Apollo Pipes Limited (531761) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to Apollo Pipes Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mit Shah from CDR India. Thank you, and over to you, sir.

Good morning. Thank you for joining us on Apollo Pipes Limited Q3 and 9M FY '20 Earnings Conference Call. We have with us Mr. Sameer Gupta, Managing Director; and Mr. Ajay Jain, the CFO of the company. We will begin the opening -- we will begin with the opening remarks from the management, following which we will have the forum open for the question and answer. Before we start, I would like to point out that some of the statements made in today's call may be forward-looking in nature. And a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Sameer Gupta to make his opening remarks.

Hello, everyone. A very good morning to everyone present on the call. On behalf of the entire management team of Apollo Pipes, I would like to extend a warm welcome to all of you for our Q3 9 months FY '20 earnings conference call. I will begin by sharing the operating highlights, following which Ajay Jain will run you through the financial highlights. During the quarter, we have reported an untrading set of numbers. We delivered a volume growth of 15% in Q3 FY '20 driven by a steady demand revival witnessed across cPVC, HDPE pipes and value-added product segment of Fittings. Improving contribution from our high-margin value-added segments also enabled us to register a healthy growth in the corporate setting in the quarter. On the operations front, I'm pleased to share with you that we have successfully integrated the recently acquired plant at Bengaluru in our business operations. This plant, with a capacity of 12,000 metric tonnes per annum, has started contributing to our performance from January 2020 onwards. We are currently manufacturing cPVC and uPVC segments at the start, and we'll also be establishing a manufacturing line for our high-value -- high-margin Fitting segments at this time going ahead. At the operations stabilize -- as the operations stabilizes and utilization level improves at this plant on the back of various initiatives we are taking, it will help us enhance our overall volumes in FY '21. I'm also happy to share with you that we have recently added a new and high potential product segment, namely solvent cements and water storage solutions to our product portfolio. In January 2020, we commenced manufacturing of PVC and cPVC Solvent Cements, which is a superior quality product with excellent installation properties that can be used in various piping applications. The new product is also a LEED compliant and meets high ASTM International standards used for plastic pipe installations. We will be launching this product in a wide range of packaging going forward. Additionally, we are also planning to launch water storage solutions product in the next fiscal. These Aqua Range of water tanks will be available in 4 different variants and will meet the highest standard of hygiene. The inclusion of these 2 new products or categories is in sync with our growth strategy of improving our value-added product portfolio. We believe, in longer term, our improved product portfolio will help enhance our business visibility and drive healthy volumes and profitability going ahead. We are also constantly working towards strengthening our sales team, dealer and distribution network and building our brand presence across existing and new high-potential geographies. Further, the launch of value-added products, enhanced branding activities and ramp-up in utilization of facilities should also enhance productivity and improve business efficiency for Apollo Pipes in the medium to longer term. From a macro perspective, the recent Union Budget of 2020 include allocation for Jal Jeevan Mission, a program that aims to provide pipe drinking water to all rural households by 2024. This along with higher focus towards agriculture and irrigation growth should drive demand for the pipe industry. So on the whole, healthy networks, improving demand across -- along with the implementation of our strategic initiative to help us in delivering a healthy operational and financial performance going ahead. On that note, I would now like to invite Mr. Ajay Jain to run you through the key financial highlights. Thank you.

Good morning, everyone. I will briefly cover the financial performance during the quarter and 9 months ended December 31, 2019. The company delivered a steady financial performance during Q3 ended 9 months FY '20 despite facing external challenges such as muted demand sentiments in the domestic market and the impact of heavy monsoons and flooding in key geographies. Total income from operations for the quarter came at INR 100 crores as against INR 87 crores in Q3 FY '19, higher by 15%. In 9 months financial year '20, our total income from operations stood at INR 313.8 crores as against INR 272.4 crores, growing by 15%. Our volumes for the quarter stood at 10,712 metric tonnes per annum as against 9,300 in the corresponding period last year, delivering a growth of 15%. Volumes for 9 months FY '20 stood at 34,971 metric tonnes per annum, up by 16%, as compared to 30,210 metric tonnes per annum in 9 months FY '19. The volume growth was -- in Q3 and 9M was driven by a healthy contribution from the cPVC, HDPE pipe and value-added product segment of Fittings. On the profitability front, our EBITDA for the quarter was up by 25% Y-o-Y to INR 10.7 crores as against INR 8.5 crores in Q3 FY '19. Margin for the quarter were higher by 86 bps and stood at 10.7%. EBITDA for 9 months FY '20 stood at INR 35.8 crores as against INR 28.6 crores in the corresponding period last year, higher by 25%. Margins for 9 months were higher by 91 bps at 11.4%, improving contribution from our higher-margin value-added segments, like Fittings, has delivered improved profitability. Depreciation costs during the quarter were up by 30% in Q3 FY '20 to INR 3.4 crores. For 9 months FY '20, it stood at INR 8.9 crores as against INR 7.2 crores in the same period last year, higher by 24%. High depreciation was on the account of commissioning of new capacities. PAT for the quarter grew by 25%, stood at INR 6.7 crores compared to INR 5.3 crores in Q3 FY '19. PAT for 9 months FY '20 stood at INR 22.3 crores as against INR 18.6 crores in the corresponding period last year, higher by 20%. With this, I would now request the moderator to open the forum for any questions or suggestions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Praveen Sahay from Edelweiss.

