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Supreme Industries Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '23 Earnings Conference Call of Supreme Industries Limited hosted by DAM Capital Advisors Limited. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Aasim Bharde from DAM Capital Advisors. Thank you, and over to you.
Thank you, Yashasvi, and good evening, everyone. On behalf of DAM Capital, I would like to welcome all to Supreme Industries Q4 Results Conference Call -- Q4 and FY '23. From the management side, we have Mr. M.P. Taparia, Managing Director; Mr. P.C. Somani, CFO; and Mr. R.J. Saboo, Company Secretary and VP Corporate Affairs. Over to you, Mr. Taparia.
Thank you very much. I am M.P. Taparia, Managing Director of The Supreme Industries Limited. I along with my colleague, Shri P.C. Somani, CFO, and Shri R.J. Saboo, Vice President, Corporate Affair and Company Secretary, welcome all the participants who are participating in the discussion of the audited standalone and consolidated financial results for the quarter and year ended 31 March 2023.
The standalone results and the consolidated results are already with you. I'll give a brief on company's product operating performance and other highlights. The company sold 147,414 tonnes of plastic goods and achieved net product turnover of INR 2,566 crores during the first quarter of the current year against sale of 128,607 tonnes of plastic goods and achieved net product turnover of INR 2,519 crores in the corresponding quarter of previous year, achieving volume and product value growth of about 15% and 2% respectively.
The company sold 506,501 tonnes of plastic goods and achieved net product turnover of INR 9,066 crores during the year under review against sale of 393,908 tonne and net product turnover or INR 7,625 crores in the previous year, achieving volume and product value growth of about 29% and 19%, respectively.
Total consolidated income and operating profit for the fourth quarter of the current year amounted to INR 2,610 crores and INR 529 crores as compared to INR 2,566 crore and INR 461 crores of the corresponding quarter of the previous year, recording increase in consolidated income and operating profit of over 2% and 15%, respectively.
The consolidated income and operating profit during the year under review amounted to INR 9,231 crores and INR 1,353 crores as compared to INR 7,793 crores and INR 1,446 crores for the previous year, recording an increase of about 18% in consolidated income and decrease of 6% in operating profit.
The consolidated profit before tax and profit after tax for the fourth quarter of the current year amounted to INR 465 crores and INR 359 crore compared to INR 409 crores and INR [ 324 ] crores for the corresponding quarter of the previous year, recording an increase in profit before tax and profit after tax, about 14% and 11% respectively.
The consolidated profit before tax and profit after tax during the -- under review amounted to INR 1,111 crores and INR 865 crore as compared to INR 1,232 crores and INR 968 crore for the previous year resulting decrease in profit before tax and profit after tax about 10% and 11% respectively.
The business scenario of other product segment of the company for the year ended 31 March 2023 and compared to the previous year as under: Plastic Piping System business grew by 37% in volume and 20% in value term. Packaging Products segment remained same level at volume and grew by 8% in value terms. Industrial Products segment business grew 23% in volume and 31% in value terms. Consumer Products segment business grew by 5% in volume and 10% in value terms. The overall turnover of value-added product increased to INR 3,359 crores as compared to INR 2,911 crores in the previous year, achieving growth of 48%.
The company had total cash surplus of INR 738 crores as on 31st March 2023 and with a cash surplus of INR 518 crores as on 31st March 2022.
The company plans to commit CapEx of around INR 750 crores during the year, including carryforward commitment of INR 153 crores at the beginning of the year. The CapEx is planned to expand capacities and introduce range of new products across all its segments. The CapEx plan also includes setting up plant at Malanpur near Gwalior. Entire CapEx shall be funded from internal accruals.
Business outlook. The country could contain inflationary pressure. Agricultural crops were good. Large investment were taking place in infrastructure by Central and State Governments. Forecast about Monsoon is good, giving hope to boost 80% production in the year. Demand for housing was quite robust. Due to weak world economic forecast, the commodity prices were on a downward path, which augured well for boosting growth in our country's economy. Cumulative effect of all these developments enable the company to achieve 29% volume growth in the year thus recovering quite a bit of lost businesses in the last 2 years.
During the year under review, the company achieved volume growth of about 37% in Plastic Piping System made from different plastic materials. Overall, the company sold 375,046 tonnes of pipe system compared to 274,295 tonnes in the preceding year. However, due to steep reduction in PVC resin prices, revenue growth was around 20% of our previous year. PVC is the predominant raw material in the company's Plastic Pipe business.
During the year '22, '23, the prices were, again, literally in rollercoaster mode for second year in succession. The prices of PVC were in downward trend from 1st April 2022 till third week of November 2022. Overall prices of PVC went down by INR 67 per kilo during that period.
