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Ladies and gentlemen, good day, and welcome to the Mold-Tek Packaging Limited Q1 FY '24 Earnings Conference Call hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Abhishek Navalgund from Nirmal Bang Equities. Thank you, and over to you sir.
Yes. Thanks, Viko. Hello, everyone. On behalf of Nirmal Bang Institution Equities, I welcome you all to Mold-Tek Packaging Limited 1Q FY '24 Earnings Conference Call. We have with us Mr. Lakshman Rao, the Chairman and Managing Director of the company, along with the finance team.
Without further ado, I would request Lakshman to start with his opening comments, post which we can open the floor for questions and answers. Thank you, and over to you, sir.
Good afternoon, everybody. Thank you very much for the introduction and initiative from Nirmal Bang. Thank you all participants showing interest in our Q1 results.
I'm pleased to inform you that we have a flattish quarter this quarter, Q1, with a marginal growth of 1.8% in volume terms and in EBITDA by about 4%. There are a couple of reasons. One of the reasons is the lower-than-expected growth in our Food & FMCG products, that is ice creams and dairies, which contribute mainly to the Food & FMCG. There's a major dip in the consumption of these 2 products during intermittent rains across the country in the summer leading to a drop in more than 20% volume sales in ice cream and dairies, which has resulted in a moderate growth of 13% for us in that segment, which used to be around 36%, 37% in the previous Q1. That is one of the reasons.
And the second major reason is our Khandala plant, that is Satara plant, is operated at around 46% of the capacity during the Q1. That is much lower than its normal. Of course, from July, we are noticing that it is now back to around 65% to 70% capacity utilization. That is mainly due to one of our major clients there taking up maintenance and expansion projects in that particular plant. So that is -- these 2 are the major reasons.
And the dip in profits by about 13% is majorly due to increased depreciation for assets which have been added during the last few months, which are yet to be really productive, both at Sultanpur and several other parts of the -- several other locations where we are starting our operations. So that is the major reason for this flattish performance.
However, the future looks very bright because our Pharma Packaging, which we are entering with 4 products might give us a good entry into the huge pharma packaging arena. And these products will be out from October onwards. By December, all the 4 products we wish to put them in the market and the impact of this could be favorably felt from the beginning of the next financial year or maybe the fourth quarter of this year.
So having said that, the month of July started on a positive note, much better than the Q1. And hopefully, we'll see growth to catch up with double-digit growth for the overall year.
Having said this, I would like participant to go on to the Q&A so that more information can be discussed or more information can be given to you. Thank you, and back to the operator.
[Operator Instructions] Our first question is from the line of Karan Khanna from AMBIT Capital.
Sir, my first question is on your Paint segment where you've seen consistently poor volume growth over the last 4 quarters despite volumes for key paint players bouncing back. So if you can help us understand, are we losing market share here? And if not, what kind of growth expectations do you have ex of Grasim in your Paint segment for this year?
Yes. Main drawback is in the Paint segment, I agree. It is 8.7% drop as against 3.7% growth we last year. This is mainly due to one of our plants at Satara, that is Khandala, has been running under 50% capacity utilization for last 6 months, mainly due to the modernization and the expansion happening at our main client in Satara. So that has now started back on to operations and from the month of July, we are witnessing normal capacity utilization close to 70%. And hopefully, this should bounce back our numbers in the Paint segment, at least to a positive number from minus 8% this quarter.
Sure. On Pharma Packaging, we have seen slight delays in terms of time lines for commercial production. So what challenges are you facing there? And where are you in terms of the approvals for regulated pharma products? Do you expect commercial production to start from year-end? And have you signed any anchor clients there as well?
Not really. No client will sign unless they see the DMS facility and audit the facility, and the facility will be open for audits from October, we hope. There was some delay because of the heavy rains, the construction activity has taken a little back seat. And now it is in full steam and internal paneling and everything is starting this month, and that is 2 months activity. So by beginning of October, we should be ready to install the machines. And probably end of October, we'll be starting our trial production and start bringing in the clients to start the auditing. That's why I said this financial year, maybe there will be little contribution from Pharma Packaging, at least till December, the whole process of certifications and a couple of clients placing orders would start.
