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Supreme Industries Ltd
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Ladies and gentlemen, good day, and welcome to The Supreme Industries Limited Q2 FY '19 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kashyap Pujara from Axis Capital. Thank you, and over to you, sir.
Good evening, everyone, and thank you so much for standing by. It's a great pleasure to have with us the management of Supreme Industries for Q2 FY '19 conference call. From the management side, we are represented by Sri Taparia-ji, Managing Director; Mr. P.C. Somani, the CFO; and Mr. R.J. Saboo, the Company Secretary. Without taking too much time, I hand over the floor to Taparia-ji. Over to you, sir.
Thank you, Pujara. I'm M.P. Taparia, Managing Director of the Supreme Industries Limited. I welcome all the participants who are participating in the discussion of the unaudited standalone and consolidated financial results for the quarter and half year ended 30th September 2018. The standalone results and the consolidated results are already with you. I'll be brief on company's product, operating performance and other highlights. The company has sold 83,175 tons of Plastic goods and achieved net product turnover of INR 1,228 crores during the second quarter of the current year against sales of 79,029 tons and net product turnover of INR 1,044 crores in the corresponding quarter of the previous year, resulting in volume growth of around 5% and product value growth of 18%, respectively. The company sold 183,080 tons of Plastic goods and achieved net product turnover of INR 2,544 crores during the first half of the current year against sales of 171,225 tons and net product turnover of INR 2,171 crores in the corresponding half year of previous year, achieving volume and product value growth of around 7% and 17%, respectively.Total consolidated income and operating profit, excluding taxes on business for the second quarter of the current year amounted to INR 1,241 crores and INR 167 crores as compared to INR 1,055 crores and INR 155 crores for the corresponding quarter of the previous year, recording an increase of about 18% and 8%, respectively. Total consolidated income and operating profit excluding taxes on business for the half year of the current year amounted to INR 2,587 crores and INR 360 crores as compared to INR 2,217 crores and INR 317 crores for the corresponding period of the previous year, recording increase of about 17% and 14%, respectively. The total net profit before tax and profit after tax excluding exceptional items and taxes on business for the second quarter of the current year amounted to between INR 110 crores and INR 73 crores compared to INR 107 crores and INR 71 for the corresponding quarter of the previous year, recording an increase of 3%. The consolidated profit before tax and profit after tax excluding exceptional item and taxes on business for the half year and current year amounted to between INR 255 crores and INR 170 crores as compared to INR 226 crores and INR 149 crores for the corresponding period the previous year, recording increase of about 13% and 14%, respectively.During the second quarter of the current year, company realized INR 80.85 crores from sale of 38,718 square feet of office [ premises ]. After allocating proportionate costs and overhead, profit before tax accrued INR 53.10 crores and profit after tax, INR 34.60 crores. The Board of Directors has considered the payment of interim dividend for the financial year 2018,'19 at 200%, that is INR 4 per share of INR 2 each and will be paid to the shareholders on the shares held as of the record date 26th November 2018. Let me give you a scenario for all the product segment of the company for the current quarter ended 30th September 2018 as compared to corresponding period in the previous year. Plastic Pipe business grew by 7% in volume and 20% in value terms. Packaging Products segment business decreased by 3% in volume and 4% in value terms. Industrial Products segment business grew by 8% in volume and 37% in value terms. The Consumer Products segment business decreased by 2% in volume and grew by 12% in value terms. The share -- overall share of value-added product had been 35% of the total share in the second quarter ended 30th September 2018 as against 37% in the corresponding quarter of the previous year. The total borrowings of the company stands at INR 259 crores as of 30th September 2018 as against INR 248 crores as of 31st March 2018. Overall net borrowing level during the second quarter and half year ended 30th September 2018 was INR 231 crores and INR 223 crores, respectively, as against INR 336 crores during the previous year ended 31st March 2018. Average cost of borrowing as of 30th September 2018 is 7.07% per annum vis-?-vis 7.12% as of 31st March 2018. With the start-up of new greenfield petrochemical plant and capacity expansion of existing plant, we have boosted supply of plastic raw material. The international polymer pressure have downward bias going forward for this financial year. Thus, the polymer price will remain affordable for the year. The demand for plastic product remain positive with a higher growth potential going forward. The company remains fully committed to its investment plan as announced in beginning of the year. New plant to manufacture industrial components at Giloth in Rajasthan has commenced commercial production during September this year. Capacity of rotomolded product at Malanpur Unit III and at Kanpur has become operational. Expanded capacity of both the plants are 2,400 tons per annum. The new plant to make high-density polyethylene pipe of 9,000 tons per annum capacity in Malanpur Unit III has commenced trial production. New plant to manufacture polypropylene corrugated sheet with a capacity of 3,600 tons per annum had been commissioned at Derabassi Unit in Punjab. The construction work is going at full speed at Jadcherla in Telangana. The production of furniture and rotomolded product at that unit will go in production during October-December quarter. The production of foam product at that site will start in January-March 2019 quarter. The Hosur unit will be streamlined with increased capacity at one site instead of 2 sites in October-December quarter. The Khopoli unit expanded capacity will be in production during January-March 2019 quarter. The company has made a breakthrough in export of composite cylinders in one more country apart from Bangladesh and South Korea. This is a brief and overall summary of the quarter just finished. Thank you for your patience.Now I and my colleagues, Mr. P.C Somani, CFO, assisted by Mr. Saboo, are available to reply to various queries raised by all of you. Thank you very much.
