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Ladies and gentlemen, good day, and welcome to the Prince Pipes and Fittings Limited Conference Call hosted by Systematix Institutional Equities. [Operator Instructions]
Please note that this conference is being recorded.
I now hand the conference over to Mr. Ashish Poddar from Systematix Institutional Equities. Over to you, sir.
Yes. Thank you, Diksha. Good morning, everyone. I'm Ashish Poddar from Systematix Group. I welcome you all for joining today. It is our pleasure to host the premium management of Prince Pipes and Fittings Limited led by Mr. Parag Chheda, the Joint Managing Director of the company.
I request Mr. Parag to do an opening remarks, post which, we shall open the floor for question-and-answer question. Over to you, sir.
Thank you, Ashish. Very good morning, everyone, and thank you for joining us for the quarter 4 FY '22 earnings call. The presentation and the press release have been issued to the exchanges and uploaded on the company's website. I hope everybody -- everyone had an opportunity to go through the same. I'm happy to state that Prince Pipes has been able to raise commercial papers worth approximately INR 25 crores. Our commercial paper rating is A+ as per CRISIL.
While we continue to remain long-term debt fee, the raising of commercial paper highlights the quality of our balance sheet and the faith of investors in our business model and long-term prospects.
Let me start with a macro view at the industry level before giving a perspective into our company-level performance and our strategy going forward. The volatility in the raw material prices continued throughout the March quarter. While PVC prices softened in January and February, upward hikes also took place in the month of March. This led to an uncertainty across the channel. This kind of volatility and uncertainty results into an environment, which is not very business-friendly. And I strongly believe that in such times, it is important to focus on long-term organization goals of: a, building stronger brand equity through network expansion; b, product portfolio expansion; and c, reinvesting into the marketplace.
These efforts have started showing results, but the true dividends will be obtained over the medium term. Despite the headwinds, and despite a strong base, we have been able to post a 9% volume growth in quarter 4. We have continued to gain market share even in such demand environment. However, I believe it is important to focus on what is next.
What will be the enablers for Prince to continue to gain market share going forward? I will focus on few of these enablers today. Starting with the significant progress that we have made in digitalizing our value chain, our SFA, which is the sales force automation should be live by the end of quarter 1. While our DMS, which is the distributor management systems, will be made live in a phase-wise manner over the next 2 quarters.
The sales force automation and the distributor management systems will have multiple benefits such as: one, better visibility of the secondary markets; second, better control on inventory management, not only at the company level, but also at the distributor level; third, superior working capital efficiency; fourth, an efficient tracking of the ground-level sales team, TPLs. I believe these digitalization programs make us immensely future-ready.
On the B2B segment, we have been making steady progress. Prince has been able to break through multiple key accounts across the country. However, we have a long way to go in this segment, and we continue to put efforts in the right direction to ensure the B2B segment becomes a growth driver for our organization.
Now coming to the underground drainage vertical. We have launched a series of inspection chambers and manual chambers. These products will add to our range in the underground drainage segment. These inspection chambers and metal chambers are made of polymers, and will replace chambers made of conventionally used materials like concrete due to better performance and faster installation speeds. We will be cross-selling chambers to the end users who are using our corporate core-fit DWC pipes.
Lastly, we have also launched PE-FIT Aqua systems, which are HDPE piping solutions. These pipes are used for water supply, and have a market across our retail projects as well as infrastructure vertical. This range expansion will enhance our ability to penetrate across market segments, especially in the semi-urban and rural markets of India. We have set up HDPE piping capacity in the Jaipur facility, and plan to set up this product in the Telengana facility by September.
In conclusion, I would like to state that volatility and uncertain environment is short term in nature. We continue to remain extremely optimistic on demand going forward due to significant demand traction in the real estate sector. Our ability to consistently deliver volume growth and gain market share in such environment is encouraging.
This volume growth has been a result of efforts: a, across applications like plumbing, agri, underground drainage and industrial application; b, across different segments like retail, projects and infra; c, and due to constantly innovating and expanding within our core by introducing newer products within the piping industry, which adds to our robust product range. We, at Prince Pipes, are well poised to capture this demand across India due to these reasons.
I will now hand over this to Shyam to walk you through the financials. Thank you.
Thanks, Parag, sir, and good morning friends. I'll be taking you through Q4 FY '22 financials now. For Q4 FY '22 revenue has grown to INR 901 crores compared with INR 761 crores in Q4 FY '21, indicating a growth of 18% on account of better product mix and improved realization.
Sales volume has increased by 9% by 45,287 metric tonnes in Q4 FY '22 as compared to 41,644 metric tonnes in Q4 FY '21, indicating a better market share gain. EBITDA margin for Q4 FY '22 stood at 15.6% compared to 19.3% in Q4 FY '21 declined by 370 bps.