Many congratulations for a good set of numbers. In the commentary, you had given volume growth of 25% in the next 3 years. But so far, in the past, we had not seen such kind of a strong volume growth. So on what basis, like geographical penetration or the product mix? What actually is -- will be the driver way forward for such a nice, strong growth guidance?

Yes. Mr. Praveen, thank you for the question. As we talk about the volume growth that we were targeting of 25%, we were very sure regarding achievement of this target. But due to some, you can say, circumstances that heavy rainfalls and some other incidents like, you can say that the extreme weather conditions and the general elections were there in the early this year. Therefore, having a little impact on the, you can say, sales. Otherwise, we were very much in line with the, you can say, with our target, and we are hopeful that in the coming, you can say, period, we'll be very much achieving this target and we will be standing up to our commitments.

So basically, I just wanted to know, like, this 25% of growth, which you had given, it will be a mix of your new product segment as well, like PVC solvent or water storage? You also talk of, for the way forward, you will venture in. So keeping everything in the mind, you are saying that our volume growth would be in the range of 25%?

We are targeting these products as a backup plan, not exactly the first plan for our growth target. Because whatever we are targeting right now, the 25% growth, we are targeting with our existing set of products with our existing set [ of key ], so whatever the growth we will be achieving with the new products, it would be over and above the 25% that we are targeting.

Okay. And also, you talked about the Jal Jeevan Mission, the allocation, the government has given and all. So is there any contribution because one of the competitor of yours has indicated they had supplied to certain region related to that. So have you supplied anything in that?

Yes. We are already supplying to various government projects for such missions, and we are a regular supplier to, you can say, government bodies through contractors. So we are already in line with those supplies. But with this more penetration from the government side, it will help us in, you can say, putting us on more, you can say, quantity or more volumes on these projects.

Any specific location can you indicate as yours?

Yes. We are already supplying to various government departments in MP, in Rajasthan, in UP who are working with these government missions for Nal Jal and [indiscernible] other government programs.

Okay. And also I'd observed that the HDPE pipe numbers have significantly improved for a quarter, even for a 9-month. So is that a B2B in the nature, that business is?

Yes, exactly. Mainly because HDPE is mainly for the government projects only, so you can say, majority of the supplies is to be in this nature only.

Okay. Okay. Great. And regarding that new product, is there any CapEx have you incurred for that, the PVC Solvent Cement? And the way forward, the water storage, as well, you are planning, what would be the CapEx spend? Have you incurred or any plan for that?

Yes. Of course, these new projects for water storage tanks and solvent cements, we have, of course, incurred some CapEx because of that only we will be able to enhance the production of these capacities. It will be somewhere around, you can say, INR 5 crores to INR 6 crores in total with -- for the, you can say, total project that we'll be installing. Up to date, some of the parts have already been, you can say, invested for building of the capacities of solvents that we have already in production. And for our water storage tanks, they will be in production by the end of this month or early next month. So you can say that will be -- you can say, the investment is already going on. The total investment should be around INR 5 crores to INR 6 crores for these 2 products.

And which location, sir?

It is in North India only, near the Dadri plant, it is Sikandera plant -- Sikanderabad plant.

Okay. And any sales target can you give on these products?

Yes. Of course, because we are already targeting, you can say, some sales for these products with -- but it's not very, you can say, high -- you can say, just because high-volume items. You can say, the margins are good, but the volumes are not so high being a initial product. We target somewhere around, you can say, INR 15 crores to INR 20 crores in the next financial year for these 2 products.

INR 15 crores to INR 20 crores for FY '21, you are targeting?

Yes.

Okay. And the last question, sir, related to the value-added also you talked about. So is there any definition for your value-added product, like 16%, 17% of margin, whatever is that and then you termed it value-added, is it like that or...

