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Ladies and gentlemen, good day, and welcome to the Prince Pipes and Fittings Limited Earnings Conference Call, hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Srivastava from Batlivala & Karani Securities. Thank you. Over to you, sir.
Thank you, Rohit. Good morning, everyone. On behalf of B&K Securities, welcome you all to the 3Q FY '23 Earnings Conference Call of Prince Pipes and Fittings Limited.
We have with us from the management, Mr. Parag Chheda, Joint Managing Director; Mr. Nihar Chheda, Vice President of Strategy; Mr. Shyam Sharda, CFO; and Mr. Anand Gupta, Deputy CFO. We will start the call with the opening remarks from management, which will be followed by Q&A.
Over to you, sir.
Yes. Thank you, Amit. Thank you all for joining us today. The presentation and the press release have been issued to the stock exchanges and uploaded on our website. I trust you have been able to review the same. I will cover a brief overview of the industry, and then discuss the company-level performance.
As you are aware, we continue to see pressure on PVC prices for the first 2 months of the quarter. Since April 2022, PVC prices corrected by an unprecedented INR 66 per kg, which is nearly the price of resin itself, and bottomed out at about INR 76 per kg by November end. The trend reversed in December, leading to improvement in market sentiments and channel restocking. Affordable rates, supported by underlying demand momentum, delivered a healthy growth momentum across all sectors of real estate, agriculture and infrastructure. Largely, the overall industry sentiments are buoyant across all sectors.
As per economic survey 2023, housing prices have started to firm up after a 2-year COVID lull and demand has stabilized. New construction is picking up pace, which has stimulated innumerable backward and forward linkages within the construction sector. This holds a good bearing on the building material industry, and we see this trend being stable. These are exciting times for the Indian economy, which has already taken center stage at the global level.
Strengthening water infrastructure, housing, agriculture have emerged as key themes and the mission of the central government. The Union Budget '23, '24 has outlined initiatives to stimulate this momentum, with Jal Jeevan Mission budgeted allocation increased by 27% to INR 69,684 crores. The mission envisages providing piped water to each rural household by 2024. PM Awas Yojana has allocated over INR 79,000 crores, which is 65% higher compared to last year, boosting the Housing for All mission. Such initiatives will positively impact industry progression.
It is noteworthy that the significant increase in allocation for CapEx spending by 33% to INR 10 lakh crores conveyed the government's intent on ensuring that the infrastructure acts a force multiplier for India's path to inclusive prosperity. Real estate, building materials, infrastructure and ancillary industries look to benefit from this CapEx push. This higher thrust on CapEx is at a time when private CapEx is yet to reflect credible signs of revival and is a step to stimulate the private CapEx environment.
I'm happy to share that this quarter, we achieved a very strong 35% volume growth. The company sold 43,693 metric tons of goods and achieved revenue of INR 706 crores during this quarter. We witnessed a respectable rebound in margins this quarter, which we believe will further improve in quarter 4. Our focus continues to be on innovation and market expansion as we launched 2 key products with superior German technology in Modern Plumbing division, which marks the beginning of new growth trajectory.
We understand India's evolving needs, and with the launch of premium line of products, we are bringing home the finest in manufacturing, design and end-to-end solutions to offer high-performance drainage and piping solutions to builders, homeowners and consultants across India. We maintain fiscal prudence and remain long-term debt-free. Our net working capital has improved to 44 days as of December '22 from 68 days in September '22. At Prince, sustainable growth is the heart of our organization progress.
I'm proud to share that our Haridwar plant has won the IMexl Commitment prize by Kaizen Hansei for a greater effort towards building a sustainable and world-class ecosystem. We are also awarded the Certificate of Merit in Believers categories Sustainability 4.0 awards by Frost & Sullivan. Our sustainability practices have reduced carbon footprint, increased recycling and accelerated the use of renewable energy.
On an overall basis, we continue to be bullish in the medium to long-term prospects of the industry with the government's growth-oriented stance. India was recognized as the fifth largest economy in the world last year. Evidently, the opportunities within India are significant. Our business fundamentals continue to be strong as we focus on implementing growth strategies centered on utilizing existing capacities, expanding our distribution network, premiumizing the brand, deeper market penetration and optimizing our product mix towards high value-added margin products. We will continue to ensure strong execution of our 3-pronged business strategy centered on organic growth, operational excellence, ESG-aligned progress and thus, steer the organization to provide great value to all our stakeholders.