For Q4 FY '22, EBITDA is at INR 140 crores compared to INR 147 crores in Q4 FY '21 declined by 4%. PAT stood at INR 88 crores compared to INR 97 crores in Q4 FY '21. For the full year financial year '22, revenue is at INR 2,657 crores compared to INR 2,072 crores in FY '21, a growth by around 28% on improved realization. Sales volume has increased to [ 139,034 ] metric tonnes in financial year '22 as compared to [ 138,289 ] metric tonnes in financial year '21, indicating a marginal increase of 1%.
Profit after tax has improved to INR 249 crores from INR 222 crores in the previous period, indicating a [ 12% ] increase. Working capital days has increased to 68 days mainly on account of increase in inventory levels. By end of Q1, inventory level should get normalized.
Company has declared final dividend of 20%, thereby making a total payout of 35% including an interim of 15% for the year -- financial year March '22. During the quarter, the company utilized the balance IPO proceeds for the purpose it was envisage. Our gross debt as on 31st of March 2022 stands at INR 150 crores. Company remains to be a long-term debt-free company.
With this, we would like to open the floor for questions. Thank you.
[Operator Instructions]
We take the first question from the line of Sujit Jain from ASK Investment Managers Limited.
Congratulations on a decent set of numbers. When one looks at the PVC price now that it has fallen to INR 125. Do you see a prospect of inventory losses during the current year FY '23?
Thank you, Sujit. So yes, there has been a significant correction in the past months in PVC prices. And as you are aware, any -- PVC raw material has been extremely volatile like any other commodity in the past few quarters. And there will be certain quarters of inventory loss, certain quarters of inventory gains. So right now, it does look like there could be some inventory loss in the first quarter.
But if I look at the March quarter, the kind of correction that we saw in the PVC prices in January and February, we were certain of some inventory losses. But then the price increases in the March month sort of neutralized any inventory loss. So it's too early to say, but I'm sure that any inventory gain or loss will not be an annual phenomena. It will be a quarterly phenomenon. On a 12-month basis, it should neutralize like it almost did.
So therefore, the guidance for FY '23 in terms of margins would be what?
So I think we continue our guidance that we have always given for the past many quarters of -- operating margin in the range of 13% to 15%.
And in terms of market size, it you can spell out, what would be the overall market size end of FY '22? The size of -- within that CPVC, PVC, HDPE and SWR.
So I -- so one is on polymers, one is on applications, right? So I think if you're asking about SWR, agri, that is by application or by CPVC, PVC, HDPE, which is by polymers. So are you looking for a polymer-wise split or application-wise split?
Polymer-wise split.
So I think PVC, of course, is the most versatile material. It can be used for all applications, be it cold water plumbing, SWR, agri, water supply, et cetera. So that is always going to continue to have the line chunk, the major share of course, CPVC obviously is a fast-growing market. In terms of market size, CPVC would be around 150 kT of annual sort of universe in terms of volumes. And PPR is a niche market. And in that market, of course, we are the undisputed market leaders.
And in terms of the size of PVC, actually the spelled-out for 150 kT?
I don't have the exact number. Allow me to get back to you on the exact number for that on the past 2 years, there has not been any official research. So we'll get back to you on that.
Sure. And in terms of differential in CPVC and PVC pricing, at [ INR 125 ] PVC, what would be the pricing for CPVC, currently?
Yes. So the gap obviously had narrowed down because PVC has gone up significantly and CPVC did not go up and that towards the same extent. However, having said that, currently, there we have seen correction in PVC prices, whereas CPVC -- we are seeing some increases that have been passed on. So that differential that had started narrowing has now started come back -- coming back to the regular terms.
Which will be about INR 40 INR 50 higher than PVC price.
I'm sorry?
Which will be about INR 40 to INR 50 per kg higher than the PVC currently. Is that the correct understanding?
It will be higher than that. It would be higher than that. It could be north of INR 200 per kg.
We take the next question from the line of Mr. Achalkumar Lohade from JM Financial.
First of all, a good performance in the challenging environment. My first question is if you look at the balance sheet, we see that the inventory days have gone up meaningfully. If you could give some idea as to what is the breakup in terms of raw material and finished goods? And number two, I think Shyam did mention in the opening remarks that this inventory will be absorbed in the first quarter. Did I hear it right?
Yes. So, Achal, I think that's an important question, and let me clarify that for the entire audience. So firstly, if you look at the inventory in days is around 85 days. Whereas a normal inventory that Prince has always carried is around in the range of 60 to 70 days. So which means that the gap is around 15 to 20 days of higher inventory.
Now the reason behind this higher inventory is that we have witnessed a major global supply chain crisis in the past year. And since the past few quarters, we have consistently maintained that this is a strategic decision by the management to keep higher inventory levels than normal because in the face of a supply chain crisis availability of materials is the biggest enabler for market penetration.
