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Time Technoplast Ltd
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Ladies and gentlemen, good day, and welcome to the Time Technoplast Q3 FY '23 Earnings Conference Call, hosted by PhillipCapital India Private Limited.This conference call may include forward-looking statements. These forward-looking statements involves a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, our growth and expansion plans, obtain regulatory approvals, our provisioning policies, technological changes, investments and business income, cash flow projections, our exposure to market risks as well as other risks. The company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date thereof.[Operator Instructions] Please note that the conference is being recorded.I now hand the conference over to Mr. Abhijeet Purohit from PhillipCapital India Private Limited. Thank you. And over to you, sir.
Thank you. Good evening, everyone.On behalf of PhillipCapital India Private Limited, I welcome you all to Q3 and 9 months FY '23 Earnings Conference Call of Time Technoplast Limited. From the management, we have with us Mr. Bharat Kumar Vageria, Managing Director; Mr. Raghupathy Thyagarajan, Whole Time Director; Mr. Sandip Modi, Senior VP, Accounts and Corporate Planning; Mr. Hemant Soni, VP, Legal and Corporate Affairs.I now hand over the call to Mr. Bharat Kumar Vageria for his opening remarks. Over to you, sir.
Thank you, Abhijeet, for introducing all of us management right.Now, you all know that it has been a year since now as we lost Mr. Anil Jain, Co-Founder and Managing Director of the company last year, the 6th of February, but his vision continue to remain strong. With his values, we will continue to work towards his dream of growing the company. The company continue to strengthen its market position in the industrial packaging segment despite challenging global economic conditions. We are pleased to announce a strong performance during the 9 months with the year ended year revenue growth of 19%. The value-added products segment grew by 29% Year-on-Year driven by good demand of the IBCs, composite cylinders. Good order book position for CNG cascades, coupled with the stable core industrial packaging businesses, increasing popularity of Type-IV LPG composite cylinders will help us to achieve our target set for the yearThe results are already announced, but I'll just walk you through some of the key financial and operational highlights. The key numbers are, on a consolidated basis in Q3 FY '23, revenue grew by 20% as compared to corresponding quarter last year Q3 FY '22, and 10% as compared to previous quarter Q3 FY '23. During the Q3 FY '23, on a consolidated basis, net sales stood at INR1,131 crores as against INR943 crores of the previous year. EBITDA was INR153 crores as against INR137 crores. Profit after tax INR61 crores as against INR64 crores. It means net sales increased by 20%. I'm glad to tell you where the India is 11% overseas is 42%, quite good growth in the overseas market.Volume increased by 16%, India 8%, Overseas 37% because of the company is getting good volumes in the new part of the geographic like U.S.A., where the expansion was there, the result has come out in the previous year. EBITDA has increased by 12%. It increased by 14%. EBITDA margin was 13.5% as against 14.5%, decreased by 100 basis point. Margin was slightly impacted owing to challenges, macroeconomic environment that we all are aware, too much volatility in the last quarter in the exchanges and the polymer prices, which took some time passing to the customer.Now for the 9-month FY '23, on a consolidation basis, sales is [ INR3,100 ] crores. And in the previous year, the same 9 months was INR2,612 crores. EBITDA achieved INR411 crores as against INR369 crores. PAT is INR185 crores as against INR133 crores -- yes, INR155 crores as against the previous year of INR133 crores.Now key highlights for 9 months. Net sales increased by 19%, India 14%, overseas 29% in the 9 months. Volume 13% overall, India 9%, overseas 23%. EBITDA increased by 12%. PAT increased by 17%. As the volume had increased, PAT is affected in that way. PAT also got same percentage increase. In 9 months FY '23, EBITDA margin was 13.3% as against 14.1%, slightly [ 80 ] basis points more.Share of the business, I'm going to tell you share of the business. Value-added products grew by 29% in 9 months of FY '23 as compared to 9 months of FY '22. While established products grew by 16%, the share of the value-added products is 24% of the total sales in FY '23 as against 22% in FY '22. Now because of that, share in the overseas has grown in terms of the percentage hike. Therefore, the share of the India and overseas business revenue in 9 months in terms of the percentage is 64% and 36% as against 68% and 32% of the previous year. Debt almost remained the same, stood in around INR800 crores. And as of 31st March also, it was on the same round. With the spike up, business has increased by 20%. Debts are on the same level maintained by the company.The CapEx incurred by the company is INR169 crores, which includes INR53 crores towards the capacity expansion, reengineering and automation. But mainly CapEx incurred this current year is on account of the value-added product, which is CNG cylinders and IBC. And in this reference, I think just -- you will see some kind of the company has sent intimation to the NSE, BSE, reference to the CNG, one largest order received by the company and intimated to the exchanges just 20 before the market closing, because we just got in the night this order and that has been circulated and inform to the exchanges. This is a large order the company has received.In terms of revenue, I can say now because it's INR134 crores value of the order, which is being received by the company and is the single largest order. Now the consolation of restructuring. Yes, I would like to update because we all are aware, that's the Board and shareholders' agreement approval. But you know that the company has a presence in 10 overseas countries and it took time in the due diligence process. So that has been completed. But again, it was earlier based on the 2021 financial results. But now as we have completed 2022 calendar year because in overseas, we follow the calendar year.So matter is under discussions with the prospective buyers and with our advisers and the results of which will come out in the period ahead shortly. So company has still continued and focusing on doing some kind of the disinvestment to to our overseas business. And further, as you heard my message recently, the overseas business has grown more than 23% in '19. So definitely, we reserve our right to enhance that value of the self investment, so which we have loss the period of this last 3 months, 4 months. So very soon, this company, the management will update you time to time in each of the meetings.Now, I would like to open the floor to the answer any specific questions in this call.
