is concerned on a overall basis, we commercialized our Thailand plant in this quarter itself, quarter 11:45 11 minutes, 45 seconds three and therefore Thailand is a very exciting market. In fact, Southeast Asia is a very exciting market, very high consumption level and we are very uh 11:54 11 minutes, 54 seconds confident and excited about the results we will get in Thailand. But to be fair, in this quarter it's been scaling up and 12:02 12 minutes, 2 seconds therefore the results which you see here are driven entirely by our incredibly good performance in China. And uh you 12:10 12 minutes, 10 seconds know you can see from our results uh we are building significant momentum in BNC in China and gaining share and we see this momentum continuing. 12:24 12 minutes, 24 seconds Got it. And uh you know if I can put in one last question uh uh uh you know you highlighted uh that the be best is yet 12:32 12 minutes, 32 seconds to come. What you know if you can just touch a little bit deeper on what do you entail by this because uh two two things 12:41 12 minutes, 41 seconds one is that uh you know if you see the America's growth of you know strong double digit growth uh it will start 12:49 12 minutes, 49 seconds cycling a higher base from next quarter next year onwards from FI24. So, so growth there can normalize. Secondly, 12:57 12 minutes, 57 seconds the margins have come back to 20 plus percent. Uh so room for further improvement can be lower from here. So 13:04 13 minutes, 4 seconds when you say best is yet to come. Uh can you elaborate a little more on on that? 13:08 13 minutes, 8 seconds Uh that's all from my side and thank you very much. 13:11 13 minutes, 11 seconds Yeah. No uh I think uh Mahira I'm really confident and very excited about the pivot we've made strategically towards 13:18 13 minutes, 18 seconds BNC. uh if you look at BNC and compare it with oral, BNC market size is twice that of oral. It's growing at twice the 13:27 13 minutes, 27 seconds rate of oral and in addition to that our market shares in BNC are relatively lower. So if and if we were to double 13:36 13 minutes, 36 seconds our market share which is very well within our reach in the next few years we have runway for growth which is higher than what we've seen so far. So I 13:44 13 minutes, 44 seconds feel BNC and the move towards BNC makes for a really exciting future for EPS. 13:55 13 minutes, 55 seconds Got it. Thank you. Uh that's all for myself. Thank you. 14:03 14 minutes, 3 seconds We take the next question from the line of Samir Gupta from India info line. Please proceed. 14:10 14 minutes, 10 seconds Uh hi good evening sir and uh uh first of all congratulations on a good set of numbers and thanks for taking my question. Uh first question is on 14:18 14 minutes, 18 seconds Europe. So revenue growth has kind of come back. It's not still at a level which is you mentioned is not is still 14:24 14 minutes, 24 seconds below expectations but it's it's still a decent number and margins still have you know witnessed a sharp contraction. Uh 14:33 14 minutes, 33 seconds overall this has been a troubled geography volatile performance. So uh you've had some interventions but we are 14:40 14 minutes, 40 seconds yet to see those results. So just wanted your sense as to what is happening in this geography and I know you mentioned uh in the presentation but a little more details here. 14:49 14 minutes, 49 seconds Yeah. No uh Sachin really good to hear from you. Uh I and I think your question is uh valid. uh so firstly uh when 8% is 15:00 15 minutes good growth uh but our expectation in this quarter was for even higher growth and therefore our plans etc were 15:07 15 minutes, 7 seconds constructed on that basis and that's why we are saying it's below our expectation having 15:17 15 minutes, 17 seconds ladies and gentlemen it seems like the line for the management has been disconnected please stay connected till I rejoin the management 15:26 15 minutes, 26 seconds Heat. [music] 15:34 15 minutes, 34 seconds [music] 15:42 15 minutes, 42 seconds Heat. [music] 15:49 15 minutes, 49 seconds [music] 15:55 15 minutes, 55 seconds [music] 16:00 16 minutes [music] 16:03 16 minutes, 3 seconds Ladies and gentlemen, thank you for waiting patiently. The line for the management has been connected. So, you may proceed. 16:10 16 minutes, 10 seconds Yeah. Uh sorry for the uh interruption. 16:14 16 minutes, 14 seconds So, as I was mentioning, our growth was below our expectation. Although to be fair in Europe kind of environment 8% is 16:22 16 minutes, 22 seconds uh good growth. Uh but our challenges were a adverse customer mix. Uh in addition to that we have we were 16:31 16 minutes, 31 seconds impacted by short-term operational challenges which are in the nature of higher write offs higher outsourcing and 16:38 16 minutes, 38 seconds some production issues as well. Also, quarter three tends to be a slower quarter in uh Europe because of Christmas and hence the lower margin. 