This has resulted in large inventory loss. Thereafter from 1st December 2022, prices started increasing till up to January 2023 and the rise was to INR 15 per kilo. From 14 March 2023 onwards the increasing trend in price of PVC was now arrested.
Prices are close to stable at lower level, leading to boost in consumption in the country. The country experienced growth of around 32% in PVC resin consumption as the previous 2-year growth was negative.
The government at the Center and State have taken several initiatives like focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation, affordable housing, smart cities and many more which all are boosting demand for plastic piping products. The initiative are much more pronounced in the past year. The same trend continues from beginning of this year also.
The company incurred a CapEx of INR 398 crores in the year under review, in plastic division at its various plants to build a higher capacity, increased range and commissioning of 3 Greenfield projects at Guwahati, Assam, Erode in Tamil Nadu, and Cuttack in Orissa. All 3 Greenfield plants have gone into production during the year one after another.
The company has successfully launched Electrofusion Olefins fittings and compression molded fittings with a portfolio of 179 numbers. The company plans to increase the range substantially and add another 140 new products during the current year. The company produced PE, aluminum, PE pipe for house service connections. These type of pipes are now part of house connection design approved for "Nal se Jal" scheme. The compression type fittings for these pipes are also developed to offer complete system of polyethylene, aluminum, polyethylene pipes application.
The company has started manufacturing piping product at one more plant in South zone at Perundurai, District Erode, in Tamil Nadu since December 2022, in addition to the existing plant at Jadcherla, Telangana, making its' presence stronger in Southern India. Erode plant is at a strategic location to service Tamil Nadu, Kerala and part of South Karnataka cost effectively.
The company has taken in hand to double the capacity of PVC pipe at Erode and also start manufacturing DWC pipe and Blow Moulded water tank at same site during this year.
That business of Cross Laminated Film and product had a de-growth of 5% in volume terms during the year under review. Company introduced many new made up products from XF film and successfully acquiring customers by entering in additional world markets. Export grew by 12% over the previous year with projects in 32 countries across the globe.
The company's furniture business grew 11% by value terms against estimated growth of 3% from Plastic furniture industry during '22, '23 or previous year. The company could grow more than the industry due to intense marketing effort, consistent business policy, launching of several new range of furniture, increase in coverage of uncovered market and strong brand position as a premium brand producer. The company's focus on creating large retail display showrooms for plastic furniture was successful.
Industrial component division is doing reasonably well. The division continues to expand its customer base to optimally use its production capacities. Business of home appliances and white goods, which constitute larger share of this dividend, is seasonal in nature to some extent and is likely to improve further with diversified customer base and acquisition of new businesses.
The company acquired a prestigious order from ECIL for manufacturing EVM machine, and VVPAT related parts and sub-assemblies. All these factors resulted in revenue growth by nearly 30% year-over-year the preceding year. The automobile, white goods, engineering, FMCG company enjoying relatively better domestic demand over previous 2 years led material handling division to grow 16% by volume and 28% by value for the year. Company's regular pitch, to reach new users of injection moulded pallet, educating again about the features and benefit of the same providing value enhancing solution for safe, effective economic material storage and transit has given positive and encouraging results.
The company is confident of this growth momentum for the coming year also as it continue to strengthen its customers reach and introduce suitable new products in this segment of business. The year under review was very successful year for composite cylinder division with plant running at 90% of its capacity and fulfilled its supply commitment. The company has supplied 4.72 lakhs cylinder in aggregate till March 2023 to Indian Oil Corporation against the LOI for supply of 735,000 cylinders.
Company expects further order from Indian Oil company during the year and continue to expand its geographical reach to other countries, expansion of existing capacity has been successfully completed and now increased capacity of 1 million cylinder per annum is in place. In Performance Films division, on the positive front changes in product mix and focus on direct sales to brands and value added products resulted in growth of 3% in volume and 21% in value term. Division is now registered under EPR Extended Producer Responsibility and is supporting government initiatives on sustainability through plastic waste management. The company expects to achieve volume and value growth in this business in the current year due to increase in customer base in India and abroad.
Protective Packaging division is putting its continuous effort to remain on growth mode, which resulted growth in 5% volume and 11% in value terms. Our products across categories in the division, assert quality and value for money.
The division is closely working with customers/end users and developing new applications for varied industries keeping their needs in mind. Division is focused to grow in volume, do value engineering, adopting new technology in manufacturing to drive improved profitability. Continuous growth is witnessed in defense, export and insulation business.
