Gravita India Ltd
NSE:GRAVITA
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
740.9
2 664.65
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Gravita India Ltd
You don't have any saved screeners yet
Ladies and gentlemen, welcome to the Gravita India Limited Q4 FY '22 Earnings Conference Call hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sabri Hazarika from Emkay Global Financial Services. Thank you, and over to you, sir.
Yes. Thanks, Vikas. So good afternoon, ladies and gentlemen. I welcome -- on behalf of Emkay Global, I welcome you, everyone, to this Q4 and FY '22 Post Earnings Conference Call of Gravita India Limited. So we have with us the top management of Gravita, Mr. Yogesh Malhotra, CEO and Whole Time Director; and Mr. Sunil Kansal, CFO.
So today's session will be a brief on the results by the management, and then we'll be moving over to the question-and-answer round.
So without any further delay, now I request Mr. Malhotra for his opening remarks. Over to you, sir.
Thank you, Sabri. Good afternoon, everyone. Thank you for joining our earnings call for Q4 and financial year '22 results. We have already circulated our earnings presentation, and I hope you have had the opportunity to go through the presentation. And we would be happy to take any questions afterwards.
We will begin this call with a brief discussion on performance and financial results of quarter and year.
In the fourth quarter of the fiscal year, Gravita continues to maintain the growth momentum as the overall economy saw reduced impact of assets and improving business environment and broad-based increase in consumption. I am pleased to report that we have delivered strong financial performance supported by healthy growth in production volumes and higher realization across business segments. Our revenue from operations stood at INR 666 crores, registering a growth of 52% from INR 438 crores in same quarter last year.
Domestic business continues to lead revenue growth with 64% share, while overseas business contributed 36%. Business segments have delivered strong growth on a year-on-year basis. Net revenues were up by 47%. Aluminum revenues were up by 104% and plastic revenues were up by 49%.
In terms of volume price mix, the ongoing geopolitical tensions have resulted in broad-based increase in commodity prices, which had a favorable effect for revenue growth.
For the quarter, volume growth was 23% on a year-on-year basis and total tonnage was 37,000 metric tons with EBITDA per ton also improving in all these segments.
Company has delivered an adjusted EBITDA of INR 73 crores, a growth of 102% on a year-on-year basis from INR 36 crores in same quarter last year. EBITDA margins have increased by 273 basis points to 11% compared to 8% in Q4 financial year '21.
Margin improvement was delivered by improving operational efficiencies, increased share of value-added products, higher volumes and higher contributions from our overseas business.
Imported net profit for the quarter was INR 41.34 crores compared to INR 21.35 crores in the same quarter last year. On a full year basis, company reported revenue and operations of INR 2,216 crores, a growth of [ 57% ] on a year-on-year basis. EBITDA stood at INR 215 crores, an increase of 83% on a year-on-year basis with margins of 9.7%. Reported net profit for the year was INR 139 crores.
We continue to generate strong returns for our shareholders in the financial year '22. ROCE stood at 29% as compared to 18% in financial year '21. This is in line with our target and is a result of a well-defined growth strategy supported by improving industry dynamics, reduction in working capital and improving product portfolio.
I would not -- now let me update you on some important developments for the quarter. In February, the refined debt of 99.9% purity and above produced by Gravita has been empaneled as approved to lead brands at [ MCS ]. This allows us to hedge on the Indian lead market as well as give us additional opportunities to work in the domestic lead market. In May 22, our shutdown subsidiary recycling Ghana Limited based out of West Africa has bought into operation a rubber recycling plant, the company has incurred capital expenditure of INR 3.8 crores for setting up this 6,000 metric tons per annum capacity, which has been funded through internal accruals.
Commercial production has started, and that and that [ March ] will augment our strategy of diversification in different business segments. Reduction in cost of production helped us improving carbon footprint of the company. We will be utilizing our learnings from this plant with [indiscernible] similar rubber recycling facilities at our other manufacturing locations as well.
We also faced certain challenges. Power and fuel costs have seen unprecedented increase. Also, there were some global disruptions in logistics. So the finished goods and transit inventory has piled up. Also due to unrest or slowdown in the economy in Sri Lanka, there have been certain operational issues due to which the volumes have been slightly lower. We expect the Sri Lanka volumes to continue to operate at lower volumes in next quarter as well. However, they will not have major impact on the group as we are fairly geographically diversified, and our capacity growth and technology improvements keeps us in a better position to manage any disruptions arising at any specific location.