One of the segment that OTC segment of IODEX will definitely go into production by October. Hopefully, those numbers will be added in this third or fourth quarter of this financial year. And other products where we are planning to launch in November, December, would take some time to pick up. And mostly, the impact will be felt in the next financial year in a positive manner.
Sure. As a follow-up on the OTC pharma side, what is your revenue expectation from the IODEX order in FY '24 and '25? And have you got any new orders about from IODEX?
No, on the OTC front, that is the only order, but for the other products, we are in touch with some major pharma companies who are interested to make use of our products. I can't give more details at this stage because those products are a little competitive, information-sensitive. So we wish to share with you probably in the next quarterly meeting.
Those products, we expect a faster penetration. They are not OTC. They are under DMS but they are not like the tablet containers, which are traditionally manufactured by Shriji and others. These 2 products are a little -- not exotic or anything about, but they're having ability to penetrate faster and not many manufacturers in this field. So those products will be out in by November. And -- but the numbers will gradually pick up from the Q4 of this year and will be conceivably contributing from next financial year.
Sure. And the last question, how has been the progress on QR-coded IML adoption with your key lubricant clients, Shell and Castrol?
Shell has already adopted. There were some hiccups in the QR code reading at several locations, which are now sorted out. And again, actually, a new batch of QR-coded containers are going out in this month to Shell. So Shell has found it very effective. But as I said, there was a hiccup in QR code readers and -- resulting in some errors. As expected, whenever you're launching something new, there will be some hiccups in the hardware or software. Those have been -- now corrective steps have been taken and further launch of Shell products are again going on in this month.
Our next question is from the line of [ Piyush Jain ] from NX Wealth Management.
Just want to know what is the growth achieved in the F&F segment.
Yes. F&F segment, in the Food & FMCG, it is 13.66% as against 35% last year. So this big dip is mainly due to the drop in ice cream and dairy products consumption that has come down in this quarter due to heavy rains during the summer.
Can you share what is the EBITDA per kg for this quarter because I couldn't find this in press release?
EBITDA per kg is now at INR 38.8 compared to INR 40.1 of Q4.
In previous call, sir, we had the target of achieving the EBITDA per kg of around INR 42, INR 43 or something. So this dip in the Q1, will this have an impact of the overall EBITDA per kg of FY '24? Or do you see the next 3 quarters, we will be able to achieve this EBITDA per kg on the higher side?
Probably, achieving what we were targeting was INR 40 to INR 42, which I still hope we can achieve because a couple of things are happening in the direction. One is from Q3, we'll be having our integrated printing facility at Sultanpur. It is now currently spread over 3 locations and all the machines will be now brought down to -- in one complex we are building in Sultanpur. From October, hopefully, we'll have all those activities under one roof.
And even today, we are purchasing HTL worth around INR 7 crores to INR 8 crores annum worth of heat transfer label from outside, and this will be completely manufactured in-house from October, November, which can result in a sizable reduction in costs in the Consumables segment. So that is where we see improvement in the EBITDA coming in.
And as I said, food and FMCG and other products of high value add like pharma -- both OTC and pharma products might start from November, December onwards. So they also will be contributing more handsomely to the overall EBITDA. So I'm still positive, we may be ending up between INR 40 to INR 41 EBITDA margin for the current year, which can go up further next year as more and more value-added products will be contributing to the EBITDA in the year '24, '25.
Sir, one thing, last time also -- previous calls also, we have discussed. I think this Food & FMCG has become, I think, quite a decent share in the overall revenue, maybe around 1/3 or something. And you have given some breakup with respect to EBITDA per kg of F&F is around somewhere INR 80 per kg and pharma is at somewhere around -- will be making INR 150 per kg. So when the share of this Food & FMCG is increasing, even though, our EBITDA has not translated to a great extent. It still remain around INR 38, INR 39 to INR 42 when the proportion of higher per kg EBITDA component is increasing because that number is not stacking up the way the share of F&F has increased in last 2, 3 years, and the number you mentioned about INR 80 per kg EBITDA. Can you just clear this?