[Operator Instructions] The first question is from the line of Hitesh Taunk from ICICIdirect.
And congratulations on a good set of numbers for the quarter. Though the number was impressive on a Y-o-Y basis, sir, but my question on EBITDA on a 3-year CAGR basis. On a 3-year CAGR basis, the revenue CAGR is still in a single digit. So, I just wanted to understand, which business segment according to you is underperforming or below our expectation? I mean, segment-wise, if you can throw some light on the performance front, please?
Yes. I agree it is. Very well, I think, overall company has grown by 20%. But as -- which is, especially composite products is giving more in terms of percentage and the packaging business overseas has done very well. But India packaging business has grown in the range of around 7% to 8% in terms of the percentage. But if you tell me the overall sale of the -- product-wise sales, then I'll tell you as far as 9 months of this FY '23 is concerned, the regular products, the packaging, excluding the IBC because that comes under the value-added products like [ lead acid ] batteries, all segment, is in the range of around [ INR200 crores ] [indiscernible] revenue as against 9 months of the same [ INR95 crores ], all grew by 16.5% if you compare 9 months. But yes, I agree that in the pipe business, it grew only 6% because in the first half, very, very less orders was there, the price too much volatile was there. And thereafter, government has also initiated to remit some money to the EPC contractor. And the second half, this business has started picking up.So in Q3 and Q4, company has a good booking as far as pipe orders are concerned. So as you, especially, you are asking me which business is the peak pipe business, which grew hardly in the single digit, 6%. All other businesses are more. In value-added products, you will find the sale of the 9 month is INR740 crores as against INR573 crores, which grew by 29%. We got good growth in the IBC. Composite cylinders has more than 50% growth because the base was very small of composite product, which includes LPG and CNG together. And at least in the next 3 -- 2 years to 3 years, you will see more than 100% growth in the composite cylinder business because base is very small and company's market demand is more and company is also doing expansion, substantial expansion in the composite cylinder for CNG application. Another part is MOX Films also, which grew hardly 8%. So these 2 products where the business growth is less than in single digit. Otherwise, every -- therefore, the average growth is 19%, which you have seen in the first 9 months.
Sir, so going forward, let's say, for the Q4, how the demand recovery you are seeing on the ground level for those products, which are not performing? And if you can give some kind of a future guidance on the other segments also as far as the revenue growth is concerned, that will be very helpful?
Yes. I noted your point. Normally, we don't provide guidance for next quarter as already 2 month is past of the current quarter. But as far as Q3 as business, we did INR1,131 crores. So definitely, Q4 will be higher. And you see the past track record always. In the first half, we do 45%. Q3, we do 27% to 28%. But Q4 always, we used to do around 30% business. So definitely, year closing, we are looking for more than INR4,200 crores business we are expecting.So definitely, this quarter we will have more than INR1,200 crores business. And especially Q4, we had a good order book of the composite products, good order book for the pipe, that all will be executed. And the packaging business, as we have shown, we are taking a growth of -- in the range of 10% to 12% only. But definitely, overall, in a year, we can say '22-'23, we should grow in terms of the volume, 15%, and value terms also will be around the 16% to 17%. This is our projections currently.But certainly, if you ask me the next year, definitely, looking to the growth, looking to the product in hand, looking to the expansion plan of the composite products in the company because another 2, 3 products we have developed in composites, which has a good demand we are expecting. So overall, I can say, at least for '23, '24 also, whatever market condition may be, but we are definitely going to grow around 15% in the period of '23-'24.