I would also like to mention that the consistent growth is delivered by the Gravita is a reflection of our commitment to shaping a sustainable world. Our focus on developing new recycling verticals and better technologies has resulted in improving product portfolio, higher operational efficiencies and expanding business, which is creating value for all stakeholders and shareholders.
We are optimistic for the year ahead and look forward to a transformational growth phase for Gravita India. Thank you very much.
And now I would like to open the floor for question and answer.
[Operator Instructions] We take the first question from the line of Mr. Rahul Bhangadia from Lucky Investment Managers.
Congratulations on a good set of numbers. I have 2, 3 questions. First one on the balance sheet, sir, I can see that the creditors had dropped -- has dropped off quite a bit in the last 6 months. September, about INR 230 crores. It was the number, and now it's down to about INR 90-odd crores. This is contrary to the general expectation that as you increase your local sourcing, your creditors should be actually in a position to fund your inventory correspondingly because the creditors has gone down, debt has gone up. So if you could just explain what has happened here.
Sure, sure, Rahul. So basically, in recycling business, practically saying there is no creditors as such because whenever we buy the scrap, we need to pay upfront. But as an exception, as we are sourcing the scrap from various OEMs like Amara Raja. So they give us the scrap, and we just need to give them the finished goods in turn convert into the metal and supply it back to them. So this model we adopted and initially, when we started this model. So there was some timing gap. Our inventory was -- their inventory was lying with us for 2 to 3 months, so which has now reduced because they want the inventory back in 1, 1.5 months. So that -- their inventory has also dropped and correspondingly, their table is also dropped. So basically, there's 2-way [ effect ].
So essentially, data arrangement, the inventory to data arrangement has gone down. So the INR 230 crore kind of credited number that you had in September balance sheet is now down to about INR 90 crores. All that is all practically led by that drop off of the inventory? Is that what you're saying?
Correct. So that is the only reason for dropping this inventory of Amara Raja batteries, mainly.
So then how do we incrementally look at this, or in the sense that then the initial.
Now it's more stable because now that cycle is almost 1, 1.5 months. So it is already stated. Actually, initially, the problem that our capacities were not ready to take on any additional inventory from their side. But now as we've ramped up our capacities now we are in a position to give them the inventory back within 1 month itself.
So this is going to be now incrementally the nature of the working capital out here because in 1 place and presentation, you've also mentioned that you want to reduce the number of days down to 60.
Yes. Yes. So this is going to be the -- so this is proportionately -- this will be number is changing according to the size of the business from that segment. So other numbers will not be in the same line. So like we are sourcing with other telecom companies also. So that is -- there is no credit on that side.
Okay. Okay. But you still stand by your target of reducing the working capital to 60 days?
That reducing our working capital is more on account of more domestic volumes. So as such whenever we are reducing the volume or we are sourcing in Mundra, so as you know, Mundra is our newest plant. So we are very close to the port. So as soon as we source to the Mundra or the source of scrap in overseas plants instead of bringing it to India, and India is dependent on the more domestic scrap, which is also growing. So we will be reducing the booking capital cycle. So working capital cycle will be used on reducing the import in India.
Sir, if you could help us with the debt number on the balance sheet, I have a rough sense, but if you could give us an exact number.
The total debt -- on the net debt after reducing the cash portion, it is approximately INR 350 crores. Out of that INR 110 crores is long-term debt and INR 230 crores, INR 240 crores is the short-term debt. So mainly short-term debt is mainly on account of the inventory.
So this INR 350 crores, what was the same number, sir, in September and last March, if you have that number handy?
Yes. So it was approximately, I think, INR 280 crores last year.
INR 280 crores last -- so INR 280 crores has become INR 350 crores March to March?
That's correct.
Okay. Sir, second is on the CWIP that we see in the balance sheet. If you could just give us a sense of where all we -- were all the -- what are the CWIP represents in terms of expansion plans?
So various whenever we do some CapEx, like we are doing some new plants like Mundra, we are also expanding to the Phase II. So that is 1 in this CWIP. Another thing is that we have -- we are also expanding at our Chittoor plant. That's also one of the components in this CWIP. Another is that we are also coming up some -- one more plant in Africa in Togo. So that is also part of this CWIP. Other than that, Senegal is the location where we are expanding with our own location. So with a better -- bigger size of facility to -- in the same business. And along with that, we are also adding up aluminum business and rubber recycling in Senegal. So all these things are a component of this CWIP, which is significantly higher in this year.
So third question will be, sir, given all these expansion plans and some of the previous expansion plans, which would have now come into commissioning and started kind of getting into the numbers. What is the kind of volumes that we're expecting in 2023, FY '23?