Throughout this year, there have been shortages of product across the smaller players, and even within the -- some of the larger players as well for both PVC and CPVC. Throughout the entire year, there has never been a single day of shortage for product at Prince. And this is also reflected in our volume performance for both the quarter and for the financial year. Despite a large base and despite the uncertain market conditions, we have been able to consistently outpace the industry growth and gain market share.
So the reason behind this higher inventory days has been, it's not something which has happened by accident, it was a strategic decision to ensure that we never have any shortages, and are constantly able to keep up with the demands of the market. What I will say, though, is that this is not something that will continue because I do see that the supply chain crisis has almost gone away and we are back to a regular global supply chain.
So I think going forward, Achal, to your question, the inventory should normalize by June, July, and this will be reflected in our performance going forward as well. So we are confident of that.
Got it. Could you help us with the breakup in terms of raw material and finished goods?
I don't have the exact breakup. Allow me to get back to you.
Okay. The second question I have is with respect to PVC raising price. How do we look at this? I mean we have seen, as you said, Jan, Feb was soft, March picked up April and May, we have seen a correction -- and compared to historical, it is still up by 60%, 70%. So if you could give some sense, some direction that I think that would be a great help.
I think Achal, at this point, your guess is as good as mine on a lighter note, but I think we have seen an extreme volatility, and there has been a sharp correction in the past 2 months. I do see -- the average of PVC prices, Achal, is not sustainable. I think that's very clear. And while the correction in the PVC could have some short-term disadvantages. I think in the long term, it is good in terms of plastic consumption and PVC consumption for the country.
To put a number on it, it's very difficult. But if I have to give a guesstimate, I think anywhere in this band of $1,250 to $1,450 per tonne seems sustainable. And the reason for that is, today, VCM every peak is around $1,250 per tonne. And typically, the PVC VCM spread for it to be viable for a PVC resin manufacturer has to be around $150. So today, it is at $1,250. So simply because of the feedstock cost dynamics, I don't see major corrections -- but I don't see a major upside from here as well. So to give you a range, sitting at this point of time, I think $1,250 to $1,450 per tonne seems to be what this next year will look at.
Got it. And just a clarification. Is the -- in an answer, you mentioned that supply chain is normalized. Does it mean that most of the capacity constrains what we had talked about in the past year have got normalized at the global level in terms of PVC manufacturers?
Yes. I think to a major extent. There is -- it's still not back to normal exactly, but majorly, I think there -- and in the next few quarters. I think that the next quarter itself it should completely ease off.
Got it. And just last question, if I may. In terms of competitive intensity, like in the last 2, 3 years, we have seen that -- some of the smaller players really had tough time, and even some of the larger players as well. Now as the supply chain is normalized, do you see the competitive intensity actually going up again? And could that have any impact in terms of the operating margin performance for the industry?
I think, Achal, which has always been a competitive impression, right? So I think we are not someone who is going to shy away from competition. I think competition does make us more efficient in terms of focusing on new product and expanding distribution and investing in the brand. So I think those things will continue to happen.
And you don't see everyone sees the growth, right? It is a growth-driven industry, which has constantly outpaced other industries in terms of growth. So I think always there are going to be some more organized players coming into the segment. The way I see it is -- today at Prince, we are much happier to compete with an organized player who may be a new entrant as long as they are eating up the market share of an unorganized player because any organized player is always going to have discipline with respect to price, with respect to credit, with respect to quality, consistently given a quality product in the marketplace.
So I think as long as there are organized players that are coming in with discipline, I think it's good for the industry. It's good for the end consumer and that it makes us all more efficient. I don't see it having any major impact on our profitability.
We take the next question from the line of Sneha Talreja from Edelweiss Securities.
First question is from my end. We were -- in the start of the quarter on me, even in the middle of the quarter, we were actually looking at a flattish kind of growth. Just want to understand the reason that led to a bit growth, what was it related to? Was it agri demand? Was it plumbing demand? And more importantly, how is the inventory now at distributors? And have we seen some model stocking up in the month of March, and now it's getting normalized? Some flavor there.
Yes. Thank you, Sneha. I think we were definitely looking at a flattish sort of a quarter towards the first half of the quarter. But I think March month has -- did revive in terms of demand, in terms of sentiment across the channel. This has largely been driven by plumbing and SWR. Agri did improve in March compared to Feb, but not to the extent that it usually delivers for us in the Jan to June period.
So this demand has been still driven by plumbing and SWR products. And I think the second half of the quarter has been much better than the first half of the quarter. Also, if I have to give you a good long-term view over the past 2 years, we've been also heavily investing in branding and expanding the distribution network.