16:48 16 minutes, 48 seconds Last year, of course, was uh helped by one-time gains which we had in the business. Having said that, the more important thing is we've identified key 16:57 16 minutes, 57 seconds initiatives which will address these issues and will improve margins. We should start seeing the benefits of 17:04 17 minutes, 4 seconds these in the coming quarters and we are confident that going forward Europe will operate at mid- teen margins. 17:13 17 minutes, 13 seconds So if you could elaborate those initiatives be helpful. 17:17 17 minutes, 17 seconds Yeah. So these are operational uh initiatives in terms of the actions we are taking as we consolidate some of our 17:24 17 minutes, 24 seconds operations which were planned. uh we will be taking uh you know very significant actions to reduce uh some of 17:32 17 minutes, 32 seconds the costs which we've seen uh emerge as a result of these operational issues. 17:38 17 minutes, 38 seconds Got it sir. Uh thanks for this. Second question is on Amsa U taking it forward from here. Uh so uh uh the growth here 17:47 17 minutes, 47 seconds has rebounded but after four consecutive quarters uh is there an element of negative pricing which has got 17:54 17 minutes, 54 seconds anniversarized now or uh do you see a pickup in oral care because we are yet to see any meaningful uplift in the 18:01 18 minutes, 1 second market leaders performance. So just wondering how sustainable this growth number is. If you could like address that. 18:09 18 minutes, 9 seconds Yeah I don't think there is any uh pricing advantage in these uh numbers. 18:14 18 minutes, 14 seconds uh having said that I think the key issue is we are seeing early recovery signs in uh oral care. Uh obviously you 18:23 18 minutes, 23 seconds will see it will take some time for it to fully recover but definitely this court has been better and we feel that 18:30 18 minutes, 30 seconds momentum will start turning and become positive. Got it sir. That's that's all for me. 18:37 18 minutes, 37 seconds I'll come back in the queue for any follow-ups. Thank you. 18:43 18 minutes, 43 seconds We take the next question from the line of AA Garval from Leeway Investment. Please proceed. Hello. 18:52 18 minutes, 52 seconds Uh good afternoon. Uh can it affect the uh government expenses between polymer and aluminium and uh uh if the polymer 18:59 18 minutes, 59 seconds prices go up in next one year, how does it affect our uh margins? 19:07 19 minutes, 7 seconds Sorry. Uh can you repeat please? Can you bite the raw material expenses between polymer and aluminium prices and alium 19:16 19 minutes, 16 seconds raw material and uh how do you see our margin uh shaping up in next one year if the polymer prices go up in next one year? 19:24 19 minutes, 24 seconds Want to answer that? Yeah. So amit uh our effort has been to make our margins uh delin from the 19:34 19 minutes, 34 seconds commodity prices and we have done uh we have taken multiple initiatives to achieve that objective. Um we review our 19:43 19 minutes, 43 seconds uh customer margins gross margins on a monthly basis. We are mostly on a pass through basis and hence uh 50% of our business is on pass through basis. 19:53 19 minutes, 53 seconds balance 50% is negotiated when the prices go up. Today our ability to have those discussions with our customers as 20:01 20 minutes, 1 second soon as we start seeing the upward movement in prices is much higher because of the internal processes that we have set up and hence our expectation 20:09 20 minutes, 9 seconds is uh as the prices go up our margins should not get impacted. 20:17 20 minutes, 17 seconds Can you bifrocate the raw expenses between the two raw materials? 20:23 20 minutes, 23 seconds Your voice is bit muffled. We can't understand your question fully. 20:27 20 minutes, 27 seconds Uh can you bifocate the raw material expenses in percentage terms between aluminium and uh polymer. See 20:35 20 minutes, 35 seconds polymer is a significantly higher part of our raw material cost. Aluminium is much smaller also because now we are 20:42 20 minutes, 42 seconds more and more moving towards plastic based laminate. uh right and hence uh NN polymer remains our our largest raw 20:50 20 minutes, 50 seconds material though I obviously wouldn't be able to give you exact percentage of both the raw materials 20:57 20 minutes, 57 seconds and any particular reason that uh net debt we have uh has increased in last one quarter of one one year 21:04 21 minutes, 4 seconds this is just phasing um so um in this quarter we do a dividend payout and you 21:11 21 minutes, 11 seconds we have some accelerated capex spendings this is the timing impact and should get corrected on a full year basis. 21:19 21 minutes, 19 seconds My last question regarding Thailand uh how much of the capacity has been utilized till now and uh what is the assumption in next one year? How much 21:27 21 minutes, 27 seconds capacity you're going to use index 1 in Thailand? 