Okay. And sir, my next question on the gross margin front. Though you have given some inputs saying that there was volatility in the raw material prices. But, sir, I just want to understand when our value-added product categories have grown so sharply, even on a Y-o-Y basis for the quarter also and for the9 months also. The gross margin, there was a pressure on the gross margin. The gross margin is still much below than our pre-COVID level of gross margin. I understand that there would be -- would have been a delay on the passing of the prices and all. But I just wanted to understand what -- is there any kind of structural issue? Or say, this is the margin you are happy with or the gross margin you see will improve going forward. I just want to understand which kind of gross margin should we look going forward from the current level, especially when your raw material prices have again moving up?
No, it's a good question asked by you. But one thing I'm just clarifying it in 2 ways. You have asked me the COVID period and the later on. COVID period, you know that many restrictions was there initially in the -- if we can say the 2021, all the production was not allowed, only the essential products was there, mainly packaging products. And at the time, because of the COVID restrictions and the limited supply of the raw material product availability, we have increased the prices also.So if you take the overall product margin, as we have always suggested, will be in the range of 14% to 15%. Yes, COVID period, there was certain COVID expenses, additional expenses was there. Therefore, we have asked for increase in the prices. But now as far as '22-'23 is concerned, everything is stabilized. Percentage of business, revenue was also stabilized. And I agree that business of the composite product is increasing as 22% increase to 24%. Therefore, we have seen that there is a substantial improvement in terms of the -- if you see the first -- last quarter of September, where the EBITDA percentage was 13.1%, which has now increased to 13.5%. Further, as a whole of the year, I'm looking that it should be around 13.8%, means I can say near to 14%. But yes, if you ask me the year of next year, '23-'24 is concerned, definitely we'll surpass 14% because value of the value-added products are going to increase.In other words, I tell you, the polymer prices increased or decreased, we have a system of passing on because 92% business we do B2B directly. All educated customers, when price increase is there, we pass on to them. If price decrease is there, we pass on to them. Only the good 2 businesses are there like composite products where we have order booking, we always keep the reasonable and good margin, looking to the contingency and then the price fixed for the yearly contracts.So, we always keep that much in hand on account of the contingency. Further, PE pipe business is there, where we also take the order very cautiously looking to the market trends. But we know that EBITDA margin in that product is in the range of 11% to 12%. So, we have to work within that for existing capacity utilization in that business. And that's going -- and as I mentioned in my last call also, that we are not going to expand in pipe business because it's a low EBITDA margin business. We will do our focus on the value-added products and the composite products. But yes, if you ask me the future, company is focusing and management is ready, increase in the operating margin, and it will be in the range of between 14% to 15.5%. 1.5%, I'm keeping the range on account of the transfer, means pass-on of the price increase or decrease.But certainly, it's 14%, our target. In addition to that, because everything is linked with the improvement of the ROCE part because when the margin will improve, then definitely ROCE. We have not changed any focus on the ROCE. Definitely, by '25-'26, we are targeting to achieve ROCE over 19% by changing the combination of established product and the value-added products.
Okay. Sir, my last question is about the LPG cylinder, what we are delivering to one of the oil and gas company, the IOCL. So how much volume and value we have generated in Q3 by supplying them?
Actually, as far as Q3, if you are asking me because this LPG cylinder, we got the approval for more than 48 countries. And I'm glad to tell you every quarter, we add 1 or 2 countries and my supply is increasing for that reason. In fact, when -- before the IOCL order, even company was having a good order book and supplying to various countries. Now, I'm glad to tell you your company cylinder is now approved in Korea, approved in Taiwan, approved in Sudan. All government have visited our plant. So regular orders are coming from that thing also. So now as far as you are asking me, as far as the quarter is concerned, around 288,000 cylinders in this quarter. But you asked me the 9 months, we crossed 7 lakh cylinders, LPG cylinders were concerned.
Sir, I'm asking particular for the domestic LPG player, I mean, IOCL company, how much -- on a volume terms and value terms, how much have you delivered?
[Technical Difficulty] available, but that supply is on and services is on to the IOCL customer.
Okay. And have you received any kind of a further indication of repeated order or anything else?
I think I had mentioned in my previous call also, one year already extension is there in the order itself. Without changing the price terms, they can extend the same and they have extended also that next year also the same quantity and same price will continue. [Technical Difficulty] is then only, repeat orders.
Okay. So, sir, in the previous call, you have also mentioned that on the overall composite cylinder category, you have given a revenue guidance of INR300 crores for FY '23, or about INR500 crores by FY '24. So obviously, with the new order in the hand in the casket category, you want to revise that guidance upwards for composite gas cylinders?
