Astral Limited (ASTRAL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Astral Poly Technik Limited Q3 FY '20 Earnings Conference Call, hosted by Axis Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kashyap Pujara from Axis Capital. Thank you, and over to you, sir.

Good evening, everyone, and thank you so much for standing by. It's a great pleasure to have with us the senior management of Astral Poly Technik to discuss Q3 FY '20 results. From the management side, we have Mr. Sandeep Engineer, who is a Managing Director; and Mr. Hiranand Savlani, who is the CFO. I now hand over the floor to Sandeep bhai. Over to you, sir.

Thank you, Kashyap bhai, and thanks, everyone, for joining this Q3 results con call with you all. And I would like to take you through the business of pipe and adhesives one after the other. In the pipe business, the numbers are already in front of you. Looking to the challenges of this quarter, which was -- one, was extended monsoon. And second was a very aggressive festive season in the month of November. Still, we have delivered a good set of numbers, big growth and also with good margins. We have overall grown in piping segment in our core business of CPVC and even the PVC business and the new products. To take you through the expansion programs. We already have completed the expansion in our south plant at Hosur, new machines, which had to be brought and added the capacities and even make a few product lines, which were actually being supplied from Ahmedabad is complete and Hosur now makes complete product line of Astral Pipes. And the expansion of -- which was going on at the north plant at Ghiloth is also complete, and we have also undertaken an expansion program for double-wall corrugated pipes, which will also be complete before the month of March. But the corrugators for double-wall corrugated pipes in Hosur is completely operational. We are supplying the double-wall corrugated pipe up till 300 mm from Hosur for the south market. And in the north Ghiloth also, we have a bigger corrugated up till 600 mm, which we supply to the north and the central market. Odisha land was allotted when we were on the last con call and when we are in today's con call, the work for Odisha plant has started. The construction work has started. And we should be up and running in the Odisha plant in next 9 to 10 -- 12 months. There was a expansion program going on at Sangli plant for adding of certain product line, for balancing certain product line, for debottling certain product lines and also streamlining the operations after our takeover. And most of these programs are over and the remaining work of these programs will be completed by the month of March. Ahmedabad at the mother plant, the Santej plant, also underwent certain expansion programs of automization. And today proudly we have automized many things like packaging, injection molding operations at the Santej plant. And also some balanced capacity addition has happened at both Santej and at the Dholka plant. And we have added injection molding capacity at both the plants in this quarter, and it is up and running to feed the requirement of this last quarter. We had some balance fittings, which we had to make and we have completed this program also. These fittings are mainly for agri and certain other product lines. And today proudly, we have a complete product line. We have all the product lines with every fitting available from in-house. And we also added certain fittings for industrial use also in CPVC and PVC. The expansion program at Dholka is on to make an indigenous plant, a stand-alone plant to make complete range of industrial and plumbing valves. And this project construction is on, machine ordering is on, and we are also in the process of procuring certain molds for this plant. And we already have streamlined a range of valves for which we have procured the molds and technology from Europe. So as Astral continues, growth continues, development continues, upgradation and continuous addition of product line is on. We have been importing PEX under our own brand PEX Pro from Europe and have been feeding the Indian market. The PEX market has a positive response from the market. We have been seeing a consistent business. We are getting good growth. We are getting good projects also. And we would be making PEX in-house in a year from now. And the process for this, for the technology sourcing and for the machine sourcing, is already on and will be completed before the month of March. And Astral would be the company making