Yes, because there is -- Paint and Lubes also were growing. Till last year, we had Lubes have gone up by 27%. And even in the Paint segment, there's a growth of 3.8% last year. So these are also handsomely grown. Lubes, in fact, contribute moderate EBITDA, less than our average. And even Paint in that manner have -- they contribute less. So when the Food & FMCG has grown at 31% last year, we could easily sustain the INR 40-plus EBITDA. Now the growth in Food & FMCG is only 13%. The Q-pack has grown sharply at 89%, but Q-pack EBITDA is less than our Food & FMCG. So overall put together, these 2 -- Food & FMCG together are around 24%. But in that only FMCG is 14%. So that has grown at 13.6%, which is our major contributor towards EBITDA. So had it grown at 36% like last year, we would have seen the number beyond INR 40.
So are we saying our EBITDA per kg in Paints and Lubes business are way lower than substantial difference with F&F business, maybe around INR 25 per kg something because of this Food and...
Yes, they will be in the range of INR 25 to INR 30 per kg.
Okay. And this number is correct of Pharma business, you will have around INR 150 per kg EBITDA. Is this number correct?
That's correct.
So this is the regulatory or something or this is a normal OTC packaging also?
No, out of the 4 products, what you see is only 1 product, other 3 products come under regulatory or DMS. In both these categories, we are aiming at INR 150 EBITDA. And in the case of OTC, it will be somewhere around INR 80 to INR 100.
Sir, do we have LOI and contract or something in hand where we can say the November -- from November onwards, this will be like the commencement and dispatches will start or something?
No, no. In case of the OTC product, the delay is because the changes in their assembly line that are happening at their filling places. They said sometime in September, they'll be completing those changes. Already, our samples have been waiting for testing. And once they complete that in September, October or November, certainly, they will be launched. The LOE is based actually by June itself. The letter of intent or the PO was given with an idea that the manufacturing should start from May, June. But due to the delay in the assembly line corrections at their seller's end, there is a delay in the launch.
So how much Pharma business can do next year? Let's hope this year, even though you start to do a little bit of something 4, 5 months, how much the Pharma business can do in the next one -- next year?
Next year, we have a target between INR 30 crores to INR 40 crores. It could be reaching INR 40 crores if things go as per our plan. Otherwise, it may hang around INR 25 crores to INR 30 crores because it's time taking for some of the statutory clearances. But our -- out of 4 products, 3 products can easily go in because they don't need very long waiting for like in the regulatory product range.
So that regulatory product range where we are anticipating about INR 15 crores to INR 20 crores for next financial year, that might take a little longer than our anticipation if things take a little slowdown. Otherwise, we should be aiming at least INR 40 crores turnover from that.
Okay. Last thing from my side on this Aditya Birla Group Paint business. Just want to know two things. What could be the volume we achieve in a full year of next year or something? And whether this business will be a QR code business right now? Or it is without QR code in Paint?
Definitely, they are not QR-coded. Definitely, they are not screen printed. They have indicated to us that they want to eliminate screen printing. So they will be mainly IML and HTL, I hope. There is another concept called DOP printing, which is similar to screen bidding. On that, we have no clarity. But definitely, their IML and HTL will be better than other paint majors, we hope. And that will have much better margins compared to our current average Paint realization.
How much volume in metric tonnes or whatever we can achieve in, let's say, next full year from this only?
At least these 2 plants, Panipat and Cheyyur could be ready by calendar year -- end of this calendar year. So these 2 plants, their indication was somewhere around 2,000 tonnes each. But Mahad plant, they're indicating to start from April next year. So there also, their indication is about 1,500 tonnes. So out of these 5,000 tonnes, what they are planning, I mean, in the year 1, how much they assume -- able to achieve, I can't comment. But from our side, we are ready with that 5,000 tonnes per annum capacity by...
How much this contributes in INR revenue term, 5,000 tonnes?
If 5,000 tonnes happen, it will contribute to about INR 100 crores to INR 120 crores.
So we see this, let's say, INR 5,000 crores (sic) [5,000 tonnes] in year 1 or year 2 probability of ramping up?
Sorry?
In year 1 or 2, we see this 5,000 tonnes entire will be able to utilize for Grasim. This is the dedicated for Grasim only, no?
That all -- majority of it is for Grasim. And at Panipat, we are parallelly setting up our Food & FMCG product also of about 1,000 tonnes capacity in the year -- by March '24, we are planning to start that. So that may also contribute to the numbers, maybe in a smaller way in the year 1 because Northern area, we are covering all the way from Hyderabad, freight and delaying dispatches is causing some disappointments. So by setting up a plant in Panipat itself for Food & FMCG, we hope to cover that market and service the market better.
