Good evening, everyone. I would like to welcome Mr.

J. Lakshmana Rao, Chairman and Managing Director, and also thank him for this opportunity.

I shall now hand over the call to him for the opening remarks. Over to you, sir.

Good afternoon, gentlemen. Thank you very much for your interest in our company's quarterly results conference call.

I'm glad to inform you that we have made a historical quarter. The turnover crossed 300 crores, partially helped by increased raw material costs.

However, one of the most important points here is the per kg EBITDA has shot up to 46.7 per kg, which is historically around 40-42 was the best in the last several years. This is a good turnaround because of the increased sales in pharma and food and FMCG, which are high value-add products, and also mainly driven by the consolidation efforts we have taken up in bringing down the number of units in Hyderabad to only two units from five units earlier.

This consolidation and improved sales of high-margin products has enhanced our EBITDA margins considerably in spite of the economic disturbance all around the globe due to the war situation. That's fairly a good quarter where in spite of the price hike, we could successfully pass on the raw material price hike to all the clients, and with internal efficiencies and consolidation, we could improve our profit margins considerably.

This is briefly the introduction, and I hope we can discuss more on question answers. Over to operator.

Hello, sir. Thank you for the opportunity.

My first question is: over the last few years, the company has diversified beyond decorative paints, and looking ahead, what would be the ideal revenue mix, what portion will we accept our decorative paints over next few years?

It is currently value-wise 46%, but volume-wise it's around 50% paint alone. Probably it will start stabilizing around there or it might come down to 40% over the next two-three years because of the increase in food and FMCG and Q-Pack, and pharma, are much sharper than growth in paints.

I hope in three-four years, paints as a segment might contribute around 40% from current 50%.

Any other segment in which we are looking to enter?

We are already growing in food now. Food is now contributing to almost 24%, and if you consider Q-Pack also, it is around 28-29% of our products are sold in food.

Pharma is only 2% in terms of weight, that is volume, but about 3.5% in the overall sales. These numbers will shoot up rapidly, say 40-50% CAGR for next three-four years, and food and FMCG might grow at least around 18% to 20% CAGR.

Whereas the paint might grow around 8% to 10%—currently it is 10%—so at that rate, paint will slowly lose the share from 51% currently to probably 40% in next three-four years.

Understood. In the overall—

In the overall.

Okay. Could you help us understand what percent of incremental revenue this quarter comes from new customer or any addition?

New customers, several customers have been added in food and pharma, not one or two. In paint, of course, it's a more matured market where we have the top brands with us for last several decades, I can say.

In the paints and lubes, there's not much of new additions, but in food and FMCG and pharma, there are several clients, I can't list. There will be more than 10-20 clients added in this quarter.

Okay. In percentage terms, can you give, in food and pharma, how much revenue came from new customer?

Percentage terms, probably if you can send a mail, we'll reply to you. There may be 3% to 5%, but overall food and thin-wall growth is 24.2%, which is considerably much better than what it was in the last two-three years.

Okay. Thank you, sir.

Thanks for the opportunity. Am I audible?

Audible.

A couple of questions. First, on the volume side, if you can help us understand this 6% growth.

Is it because did we apply new selective approach as far as the current market conditions are concerned? Is this the reason that the volume growth was relatively low?

Second, on the EBITDA per kg side, how sustainable this number is because one part is obviously lube has come down and mix has changed, but if you can share some color and attribute the reasons behind this EBITDA per kg improvement. These are the first two questions.

Yeah. Volume growth is tapered a bit because of drop in lube segment.

Lube segment has dropped by 17%. It's mainly because of base oil unavailability with couple of private companies, due to the war in Iran, their base oil procurements have been affected, which impacted their sales and volumes, and which in turn affected our sales in lube segment.

Lube being a almost 17% to 20% of our sales, a 17% drop has impacted almost directly 3% to the volume growth. The 6% volume growth what we achieved would have been 9% had even lube remained at the same level.

Lube is the disappointing performance this quarter, which is beyond our hands because of the input problems of oil, base oil to the some of the private players. They could not get the oils in time, and in turn, we lost the volumes.

That is about the volume growth. I also told you in the last quarter, as pharma growth is 38%, but it won't reflect too much on the volume because they are lightweight containers, lightweight components.

On the volume side, anything around 10% is a great volume growth given the war scenario. What I am very glad about is the EBITDA growth that has been achieved through consolidation of our units and improved efficiencies and a little bit better capacity utilization compared to the last financial year.