This is a brief and overall summary for the quarter and year under reference. Thank you for your patience. Now I and my colleagues, Shri P.C. Somani and Shri R.J. Saboo are available to reply on various queries asked by you. Thank you very much.
We will now begin the question-and-answer session. [Operator Instructions] We have a first question from the line of Venkatesh Balasubramaniam from Axis Capital.
You had communicated that in the inventory loss in the first half of the year was between INR 200 crores to INR 250 crores. Can you tell us if there was any inventory loss or inventory gains in the second half of the year and especially the fourth quarter.
Fourth quarter, there's inventory gain of around INR 50 crores, INR 70 crore, precise number very difficult to give. First off, we lost INR 250 crore in inventory loss [indiscernible] higher side of INR 70 crores gain, net-net, we lost INR 180 crore inventory loss for the year.
Okay. The INR 70 crores was in the second half? Or was it in the fourth quarter?
Fourth quarter.
Okay. Okay. Now what is your volume revenue and margin expectation for the next year, volume growth, revenue growth and margin?
We anticipate 15% volume growth and margin will be between 13.5% to 14%.
Okay. Now why are you -- why is your...
That will be in excess of INR 11,000 crores.
Okay. Okay. Now because your 13% to 14% margin expectation seems very, very low because in the fourth quarter, you have done almost like 18% plus kind of margins. And it is -- yes, it is almost 18.5% kind of margin. Even if you adjust for that INR 70 crore kind of number, you will still get to almost 17.5% margin. So why are you guiding for such a low number for the next year, 13% to 14% margin.
Your INR 70 crore [indiscernible] comes to 3% for the quarter.
Okay. Still that is like 15.5%, right?
Ultimately, the products are seasonal. Agri pipes does not command that much margin in the rest of year. So we have to factor the overall average what we are getting.
Okay. Understood. Can you just add one last thing. What was your capacity at the end of FY '22? And what will be your capacity at the end of the next year?
Our current capacity on 1st April 2023 8 lakh tones and on 31st March 2024, it was 9.5 lakh tonnes.
We have our next question from the line of Rahul Agarwal from InCred Capital.
Congratulations for a strong recovery in business. Sir, first question is, how has been the start to the first quarter, April of this month, PVC prices are now stabilized. So any views on PVC prices and the start to the volume for this season, please?
Now the first quarter it was going to be volume wise higher, better than last year first quarter. Last year first quarter was quite big. So this year, demand for [indiscernible] sector is quite good, because the PVC prices have gone down substantially what it was in April last year. So [indiscernible] pipes are -- they sell mostly in April segment. And their demand quite robust due to low price and secondly demand from infrastructure, Polyethylene pipes also are also quite good because they can last [indiscernible] before rainy season, so April, June demand from infrastructure and [indiscernible], both are better than last year.
But sir, any outlook on PVC pricing?
PVC prices outlook may multiply. Today they are -- prices may [indiscernible] $50 plus minus still continue, $50 around INR 4. Now the pressure dropped to such a low level, it can drop by INR 4 or it can go up by INR 4. Going up is difficult due to the world economy not in great shape.
Got it, sir. And my second question was on -- for Mr. Somani, in terms of rates for the company on an effective basis, have been pretty low, like 19% to 22% for the last 3 years. Any specific reason, sir, why is that? And what is the guidance for fiscal '24?
Again, just can you repeat again?
So the income tax in the P&L, the rate is about 19% to 22% average for even fiscal '23 and last 2 years. Any reason why the income tax rate is lower than the marginal rate? And what is -- what should we build in for fiscal '24?
No, no, no. If you're looking at standard results, we have a good income from dividend from Supreme Petrochem since we are distributing the dividend more than that, the whole income or dividend become tax-free, Section 80N.
I'm looking at consolidated number, sir. I'm looking at consolidated numbers.
So the consolidated number, because the profit -- share of profit from Petrochem, we are taking net of tax only, there is no tax further to bear on that in our accounting.
We have our next question from the line of Sonali Salgaonkar from Jefferies India.
Congratulations on a great set of margins in Q4. So my first question is broadly towards this pipe drinking water or Nal se Jal. You did mention some part of it in your opening comments, but it would be useful to have sort of an update as to what is the development on this project? And if at all, you could share what kind of sales have we accrued so far out of this?
Nal se Jal scheme. What is the outlook? And what is -- Nal se Jal scheme..
Nal se Jal scheme. Now the work is started now more effectively, we are trying to see that by 2024 end, they complete Nal se Jal throughout the country. So it will look possible because some States are not cooperating or some States are not doing the chain but quite a large portion of the country is going to be covered by Nal se Jal by -- within 20 months from today, they'll be covering most of the country, Nal se Jal, due to provide 600,000 million units, really very gigantic task. The central and state government, both are working very effectively and strongly nowadays, just today [indiscernible] they are giving 40,000 connections only in UP per day. [indiscernible] the way government is going [indiscernible] and drive they may achieve covering the entire country by December 2024.