All said and done, with the ABG, Pharma and the new Panipat Food & FMCG unit, they 3 themselves contribute, I mean, on the paper looks like 6,000 to 7,000 tonnes, which 30,000 to 40,000 tonnes for this year is a big jump considering other areas are yet to be counted. So for the next year, we are all set for a major jump if plants go as per their projections.
Our next question is from the line of Amnish Aggarwal from Prabhudas Lilladher Private Limited.
I have a couple of questions. Maybe I might have logged in slightly late. So what is the total volume growth -- volumes during the quarter? And what is the breakup between the 3 segments?
Yes, 9,200 tonnes is our overall volume, out of which 48% is Paint, 28% is Lubes. Food and Q-pack together is close to 24.2%.
Okay. So it means that there has been -- yes, there has been sharp reduction in the Food share, Food department?
Yes. In the last year, it was somewhere around 18.2%, is now 24%. There's no reduction actually. There's an overall increment, but the increment has come more in the Q-pack. That is our square pack for edible oil, cashews and other segment. But in the Food & FMCG, the growth is nominal at 13%, which used to be around 30% to 35% in the previous quarters.
Okay. And sir, you have also written in your release that the Paint segment has also been under some sort of a pressure. So -- whereas if you look at the paint companies, they have, you can say, reported 8% to 10% kind of a volume growth. So do you think that this year offtake was there was some one-off factor and offtake could improve in the coming quarters?
Yes. That's what I explained in my previous question -- to the previous questions. One of our units, Khandala is performing below 50%, at 46% capacity utilization in the Q1. Like the previous Q4 also, it was down because of the maintenance and expansion works taken up there by our major client. So that is improved in July. We are back to almost 70% capacity utilization in the month of July because, there, production restarted and expansion also is in place. So we are hoping that during the remaining 9 months of the year, we may recover from the deficit and at least come into positive growth numbers in the Paint segment also.
Okay. And sir, you also stated that you could be, say, supplying approximately 5,000 tonnes of packaging to Grasim in the first, you can say, full year, if the...
That is our plan. That is the target they have set for us.
Okay. So -- yes, so how much that could be as a part of total supply to the paint industry?
See, total supply to paint industry is more than -- one second, is about 18,000 per annum.
Okay. So...
Last year, it was 18,150. Maybe this year, it may be 19,000. Assuming some 4%, 5% growth at the end of the year, we may end up around 19,000 tonnes.
Okay. And this 5,000 tonnes number is for FY '25? Because the plants will...
Our 3 plants put together, the capacity we are creating is 5,000 tonnes.
Okay. Okay. Understood. And all our plans are in terms of time line there on track?
Yes. Hopefully, Panipat should go into production by December, maximum Jan; Cheyyur by Jan; and Mahad by April, May. Clear indication is that.
Okay. And sir, finally, in terms of our EBITDA per kg because on a Q-o-Q basis, it has come down to now INR 38 per kg. So do you see the uptake happening in the immediate quarter or it will take some time for the things to recover?
It should come back at least to INR 40 soon because a couple of matters have created this. One is the correction in the contract labor costs and power costs, which happened last year, we could not carry forward to the clients till now. But in the month of April, May, we have started negotiating and most of the clients have accepted increase in the conversion cost. So this labor and -- contract labor and power costs have gone up in Telangana and Andhra where we have our major operations. So the clients -- major clients have agreed for the acceptance of the increase.
And other admin costs have gone up due to some legal patent work we have taken over against a couple of competitors in our square pack where we have won one of the case also. And that is what is the minor reason for the drop in the EBITDA below INR 40. Otherwise, it could have been close to INR 40 this quarter itself. So going forward, recovering from -- recovery in our plant at Khandala itself and some additions of Pharma from third quarter onwards can take this above INR 40 is our hope.
So for full year FY '24, we should be looking at a number around INR 40 per kg?
Yes, INR 40 to INR 41 is our target.
Okay. And for next year, if you have any number?
Next year, we are aiming much better because there will be a reasonable contribution from Pharma at a much higher value addition. And I hope next year, summer will be a good summer for us, at least for ice creams and dairies which are our major contributors in Food & FMCG industry. And we are setting up a plant in Panipat for Food & FMCG by Feb-March next year, along with the Paint plant for ABG. So that will enable us to capture some part of the northern markets. And overall, next year will be much brighter with EBITDA at least conservatively INR 42 plus is our target.