21:31 21 minutes, 31 seconds I think to be fair Thailand is just uh starting we commercialized the plant in uh November of this quarter which you 21:38 21 minutes, 38 seconds are uh you know the results we are talking about. Uh it's really early days in Thailand. It's a very attractive market as we uh spoke about earlier and 21:47 21 minutes, 47 seconds I think we should give it some time as it scales up and I'm sure we'll have a deeper conversation on silent as time goes by. 21:56 21 minutes, 56 seconds Okay. Thank you best of luck. 22:00 22 minutes Thank you. We take the next question from the line of me Jane from Motila Losal. Please proceed. 22:07 22 minutes, 7 seconds Hello. Uh sir um I have one question on viewers. So as we've seen and also guided that there are some operation 22:14 22 minutes, 14 seconds issues happening in that. So in terms of demand front how are we seeing the demand as we understand that for the B2C uh BNC market is one of the largest 22:23 22 minutes, 23 seconds markets. So any new products launches that we are planning or how is the traction in terms of demands that we are seeing there also if you can throw some 22:30 22 minutes, 30 seconds light on the mix current mix of your uh but cosmetic and oral care of market. 22:37 22 minutes, 37 seconds Yeah. So I think uh we are very excited by the performance we are seeing in beauty and cosmetics. We've had multiple 22:45 22 minutes, 45 seconds uh quarters of uh 20% plus growth and even in this quarter each of our regions are close to 20% or ahead of 20% growth. 22:54 22 minutes, 54 seconds So I think we are seeing a lot of positive momentum in this space. uh and as I was mentioning earlier this is a very attractive market large fast 23:04 23 minutes, 4 seconds growing where our capabilities become very relevant uh some of our very interesting innovations which are coming 23:11 23 minutes, 11 seconds out of different parts of the world including China are getting to traction we I spoke about tube tubing tube which 23:18 23 minutes, 18 seconds we've talked about earlier but also other applicators which we are using are seeming uh getting a lot of customer 23:25 23 minutes, 25 seconds positive response so overall we feel very positive and confident of BNC and the demand in that space. 23:35 23 minutes, 35 seconds Understood. And also on bookkeeping question uh in terms of debt itself. So currently we are doing an interest cost 23:42 23 minutes, 42 seconds of around uh 28 crores. So uh what is the like can you throw some light on the guidances or outlook will it come down 23:50 23 minutes, 50 seconds or how you are seeing traction going in this this part? 23:54 23 minutes, 54 seconds Uh yeah me. So we will uh continue uh with our gradual reduction of debt and 24:00 24 minutes interest cost uh will show uh the con uh consequential benefit. However, we do not however we prioritize growth and 24:09 24 minutes, 9 seconds growth is the biggest priority for the company and hence we keep will keep investing in our growth priorities as well. 24:17 24 minutes, 17 seconds Understood. And lastly on the current momentum like uh we are in the middle of the last quarter uh last quarter. So how is the performance in the geographies right now? Um any that on that? 24:29 24 minutes, 29 seconds Our long-term guidance remains unchanged which is doubledigit uh revenue growth. 24:33 24 minutes, 33 seconds We've delivered it now consistently for the last few quarters and we are confident that you know we will continue to deliver to our strategy. 24:44 24 minutes, 44 seconds Okay. Thank you. Thank you. 24:50 24 minutes, 50 seconds We take the next question from the line of Abhishek Maheshwari from Skyidge Fund Managers LLP. Please proceed. 24:58 24 minutes, 58 seconds Hi, thank you for taking my question. Uh just few things. Uh so you mentioned about the factory closure in China. Can 25:07 25 minutes, 7 seconds you elaborate uh a little bit more on that because you said the customer move so we had to move our machines also but 25:14 25 minutes, 14 seconds does other plants have enough space to accommodate those machines? I mean can you elaborate a little on that? 25:23 25 minutes, 23 seconds Yeah, actually the move has uh been executed uh already. Uh so we do have space in the other facility which we 25:32 25 minutes, 32 seconds had. This is a customer initiated change and uh we've had to close because our customer filling facility moved closer 25:41 25 minutes, 41 seconds to another plant we already had. So we just moved our machines there. We have enough space. uh the only impact has 25:47 25 minutes, 47 seconds been on uh some of our employees where we've had to pay severance cost but this is a u you know uh action which has already been executed. 