Thank you for your time and mind share. I will now hand it over to Anand Gupta, our Deputy CFO, to take you through the key financial highlights.
Thank you, Parag bhai, and good morning, friends. I'll be taking you through the quarter 3 financial -- '23 financials.
In this quarter, company saw a revenue growth of 6% Y-o-Y at INR 706 crores compared to INR 664 crores in Q3 FY '22, led by very healthy volume growth across segments. Our volume grew by 35% at 43,693 metric tons. EBITDA stood at INR 69 crores for Q3 compared to INR 111 crores in Q3 FY '22. EBITDA margin recovered quarter-on-quarter, stood at 9.8% for this quarter. Further, our finance costs reduced by around 50% due to decline in short-term borrowing. Profit after tax stands at INR 35 crores compared to INR 67 crores in quarter 3 FY '22.
Our average realization has been very healthy as we continue to maintain our focus on our core strength, which is SWR and Plumbing segment. Agri segment helps us drive cost absorption and unlock cross-selling opportunities. Commenting on working capital, inventory days improved from 85 days in March to 61 days in December '22. [ Data ] days from 60 days in March to 48 days in December '22, and which we are working upon to further reduce and improve the credit cycle.
With this, I would like to open the floor for questions. Thank you.
[Operator Instructions] First question is from the line of Pranav from Equirus Securities.
Sir, I wanted to understand your strategy on the Bathware segment. So where are we standing as of now because you had announced that you have moved into the Bathware segment 2 quarters back, so where are we standing in this? And how are we strategizing for increasing the share of, let's say, overhead water tanks as well as the fitting business?
Thank you, Pranav. So on Bathware, I would like to take this opportunity to give everyone an update. I think we have finalized our designs as well as shortlisted our outsource partners for both the [ CP fittings ] and sanitary divisions of the Bathware segment. We are in the process of finalizing the cost structures as well as the pricing that we would offer to the market. And I think as we had guided, by March or April, we would be able to launch to the market our entire range of Bathware products. The team down the line is being hired, and we have made some progress on that. And the next quarters, most of the state head positions should be in place, which will help us build a strong team for the overall Bathware vertical.
Comment to storage tanks, I think we have seen good growth from last year. Of course, the base is small, so this percentage growth would always look good. But I think we have -- as we have always guided with water tanks, that we need to be patient in this business. It's more of a 3 to 5-year strategy before it really starts impacting our overall revenues, but the product acceptability has been excellent across markets. We have in-house manufacturing in the Jaipur and Silvassa plant. We have also started now manufacturing water tanks at the Hyderabad facility, and the rest of the market is catered to through outsource partners. And we have seen a very good acceptance of the product, and we will continue to steadily grow the water tank business, leveraging the cross-selling opportunities across our distribution network.
Okay, sir. And what about, sir, the PVC fittings business?
The PVC fittings business?
Yes, sir.
Yes, what about that? What is the question?
So sir, how is that performing? And how are you strategizing on, let's say, increasing the contribution from value-added products in that segment?
The PVC fitting goal is the basket selling with PVC pipes. We have been in the PVC fitting market for 4 decades now, and we are one of the leaders in the PVC pipe and fitting industry, as everyone knows. I think the new products that we have launched are the value-added products. Of course, in CPVC, we have a tie-up with FlowGuard Plus. PPR is a value-added product for us, in which we have been present in for more than 2 decades. We have also launched 2 products in the Modern Plumbing division through 2 partnerships with German companies, Ostendorf and Hauraton, which we are extremely excited about as we focus on more innovative products and then try to drive innovation in the industry, so that's where we are.
Okay, sir. And sir, my next question was related to how the demand you are expecting to pan out in 4Q because 3Q also actually saw kind of restocking at dealer level because of December seeing all the price correction getting wiped off in PVC segment. So are you seeing 4Q to be somewhat muted versus 3Q volumes because of this sudden [indiscernible] the demand? Or do you think that both resi and agri would be able to more than cope up and give you sequentially also a very good set of numbers?