Okay. And sir, finally, what is the planned CapEx for FY '24 and '25, if you can share?
FY '24, we already had a plan that looks like it will be similar to INR 130 crores, INR 135 crores what we spent last financial year because these 3 plants are up and running and our integrated printing facility at Sultanpur is also getting ready. Our pharma investments are partially made, only advances are paid and rest of the cost had to be borne in this year. So the investment, overall, will be in the region of same level of INR 130 crores, INR 140 crores last year. Also, INR 30 crores were spent in the Q1.
Our next question is from the line of [ Chandrika ] from Rica Enterprise.
I have 4 questions to go. My first question is we have already invested a lot in setting up a plant for the Grasim paint business. Now we don't know whether Grasim will be successful in the paint business or not. It is a very difficult business to enter. Suppose Grasim is not successful in the paint business, and they are not able to generate enough volume for us, what happens to the investment we have made in setting up capacity for them?
Okay. Grasim as a group, as you know, has an excellent distributor network in building materials, including their white cement, and they have their own plans of marketing. But as you correctly said, as a standby option at Panipat, we are starting our Food & FMCG products also, which will be giving us an entry into the northern market where our presence is almost nil. So in South itself, we are able to do INR 120 crores, INR 140 crores last year in Food & FMCG and INR 50 crores in Q-pack and we have got almost INR 200 crores in South and West. So there's no reason to feel that North market will not accept our products.
So our standby backup option is to have the range of Food & FMCG products in the North in case ABG takes time longer than what they envisaged to stabilize in their volumes. And as you all know, that injection molding machines are fungible. If not fully, at least 40% to 50% of the mission capacity can be used for different purposes. So that way, our Panipat plant is well preserved with our plans to introduce the Food & FMCG.
Coming to Cheyyur. We have several clients in Chennai, mainly which are close to Cheyyur, who are our clients and some of them are public sector whom we are not servicing because of costs and transportation delays that generally included. Once we are in Cheyyur, some of these clients can be reachable from Cheyyur to Chennai. And we will be able to grab some of the paint companies, which we are not really following up like Nippon and other companies in the South, and even access to Kerala is extended. And we can also produce some of the Q-packs there, if not the thin wall Food & FMCG.
Q-packs like 5 liters, 10 liters, 17 liters, 20 liters, they are going up very rapidly. In fact, in this quarter, from a small beginning, we have 89% increase in the square pack. From a small INR 4.8 crores, the sales are above INR 9 crores. So there is a jump of almost 90% in our Q-pack sales, which are mainly for cashews, edible oil, nutraceuticals, fish food, all other products, which can be sold to our clients in Kerala and Tamil Nadu in a better way if we start our operations in Chennai. So that is our backup plan for Cheyyur.
Coming to Mahad. Mahad unit itself is a small unit. It will be having 4 machines, hardly able to cater the ABGs plant. And we also have a commitment with them that Mahad plant capacity will be created using even the molds that are made for other locations. That way, we are safeguarding our investments. And of course, we are confident that ABG, with their major game plan in Paint segment, will able to attract reasonable market share over a period of time. And with these backup plans, we hope our investments will be safe.
Is Grasim going to be IML or non-IML?
Sorry?
Okay. My last question is, we are entering the injection blow molding business, the IBM business, which is a commodity business, unlike the IML business. We have no competitive advantage in the IBM business. The pharma company already have IBM suppliers who are supplying to them. So instead of buying from you, they will just use you to get better rates from their existing IBM suppliers and buy from them instead. They won't buy from you. So why do you want to enter this competitive IBM business? Why not stick to the IML business where we have a competitive advantage?
Yes. I remember you asked this question last quarter also. IBM, I don't know where you are learned that it is no more a commoditized business. IBM in various applications are still considered as good as injection modeling. And as I explained in my previous quarter answer, we are also planning IML in IBM. And in IBM, there are products which are highly valued in the regulatory market, like tablet packs, for example. And they attract more than INR 150 to -- at least INR 150 conversion on the raw material which you can't get in EBM or other packaging processes.
