EPL Ltd

NSE:EPL

Earnings Call Transcript 2023-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Earnings Conference Call of EPL Limited, hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Tholiya from Systematix Institutional Equities. Thank you, and over to you, sir.

[Pratik Tholiya, analyst]

Yes. Thanks, Jacob. Good evening, everyone. On behalf of Systematix Institution Equities, I would like to welcome all the participants who have logged into this first quarter conference call of EPL.

From the management team, the management team has been represented by Mr. Anand Kripalu, MD and CEO; Mr. M.R. Ramasamy, COO; Mr. Amit Jain, CFO; Mr. Suresh Savaliya, SVP, Legal and Company Secretary; and Mr. Deepak Ganjoo, President AMESA region. At the outset, I would like to thank the management for giving us the opportunity to host this conference call. I would now like to welcome Mr. Anand Kripalu to give his opening remarks, follow which we would like to open the floor for Q&A. Thank you, and over to you, sir.

[Anand Kripalu, executive]

Thank you very much, and hello, everyone. Very good evening, and welcome to the Q1 FY '23 Earnings Call. Before we get into the results, I want to thank those of you who are able to attend our recent strategy conference. And for those of you who could not, I do hope you had an opportunity to peruse the presentation materials that we had shared during their session. Just for your information, it is our intent to repeat this every year.

Coming on to Q1 FY '23. The inflationary environment persisted through the first quarter of FY '23. Polymer costs continue to rise. Energy continued to inflate particularly in Europe and minimum wage increase in the Western world driven by general inflation. All these added to the increase in costs. However, as indicated in our last quarter's earnings call, the major hit came from EAP, where business was severely impacted due to the lockdown as a result of COVID in China. Consequently, revenue for EAP declined by 6.4%.

Given this context, I am pleased that we were still able to grow the overall business by 4.1%. Excluding EAP, revenue growth was 11.4%, broad-based across all other regions. AMESA grew by 13.4%. Americas grew by 20.4% and Europe grew by 10.5%. In the quarter, non-Oral Care grew faster at 11.7%, while Oral Care grew by only 3.2%, predominantly affected by EAP. EBITDA margin was 15.1%, not far from last quarter's 15.4%. Importantly, our efforts on pricing and cost saving programs have started to deliver.

If not for the COVID impact in EAP, our EBITDA margin would have been sequentially higher. Net-net, considering the challenges we are pleased with the performance. Moving on to sustainability, ESG and recognition that we've received. Sustainability remains a theme focus area, be it product, process or people's sustainability. Q1 was strong in terms of Platina and the plan to more than double Platina volumes in FY '23 is tracking well. The company has been awarded a silver medal by EcoVadis for making significant progress on sustainability.

This is a major milestone in our sustainability journey. We received an overall score of 65 out of 100, and we stand at the 90th percentile across all companies, across all industries. Significantly, EPL is now in the top 5% of plastic product companies rated by EcoVadis.

In order to drive people sustainability, EPL donated 186 benches across 4 schools near our factory locations at Wada and Vasind. These benches were made by recycling our own factory plastic scrap.

Brazil, the Brazil project is on track. This new entity in Brazil has been incorporated. We have finalized the location of factory, which is close to one of our key customers. A project team is stationed in Brazil and recruitments are in progress for factory operations. The first commercial delivery is expected by the end of FY '23.

Looking ahead, EPL will continue to drive sustainability in line with our long-term ambition of becoming the most sustainable packaging company in the world. We believe this will be the key source of competitive advantage laying the foundation for long-term profitable growth. Specifically, in the short term, we expect challenges in EAP to continue through Q2, albeit with lower intensity.

However, our comprehensive margin improvement plan, including continued success on price increases, is expected to help us recover EBITDA margins. Additionally, we are seeing early indications of softening of input costs. We expect to see some positive impact of this in Q3.