[Operator Instructions] We have the first question from the line of Sriram Rajaram from Sundaram Mutual Fund.
So if I look at the other plastic revenue, does -- the INR 81 crores for this quarter, that was INR 7 crores for Q1. So could you just please explain to us what impact other plastic -- what and why is there a marked difference in terms of revenue reported? Even if I look at your Q3, Q4 number, there has been a sharp increase, decrease so -- because of which, my -- the EBITDA that has been reported and the EBITDA that has been -- the product-wise EBITDA, there has been a difference. I think that is due to only the other plastic. So if you could just give the operating margin for the other plastic business also, it could be helpful.
Yes. If you look at the press release or the [indiscernible], the impact for that has been [ shared in the prepared speech ] also. We have sold our Andheri premises, which is part of this talk about the construction business, and there's a revenue of INR 80.85 crores during this quarter. So 38,718 square feet we have sold in this quarter. [ After allocating costs and overhead ], we have generated INR 53 crores of EBITDA and INR 34.60 crores profit after tax.
The next question is from the line of Umesh Patel from TCG Asset Management.
Can you give me EBITDA margin across segment sequentially in this quarter?
[ M.P. Taparia ]
Yes.
Segment margin across the segment for this quarter, Plastic Piping is 13%. For Packaging Products, it is 15.7%. Industrial business was 10.33%.
10.3?
11 point...
Sorry, 11.1%. And for Consumer, it is 16.45%.
Okay. And what was it in last quarter, Quarter 1?
You are talking quarter to -- corresponding quarter or ...
First quarter of this year, first quarter of this year.
First quarter this year?
Yes.
Yes. First quarter was for Plastics Piping, 13.08%. For Packaging, it was -- sorry, this half year. First quarter was -- Plastic Piping was 12.27%. For Packaging, it was 16.93%. For Industrial, it was 13%. And sorry -- I'm sorry, I gave you corresponding quarter of first year -- previous year.
No, I need it for the Quarter 1 FY '19, I mean.
Quarter 1 FY '19?
Yes.
Next question. We'll come back to you.
Yes, sure. Second question was related to volume. If I look at the past 6 to 7 quarters, volume growth this quarter was subdued. What was the reason? And even though the realization was significantly higher in few of the segments, particularly plastic and industrial. You managed -- I mean, lower volume growth and EBITDA margin was -- I mean, was the increase then because of the inventory gain of that 113? If I added that 113, what was the core EBITDA margin that we reported?
What inventory -- there's no inventory gain. Which inventory gain?
Inventory increase.
Sorry?
Change in inventory.
Inventory of what?
No, there is no inventory gain in the company this quarter -- for the half year. But where we [ turned it around ], our focus will remain to increase the sale of -- not much focused on the sale of plastic pipe, where the margins are lower. So we are not changing the volume. We are changing our value and our operating margin -- and our ROIC; most importantly, ROIC. Our ROIC last year was at 34.7% at the company, and this year, we are trying how to improve ROIC against last year. And value-wise, definitely, we are quite happy that we have grown by 17%. And we expect this year, we've maintained the growth. Value term may grow between INR 5,700 crores to INR 5,900 crores, again no change in volume.