So IBM per se is no more -- not a low-entry technology. It also has molds, both injection and blowing, and there is a lot of usual inspection and other controls that are required in pharma, which make many people cannot enter in that segment. If you note, even on hand, you hardly have 5 or 6 players of notable presence in regulatory pharma, Shriji, Pravesha, Gopaldas, Gerresheimer, Doctor Pack. Like that, there are the only 5, 6 players who are above INR 100 cores or INR 80 crores turnover top line. There are only a few companies, none of them are listed. And their technology in terms of molding and mold manufacturing is definitely we can surpass within a year or 2 because of our understanding of mold manufacturing, understanding of processing much better than any of these leading players.
And pharma in DMF is a different animal altogether. If pharma products are made for Indian companies for Indian products, let's say, the conversion cost is INR 50 to INR 60. But if you are going for pharma for regulatory market, the pricing is nowhere less than INR 150 to INR 200 per kg. So this is a difference. I request you to study. Last time also you asked me the same question. I want you to update wherever that information is available.
[Operator Instructions] Our next question is from the line of Jenish Karia from Antique Stock Broking.
The first question is with regards to bookkeeping. Sir, if you can just help us with the volume contribution across -- the value contribution across the 3 segments. You have given the volume numbers, value if you can give in share percent?
Yes. The percentage of paint is 43.3% in value, 25.6% in lubricants, and 31% in food and Q-pack.
Okay. Sir, what -- how much would the Satara plant be contributing to our Paint segment?
You mean Khandala?
Yes.
Yes. See, Khandala, Mysuru and Vizag are the 3 dedicated plants for Asian Paints. Small quantities go from Hyderabad. But these 3 contribute to almost 90% of our Asian Paints supplies. So that plant is almost 1/3 capacity, say, 25% capacity, what we have created for Asian Paints. So that was running under below -- at around 45% capacity utilization.
Understood. And is it fair to assume that we would have lost volume up approximately 400 tonnes or 500 tonnes because of the underutilization of the plant during the quarter?
Yes, you can say that.
Yes. So if I just add back 400, 500 tonnes to the paint volumes of approximately 4,400 tonnes that we have done. Still the paints growth seems to be very muted at around 2% to 3% compared to the paint industry growth of much higher. So how do we plan to ramp up, or what am I missing in this 2%, 3% adjusted growth number?
No, 1 or 2 reasons is that we are not chasing the other paint companies for business. Actually, we are letting go some of the small- and medium-sized companies where we used to chase till last year. From last year, we are taking contrition to stick with the top players, 4 or 5 top players and grow with them because the realizations and the efforts what we put in were not worth the kind of realizations we get in that industry. So we are not chasing those small players anymore. So that is one of the reasons for muted growth in the paint industry. And the drop in the last 2 quarters is mainly due to that Khandala plant underutilization.
Okay. Understood. So going forward, any guidance you would like to give for the Paint segment growth? I understand you maintain an overall double-digit growth guidance, but anything for -- specific for the Paint segment?
Overall, I'm still confident we may be able to reach a double-digit growth. But the paint industry might become a single-digit growth only this year also because I hope -- I wish Grasim will go as per schedule in December, January. If there are a couple of months delay, we may slip into next financial year. So if Grasim won't contribute in this year, probably we'll end up with a single-digit growth in the paint industry for this year.
Okay. Next year, we will definitely see a double-digit growth for Paint segment.
Yes, yes. Definitely, next year will be much better because they were talking about 5,000 tonnes, even if they achieve 70%, 80% of that projection, that will be a massive number for us.
That's helpful, sir. And just one last question. If you could just help us with the volume and value mix for IML and non-IML for the quarter?
Value-wise, IML contribute 68%, up from 65.7% last year. Non-IML is 31%, down from 34%.
And volume-wise, sir?
Volume-wise 61.8% has become 64.1%, 38% has become 36%.
Our next question is from the line of Harsh from Marcellus.
Yes. Just one question. So Asian Paints' volumes have grown at high single digit during the quarter. I understand that Satara plant might be not utilized and not being used at full capacity. However, then the Mysuru and the Vizag plants should have run at higher utilization levels. So overall, our volumes shouldn't have been impacted to such a large extent, sir. So am I missing out something here like...
No. As I explained to you, these 3 plants are more or less equal capacity. And Khandala plant running at 45% or 46% is a big drawback in the overall number.
So are you saying -- suggesting that Asian Paints' volume growth is coming because of some of the other plants where we are not present?