the best of the PEX available in the world that is PEX-a. PEX comes in 3, PEX-a, PEX-b and PEX-c with different properties and grades. But PEX-a is the highest cross-linking and the best properties of bendability and temperature to register a high temperature. So we would be going with PEX-a. PEX-b and c are cheaper technologies, but don't have the bendability and the lifespan also of these product is very low. For PEX, we are going with one of the best technologies. Silencio has got a very good response from the market. It is consistently growing. We have been getting good export orders for Silencio and Silencio capacity addition is on. So we are going to double the Silencio capacity a year from now. And we have almost finalized the sourcing of the machines and also have made the necessary ordering of the same. So there, we have a good response. The capacity would be doubled in a year from now because the machine takes a year to get it really work. Overall, the clamps, hangers and a lot of other product installations, which we source and sell to complete our buffet are also getting good response. So as Astral right from the electrical pipes to the plumbing pipes, to the infrastructure piping, to the fire pipes, or fire sprinklers, all the product line has got a positive response of growth from the market, and it is continuously developing. We are also running certain programs, which have got good response in the plumbers programs, the dealer attachment programs, and we are also working on a lot of other systems, which would be helping the network to move fast for distributor connect, the customer connect, to service the -- how to attend to the customers, all these programs are on and these are also giving positive response. The branding activity, as usual, Astral is on -- it's best to do its branding activity, but I would proudly say that from the month of April, already it is in public domain that we have the new brand ambassador joining us and he is Ranveer Singh, who will be our new brand ambassador for the next 3 years from now. And we are also proudly going to be the part of the Mumbai Indians teams this time and Kolkata Knight Riders. So that is also going to be there from the first quarter that is major planning activities. And with the brand ambassador changing, we will be taking a major brand initiative activity in 360 degrees. Our DWC pipe averaged good response but due to the lower spending, we have not grown in that pipe. But from this quarter, we are seeing a good number of orders and growth. And next year, we will be seeing very, very positive growth in this product. But the other good thing is we have opened this DWC pipe in our retail -- in our distribution channel for the nongovernment business, where we have got a very good response from the market. And that market segment in the next 2 to 3 years will be also developing and will be equal to the market segment of our supplies for infrastructure to the government projects. So other things on the piping side, I would be answering your views during my question and answer. But overall, the piping business has been a very, very positive business and growth and overall, has been helping us. Everybody would have been -- would now like to know about the CPVC situation for Astral, the supply detail to dumping and a lot of things going around in the market. Astral in CPVC is very, very secure. We have never gone with the countries where the antidumping has been there. We have gone with multiple sources. We have gone with good suppliers. Our suppliers have been positively supporting us with the supplies being -- taking a rationalized way of pricing and Astral has been always -- been positive in getting the supplies, the stocks, the inventories and would maintain a continued growth on CPVC and will have a continuous supply on CPVC though anything or any situation arises due to the government legality of antidumping or anything is imposed. And Astral sits on a very, very strong position on CPVC on its supplies and pricing and to feed the market. And Astral also makes best of its product in CPVC, which is now NSF, which is all our plants have CPVC, which are NSF-approved. And all our products are NSF approved. Our pipes are NSF approved, and our fitting is also very NSF approved. So Astral has a lot of positives about CPVC. And if you have any questions again, I would answer it during my question-answer on CPVC. Adhesives, I know, everyone has a great concern and questions about the adhesives. But I would like to clarify that we have -- get