25:57 25 minutes, 57 seconds All right. Got it. So no capacity cuts in the sense this machine is operating elsewhere. Yeah. 26:04 26 minutes, 4 seconds Okay. Uh in the next question is regarding Europe. I think last few last quarter con call uh you had mentioned 26:12 26 minutes, 12 seconds that the Europe was slightly slow because a big customer was restocking and it seems that the slowness has 26:20 26 minutes, 20 seconds persisted this quarter also. So uh what are we seeing from that customer again? 26:25 26 minutes, 25 seconds The big customer has the inventory buildup started again or are we still seeing some slowdown there? 26:33 26 minutes, 33 seconds there is recovery and as you can see in the results on growth also you can see between the two quarters there's been an improvement uh as I mentioned earlier uh 26:42 26 minutes, 42 seconds our expectation was of even higher growth uh we are beginning to see some turnaround of the customer which we spoke about but there's some way to go 26:51 26 minutes, 51 seconds still and we need to watch the situation carefully got it got it thank you so much sir all the best 27:00 27 minutes thank you we take the next question from the line of Smith Gala from RSPM Ventures. Please proceed. 27:08 27 minutes, 8 seconds Yeah, thank you for the opportunity and congratulation on good set of numbers. 27:11 27 minutes, 11 seconds My first question is uh by when can we expect some clarity on uh Thailand ramp 27:19 27 minutes, 19 seconds up because uh the depreciation has grown 3% sequentially from 94 crores to 97 27:25 27 minutes, 25 seconds crores. Uh so do we expect any more increase in the near future or this is a steady state at least for the next two or three quarters? 27:38 27 minutes, 38 seconds Yeah, I think we can get back to you on Thailand as uh a little time passes by. 27:43 27 minutes, 43 seconds As I told you, we just commercialized our plant in November. Uh these are early days. It's a very very promising 27:50 27 minutes, 50 seconds market. Uh and on investments, uh Deepa can add more uh to it. Yeah. So our investment philosophy continues uh where 27:58 27 minutes, 58 seconds we invest in line uh line with uh uh with depreciation and the depreciation cost obviously because of phasing and 28:07 28 minutes, 7 seconds the fallout of existing assets can move up or down but essentially as a strategy it will always remain lower than uh revenue growth and that's what you see 28:15 28 minutes, 15 seconds in the YTD numbers as well our depreciation growth is lower than the revenue growth u u and that's that's 28:22 28 minutes, 22 seconds what we'll continue following Okay. Uh so next question is in the 28:30 28 minutes, 30 seconds future uh after as and when silent ramps up uh do we expect our uh revenue 28:39 28 minutes, 39 seconds growth from uh double digit to mid teens kind of thing. And secondly, can we 28:46 28 minutes, 46 seconds expect some operating leverage or in future now the revenue growth will mirror AIDA growth going forward? So our 28:55 28 minutes, 55 seconds guidance remains unchanged which is that we will deliver sustained doubledigit growth on revenue uh and our margins 29:03 29 minutes, 3 seconds will be aida growth will be slightly ahead of that. So that's our uh guidance and that remains unchanged. 29:11 29 minutes, 11 seconds Okay. Thank you. Thank you. 29:17 29 minutes, 17 seconds Thank you. Before we proceed with the next question, a reminder to the participants in order to ask a question, 29:24 29 minutes, 24 seconds you may press star in one on your touchstone telephone. We take the next question from the line of Yogesh Mittal and individual investor. Please proceed. 29:46 29 minutes, 46 seconds Hello. Uh am I audible? Yeah. Uh thanks for giving me the opportunity. 29:53 29 minutes, 53 seconds Sir, I have a question to ask about the operational aspect of the company. Uh please pardon my ignorance. 30:02 30 minutes, 2 seconds wanted to understand that uh when we when we make the empty tubes they are 30:09 30 minutes, 9 seconds shipped to the client's place and the filling and packing of that is done at client's place including the labeling 30:18 30 minutes, 18 seconds and the printing or that is done at our facility. 30:24 30 minutes, 24 seconds We sell uh empty printed tubes to our customers and they do the filling at their own locations. That's normally the 30:32 30 minutes, 32 seconds that's the normal conventional model which is followed right sir. Sir I have one more thing to 30:39 30 minutes, 39 seconds ask on this. So so coming to that point of the 30:46 30 minutes, 46 seconds when we were shifting the facility in China to near to the client's place. So understanding this part then what was 30:55 30 minutes, 55 seconds the reason to shift to the client's place? So, so do I understand that we have some more coordination to do with 31:02 31 minutes, 2 seconds the clients manufacturing where they have the contents to fill in that do we have a close coordination to do with them? 31:12 31 minutes, 12 seconds No. Uh I think I should clarify that our customer in this case they decided to change their own filling unit. So they 31:21 31 minutes, 21 seconds were producing in one place where we were producing very close to them. They shut down their factory there and moved 31:28 31 minutes, 28 seconds to another location and therefore we had to follow them. So this was initiated by the customer and it was a customer 31:35 31 minutes, 35 seconds decision and what we can tell you is that there is extremely high coordination between us and our customers so that we can do a lot of these things in synchronization. 