All these three are long-term in nature. As you asked, we are bullish that we may able to cross our projected 42-43 rupees EBITDA for the year marginally.

Maybe we are now aiming at 44-45 for the full year.

Got it, sir. The way to look at is that incremental YoY EBITDA per kg growth would more normalize from 46 that we are seeing in the current quarter, meaning that Q2, Q3, Q4 would have a little bit of a normalized growth on the EBITDA per kg side compared to last year.

Is that the right way to look?

It will be better than last year, certainly, because Q2 and Q3 of last year it was below 40, but we are aiming still at around 45 because the cost advantages and consolidation benefits will continue to accrue. We have other areas of automation, which we are started recently, which also start contributing in a couple of quarters.

Things are looking brighter because the corrections what have been done are long-term in nature. Consolidation of units is a one-time thing, but its benefit will last forever.

That's why we are—

Got it, sir.

—increase with food and FMCG and pharma, we are confident to sustain momentum in the EBITDA.

Got it. One last question on the paint side.

11% volume growth, 30% revenue growth, this 20% value growth that we have secured, if you can just share some color. Is it more one-off or this is more looking sustainable?

How should we look volume and value growth going ahead on the paint side?

No, no. This 31% growth rate in paint and 10% in volume is basically eaten away by the raw material price rise.

The sustainability of this will depend again on the raw material movement. If the raw material stabilizes or comes down, this gap will slowly come down.

What you should appreciate is company could immediately get the price rise. Due to the war, the raw material shot up from 110-105 range to almost 155.

The company could get that money with quick time frames from the clients and able to sustain or enhance our EBITDA. Otherwise, we would have seen EBITDA affected.

This shows the relation what we have with our top clients in the paint or lube or even food industry, and also the confidence they have on Mold-Tek. We are able to pass on the price rise as and when the price rise happened and able to sustain our margins, rather improved our margins.

Got it, sir. That's pretty helpful.

Thank you, and all the best for upcoming quarters.

Thank you.

Hi, thank you for the opportunity. My first question is on Q-Pack volume, they have come down sharply, growing at close to 20% last quarter to 2%.

What was the reason for the same? Secondly, in terms of—

Q-Pack?

Sir. Secondly, on pharma also, on a quarter-on-quarter basis, our volumes are up 2-3%.

How do you see this ramping up? In terms of our target of close to 55 crores of revenue from pharma, so, what kind of growth do you see in the next couple of quarters?

Yeah. Q-Pack, the growth is only 2% mainly because Q-Pack is a little price-sensitive segment.

It is mainly used for edible oil and cashew, and edible oil industry has been under stress because of the increased freight costs and oil prices on one side, and with such a shot up of raw material price from 100 level to 150, they were a little hesitant to increase their sales and volumes. That is one of the major reasons even companies which have moved into our square packs have gone back to tin or other forms of pack tentatively.

That is one of the reasons why Q-Pack growth is disappointing. Now we set up our Q-Pack facility at north.

It is started adding numbers, and also in south in Cheyyar. We hope that coming quarters we'll see double-digit growth in Q-Pack again.

That is your first question. Coming to the second question, pharma, we reached 41% growth, which is a sizable growth compared to last year Q1.

Even in the volume terms, it is 38% growth, which I am sure you'll appreciate is a big jump given the scenario. At this stage, we already have about a quarterly projection of 11 to 12 crores, which can go up to 14-15 crores towards the end of the year.

We are still looking at a 50-55 crores target for our pharma. Which will be almost 50% growth over the last year number, 34 crores, what we achieved.

In pharma, we are definitely on a strong wicket. We also have plans to get into ophthalmic range of products for which trial moulds are completed, and commercial moulds may take another five to six months to arrive.

Hopefully from beginning of next calendar year, we'll be entering into that. We also are looking at other medical devices like dosing pens, for which we are looking at a ways to shorten the development period.

No firm plans as of today, but certainly that is another product we'll be landing in the next financial year.

Understood. Secondly, on our finance cost, we have seen a sharp increase on a quarter-on-quarter basis close to 20%.

What is the reason? Last quarter I think we have said that we will not be increasing debt from hereon.

What was the reason for the increasing finance cost?

See, increased finance cost is two reasons: one is raw material cost goes up, our working capital needs go up. On that, on a higher volume of material cost, we will be paying the interest to the bankers.

The raw material cost shot up. If you compare to last year fourth quarter is 97 rupees average price is 130 rupees.