In conclusion, we would like to reiterate that the business is doing all the right things in the face of these challenges, and will emerge stronger as these dark clouds pass. Hence, we remain confident of our stated objective of delivering sustained profitable double-digit growth with margin recovery.

Thank you. And with that, we will now open this up for questions, and I'll be joined by my colleagues in dealing with some of the questions that you may have. Thank you.

[Operator]

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sameer Gupta from India Infoline.

[Sameer Gupta, analyst]

I have 2 questions. I'll take it one by one. So first of all, sequentially, I would like to ask which are those costs that have seen an increase for us in Americas and Europe? And when I say sequentially, it is versus fourth quarter, here, despite a healthy sales growth, our EBIT margins have actually worsened and they went at a high level in the fourth quarter in the first place. So is there any increased element of competitive intensity, which is inhibiting margins? Or what exactly has gone wrong here in these geographies versus fourth quarter, specifically?

[Anand Kripalu, executive]

Yes. So first of all, I can say this that we are not pleased with the margins particularly in Europe that we have had in Q1. And we are all over this in terms of what needs to be done to fix it. Now specifically to your question, what has moved between Q4 and Q1 is that input commodity costs have actually hardened in Q1 versus Q4. So input costs were higher. We had general inflation-related cost increases in both Europe and the Americas, particularly through wages and so on.

We had specific energy-related costs. And if you're well aware about the energy situation in Europe, that is continuing to escalate. And finally, we had some in production-related challenges both in Europe and U.S. Europe was specifically because of COVID. In fact, in Germany, we had as many as 28 people down with COVID at a point in time, and therefore, our production was severely hampered. And we have some specific operational issues in America.

So what I want to say is that, absolutely, we are focused on improving our margins in these 2 regions. We believe that single digit margin in Europe that has happened in this quarter is not acceptable, okay?

So we are doing whatever it takes. And we believe both volume improvement through operational improvements as well as pricing, not just for commodities, but for general inflation, which is absolutely underway now. All this put together, right, we'll make sure that we consistently improve from this position.

But I just want to leave you the message that we are pleased of this, right, especially Europe, right? In U.S. as well, which is lower sequentially, as you have rightly pointed out. And we are helping on fixing this with the kinds of things that I have spoken about.

[Sameer Gupta, analyst]

Just one follow-up here. When you say input commodity costs are hardened, it is because of the lag that is there for us because of the costing inventory, et cetera, because or aluminum, et cetera, those, I believe, have already softened in 1Q versus 4Q?

[Anand Kripalu, executive]

Yes. So I told where we stand, we carry a certain amount of inventory in our system, okay? And if you look at the graph, you will see that the softening, particularly of followers is really happening in June, right? In May, it was actually increasing, okay?

Therefore, we have actually seen a kind picking those costs in Q1, right? And as I said in my opening narrative, the benefits of softening, right, which will happen by the way, because we know what we are buying now to the benefits of those will really come into Q3.

[Sameer Gupta, analyst]

Got it, sir. That's very helpful. And second question is a little more strategic or a longer-term question. Now if I look at your non-Oral Care revenues historically, I see that it is in AMESA that it has really been in single-digit growth rates over the last 4, 5 years. And if I just remove the Creative Stylo that you have required in FY '22 towards the late end of FY '21. then it is more or less flat so what exactly has been the story of Personal Care in AMESA? Has it been that the underlying market itself has been very weak? Or are we losing wallet share here? What exactly is the problem?

[Anand Kripalu, executive]

Sorry, your question was that Oral Care has been flat a bit in terms of growth?

[Sameer Gupta, analyst]

Non-Oral Care, AMESA. Only AMESA, rest all have been in double digits.

[Anand Kripalu, executive]

Non-Oral Care in AMESA has grown by 9% in Q1 FY '23, okay? In FY '23.

[Sameer Gupta, analyst]

Let me clarify, sir. I was particularly looking at non-Oral Care revenues in AMESA, FY '18 to FY '22.