Sir, you did mention that some of the states are not cooperating. So approximately how much of the country is already covered?
What is the paper item I cannot tell you. I don't know the States also, which is not cooperating. Personally, I believe they all must be cooperating. Nal se Jal who would not like to provide it in their state.
Right. So for Supreme, is there anything -- any kind of sales or margins you could share that you have accrued from Nal se Jal so far?
We don't give separate numbers. We are participating to supply them pipe and we supply fittings.
Okay, sir. All right. Sir, my second question is regarding to Mr. Somani, if you could help us with the segment-wise capacities as of March '23.
Yes. So Plastic Piping Division, 600,000 metric tonnes. Industrial Products, 84,000 metric tonnes. Packaging product, 90,000 metric tonnes and consumer product, 29,000 metric tonnes.
And what's our average utilization?
You see this 800,000 capacity, part of the -- beginning capacity was 725,000. If you look from the opening capacity, and we have sold close to 510,000, 506,000 so it will be around 65% to 70% -- 66% 67%.
Got it. Sir, just one last question. The value-added sales in Q4, Correct me if I'm wrong, but are they showing a minor decline in absolute terms compared to last year?
This is our Silpaulin film, which was [indiscernible] 100% valuated due to the poor margins or the margins below 17%.
[indiscernible] of the valuated product kind of gone down from INR 972 crores to INR 943 crores.
Understand. So Silpaulin has now gone out of value-added product because the margin has slightly come below 17%. Is that right?
In the fourth quarter, it's gone down.
We have a next question from the line of Dhananjai Bagrodia from ASK.
Congratulations on a fantastic set of numbers. Would this volume growth be predominantly our company have we gained share? Or would this be an industry-wide phenomenon in piping?
Industry-wise, the growth was 32% of plastic, PVC, resin and we have grown 37%.
Okay. Sir, industry-wide would be 32%. Okay. And so for your other businesses, the other verticals, do we have any like revenue guidance or what we're seeing in those?
Other verticals are in the range of 10% to 15% growth.
We have our next question from the line of Bhargav Buddhadev from Kotak Mutual Fund.
Congratulations for the good set of numbers. My first question is, sir, we've started this Erode plant in South India. So can you quantify what could be the savings in freight cost towards supplying material to say, Tamil Nadu, Kerala, South Karnataka and also, what could be the improvement in terms of delivery time because I believe earlier the material used to come from the Jadcherla plant in Telangana.
The savings of the freight all go to my customer or to go to my users. the freight from Gadegaon to Kerala, Erode to Kerala is 3.5%.
Sorry, sir, how much, I could not hear it.
Kerala to -- Gadegaon to Kerala and Erode to Kerala is 3.5%.
3.5%. Okay. This will help you make you competitive in South India?
Make my goods more affordable to the customer of Kerala and customers of Tamil Nadu also, make them more affordable and goods can reach in the same day.
Same day. And earlier, it used to take what, 2, 3 days?
3 days. Now, it is same day, they can build with low inventory also. With the lowest [indiscernible] goods.
Okay, okay. And secondly, sir, we've started this plant in Cuttack as well. So how about the economics in East India, there also will have savings in freight cost and delivery time?
Same location is going to [indiscernible] definitely our plant is close to Cuttack. The Cuttack freight will go down dramatically. Cuttack can go [indiscernible] Bhubaneswar is commercial area. Plant is very close to Bhubaneswar and Cuttack.
Okay. Okay. So earlier, the delivery used to happen from which plant in the eastern part of the country?
Kharagpur, Kharagpur.
Kharagpur. Okay. Okay. And lastly, sir, just wanted to know what has been the growth on the CPVC portfolio for us in FY '23?
Volume growth was 24%.
34%?
24%.
24%. And value growth?
More than 40%.
We have our next question from the line of Keshav Lahoti from HDFC Securities.
Congrats on a great set of numbers. Just to follow up on the last question. So what would be the mix of CPVC right now, a broader range? What was the mix of CPVC portfolio in terms of revenue.
Mr. Lahoti, can you use your handset, please? Your voice is not very clear.
Share of CPVC value wise, classified information.
Okay. Okay. Got it. And what is the sense on the agri demand as of now?
Demand on CPVC? Agri demand is quite good.
Sorry, I missed it.