Okay. So that translates into what percentage of volume growth, 8% to 10% [ by the depreciated ... ]?
We are now believing that it can be 10% volume growth. We are currently 7%. For the full year, we expect 10%.
And because of the recent raw price decline, I mean PVC pricing has also declined. That will basically...
PVC prices, olefin prices, [ BP ] price all have declined. But also, we need to look for [ all the peers ] gets iron out.
Q1 operating margin, the Plastic Piping was 13.15%. Packaging Products was 17.75%. Industrial Products was 11.6%. Consumer was 15.35%.
15 point?
3-5.
Next question is from the line of Abhishek Ghosh from DSP Mutual Fund.
So just wanted to understand about the packaging segment, wherein we have kind of seen somewhat of a volume decline and also some pressure on margins. If you could just help us what happened there.
In packaging, in our Cross-Laminated Film business, there was a demand [ destruction ] in this quarter, in July-September quarter. Last year, in July-September, we introduced -- offered a scheme and this year, we started very slow because we wanted to start off things in a big way in October-December. That was the principal reason for the volume to grow. And also in our packaging film business, there are some plants shut down due to some big maintenance. That's why the volume has gone down. And for the full year, there will be volume growth in industrial packaging film and volume growth in our Cross-Laminated Film also. So for the year, there will be no problem.
Okay. So the -- sir, what I'm really coming from is, what will happen -- the volume decline is largely specific to our company and not heightened competitive intensity and we will cover it up in the second half of FY '19.
Competitive intensity had definitely reduced our operating margin in Cross-Laminated Film business but volume will not destroy it.
Okay. Is there also some amount of cost pressure that we are seeing in the packaging division, sir, because I can now see your realizations have gone up on a quarter-on-quarter basis but your EBITDA has come down. So is there cost pressure also there, sitting there?
Possibly. We need to reduce our operating margin in Cross-Laminated Film, which was bigger [ data ]. And that was our monopoly and then so many competition came. So to maintain the product volume, we had to reduce our margins.
Okay. And you expect it to remain at these levels in second half of FY '19 also?
No, depend on -- Protective Packaging product may do better. So overall -- given our operating margin, overall may be better.
Okay. Okay. And sir, if you could just take us through your CapEx plans in terms of for FY '19, what is the number that we are looking at?
We had opening -- on 1st April 2018, opening commitment of INR 218 crores, which we committed last year to be invested in this year. In the current year, in first 6 months, we've already committed INR 208 crores of this. We know that all the investment may not come on ground in this year. Our original plan to invest between INR 350 crores to INR 400 crores remains intact.
INR 350 crores to INR 400 crores?
Yes.
Okay. Okay. That's helpful. And just coming to the last thing, in terms of the pipe segment, so as we are looking at more of value-added products, so how do you see in terms of the overall competitive intensity in that value-added product? Is it like stable? Or with polymer prices being fluctuating, are you kind of able to pass on the input cost increase or anything of that sort? How is your experience...
In piping, everybody required to increase the price because it's working with a small margin, right? Business is growing properly. So until continuing intention is there, more and more demand is growing. In affordable housing, we are seeing good growth now occurring there. Overall housing segment also, we are seeing better demand growth. We now realize it will stabilize. And so in farming sector also, we are seeing good demand growth and government demand is also coming up. So demand is looking quite okay.
The next question is from the line of Avi Mehta from IIFL.
Sir, since we're just speaking up on the margin bid, you highlighted that in the Plastic Piping business, there is a clear focus on improving ROICs and -- instead of volume growth. Was that...
Not only Plastic Piping, overall for the company also.
Okay, overall. Sir, but in the Plastic Piping segment, if you're kind of doing that focus, would it be fair to say that your EBITDA levels or margin levels should logically structurally move up? Is that what you are also aiming for, sir? That's a right understanding?
Correct. See present 13% operating margin, then certainly get that [ amount ] -- if I give more focus to volume and sell more plastic pipes only, then the margin will come down than 13%.
Okay, sir. Okay. So the realization-driven growth will continue and hence EBITDA per kg will also be remaining healthy?
You are right, yes.
And sir, second point on the packaging business, which you was raised by one of the earlier participants, what would be the right way to see this business? Because, as you rightly said, there is a seasonality. When the product does well, the EBITDA margin on this and EBITDA per kg does well.