[Anand Kripalu, executive]

FY '18 to FY '22, I think we'll have to make a note of this question, and come back to you, okay? I just want to say this that our recent efforts on Beauty & Cosmetics and Pharma, you will see examples of that, even in our deck today of conversion from aluminum to laminated tubes in pharmaceuticals, right? That is very clearly gaining momentum, both on the back of CSPL acquisition, which gives us a whole opportunity of customers and manufacturing capacity in extruded tube, right, as well as our own experts.

So I mean -- I believe we remain confident about our ability to grow non-Oral, both in B&C and in Pharmaceuticals, there's a big opportunities to the pharmaceuticals incidentally, there is a large market in aluminum tubes in Pharma and with aluminium prices the way they are and so on, we are doubling up our efforts. And you have seen some of the recent wins, including one that the photograph of which is there in the deck and that's a reasonably large brand. So I think you can ahead on the past, I will have to get back to you specifically. But on the future, I think we are really confident.

[Unknown Executive]

And Sameer, if you see on the non-Oral Care, I'm not going back to '18 and that number we can take offline. If you see last year, March '22, AMESA non-Oral Care has grew almost around 30%. And even if you remove the CSPL. CSPL is also a strategy to improve the non-Oral Care. That was a strategic acquisition from non-Oral Care point, whether we acquire or whether we put up a new plant or new customer, it is a strategy to improve the non-Oral Care. Even if you see this quarter, first quarter is also a growth of almost around 8% to 9% in the non-Oral Care in AMESA. So we will take it offline on the number part, but overall, we see a growth in non-Oral Care in the AMESA region.

[Operator]

The next question is from the line of Sanjesh Jain from ICICI Securities.

[Sanjesh Jain, analyst]

I got three of them. First on the AMESA and Europe,particularly AMESA, sorry Europe, what led to a sequential decline in Europe in the revenue because I guess we were also in the process to take certain prices, [indiscernible] and all, despite of getting 5.5% difference sequentially in the Europe. And as far as USA is concerned, I think we must avoid the [indiscernible] from the lockdown. From Q1 onwards, we actually started seeing some unlocking in the China, a side of it, despite that there is a sequential decline in the revenue. Can you help us understand or reconcile what is leading to the sequential decline in the revenue?

[Anand Kripalu, executive]

So your first question was Europe and the second is on China. Is that correct?

[Sanjesh Jain, analyst]

Correct, correct.

[Anand Kripalu, executive]

Now on Europe, I spoke about it. There is a small sequential decline, right, between Q4 and Q1. Now having said that, I think this business is not unseasonal, it is seasonal. And there are significant differences quarter-to-quarter in current wage ranges, okay? So we know that in the Chinese year quarter, right, there's a lot of disruption in China and volume tend to be lower in Europe, there are some quarters that higher.

So we don't look at the performance of this business sequentially, all right? Now having said that, what I do want to say is that despite the growth that I spoke about in Europe, which was a 10% revenue growth already, this growth would have been higher if not for certain specific ongoing challenges that we have had operationally related to COVID, specifically where in Germany, we were just not able to run our plant and see demand.

So actually, there was unmet demand left in the quarter in Europe, okay? In the normal course, right, the revenue itself would have been higher than what 10% or so that we have reported. Now on China, you'll have to repeat your question.

[Sanjesh Jain, analyst]

Are you clear about the question on China?

[Anand Kripalu, executive]

No. Yes. If you don't mind, please repeat it. So it was a little muffled, so I couldn't follow it.

[Sanjesh Jain, analyst]

Let me let me rephrase it. So one, China, I think the rest of the lockdown impact was in the Q4. In fact, Q1 was where China was in the process of unlocking. I thought there would be a pent-up demand in China post the unlocking happening. And the sequential decline in China, again, is -- can you help us understand what led to a sequential decline in EAP?