Rahul, basically, as we have mentioned also earlier also that we are going to have approximately 25% growth in the volumes every year. So that we have sticked to that number of the volume growth.
Okay. So FY '20, 25%. In FY '22.
Yes, 25% -- approximately 25% to 30% growth in revenue numbers, [ I think ] volume growth sorry, not in revenue numbers year-on-year, we are expecting.
And sir, my final question before I just join back the queue. This gross margin, while it is steady at about 21%, 22%. On a per tonne basis, this has gone up. So you still stand by your initial comments that you used to give where EBITDA margin of 8.5%, 9% kind of number? Is there a change there? How do we look at this?
So as gross margin in a similar kind of range. But the fixed cost remaining the same. So we are making better margins on the EBITDA side also, and [ PAT ] is also improving. So yes, definitely, we have improved. We are in the range of 9% to 10% now. But -- so it is all 2, 3 things is the driver to this. One is more volumes. Another is the more value-added products and more contribution from the overseas business. So what we say, 3 things, which is helping us from bringing it from 8 to 9 to 9 to 10.
So no element of higher commodity prices helping you in a per tonne gross margin here in the business?
Not in that, but to some extent, in aluminum, we have seen certain improvement in the total gross margin because of the commodity prices.
Okay. So lead doesn't have any element of inventory gain or commodity price gains, you are saying?
No, we are fully hedged.
We take the next question from the line of Raj Shah from [indiscernible] Capital.
So congrats on very good number. My first question is that the plastic division has seen substantial increase in margins. Also if you could just throw some light on what has led to that increase? And is it sustainable or not?
Yes. So actually, plastic business has just started to stabilize for the past 1 to 2 years because of the COVID as we already mentioned sometimes back in our presentation that because of the COVID decrease in the business is, especially our PET business, which is dependent on overseas in Central American business. But now that has started stabilizing, and we see huge growth in terms of the value we can unlock in that region. Also because there are certain policy changes that has taken place in the markets we supply to, like the U.S. and the Europe where they have made recycled food grade plastic mandatory for use in bottle to bottle applications. So we are taking advantage of those benefits, and we believe that the margins will continue to remain on similar lines, around INR 15,000 to INR 17,000 per tonne.
Okay, fair enough. And the effective tax on a consolidated basis is fairly low. If you could just help me understand that why it's that low?
Yes. So we are -- so basically, we are into -- so as the overseas business is growing, so we are into certain geographies. There still taxes practically 0 because we are in 2, 3 zones in certain new graph like Ghana and Tanzania, which is contributing significantly in this bottom line. So the average tax rate is close to 10%, 11%. And we believe that with the coming future growth also, we are expanding in overseas in further -- we are expanding in Senegal also. We are coming up with the new plant in Togo, which will also be a tax-efficient geography. So we will be continuing to -- in the range of 10% to 11% of tax in future also.
We take the next question from the line of Piyush Mehta.
Sir, just a couple of questions on -- I think the finance cost, which you mentioned, which you mentioned is actually the adjustment to interest cost. Is this a one-off or will we keep seeing it as long as this. So can you explain the nature of this incremental almost close to [ INR 8 crores ] cost. That plus the ForEx cost, which we've taken INR 6.7 crores the nature of these 2 costs that are coming.
Okay. So the one reason of increase in the finance cost is an increase in the debt. One part is that -- but the major part in this quarter is on account of like we do take some foreign currency borrowings in the form of [ PTFC ] and [ buyer's ] credit and all. So this borrowing, there is some onetime loss. We have booked, which will be as against inventory. So whenever the inventory will be sold off. So we will be getting some operational gain on that account. But this is onetime booked on an [indiscernible] basis in the finance costs for this quarter.
But the corresponding part of this gain will be reflected in the operational income in the P&L.
Okay. Okay. So now that we booked it, as you said, whatever gain could come would come from the sale of whatever -- from the goods -- okay. And the ForEx cost of 6.
[indiscernible] brought on the lower price, lower dollar price. We have already paid that goods -- for the goods. So this will be whenever this goods delivery exported against -- export order we already have so that gain will come.
But it still will not be to -- added to the tune of INR 7.9 crores.
So that's in the range last year book is approximately 6 crores in this finance cost.
Okay. Okay. Understood. And the ForEx cost of INR 6.7 crores.
ForEx? ForEx cost?
The ForEx cost, if you see in your expenses items that will be reclassified to profit and loss, you have shown foreign currency translation reserve.
So this is only INR 6 crores approximately. We have booked in this finance cost. This is the only loss.