I have one [ restriction ], you know very well, because I think you -- if you go through my recent, just on our back, I have given my intimation to the exchange and BSE and NSE. With my capacity 100% booked as far as CNG casket part is concerned because I'm completing the expansion Phase 1. Now Phase 2 expansion, which is going to be completed in January 24. So as far as guidance part is concerned, for the composite products, LPG and CNG put together in the range of around INR500 crores, I'm taking for '23, '24, not much because I don't have available capacity.
Okay. INR500 crores.
Yes. Over INR500 crores, maybe plus or minus 5% maximum.
Okay, sir. Sir, if I have more questions, I will come back.
Yes.
The next question is from the line of Sandeep Dixit from Arjav Partners.
Everything is answered. Nothing to ask.
We'll move on to the next question that is from the line of [ Panak ], an Individual Investor. Mr. Panak, your line is in the talk mode.As there is no response from the current participant, we'll move on to the next that is from the line of Mahendra Jain from Way2Wealth.
[Foreign Language] Sir, my question was regarding only this divestment process or strategic partnerships and all these things. We are like discussing in last so many quarters. So if there is any hurdle or any progress which you can share with us on the direction like? Because of this being a, I mean, packaging business and not having more value-added business, that's why we are suffering some issues or something like that? Or can you just put some highlights, what is the -- right now, the process is going on, in which direction?
Mahendra, I know you are concerned, and you are right that our talk is ongoing for the last 3 quarters. Because initially, you know that we were talking last year, '22-'23, and it is delayed by 3 months because of the sad demise of our honorable Managing Director. Subsequently, the remaining promoters took back this process on. And you know that the overseas business has presence in the 10 countries and all are in different geographies. One is U.S.A., several in Southeastern Asia, plus Far East Asia, Taiwan and Middle East. So it took time. In fact, we were estimating that we will be able to complete in the 6 months to 8 months' time. But considering the due diligence to assess, it took more time.So now -- and as we complete the due diligence process, then the year of the 2022 end. So as I mentioned in my first remark also, we have not hold up this any process. It is on. But at the same time, we have seen the growth also, more than 30% business has grown overseas, okay? So as far as this business is concerned, good business is there. But again, as a promoter, as an investor, we also would like to have a good value is concerned, overseas part is concerned. So, we are talking with them. And now we are talking overseas as a whole also and the part that is open for the discussion. Yes. And another thing, based on the '22, that decision will come out. And I think I'm not asking you much time. But yes, in the next 90 days, some results will come out.
Okay.
The packaging business scales, overseas we do packaging business and nothing to worry. Packaging business has grown. And further, we are expecting growth in '23 also for more than 12%.
Correct. Sir, the domestic packaging business, are you planning any restructuring or can you put some highlight on that segment?
Not now. Because you know very well because it is a very cumbersome process. At many locations, I do packaging product, I do composite products. Because, just I tell you, packaging products, I use the blow molding and injection molding process. For my composite product also, I use the blow molding and I use the injection molding, then we use some kind of other composite products. So there is a crisscrossing of the process. So it is -- because in India, we have 16 many [ sourcing ] locations. And composite products, we are manufacturing at 4 plus 2, 6 locations.So it's a time-taking process, and I can't comment right now. But yes, my first objective, disinvestment of the majority stake for the overseas business in whole or in part. Then second stage, we will take the India restructuring also, not now. When the business is growing and the good growth is there, and again, I repeat that. We are not compromising of our business of the value-added products because we have a good -- we have -- leverage of the balance sheet is good. We have a capacity of the borrowing capacity.So CNG expansion as the demand is increasing, yes, we are doing the expansion, and we are not compromising any value-added products business based on my disinvestment. We have not planned that way. That was the one of the objective. If I disinvest, it will be a benefit. I will do the expansion in CNG to the benefit of the shareholder and repayment of the debt. These are the 3 objectives of the disinvestment. It's still there. As they have been materialized, we will do, but not at the cost of the expansion of the composite product. That will carry on without any -- whether if disinvestment happens or not happens.
Yes, yes. That is the biggest advantage that if it happens, then we can take care of working capital, long-term loan and all these things like.
Yes, yes. I agree, Mahendra. You are right. We are worried because cost of the fund has also increased. And second thing, working capital cycle time, time to time, it is improving. And you know that COVID period [ when we went ] back to the 130 days, now reduced to round -- we are targeting less than 100 days in the next 6 months' time because the value-added products share is increasing, which is currently 24%. And I'm targeting by '25, '26 value-added products share will be 40% and others share will be 60%. By the time, definitely working capital cycle time will be in the near to 80 days to 85 days.