So firstly, it's early days, right? So I think I would stay away from talking about how the overall quarter is going to go. We continue to be optimistic because as you're aware for the building material part, I think real estate is doing well. There can be short-term challenges, but I think next 1 to 2 years, at least, I think real estate will do well. The data is out in the open, and whatever ground-level interactions that we've had with builders and architects across the country has been extremely encouraging.
So I continue to believe that next 4 to 6 quarters will be strong for building materials, which is Plumbing and SWR, which is 2/3 of my portfolio. And 1/3 of our portfolio, which is agri, has been -- PVC is affordable today, so -- and past 2 years of agri has been weak for the industry. So agri will also continue to do well.
So overall, we are optimistic about both end user segments, Plumbing as well as agri. Of course, we have to be realistic that December quarter, the kind of 35% volume growth that we've had. Of course, restocking has been a part of it because the channel was empty for the first 6 months of the year. So 35% volume growth is not something we're going to see continuously for the next 4 or 6 quarters. It was driven by both genuine demand as well as restocking. And restocking of course, I think now channel inventory is closer to the normal inventory days today than it was at the beginning of December quarter.
So I think we can see a healthy growth for the industry now because volatility of PVC actually is behind us. I think PVC will be stable, will be range bound. So I think we are back to normal, the worst is behind us, and we should be back on a growth trajectory, a healthy growth and a sustainable growth trajectory.
[Operator Instructions] The next question is from the line of Shrenik Bachhawat from LIC Asset Management.
So my first question is, could you quantify the inventory loss for this quarter? First question. And the second question, can you throw some light on do we supply materials for Jal Jeevan Mission, and is it big for us?
Yes. Thank you, Shrenik. I think the overall inventory loss -- since we are importers of PVC and mainly a PVC player, so inventory loss was around INR 25 crores to INR 30 crores for the December quarter, so significantly less than the September quarter. And like I said, the worst is behind us and all the high cost inventory has been consumed in the past quarter. So I think that is now behind us. So that is, to answer the first part of the question, INR 25 crores to INR 30 crores.
And can you repeat the second part of the question?
Do we supply materials for Jal Jeevan Mission?
Yes, Jal Jeevan Mission is -- so we have seen some demand from some pockets. In PVC, we have participated. HDPE, we are not that keen because of the extremely paper-thin margins. But PVC, wherever there is an opportunity, we have participated. We are very clear as an organization that Jal Jeevan Mission is good for the industry. It can be a growth driver for the industry. But it is not going to be a primary driver for growth because it's something that we cannot trust whether it will be consistent or not month-on-month, quarter-on-quarter. So I don't see Jal Jeevan Mission as a sustainable growth driver. It will be a third or fourth driver for growth. But primary driver for growth has to be driven from real estate, agriculture, network expansion and newer products that we are coming into within piping segment.
And just last question. So I think -- I believe agri season has already started, so how is the agri season -- agri demand performance has been Jan and Feb, till now?
So I think December, we saw some good agri sales and affordability is back. So I think agri should be good towards the end of this quarter and in the first quarter. As you are aware agri is around 30% of our business, so I think that part of the business should do well, given that affordability is back. And the past 2 years has -- of agri had not been very good. So I think Agri should do well at an industry level.
Okay. And just last question, on the Telangana plant, how has been the progress over there? Like, what is the current capacity that you are running at the Telangana plant, and all the products are in place. Can you just enlighten us about the Telangana plant?
So Telangana, we have been able to put up a capacity of approximately 50,000 tonnes. Initial response has been very good. And we have -- as you are aware, South India is a focused market for Prince Pipes today. And having a local plant, we are already seeing the green shoots of having lower freight structure and a local supply chain. Of course, capacity utilization, it's still early days. It will take a few quarters to really ramp up, but we are on track as to what we had internally projected.
The next question is from the line of Udit Gajiwala from Yes Securities.
Yes. I just wanted to know that what kind of volume outlook are you looking for FY '24? I believe you said that you are [indiscernible] 14% margins on a sustainable basis. So what would be the volume growth that you are looking at for the next fiscal?