[Anand Kripalu, executive]

Yes. So again, I'm not going to comment on sequential decline. But I want to say this that the real impact of China happened in Q1, not in Q4. There was just an early indication towards the end of Q4, right, that the lockdown is happening, but the real impact, the shutdown of plants, the shutdown of our customer locations and so on actually happened in Q1, with April and May being very severe. And with each passing month, the severity reducing, right? And that's why I called out in Q2 saying that some impact will continue. So it's not bouncing back like a rubber band, right? Because, by the way, all the restrictions in China have not been lifted as we speak, right?

There are selective lockdowns that are continuing. But I have called out and said that the intensity of the disruption is reducing, right? And we've seen a bit of that reduction as we have reversed this quarter between April, May, June, so June was not as bad as April was, and April was very severe. And we expect that things to sequentially look a little better, even though there will be impact in Q2, okay?

And that's why we've called this out in full transparency, right? Because if you read the situation on the ground in China, you will know that isolated lockdowns are still quite prevalent in China.

[Sanjesh Jain, analyst]

Sure. Some bookkeeping question here. One on why this quarter we have a very high elimination, revenue has very high elimination. The strong growth in each of the geographical segment is actually not showing up in the total revenue because there is a very high jumps in the elimination. Can you explain what is led to such a high elimination? That's number one.

Number two, there is a significant drop in laminate sales that has bid by [ 22% ]. So why there were lower sale of revenue?

[Unknown Executive]

Yes. So as far as elimination is concerned, that's a normal accounting process, Sanjesh. And to keep the demand requirement in other countries and other subsidiaries, normally, the laminate sale to intercompany is plus or minus. So this quarter, it is high because of the demand which we are seeing in coming quarters, so the laminate supplies are more.

[Sanjesh Jain, analyst]

Okay, but laminate supplies are new, but our total revenue has not gone up to that extent. That means, are we saying that in Europe, there was a challenge in production for you produce from India and [indiscernible] or China, and that's why there was a higher elimination?

[Unknown Executive]

No, higher laminate sales to the subsidiary, intercompany sales.

[Sanjesh Jain, analyst]

Okay. But that did not turn into higher [indiscernible] sales, right?

[Unknown Executive]

It will happen, Sanjesh subsequently.

[Unknown Executive]

Yes. So it is -- that's why I'm saying that it is for the future demand which we have seen the growth in all the geographies. So this quarter specifically, the laminate sale be higher to peer of those future demands. So there are certain inventories, which are under in the sea also in all those things.

[Sanjesh Jain, analyst]

So to that extent, our India or China, wherever the laminate supply has done, that the revenue is slightly looking higher because we have done a lot of intercompany transactions, right? Is that fair?

[Unknown Executive]

Yes, that's the accounting, right? That's why you're seeing consolidated level higher than eliminations.

[Sanjesh Jain, analyst]

Got it. Got it. And why was the lower laminate sales hit by 22% on year-on-year basis?

[M. Ramasamy, executive]

See, there are 2 things will continue to happen. During COVID period of time, we have [indiscernible] certain inventories, okay? We can't continue to operate in that kind of inventory over a period of time, we need to produce. So when to reduce, how to reduce our -- we consider had 2 more elements are happening. Sustainable laminate conversion is happening also in a higher accelerated rate.

So some months, we sell more of sustainable laminates in the intercompany. Some months we sell less. But over a period of time, this year, you will see certain fluctuations in the company's sales, because we are trying to adjust payments. You got it?

[Sanjesh Jain, analyst]

Understood. Very clear. One, on the gross profit margin. This quarter, we have seen a very good jump in gross profit margin sequentially. This is sustainable margin from here on, and it only prove it falling raw material prices.

[M. Ramasamy, executive]

Yes. We continue to see our efforts to continue to recover the price fees on. They are done in some places, some places [indiscernible]. We will continue to keep margin improvement. Plus, there are lots of work on [indiscernible], we explained in the last call, cost efforts and everything is continuing. Those are also will start yielding as we go along. So you will continue to see gross margin increase.