Agri demand is quite good. Now, the season started. So it will continue till middle of June. So too early to say the growth, what growth you are going to get, but growth is looking quite good compared to last year.
Okay. One last question. As you highlighted, capacity by year-end would be 950,000. Can you give some bifurcation among the 4 segments?
You see I had given the ratification of the current capacity -- expansion is taking place in plastic piping. So 90% of capacity increase will be in the plastic pipe mixture.
We have a next question from the line of Praveen Sahay from Prabhudas Liladher.
Sir, can you give some indication on the industry growth for the piping, pipe and fitting segment for '24.
'24, [indiscernible] is 13% to 15%.
That is for your or for industry as well.
No [indiscernible] 13%, to 15%, our company may grow 20%.
It's a volume term?
[indiscernible] volume only price, how can you forecast?
Yes. And second question, sir, on the geographical mix for the pipe segment. Can you able to give the geographical mix of your pipe segment? Like how much is from North, how much is from South?
We sell throughout the country.
So equally throughout the country.
More or less, it depend, but we sell throughout the country.
Okay. And lastly, on the capacity, sir, the 3 plants you initiated at Guwahati, Erode, and Cuttack. Is it possible to say the capacity of these 3 plants?
Yes, all 3 put together. Yes.
yes, All 3 are 80,000 tonnes.
We have our next question from the line of Sneha Talreja from Edelweiss.
Congratulations on great set of numbers. Just 2 questions from my mind. I would like to know the contribution in this particular quarter from agri pipes. Was -- I mean the growth rate in agri pipes would have been higher? Or was it plumbing which was driving the growth? Or was it Infra?
Which one? For the quarter?
For the quarter as well as for the year in case you can just give some highlights. Like you mentioned for CPVC, it was 24%. What would have been the case contribution from Infra and from Agri?
We don't give proportional percentage. This [indiscernible] just out to tell you how much growth came from Infra, how much from plumbing, how much from Agri, cannot say.
Okay. Was Agri present in Q4.
Pardon?
Sir, was Agri demand present in Q4? Or will we see the major growth only in Q1?
Agri demand starts from Q4, but big growth only in the first quarter, I mean, the April, June quarter, but demand start growing from after Pongal. After 20 January demand starts.
Okay. So was this year better in terms of demand compared to last year?
Demand is better than last year for sure, otherwise, how can you grow 39%.
Okay. Sir, second, I wanted to take an update on the Maharashtra project that we have received from HDPE pipes. This was for INR 480-odd crores to be executed over 4 to 13 months. Any number here how much have we achieved or any other government projects also that we have added, some update here will be really helpful.
Yes, INR 15 crores, INR 20 crores we are supplying them for a month, [indiscernible] will run for 24 months.
Any other government projects that we are working on apart from Maharashtra.
Maharashtra, we are supplying them INR 15 crore to INR 20 crore goods every month -- to Maharashtra government.
Sir, are there any other government projects apart from Maharashtra that we are supplying or is it only Maharashtra at this point of time.
We are supplying but very few contractors. We are supplying for our Kharagpur plant, we are supplying from Malanpur plant. We are supplying to various state government requirement from our plant at different locations. But in Maharashtra, we are supplying direct to Maharashtra government.
[Operator Instructions] We have our next question from the line of Achal Lohade from JM Financial.
What I wanted to check, sir, if you look at the past, in the Plastic Pipe business, the blended realization, the realization to average PVC resin price used to be about 1.3% to 1.4%. For the last 3 quarters, we have seen this number going up to 1.7 so is there any structural change in the mix which is driving this -- the markup or gross margins on the Plastic Pipe segment?
In our piping system, we are not only PVC pipe. We increased the percentage of polyethylene pipe, the polyethylene is much more expensive than PVC. We increased our share of CPVC, which again much higher than PVC. We increased the sale of polypropylene that is also much higher than PVC.
And would that also have a higher margin as well? Is that a fair understanding compared to PVC.
Margins, I cannot say. Margins differ from product to product. But overall, it will definitely increase the value.
Understood. And with respect to the HDPE, is that also driven by the project business?
No. PP is mostly private only for plumbing. And CPVC for plumbing and polyethylene we have got both the set of business, trade market and project government business, both.
Right. And just 1 clarification. In terms of the sales, project versus retail, would you be able to share some sense of what is the mix of the -- from your sales company to project our company to a distributor?
Not readily available with me.
But is there a substantial change compared to what it was, say, 2 years back or 3 years back or it would be similar?
So we sell to state and we sell to government.
Right. Would there be a change in the mix, sir? That's the question I had.
For mix, because government, there are many -- we supply to both. I don't have percentage before me, so I cannot [indiscernible] differently. We supply to state also, we supply to government also, [indiscernible] CPVC we supply only for plumbing.