So I think volume growth in -- so we really stay away from giving quantitative guidances, but I think given all the tailwinds that we have today in terms of affordability of PVC, strong real estate market, like I said, agri should be doing well. So that's at an industry level, and we have always looked to outperform industry growth via our network expansion or entry into the project vertical. And lastly, the large range of new products that we are getting into within the piping division.
So I think whatever industry growth will be, we have constantly outpaced by 2% to 4%, and then we would like to continue that. I think industry growth typically has been around 6% to 8%, which I think should be back. And as a result, we should be trying to outpace that over the medium to long term.
Absolutely. And then secondly, like, we have been -- one of the focus is growing into newer products. So do we have any sort of data that -- what would be the contribution of these new products that we have launched since the last 12 to 15 months and new market accessibility for the sales?
Yes. So I think it's important to not look at this quantitatively. It has to be looked at qualitatively because a lot of these products take time. A lot of these products, we are the first movers in the market to introduce this kind of technology. So that conceptually takes time, but the initial response has been very good. So I'll maybe give you a slightly detailed answer here. So starting right from 2017, we were one of the early movers to come into the DWC, the double-wall corrugated pipe segment, to use for underground drainage, where we are replacing RCC with DWC. And we have seen very good acceptance of this product, and it has started silently contributing to our overall revenue, and the potential for this product is immense going forward. And we are excited about the underground drainage vertical, and we have set up capacities accordingly over the past 3 to 4 years.
Apart from that, we have come into storage tanks, which I commented on earlier that good product acceptance, about the quality and the design of tanks and over the long term, this will also be a growth driver for the organization. And tanks is more a story of concept selling and -- of cross-selling in our distribution network.
And the last part is the Modern Plumbing vertical that we've recently started, with the surface drainage product as well as the low-noise polypropylene drainage pipes in collaboration with German companies, which also -- we have started creating awareness about these products in the market. And being the first movers, it's up to us to how that we are able to concept-sell these products.
In the long term, this will not only contribute to our revenue, but it is -- it will heavily contribute to our profitability because the gross margin for these products is very, very strong to contribute to the value-added part of our portfolio. And more important than the number part of it is this will help us create a very strong brand. Today, we are already one of the leading brands in the industry, but having these kind of products really helps us focus on research and innovation, which is very, very important for any leader in any segment.
The next question is from the line of Dhananjai Bagrodia from ASK.
Nihar, congratulations on the good set of results. I wanted to ask you, in your breakup in sales, would you have any percentage of like how much will be the breakup between segmental in the Piping business?
No, we do not give out segmental revenue. But broadly, 2/3 of the business is building materials, 1/3 is agri and 2%, 3% is infrastructure.
Okay, 1/3 is agri. So comparatively, would you have seen -- in this Q3, would you -- which segment would you have seen which has grown on a higher base considering -- I'm just trying to compare between the 3 players and their focus area, so which segment have you seen a good growth in between building materials and agri in Q3?
Yes, that's a good question. I think in the December quarter, our growth has been across segments, across Plumbing, SWR and agri, so the contribution to the top line remains similar. I think as we stated in the opening remarks that our business strategy is very sustainable. We want to -- agri, we see as -- the agri segment, we see as a way of absorbing costs, driving volume and entering into rural markets. But the entire mind share is obviously on the Plumbing and SWR segment. So this contribution to revenue for all the 3 verticals has broadly remained the same, and we have seen growth across segments.
Okay. Sure. And yes, my other questions have been answered. Congratulations.
We have the next question from the line of Keshav Lahoti from HDFC Securities.
I just want to get a sense about channel inventory. Where was it in December? Where is the channel inventory currently?
So channel inventory in the first half of December quarter, so October, November, channel inventory was very low in anticipation of further reduction. Starting from December as prices started to stabilize and reverse, we saw a restocking phenomena in the December month. So I believe today channel inventory is [indiscernible].
I think there is some disturbance, too much of background. Moderator?
Mr. Lahoti, are you online?
Yes, I'm here. Sir, I missed, you said channel inventory -- is it better now.
Yes, this is much better, sir.