When we talk about the value-added products, we talk -- we take these Fittings into the margin and even that cPVC segment is also a value-added product. And we are targeting these products as a main agenda for our sales. And as -- going ahead, we are actually, right now, increasing the capacities of these products because we are right now operating at almost, you can say, 80% to 90% for these products. And because of this thing, we are increasing the capacity -- production capacity for these products. So we are working for our Fittings and, you can say, cPVC lines we are working.

Which location you are increasing for these products capacity?

Both at Bengaluru and for -- in Dadri plant.

Okay. And can you able to give any capacity, like how much is capacity of cPVC right now?

cPVC, right now, the capacity that we are having, right now, it is around, you can say, 4 kt put together per annum, around 300 tonnes per annum.

The next question is from the line of [ Dhiral Shah ] from PhillipCapital.

Sir, earlier, our plan was to end the FY '20 capacity as 90,000 tonnes. But now looking at the presentation, you are targeting 90,000 tonnes by H1 FY '21. So what has led to this deferment?

Yes. Some factors. Actually, we were planning to acquire this Bengaluru plant by the end of, you can say, last quarter FY -- Q3, but it got a bit delayed. And because of that, I think, some of the activities that we have to take at the Bengaluru plant, that was delayed. Other than that, some delayed rains also deferred our, you can say, construction activities at the Dadri plant, which started, you can say, around 2 months back. So because of those -- some, you can say, minor, you can say -- since it's something that was not in our control, we were not able to, you can say, enhance the capacity. But we are already working in line with that all those target that we've given to you. Only a month here and there, we are, you can say, working on the same target. And we will be working for this same target that we have given to you by the end of, you can say, not by H1, by the, you can say, Q1 of next financial year.

Okay. And sir, what kind of capacity utilization we're expecting next year?

We are targeting a capacity utilization because we will be increasing the capacity at all the locations. So we are targeting a capacity utilization of around 65% in terms of overall capacity utilization in the next financial year.

Across the plants, sir, with this 90,000-tonne capacity?

Yes. Yes.

And sir, what is the kind of expansion we are targeting for next 2 years. 90,000 tonnes would be there, but what are the incremental capacity plan we are targeting, sir?

For the next 2 years, if we talk about, we are targeting around -- to increase the -- first of all, increase the production capacity to 90 kt in the next financial year. And another, you can say, is around 20% in the 2020 -- '21, '22. But we will -- first one, focusing then implement, you can say, that what exactly the capacity we are able to utilize, utilization of the capacities. As good as -- we will be able to utilize the same, we will be going on investing on the same utilization of capacity, you can say, now. Without utilization, there is no sense of, you can say, installing the capacity and making -- or you can say, and plant keeping idle.

Okay. And sir, when I see your gross margins in 9-month FY '20, there has been a 1.5% improvement to 29%. So what is your view for the same for next 2 to 3 years? And how much is due to product mix?

It is mainly due to -- the enhancing of margins are mainly due to product mix only because we are working for the last 2 to 3 years. 2 to 3 years, we are really working on the value-added products. So mainly, these products are only helping us in enhancing the margins for the current year. And in the coming years also, we are still focusing on the value-added products. So we will be in the same line of increasing the margins for the coming years also.

So we can expect about 30% in terms of gross margin?

It should be like that, but we cannot comment right now because as we go ahead in the line, so the pictures will be much more clear in the coming days. But we should be in the same line.

So as we are also expanding, sir, our employee costs have also increased. So is there any target to restate our employee cost as a percentage of sales? Or we can see 7%, 8% kind of an employee cost also in coming years?

It should not be because right now, we are on our expansion mode. So we are increasing the sales team and, you can say, other branding activities that we were -- earlier we were not doing. So our main cost is going to towards that section. So with the increase of sales, it should remain in the same target that we are saying. A minor, you can say, changes should be there, but there should not be any major change in the coming days.

Okay. And sir, lastly, regarding our distribution network, so what is the current distribution network in our retail touchpoint? And how much it has increased?

If we talk about the retail touchpoints, right now, it is around, you can say 4,000 to 5,000 retailers. We are touching across that, you can say, our old book, you can say, old sales network. And we are targeting -- because of increasing the sales network, we are targeting to increase these touchpoints by at least, you can say, 15% to 20% every year.

Retail touchpoint you're talking about, sir?

Retail touchpoint. Yes, we are talking about the retail touchpoint.

Okay. And lastly, sir, regarding the cash which is there in the balance sheet. So how we have utilized it? And what is the current cash position?