31:48 31 minutes, 48 seconds Right sir. Sir and one thing more please if I may ask. So the final uh means the batch number etc those kind of printing 31:57 31 minutes, 57 seconds might be done at the client's place. Uh so basically other than that all the pro means all the product labeling is done 32:05 32 minutes, 5 seconds on your product uh on your empty tube and we ship to the clients. That's correct. Is that understanding right? 32:13 32 minutes, 13 seconds Yes that your understanding is right. Uh okay. 32:19 32 minutes, 19 seconds Thank you so much for helping me out on this one. Uh wish you all the best. Thanks. 32:27 32 minutes, 27 seconds Thank you. Before we proceed with the next question, a reminder to the participants in order to ask a question you may press star and one on your 32:36 32 minutes, 36 seconds touchstone telephone. We take the next question from the line of Cherag from Keynote Capitals. Please proceed. 32:44 32 minutes, 44 seconds Yeah, thank you for the opportunity. So my first question is to understand what kind of operating margin difference there is on non-oral care and oral care 32:54 32 minutes, 54 seconds products. As we are seeing the move and growth in beauty cosmetics to be in the high double digits of more than 20 33:01 33 minutes, 1 second percentage uh the margin is expected to take a shift accordingly. So just wanted to understand what kind of margin difference is there. 33:11 33 minutes, 11 seconds Yeah. So uh our ASP in uh beauty and cosmetics which is the larger part of 33:18 33 minutes, 18 seconds non-oral care business is significantly higher than the oral care business. As a function of that the per tube margin 33:26 33 minutes, 26 seconds that we make in non-oral care or beauty and cosmetics is significantly higher than the oral care. However, as a percentage of margin, they are roughly 33:35 33 minutes, 35 seconds similar. But because the ASP is higher, the fixed cost absorption happens better and hence beauty and cosmetics or our 33:43 33 minutes, 43 seconds movement to non-oral care is margin a bit advantageous uh as a overall. 33:50 33 minutes, 50 seconds So it would be fair to assume that it would it is better for us to look at on unit economics rather than margins because uh higher ASP uh slightly high 33:59 33 minutes, 59 seconds cost but because of uh operating leverage your margins are slightly higher else it is balanced off correct 34:07 34 minutes, 7 seconds I would say that uh we look at our business uh on a revenue basis because that becomes the equalizer and beauty 34:15 34 minutes, 15 seconds and cosmetics deliver better economics on an overall P&L basis. 34:21 34 minutes, 21 seconds Okay. Uh the second thing I wanted to understand uh like uh in the personal category uh there has to be there have 34:30 34 minutes, 30 seconds been multiple subcategories that we have been catering. Uh since last two one and a half years I'm able to see that uh there is no new category being added 34:39 34 minutes, 39 seconds into it. So is it fair to assume that the the width of the products that we wanted to manufacture we have we have catered to them and moving forward this 34:47 34 minutes, 47 seconds would be the product basket we will be catering to. 34:51 34 minutes, 51 seconds I think personal care and beauty and cosmetics has multiple categories subcategories within it. Uh you can you can go from conditioners to shampoo to 35:01 35 minutes, 1 second face wash face care you know and then you can go into mascara eyes. So there are multiple categories uh in uh beauty 35:08 35 minutes, 8 seconds and cosmetics and personal care. Uh we are able to operate in all of them. So we have capabilities and we have skills 35:16 35 minutes, 16 seconds to be in all of these spaces and that is something which we uh have been executing for some time. So it isn't 35:23 35 minutes, 23 seconds like there is any area in which uh we can't be present or are not present. 