So channel inventory in October and November was extremely low in anticipation of reduction of prices. In December, as soon as prices stabilized and reversed, we saw restocking phenomenon. And today, as we speak, I believe channel inventory is moderate, close to normal.
Okay. Sir, just want to -- if I see quarter 3 performance, is it fair to assume the growth came because of restocking? So maybe the growth in October and November would have been low single digits?
So restocking was one of the drivers for growth, but we also believe that there is genuine growth in the market because of 2 reasons. One is real estate is doing well, which is why building material will do well, and PVC prices had crashed. But the silver lining was because of affordability, agri also grew. So we saw it. So restocking is one part of it, apart from genuine demand improvement in the market.
Because the reason why I'm asking you this question is that...
Sorry to interrupt, if you have further questions, we request you to kindly rejoin the queue.
The next question is from the line of Nikhil Agrawal from Vt Capital.
Sir, I just wanted to know what is the current run rate in the water tank business, monthly run rate?
So I think it contributes to around 1% of our overall value today.
1% in quarter 3?
Correct.
Okay. And sir, what would be the capacity? You have a total capacity of 315,000. So how much of that is water tanks?
I would have to get back to you with that. I don't have the exact capacity. [ Karl ] would be in touch after the event.
Okay. I'll get back to you. And so in your pipes segment and overall as a company, on the company level, what was the capacity utilization in Q3? And how much can it go up to going forward? I mean, at optimum utilization, how much can that be?
So see, we have put up 2 new plants in Jaipur and Hyderabad in the past 3 years, and we have put up this capacity for the next 2 or 3 years. So today, capacity utilization is fairly low. But on a rated capacity of 315,000, our production capacity can go up to 230 to 240 kt per annum.
Okay. And sir, you have no CapEx plans as such right now going through for the next [indiscernible] CapEx?
So right now, we are debottlenecking existing facilities, and yes, the focus in this current financial year has been on maintenance and debottlenecking.
The next question is from the line of Sandesh Barmecha from Haitong Securities.
Sir, first question, how much CPVC contributed on volume terms and on value terms?
We don't give out segmental data as you are aware. But broadly, on -- CPVC contributes to around 20% of the revenue.
Okay. So do we -- what will be our full year guidance -- CapEx guidance, sir, for this year?
The guidance for?
CapEx, sir.
So 9 months, we have already done INR 80 crores, we have capitalized this fiscal, and around 20%, 25% is what we'll be expecting in Q4.
The next question is from the line of Archana Gude from IDBI Capital.
Sir, overall, like, what kind of growth we should look at for the next 3 years down the line? And more -- if you can give some color on how we should look at the margins in the sanitary ware business going forward?
Yes. I think the next 2 to 3 years, as an organization, we are growth hungry. And we have put up the capacity to take advantage of any such uptrends in demand. And I believe the past 5 years, all the growth that came, came because of market consolidation, the top 3 or 4 players like us grew mainly because of a consolidating market environment from the unorganized to the organized, and within the organized also, the big were getting bigger. This was despite a weak real estate segment. However, over the next 3 to 4 years, I believe consolidation will continue to take place. But we will have the tailwinds of a strong real estate market, coupled with affordability of PVC prices, which will bode well for the agri segment as well. So the confluence of these factors -- these 3 factors makes me optimistic about growth over the next 3 years.
And the sanitary ware business, I think we would be able to give exact guidances on revenue and margin once we officially launch.
Sure, sir. And sir, just one more bookkeeping question. There has been 14% decline in other expenses in this quarter. Was there any one-off, or like, what exactly has been going on there?
Yes, I think there should be a one-off, nothing sustainable. So just a one-off, nothing specific.
Sure, sure. And any guidance on expense going forward?
I think -- guidance on expenses, I think the main discretionary expenditures for us are, obviously, manpower and advertising, which I think will continue.
So should we take that like 2% to 3% of your top line for ad spend?
I think 1.5% to 2% on ad spends will sustain.
The next question is from the line of Sujit Jain from ASK.
If I look at the working capital situation compared to March quarter, March '22, inventory has gone up and so have, I think, receivables. Overall working capital days, if I normalize the payable days, which have increased, would have gone up. So if you can just explain, would it be in line with the inventory you would want to keep for this season, upcoming season, or how is it panning out basically?