[Sanjesh Jain, analyst]

One last on my side on the Brazil, you have disclosed that we are going to invest close to [ INR 1.3 billion ] in Brazil. What is the asset term we are looking on this investment? And when should we see like full utilization level in Brazil?

[Anand Kripalu, executive]

Yes. So like I said, our intent is to start commercial production by the exit of this fiscal. The decision to go ahead with this investment met the thresholds we have in our business for payback, okay?

So it has met our internal thresholds. We believe that we could even beat that case because right now, we have done the entire evaluation based on the commitment of one customer on the back of which we have gone and set up this facility and made this investment, but there are several other customers who are very keen to do business with us. At the moment, we have operations on the ground, we believe that many of them will come to us. And that will help us to beat the threshold case based on which we took this investment decision, right?

Now when will we fill the capacity and so on. I think we will wait and see how this evolves. But these are the broad contours of our investment decision.

[Sanjesh Jain, analyst]

But generally, what is the thumb rule of an asset turnover there?

[Anand Kripalu, executive]

I don't think we'd like to share specifically what is our thumb rule, right? But it has met our internal thresholds and our internal hurdles, right? That is why we have gone ahead and our Board has approved the decision to go ahead because it was financially effective, right, and that's the only reason why we applied and done it.

[Operator]

The next question is from the line of Sumant Kumar from Motilal Oswal.

[Sumant Kumar, analyst]

Price increase, we have taken in the month of July?

[Anand Kripalu, executive]

Have we taken any prices in the month of July, we are taking price increases every month, okay? Including price increase in July, right? Now, it may be different customers in different geographies, but somewhere, some customer price increases are happening.

I think the larger message I'd like to give is this, that we have doubled or tripled our intensity of price increases, coupled with our efforts on driving cost savings so that we can get margin improvement. I think we have seen increasing success on price increases, not only relating to polymers and input material costs, but also price increases related to general inflation, which are becoming more and more critical in the Western world because input materials is only a part of the cost increases that we are suffering, right?

And I feel confident that our pricing efforts is bearing dividend. And the cost movement in the world today are dynamic. So too is the need for pricing to be dynamic. And pricing in this industry follows cost increases. And every time there's a cost increase, there's a price increase that we are pursuing. And therefore, it is ongoing. And every month, there is something that's happening.

[Sumant Kumar, analyst]

So how much price increase we have taken effectively in month of July?

[Anand Kripalu, executive]

Yes, I can't give you a specific number like that because whatever number I give you will not be correct, okay? The reason is that in some geographies, some customers we took significant price increases in Q1, right? And in some geographies, some customers, we'll be taking significant price increases as we see now in Q2, which is July included, okay? But I am hesitant to give you a number specifically on that.

[Operator]

[Operator Instructions] The next question is from the line of Shivangi Mehta, an Individual Investor.

[Shivangi Mehta, analyst]

Sir, in one of our earlier investor calls, we had mentioned that we want to achieve a mid-teens margin in Europe. But now with the current situation, the current energy situation in Europe, which looks more structural than temporary, do you feel that this target is achievable?

[Anand Kripalu, executive]

The mid-teens goal remains our aspirational goal and that's the end game, right? Now obviously, there are all kinds of hurdles and barriers to getting there. I think our first objective is in to be in the teens in terms of margin, okay? Then we'll get to mid-teens, okay? And we are putting in every effort to make sure we get there. First at getting to double digit, back into double digit where we were earlier, right, and then into the early teens at least, right?

But I'll say just that while mid-teens remains aspirational, single-digit margin is unacceptable, okay? And therefore, we will do other things to get into double digits and then gradually make our way into the teens and then into the mid-teens. But we are dealing with this energy. The energy thing is quite exceptional, both the energy thing and the general inflation led wages that are going up in Europe is quite exceptional, right? And honestly, it would have been very hard for anyone to forecast. 9%, 9.5% inflation in Europe. Energy costs, not just doubling, even beyond that, anyone would have found it hard to forecast this even a quarter or 2 ago.