Okay. Okay. Understood. And the one of the slides, I think it was Slide 19. I saw that the value-added products from FY '21 to '22 has fallen from 44% to 42% as a percentage of total revenue. But during the same then our margins have moved much higher. Can you explain the anomaly -- the anomaly.
Yes, that will be -- yes, so this is basically a onetime situation because as we mentioned that there had been some logistic disruptions. So some of the finished goods is lying there in the plant and also because we could not get to sell it to the OEMs. We have diverted some of the material to the traders. But this is just onetime otherwise we are in line with our commitment to increase the value-added products overall.
So do you mean that the...
So in this quarter, what was happening is that there was some logistic disruption. So we were not able to bring the goods for value addition to India. So -- and we were compelled to sell some of the goods directly from the subsidiary in that -- before we do undertake some value addition. So we have to sell that to some other countries to the trader. This is a one-time impact, and we will continue to increase this number.
So do you mean to say that the revenue growth could have been much higher if things were okay?
Yes, to some extent, yes.
Okay. And in terms of volume guidance, we mentioned that 25% to 30% % growth in volume, but in absolute numbers, will Mundra -- like how much in Mundra contribute for FY '23 Mundra, Chittoor. Chittoor, also we've indicated that we are investing [ INR 22 crores ] of CapEx, and that would result in a large revenue addition.
So Mundra plus Chittoor with international, what is the overall volume number that you could see. International could be tricky, but Mundra and Chittoor is acute in terms of volumes for FY '23 that we could see?
So Mundra, we have a big capacity of approximately 20,000 tonnes at this moment. And we are also increasing the capacity by mid of the year or by third quarter. So the total volume number from Mundra should be close to approximately 22,000 tonnes of lead. And we are also planning to have aluminum recycling also in the future in Mundra. So that whatever we import and export to -- for aluminum also that can be -- that can be done from Mundra itself.
And for Chittoor, the capacity of Chittoor is approximately 44,000 tonnes, including plastic and the lead part. And so this year, we did approximately 36,000 tonnes from Chittoor. But going forward, we should -- we are planning to increase this number from 36,000 tonnes to approximately 45,000 to 47,000 tones.
Overall if you talk about India business would again similarly by around 25% in volume terms. And overseas -- this is also grow at the same level. So there is no change in the mix in terms of growth from all these 3 segments.
So how much would Mundra contributed in this quarter?
So Mundra, as it was started initially, so only approximately 4,500 tonnes we did it from -- so this was the only quarter because we started somewhere around November. So 4,500 tonnes is the volume number.
So quarterly, we could do anything between 5,000 tonnes to 5,500 tonnes?
Yes.
Okay. Okay. And -- okay, right. And how much does Sri Lanka subsidiary contributed to overall revenues?
So Sri Lanka, overall revenue contribution is somewhere around 5% to 7% only. It will not impact us that much because we have other -- and it has not stopped completely. We are still doing [indiscernible] business. It has really gone out to some extent, and we feel that probably in 1 quarter, we will be back to normal. But even then, we are increasing our capacity in Ghana, also in Senegal, Togo, our new plant is coming up. So we believe that we are in a good position to manage whatever disruptions Sri Lanka brings.
Okay. So over the next year, as we scale up Ghana, Senegal to go, what is the CapEx that we envisage?
It's around INR 70 crores to INR 80 crores in the next year. The total CapEx, including the CapEx in India as well as overseas.
This is all fresh CapEx, right?
Sorry? All fresh CapEx in the existing verticals.
Right. And usually, what is the asset turn on the CapEx? Because I know the Chittoor one has some crazy asset turns, but on an average, if they're doing such CapEx international or domestic, what is the asset turn?
So asset turn is approximately 8x to 9x what we achieve normally.
Okay. Okay. And in terms of the EBITDA per tonne, you said plastic will keep getting better. And is that the case for -- so we -- of course, saw a drop in aluminum. What was the reason that you said drop in EBITDA per tonne for aluminum this quarter?
Aluminum, we do not have a hedging strategy as of now because the volumes are lower and also because we are into alloys and it's 100% hedged aluminum because we are not getting into pure aluminum. So it has gained certain EBITDA margin because of the improvement in the prices of aluminum. So we try to make it a neutral in the sense that we try to oversell whenever the markets are going up because we don't want to take into consideration the volatility of the market. But we believe that we still make certain EBITDA margin because of this increase in the commodity prices. So if the commodity prices remain stable, I think there will be around INR 2 reduction in the total EBITDA margins maximum.