See Cross-Laminated Film business has got 3 segments, Protective Packaging Product and flexible packaging film, those divisions are triple digits every month. Only Cross-Laminated Film because it is mostly serving tarpaulin, which is a [ nonsignificant ] product. So there the demand has got a big shrinkage. So -- otherwise -- as far as the other products, they've got [ triple digits ] month after month.
Sir, okay. So sir, where I was confused is, you said, this time we did give a scheme, which was a little late, so our scheme...
Yes. We offered a new scheme in September last year.
Last year and this time it was...
See, we started in September but it started mostly later because this year Diwali was later. They're always linked to Diwali.
Sir, then margin should have improved now, sir, that would have been a positive signal.
It has slowed down because people don't buy goods, so we had demand destruction also, lower sale in Cross-Laminated Film.
Okay, sir, okay, I got that. And sir, lastly, on the -- you said there's no one-off gain. But could you explain the reason for the interest cost being so high and whether we should kind of assume that level to continue?
It just got high due to the foreign exchange rupee depreciation.
Okay. So that was -- can you share the number, sir? Just to go over back, how much were the borrowings? Would you be able to share how much was -- in that was rupee, really?
Yes, cost for the quarter, if you're looking at it, there are 2 reasons. One is mark-to-market accounting of the committed loss in foreign exchange borrowing. So there was a good gain in the first quarter because of the hedging gain mark-to-market accounting, which got reverted second quarter automatically. And since we don't have any borrowing now in foreign currency, so there is no mark-to-market or hedging gain. So the first quarter gain became the loss of the second quarter in quarterly accounting.
Okay. So the first half average is the number that we can use.
Correct. Correct. Correct.
Okay, sir. And then lastly, sir, on the debtor side, the increase that you have seen in the quarter, is there any channel issue on liquidity that you are seeing? Or could you just share your comments on that? That's all from my side.
It's started to go, actually it had gone up from 21 days of sale to 26 days, where directly now it came down to 25 days. This is 3 to 4 days more than what it used to be earlier 2 years before. If you have the -- we may be -- over a period of next 4 to 6 quarters, we may be able to bring down lower than 25 days. With 25 days, definitely our book getting burned up by INR 70 crores, INR 80 crores extra.
Sir, so liquidity is the issue? Is channeling not coming back? Is liquidity now available in the channel?
If you notice our company, liquidity is our customer.
No, no, correct, sir. Channel, channel, I meant channel, not for company.
Generally, definitely there is a liquidity issue nowadays.
Is it changing? Worse or the better? Or still it remains, sir? Because you said that same issue...
Because I mentioned earlier it was -- it went up to 26 days of sale on second quarter, we've assumed now 25 days of sale. Am I clear?
Yes -- no. I understood the trajectory, sir, but I mean, I recollect you had said that we expect it to sharply moderate because GST was the reason. But I was just thinking how long do you think this will play out? I was just trying to get your comments on that.
Can't comment because we are aiming to bring it down back again from 25 days to 20, 21 days. Our initiatives are that we must bring down this number of days to a number which we had there 2 years before.
Next question is from the line of Maulik Patel from Equirus Securities.
Couple of questions. One on the piping segment. Sir, is there anything in volumes within the pipe? Because it didn't show sequentially on a quarter-on-quarter basis the realization has gone up from INR 107 per kg to INR 120 per kg.
Yes. So?
Sir, is there -- because of polymer prices were around INR 77 per kg in the previous quarter in the April to June period. While in the July to September period, it were approximately INR 80 per kg. So there was not a significant change in the polymer pricing, there was a 3% increase in the PE prices, polyethylene prices, and so the PVC prices. But your realization has went up very fast.
We don't make pipe only from PVC. We make pipe from PVC, we make pipe from high-density polyethylene. We make pipe from polypropylene random copolymer. We make pipe [ from these 3 ]. So...
That's what I wanted to see -- is there any change in the volume mix? Are you selling more to -- more PE under the...
And we told earlier that we are -- you just focus on PVC pipe business, there the margins are quite low. And we give focus on HDPE, HDPE price has gone up too much in last 6, 8 months. So the price per kilo must have gone up on HDPE. That is the only reason, change in the product pricing or the raw material price.