We are -- right now, the cash is in [indiscernible] FD is still in the bank. And we are trying to, you can say, compensate the same with whatever the borrowings we are having, we are trying to make up the same thing with that. Right now, we are waiting for some big project that may come into the picture in the coming days to invest this money exactly into that. But straightaway, right now, we are not having any, you can say, financial loss on account of that because we are putting FD on the same cost we are taking -- borrowing the money. So there is no financial impact on the company because of that.

[Operator Instructions] The next question is from the line of Punit Mittal from Global Core Capital.

A couple of questions. One...

Sorry to interrupt, hello. Mr. Mittal, the audio from your line is not clear.

Is it clear now?

No, sir. There is a lot of static from your line. May we request you rejoin the queue? The next question is from the line of Ankit Merchant from S&P Global (sic) SMC Global.

So my first question is related to the industry demand and in those periods which we operate. So how is the demand scenario? Can you throw some light on it?

The industry demand as per the Reliance and as per, you can say, that the industry that is foreseeing, it is around 6% to 7% or around 5% to 7% growth is there as per the, you can say, Reliance data or other, you can say, data that was available in the, you can say, public platform. Around 6% to 7% industry growth is there.

Sure. And what are the upcoming capacities in the regions which you operate? So I believe, in the north, where you are operating, is there any other capacity [indiscernible] player? And the...

Yes, capacities are coming in the picture on a regular basis from different players whether it is a large-cap or the small-cap, it keeps on coming. But the main sector, Ankit, it is that what exactly capacities utilization you are running at and what costings you are able to achieve so that you are able to fight the competition in the industry. That is the major question and what quantities you are able to sell. So we are working on both the lines to increase the, you can say, capacity utilizations to reduce the production cost as well as to -- you can capture more and more demand share in the industry. So these are 2 main factors that we'll be working. There on increasing just the capacity is not a, you can say, big threat, but increasing the capacity with a lower cost of production, that is a big threat. So whatever the production capacities we are working on, it is with the latest, you can say, facilities and the latest technologies. So our cost of production is very much in line with the other, you can say, big players of the industry, and we are working on the same line to, you can say, increase the production with low cost, and we are also working on the brand building. So that is also helping us in, you can say, increasing the, you can say, sales of that.

And is it safe to assume that we are competing more on the price front as well that our production hours will be cheaper than compared to of our competitors?

Of course, we are working on both the lines. We are working on the brand also and the price front also, so that our product is not that much costly because that the competitors are very easily able to enter into the market. So we are working on both the fronts.

Sure. And my next question is related to the RM costs. So in this particular quarter, before this PVCs have come down, the raw material costs. And -- so what is the reason behind it? And second is that due to any -- because of this coronavirus, are we seeing in -- for the industry, any fluctuations for the PVC prices?

Sorry, Ankit, your voice was not clear. Can you repeat again your question?

Sorry. So my question is, one, related to the raw materials in this quarter, quarter 3, RM costs have come down, has come down for us. So what is the reason? And going ahead, are we seeing any supply disruption for PVC prices, not for us but also for the industry due to this coronavirus?

No. First of all, as regarding to RM cost, as we have talked earlier that we are working mainly for the value-added and the, you can say, Fitting and other high-margin items. Because of that thing, the cost of raw material has been decreased because we are working on high-margin products. Second of all, if we talk about China. The disruption is actually -- it is there, but I don't think that it will disrupt too much because China, as we talk about the PVC, we are not very big importers because they are all already exporting this product to other parts of the world. So if they are not, you can say, big importer, so they will not be affecting too much the price of, you can say, of this product, too much. Of course, it is -- you can say, right now, a bit of disturbance is there in the market. But I don't think it should prevail too long because the supplies to the Indian market and to, you can say, other major market is mainly from other countries other than China.

Sure. But there has been no fluctuation in the prices of it?

It is there, but it is not because of coronavirus.

The next question is from the line of Punit Mittal from Global Core Capital.

Am I audible now?

Yes, now it is very clear, sir.

So a couple of questions. One is what we are seeing is that the volume increase is in line with the revenue increase. But at the same time, you mentioned that your portion of value-added products and cPVC is increasing. So why wouldn't the revenue, the value increase with the better product mix?

Yes. Thank you, Punit. Actually, if it's -- see our product, you can say, that -- portfolios, we are making a lot of products that are, you can say, having a different cost of raw material, like cPVC, uPVC, Fittings, HDPE. So all these products have different, you can say, cost of raw materials. So it is a coincidence that the volume growth and the value growth fall on the same line, whereas right now, what -- actually, we have viewed in HDPE also, which is a bit costlier material, so because of that thing and Fittings has also grown, so because of those things, you can say, the open margin has increased. And whereas if you talk about the value increase, the value is increased in the same line because the HDPE product that is not, you can say, having as good margin as Fittings have, but the value is high. So because of that thing also the value has increased in that same line. So overall, if you see that the volume has increased by 15%, but because of HDPE product sales increase, the value has also increased in the same line.