Almost 35% there is a jump in the raw material cost. Our raw material inventory cost and carrying costs also will go up accordingly.

That is one of the major reasons why the interest has gone up. It's not because of term loans.

Term loans also, of course, are there, but not to the extent of this much difference. This 20% rise what you see there compared to the Q4, 20% rise is mainly due to the cost of raw materials and goods, which shot up in the war period.

That is the reason for increase in finance cost.

Understood. Sir, lastly, just on Wyp, is there any update in terms of after JV, when do we see volumes coming in?

Yes, as I said, with Wyp, we have developed three products now, which they have got applied for patent, and another six products three products which consist of six components are also getting onto the pilot stage. Probably in next two months, they will also be ready.

Together, they already applied for IP for these three products, and another two products also they want to go for IP, and they already taking the call on IP expenditure and marketing efforts. Even they agreed to participate in the new mould cost to the tune of $50,000.

All this augurs well, but as I said, it is a long call. Probably towards the third quarter, we'll be starting some commercial products for Wyp.

Understood. Any targets for this year?

This year, probably a couple of crores we may do for last quarter because these products are very high value-add. They are even better than or at least equal to pharma products in terms of EBITDA.

Once they are launched, the volumes also can shoot up. Probably next financial year, we'll certainly see decent numbers coming from Wyp.

Understood. Okay.

Thank you so much.

Hello. Am I audible, sir?

Audible.

Yeah. Very good evening, sir.

I just want to understand that you suggested that you have passed on the prices, but if I see your quarter-on-quarter margin, you have reported revenue growth is around 46.6%, but your gross profit is grown around 12% and EBITDA is grown 16%. There is some cost absorption.

There is a drop in gross margin from 46.60% to 41.31%. What is the reason of this?

No, if you notice, our EBITDA has shot up by 12%, which is a very big jump from 40.7 rupees per kg to 46.7 compared to the last full year. That is a very considerable achievement.

The revenue rise looks high because of the inflationary trend in the raw material, which we could successfully collect, otherwise it would have impacted our EBITDA per kg. EBITDA per kg has gone up because of the efficiencies and consolidation what we have taken up in the last financial year.

These are the reasons, and we could effectively pass on the price rise of raw material. If you notice the raw material cost, it was 97 rupees in the Q4, for the full year, 107 in Q4, become 130 now.

The revenue growth is partly due to the inflationary raw material price, but the proof of the pudding is EBITDA growth. EBITDA growing by almost 6 rupees over the last year number is a big relief or proof that our efficiencies and consolidation are adding to the bottom line.

Got it, sir. Could you please explain what kind of value-added products in pharma that we are planning to launch?

Currently we have three set of products, that bottles and caps, variety of caps. We have EV tubes, effervescent tubes, and canisters.

Now currently we are working on some other products including dosing pens, wherein IP requirement is there. We are trying to work out with a suitable IP holders who will be able to give us the IP rights and able to bring the product here in India.

That will cut our development time from three years to one year and enable us to get into this business within a year's time. Even some imports can be done during this period to do the market seeding.

That way we are going Sorry?

Please, sir.

That is one product wherein we are putting efforts. We are also looking at semiconductor trays.

That will be a little longer shot because by the time semiconductors and chips are made in India, they will be needing a lot of packaging support, and this packaging is very high-end, accuracy and high-end raw material requirement and understanding of the technology is very much needed. That is one very high-end value-add products we want to look into in the coming years.

What kind of EBITDA margin could we expect in these new products?

EBITDA could be very high, something around 150-200 rupees, I guess. We are still having basic data.

That again depends upon the capacity utilization, but it will be at least double that of pharma is my guess because the material used, the dimensional accuracy required, and temperature characters, all that are very demanding. It is a step ahead of pharma.

There are very few players in the entire world who are doing this, but Taiwan and Korea are the main countries. Of course, China also there are suppliers with good technology.

We are trying to find some good technology partner to enter into this. That is a little longer shot, but pens is one area where we are focusing now and hope to get into that business in a year's time.

Sir, what kind of capacity are we putting up for these pens and what is the capex estimation?

Currently the capacity requirements are shooting up in India not only for diabetes, but also for semaglutide and other products that are expected to move into disposable pens. Once that volumes come up, the volumes in this country or even exports to the African and other countries can be of sizable numbers.

We are still at the drawing-table stage now. Depending upon the plans, it could be a million pens per month will be the minimum capacity we'll be starting with.

This revenue will come from the next financial year, right, as you said?