Yes. No, I think, see, every quarter, this would be dynamic. So I don't think we can take March '22 as a benchmark for working capital for all quarters. But yes, we are -- I think 60 days is an inventory that we have always guided. 60, 65 days is a very normal level of inventory for this industry. So I think that will continue. And receivables, I think, as we mentioned in the -- earlier on the call also, the focus is on receivables. Clearly, we acknowledge that there is scope for improvement. We have come a long way from whatever, 70, 75 days of [ data ] days that we had, which has come down to 48 days over the past 2, 3 years because we cannot have overnight reduction because we are still a growth-oriented organization. But I think in the next 2 to 3 years, I would like to see receivables come closer to the 30-day mark and more in line with the industry.
So today, the kind of brand that we've built, I think it's -- we need to leverage our brand equity that we've built by tightening our receivables. It will not happen overnight, but I'm confident in the next 2 years, we should see a significant improvement in the receivable sales.
Sure. And the 2 technology tie-ups that you have spoken about, German tie-ups and launch of 2 products. Any details about royalty payments? And how does this work?
There is no royalty payments. Initially, it's a trading model. We will start with the trading model, and as volumes pick up, we are open to local manufacturing as well. But the initial days, the hard work we need to put in to really concept-sell these products. So for example, the surface drainage products of Hauraton, we are replacing cast iron and RCC surface drainage channels. So the same way, we replace cement pipes to DWC pipes. The first 2 to 3 years were very, very painful, and it looked like we were sitting on a very low capacity utilization. But eventually, all conventional products, like steel and cement, will move to polymer products because of better product life cycles and more user-friendly, high-performance products.
So the way we have done with DWC now, we want to create these pockets within piping, newer applications, where we replace conventional use products with polymer products, and we have to do the concept selling. So first 2 to 3 years will be really challenging, but that's what we like. We like the challenge because that helps us cement ourselves to become synonymous with that product, an established category leader. And this will not only contribute to revenue, but because of the better gross margins, once we start in-house manufacturing, there is immense potential for contribution at the earnings level as well.
And one quick question is that buildings you have with SWR for drainage pipes and surface drainage is meaning overall drainage system. Is that the correct understanding?
So surface drainage is basically helps you to -- helps the storm water or the rainwater to a grid of project. It is the surface -- the channels that we see of RCC in our buildings, our residential and commercial buildings today, that we are replacing with 100% recycled polypropylene surface drainage products. So I would be happy to share some product pictures with you. It's also available on our website. But it's a surface drainage channel.
Perfect. Thank you and all the best.
The next question is from the line of Praveen Sahay from PL India.
So first question is related to the Plumbing. How is the project versus the retail contribution?
So we are retail-driven today and heavily indexed towards the retail. So I think it would be like a 75 retail and 25 project split, because we've built out the project vertical only in the past 2 years with a separate project head and a -- entire project team. So the progress that we have made in the past 2 years has been immense. And I think we are already heavily skewed towards retail, but project segment will now help us drive the next level of growth over the next 2 to 3 years.
It's a very different kind of business than retail. Retail is more distribution network-driven. Project is more relationship-driven, the relationships that we're able to build across builders, contractors and consultants across the country. And we have made a lot of strides in the past 2 years. And I think going forward, we should see a better contribution from the project segment. And I think we -- the timing of this has been opportune as the real estate segment is doing well. So as an organization, we are excited about the potential of the projects division over the next 2 to 3 years.
Okay. And the next question is related to the Plumbing mix, PVC and CPVC. So PVC prices are down significantly. So is that impacting your CPVC performance?
What do you mean?
So in the Plumbing segment, you sell PVC and the CPVC both. So now the PVC prices are down, PVC pipes and fitting prices were corrected. So is that some way impacting the CPVC?