Okay. Okay. Understood. Second, of course, our margins -- EBITDA margins are inching up slowly. But it's a far out cry from the competition, which is between 16% to 19%. So at what level of revenues do you think would be -- you'd be able to reach those 15%, 16% margins?

Punit see, right now, we are not targeting, you can say, EBITDA margin of 15% to 20% because we are in the growing stage and we don't want to upset our buyer segment. Because of high margins, we will be able -- we will not be able to achieve the, you can say, new market segments that we are right now targeting in. So with the -- you can say, with the sales turnover of around, you can say, 15 to -- INR 1,500 crores to INR 2,000 crores, we think we should be in that line to achieve that, you can say, EBITDA margin of 16% to 20%.

Okay. That makes sense. The next, I think, on your annual report of 2019, I think someone asked about the capacity. But I think you also mentioned your turnover vision of about USD 100 million by 2020, which looks bit difficult now. So any comment on that?

Yes. We were targeting this -- earlier, we were targeting this sales target. But because of certain circumstances, we will not -- we were not able to achieve this thing. But we are working hard for the achievement of these targets, and we think that, you can say, we are delayed by, you can say, 1 year to 1.5 years to achieve this target. But we are working hard for this -- achievement of this target.

Okay. And the last question, I think you mentioned about 2 new products, the PVC solvent cement and the water storage. So for both these products, can you just give some color on what the market size is, opportunity size, competition, et cetera?

Yes. The market is -- if you talk about the water storage tanks, the market is pretty big, and there are some big, already, players working in this same line. We have started this product because we are selling to the same set of customers with same product base. Thus, this product is being sold by our existing dealers, and they are very much keen regarding the same product being introduced by our own company. So as we talk about the market -- market size, it's a pretty big market size, if you talk about this water storage tanks. It is in liters they count, you can say, market size. And it is somewhere, you can say, around INR 10 crores of liters per month that market size we are working on. That it should be the minimum of the market size should be there. Because a lot of unorganized players are there in the market. So the exact figure is not there in the industry. And we are targeting -- right now, we are targeting the sale of around 40 -- 30 lakh to 40 lakh liters per, you can say, month for this product. So we are seeing that -- because of the absence of, you can say, organized players, big organized players in this industry, so it should be able to -- we should be able to achieve this thing. Second of, we'll talk about the solvent cement. Again, it is mainly catered from the unorganized sectors, few players are making this product, not all the products -- not all the players. So we should be able to, you can say -- because it's not, you can say, very high investment we have made on both these products. So we should not be able to, you can say, face any trouble in this product. We should be very easily selling through this with our whatever capacities we are putting on in initial phase. We should be able to sell it. And in the coming days, we will be able to see that what exactly capacity enhancement and how big we can make this product segment in the coming days.

So when you say 30 lakh to 40 lakh liter per month, how does -- how much of it translate into, say, revenues?

It is INR 1 crore to INR 1.5 crores, you can say, INR 1.5 crores of [indiscernible].

The next question is from the line of Nikhil Gada from Asian Market Securities.

Sir, my first question is on, why has there been such a sharp increase in our other expenses in this particular quarter? Can you give some reasons for that?

Yes. Nikhil, other expenses, these are mainly because of some of -- we are increasing the capacities through some -- and we've value-added products increased, you can say, at much higher rate rather than this around 30% to -- 30% growth this year in the value-added products. So these products need a higher, you can say, cost of production as compared to the other conventional items. And other thing that we are spending a lot on the branding and the marketing expense. So these are also getting into the picture for, you can say, that contributing to the higher, you can say, other expenses.

Sir, can you just give some numbers in terms of how much is this marketing spend that you're doing? Any color?

Yes, marketing. If you talk about the advertisement expense, earlier, we were expending around 0.7% to 1% of the total sales revenue in the marketing segment. But right now, we are targeting around 1.5% to 2%. So we are almost doubling the same expenses for the marketing expense in the coming -- current and the coming years. So it was mainly this season, the other expenses is going up. And other than that, Fittings segment has -- is going up, so on that account also, the labor expenses and other expenses have gone a bit higher.

So is it fair to assume that these sort of the numbers and other expenses will continue in future as well because you are focusing more on the high margins?