behind whatever was to be changed, every change has been done. In the last quarter, we did have a positive impact on growth. But as we made the structural change in the first 2 quarters and due to the structural change, we had to -- we had some goods, which we took back from our change in the distribution pattern, the distributors who were discontinued and all these did effect negative on the growth. So overall, growth we came to -- we could not grow. We just had a flat growth, but actually, the structural changes put behind it is done. We have a new channel, which actually was the secondary channel. We were already connected with them. We are adding more to this channel and this channel is fully active. We are getting consistent orders. We are getting consistent growth. Even in this quarter, we have done very good in the first month, and we should continue to do the same. But I would assure you that our margins are good. It would be always -- it will be even better off in next year, quarter-on-quarter, and we'll be back to our EBITDA levels of 18%, 19%; 17%, 18% in the adhesives and even more, and the growth will be back. And we would be pushing the products through the market in the right way in the right directions and to the right customers. The adhesives business also has verticals. We have made changes in the drivers of the business. We have brought in good talents from the market. We have very good senior people, who are driving the company in the right direction. We have a very good senior people in the R&D at the plant level. So many, many corrections have been done in last -- over 1 year. And all these are giving us positive results because we have added many products which were not there in our stable, in the white glue section, in the epoxy silicon, in the silicon, in the cyanoacrylates, in the hybrids. In the construction chemicals, we are filling the gap. So we have been taking a lot of positive steps in seeing the business growth and we will reach to a next level, and we are committed to this business. The change which we did in -- structural change, which we did, was a change where we were undergoing a process of understanding a business because this business was acquired, and we did not create it, but all these changes and all these ups and downs have brought us more closer to the business and have given us in-depth knowledge of the business, which is now helping us to guide it and drive it in the right direction. And we assure you of a good year next year, and we assure you that we will be riding high in all the ways in this business like the pipe business in coming quarters to come. Kenya plant is on growth. It is in 20% plus growth. The cash losses are not anymore. And we have been doing good. We have added some product lines there which Astral makes here. And overall, there is a positive result from the Kenya plant, and we have some assets which were unutilized, the land, huge land we bought to expand the plant, which would be not utilized at least for next coming 3 to 5 years. And we have -- we are disposing those assets, and this will help the Kenya plant to reduce the interest burden to a huge extent. And so next year, the Kenya plant will see positives, not only good growth in EBITDA, but also in the bottom line, in the net profit. So overall, Astral is committed to its -- both the businesses and all the plants. The U.K. plant is stable, growing at consistent 10%, doing good, the margins are stable, the EBITDA is stable and U.K. will still continue to grow. And the Brexit effect is going to be positive on the U.K. plant for growth and improvement of margins. So Astral is committed to its overseas plants, businesses, pipes and adhesives, the Indian businesses of adhesives and also the pipe. And one more thing to add, the last thing before we move to Hiranand bhai and then question-answer is, we've just got a clearance from the environmental site clearance for our Dahej land for the Astral adhesive business, the Resinova and we would be starting to put a state-of-art adhesives plant at Dahej in next year. And we would be making most of the chemical products, which have the long-term growth prospects as the land is big and it's the chemical zone at Dahej. And in next 2 years, we'll be completing this project at capacities and make a state-of-art adhesive plant and R&D center at Dahej. So thank you very much for joining this call. I'll hand over the con call to our CFO, Mr. Hiranand bhai Savlani, and then we will move to the question and answers. Thank you very much, everyone.