35:30 35 minutes, 30 seconds Perfect. Perfect. So one more thing uh since the time Sansush G used to run this company in 2020 uh we used to 35:39 35 minutes, 39 seconds provide a bifurcation between regional wide bifurcation between rural care and non care which I am not able to see in 35:47 35 minutes, 47 seconds the last 3 to four year time span so will it be it's just a request will it be possible for you to again show those 35:55 35 minutes, 55 seconds numbers because we are able to see that the growth is completely driven currently by future cooperatives by the initiative that we updated. So it would 36:03 36 minutes, 3 seconds be fair for us to understand this regional wise too. 36:08 36 minutes, 8 seconds Um this our understanding is this is the information we've been disclosing for a very long period of time and that is 36:16 36 minutes, 16 seconds what we will continue to do in the meanwhile we will check what's there in the past anything what I think [clears throat] no that's fair I think 36:24 36 minutes, 24 seconds our business uh we deliver or we provide the category level information at a 36:31 36 minutes, 31 seconds global level um the regional numbers at a quarterly level could be very volatile and hence may not be productive to 36:40 36 minutes, 40 seconds discuss. However, at an overall level, we provide enough guidance to uh show the category momentum. That's what we 36:47 36 minutes, 47 seconds should continue with and uh we will as Hmon said we will look at what we were doing. 36:55 36 minutes, 55 seconds Okay. No issue sir. So uh so one more thing will it be possible for you to give the capacity size in metric tons 37:01 37 minutes, 1 second for uh at EPL after the Thailand capex got completed. 37:08 37 minutes, 8 seconds Our capacity does not work in the metric tons manner. Uh the laminates are actually in square meters. However the 37:16 37 minutes, 16 seconds kind of tubes that we make are very very different from each other depending upon the size of dia the printing etc. and 37:22 37 minutes, 22 seconds hence uh it will not make sense to uh provide a capacity in in in that metric. 37:32 37 minutes, 32 seconds No issues. Uh that is it from us. Thank you. Okay. 37:39 37 minutes, 39 seconds Thank you. 37:41 37 minutes, 41 seconds We take the next question from the line of Adita from Securities Investment Management. Please proceed. 37:47 37 minutes, 47 seconds Uh yeah. Hi sir. Thanks for the opportunity. uh so just wanted a better sense of the scale up in Thailand. uh so when we had expanded in Brazil we had an 37:56 37 minutes, 56 seconds anchor customer with us so which helped us in scaling up that geography faster. 38:00 38 minutes So is it a similar case in Thailand as well or do you think the scaleup will be much more gradual here? 38:06 38 minutes, 6 seconds Our model in Thailand of entry is different. Uh this is a much more organic uh entry model. uh we worked in 38:14 38 minutes, 14 seconds Thailand now for more than a year with a actual sales team on the ground which has been building a pipeline of business 38:21 38 minutes, 21 seconds for us and we have a very strong and healthy pipeline and we'll execute against that over a period of time because you know Thailand's been 38:30 38 minutes, 30 seconds operational in this quarter for less than four weeks so it's a bit premature to you know start talking about you know what's the performance and so on you 38:38 38 minutes, 38 seconds will see that come through in the next few quarters but our model of entry has definitely been different and it's a very uh interesting new model which will 38:47 38 minutes, 47 seconds open up many more markets for us. So yes, what we've done in Thailand is uh different. 39:04 39 minutes, 4 seconds Hello Mr. Adita, are you on the line? Yes. Am I audible? Yeah. Yeah, you're audible. 39:12 39 minutes, 12 seconds Yeah, we can hear you. 39:14 39 minutes, 14 seconds Yeah. So, just a followup. So, is Thailand a completely new geography for us or we were supplying to the geography from other manufacturing plants? 39:23 39 minutes, 23 seconds Yeah. So, there was some export happening from China into Thailand. So, we did have a you know connection with the market and uh tubes used to come 39:31 39 minutes, 31 seconds from China. Uh but obviously in this business on ground uh presence and you know having a manufacturing base makes a 39:39 39 minutes, 39 seconds huge difference. So it is indeed a new opportunity. 39:44 39 minutes, 44 seconds Understood sir. Uh and secondly sir uh if I look at your target for ROC expansion from 18 to 25%. Uh so just 39:52 39 minutes, 52 seconds wanted to get a better sense. So is it that the margins would have to do the heavy lifting for us to improve our ROC or there is more capital efficiency which we can bring in in the business. 