So at some point, that is bound to pay off in terms of helping us outpace industry growth. And to answer the last part of your question, I don't think dealer-level inventory is very high. In fact, because of the volatility in raw material prices, I think the dealer-level inventory should be moderate or -- moderate to low in that band.
Does that also mean that now they are pretty hesitant in terms of picking up the material given that there has been such a sharp fall in prices, or now as after this INR 10 which is already very steep, you think the acceptance will come back? Or do you see further destocking in further foreign prices? I just want to understand the plan from your perspective.
See, you are aware, whenever there is a sharp correction. There is a tepid sentiment in the channel, right? So that's just the part and parcel of the business, and this time is going to be no different than the other times. So there is definitely a reluctance to stock up entering inventory back to moderate to high levels. But it is part and parcel of the business.
We cannot -- today, we don't have a trader mentality, we cannot look at prices or inventory gain, inventory loss or push products when prices are high. And we, as a management, need to focus on the things we've always focused on like distribution and product -- new products. Any restocking or destocking phenomena will continue to happen. And over 2 quarters or 4 quarters, it always evens out. So that's how I see it.
Perfect. And could you also quantify your CPVC growth rate. What is CPVC? Some flavor there.
CPVC, the base was high in the quarter 4 of the past financial year. Despite that, we have seen growth in the CPVC space as well. It has been in similar range to PVC, both has grown to be similar extent.
Understood. And one last one, if at all, I mean, is getting the ad spend during the quarter and during the year.
I'll just -- give 1 minute. Sneha the ad spend for the financial year are INR 41 crores. And out of that INR 13 crores has been in Q4.
We take the next question from the line of Pranav Mehta from Equirus Securities.
Congratulations on decent set of numbers. I wanted to understand on the current availability of the CPVC resin because we have also heard that availability of CPVC resin is also tight in the global market. So has the plants which were expected to get commissioned in India, have they started supplying some of the CPVC resins, which might reduce the imports of the period. That was my first question.
And sir, the second question is related to how are you adding your channel, particularly in the tier 1 in low markets, and tier 2 in low market. So how that thing is panning out? If you can share some number of the dealers and distributors there? And my third question, sir, was related to the overhead water tank business. So how that is shaping up?
Yes. Thank you. So I think if I look at your first question was to do with the CPVC. The local capacity of product has not really kicked in for the CPVC raw material manufacturers. So India as an industry, we continue to be import-dependent for the CPVC raw material. The availability is still not even in the way the PVC raw material availability is even. And I think this will continue for the next 1 year, minimum.
And we are in a good position, and has strong supply security in CPVC as well. And like I mentioned in the previous answer as well, that we have been able to post low double-digit growth in CPVC as well despite a high base. So I think we continue to gain market share in the CPVC segment on the back of material availability, and all the activities that we're doing in the front end.
And I will join that to your second question in terms of also the distribution network that we have added has had us grow our plumbing and SWR portfolio market share. And this -- we have constantly maintained a number of distributors are not very important because the yield the distributor can vary from -- right from INR 1 crore to INR 70 crores. What is important is adding the distributors in the right markets in the market where there are wide spaces, markets which are weak for Prince today. And I think we've been able to consistently do that over the past few quarters and then that activity continues. So it's a spread across the urban, semi-urban and rural parts.
So of course, while today, our distribution network is as good as any distribution network in the industry. It's something that we are not content with them, and we need to continue to improve the reach and the quality of the distribution across north, west, south and east India.
Sure, sir. And sir, on the overhead water tank business, how is that shaping up?
Yes. So the tank business is shaping up well. The good part is that the distribution network is exactly the same. So right from the distributors, retailers, plumber who buys a Prince pipe, but the same channels derive the tanks and that was the reason for getting into the tank business. So initially, we have always stated that our focus is not on numbers, but it is on quality and distribution.
And I think across country, across different markets, we have a very strong brand equity in the tank space in terms of quality, and the market realizes our quality that we are giving to the market, the design that we are giving to the market. And we have reached a strike rate of around INR 2 crores to INR 3 crores of sales per month.
There is a huge, huge scope for growth going forward. But this will not come overnight. This has to come in a structured manner. The way it has come in the pipe business for some of the top 3 makers. So we don't need to focus only on the top line of the volume when it comes to tank. It's on focusing on improving the asset-light manufacturing network and focusing on the quality of the products that we're giving consistently to the market.
And I think the numbers will take care of themselves. But the potential is huge, and we are a very small baby in the market today, of course, because we entered only in the past 1 or 2 years.
Got it. And sir, one last question on the competitive intensity. So obviously the unorganized and organized side has remained impacted in last 2 years. But what we are also seeing is that some of the other guys are also planning to, let's say, some of the MNCs are looking at Asia as a growth market, and we are trying to acquire assets and as well as some of the other groups are also entering into this. So can you throw some light on how the competitive intensity is shaping up on the organic side of the market?