Good evening, everybody. I think numbers are all with you. So I will quickly take this through the number, and then we will move to the question-answer session. So the top line growth of this quarter was roughly about 6%, and the EBITDA growth of this quarter was 22.6%. On a 9-month basis, the top line growth is 12.5%, and the EBITDA growth is 23.26%. So as communicated earlier also that our focus is that the top line -- compared to top line growth, the EBITDA growth should be higher. So thus that same we are maintaining this quarter also that our EBITDA growth is much, much higher than our top line growth. PAT growth is higher because of this tax effect also in the current year. So that's why you can see that the PAT growth is 30% in this quarter. On a full 9 months basis, it is close to about 47%. As far as this volume is concerned, the volume growth in this quarter -- overall volume growth was close to about 15%, including Rex numbers. And if we remove this Rex effect, then the volume growth to this pipe business was close to about 6.5% kind of level. Now coming to the -- most of the point I think Sandeep bhai has covered. I just wanted to highlight what are the going forward scenario for Astral in terms of piping business, Rex business, and the energy business. In this quarter also, as usual, we have kept the working capital cycle very tight. We have reduced our receivable days in this quarter also. On a consolidated basis, with Rex and the piping business, our number of days receivable has come down from 31 days to 26 days. So we have reduced that day. So in this tough environment, also, we would never ever diluted our working capital cycle. We are very, very closely monitoring the working capital cycle. And we are targeting that. From here on also, we will try to slightly improve, but now the scope is very limited. So we -- our ultimate target is 20 days. So we may be close to about 20 days in the next year. Now coming to the growth side, the piping business is continuously giving growth. You can see in this year also close to about 17% growth is there into the piping sector in 9-month basis. But the only lacking part was the adhesives business of Resinova and the Rex part because Rex was not able to grow because this project activity is very slow. And secondly, we were doing a lot of systemic correction into the company because of the acquisition, we wanted to streamline the system into that company. Also, we implemented SAP and everything to that company. We wanted to streamline the receivable cycles also. We have brought down the receivable cycle to below 60 days in the Rex also, which is a very, very big achievement for our company. So the Rex was working on a very, very high receivable days. So that we have controlled very well. And going forward also, we will see that how best way we can improve this cycle also when again, the business will start growing from here on because now we are seeing a good attraction into that business also. And January was very good, I can say, for the Rex also. Now coming to the Resinova side, Resinova on a quarterly basis, it was a 2% kind of growth. And on a full year basis still, it is a minus 5%. So Resinova has not contributed this year to the top line, but the silver line is that what Mr. Sandeep Engineer indicated that the legacy issues are done now. So whatever the sales return we wanted to take from the system that is being done. And from last 2 months, from December and January, we are seeing a double-digit growth into the Resinova also. But still, I am again cautioning that still, we are in a correction mode in the sense that the return part is over, but new distribution onboarding is taking place because once you remove the stockists, all the distributor will be dealing with you directly. So right now the KYC process is on and we are fixing up the limit for each and every distributor so that work is going on which may take some more time to come back to consistently a double-digit growth. So there may be up and down, but at least we are positive that this quarter also we will be ending at a very, very positive note into the Resinova side also. Another good part is that on a gross profit margin level, Resinova has increased the gross profit margin to the tune of 400 bps. So like we were working on a 37%, 37.5% gross margin in Resinova. So right now, we are working close to about 41% gross margin. But that gross margin improvement was not converted into EBITDA, mainly because of the structural correction, and there was no growth so our fixed overheads were continuously increasing. Because of the launch of a lot of new products, we have added the new senior people in the team. We have added the junior level people also in the marketing side. So our salary costs have -- shoot up. Because of all these things, it is not converted into EBITDA. But we are quite confident that in the coming quarter, you will see that this 400 bps improvement into the GP margin will definitely go into converting to the EBITDA also. As far as the antidumping duty on CPVC, Sandeep bhai has already explained in detail, which is going to consolidate the market, a lot of small player, which were disturbing the market, particularly by importing the Chinese goods and all, that maybe the history in this coming quarter. So we are of the view that the CPVC growth will be also a good growth for companies who are a brand. So we will be getting benefit out of that in the coming quarter also. Odisha plant is almost working on a full fledge and hopefully, we are targeting that we should be done by December. So some benefit we will see for the Odisha plant in Q4, like you see the Ghiloth plant coming to the north, we have saved a lot of logistic costs and other overhead. So that is also helping us to improve our margin. And this Odisha plant will also help us to improve in our margins in the going forward once it will be operational at a certain level of capacity utilization. Rooftop solar system, which we communicated earlier. Now I think almost on the verge of completion. And you will see the benefit of that from the next year because we are targeting to complete this by 15th of March, safely we can say by year-end. So you will see the benefit of that power saving from the next year Q1 onward. Further, the capacity utilization right now, we are working on a 60% capacity utilization. So a lot of space is available for the utilization once this Odisha will have been done. I think we will be focusing to improving the capacity utilization. We are targeting to take it to 75% to 80% utilization. That will help the company to improve all its ratios, including ROCs and all this thing. So that is going to help the company in a big way in the next year onward. And the incremental CapEx will be substantially low from the next year onward. As of today, the consolidated basis, the net debt position of the company is only INR 140 crore, which we are observing that next year, we will be in a position to almost pay off that thing unless and until there is somethings like acquisition kind of opportunity or something can come then is the different scenario. Otherwise, we are of the view that by next year-end we'll be close to have our [ debt-free ] company. Now with this, I'm opening up the question-answer session.