Got it. And just a clarification. With respect to the ratio, what I was asking in terms of the realization to PVC resin price, this is more sustainable one. Is that a fair understanding here in terms of the explanation what you gave, what has driven that is more structural change or ongoing ratio? Would that be a fair assumption?
I can't say it because we were never only PVC pipe company. Now we are increasing capacity in polyethylene also, we are increasing capacity of CPVC also, so PVC also we are increasing capacity. So we are increasing capacity in all the segments where we are operating.
We have a next question from the line of Ritesh Shah from Investec.
Couple of questions. First is, sir, on Silpaulin, you indicated that the margins are below 17% right now. Sir, what is the strategy that we are adopting over here? Are we looking to push volumes or increase prices? How should we understand that, sir?
First, we will increase the price now.
Okay. Sir, anything beyond increasing prices, any new products, variation?
Please allow me to complete the answer. There are so many lookalike fake product came in the market, and they were selling at a much lower price than us 20%, 25% lower. So we were first to drop the price. But finally, in the last 3, 4 years, it was found out that their quality was [indiscernible] basis, that quality cannot meet the comparable of our Silpaulin, so now we are taking our Silpaulin product at the right price, which was there, and we were required to drop, and now we are correcting the price [indiscernible] level. we can justify the investment.
Sure, sir. This is helpful. Sir, my second question is, over time, the company continues to launch new products. Sir, just if you can help us with the list for what all categories the company will be clocking, say, more than INR 150 crores of sales. A few variables which come to my mind would be probably like tanks, curtains, walls. So can you list out 5, 7 new categories, which over the last 3 years that we have come in and which will be clocking more than INR 150 crores of top line?
No, 3-year is too short a period to achieve such a turnover, Normally, we calculate a 5-year time frame. As of today, I can only say one thing that we are happy to report whatever product we launched in the last 5 years. Every product [indiscernible] accepted in the market, very appreciated and we are further adding to the range. So presently, I don't have figures at what was the quantum of target we achieved by the [indiscernible] last 5 years. We don't have. So I cannot give you any imaginary number. But one thing I can only say that whatever product we launch is always successful.
Sure, sir. Sir, just last question, it is more from an industry standpoint. It is not something with respect to Supreme Industries. Sir, when all the companies report pipes and fittings volumes, sales volumes, should we assume that it is only pipes and fittings, it is not at all resin trade volumes included over here? Sir, if you can speak on behalf of the industry also it would be great, sir.
Can you repeat your question, please?
Sir, my question is, when companies report pipes and fittings sales volumes, does it only include pipes and fittings or there is scope that it could also potentially include resin sales over here?
We don't make resin. Resin is only made by Finolex.
I'm referring to the traded volumes on resin. So if we buy at a lower price and if we sell at a higher price, we would not put it in our pipes and fittings volumes, right? But is that an industry practice as well?
Ritesh, even in the industry, other companies will feel if suppose they are disclosing pipes and fittings, it will be pipes and fittings only, the resin will not be included in that. How it can be included. That's not a product sale that were traded sales.
We have our next question from the line of Rishabh Bothra from Anand Rathi.
Congratulations on good set of numbers. Can you just tell me the quarterly volume, Q4 volumes for each of the segments, volumes sold?
Quarterly, okay. For Plastic Piping, for this quarter 4, 112,293 metric tonnes. For industrial products, 16,508 metric tonnes. For Packaging segment, this 13,532 metric tonnes and for consumer segment, it is 5,081.
And sir, secondly, the new 3 plants, which have been commissioned, what is the revenue potential from the plants? And by when will it optimally utilize the capacity?
This year only. [indiscernible]. Now we have put up the capacity to meet the local requirement from the plant [indiscernible] in the state, earlier it was being supplied from other plants. The market was there and capacity started running. So they'll be all sold out this year. Equally, in Erode plant, we have now taken in hand to double the capacity. Present capacity there 3,000 tonnes monthly. Now we are making additional further 3,000 tonnes, which may start by November this year.
And sir, my last question is on the associate company that is Supreme Petchem. Last year, I think there was a substantial profitability in the company. And how do one should look at the company profitability going forward? What would be the contribution like?
I think that will be best replied by Mr. Rakesh Nayyar, Chief Finance Officer, Director of Supreme Petrochem. He will be able to reply to your question, please. Supreme Petrochem.
Okay. Is he on the call today?
Sorry.
Is he on the call?
They have a different call or different presentations. So you can connect to them.
But if you could throw some insight on that part. Okay.