Correct. Okay, sir. Sir, anything you would like to share regarding the hydrogen cylinder approved, like anything? Very long term, but would you like to share anything?
I give Mr. Raghupathy because last time he has clarified what is hydrogen cylinder and when we will be there, because my expansion line is also covering some kind of a development part that my partner, Raghupathy, will expand into.
Yes. We have been working on the composite cylinders as Bharat has been informing you. We've been very -- progressing very well as far as the high-pressure centers of CNG application is concerned. Hydrogen theoretically comes in as the next step of this development process, wherein the working pressure for CNG is about, let's say, 250 bars. So hydrogen would be 350 and 500 and 700 bars. So, these are the steps at which the local pressure will also give [indiscernible] to us. So, our expansion that we are also planning for the composite cylinders has been incorporated to ensure that we are in a position to use a part of our capacity for hydrogen cylinder manufacturer as well. We are in discussions with quite a number of potential users also. We recently participated in the India Energy Week, which was inaugurated by Honorable Prime Minister, Modi, as well, where there's a lot of emphasis on CNG natural gas as well as for hydrogen. There has been a fantastic response that has been received. There are people who are in the pipeline wanting us to really develop because we are definitely going to [ move up ]. And for a long time, the only company in the country would be able to offer the hydrogen cylinders as well. So, we are working very vigorously as the new equipments are also in take. By year-end, we should be in a position [Technical Difficulty].
Sorry to interrupt, sir, your audio is breaking up.
Pardon, please?
Sir, you audio is breaking up.
Okay.
Okay. I do not know where it broke. I just would summarize once again. We are working definitely towards the development of the hydrogen cylinders. Theoretically, it's one step over the development of the CNG cylinders. There are enough inquiries that are there in the pipeline for hydrogen cylinders also. We have recently participated in the India Energy Week where there has been a recognition for Time Technoplast as a good manufacturer of high-pressure cylinders. So, there are -- there is very clearly a pipeline requirement. We are planning to manufacture, coinciding with the investment that we are doing for expansion of this [ composite ] project. And by this year-end, we should be in a position to have this announcement also of an indigenous manufacture of hydrogen cylinder as well.
The next question is from the line of [ Umang Shah ] from India Bridge Capital.
Am I audible?
Yes.
Sir, the first question was, can you tell me the difference between the working capital requirements for the value-added products and for the base business?
Yes. If you ask me, 2 things are different. The value-added products, which includes IBC, then is the MOX Film and especially, composite products. Composite products, I tell you is the volume of business because when anybody gives us the order, they give us in certain volumes to produce that, then the inspection carrying out. I have to carry out the inventory because in composite products, most of the items are imported, imports are there, which has the long delivery process time. So, I have to carry the inventory looking to the contingencies of the shipping line, contingent delivery time. But in a nutshell, I can say the difference between the working capital cycle time of the established products and the value-added products. If established products needs a working capital cycle time of around -- in normal, I'm telling you, 110 days. But in case of a value-added product, it will be 70 days.
Okay. Okay. So sir, the reason I'm asking this question is if I look at long-term fundamentals of the company on a ROCE or ROE front, the company has not been able to reach 15%, 14% in last 10 years to 15 years. So on a return equity front, how do you think about the business overall? Do we think that it's because of less utilization of the capacities? Or do you think it's because of higher working -- investments in working capital?
So in fact, I tell you, apart from this COVID period where the working capital cycle was increased substantially in the last 2 years, '19-'20, '20-'21 and '22, 2.5 years, something pre-COVID number, prior to that, my working capital cycle time was 85 days, 90 days. So we are coming back on that period. Target is there. In fact, by end of this '23, we are keeping a target of less than 100 days. But definitely, I'm putting my internal target of 85 days to 90 days in the period of '23, '24. And as I mentioned to you, value-added products, when the share will be 40% and this share will be 60%, by '25-'26, definitely, net working capital cycle time will be in the range of 75 days.
Right. And what would be the impact on it?
Again, I'll just add it further. Another thing, ROCE part is concerned, currently, which is in the range of 13%, in the next 3 years' time, by '25-'26, we are targeting ROCE over 19%. And that [ change ], as said, ROCEs, we will achieve it by improving the working capital cycle time, by improving the margins -- EBITDA margins currently, PAT margins, all put together, there will be a improvement in the ROCE.
Right, sir. And sir, one question is you had a massive CapEx program from 2010 to 2014, where you almost doubled the gross loss from INR800 crores to almost INR1,500 crores. [ After this change ], in last 5 years, 6 years, the CapEx has been more or less to the extent of maintenance CapEx, broadly near there. So first question is, the machinery that you had installed in the first CapEx cycle of 2010 to 2014, how long can it further go for? And do you have any major maintenance CapEx coming out?