So it's the dynamic nature of the environment we're in. We have to keep changing our tactics and strategies to deal with this new information or this new challenge. And I just wanted to know that we are all over it, right? And I'm very confident that we will start making progress towards double-digit and beyond.

[Shivangi Mehta, analyst]

Sir, my second question is on -- even if the commodity prices just stay at these current levels. And we are able to get the price hikes that we are seeking from the customers. What kind of margin level do you feel we can be going ahead? Is it that the pre-COVID level margins of 20%, 21% at the EBITDA level, do you feel that is something that we can achieve, if we are just able to get the price hikes and the commodities just stay at where they are?

[Anand Kripalu, executive]

Yes. So I can't tell you whether this will go back to those numbers, right, specifically because you also know that with all the inflation that happened, there's also mathematic translation loss in the absolute numbers, right? However, do we expect that our pricing, our cost-saving initiatives and the softening of commodities as they happen, as we are beginning to see the early signs that a combination of these will get us back to the kind of profitability we had. That is absolutely our ambition, right?

To get back to the kind of what percentage margin is there is a matter of mathematics. But that is our intent, to make sure we continue to persist on pricing that we continue to drive cost savings, and we harness as much of the commodity softening as we can. Now the carrier to all this is, do recognize that there is some part of our business that is contractual and softening of commodities will also, therefore, impact pricing with those contractual customers.

As indeed, we have seen it happening when things have gone up. The only difference is that when it's gone up, we have lagged pricing. Pricing has lagged the cost increase. When it goes down, hopefully, it will lead, right? And we will be able to retain some pricing before the prices go down based on input commodities, okay?

So we should aim to gain back some of the stuff that we have lost. But that is the equation. So absolutely, the ambition is to get back to the order of profitability that we had, it's a bit strange because the commodity [indiscernible] and lots of things need to happen. But that is what we are working towards.

[Operator]

[Operator Instructions] The next question is from the line of Resham Jain with DSP Investment Managers.

[Resham Jain, analyst]

I have a couple of questions. The first one is on the competition, given that [ DSPR ] seeing subdued performance from our side, but I think there will be many smaller players who might be seeing much more higher pressure than us. So are you seeing some of the smaller marginal players going out of system or are on the verge of moving out or something like that? If you can just give some sense around that.

[Anand Kripalu, executive]

So I can't comment on whether some of the smaller customers have gone out of business or shut down. But what I can tell you is this, that our business will, right? The momentum on our business wins continues strongly, which means we are winning business that was either to done by other competitors, right? And that reflects strengthening of our business and correspondingly, weakening of some of those competitors. And I think that's the way for us to really think about this.

[Resham Jain, analyst]

Okay. Like -- and secondly, on the overall equation between the production cost, let's say, between Western world versus, let's say, India. Are you seeing export opportunities also emerging for you? Or because of the nature of the products that might not be the possibility?

[M. Ramasamy, executive]

I think, as you rightly pointed out, there's a production cost accounted in countries like India. But this is -- we are transporting primarily, yes, right? So it's not very cost competitive in terms of transportation. And in the recent past, freight cost also has gone very high, right? So it's a -- there are certain diameters possible, there are certain diameter not possible. There are supply chain challenges. Most customers doesn't want to hold inventories.

So we need to look end-to-end to see whether we have a winning proposition in terms of vacant in local countries, so which we continue to evaluate. There are exports we do. There are export we don't do. So we look as the case arises.

[Anand Kripalu, executive]

And let me just add to what Ram said. You see, I think the power of EPL is that we have local manufacturing across the world close to the demand. So we have a unique opportunity to actually ship laminate out of places like India and China and make the tube, which is the air part, right, closer to where the demand line.