Sure. So I think firstly, new entrants coming in, not only in India, but like you said, players from overseas coming to the Indian piping industry. I think it's the biggest sign of the opportunity, of the potential that we are seeing, and it reiterates the belief on the prospects that we have for this industry to grow exponentially over the long term.
Coming to competitive intensity, like I said, we always welcome organized players coming in, MNCs or larger Indian players. It -- one helps us -- it keeps us on our toes, makes us more efficient. Also, a lot of new products have launched a lot of new avenues for growth. And we are not shying away from competition in any way. I don't think this will have any sort of material impact on our profitability, on our earnings. But I see this in a positive way and organized players who are going to focus on -- who are going to be disciplined and focused on new products is always good not only for the end user but also for us as an industry.
We take the next question from the line of Abhishek Ghosh from DSP Mutual Fund.
Sir, just a couple of things in terms of the capacity. You broadly at about 283,000 tonnes. So what's the capacity addition going forward how should we look at it in broad CapEx plans?
So Abhishek, I think most of the capacities that have to be put in Jaipur and Telengana are on stream. So there will not be any major or new capacity coming in. I think the focus, at least, for the next if I have to talk 4 quarters has to be on setting out the assets at Jaipur and Telengana. We're ramping up capacity utilization by ramping up the market share, the market penetration in the newer geographies that we've put up plants in. So I think for the next 4 quarters, we just need to keep our focus on setting out these assets and improving the utilization before putting up any major capacities going forward.
And the capacity utilization in Jaipur and Telengana put together will be more like 30,000 tonnes in this year? Or did that got increased?
Just give me 1 second please. It would be around 35 to 45 kT, in that range.
Okay. And the other thing you may have is -- because this year, your cash demission has not been positive because, a, you had a higher CapEx of INR 170-odd crores and plus you had a higher inventory buildup. But next year onwards, you'll have a much higher cash generation because, a, working capital requirement will be quite stable and also in terms of the capacity expansion not happening. So how should we look at the capital allocation more from maybe a 2- to 3-year perspective?
Sure. I think you're right. Any challenges of working capital or deviation from the regular is only on account of -- or majorly on the account of higher inventories, which like I said, will normalize by July. So we do anticipate stronger cash flows in the next 1 or 2 years.
In terms of capital allocation, this is something that is brainstormed regularly at the senior management level with our CXO team. So one, I think the first thing is that we continue to remain a growth-oriented organization. And there will be capital allocated either within the industry or to allied products like tanks or any other avenues that we think will help the company grow in a structured manner over the long term.
And there will be a sort of consistent dividend payout as well what we have maintained over the past 2 years. We would like to contain -- continue that going forward. But the focus is that the organization will continue to be growth-oriented, and then invest in the market growth, both in terms of capacities and in terms of branding and building a better brand equity over the long term.
Okay. And broadly, sir, located utilization, while for the years, utilizations have been lower but probably have exited by almost about 60%, 65% utilization. So what is the peak utilization that you can hit?
Peak utilization would be in approximately 70%, 70% to 75%. And a lot of our capacities have actually come in the second half of financial year as well. So that will actually -- the true picture of capacity and the right understanding of the capacity utilization will come at the end of the current financial year.
Okay. And the other thing is this capacity expansion as far as the HDPE is concerned. Now if you can probably help us understand that where is the demand from HDPE coming, is it more from the Nal se Jal projects? Or is it also coming into the agri part of it given the sharp increase in -- and if there's a price differential between HDPE and agri -- and PVC price? Just some color there would be helpful.
Yes. I think firstly, like we said, Abhishek, I think this HDPE demand will be across retail projects and infrastructure, but mainly it will be driven by infrastructure followed by the retail market. That's where the demand will come from.
And you're right. It is because of the gap between PVC and the other polymers like PE and PP is not what it used to be, which is why HDPE consumption has increased over the past few quarters, and which is why we have [ 4 ] for this segment. Again, this segment is not going to be lucrative as far as margins are concerned, but it's going to be a good volume driver, good potential to cross-sell this product in our distribution, and obviously help us with operating leverage benefits in terms of cost absorption and capacity utilization as well.
Okay. Just one last question from my side. If you look at the overall demand, if you look at the individual segments of your demand drivers. One is housing which has been strong in which the outlook is also strong. Agri has been because of a weak base and last 2 seasons has not been great. And then you have Nal se Jal infrastructure project. So housing and infrastructure projects, I think you've been consistent in saying that the demand has been good.
In terms of agri, how are you seeing -- is it like this season also because of the capital destocking and PVC prices coming off will be kind of a washer because agri is a short season, right? We have probably March to June. And in that. At that point in time, lower PVC prices should it impact demand because people will kind of postpone their purchases. How should one look at it? If you can just helps us understand that.