No. I expand in 2 ways. As you are right, as you know that CapEx company did the CapEx in the -- you are talking about 2010-'11 onwards. First 5 years, 6 years, company will expand it overseas and which, as I mentioned, when you were on the call, that the fruits are coming and that fruit will come when the company management will take the decision of disinvestment. And I tell you, definitely, the investment, which we received the return in the period ahead and further, as the CapEx, which we are currently incurring is the value-added products measure, and that is where the EBITDA margins are also higher compared to regular products where the EBITDA margin is in the range of 11% to 14%, but value-added products in the range of around 16% to 20% is the margin. So company is making more investments, less working capital cycle time. So, these are the written day plan. And 3 years, as I mentioned to you, working capital cycle time will also be reduced.
Right. And sir, one final question is, what is the update time in machinery? I mean, machinery of yours would have a age of 15 years to 20 years. But the new machinery might make the current [indiscernible], right?
I expand it this way. You considered as a plant because in the processing industry, there's an investment in the molding machines. Maybe injection, extrusion, blow whatever may be there. In addition to that, we have blow molds where dependence of the cycle time depends on how many products you have made from that. But normally, we consider life of the machines, around the 15 years we consider. Life of the mold, we consider 10 years as per the policy. And we take always -- because we are 25 years old -- more than 25-years old company. Okay.So from manufacturing side, normally, with automation, repairs and maintenance costs, we consider 50% to 60% of our depreciation amount we consider required on account of the maintenance and to maintain the capacity, which we were having at that time to maintain that machines, okay? The more replacement it takes, based on the customer requirement, based on the customization of the product and based on how many products we have produced from that molds.So around, I consider -- you're right that we have -- in fact, I tell you, my CapEx in the last 3 years, 4 years in the range of INR150 crores to INR200 crores. Except in the COVID period, it was less. But now, as you have seen, the product, which is CNG product, major focus is on the value-added product company is incurring. And another thing also I would like to tell you, yes, this year, CapEx will be in the range of around INR225 crores, considering the major expansion in the CNG products, where the order booking is more and the demand is more and we have less capacity. But yes, next year onwards, definitely, the CapEx will be less than INR200 crores, net of that thing, because company has some kind of the -- put some kind of the assets, which are not in use, some kind of the assets which have been to be disposed off. So that considering, the net of the CapEx for next year will be less than INR150 crores because the company will dispose of the assets, which have been held for the sale.
Thank you. The next question is from the line of [ Ankur ], an Individual Investor.
My question is regarding the disinvestment of the foreign business. Sir, are we talking to a single buyer or we have different buyers for different countries for the foreign business?
I tell you those who are in this packaging business, but I will give this answer -- my partner, Mr. Raghupathy will provide you because he is handling this matter with the advisers in the party.
We have talks ongoing with the strategic investors, 2 of them and financial investors. There are multiple people who are interested. Talks are in an advanced stage with one of the strategic investors, where the diligent process is already almost completed. So, that's where the process is. There are other people also in standby wanting to, expressing their interest, especially after the '22 results have also been announced. So, there are options that are there, are being considered by the company.
Okay. And sir, one thing more. As far as the revenue share is concerned, it is about 34% for the foreign business. And if in case, I see the book value of the company per share is about 95%. What would be the share of the book value of the foreign business as compared to the Indian business?
I think I will have to work it out. That's where we have not worked out. But you -- I will work out and you can -- we can -- then we'll query your answer because I've not worked out in that way. That figures are not available with me right now.
Yes, because I was interested in -- when you disinvest, what would be the balance book value of the company be after disinvestment? That was my query.
I think the overseas turnover in the range of around INR1,200 crores. If you tell me that as we are estimating INR1,400 crores, INR4,200 crores business of overall business. Out of that, INR1,200 crores business, we are estimating from the overseas to balance [ INR3,000 ] crores business is in India. And as I have told last time also, whatever business we will lose from the overseas disinvestment, that will be created by way of a value-added product in the next few years' time in India.
Yes, sir. I'm very hopeful of that. But the only book -- how will the book value be affected after disinvestment of the company? That will not depend on the revenue share, but....
I think you can share your number with my -- I can say, Investor Relationship manager, and we'll provide you that working.
Sure, sir. One last question, sir, is regarding the oxygen cylinders that you talked about that you're working on. Is there any development on that regard?
Yes. I'm very pleased to inform you that the development of the oxygen cylinder has been completed. The in-house testing results have been positive. We've been able to surpass the requirement. We have applied to the PESO for approval for 3 different sizes. It's just a matter of time and we should get the formal approval. The capacities for the manufacturers are also being put in place. We should be able to launch it probably by April of this year.