[Operator Instructions] Our first question is from the line of Ritesh Shah from Investec Capital.

First question is for Sandeep bhai. This is on adhesives. Sir, it has been like 3 quarters we haven't seen much of growth. You did indicate in the last quarter as well that we are getting new management in place. We have done away with the stockists. I do understand the return sales phenomena is behind. But what worries me is when we say that it will take time for us to reach in double-digit growth rates. So I wanted to have a view here? And secondly, we have had a lot of new people at the senior level. How does the management structure look like? So earlier, we had the same distributors who are looking at multiple chemistries. So now do we have new management, which is responsible for each chemistry and region? How is it plays from a management perspective?

See, Ritesh bhai, the first question is we have -- the growth being double-digit will be seen from next year first Q1. We don't want to push and do sales, we are equally -- with the addition, we are equally trying -- we are not trying, we are doing -- we are maintaining our cash cycles. We are adding distribution. Addition is going on. It's almost complete, I can say, but distribution addition is never completed in any business. Even in pipes, we had distributors and we have been adding everywhere. And we have a target also in pipes that we should add so many new distributors and cover the regions every year, more and more regions. So here, the channel settlement or the change is almost -- it's done. It is on also, and it is showing good results. We have been getting very positive results because we are now monitoring the [ secondary ] sales by ourselves. And we are trying -- we are always selling the product to the distribution channel, it's a channel, which is facilitating the sales to the secondary dealers and users, and we are only selling products to them, not to overburden them with stocks, which goes to the actual user in the market. So that is setting up well and is doing well. I'm assuring you that double-digit growth will be back soon and with the good numbers. We have hired a senior at higher levels, and we have separated every chemistry, both in the verticals of sale and also in the distribution channel. Formally, the same distribution channel was doing good also, construction chemicals also, maintenance also. Now the maintenance distributors are doing maintenance, the construction chemicals, we have new distributors, and for the wood we have complete new channel. And this is working very well. This is picking up and all the heads who work for each channel are separate. And this is actually the org chart for us, has been very, very nicely devised now, the way things work for marketing, the way things work on sales and the way things work on credit control, supplies, logistics, depots everything. So the channel lever systems, the management, the people at the top, the people at the right bottom of the pyramid are all set and are all knowing what they would have to do? What they should do? And how they should do? And how they should reach to the market? And how they should sell. And it is giving a very, very positive result in growth and margins. And I would give you -- I assure you that we would be back on a very good growth, and we would, mean then like in -- on a racing track where we have gone behind but we'll cover up, our car will cover up the distance and will be way ahead in the next year on this front.

Further, Ritesh, what Sandeep bhai has said, I can add you that any business when they do the structural correction, it cannot be defined that it will be done in 6 months or 9 months. So it happened that one quarter plus/minus can also happen. I remember when we acquired the Resinova, the entire street and entire investor were very disappointed with the acquisition. The moment we delivered the 1 quarter, the entire mindset of the community changed. So it happens that sometimes when you are doing a structural correction, it takes some time also. And structural correction are always painful. It's not a easy thing. And that is the reason we always caution the investor community well in advance that we are going to do all this correction, which will take some time because of that, some numbers will be affected. So we are always transparent to communicate the industry well in advance. And it's not that we are not working, we are working very hard on that side but it's a question of time. In my initial remark, I already communicated with this structural correction, 400 bps of GP improvement, which is not a small thing in the industry. And you see the -- compare the number of the PRs or leaders in the industry of adhesive, everybody is struggling for the growth in this environment. Under that also if we have maintained our EBITDA, we have maintained our top line itself at a internal level, we feel that we have done a good job. So it will take some more time. But yes, we are quite confident. Your concern is also a valid concern that, yes, adhesive should grow faster rate. But yes, it's a question of time only. Now we are almost at the last leg. Hopefully, in the coming quarter, you will see a positive response.

I would only like to add someone -- up here that my 70% to 80% time goes in this business. And the pipe business is now more -- handled mainly by Kairav, my elder son, and only strategic decisions I enter. I'm in and out in adhesives, and I'm enjoying it with my younger son Saumya, who is also handling the thing. And I assure you that what I've seen and I've got into the deeper because after acquisition due to the changes in Astral in the CPVC product lines, I was very busy 2 years in getting -- stabilize the new CPVC product line and CPVC Pro. But everything is doing great there. I'm maintaining it. I'm -- in pipe business for the key decisions, but I'm in and out in adhesive. You ask any nook and corner what is going now, I'm aware of it. And when I'm aware of it, I would tell you that I know how to deliver the results, and I will be delivering it very soon to the market, and I'm sure about it. Thank you very much.

Sir, my second question is, you indicated in the initial remarks that we'll make chemical products at Dahej land. Sir, can you details this?

We're not making chemical products, we'll be making adhesive products. Because we have an agreement that in Kanpur we have 2 plants, Unnao and Rania. And we have a agreement when we acquired Resinova, the Unnao plant at the seventh year, we have to hand over the plant facility, the land and the building towards the owner Vijay bhai. That falls in November 2021. So we will be -- Kanpur will then run only one plant, Rania and the Unnao facility product line will be shifted to Dahej. Okay, it's clear?