Sir, on the annualized business, entire pipe volume, what could be the component roughly about LDPE and HDPE prices approximately?
We don't have the number before us.
Okay. Sir, second question is on packaging business. Again, I think there was an earlier question for that there on the same side. But sir, you mentioned that you have taken a price cut in Cross-Laminated Films. Can you just quantify to what extent we have given the price cut?
I think it must be around 2.5% to 3%.
2.5% to 3%. Okay. And sir, from this quarter, this -- because the Kumi JV has been applicable from this quarter. So anything -- because in Industrial, earlier you were reporting the volume from those 2 plants but now it is not there. So what could be the volume impact because of that?
Which one?
Kumi JV.
Yes, the entire turnover of that unit was INR 100 crore. In volume terms, it was about 6,000 tons per annum.
Okay, I got it, sir. And sir, the last question is that, as you mentioned that the PVC is seeing lot of the pressure in terms of margin and probably there is more competition, is same applicable to the CPVC also, sir?
Yes, on all the Plastic Piping business, there is already pressure but for PVC pipe, principally the margins of 8-liter market, no other application. An 8-liter application, the margin [ gets narrowed down ] under 8-liter application. An 8 liter application market also give you good volume, so that volume we are not chasing as aggressively as other players are chasing.
Okay. But sir, are we seeing a trend as what will be the PE and others are much better polymers, they're having much stronger properties compared to the PVC. Do you see a trend where the...
Every polymer has got very good property based on the application. For agricultural application, no product can match PVC. So I think it depends on application to application. All polymers have got their own strength. CPVC extremely good for plumbing, polyethylene pipe will be extremely good for drinking water supply. PVC for agricultural -- for farmer to supply water to the field. Application to application, every polymer has got its own strengths.
Okay. For the last question, historically, we have seen that whenever the polymer price is more, either the PVC or PE or the PP because of the oil price rise or the rupee depreciation, we have some softness in the margin. Even if we look at this quarter, we have some softness. Even in the previous quarter, we had some softness in the margin. In that particular period, the EBITDA growth is generally lower than the revenue growth. So what kind of a guidance you can give probably on the margin side? And is the price increase -- or the market is expecting this price hike from the polymers? And are we passing it completely to the customer?
We will tell you, in the first 6 months, the PVC price went up by 3.5% comparable, and other polymers did 4.5% to 5%. Rupee decreased by more than 15% with polymer prices not grown to the extent of rupee depreciation or the increase in crude price with a lot of capacity coming up. Going forward, we believe the polymer price will have downward trend. As on today, PVC is the only material where there is some stability. Polyethylene and polypropylene and polystyrene, all the prices are estimated to further go down going forward in the remaining 5 months.
Okay. So you do not see any pressure on the margin because of the polymer prices going up?
Definitely there are some loss in the inventory, some loss in the inventory, but over a period of 5 months, you can [ hardly ] recover, it's not the issue.
The next question is from the line of Madhav Marda from Fidelity.
Sir, I just have one question, more sort of longer term that our company used to grow volumes anywhere between above -- at about 12% CAGR earlier about 2 or 3 years back. At an India level or at an industry level, what are the 2, 3 things that need to work for us to move back to that growth rate? Is it housing? Or I mean, how should we think about that growth coming back for the company?
Let me count on the [ wealth ] growth. Growth is a very difficult thing nowadays to guide about it, things are so volatile. I must say, last year was the first year in last several years, where the polymer consumption in the country was lower than the GDP growth. Normally, polymer consumption should be 1.4x of GDP growth, which was happening historically. Last year, the growth was less than 6%. This year also in first 6 months, now being better than last year but it is nowhere to 1.4x of GDP. So depending how the GDP grows in our country, we cannot do better than what is our country is doing, so we are domestic-driven company.[indiscernible] believe that the growth may be -- going forward from next year may be between 8% to 10%. If they grow like that, we believe that we may grow slightly above the market growth in the country -- of the polymer tenure in the country. Moving on with the forecast, out of the country will [ all be coming in for ] polymer for the next 4, 5 years given that, it is very tough.
Yes. I mean, the economy would be about assets but if you look at housing growth or look [ border ] same sort of [indiscernible].
Housing growth will continue. Now that we have a good segment, housing now thinking stabilized [indiscernible] other activity. So now that players have -- small player and big player and affordable housing in good esteem. So the housing clusters in housing, they are definitely growing.