Yes. So couple of agri seasons have been washed out, Abhishek, because of the higher PVC price, right? And which has led to the farmers postponing their demand for the product due to whatever extent that they can. And really, it's not a discretionary purchase. It's a purchase, which is needed and is sort of mandatory for the irrigation.
So PVC prices softening and coming back, maybe not at normal level, but at least softening from the higher levels is good in terms of PVC consumption for the country, especially for the agri market, which is -- tends to be more cost-sensitive. So while there could be some destocking phenomenon in volatile raw material market. I think in terms of long term for the next couple of agri season, ideally a lower PVC boots in.
We take the next question from the line of [indiscernible] from [ LIC Mutual Fund ].
So my first question is on the volume growth. Basically, what is the customary value that you can see for the 2, 3 years? And my second question is basically on the gross margin. So is the product mix only the reason for the gross margin decline? Or is there some component of inventory losses as well?
So in terms of volume growth, it's hard to give any guidance in such sort of a volatile market, but we have outpaced industry growth consistently. And we continue to do that. And in terms of our guidance, it's very hard to sort of estimate where industry growth will be. But I do believe that we will continue to outpace industry growth by 2% to 3% in a base case.
So I think we continue to remain bullish in terms of our ability to gain market share. And overall, I think the revival in real estate that we are seeing make -- that will have a significant demand traction, certain industry level as well over the medium to long term and pretty optimistic on the demand and consistent volume growth for larger players like ourselves across different segments, be it retail projects or infrastructure.
And what we are also doing to improve our market share is launch new products, be it HDPE, be it inspection chambers and manual chambers for the underground segment. So this is also going to help us improve our range and improve our cross-selling that we're able to do on the market.
So that could be help with the industry growth or decline in FY '22?
I think industry growth should -- there should be a degrowth at an industry level in the past financial year. I think exact numbers, we will have when there is a official research.
So that's the last question. Could you please share the progress in the newer products we've been launching various products in the last 6 to 8 months. So where are we on that which products are firing which products are slower? Any light on that?
Sure. So for industrial CPVC, our capacities are coming in place and we should be in a position to launch that in the next 2 quarters. And I think this is a product that is going to be not a major contributor in terms of volume. But a very good complement to our existing portfolio because it's going to have almost doubled the gross margins of our current product portfolio, although the base would be very, very small in terms of contribution to our overall top line.
And on the other end of the spectrum, we have added, like I said earlier, the HDPE pipes and the manual chambers and inspection chambers, which will be more volumes in nature, more volume driven rather than value-driven but will help us improve capacity utilization and improve -- enjoy the better benefits of operating vantage. And in the next few quarters as well, we should continue to expand the product range and launch some newer products, which help us improve the overall brand equity of sprints in the marketplace as well.
We take the next question from the line of [ Janish Karia ] from Antique Stock Broking Limited.
Sir, can you just helps us with the revenue and volume growth on those for polymer-wise and/or end user industry-wise for the full year?
So like you are aware the volume growth for us has been 1% over the past financial year. So this is very heartening to see that in this kind of business environment, we've been able to keep hard volumes impact in the face of a challenging business environment, and on a large base as well. And for the quarter, our volume growth has been 9%, and this has largely been driven by the CPVC and PVC plumbing products as well as the SWR products.
Okay. And can you just split it in irrigation or plumbing and SWR for the full year?
Yes. Like I said, the growth has been driven by the plumbing and SWR as a company policy and as an industry norm as well, we would be well aware that nobody shares segment-wise growth. But I understand why you are asking the question, and the growth has been driven largely by the plumbing and SWR spaces.
We take the next question from the line of Vivek Tulshyan from New Mark Capital.
Just from the new product launches, the HDPE pipe and the manual chambers. How big is this market and what is the landscape like and as a 3-, 5-year view, how big could be this in terms of revenues?
Sorry. could you repeat? I was not able to hear your question.
Yes. Can you hear me now? Is it better?
Yes, please.
Yes. So I was asking about the 2 products that we are launching the HDPE pipe and the manual chambers. How big is this overall industry -- what is the overall landscape like and what revenue you'll see from these products in a 3-, 5-year scenario?
Yes. I think manual chambers and inspection chambers are only going to be cross-sold with the DWC pipes in which we are seeing a good traction and a good growth, especially in the past 1 year. So these manual chambers and inspection chambers are for the underground drainage sort of infrastructure vertical, and it is mandatory to have 1 chamber between every 30 meters of DWC pipe. So essentially, every 5 pipes, you need 1 chamber.
So while I don't have exact numbers in terms of potential. As DWC will grow, and we are very optimistic on DWC growth, we would be able to cross-sell the chambers and grow this product segment as well. Only for the sewer application for the chambers, the market approximately would be around INR 2,500 crores to INR 3,000 crores. This can also be used for storm water and other applications and there is no sort of official data on that.