Right. Sir, what is the kind of CapEx that we will have over here?

We have not finalized it. As soon as we finalize -- in this quarter work is on, we'll let you know in the next con call after this Q4 ending.

[Operator Instructions] The next question is from the line of Madhav Marda from Fidelity Investments.

I just wanted to understand the reason for our gross margin expansion? Because if I look at the peers, including the larger peer in the industry, he's also seen a positive gross margin expansion. So is it raw material prices declining? Or is it better pricing when we cut the discounts that we were earlier offering on some of our products, what's driven the expansion?

So both are contributing to that. Some -- the raw material side also we are getting and at the same time, we are improving our realizations also. At the same time, we have done a lot of structural corrections, logistic things and all these things that is also contributing. I don't know whether you were there in analyst meet or not. Last analyst meet, we were just focusing on to that side only, how we are transforming the company to the systemic approach kind of things rather than a human dependent approach. So that is also paying us a lot. So I think with this another Odisha plant and all will be added, that will be the -- further added to that side. And in piping industry, logistic play a very, very important role. So that is helping us in a big way.

Got it. Got it. And sir, on the adhesive side, just one other question that -- if I look at the distribution side for adhesive, it's a very diverse distribution channel across plumber, construction, chemicals is very, very diverse. And there are players, including large ones who spent years setting up the distribution network. So how challenging are you actually finding it penetrating into this market? Because there are people who have done a lot of market development activity, especially in the construction, chemical side for the last 10, 15 years.

Basically, we are already a brand, Astral. We are already penetrated not from today, we have 20 years in plumbing. So we know plumbers. In construction, chemicals, we are -- our -- if you see our product buffet even in adhesives were -- it is used in that 4 walls of the house. And in 4 walls of the house, the brand Astral is known. So penetrating with the backup of such a strong brand, you can always see the change other -- the smaller guys or the other guys and Astral people take -- people want to join us. People want to be our distributor. Now people want to sell our products. And we are also equally keeping good quality. We are equally in the branding activities. We are doing good servicing. Our logistics are good. A lot of things couple for a brand to grow. And we are doing everything for that -- for the brand to grow. We don't say that only a branding activity helps. We are doing everything which helps the product to grow. So for us to find distributor or for us to get into the market, and for us to develop the market, I feel is much, much better and much easier. And I don't say other brands cannot do it or are not doing it, but we are doing it in the right way, and we are getting the results out.

The next question is from the line of Saumil Mehta from BNP Mutual Fund.

Sir, first question is, while we've seen because of the raw material benefits, the all-time high margins, both on gross as well as EBITDA margin, from now to maybe over the next 2 years, is this the peak of the margin, and we would like to distribute more of the incremental margins to gain more market share? How should we look at the approach between market share and profitability over here?

So I think even last quarter also, we were thinking that this will be the peak margin. In fact, in our commentary also, we said these are the high-margins. But the market is giving opportunity, so we keep improving our margins. And again, logistics thing and all that is also adding to the margin side. So it is very, very difficult to define that these are the peak margin. We are open on both side. If the opportunity will be there, we can improve the margin also. And if the market scenario demands where we feel that now there is compromises happening to the volumes and all the side and we have to drop the margin for 1% or 2%, we are ready for that also. So it is not that this is a peak or this is the bottom. We will act as per the market requirement, and we are not choosy only for the margin improvement. But at the same time, we don't want to lose our market share also. So for maintaining our market share or improving our market share, if we have to sacrifice some margin, we are always ready to sacrifice that.

So basically, what I was looking at, especially on the PVC side, you've seen a lot of competition coming over the last 2 years while -- between us and Supreme and some of the larger players, margins are really very healthy, but volumes aren't coming through for an industry as a whole. So is it because of, in general, softness in demand? Or are you seeing some of the smaller players looking at this profit margin have come to the industry and actually taking some market share at the bottom of the pyramid?