Yes, it will take at least one year to get the validations and clearances from clients. If any tie-up happens with a couple of foreign suppliers we are working with, in that case, probably some imports can be done in this year itself.

Otherwise, it will take at least a year to get into that business.

Got it, sir. Thank you very much for answering my questions.

Thank you.

Good evening, Mr. Rao, and thank you for the opportunity.

As usual, you have surprised us. I just wanted to check few things.

This quarter, our lube volumes were lower, and because of that, our EBITDA has shot up to 46.5. Now, what I'm trying to understand, if you can give me a number, what is the lube quarter one EBITDA per kg?

In future, once lubes' order comes back, will this EBITDA look like towards 45 or will be lower than that?

Lube as it is is not a bad contributor. It is average somewhere around 35 to 40 level.

Yes, lube coming down is not the reason for improving the EBITDA. Improving the EBITDA is mainly due to consolidation of our units, which has reduced overheads, wastage, inter-unit transfers, and rejections, which were happening in printing especially because our printing units were spread in three locations.

Now we brought them under one roof in Sultanpur. Also couple of units closure reduced our overheads considerably right from power costs to the supervisory and managerial staff.

They could be used elsewhere or we let go some of the people. The overheads have come down considerably.

Inter-unit transfers have come down, and wastages and rejection rates have come down. These are long-term in nature.

That is why we are confident about a consistent EBITDA growth in the current year in spite of moderate volume growth. You must appreciate that in spite of the war situation all around, other than lubes, all our other segments have done well, especially pharma and food and FMCG grown by 38% and 24% respectively, and paint by 10.8%, which is a fairly good number.

Only lubes are down due to the base oil disruption in couple of our clients' locations. They could not get the base oil because of their dependency on Middle East.

Of course, Q-Pack, as I explained, is a price-sensitive market, edible oil and cashew being users, and so they were a little hesitant when the raw material shot up by 50 rupees per kg. They're coming back now.

We're seeing the trend is returning for at least a modest 10% growth in Q2.

Okay. My second question, our core business, the paint has grown about 11% and food and FMCG has grown 26%.

However, there could be aberration because quarter one overall volume growth was about 6%. Now, in this setup, how we should think about the full-year volume growth because I think the core business will continue to grow at that speed.

I just want to understand if this price is now settled and the growth looks better in second half for volume?

For volume growth, as I said last time, we are aiming at 10% to 12%. Even today, I still feel 10% is possible because in spite of the war, the clients are sticky with us, and rather some of our clients who left us are coming back because they know Mold-Tek can afford to maintain the material, produce at good efficiency, and ensure supplies in time.

When any disturbance is there in the markets or a general atmosphere around, they will fall back more on Mold-Tek. The trend of IML adoption in paint industry is growing because the leader has started using more and more IML brands, and Aditya Birla also using more than 25-30% of their sales in IML.

The trend is spreading into the lower players also, and they're coming back to us, and hopefully paints especially we'll see a double-digit growth for the full year. If paint remains at that level, if lubes even come back to a zero level of growth, food and pharma will pull up the numbers to make sure we are at 10% volume growth at least for the year.

What you should appreciate is pharma numbers are in weight-wise, they're very less compared to paints. Even if growth is 10%, it's equivalent to a growth of 15% volume if pharma is growing at 40%, which I think that trend is already in line with that.

Now more than volume, I would look at one is definitely volume up to even 9-10% volume growth is equivalent to 14-15% of the past volume growth, and EBITDA growth of 5 rupees we achieved, 6 rupees in fact compared to last year full year 40.7, we did 46.7, is mainly due to consolidation and efficiencies and better capacity utilization, which will be long-term in nature. That's why I'm confident this year we will be crossing our target of 42-43 we set for the full year.

That's really helpful. My last question, have we taken any further price increases or passed on any raw material increases in the month of July?

You see, whatever happens in the month, we pass it on in the next month. If the price have come down in the beginning and again last two weeks they've gone up, and now today they're back to 145-146 compared to the peak of 155 they reached in end of March.

Again the price is rising, but we don't know. If the war comes to an end, I'm sure it will come down to 120-125 at least.

I understand. The reason why I'm asking because you also eliminated the in-house printing levers, there is a cost lever also sitting there and there is a margin lever also sitting there.

I was just saying that 46 you are saying 43-44, but I would expect the margin to remain stable the same level at EBITDA of 19%.

I hope so.

Okay. All right.

Thank you, and all the best.

Thank you.