We have our next question from the line of Praveen Sahay from Prabhudas Lilladher.
So it's related to the industrial product where we had seen for year '22 as well as '23, there is a very good volume growth. And also, you had mentioned about the growth were from the home appliances, white goods, share has increased and growth were there. So can you guide us for the way forward, like the similar kind of a growth you are expecting the way forward as well in this segment?
We expect good year for them this year also [indiscernible]
And the same home appliances or white goods are driving the growth -- the way forward also you are expecting from there only.
[indiscernible]
So all 3, industrial components, material handling product and composite cylinder, [indiscernible] good and they are expecting a good growth continuing.
And the cylinder utilization level, can you give like you have now 1 million cylinder capacity? How much is the utilization level there?
Last year -- expansion has gone into production or commenced only in February so last year capacity -- initial capacity of 5 lakh cylinder. Last year, we have utilized 90% plus.
And now you have visibility to utilize this 1 million as well.
yes, ultimately we hope so. Yes.
Okay. Okay. Great. Because you had given answering to the 1 of the question that's other vertical to grow at a 10% to 15% of growth. So that's why just asking for industrial where the growth were higher.
Industrial margin -- product volume will grow 10% this year.
We have our next question from the line of Rahul Agarwal from InCred Capital.
Sir, it's been some time the new HR had joined the company. Could you elaborate a bit? Or could you -- whatever you can share in terms of what changes he has made in the organization? What kind of recruitments have happened? And what should we expect going into next 12 months?
He started [indiscernible] in the company. He has already engaged with 2 quarters. He is involved in all our new recruitment. And they are very happy the way he is moving forward to improve the capability of our key people. He is working overall to improve the capability in human sector.
Sir, any specific gaps you want to fill where he's helping? Or is it like very general across the company?
There's no gap, but [indiscernible] great potential. So the potential [indiscernible] that his job he is doing very nicely.
Okay. Got it. And secondly, sir, in terms of piping, Plastic Pipe Division, what is the count of distributors now and the thought process for fiscal '24 in terms of new additions in case you are thinking on those lines?
Plastic piping the total distributor stands as of 31st March is 1,443. The target is to add another 100 general partners during the current year.
And how much did we add in this year?
1,250 to 1,443.
Okay. Okay. Got it, sir. Best wishes for fiscal '24.
We have our next question from the line of Bhargav Buddhadev from Kotak Mutual Fund.
Sir, just one follow-up. You mentioned INR 70 crores inventory gain in this quarter. Is it possible to quantify what was the inventory gain in the same quarter last year?
Last year, the inventory [indiscernible] in last year's fourth quarter. Prices started dropping I think in January, March last year. During the peak October, it was INR 150 per kilo PVC, October 2021. And then when we reached on 1st April, it came down to INR 140. So I don't see any reasonable gain in January, March 2022. You don't [indiscernible]
INR 144 to INR 137 to INR 144, so in [indiscernible]
We have our next question from the line of Mohit Agrawal from IIFL.
My question is on the volume growth guidance for FY '24, 15%. Now the last 5 years volume gather has been around 6.5%, 7%. Just wanted to understand that this 15% number, does it include impact of some pent-up demand that you expect on the agri side? Or is it more like a sustainable number, 15% going forward?
Last 5 years, when you calculate, please remember 2 years of COVID and growth in the economy. 2 years of COVID, please don't forget, nothing to compare. But now because we are putting more -- we are reaching more areas of the country, we are adding more product portfolio, we are appointing more distributors, we are increasing our capacity, we are increasing our range, so we believe we should go on growing between 12% to 15% going forward.
Okay. Understood, sir. And sir, any comments on the level of channel inventory now? You had earlier stated that February onwards, the restocking will start. So any comments on that?
Now presently, the channel, according to our knowledge, that is maintaining only normal inventory, no extra [indiscernible] because the trend is not bullish, the PVC price, the polymer prices may go down or may remain at this level only, because the commodity prices worldwide are remaining soft. They know apparent reason for them to build -- keep extra inventory. Normally inventory they are running to just run the business.
We have our next question from the line of Chirag Lodaya from Valuequest.
Sir, just one clarification. This 13.5%, 14% margin is for the overall company or you are talking about plastic product as a division?
Overall company.
And what could be Plastic Products division margin, sir, going ahead?
That gives you the forecast for the full year, overall the company, 13.5% to 14% with the prices remain so volatile [indiscernible] also we can't say -- very difficult to say.
Okay. Okay. So earlier used to guide about 15% to 16% is a normalized margin?
Last year, the margin was 13.3%.
EBITDA margin.
Yes, we're talking EBITDA only.