It is both. We are taking some market share from the unorganized player also, at the same time, a lot of stresses there onto the organized side also. You see a lot of organized players are facing problem because of the quality of the balance sheet. Because they are not getting funding from the bank, PSU banks are not ready to fund a smaller player. So it's a combination of both. We are taking some share from the unorganized side also and at the same time, organized players also. And also, continuously, we are increasing our product basket. Secondly, we are continuously decentralizing our businesses. We started our journey with west, then we entered into south. Then last year, we are -- we entered with the plant in north, now we are entering into east. So that is also helping. So it is not a one thing which is driving to the growth. It's a combination of all. And you see that even if economy is not that -- growing that pace and market is also, particularly the construction side is slow, but still, we are growing. In 9 months, you see, our numbers are still healthy number.

Sure, sure, sure. Sir, my last question on the distribution of adhesives. In terms of retail touch points, where they would be? And over the next 2 to 3 years, what is the kind of growth we can envisage?

Can I give this picture clearly in my next con call after Q4 and in the analyst meeting because I would be better off there? I don't want to give any hazy pictures at present. But we are -- your question is right, and we are exactly working on this, and we will be giving you a very detailed presentation on this in the next Q4 results.

Perfect, perfect, perfect.

And it will be a very clear picture for you. But we are doing all these things very positively.

Our next question is from the line of Praveen Sahay from Edelweiss.

Is it possible to give Rex sales number, sir?

I think now it is merged. So we are not sharing the number of individual products.

Okay. And as you had said that 6.5% in the stand-alone volume growth. So we have seen a good double-digit growth in the Rex volume?

No, Rex would degrowth in 9-month basis.

I told in the opening remarks, Rex sales actually degrowth. So that tonnage, our PVC, CPVC tonnage growth has been little taken over by the Rex degrowth. One is, there is a slowdown in the infrastructure project usage. And second is Rex, we had to go through a correction of the creditors aggregator cycle, where we took some hits on orders, but we need to correct that in cycle. We ended up to degrowth in Rex, and we will be back on growth from this quarter and coming quarters.

Okay. And also, you have given a detailed explanation regarding plant wise. So can you give like currently, we are at 221,000 metric tonne. So after completion of all the 3 major things, like Odisha and Sangli and Ahmedabad, how was the expansion -- the capacity expansion you are expecting?

I think it will be 250,000 metric tonne.

Okay. And south plant at what level of utilization currently?

Which plant?

South plant, sir.

South, in the original capacity level, if you see, it is close to about 82% utilization -- sorry, 80% to 82% kind of utilization. But now with the new addition of capacity, which we have done in the last quarter, it will be lower.

Our next question is from the line of Devansh Nigotia from SIMPL.

Sir, my question was predominantly related to CPVC pipe and the competition, which is coming up. I think we -- when we look at the agri players, who are also showing strong scale-up of CPVC pipes.

Devansh...

Hello?

Yes, yes, carry on.

Yes. Yes. Sorry, sir. Sir, I mean, even they are showing strong scale up in terms of their pipe segment and our volumes are flat. And even some of other building material player, they have been able to scale up, though a very small base, but a sizable business. So then if you can just elaborate on the competitive strength, which will prevent them from hurting our margin, maybe not today but over next 2, 3 years? And then you can -- if you can just throw some light on that.

I don't understand what the question is that? Our margins are not affected at all. [ Our margins are ] lifetime high.

No, no. Sir, not -- sir, my question is not in context in today. But I mean, as in today, we are in the phase that CPVC pipe, the opportunity is also growing, and it's a growing market. So maybe not today, but maybe like after 3, 4 years when growth moderates, do we see a margin risk over there? So the question is not related to what -- of course, our margins are at lifetime high.

See 3, 4 years scenarios can be predicted, but we need time and prediction of a 3- to 4-year scenario. See, one thing is that India is 1.3 billion people, and housing is going to be there, always been here. Going -- if you go back in the history, many slowdown scale. And every slow down our -- in our con call, there was a question, what will you do? How will you grow? What will you do? How will you grow? I remember, 7 years, 8 years back also 9 years back, the same things have been happening. And still, we have delivered the results because the country itself is going to grow. And you see, we are not iPhones or we are not very big technology people that every time the tech -- the pipe is going to be round, the elbow is going to be elbow, whether it was in the Mohenjo-daro time or in the future. And the water is going to flow through that. Technologies are -- if you see the technologies today, the researches -- or CVPC, the vinyl chloride is polyethylenes and the -- these are the 2 polymers which the world has developed. There's nothing other going to be developed. If there are bio things coming or anything coming, it will be happening only in the next maybe many, many years to come, bioplastics. So I don't see any issue of 3, 4 years about anything. And especially with the strength of the brand we're growing day by day, I think we'll be on the solid footing. If we do the right thing, one, if we keep our financials right, two, which we also know. And if we do the right expansion. And even if we keep on adding technology, that's why we are seeing visions of 3, 4 years in bringing in Pex. We're always the first one. We brought Silencio 8 years back. Nobody -- people were laughing at that time. Why this [ Silencio ]? But today you can see Silencio this year will be a very good market and very good numbers we'll deliver after March. Basically this is growing at 30%, 40%.