Understood. And on the HDPE pipe side, how big is that market?
Vivek, allow me to get back to you on that exact figure.
Okay. No problem. The other thing on the other expenses, so the other expenses have come off happy compared to last quarter of the last year. And from a full year perspective, it's not grown much. So what are the few line items where this is showing the -- kind of not growing as much?
So this would include -- just to give you a few line items, it would be power, labor, transportation, advertising and legal costs. These are the few line items.
And where would you say most of the saving has been because this has not grown much despite revenue growing?
Yes. So I don't see it as a saving. I think a lot of it is semi-variable in nature. So that operating leverage is down to pay off when we have the kind of a growth.
We take the next question from Utkarsh from Haitong.
I have a few questions. First on the CapEx amount. If we see over the last 2 years, we have spent roughly around INR 290 crores to INR 300-odd crores on CapEx whereas our pipe capacity has just grown by around [ 26,000 to 26,500 ] tonnes. Can you please help me out why the pipe capacity vision is so small compared to our large CapEx?
Yes. That's a good question. I think this number of around INR 250 crores to INR 300 crores includes 2 greenfield projects in Jaipur and Telengana. So a significant chunk of this has gone into infrastructure, civil and utilities at both the plant, and the land bank as well, which is why the CapEx number is higher. And like I said, in the next 1 to 2 years, the focus will now be on these capacities, how we set out these assets and drive the market share on the front end, which will help us improve the capacity utilization of the back end.
And the good part is now we have the land bank. We have the infrastructure in 2 strategic locations of Jaipur and Telengana where now when we want to do incremental CapEx once we reach our ideal capacity utilization, that incremental CapEx is going to be very favorable, or cheaper, which will really help us in terms of performance going forward.
And in the second half with PVC, second half of FY '22, we have spent roughly INR 90-odd crores on the CapEx side. And if you get the capacity data, what you have given in the second quarter presentation, and in this current quarter. I see that our installed capacity have come down from 292 KTPA to 283 KTPA. Why it is so?
Just allow me to get back to you on that.
Okay. Third thing is that like when we discuss the CapEx part in the last earning call, it was mentioned that our Telangana capacity is currently at 25,000 tonnes. And by the end of March quarter, it is likely to go to 50,000 tonnes because we are towards the end of the CapEx cycle. But in our current presentation, it is mentioned that the current Telengana capacity is 17,000 tonnes. It is lower than what we have guided in the last earning call.
Yes. I think this was being done in a phase-wise manner. And because of the challenging business environment, some of this capacity will be brought up in the next 1 or 2 quarters going forward. There has also been some machines in transit from inter unit, which is why -- there's difference.
Sorry, I'm not able to understand. I just wanted to know, are we done with the total CapEx regarding Telengana? Or is still some amount is led to be spent on Telengana?
Yes. The total CapEx for Telengana is done. There is just some capacities inter units that are being realigned, which we will be able to realign in the next 1 or 2 quarters.
Okay. And what would be your CapEx outlook for FY '23? And if you can specifically guide what would be your routine maintenance CapEx? And if there are any further growth CapEx for FY '23.
So the CapEx in the current year will be low. It will be mainly towards maintenance and debottlenecking. So it would be around INR 40 crores to INR 50 crores.
And what would be the current utilization of Telangana and Jaipur plant at the moment? And what it was there in the Q4?
So of course, at the moment, capacity utilization is not as exciting. But in quarter 4, we have reached a good capacity utilization. I think what is important to discuss is to have -- consistently have a capacity utilization of more than 50% to 60%, and it will take a few quarters for that to happen.
We take the next question from the line of Rajesh Shah from AlfAccurate Advisors.
This is Rajesh Kothari here. Great set of number in otherwise challenging one. And just one question. If I look at the overall industry growth and of course, Prince is outperforming industry, but let's take the Prince numbers for a moment that in last 3 years, FY '20, FY '21 and FY '22, we have volume growth of 3%, 4% and 1%.
And this is, of course, better than industry because the industry has been either 0 or it could have been a degrowth. If I compare with it FY '19, of course, FY '19, the volume growth of industry was also high and Prince was also around 18%. Sir, my question is, why the flattish growth of the industry in the last 3 years? And what will make it to grow at around 19%, and above industry growth. Can you explain this?
The flattest growth of the degrowth at an industry level has majorly been on account of COVID and other challenges, which have not only been, I think, in the industry, but for the economy and the global economy at large. I think going forward, like we said earlier in the call that the industry is poised for growth. I would say high single-digit growth at an industry level is very, very attainable, to answer your question. And that is on the back of strong demand traction from the real estate sector, I do believe will help this industry grow at a pace that it should be growing.