Yes. Of course, this may increase in the coming days because of the high-margin products. A bit of expenses is more, you can say, incurred on the selling and the manufacturing part, both parts. So it may increase in the coming days if the high-margin products keep on, you can say, selling at the highest pace. So it will be contributing in this growth.

Okay. Sir, my second question is, I know you mentioned that we have benefited from better product mix in terms of gross margin improvement. But was there also some benefit of inventory we had in this particular quarter?

Yes. We had inventory in this particular quarter, but I don't think that the inventory was contributing too much on this -- you can say, on this plant.

So majorly, it's the product mix only?

Yes, it's mainly -- majorly the...

Okay. Sir, and you also mentioned regarding the industry demand that it has grown to around 6%, 7% and while we have seen a very strong volume growth in this particular quarter. So there definitely we are gaining market share. It comes through. So just wanted to understand how -- has there been that the unorganized sector is feeding sort of market share to us? Or is it just that we are also able to gain some market from the other organized players as well?

Yes, we are working on the both fronts. So we are gaining some, you can say, demand from the organized sectors' demand portfolio. So the market share also. And also, we are mainly, you can say, targeting the unorganized sectors, where we are mainly getting the growth from there. So the major growth of this are -- our growth is from the unorganized sectors here.

So what would be the pricing differential between our products and the unorganized players? Are we at, like, 5%, 6% premium or we are, like, at similar levels or something if you can highlight?

No. No. No. We are at a premium of, you can say, around 8% to 10% from the unorganized sector.

But we are still able to capture market there?

Yes, we are able to capture because the quality -- because of the quality difference, because of the infrastructure and the supply constraints, and other, you can say, other parameters. Because of those things and brand value also, we are able to capture that market.

And sir, just on the channel inventory front because I know the main season is coming for products, especially in the agri pipes. How is the current channel inventory? Is it like the dealers have stocked much or they are like at optimum levels or there is further scope to improve the inventories in the [indiscernible]?

If we talk about the channel inventory, in the first month, like -- if we talk about at January 1, the channel inventory was not so much, you can say, with that channel partners. But with the recent increase in the polymer prices in the 1 month, you can say that, we have increased, you can say, the inventory at the end. So right now, there should be a comfortable position. But still, they have not, you can say, overloaded themselves because they are still waiting and, you can say, seeing what exactly, how exactly the market is going. So they are right now at a comfortable position, but they have not overcrowded themselves.

Okay. Okay. And -- so just regarding these new products, there is water tanks that we are coming with, so if I have heard correctly, you have said that the CapEx spend would be around INR 5 crores to INR 6 crores. That would be both -- for both solvent cement as well as water tanks, right?

Yes. Yes.

And this is going to be in the existing -- as in did we already have a land in Dadri because you have mentioned Sikanderabad. So I just wanted to...

No. No. No. Dadri, in Dadri plant, we are already expanding in Fittings and other value-added products that we have already told in about earlier, earlier presentations also. So Dadri plant, we have -- we are working with those products, which are in line with the PVC pipes and cPVC pipes. So this product is actually a total different product. So we have installed this facility in our Sikanderabad unit.

And the land cost is included in this INR 5 crores, INR 6 crores or...

No. We already had our land in our Sikanderabad plant.

We already had that land. Okay. Okay.

Yes. Yes. We have not acquired any land.

And this solvent cement is also being produced out of that plant?

Yes. Yes. Yes, sir.

Okay. Okay. And just lastly, if -- you mentioned regarding the -- because this product -- this water tanks generally sales to our existing distribution network only. Just wanted to have some color as to -- because this -- if you see the water tanks market, as you rightly mentioned, there are a lot of -- there are many other players as well. So just wanted to have -- because, say, the unorganized market is there, but are we trying to push it to other distribution network as well to actually benefit from this so-called unorganized market being so large?

Nikhil, if you see the market -- if you see our market, basically, our distribution network, they are already dealing with this product, but they are dealing with some unorganized players who have -- we don't know -- don't have any, you can say, quality standards or we don't have any, you can say, any particular, you can say, industry standards we are working on. So it will be not a big challenge for us to, you can say, keep the shares of those unorganized players who are there in the industry, but working on an unorganized matter -- you can say, manner. So mainly, we are targeting those players only, and we are quite, you can say, optimistic regarding the quantities that we are targeting. Because we have already, you can say, taken a feedback from our distributors, and they are pretty much confident of selling the quantities. Still if the quantities are less for, you can say, any selling, we will be targeting new set of, you can say, distributors or new segments that we will be selling. But first of all, we'll be targeting same set of, you can say, customers that we're already dealing with, so that it is easier for us to sell the product without any much extra cost on the sale.