Next question is from the line of Nehal Shah from ICICI Securities.
On the initial part of the commentary, can you just, sir, give us the numbers for borrowing and the average monthly borrowing?
[indiscernible].
Yes. At the end of September 2018, the total borrowing of the company was INR 259 crores. Average borrowing for each quarter versus for the half year is INR 231 crores and INR 223 crores, respectively.
Sorry, I didn't get -- your INR 259 crores is for September 2018?
Yes.
And INR 231 crores is?
For the quarter, average for the quarter.
Average, okay.
And INR 223 crores is the average for the half year.
INR 223 crores is the average for the half year.
Average cost of borrowing end of September 15 is 7.07%.
All right, fine. Sir, my next question is on the industrial products side. Now, the volume growth has been INR 30, pretty good as far as last couple of years is concerned but if you look at the realization growth, the realization has come in at 26%. I just want to understand as to why the realization growth has been so big.
It depends on what polymer they want us to make product of, which product to -- which I'm going to use for the particular industrial product. [indiscernible], they grow much more than normal.
So is this sustainable or...
We can't forecast about the [indiscernible] required for -- product which they require for the future.
Okay. And sir, my last question is on the value add product segments.
On?
On the value-added product segment, which includes DWC pipes?
DWC pipe is not value-added segment. Our value-added product is 25% of total sale in second quarter and then 37% in the corresponding period -- quarter of previous years. Actually, value-added [ volume ], overall quantity have gone up. Overall, value-added item share, they've gone up from INR 749 crores to INR 850 crores. Concerning the [indiscernible] growth in our business, the percentage value could come down.
All right. But which part of your value-added products has started going well and which one has not been doing well?
Nehal, all are doing well and no issue. And assuming they come down due to the overall growth -- higher growth of turnover.
All right. So -- and sir, lastly, on the LPG composite cylinders growth, where is it headed?
Sorry?
On the -- give you confidence running the business.
LPG composite cylinders business is not great in the domestic market. And next quarter, we are doing business in next quarter only a lead to petroleum [ uptick in ] demand also but we have this. In South Korea, we are already exporting. And now, we're in more countries where we will be exporting this quarter. Domestic market is still not opening up. The government finally has still not decided to go and [indiscernible] and to control the policy -- in their market but bound to come, but as you can see, they have been delayed.
So do you expect the segment to return in this year because last year you said the prospects are looking significantly better?
We are very optimistic, definitely looking better than what we are than last year.
Next question is from the line of [ Vipul Shah ] an individual investor.
Sir, what is the PVC price during the quarter? And how does it compare against previous quarter?
We don't have the number from the previous -- PVC price have gone up and down in this year 6 or 7 times.
I see.
We don't compare last year [indiscernible].
No. In reply to an earlier question, you said?
Roughly it was INR 17.5 and then now [ INR 17.4 ]. So it has gone up and then come down.
Okay. So which -- are there raw material prices that were -- have gone up and you are expecting it to come down? I missed this part of your comment.
Polymer, as I said, we expect to come down further. They've gone up compared to [indiscernible] high by 45% and we are still going forward, they will come down.
Okay. And lastly, sir, what percentage of pipe -- percentage-wise, what should be the business's contribution in the pipe business for raw materials?
I don't have the number before me.
The next question is from the line of Ritesh Shah from Investec.
The first question that I have, can you share too, like, on recent product launches and your internal outlook on HDPE Pipes?
In recent product launches, until now we could not make a break for double-walled corrugated for high density pipe. Apart from that, all productions are selling okay. Double-walled corrugated [indiscernible] pipe that are being supplied in the market are mostly [indiscernible] regulation and starting [indiscernible], so we are not able have a prediction in the market other than [indiscernible] our newly launched products all are selling okay.
Next question. Can you -- or do you have a pricing on every pipe segment outlook?
Sorry?
There has been price...
We expect demand should be okay. Now onward, overall demand should start picking up.
The next question comes from the line of Abhishek Ghosh from DSP Mutual Fund.
Just wanted to get clarity on the Consumer product division as well. While we are seeing a good traction in terms of profitability, I think the volumes are down, on a Y-o-Y basis, too, marginally, but just wanted to get your sense around that.
We are not very aggressive in the commodity product. So the volume will go down, margins will remain healthy.