Okay. And with the Mundra scaling up completely Chittoor coming in -- just a follow-up question Yes. Just a follow-up question. So in terms of lead, since Chittoor and Mundra would be coming up. So the EBITDA per tonne will only increase from here for lead?
Not EBITDA per tonne increase will not happen from the Indian business going forward because most of these businesses, the additional business would come from kind of buying and selling arrangements with the OEMs. So this will not increase the EBITDA margins, but because the inventory -- I mean, it's a 0 working capital business. So overall, return on capital was increased, but the EBITDA margin could be a little lower than the overall EBITDA margins of the business or its incremental business. But overall, the EBITDA margin pattern for lead business will remain same in the -- in the same -- similar range.
We take the next question from the line Mr. Nitin, a private investor. [Operator Instructions].
Regarding cash flow from operations and therefore, FCF has, in fact, reduced kind of robust revenue growth in this year, which is somewhat underwhelming. Could you share some color on this, the management's guidance for OCF and FCF for FY '23 and FY '26.
So this negative free cash flow is because of, as we mentioned, that there was some inventory pile up because of some logistics disruptions. So going forward, as we are reducing the working capital cycle. So there will be free cash flow generation, positive generation even considering the CapEx of INR 70 crores, INR 80 crores every year. So we will be generating some free cash flow from FY '23 onwards.
Okay. Secondly, as per your investor materials, which went out that most of the sales are in India, the most of your profit in fact come from your overseas operations. This is also evident from the difference between consolidated and standalone numbers and Y-o-Y changes in the same. So could you please share some light on this? And how could the picture change over the next few years?
So I mean going forward also this will remain similar in the sense that we made more margins from our overseas business because the procurement cost, because we have a very vast network of our own procurement yards in various countries. So our overall procurement cost is quite low as compared to the procurement costs in India. So that gives us a better margin -- that gives us better margins in our overseas businesses. So it will continue to remain on the similar lines because in India, what we do is we import all the material from the similar locations. So the logistic cost eats up most of the gross margin from the business. But as we have now increased our capacities overseas and also as we have increased the capacity in Mundra. So that will also add on to certain gross margin numbers from the Indian business as well.
Yes. But don't you think that the increase in crude oil prices could partially offset the advantage of scale for us and therefore, our margins.
Eventually, in the shorter run, yes, you could see certain disruptions because of the increased fuel or power cost. But eventually, it's -- we have only -- our company that is into processing. So in the end either from the buyer side or from the seller side, there will be certain changes. We are already discussing in terms of premiums over the -- increase in premiums from the seller side also because the overall number for everybody will increase or decrease. Whereas in our [ favor ] what we are doing is we constantly finding new ways to take care of these increasing power costs as Sunil already mentioned that we have put up a rubber recycling unit, and we are getting a [ fuel oil ] from this unit to for our own consumption. So that -- and slowly we want to build up these capacities in almost all our plants so that will take care of the increase or decrease in the power cost in the future product sales.
And in addition to this, we are also focusing on increased use of solar power, so which has also helped us in reducing the power cost.
We take the next question from the line of Shanti Patel from Shanti Patel Investment.
The next question is from the line of Mr. Faisal from H.G Hawa and Corporation.
So this is like looking in a very interesting space with the entire coming into so much focus. So will we also go more multi-location or multi-country or our strategy will be to -- more spread out in India itself? And what would our breakdown between metals, plastic and paper, et cetera, in our entire revenue?
So the current business is that we are in, we believe that we will grow both in India as well as overseas. We see huge opportunities, both in India because of the change in the policy mechanism of the government. There is already talks about EPR, then we have battery-waste management rules coming into picture. So we see a huge growth in India itself because we believe now the recycling would start happening in the organized sector, which was earlier happening only in unorganized sector. So there also -- there is this huge growth opportunity. But overseas also, we are very -- because most of our operations are in Africa and to some extent in Central America. And both these economies are growing at double-digit figures.
So we see huge opportunities in these countries as well. So in both these cases, we would be growing. So in the end, we believe that the number is currently at around 35% to 40% of overall revenue will continue to come from overseas, whereas India would continue to remain at 60% to 65% going forward also.
So would it be a fair statement like that our company will grow like at 15%, 20% in terms of tonnage for the next 7 to 8 years, at least. Will we add more geographies?
So for the next 2 to -- 3 to 4 years, definitely, we are targeting a growth rate of 25%. And going forward, because we are also planning to enter into other verticals like e-waste, lithium, copper, paper, steel. So we can see the growth numbers going -- even better going forward.
And is there any thought process within the company to go for like a cooperative model or to adopt any technology to really take unorganized sector also along with it and rather than try to build up its own organization, try to have a kind of like an [indiscernible] unorganized sector also take up volumes through them.