Okay. Fair enough, sir. And sir, lastly, this 90,000 capacity, this is going to be from our existing plants only, right? So if you can just break it up how much you are going to add in Dadri, how much in Bangalore and how much in Ahmedabad?

Dadri, we are targeting, you can say, addition for the [indiscernible] -- if you talk about total 90, Dadri, we are targeting around 7 to 10 kt, you can say, and Ahmedabad, we were targeting around 3 to 5 kt. And South, it will be -- total is, you can say, around 12 to 15 kt.

Okay. And what about the Raipur capacity that you're planning?

Raipur capacity will be there in the picture. We -- first, we go through this Bangalore capacity. It should be in line by the end of, you can say, first quarter, then we will be seeing towards that Raipur capacity. And we are hopeful that we can start this -- manufacturing this capacity by the end of this current financial year.

But the land and everything has been identified is my...[indiscernible]?

It has been identified, but is a bit, you can say, delayed right now. We are not in the same, you can say, line. We have identified all -- You can say, land facilities and other things, we have already identified. But right now, we are much more focusing on the Bangalore capacity. When it gets through, then you can say, later on the year, we will start building this capacity.

The next question is from the line of [ Pushkar Shah ] from [ Nippon Wealth ].

So I just wanted to ask what will be the revenue mix going forward between the traditional PVC fittings products and the Fittings and the solvent that we recently launched. What was the revenue mix?

Revenue mix, it is the same we are targeting that with the conventional PVC pipes, this should be working at the revenue of around 60% of the total revenue and balance around 20% to 25% will be coming from the Fittings and 10% to 15% from the HDPE products.

All right. Great. And the average capacity utilization currently? And the future outlook on the capacity utilization of the plant?

Yes. We are working very hard on the capacity utilization because earlier, we were, you can say, lagging on this plant. So right now, we are working very hard, and we have achieved a good capacity utilization all across, and we are targeting, right now, capacity utilization of 70% to 75% in coming days also. And we are working on the same line right now also.

The next question is from the line of Govind Saboo from IndiaNivesh PMS.

A couple of questions from my side. One was regarding the sales mix. So if we have to break the sales into government project sales and rural agri pipe sales and urban sales, so what would be our sales mix?

Sir, because as your mixing the sales that we cannot built the sales mix like that. You can break the sales mix like the trade, government, exports, and like that. You cannot break the sales like government, then agri, then rural because these are on the same line or different line. These are different parameters. So if we talk about the government sales, right now, we are having the total sales of around 10% or less than 10% from the government segment. Maximum of the sales we are achieving from the trade network. So on the product front, if we talk about the agriculture product and that other product segment, we are mainly, you can say, achieving around 60% to 65% of our product sales from our agriculture sector. And rural sales, if you talk about, again, it is on the same line around our total -- out of our total sales, around 60% to 70% of the sales is coming from the rural market.

Okay, sir. Understood. And exports would be negligible?

That is very negligible. We are working -- right now, we have started working hard on this front. So in the coming days, we should be able to see some, you can say, figures in this front also.

Okay, sir. Sir, my second question was regarding the warrant conversion. So when can we expect this warrant conversion to take place?

Warrant were to be converted in 3 different years. In last 2 years, it's already have been converted. And the third phase would be done in FY '21. So probably by first month of the year in April '20, they would be converted.

And the balance warrants, if I understand correctly, is 24,85,000?

No, sir. It is now 13,60,000. Total 34,35,000 were to be -- were issued. And then last one is 13,60,000.

13,60,000. Okay.

Yes.

And sir, what is the cash position and debt position as on 31st December?

Sir, currently, we have already INR 120 crores -- INR 125 crores have been put in FD account. So literally, [ indiscernible ] we are at 0 debt company. Whatever tax we have issued, [ indiscernible ], we are using, they are for working capital. That is around INR 25 crores.

So 20 -- INR 125 crores is cash balance or FD balance and INR 25 crores is the debt balance against this?

Debt balance. The INR 25 crores is working capital loan what we have taken.

The next question is from the line of Rajat Setiya from VRDDHI Capital.

Just wanted to understand what is the amount of CapEx that we did in Ahmedabad and Bangalore?

In Bangalore, we invested somewhere around INR 24 crores upfront, and we have installed some new capacities and new products also there. So the total CapEx will be around INR 30 crores to INR 35 crores in Bangalore. In Ahmedabad, we have spent the similar set of, you can say, around INR 20 crores, INR 22 crores, the investment we have done.