40:02 40 minutes, 2 seconds So which of these two would be the uh growth driver for us uh for ROC expansion? Yeah. So, our ROC this year 40:10 40 minutes, 10 seconds has gone up. Uh it's at 18.7%, it's gone up by, you know, two b uh 200 basis 40:18 40 minutes, 18 seconds points and we will continue to target to improve our ROC year on year as we go forward. But, uh we do not want to provide any year level guidance on it. 40:29 40 minutes, 29 seconds Having said that, there are multiple levers uh which can be deployed to improve ROC and we will do all of them. 40:36 40 minutes, 36 seconds uh and we will always as uh I think we mentioned earlier prioritize growth uh over all other metrics 40:45 40 minutes, 45 seconds understood but so structurally if I have to understand so beauty and cosmetics would give us better margins a platina segment has also I believe better 40:53 40 minutes, 53 seconds margins uh uh so going forward do you think structurally this business can operate at 20 to 23% margins 41:01 41 minutes, 1 second so firstly I should clarify and I think deep mentioned it uh earlier are BNC and oral care margins as a 41:09 41 minutes, 9 seconds percentage are the same. So it's not that BNC has higher margins on a percentage basis. Of course, because the 41:16 41 minutes, 16 seconds selling price is much higher, the total cash you make or the amount of money you make might be higher in BNC per unit, 41:24 41 minutes, 24 seconds etc. Uh having said that, uh our intention is to grow if it does slightly ahead of uh revenue, but we will 41:31 41 minutes, 31 seconds continue to prioritize growth uh over other metrics. 41:37 41 minutes, 37 seconds Understood sir. Got it. And so just last question uh now if I uh look at our target for double digit revenue growth one of the things you have mentioned is 41:45 41 minutes, 45 seconds we might look for M&M opportunities. Uh so just if you could help us understand in I believe we have good amount of 41:52 41 minutes, 52 seconds market share in care beauty also uh we are growing and we have manufacturing facilities in many of the major 41:59 41 minutes, 59 seconds geographies. Uh so just wanted to get a better sense. So are we looking at opportunities in the beauty and cosmetics or uh or something new kind of 42:08 42 minutes, 8 seconds a packaging uh just if you could provide some flavor where are we looking? 42:14 42 minutes, 14 seconds Yeah. So I think firstly we must say that we continue to actively pursue uh M&A opportunities. When we look at M&A 42:22 42 minutes, 22 seconds we use two criteria to look at uh targets. One is anything which takes us to a new geography or indeed helps us 42:29 42 minutes, 29 seconds build new capabilities. capabilities we don't have. So we seek uh incremental capabilities or presence in geographies 42:37 42 minutes, 37 seconds uh from a M&A point of view and of course we have other criteria for value creation on it being margin and growth accuratives. Uh keeping all of this in 42:46 42 minutes, 46 seconds mind we are you know actively considering M& but we don't have anything concrete to come back and discuss with you at this stage. 42:56 42 minutes, 56 seconds Thank sir uh thanks for answering questions. 43:04 43 minutes, 4 seconds Thank you. Before we proceed with the next question, a reminder to the participants in order to ask a question, you may press star and one on your 43:13 43 minutes, 13 seconds touchstone telephone. We take the next question from the line of Chira from keynote capitals. Please proceed. 43:20 43 minutes, 20 seconds Yes. Uh thank you for the followup. So I just wanted to understand what kind of initiative that we are taking which is helping us to grow more than 20 43:29 43 minutes, 29 seconds percentage in beauty and cosmetics. Uh if you can highlight one of the few of this yeah I think uh beauty and cosmetics as 43:36 43 minutes, 36 seconds we've been speaking through this uh discussion is extremely important for us and the initiatives we've taken are showing very good results. I think what 43:46 43 minutes, 46 seconds we have done is firstly to build front end and backend capabilities. The PNC business is distinct from oral uh care. 43:55 43 minutes, 55 seconds Uh we have many more customers in beauty and cosmetics. Oral tends to be dominated by a few customers. BNC has 44:03 44 minutes, 3 seconds many more customers and therefore our sales uh effort has to be one of acquiring and retaining customers on an 44:12 44 minutes, 12 seconds ongoing basis. So we've invested in front-end uh capabilities. We've also built a center of excellence uh in 44:20 44 minutes, 20 seconds Mumbai uh which is managing our innovation pulling it all together globally and also building capabilities 44:29 44 minutes, 29 seconds on proofing sampling and so on. Uh and we are also at the same time investing in extruded capacities. So overall 44:37 44 minutes, 37 seconds there's a many things we need to do many new capabilities have to be built and we are investing in doing so. We've been 44:44 44 minutes, 44 seconds doing it for the last few quarters. As you can see, the investments are bearing fruit, but the investments will continue in the future as well. 44:54 44 minutes, 54 seconds Fair enough. Uh and so just from the perspective