So we have not seen anything like that. I think CPVC continues to be 20%, 25% of business. We are growing in CPVC for the year. We have -- for the 9-month period, we have a double-digit growth in CPVC because what you must understand is CPVC is used for a very niche application, which is hot and cold water plumbing. It's today only a INR 4,000 crore, INR 5,000 crore market versus PVC, which is obviously a INR 30,000 crore market because PVC is much more versatile, can be used for agri, SWR as well as cold water plumbing. So -- CPVC while can only be used for hot and cold water plumbing, so I don't see much cannibalization happening across the polymers.
Okay. Last question, sir, related to your capacity. You said 315,000 post this expansion in both the plants?
Yes.
Okay. And that will be the year-end number?
Yes.
[Operator Instructions] The next question is from the line of Keshav Lahoti from HDFC Securities.
Sir, as you said, the project division is expected to grow at a higher rate. Will it be fair to assume you will have a lower margin in project division, so overall, your margin could be decreased because of that? .
No, I don't see this challenge because you're right, of course, project pricing for the entire industry or across any industry project usually tend to be more aggressive on timing. However, this is compensated by 2 things. One is the product mix tends to be better towards plumbing or a specifically CPVC. So this helps partially offset the aggressive pricing at the gross margin level because of a superior product mix relative to our product mix overall.
And at an operating margin level, the volumes in the project business are lucrative. So from a cost absorption point of view, I think it almost evens out. So at an operating margin level, there is not a significant difference in the project and in retail business.
Got it. Can you give some sense what would be your current margin difference between the project and retail?
So like I said, there is not a significant difference at the operating margin level, so it is not very material.
Okay. One last question from my side. What would be the margin you would be making in agri and plumbing? The order [indiscernible]. I'm not looking at the exact number.
Yes. Because you are aware, we don't give segmental breakup for revenue and margin, but I understand what you are asking. Plumbing margin is superior compared to agri. Plumbing is more value-driven, brand-driven. And agri is more volume-driven and price-driven.
The next question is from the line of Arun Baid from ICICI Securities.
Nihar, just one question here. If you look at your EBITDA per kg in this quarter, which came into about INR [ 50.5 ], INR [ 50.9 ]. And as you said, the inventory loss would be of INR 20 crores, INR 25 crores. So if I take INR 20 crores, the EBITDA per kg, ballpark would be about INR 20.50 paisa. What I'm trying to ask is, is that the normalized margin we should look at, forget about inventory gains, which you may have losses or normalized? Assuming things being normal, is that the range we should look at going ahead?
So Arun, as you are aware, we don't really give guidances on EBITDA per kg. Of course, there has been an improvement quarter-on-quarter as the prices improve. But I think on a long-term basis, 12% to 14% EBITDA margin is something which is sustainable, with, obviously, a healthy volume growth.
The only catch here is when you say 12% to 14%, we don't know what the PVC prices would be. So that's the catch there, right? Because if I assume the PVC prices like, for example, in this quarter, your PVC was roughly INR 161, INR 162, your blended realization, which is obviously lower compared to quarter because you had lower prices in between the quarter.
Now the point is, if you look at today's realization, which would be higher because PVC prices have gone up from what the lowest was, then your number changes dramatically, 12% to 14%. So what I'm ballpark trying to get to is, is that 12%, 14%, actually is the [ slowest ]? So is that EBITDA per kg, which we are seeing normalized? Is my calculation really correct? I'm not asking you to give guidance, but is that the way we should look at it?
Yes. So you're right. I'll stay away from giving a guidance, but your calculation is accurate.
The next question is from the line of Nikhil Agrawal from Vt Capital.
Sir, I wanted to know like, your 9-month CPVC volume growth, if you could quantify it?
We have seen double-digit growth in CPVC in the 9-month period.
Okay. And in the first half, you had mentioned 25% growth. So it's been around the same levels?
I'm sorry?
In your Q2 call, you had mentioned that CPVC volume growth has been around 25% in the first half. So has it been around the same levels? Or has there been some [ tapering ] off or anything?
So we have seen double-digit growth in the December number. I don't have the exact number with me. But in December, we have seen double-digit growth, and for the 9-month period as well, we have seen double-digit.
Okay. Great. And sir, what would be the price trend? Any major changes in the CPVC prices?
No, I think PVC prices continue to -- CPVC prices continue to remain stable.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you to all for attending our call. Thank you.
Thank you very much. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.