The next question is from the line of [ Suresh Warren ], an Individual Investor.
Yes. Sir, we have been discussing about onboard CNG cylinder actually for more than one year. Have you got any order for this one?
Admittedly, as far as onboard cylinders are concerned, we would be launching it only coinciding with the new manufacturing program, which is coming on board by end of this year because whatever current capacities are available, they are all being utilized for the cascade part of the requirement. And even as per the chain of requirement goes, the cylinders are normally put into the supply part of it wherein the cascades are put into use. And subsequently, as this gas moves downturn to the retail station, then they will further find their way to the -- among the retail users. So, these cylinders for onboard applications will also be developed by this year and as we have some surplus capacity available.
Okay. Okay, sir. And my next question regarding the MOX Films. Sir, what is the advantage of our MOX Films? Actually, I see many players are offering the 2-year warranty for pond liner and tank covers. What is our advantage to crack this market?
Yes. As far as the MOX Films is concerned, it is process of manufacture, which keeps us specifically apart from the others because here, the process is technologically-oriented, a little more advanced in terms of how we are in a position to manufacture or cross-laminated or MOX Film. We are able to give better tensile strength as compared to any other film, and we are able to get that price-to-grammage advantage for sure. All the other people, I would put it, 7 out of 10 in the market today would claim to be a cross laminated, but half of them are not even there as a cross laminated film. They are kind of deceptively similar, I would say that. It's a matter of time when these films also starts performing differently and the consumer will be in a position to find the advantage. So, we are sticking very securely to the process that we have adopted, and we'll continue to deliver the superior products that we do and offer.
Okay, sir. And another -- my question is regarding the high tech -- our another high-tech product, DEF urea tanks. So, we are getting -- what is the reception, sir, in the market now? Are we getting order for this one?
Yes. As you are aware, the urea tank is used for the urea application, which goes along with the diesel as per the BS-VI norms are concerned. These have been put into place. We have already developed 3 different sizes of urea tanks, which we are supplying to OEMs. The tank is doing exceptionally well. There are additional sizes also been ordered, which should see further growth in the business. So, we are working with OEMs. This is a strictly OEM product. The product is manufactured using the technological advantage that we have, and we are able to successfully exploit it. I think there are very few successful players offering these urea tanks in the country today.
Okay, sir. Are we expecting any -- we are working for foreign order also from other countries for this OEM tank?
Potential good exist in terms of the quality, but then, obviously, when we're looking at the tank, it is a hollow product. You would end up exporting air. So, there would be preference by the OEMs to develop local players. They don't normally want to develop a player or depend on a player who is secured broad. In fact, they not only want it within the country, but they want it in their own district and region. So OEM products normally are -- you can develop the business if you are there in the neighborhood.
Okay, sir. And my next question, sir. Sir, now lot of big players are coming for green hydrogen. So yes -- so they can -- they have deep market. They can manufacture hydrogen cylinder also. What do you think? Actually, they can manufacture hydrogen cylinder because it's a small part of their business as a backward integration. So then in that sense, how can we compete?
Well, admittedly, the process of manufacture of hydrogen cylinders is not very, very easy. People who would want to do that will require a lot of CapEx that will be required to be done. When you are in the business of making hydrogen globally, there is yet -- we are yet to experience any single hydrogen manufacturer today in the world who has been able to develop a hydrogen cylinder successfully. We are very clear about it. We will develop the hydrogen cylinder. There will not be one, but there will be 20 manufacturers of hydrogen because it is a heavily decentralized process of manufacture of hydrogen. So over a period of time, you will find that hydrogen process of manufacturer will start almost in every nook and corner because at the end of the day, you electrolyze water and you get hydrogen.And if you are in a position to provide green power to it, then you get green hydrogen. So wherever the hydrogen is manufactured, the biggest challenge will be how this lightweight gas would be able to be captured in a cylinder and what pressure you can do so that the cost of carrying the cylinder would be as optimum as possible. So, we are able to foresee that whatever the business, the strategy that we have adopted should be able to see us very successfully in the years ahead. We are not really bothered about such a possibility.
Okay, sir. Then my last question is still, are we looking for disinvestment of battery division, sir, our battery division?
Yes. I think yes, [ we mean ] to say, we are open, but not that as a distressed seller because at the battery division is a self-sustained company, self-product company. And yes, I know that ROCE from that business is hardly 7% to 8%. But yes, that company is also doing -- developing the electrical batteries. Lithium-ion batteries development is on. We have produced some kind of the samples, submitted to some authorities for the approval for especially 2-wheelers and 3-wheelers. But yes, we are open. If good value we are getting along with our returns, we can discuss with them and do it.