So based on an exception, we can export out of India. But as a rule, it is far more efficient for us to ship the web, make the tubes closer to the demand, right, and deliver it locally there when freight will be much, much lower.

[Resham Jain, analyst]

Understood. I have one last question. On the cash utilization, let's say, for this year and next year. How are you looking at it because you have a very healthy dividend payout ratio. So just from a cash utilization perspective between CapEx dividends and working capital, how are you thinking about it?

[M. Ramasamy, executive]

So Resham, I can't be very specific on the numbers. But priority-wise, first is the business and the growth. And then whatever is the cash available, which you know that we are consistent on our dividend payments.

[Resham Jain, analyst]

What is the CapEx plan for '23?

[M. Ramasamy, executive]

CapEx plan, again, the guidance is same that normally, in a 3- to 4-year average range, we invest the depreciation amount. And in FY '23 almost so it will be more or less same or equal to that depreciation. But one thing which I just want to inform here is that the Brazil project is separate out of this CapEx because this is a greenfield project and that's a strategy project.

[Operator]

[Operator Instructions] The next question is from the line of [ A. C. Gilpin ], an individual investor.

[Unknown Analyst]

Regarding tax, in Q4 and Q1, I find it [indiscernible] and also depreciation is also slightly higher in Q4 and Q1. Any reason for the tax increase?

[M. Ramasamy, executive]

Can you come again?

[Unknown Analyst]

Between Q4 and Q1, tax increase is higher. And any reason the turnover -- I mean, what are the same turnover, but to the tax increases side? Any reason?

[M. Ramasamy, executive]

So the tax part is -- it depends on the country mix of the profitability and the taxable incomes and everything. What I can say is that the effective tax rate for the year will be around 27% to 28%. But quarter-on-quarter, it may move based on the country mix.

[Operator]

[Operator Instructions] The next question is from the line of Shivangi Mehta, an Individual Investor.

[Shivangi Mehta, analyst]

I just had one question regarding the revenue growth. So are there any areas that we are working on that could really provide us a step jump in terms of the growth? Like, say, for example, earlier, as you had mentioned also in your opening remarks on the Pharma segment, your work, also hand sanitizers when the pandemic struck, we had also worked a lot out there. So are there any step jumps which could really give us some sort of impetus when it comes to revenue growth?

[Anand Kripalu, executive]

So I'm not sure I can say step jump, okay? But I'll tell you that, first of all, our efforts at our -- building our business development pipeline right, has been significant, and we believe that the pipeline is very rich, and that's going to give us significant volumes.

And the volumes there will be much more in Beauty & Cosmetics and pharmaceutical right, in line with our strategy, okay? So that is about ongoing growth. But I can tell you that we believe that the future growth rates will be better than the past, at least based on the richness of the business development pipeline we have. The other sectors that we are looking at is obviously conversion of aluminum tubes, and I've already spoken about that earlier, and that's another factor.

The third thing is looking at markets like Brazil, right, and Brazil will come in and will hopefully be material to our total revenue performa, okay?

And finally, we are still on the hunt for M&A opportunities that can create a further step change, particularly in geographies where we believe there's an opportunity, all right? So I would say these are the factors that we are looking at in terms of making sure that the future growth trajectory of this business is much better than the past.

[Operator]

As there are no further questions from the participants, I now hand the conference over to Mr. Pratik Tholiya for closing comments.

[Pratik Tholiya, analyst]

Systematix Institutional Equities, I would like to thank all the participants and the management for this candid discussion. I'd like to request the management if you would like to make any closing comments?

[Anand Kripalu, executive]

No, I'd just like to thank everybody for being engaged and supportive of our business as we traverse these choppy times. And all I want to say is that I think there is light at the end of the tunnel. And when these dark clouds past, I think this business is going to be stronger than ever.

[Pratik Tholiya, analyst]

So thank you so much, sir.

[Anand Kripalu, executive]

Thank you very much.

[Operator]

Thank you. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.