Okay. And what is the capacity that we have in the 2 plants?

In Ahmedabad, we have, right now, the capacity of 10 kt. In this Bangalore plant, we have the capacity of 12 kt.

And what does that convert into in revenue terms?

If we talk about the revenue terms, the conversion of that Ahmedabad capacity, it is around -- you can say around INR 70 crores -- INR 80 crores somewhere around, you can say that.

Okay. And around INR 130 crores...

Bangalore, it was...

Yes, Bangalore, it is a different set of products are there. So Bangalore capacity should be around INR 125 crores to INR 130 crores.

Okay. And we can expect similar asset turns for the Raipur whenever it comes online, right?

Yes. Of course, it should be in the same line, yes.

And in terms of revenue mix. Sorry, I missed it if you have already talked about it. What will be the share of fittings and taps?

It is roughly 25% around of the total revenue is coming from the Fittings segment, yes.

Fittings and taps?

Taps, you have 25% to 30%.

25% to 30%. And how much of our sales comes from residential segment? Is it just fitting and taps or some...

Yes. It's actually a bit tricky question because we don't know exactly where exactly the pipes are being used. Some pipes are used for both the application whether it is residential or the industrial or, you can say, agriculture, the same set of pipes are being used for all the these, you can say, segments. So right now, if you see the residential segment, it should be somewhere around 40% to 45%.

Okay. And cPVC share, cPVC pipe share?

cPVC pipe share is around, you can say, 5% to 7% of the total revenue.

And sir, what was this number for residential and fitting and pipes, let's say, 3 years back?

3 years back, we were not having such -- you can say, we are not such data strong, so we are increasing at a speed of around 30% to 40% in this segment. So going backward, you can say that it should be around INR 20 crores to INR 25 crores.

Okay. Got it. And in terms of our realizations in North and Ahmedabad and Bangalore, what will be the difference for us?

North being our older market, and we were very strongly working in this market for the last 20 years, so North being the, you can say, revenue side and the margin side, not as pretty good as compared to, you can say, Ahmedabad. Tumkur, we have just started. So we will be seeing in the coming days that how exactly it lasts. But of course, it will be, you can say, below the, you can say, revenue and the margin on both fronts from Dadri plant, both the plants.

Okay. And sir, just one last thing. In terms of realization, what kind of difference would you say, 5%, 10% difference or more difference, I mean, in Ahmedabad?

In Ahmedabad, no, 5% -- no, 10% is too far. It should be 5% to 7%. It should be like that.

Lower than that.

[Operator Instructions] The next question is from the line of [ Harsh Jhan ] from Centrum PMS.

Yes. Sir, we launched plastic faucets, tap and showers in domestic market. Can you say what was the response in the market? And if you could quantify in terms of volume or value, sales we have done?

Yes. Harsh, we launched this product early this year, this plastic taps and faucets. But we were new to this market, and we were not very sure that what exactly will be the, you can say, market movement for this product. So as going ahead, we saw that a lot of products were missing in our total product range. So we were adding those product range and sales team were not -- actually, you can say that sales team that we took in the initial days, they were from the brass tax segment. So they were not able to sell this product. So for the last, you can say, few months, we were working hard on increasing the product range that were missing in our product -- you can say, total product portfolio. So right now, the volume is very negligible in the, you can say, total sales. But in the coming days, we see a good growth right now in the coming days. Because we have, you can say -- we have hired a new sales team for this product segment as well as we have increased the products, you can say, whatever products were missing in this product range. You can say, we have added those products also in our product range. So in the coming days, you will be seeing good numbers. Right now, it is very negligible, so it's not good to share right now.

Okay. Okay. And sir, can you quantify how many distributors and dealers have we added in the last 9 months and last 3 months?

If we talk about the distributors and dealers, we are -- you can say that around 20 to 25 distributors we have added in the last 9 months being working hard for the Ahmedabad and Tumkur plant. So we have added around, you can say, December -- in the last, you can say, 25 -- sorry, 9 months. And dealers should be around, you can say -- because we are working hard with the existing market also, the dealers should be -- numbers should be around, you can say, around 800 to 1,000 dealers we have added in the last -- for the 9 months. But right now, the results will be seen in the coming days because it has been recently added because we have been recently adding the sales team as you can see in the sales number, that sales team we have recently added. So these numbers will be coming in the -- you can say, coming quarters. Right now, we are working with them for increasing the market, you can say, presence in the market share.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.

Thank you, all of you. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. I thank you, once again, for taking the time to join us on this call.

Ladies and gentlemen, on behalf of Apollo Pipes, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines. Thank you.