Okay. Okay. So looking at, again, value-added, is that not so much...
Value-added is around ? normally, it should be not less than 17% market. Since this product is earning 16%, we will not classify it as value-added vocabulary. We cannot get 15% margin in a commodity furniture.
Correct, correct. Okay. So I think, looking at EBITDA growth, there is more of a relevance rather than individual volume within that segment. Is that...
Absolutely. We focus on EBITDA growth and we focus on where we are [ regionally on the economic impact ].
[Operator Instructions] The next question is from the line of Sriram Rajaram with Sundaram Mutual Fund.
Sir, regarding your breakup regarding the PVC, say, PVC and actually, can you give that volume and the volume-wide [ PVC ] for the quarter?
That's classified information. We don't give a breakup.
Then sir, in that case, I mean, is it possible to disclose the end user industry income? Like, how much would be the industrials and agricultural contributing to your plastic pipe revenue?
We've got a method we call we are -- whatever we are selling [indiscernible] pipe [indiscernible] in housing. So we cannot give how much is going to agri, how many is going to housing. We don't sell much to industry. It's mostly housing and agri.
Fine, sir. Fine, sir. And from here on, how do you see the realizations going forward? Because you are seeing polymer prices are going down, so can we see the realization also going in that trajectory?
We know one thing, that this definitely reduced our working capital requirement. We require less money for holding the inventory, less money holding onto debt. And we lessen -- after or when the price come down, I have to drop the price of my product.
[Operator Instructions] The next question is from the line of Kashyap Pujara from Axis Capital.
Could you just give an update on Supreme PetChem? You have not discussed anything on the call on that front.
Supreme [indiscernible], I mean, the first 6 months, it was [ the best ], which had been followed by [indiscernible]. They still -- around 15,000 to 20,000 demand of polystyrene in the country. So the demand is sinking instead of growing. And if crude import started coming from Iran, which was lower than our selling price, [ a complicated correction ] margin and decreased in the first 6 months. [indiscernible] now, the remaining 6 months may be better unless our other verticals start showing better margin, which have grown to [ so far show ] that we cannot get out of the Australian monomer price fluctuation. Other verticals are SMMA, EPS, conforming business and SBS. And [indiscernible] may come after 12 to 15 months. We remain very optimistic about the company but for a short time, it's a problem, can people then demand restriction on polystyrene and due to dumping of material by Iran.
So probably one final question on Supreme Industries. You had point out about your outlook of growth, which is still exactly you expect close to 10% volume growth for the full year. And obviously, you did mention the correlation that you expected to be more or less normalized, whether it should be 1.4x the GDP, which we haven't seen in the recent past. But if I look at the margin front, I mean, historically, Supreme's gross margin has been extremely steady and so which means that whatever the raw material cost fluctuation that happened because of crude going up or down or rupee going up or down, essentially, over time, has been passed through. So there might be quarter-to-quarter gaps, but over time, it's very steady. So -- and you are basically focusing on ROCE. So capital intensity is very, very controlled. You are trying to reduce the working capital base. And on the margin front, the peak cost had -- after material cost is power and manpower. And on both these fronts, the new CapEx is that we are doing this essentially, having more energy-efficient machines, more automation. And with higher value-added products, where do you see operating margins of the company 2, 3 years down the line? I mean, what is your thought? Even if you can't comment a number but how do you see this trajectory?
Firstly, it is down this year. Earlier, we thought that our general made INR 5,500 crores. The general product mix now [ we renewed it out ] should be INR 5,700 crores to INR 5,900 crores for the year. Our operating margin due to these so many headwinds coming, now we are going down our forecast from 15.5 to 16 to 14.5 to 15 for the current year. [ Completely different ends ], you must break operating margin of around 16% going forward. And with [ the market we are going] we exported we must stabilize 15% plus operating margin going forward.It is very difficult to give a guidance. Things are so [ different ] nowadays and so many headwinds are growing, but still, we are comfortable with the business. It is robust and it is a growing business. An opportunity to address demand, it's a good place. In our product segment, we are in good demand and we are not the problem from any government other than [indiscernible] today.
[Operator Instructions] As there are no further questions, I'd like to hand the conference back to the management for closing comments.
Yes. Thank you very much.
Thank you, everyone.
On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.
Thank you.