I mean, when you see that the post antidumping, on the contrary, CPVC, whatever the number of players are there in the market today, it is going to go down, not going to increase in the CPVC side. We are on the contrary, positive of that side.

As Astral, I'm very happy with this correction, because now I will be piping with the right people because I was paying the right price, I was making the right product. I was taking the right price. Now the others -- other brands, I don't want to name the brands, who are selling 15%, 18%, 19% lower than me, which are bigger brands and names and you know all these brands. They get material costlier than Astral. So they will have to come to my level. Or they will have to come to near to my level to maintain their margins, maintain their profits, maintain their growths. And if they don't -- if they come to my level, I'm sure that I would have a preference above them, because I deliver the best products, I'm making the best products. And I'm a better brand in any context. So I'm happy that the rationality of pricing is going to help Astral for its future and for its growth and for its stability and for its margin in years to come. It's a very good initiative to get all the pricing at one level of the raw material which is going to happen. Actually, we being with others will have a little edge of benefit than the others who have not been -- been working only on China or Korea. So that's a move for us, Astral. If you do the right analysis of numbers, we have -- and as a businessman, I'm very happy about it.

Okay. And sir, just a follow-up on that. Sir, the backward integration in terms of the compounding that we started producing ourselves. How much delta on margins did that give to us?

We don't share individual number how much delta is generated by compounding and how much is the final products. But you can see from the number, it is definitely helping.

Generally, if you -- it is obvious. If you go backward and backward, you always get benefited. And secondly, you are in control of your product. Thirdly, you are making the right product, you are in control of your raw material supplies, you can even source the right raw material and save on that, so it is always going to be beneficial in many ways for us.

The next question is from the line of Maulik Patel from Equirus Securities.

Sandeep bhai, just -- if you can give update on this antidumping duty on -- I mean, 6 months has passed. What's the status now?

It is almost finalized. The order has been -- the orders will be through any time and they have maintained the same duty, which was provisional.

Okay. Sir, now this time...

But currently budget is...

Once the government has been -- this commerce department gets this thing, it goes through the finance and it becomes an order in the state. So it's a process, which is -- it should be through. But in this process also, people have to pay the same duty, which is there.

Even people are paying the provisional duty with the expectation that some reversals will take place, but that is not going to be reversal. So whatever the provisional duty paid, it will be treated as a final duty.

Because the order was very clear. If the final duty would be lower than the provisional, then only it would be refunded. But the final and the provisional are the same actually.

Okay. And this will be applicable for now 3 years?

Normally, it takes 3 years, but it depends on the government to take the final call.

Okay. Okay. I got it. Second question is on the CapEx side. What kind of CapEx we have done so far? What we envisage in this -- the remaining quarter? And what's the CapEx for the next year?

So like in 9 months, we are close to about INR 140 crores or so. And next year, we are projecting somewhere around between INR 75 crores kind of level to maybe INR 100 crore. Because now we are working on this -- some backward integration into this adhesive also with this Dahej facility. So we are working actually for this adhesive side. But roughly, it will be somewhere around INR 75 crore, maybe on a upper side INR 100 crore.

But adhesive in Dahej also, we have 1.5 years. We are almost more than 1.5 years. So we'll be moving one by one chemistry, and adhesives does not take a huge CapEx. We'll be doing it in the right way. We would not be going and making a INR 200 crores, INR 300 crores [ world class ], like a bombshell facility. We are very cautious about our moving ahead investment, and we would see that it is done in the right way, matching up with the margins of the adhesives business and the growth book. We will not be doing any activity blindfoldedly.