When we talk about organized or unorganized sector, I mean, it's different in the sense that we definitely the unorganized would be -- would remain the part of the -- so overall recycling scheme. It's not going to go away, but the only thing is to make them work in an organized manner. Because in the industry, we are -- especially lead is the hazardous material. So we want -- even the unorganized sector to do it in a proper manner so that there is no health hazard to the society wherever they are working. At the same time, there is kind of -- I mean in unorganized sector generally they don't pay the GST, if they start doing [ VAT ] also because there is currently a mismatch between organized and unorganized sector base was remaining sustainable in terms of environmental sustainability and also because based on mismatch of paying the GST and not paying the GST.
Once that starts coming into picture from -- even playing deal for all. I think there is no difference between unorganized or organized sector later on.
And can you give some examples of are we adopting technology to really increase our business and making things more simpler.
I think we've mentioned sometimes back that we also have our own project division, where we develop, make, fabricate, design recycling plants, and we give turnkey solutions to all, not only all of our materials that we use are designed and developed by Gravita, we also give the solutions to others in terms of lead and aluminum recycling. So we continually see people doing R&Ds. We continuously start doing process improvement, and we continuously try to find a solution for better environment -- environment friendly processing basically.
We take the next question from the line of Pranay Jain from [ Nevill ] Capital.
And congratulations and gentlemen, on a strong show. Couple of questions. One, out of the 25% volume CAGR that we are penciling for the next 3 to 4 years, could you give a sense of the rising contribution from plastics and rubber at least for the next 1, 2 years?
Yes. So as we earlier discussed also that we want to decrease the dependency on the lead business. Although lead is also growing. So we are trying to increase the higher growth in case of plastic and the aluminum part. And even from the new verticals like rubber and we are also coming up with the copper recycling. So the contribution from rubber, sorry, plastic and aluminum is currently approximately 16%, 17%, which will be growing to approximately 25% or more in the next 2 to 3 years.
And how would the margin profile shape up as our facilities mature and become more efficient, not just in processing, but also procurement. What's the EBITDA per tonne or EBITDA margin aim in the next 2 years?
So EBITDA per tonne in the case of plastic, we have recently improved on significantly from earlier to approximately INR 17,000, INR 18,000 per tonne. So plastic should be in a similar number of INR 17,000 -- INR 16,000, INR 17,000 per tonne. Aluminum is also slightly higher, it was earlier because of some gains on the inventory side because of some partially hedged inventory. But going forward, it should be in the range of INR 18,000 to INR 20,000 per tonne. And lead that should be similar in the range of INR 16,000 to INR 17,000 per tonne in case of lead in -- overall.
And lastly, for the new segments like lithium-ion, e-waste, and paper. By when do you think we'll be in a position to put up capacity?
So we are still working on identifying the location -- exact location where we can put up this facility. So we have already done some work -- homework on steel recycling in Africa and paper recycling in Central America. So we hope that in the next 2 years, one of the pilot projects of each of this paper and steel recycling will be -- we will be initiating for at least both of 1 plant, each of both the regions.
Okay. Not considering India strongly for these?
Not for paper or steel, but definitely for e-waste and lithium-ion we are considering India also. But these 2 are location specifics because we also look at the overall margins or the availability of raw material and whether there are other units competing in those locations and what are the benefit of having those units in those locations. So for example, if we talk about steel, we are planning an inland location in Africa, where generally they sell the scrap out to India or China, and they import the steel back to those countries. So we see huge potential in those countries when we put up a steel recycling unit there.
Similarly, for paper in Central America, they buy a new paper from the U.S., and they sell the scrap to India again. So we see huge opportunities in these 2 locations for these 2 projects even we are [ still doing ] copper recycling in India.
This year or next year?
This year, additionally we are initiating a pilot project for copper recycling in India.
Okay. Okay. So second half, perhaps we'll see something coming from it. Got it. So since you mentioned competition from other units, I just wanted to get your perspective on this. How are the other organized players trying to capitalize on this opportunity? I mean, were the top 2 or 3 that we are watching out for in the organized space. And whom do we benchmark ourselves against, just sure that we have our FY '26 ambition on track.
So first of all, I mean, it's a very segmented market. As I mentioned, that around 70% of the total business goes to the unorganized sector. And because of logistic issues, these are generally region-wise or geography-wise, a fairly fragmented market. So there is no company that has -- I mean, we have yet to come across companies that are there in all geographical locations. I mean even in India, there are very few companies that have multi-locational presence. And this is the USP that Gravita has currently because even in India, we have a plant in West, we have a plant in North, we have plant in Central India. We have plants in South India, and we are also planning a new plant in the next 2 years in East also.