Thank you for the opportunity. Sir, my first question is related to the price pass-on that you were talking about.

Tomorrow if the price reduces, will it be fair to assume that our gross profit per kg would still remain in the range of 100 rupees?

Gross profit per kg at 100 rupees, where are you seeing that?

Calculating gross profit by volume.

Yeah.

Because this is an entire pass-on basis, right? If there's a price increase in raw materials of about 30 rupees from 100 to 130 and we are selling at 150 rupees, it increases by 30 rupees, 180 to increase from 150 to 180, due to which by eyes, we look that the margins are down.

However, on unit economics basis, the realization is still better.

Yes, yes. That's why I always encourage people to look at EBITDA per kg, which is a correct sign of profitability in our line of business.

Because raw material is a variable which is not in our control, and the price goes up or down, we pass it on to the client in the following month. That is still happening.

Tomorrow if the prices come down, it will come down, and the percentage looks higher. If you look at absolute figure, EBITDA per kg, that is what matters.

That's where I'm very happy that we got a almost 12% jump compared to the last year number in spite of the war situation and in spite of the lubes being impacted due to war. This is through consolidation and efficiencies, which are long-term and permanent in nature.

Right, got it. Second question, we are talking about the lube as a segment.

If I'm not wrong, in Q2 we lost a big client in last year Q2, which led to a normalized rate of 1,800 to 2,000 metric ton volume on a quarterly basis. One thing is that it is still a normalized level.

Second, I wanted to know if the Q-Pack segment's volume normalizes, which wasn't any growth because of the competitive intensity it has, that is the reason why you are talking, na, that the EBITDA per kg, which is around 46 rupees, will come down to about 44-45 as a range?

Because not only that, when the capacity utilization remains at the same level or maybe a little less, automatically EBITDA per kg will come down. I'm sure that lubes will compensate this quarter.

If not fully back, they're improved a lot. Maybe they made some alternate arrangements of the base oil.

Couple of clients who are impacted during the war are now back into market in terms of quantities, and we hope lubes will get back into shape in this quarter. That will overall improve the capacity utilization at least at the 75% level.

If that happens again, we may reflect on similar set of EBITDA per kg, otherwise probably marginal reduction here and there. Overall yearly projection of 42, which I gave at the end of last year, will certainly be surpassed in this year.

Right, right. Next question is related to the new lines that we are getting into: the ophthalmic and looking to get into the dosage pens too.

I wanted to understand what kind of size this industry has and even when we started to get into pharma, the quality requirement that the plastic products should not mix with the ingredient, maybe the capsule or something else, we faced hurdles to bring up to that quality. Similarly, I guess that this is similar for the dosage pens too because there is an liquid API included in that, right?

Just wanted to understand the learning curve that would be required, and as you're saying that once we will get the IP done, the time frame can reduce from three years to one year, just wanted to have a ballpark view of how you're looking at this.

No, what I'm saying is, in case we find a partner who is willing to share his IP and the validation data, which will like a tech support or a tech understanding, then the time lines can come down from three years to one year itself. Because then already some of the suppliers abroad we are in touch with, they already are in Indian market at the various levels of testing.

If we tie up with them, things can go faster, like few months or max one year. If that fails and we have to come out with our own design and IP, it will certainly take two to three years.

At this stage, it's too early to comment, but we are on a track to see both options.

What would be the capex for this new plant and machinery for this?

No, we already have the land, we'll be needing at least 50,000-60,000 square feet of area to start with, and that will be around 10 crores investment. The machinery to start with would be also in the region of around 10 to 15 crores.

Minimum 25 to 30 crores minimum plant size is required in the beginning, and which need to be ramped up depending upon the growth in the business. The pricing and EBITDA margins are more than double that of regular pharma products.

Right, right. For this ophthalmic product that we are talking about, for that, we can make it on the same assets that we have today with us, right?

Yes, ophthalmic, we don't need any special level of safety or ambiance. Our current facility where we are now already taken up construction of 25,000 square feet area, which will be completed in six months' time.

That is where we'll be setting up the ophthalmic range. The new land which we acquired a year ago will be kept for devices, that is mainly pens.

There are some more devices under consideration, but will be too early to comment. We are working on feasibility and market demand.

Let me assure you, Mold-Tek is now focused on pharma and diagnostics in a big way and devices on a big way. Coming forward in the years or quarters, if not quarters, years, there will be certainly more focus and growth in that segment.

It's a huge potential area, and we just are touched the tip of it, we have a long way to go.