you have already answered it, that uh the spark on cap cost on 45:03 45 minutes, 3 seconds capabilities we have enhanced. Uh just wanted to have a view that the improvements related to this was taking 45:11 45 minutes, 11 seconds place in the last cycle where polymer prices shot up in 2022. Was that the 45:18 45 minutes, 18 seconds time the new initiative related to pass on cost which is giving us the confidence that down the line it would be much more easier to maintain the kind of margin that we have. 45:30 45 minutes, 30 seconds uh chak u we went through a a cycle where our margins kind of dipped after the RM increases. When we went through 45:39 45 minutes, 39 seconds the ladies and gentlemen, it seems like the 45:46 45 minutes, 46 seconds lines the management has been disconnected. Please stay connected till I rejoin the management. 45:52 45 minutes, 52 seconds [music] 45:58 45 minutes, 58 seconds [music] 46:05 46 minutes, 5 seconds [music] 46:12 46 minutes, 12 seconds [music] 46:16 46 minutes, 16 seconds Thank you for waiting patiently. The line for the management has been connected. You can proceed, sir. 46:22 46 minutes, 22 seconds Okay. Yes. Shira. So last time when we saw our margin contraction we as an organization went through every process 46:30 46 minutes, 30 seconds and introspected saying what went wrong and how can we prevent it from happening again. [clears throat] Uh one thing that 46:37 46 minutes, 37 seconds came out uh was that the pricing discussions that we were doing with the customers were not timely and hence we were out of pocket on many of these 46:44 46 minutes, 44 seconds things. We have significantly strengthened our capabilities to first review our margins at a customer level 46:51 46 minutes, 51 seconds and then also how can we have those discussions with our customers a lot more proactively that we have demonstrated in certain pockets in 46:59 46 minutes, 59 seconds certain uh certain products certain regions and hence feel confident that in case there is a cycle turn that happens 47:06 47 minutes, 6 seconds on commodities we are well equipped to protect ourselves. Hello. 47:17 47 minutes, 17 seconds Does that answer your question? Ch. 47:20 47 minutes, 20 seconds I'm so sorry for my line, but uh it the the your voice was a little muffled. If you could just repeat the last part again. 47:28 47 minutes, 28 seconds I'm saying that uh we have learned from the last episode that happened and we have built in capabilities to review our 47:36 47 minutes, 36 seconds margins and have proactive discussions with our customers to make sure that our margins don't impact it in case the cap 47:43 47 minutes, 43 seconds uh commodity cycle turns and that we are building as a core capability in the organization. 47:49 47 minutes, 49 seconds Happy to hear that sir. Uh and so just last thing uh uh from a longerterm view like five years point of view uh we expecting the internal targets to be 47:58 47 minutes, 58 seconds around double digit kind of a growth in top line. 48:02 48 minutes, 2 seconds Absolutely without doubt our guidance continues to be sustained double digit growth uh revenue growth in the future. 48:10 48 minutes, 10 seconds So it would be fair to assume that we would be growing our beauty and cosmetics into high teams or high team kind of a problem. 48:19 48 minutes, 19 seconds That's correct. That's the model that the beauty and cosmetics there is a significant headroom. We'll grow it in uh high tea uh and then oral and pharma will continue to grow on a steady base. 48:32 48 minutes, 32 seconds That is it from my thank you so much sir. Thank you. 48:39 48 minutes, 39 seconds A reminder to the participants in order to ask a question you may press star in one on your touchstone telephone. 48:53 48 minutes, 53 seconds A reminder to the participants in order to ask a question please press star in one. Now 49:03 49 minutes, 3 seconds as there are no further questions from the participants. I would now like to hand the conference over to Mr. Pratik Tolia for closing comments. Over to you sir. 49:12 49 minutes, 12 seconds Yeah. Uh thanks Anishab. uh on behalf of systematics institutional cities I would like to once again thank all the participants who joined this call. I 49:20 49 minutes, 20 seconds would like to also thank the management for giving us this opportunity. Uh thank you so much sir and thanks for answering all the questions in so much detail. Uh 49:28 49 minutes, 28 seconds so would you like to make any uh closing comments uh sir? 49:31 49 minutes, 31 seconds No thank you very much really uh welcome the engagement of everyone and we look forward to speaking to you again in the future. 49:40 49 minutes, 40 seconds Thank you so much sir. 49:44 49 minutes, 44 seconds Thank you on behalf of systematics show shares and talk limited that concludes this conference. Thank you for joining us in human disconnector online.