Of course, they have 7 plants across India. We are only partners at 3 plants and a small capacity utilization at Hyderabad. So they have -- apart from Hyderabad, there are 7 clients which are making emulsion.
Our next question is from the line of Avadhoot Joshi from Bryanston Investments.
Sir, we normally guide for the volume growth of double-digit, 15% average. So considering now the Pharma going into the next financial year and if ABG volumes also go further, do we maintain overall volume guidance of 15% around?
I think maybe 15% will not be possible this year being hit by the drop in ice cream and volume sales of paint in this first quarter. We -- but still confident that we can reach a double-digit volume growth this year, maybe around 10%, 11%.
Our next question is from the line of Richa from EquityMaster.
My question was related to Pharma segment. Let's say for next 2 years, what kind of capacities or revenue potential we are looking at 2 to 3 years? And how much -- what is the mix that you see between domestic and export markets to the revenue contribution?
Yes. Currently, we are anticipating to start only for the domestic market, but the products which will be ultimately filled and sell -- sold could be for American and European markets through the pharma companies in India. That is called regulatory market. So overall, we are -- current capacity of our plants what we are setting up in Sultanpur in the Phase I, we'll be able to reach a turnover of up to INR 50 crores to INR 60 crores. At its peak, maybe INR 60 crores.
So after that, there is an expansion possibility. We have space and immediate plans to expand as we progress. We are also in touch with some of the major pharma companies who have indicated interest in our range of products. And the range of product is something different from any other packaging company as of today in the country. Not that they are unique, but we have a mix that none of the other pharma packaging companies are pursuing.
So we hope that this will give us a better edge in penetrating the pharma packaging faster than others could. Others might have taken 3 to 4 years to reach a reasonable level of INR 40 crores, INR 50 crores turnover. But I think with our strategy, we'll be in a position to do that in at least max 2 years. And once we establish the relations and regulatory market also, we get the clearances, the growth can be substantially good in the going years. So minimum in 2 years, we hope to reach a turnover of around INR 50 crores, and then we can comment what is our new plans because in anticipation of good growth, we are even procuring further land in Sultanpur area so that we'll have land and other facilities ready once the takeoff happens in the pharma packaging.
Okay. And sir, this guidance of EBITDA of INR 150 per kg kind of guidance, this is keeping in mind the potential in the domestic market or the export market realization?
No, no. The domestic market for export markets and domestic products what we have in plan, altogether. None of the products we'll be planning to export right in the beginning, but they have the potential. I'm not counting those prices. I'm considering what our ability to sell within India, either for exports or for Indian market.
Okay. And sir, in the northern plant where -- in the North region, when you're setting up this Food & FMCG plant, what is the capacity that we are setting up there for this?
Initially, it will be with about 1,000 tonnes per annum.
4,000?
1,000, 1,000. Only 1,000.
Okay, 1,000 tonnes per annum. And sir, what is the typical utilization time? Let's say, once you set up this plant, to reach 80% kind of utilization, how much time does it take?
That plant because it's going to have standard products which we are already marketing in South and West, and there is some presence here and there in North, so once we have this product range ready, next year itself achieving a 50%, 60% capacity utilization is possible in the year 1 itself.
And sir, you were also using some kind of recycled materials. So can you share the contribution of that in the total volume? And also, I wanted to understand if the increasing share of this kind of attracts more client toward you if you could talk about that in terms of ESG and all those things?
Actually, there is an increased use of RCP, that is recycled polymer in the entire country, thanks to the new statutory measures on the end users, like our clients are under statutory compliance now. So we -- they in turn put the pressure on us, and we are able to find very good quality RCP suppliers in the country today, thanks to the new technology. And there are cases where the utilization is as high as 15%. But in the Food & FMCG, we can't use RCP. So -- and there are some clients who don't want RCP to be used. So overall, our consumption of RCP may be now reaching around 5%, 6%. And it will gradually go up, I hope, in the coming years.
[Operator Instructions] Ladies and gentlemen, that was the end of our question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Hi, everybody. Thank you very much for your time and interest you have shown in our company's Q1 results. And I wish you all a very happy evening, and good luck. Thank you very much, and thanks, Nirmal Bang, Abhishek, for your cooperation.
Thank you. On behalf of Nirmal Bang Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.