Right, right. Just last question from my side, sir.

Generally, after reaching a 75% capacity utilization, we generally look for new capacity addition. We are currently at about 77,000 MTPA, if you could just highlight what kind of—

67,000, I guess. Our total capacity is 67,000.

Yes, correct. 67,000.

Right. What are we looking at by the end of the year, what are we looking at capacity, and down the line about two years down the line or three years down the line, how are you looking at it?

There'll be certainly at least 10% to 12% capacity addition every year. That is to capture the growth and better utilization at three units, which are Cheyyar, Panipat, and Mahad.

This is where we are now trying to focus by enhancing the product range there. For example, in Panipat, we already started test marketing our thin-wall products with four machines last year, and response is pretty good.

Already goods worth of around 70 lakhs to 1 crore are being sold every month, and now we are doubling that from this month August onwards to catch up for the festive season. Hopefully north Panipat unit will be utilized better in food and FMCG, Q-Packs.

Already Q-Packs we are selling more than 1, 1.5 crore worth of Q-Packs from Panipat in this last six months. Whenever there is ups and downs in the paint demand, there will be fungibility with Q-Pack.

Same thing we are doing at Cheyyar. Now a set of moulds are going to Cheyyar for Q-Packs and also paint industry moulds, which will enable us to use the capacities in that unit also better.

Our focus now is utilizing this capacity from 75% to probably 78% or even 80% in the coming years. Apart from that, create another 8% to 10% of capacity to catch up with the growth.

Perfect. Thank you.

Thank you so much, sir. I'll join back.

Yeah. Good evening, team, and congratulations on a good set of numbers.

Sir, my first question is that is it fair to say that paints we could have seen some volume decline, obviously because of elevated RM prices, they might be destocking. Now with crude coming off, is it fair to say that we can in the ensuing quarters see volume growth coming back in paints?

Paint actually we have 10.8% in spite of the severe conditions what we are experiencing. The main culprit is lubes.

That is where I explained 17% dip compared to the Q1 last year. So—

No, I'm talking on volume growth, volume growth.

Yeah. Even volume growth in paint is 10.8%.

The lubes was minus 17%. That is where our volume growth has been stunted to some extent, otherwise we would have been close to 9-9.5%.

The 17% dip in lube is the culprit for our volumes being moderately less compared to what it used to be. Once the war situation becomes normal, even now I think lubes they have found some alternate arrangements of base oil, so that their sales will come back to normal.

Hopefully in the coming quarters also, we'll be able to achieve double-digit growth given our growth patterns in food and Q-Pack, and Panipat and Cheyyar utilization being improving, we are aiming double-digit growth in the coming quarters.

Secondly, sir, with Asian Paints also increasing IML share and within that Mold-Tek is also now seeing incremental business given that our capabilities are far superior, is it fair to assume that within Asian Paints our gross profit per kg as well as EBITDA per kg should sort of increase from hereon?

Yes, yes. It is increasing because volumes are increased, capacity utilization is improving, moulds and machines are being kept on better use.

I can't tell you the exact number, but we have a very good growth in Asian Paints in this quarter.

Their IML share is rising. Is that fair understanding?

Yes, yes. IML share is also rising and their volume growth is very considerably high, which used to be down in the previous couple of years, started positive from last quarter, that is Q4, and this quarter it's one of the best growth numbers.

This 10% volume growth in paints which we have seen in the first quarter, maybe in the next nine months, it should only accelerate. Is that a good understanding?

It should at least remain at 10% to 15% range. We are confident this time paint will go in double-digit, and the signs so far are good.

For at least the war stops in a couple of months' time, hopefully we'll be seeing even 15% growth is possible because of very handsome growth in Asian Paints sales for us.

Around 15% for the full year, you're saying?

Sorry?

You're saying 15% in paints for the full year can be a possibility, volume growth?

10% to 15%.

Okay. Understood.

Great, sir. Thank you very much and all the very best.

Thank you.

Hello, am I audible?

Yeah.

Thanks. Sir, I have just one question.

Earlier our team was planning certain visits in China for tech tie-ups related to semaglutide pens. Any update on that?

Yes, we are in talks with a couple of them actually, not even one. There could be some visits in the coming months, and talks will start in September.

If things work out with at least one of them, there could be some initiative in that direction.

Got it, sir. Thank you so much.

Hi, thank you for taking my question. My first question is that we had a strong growth of 11% in volumes for the paints sector.