So it gives us a specific advantage over others because we can collect batteries from all across India and then sell it to the customers directly from the nearest plant. But having said that, there are other companies also because there is a huge opportunity. Currently, 70% to 80% of the material goes to the unorganized sector. So there is huge potential in terms of all the organized players that are there in the market to come and take advantage of this opportunity. So it's a very -- I mean, if we talk about plastic also, it's a very -- fairly big market.
Currently, we are not even testing 5% of the total recycling market there in plastic as well. In terms of competition, if you talk about in India, we have [indiscernible] which are doing recycling then we have certain other players in aluminum recycling and plastic recycling is very fragmented currently.
[Operator Instructions]
We take the next question from the line of Navneet B, from an individual investor.
I have 2 questions. One, you mentioned on the commodity cycle in lead and plastic, you were sort of indifferent to the commodity prices. However, your EBITDA per tonne as compared to last year has actually grown quite a lot. It was INR 12,500 in Q4 last year, it's INR 13,700 now. Plastic was actually INR 6,000. It's INR 19,000 now. So if you could explain this variance, it'll be helpful, please.
So as we mentioned that in plastic, basically, in last year, the overall business was -- I mean casing a [indiscernible] because of COVID, the collection was also lower, the demand in the market was also lower. But now after COVID, I think the market has stabilized a lot. And we see a great demand for recycled products in the U.S. and Europe. So because of that, the overall margins have increased. Not only that because now the volume has also grown up. So we are taking advantage of economies of scale in plastic also.
Similarly, in lead, as we mentioned that our business overseas has grown up. We have also increased the capacities. So here again, economies of scale is there. The value-added products have gone up. That has also given us additional gross margin. So all these combined have given us higher margins in lead also compared to last year.
As we started Mundra plant also, we are saving the logistics because we are very close to the port for imports. So earlier the scrap was moving to Jaipur for processing. Now we are processing that scrap in Mundra itself and exporting that to different countries from Mundra. So that's, again, a saving in the logistic cost.
Okay. So on volumes, especially in plastics, actually, your volume growth has been only 1% over Q4 FY '21. So would economy of scale be really a factor because at least as compared to last quarter '21, it's only 1% growth in plastics for other increase in margins?
Quarter to quarter, probably you're talking about.
I'm talking about year-to-year. So as per your presentation, your plastic volume was [ 4232 ] in Q4 FY '21. It's [ 4272 ] now. So that's about a 1% increase whereas EBITDA per tonne has gone up from INR 5,895 to INR 19,416. So that's almost 3x.
Yes, correct. So basically -- correct. There is certain issue, I think.
So I think we'll get back to you on this. I think there is a certain issue. The volume growth has come. I don't know if it is 1%, I think we look at this number again.
Sure. No worries. Second, on your rubber facilities that you're setting up, so what type of rubber are you looking at to recycle? Is it going to cater to the road sector? Or is it going to cater to the tire manufacturers?
It is basically -- currently for in-house consumption only. But later on, when we increase -- it's only a pilot project as of now. But when we increase the total capacity, we will cater to the tire manufacturers also in the future.
So this is going to be micronized rubber, right?
Sorry?
So are you going to extract, so are you going to recycle micronized rubber? Or is it going to be crumb rubber?
The crumb rubber -- currently, it's crumb rubber, but we will go into value additions later on also.
Okay. And what's the size of facility that you're setting up?
It's only 600 tonnes per month capacity as of now.
So 7,000 per annum. Okay. Got it. And lastly, just an observation as compared to your Q3 presentation, you've changed your vision gear from 2025 to 2026 while all the metrics are broadly the same, but have you pushed your target to achieve a 50% value add and 25% non-lead by year? Any particular reason for this shifting the year by 1? It was 2025 earlier, it's now 2026?
Yes. Basically, it's -- because we are taking some growth on a CAGR basis. We see that the similar growth of like going forward, growth of 25% in top line, our volumes are 35% in the bottom line. So that growth will continue until 2026. So that visibility we have. So instead of giving the visibility up to 2025, we are giving the visibility of up to 2026.
Okay. But your contribution from value-add products and non...
That will continue to be more than 50%.
We have increased the -- I mean earlier it was 25% now it 25% plus for ROCE similarly 50% plus for value-added product remains there. So it should be more than 20%, 50% in case of value-added products.