We have our next question from the line of Navid Virani from Baskin Research. Sir, we cannot hear you clearly. Please use your handset.
Am I audible now properly?
No, not clear.
Not audible fully.
Is it better now?
Now Better.
Just wanted to understand on the -- just wanted to have some understanding on the competitive scenario for the packaging business, sir?
Packaging segment we are lacking 3 products in packaging. Protective packaging, cross laminated film and performance packaging.
So can you give us an update on the competitive scenario as to how is it shaping up? Because most of these products, if I'm not wrong, used to qualify as value-added products before, which might not be the case currently due to increased [ combustion ]. So just wanted to understand that.
The only out of 3 component of the packaging, Cross Laminated Film only was qualified. Now this year, we have removed it, but the margins have gone below 17%. [indiscernible] difficulty for last 3 years, every year, the margins are shrinking. Now we believe that the deduction will be contained now, but the couple of products are not selling properly.
We have a next question from the line of Devansh Nigotia from SIMPL.
[indiscernible] on the current capacity and the orders that we mentioned and also the value of total order or what is the value for composite cylinder.
The letter of intent, what we receive from IOCL for 735,000 cylinders, the order value is close to INR 170 crores, out of which about 472,000 cylinders we supplied until March '23. Our current capacity, which was 5 lakh cylinders per annum has been doubled now in February '23. Now we have a 1 million cylinder capacity per annum. So apart from the balance order of IOCL, we expect further order from IOCL. We are also looking at many inquiries from the other geographies of the world market.
So last year, we were utilizing 90%-plus capacity. This year, it is yet to be ascertained how much inquiries get certified, but we are quite hopeful of utilizing the capacity to an optimal level, which is 70% to 80%.
Okay. And 1 [ billion ], how much does that translate into value -- the current capital if utilized fully and also, over the next 3, 4 years, what kind of the triggers and how big this opportunity can become in terms of revenue contribution for that?
[indiscernible] the current capacity translates about INR 200 crores per annum.
Okay. Okay. And in terms of scale, over the next 3, 4 years, how big it can become and any constraints that we are seeing for its scaling up to, let's say, INR 400 corers, INR 500 crores?
It all depends how the composite cylinder is accepted in the market or promoted in the market by the [indiscernible] companies. They have been required to put up the plant geographically. It cannot be catered from a single plant, yet to be seen.
Okay. And sir, over the last 3, 4 years, we see that a lot of capacity in pipes has covered, utilization has actually dropped down significantly with some recovery shown this year. So do we see a risk to the margin structure and any risk if we see? The total capacity expansion that has happened over 3, 4 years by the new players and even the existing players and volumes actually not coming.
We are expanding to give you numbers. We are expanding, we have informed you.
There is a good potential to grow. So there's nothing to...
Yes, we will close...
We have our last question from the line of Aasim Bharde from DAM Capital.
Just one question from my side. I heard your comments on the packaging business, especially the cross lam film one, you will be introducing new products or you already have to an extent and will be hiking prices gradually, but on margins, will this segment be a 10% to 12% margin business from here on or can it go back to old levels, same 3 to 4 years' time? Any outlook on packaging segment margin?
First, we are trying to make it value-added items which means we have to bring it to 17% level. But first, our effort is to make it back to 17% level, which came down below 13%. Okay.
So gradually, I think the 13% will take time to reach 17%. So the segment margin should still be somewhere around 11%, 12% over the next 2 to 3 years?
Why -- this year only. [indiscernible] we are working to make it 17% this year because there's no reason -- first that product and we just reduce the price because of the lookalike product, we're selling 15%, 20% lower than my price, [indiscernible] by the customer, [indiscernible]
Sure. But this commentary is something that you've been giving for the past 3 quarters and our margins have been sub 10% in packaging, so just wanted to get a sense of the outlook on margins. So will that jump this year because you've already put in place new product at a high price.
[indiscernible], other packaging business, Protective Packaging products also had [indiscernible] they also fallen very drastically in the first 9 months. Therefore, this year, the packaging margins are because the quantum of business is comparatively strong compared to piping divisions, they also have inventory losses. So going forward, Cross Laminated definitely improve to the 60%, 70% what we are talking. And other segment of packaging are also going to improve. So definitely, you will see a remarkable change in the margin profile.
Can you give any like rough quantum as to what kind of growth in margin can we expect in FY '24, for example, versus FY '23?
For packaging, if you talk, is it combined packaging between 13% to 14%.
I would now like to hand the conference over to management for closing comments. Over to you, sir.
We thank all the participants and thank all the investors for their very incisive questions, and we are very thankful for their support extended to the company throughout the year. Thank you very much.
On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.