If you could tell us how much of this growth would be due to our current clients and how much could be due to some new clients that we might have onboarded in quarter one?

We don't onboard any new client in paint. This growth is all through our existing clients only.

Okay.

In paints.

What is the total capex that we can expect in FY '27?

This year we hope to bring it down from 130-135 crores to around 90 crores.

Right. One of the points that you mentioned in your opening statement was that the consolidation of the Hyderabad facility was a major factor in improving the EBITDA per kg.

Is there scope for any other consolidation of some of our facilities or was it just this facility which in which we were able to do this consolidation?

Yes, I think as far as the consolidation of units is concerned, Hyderabad is the only location where we had several units earlier, which we brought it down to two. The same thing is not possible elsewhere because everywhere we have only one unit.

There are couple of other areas where we can still see improving the margins and efficiencies. One is automation, wherein we can reduce the manpower and improve the accuracy and reduce the rejection rates.

We are working on that. A team is currently planning to visit our partner or a good friend in China who have similar manufacturing facilities running with very lean manufacturing methods.

That study will enable us to implement the same here back in the next couple of quarters, and that also should improve our overall efficiencies.

Thank you for answering my questions.

Thank you.

Yeah. Thanks for the opportunity, and congratulations on a good set of numbers.

My first question is we have seen 19% of our overall value growth and 6% volume growth, and almost 19% growth in sales per kg. Would it be possible for you to bifurcate how much of that growth is because of the price inflation and how much is because of the product mix change?

See, if you can see directly that the sale in tons is only 6%, 6.25% increase. The rest of all 18% is mainly due to raw material price increase.

Won't there be any change because of the product mix as well given that food and FMCG and—

You are correct. There will be definitely change in the product mix, which would improve the net revenue per kg due to pharma increased by 40%.

Their per kg rates are much higher. Yes, you're correct to the extent that if the raw material would have been the same level, the difference of 25% would have been somewhere around 12-13% because from 6% volume growth, the value-add in revenue would have been 10% to 12% at least because of the product mix of food and FMCG and pharma increasing compared to paint segment.

Just to confirm that 12-13% growth will be because of mix change.

Yeah, 6% volume growth have resulted in 10% growth in the revenue because high value products were sold, but the change what you are seeing 6% to 25% is mainly because of the inflation. At least 15% is inflation in the raw material price.

Okay. Got it.

Secondly, sir, listening to your commentary, right, how our nature of business is changing, we are focusing more on pharma and medical devices and now food and FMCG also growing at a faster rate, would it be fair to assume going forward overall profitability growth or EBITDA per kg improvement should be the right metric rather than the volume growth number?

Yes, I would always encourage people to look at the EBITDA per kg, and of course volume growth also as secondary. Because going forward, volume growth might be close to 10%, but EBITDA can grow around 18% to 20% also, given our product mix changes and efficiencies that we are bringing in in our operations.

Sure, and so would it be fair to assume we should maintain this 19-20% EBITDA growth for rest of the year as well?

Yes.

Great. Lastly, if you can please share the IML versus non-IML absolute volume and absolute sales number for this quarter.

It's around 75.8% in tons and 77.8% in terms of value for this quarter.

Great, sir. Thank you so much and best of luck for the future.

My questions are answered, thank you.

Thanks for the opportunity. Sir, I wanted to ask a few questions.

Total how many pharma companies have visited and how many are actively giving orders?

How many means the number of pharma companies that visited are more than 50, and current orders may be coming from around 20-25 companies. Another another 10 companies are also slated to visited in the next couple of weeks, months.

Okay. Sir, one more question: 2 2.5 acres land which we have got, and when will the building construction start, and when it will be operational?

As I said, the current growth will be contained within the current premises of our Sultanpur land, old land. Future growth will be for devices.

Once we have a plan, as I said, we have two ways of going into devices: one is tying up with a existing patent owner, which will reduce our time frame. In that case, we have to start immediately and complete the buildings within a year's time or 8-10 months' time.

In case we are going for our own internal IP and development, which had a long time period, it could start later.

Sir, those are medical devices?

Yes, medical devices like dosing pens and other items similar nature.

Okay. Very good.

Thank you. One more thing.

How many new moulds are being made for pharma and Wyp?

See, pharma, number of moulds are increasing every quarter. Say, I don't have a count now because number of products have crossed 100 now.

Maybe every quarter we are adding at least five to eight new sizes, bottles, or caps every quarter. I think yearly we'll be adding at least 15 to 20 products of different sizes or within the same size, different weights and next sizes.