The next question is from the line of Hiten Boricha from Joindre Capital.
Yes, sir. Sir, most of my questions have been answered. I have only 1 or 2 questions there. So first is on the guidance you have given, 15% growth for FY '24 as well as FY '23. Would you like to give it the breakup of value and volume, sir?
There different products are there. Volume will be -- in each of the segment, there is a different volume, I tell you. I'm giving over 20%. If you ask me, the established products and the value-added products, I can tell you. Value-added products, we are expecting growth of around 25%, more than 25%. For established products, we are projecting growth of around [ 21% ]. So combined growth [Technical Difficulty]
Sorry, sir, but your voice is breaking. You told value-added products growth is 25% and established is, I mean that number?
Yes. Established products in the range of 10% to 12% and for [Technical Difficulty] around more than 25%, you can take 30% because CNG products, cascade products, which we have expanded is going to get as against current year projections business of around INR350 crores. The next year, we are working around INR550 crores. So the growth is more than 40% in CNG product. But if you take the entire value-added products growth, it will be over 25%. Combined, we are sure and we will achieve the revenue over 15% volume, value and both.
Okay. So 15% for this year and any number for FY '24, sir?
Number, you can take as I have given you [Technical Difficulty] on my call. See, INR3,500 crores revenue is already achieved in the 9 months. So, we are projecting this year, considering this Q4 quarter in the range of around INR4,200 crores. It will take 15% on INR4,200 crores, which works out around INR4,800 crores. But for best, if possible, if prices also remain on the higher side, then we can get INR5,000 crores also. But you know the revenue is dependent on the polymer prices. But yes, we are sure as far as margin is concerned, we will be able to achieve EBITDA margin in the range of 14%.
Okay. Okay. Yes, sir. Sir, just last question on the divestment side. Would you like to give any ballpark number? What kind of inflow we are expecting from this divestment? Assuming, we are selling the whole business?
Yes. I know that because sales can happen in the past, can happen in the full. And again, it will be -- the disinvestment, maybe in the range of 70% to 80%. Percentages are different. So exactly figure of the inflow cannot be given. But I tell you, as initially, we have kept target. If, for example, I get INR1,000 crores, then that will be used for the repayment. 50% will be used for the repayment of the debt, balance benefit to the shareholders because I'm also one of the shareholders, investor is there. And the balance will be used in expansion of CNG products, which already we have talked. And you will see my communication, which was sent back 1.5 hour back is sent to the exchange also. And that expenses -- that expansion is already [ complete ] and we are going to get it done.
So around INR1,000 crores, right?
You can take it. I've given an example of that.
Okay. Yes.
INR1,000 crores for 100% value. Then what will be the percentage of, if I say [ 90% ], then I will get INR800 crores depending on the -- how percentage disinvestment depending, because we have seen in the overseas, the practice is nobody sells 100%, always continue because wherever -- we have also bought some businesses in the last 10 years. We bought initially 70%. Then later on, we bought the balance equity also and become today [Technical Difficulty].
But this INR100 crores is pre-tax number, right, sir?
Tax wise, we will have to see. Each of the countries, tax rules are different in each of the regions because we are holding this through our holding companies in the overseas countries different regions. So taxation, the overseas taxation is in the range of 20%. Pre and post-tax, we will see, depending on each of the country liabilities because if I have a holding company in Singapore, there is no tax on the capital gain tax. But I have a -- now I just heard in Middle East, there is some taxation rules that's come out recently in 2023. So, we worked out when the absolute transaction will take place. In India, yes, India, if any India disinvestment because most of the companies [Technical Difficulties] overseas, the companies which are holding through the India. India, the tax liability is in the range of 25%. That amount with the taxes is worked out, then we will maybe be the near to the transaction. So, you can take it. There is a pretax. Pretax working with the [indiscernible], just given you the examples.
The next question is from the line of [Panak] an Individual Investor.
I think last time he had come. Panak? He is not on the line, I think. Last time he was there. Panak?
As there is no response from the current participant, we'll move on to the next, that is from the line of [ Manish Omar ] from [Manish Investments ]. [Operator Instructions]Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments.
Yes. I would like to convey thanks to all participants who heard carefully about the Q3 and 9 months results of the company. And definitely, as I promised, we will try our best to keep the -- looking to the present scenario and to achieve the targeted revenue of the company. And as I mentioned in the beginning remarks, to fulfill and to complete the dreams of our honorable Shri. Anil Jain with our best. Thank you very much.
Thank you, members of the management team. Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.