So then why you are saying that it's going to be only high single digit? Because for 3 years, it has been flat, correct? So from -- when you have 3 years of 0 growth or worse, why you don't think that at least for 1 or 2 years, it can be high double-digit growth or is it the high single-digit growth?
I mean if it will be high double-digit growth, we would be happy and normal will be -- we are in a position to create that demand from a distribution and from a manufacturing point of view. So see, there are so many uncertainties in the environment. It's really hard to give a guidance from industry growth. But we will -- if the industry grows at a better pace, we would be the happiest because we are poised in the right direction.
We take the next question from the line of Rajesh Ravi from HDFC Securities.
Yes. I have a few questions. First coming on the capacities during FY '22, can you share the split of CapEx across plants where have we spent this CapEx amount?
We will be -- we'll get back to you on the plant-wise CapEx.
No, no. Just -- because the Telengana plant, broadly, what would be the split of CapEx? Is there anything pending on the Telengana plant and on the Jaipur plant?
No. The majority CapEx has been concluded.
Okay. Why I'm asking this is because I know the PPD continues to say that phase-wise capacity expansion over next 2 to 3 years.
Yes. Maybe that would be an error. But there will be incremental capacity as the demand improves, there is we have set up the infrastructure and the civil, and the utilities in such a way that we have an ability to do incremental CapEx going forward.
So that would be over and over the current installed capacity?
Correct.
Okay. And second is in terms of your dealer productivity, you have been talking about that your focus has been consistently on -- which are making better yield per dealer. So how has that improved in this financial year FY '22 and verses over, say, FY '20, something like that?
So I think the focus is on expanding the distribution network. The yield per distributor really is not something that is controllable because the distributor could be -- it depends on the market, whether it's urban market, obviously, the yield tends to be higher, and semi-urban and rural market for the maybe market sizes of that particular district or particular town would be lower.
So then the yield in those markets would be lower. So I think yield for distributor is not something which is really controllable for us. I think what is controllable for us is driving volume growth by expanding the distribution network.
Okay. And how has that grown sir, year-on-year?
We have posted a 1% volume growth in the past...
NO. Not the volume growth, your dealer network growth.
So in terms of numbers, it's not something which is very significant. It continues to be more than 1,500 channel partners across the country but no major addition.
Okay. Two more questions. One is on the project sales. Where you have a dedicated team set up and has been working aggressively. So how is that reflected in numbers? What is your revenue share from project sales for you? Maybe in Q4 over all long when you can give a comparative period, how has that changed for you?
So I think there is good growth that we see in the project segment, but of course, the base is not smaller. So in terms of -- reflecting on our overall numbers, it is not major shift. I think retail continues to be the core business for the organization. Project has grown, but it's not major in terms of shifting the contribution from project.
So any target for next 2 or 3 years like FY '24, what sort of projects have you number you are looking at for your overall revenue mix?
See, in terms of revenue mix, it's hard to guide because the retail also will continue to grow. So it's challenging for me to put a -- project will be x percent of the overall business. But it will continue to grow. We are very -- we are babies in the project market. We have a long way to go. While we have made breakthroughs in multiple accounts. We have a long, long way to go. So we should have double-digit growth in the product segment consistently for the next 2 to 3 years.
Okay. And one last question in terms of the demand, so if I see the last 3-year volume for most of the players. So we see Supreme and Finolex have de-grown on a 3-year basis. Among the bigger players only Astral have grown around 6% volume CAGR, Prince, you've delivered a 3% in volume CAGR. So the point I'm trying to get into is there are 2 points.
Is the market itself has not grown over the last 3 years, first? And second, the hypothesis that there is a consolidation, smaller players getting wiped out or it seems the other way around the top 2 players have seen a volume contraction, and some of the midsize players like Prince, Apolo pipes has shown volume pick up. So how do we understand this demand and market consolidation?
So I think the overall trend is towards compensation and the organized players have become larger. Within the organized, there has been some players which have been more agile with more of a focus on distribution and newer product launches and heavy investments into the marketplace. So within the organized players, of course, there are going to be players on different terms of the spectrum. But I think like every industry, this industry continues to formalize and continues to consolidate. I do believe that.
So in demand, any view? What could be the demand growth at 3 years or maybe for '22, what sort of demand industry has shown? And also, what sort of number you're looking at from a macro perspective? Because that would be an important driver.
Yes. You're right. It would be that an important driver. And going forward, I do believe that I cannot quantify it or put a number on it, but there are strong growth prospects given that real estate is headed in the right direction.
You would agree that last 2 to 3 years, there have not been any growth in the industry. Is that a fair assumption?
Yes. That is a fair assumption.
Thank you. Due to time constraints, I now hand the conference over to the management for closing comments. Go ahead.
Thank you to all the participants for joining the call today. Thank you.
Thank you. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.