Okay. Understood. And just coming back to your EBITDA per tonne. You're saying the sustainable range, as you mentioned earlier in the call, for lead, plastic and aluminum. Would -- or at least on a year basis, would be in that range. It would not fluctuate more than that on a full year basis, right?
It should be in the range like we -- whatever we've mentioned.
We take the next question from the line of Mr. Rahul Bhangadia from Lucky Investment Managers.
Sir, you've mentioned about a few diversifications, rubber, copper and [indiscernible]. I'm assuming these business models are different from your basic lead, aluminum, plastic that you are doing. How do you plan to kind of the bandwidth needed will be different, the models will be different? How do we plan to deal with all that.
So some of the verticals are extension of our current operations, like, for example, a rubber is very similar to what we are doing in aluminum and plastics. Similarly copper is also very similar.
In terms of lithium-ion, of course, it's a little different. But paper is also different, but we can hire people -- so we can hire people, we can set [indiscernible]. And in lithium-ion, lithium batteries [indiscernible] the market dynamics remain the same. We have to collect scrap from the scrap holders and give it to the OEMs -- recycle or we can give it to the OEMs. So sourcing, which plays a very important part remains core of the total value chain that we have.
So it remains the core of each and every -- I mean, core of the value chain of each and every vertical that we are going into. So there is a significant synergy on the side of the sourcing. So which is the biggest thing in this recycling business. So other things like technology and the expertise, we can always gain as we did in case of plastic also aluminum also, so that can be gained.
[Operator Instructions]
We take the next question from the line of Shanti Patel from Shanti Patel Investments.
So looking to your all expansion plans, et cetera, is it set to assume that in next 3 years, our turnover will be more than double. And consequently, the profit also?
Yes, we already -- in the last 3 years, we already doubled the number that we already demonstrated. So it can be again repeated. Whatever capacity increase, we've already set up and whatever capacity increase, we are in the process to set up itself will take this forward to around 5,000 crores numbers in revenues. And we see the profit will grow at a faster rate than the revenue numbers.
We take the next question from the line of Pranay Jain from [indiscernible] Capital.
Just one understanding on the value-added products. From the present level, what do we see that scaling up to by end of this year and next year? And could you give us a sense of what is the rising names of these products, the value-added products that we are bringing to market this year and next.
So basically, we would take it to around 45% in this current year. 45% to 46% in the current year and eventually taking up to around 50% in another 2, 3 years' time. So in terms of what exactly earlier, then we make red lead, we make oxide sheets, lead sheets, lead bricks, specialized plastic granules for food grade, certain customized alloys. These all give us a higher margin than the main [ vanilla ] products like plastic flakes or refined lead. So wherever we get our regional margin of around more than 2.5% to 3% over and above the cost incurred in making those products, we consider it as value-added products.
I'll just rephrase it. Which are the value-added products, which are more in demand now compared to last year. And incrementally, you see their share increasing. That's what I wanted to understand.
So food grade products from our plastic business is 1. Red lead, lead sheet, so all the -- I mean the demand was already there. We have now started giving it to -- we are trying to convert it more because it depends on which segment you sell more to. So customized alloy is also increasing. So we are increasing in all the segments over and above because if you see the overall volume has also grown. Last year, around 50% of the volume has grown.
So when we -- and we have also increased the overall the value-added products. So it's value-added products, even if it remains same that there is a growth of around 57% from the value-added products also in the last year.
Since you mentioned that there is R&D and continuous process improvement for new solutions being done. I just wanted to get a sense if there are any new products, which we will see in the next 1 to 2 years?
Yes. In last 2 years, because in lead, we are already there in so many -- from the past so many years. We keep on developing new alloys in lead as per the requirements from the OEMs from time to time. Regularly, we work with them to develop products. So that is already there. But other products like lead sheet, lead [indiscernible], et cetera, are already there -- the market is already there, and we have been making this for the past 3, 4 years. It's only just now we are focusing more on developing these products.
But in terms of plastic, definitely, we are looking at options to increase the overall offering to the food grade industries.
So we're looking at other options also in plastics.
And likewise, potential of that in rubber and copper, is there anything we can look at?
Rubber and copper, to start with, we will go initially to just streamline the operation in the current 1, 1.5 years. And once we have streamlined those operations, and we have overall increase our capacity, we would look into valuation of, I mean, definitely, but at a later stage, not immediately.
Thank you. As there are no further questions from the participants. I now hand the conference over to the management for closing comments.
Yes. Thank you. Everyone, for participating in the earnings conference call, we have tried to address all your questions. If you have any further inquiries, please connect with our Investor Relations team, and we will be happy to address the same. Thank you.
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.