Yeah. Sir, any good news about pharma and semiconductor packaging?

There are a lot of things happening on the background, and probably in a few months' time, we'll be in a position to talk about it.

Okay. Sir, any capex for 2027?

Yes, there will be a capex of about 90 crores for this current year, assuming 25 to 30 crores for pharma and the remaining for balancing and replacement.

Okay. Only the medical devices is the new business we are entering, or any other business also we are planning?

We are open to consider white goods. We are even looking at electronics and semiconductor packing.

These are all long shots, and they're at the drawing board stage now. Based on how we tie up or how we get the partners in this field, the time frames can be decided.

Okay. Sir, the five to two units which we have consolidated, now other three units, what business is going on there right now?

Currently the lands are available for us. Probably in a year or two, when a good price comes, we may sell off at least couple of them and use the funds.

Okay. Thank you very much, sir, yeah.

Thank you. Thank you for taking my question.

My question was what was the benefit to EBITDA per kg from higher realization?

For a higher realization of FMCG and pharma together, it should be at least 3 to 3, 3 rupees per kg would have come from those two lines, and another 3 rupees from the consolidation and improved efficiencies.

Okay. Since our RM will be higher in the near term, what is your outlook for working capital?

The reason the interest has gone up considerably with increased raw material costs, inventory costs, we end up using more working capital, and hence pay more interest on it. Current our working capital is 100 and 125 crores, which was around 110, 112 end of March, I think.

It has gone up by around 16, 18 lakhs crores.

Do you see this continuing for FY '27?

It may stabilize there because raw material is now not as much as it was in end of March. It is now currently trading around 10% less than what it was in the peak months.

Hopefully it will stay there. It may not decrease much, but it won't increase.

It may decrease to the level of 5-10%, but it may not increase, given the raw material price. If the war worsens and further crude prices shoot up, then maybe a different point.

Given this current scenario, it looks like it will come down a bit.

Okay. What was the capex in Q1 FY '27?

Q1 already 20 crores we invested, I guess. 20-22 crores.

Okay. Thank you.

Thank you. That's it from my end.

Hi, sir. Thanks for the opportunity.

Sir, since you mentioned that raw material cost spiked from 107 rupees per kg blended in 4Q of '26 to around 130 in first quarter of '27, am I right? Sir, just wanted to understand if there's any inventory gains that we got in the gross margin, of, say, 103 rupees per kg from 97 rupees last quarter.

Inventory gains will be there to some extent, but not huge.

Would you be able to quantify, say, 2 rupees, 1 rupee per kg?

Probably, yeah, 1 to 1 rupee 50 paisa, you can say.

Understood, sir. Got it.

Sir, and currently, what is the raw material cost, you said?

Current raw material is 145. The peak was 160, I think, in end of March or early April.

Got it, sir. Understood.

That's it from my end, sir. Thank you so much.

Hi. Can you hear me?

Yeah.

Just one question, what your suppliers are saying in terms of availability of raw material, because again, throughout this month, which is July, for just about 15-20 days, Strait of Hormuz was opened. Now, we understand that US Congress, Senate, they have also sort of passed the bill, which will restrict imports of Russian crude oil also into the global market.

Have your suppliers have had any sort of conversations with you in terms of supply availability?

Supply availability, they're not worried about, but the price they're not able to confirm. That's volatility will still continue.

As of now, PP, copolymer, which is our main raw material, availability is still I won't say it's plenty, but it is available as of today. Even the worst days of March and April, the material was available, and there was some shortage, and there was some rush to get it from Reliance or other manufacturers.

As such, I think the situation now is better than what it was in March-April in terms of availability. In terms of pricing, yes, it depends on crude, at what price they get the crude, and they will change it up or down.

That volatility is still there. Availability-wise, we are much better off now than what it was three months ago.

In terms of inventory, your own inventory holding as well as your customers', it's sort of lower than normal, higher than normal, where do we sort of stand there roughly, if you have any sense?

We don't have the details of customers or competitors, but our standards are around one-month inventory.

Three weeks to one month. This you're talking about raw material, or finished goods, or total?

I'm talking about raw material. Including finished goods and SFG, probably one month.

Okay. Understood.

One month, one month a few days, yeah.

Thank you. Thank you.

That's it from my end.

I take this opportunity to thank Emkay team for arranging this meeting with all the investors who have shown a lot of interest in our company and its operations. I thank everybody, one and all, and wish you a great evening.

Bye. Thank you, Rajesh.