Huhtamaki India Limited (509820) Earnings Call Transcript & Summary

Good afternoon, everyone. On behalf of ICICI Securities, we welcome you all to the Q1 CY '23 Earnings Conference Call of Huhtamaki India. Today, from the management, we have Mr. Dhananjay Salunkhe, the Managing Director; and Mr. Jagdish Agarwal, Executive Director and Chief Financial Officer. I would now like to hand over the call to the management for their opening remarks, after which, we can open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Hitesh. Good afternoon, everyone, for attending the call. I'm Dhananjay Salunkhe, Managing Director of Huhtamaki India, attending this call along with our CFO and Executive Director, Jagdish Agarwal. Let me start the presentation by drawing your attention on our safe harbor statement included in the presentation for good order's sake. So a peek around the Huhtamaki India's background. So Huhtamaki India is a leading provider of the primary packaging and decorative label solutions in India. We are part of Huhtamaki Oyj, a global leader in sustainable packaging solutions, over 100 years of legacy and Nordic heritage. We have been consistently growing since 1935. So Huhtamaki has been packaging, packing memorable experiences together with our customers and partners. Today, we are an integrated flexible packaging solutions company with a pan-India presence backed by 15 manufacturing sites, 1 R&D center and 5 offices. A bit on Huhtamaki Oyj. Huhtamaki Oyj is a global leader in sustainable packaging solutions with a Nordic heritage. With the innovations and a transformation at core, the company is steadily pursuing a 2030 ambition of achieving carbon neutral production and making all its solutions recyclable, reusable or compostable. So coming to the March quarter performance. So company faced challenging external environment, with overall demand impacted by continued pressure on consumption, [ more ] predictable supply chains, which are evidenced by destocking and inventory pipeline corrections by our customers, and return of demand seasonality. So overall, sales declined due to lower volumes. However, company has been able to realize value for its products by increasing our relevance to the customers. So in spite of decline in sales, EBIT and EPS improved due to better portfolio and price management. And we continue to invest in our operations and technology to innovate and develop fit for purpose, sustainable packaging solutions. So we are redefining the possible with game-changing sustainable packaging solutions, setting new industry standards. So under our Blue Loop brand, we have developed fully recyclable, mono-material structures for flexible packaging. What is unique about this solution is the combination of best-in-class protection in packaging which is fully recyclable and being fully affordable globally. And these structures or these products will be replacing conventional flexible packaging with completely new structures, suitable for a broad range of demanding applications in food, beverages, pharmaceutical, home and personal care and industrial applications. And these innovations will help our customers in delivering onto their commitment of using only recyclable packaging by year 2025. Many of our key global customers have independently pledged to drive fully recyclability and circularity of packaging. And with our innovations, we are helping address this need. Similarly, we are also making good progress on our strategic priorities, which are delivering customer excellence, developing new innovations, driving world-class operations and embedding sustainability in everything we do and developing a talent [ which by ] to execute our strategies. And during the quarter, our labeling innovations have been recognized for their outstanding quality and excellence by the India Star Award. These pressure-sensitive labels were recognized for their unique features, which are metallic and tactile finishes and security features and also for innovative 2-layer requirements, which are for tablet packaging. Similarly, our PP-based laminate for specific product category like chocolate and transparent barrier for a snack pack won the SIES SOP Star Awards. So these awards are a testament to our focus on delivering packaging excellence to our customers in product development, innovation, creativity and sustainability. These recognitions are also a reflection of the collaboration and collaborative efforts our teams are doing along with our partners, to help brand owners in terms of personalization, sustainability and improving accessibility in the packaging area. Now I would like to hand over to Mr. Jagdish Agarwal, our CFO and Executive Director, to walk through the financial performance.

Thank you, Dhananjay. Good afternoon, everyone. I'm feeling excited as we are recording this call after a long gap, and I'm sure it will help to strengthen our communications with our stakeholders. I will walk you through our March quarter performance. Notwithstanding a challenging environment in March quarter, we have been able to maintain a steady bottom line during the quarter despite of Y-o-Y decrease in the top line by 9%, which stood at INR 6.46 billion for the quarter. The decrease is mainly attributable to volume pressure. However, softening in inflationary pressure and improvement in operational efficiency partly helped to [ dis ] the price versus cost [ hit ], leading to an improvement in margins. Even though EBITDA at INR 576 million [ went back ] for the quarter in terms of percentage of sales Y-o-Y, EBIT at INR 420 million is higher at 6.5% of sales compared to 5.8% year-over-year. And this increment is majorly driven by lower depreciation due to revision in useful life of fixed. Profit before tax at INR 352 million, slightly better on a Y-o-Y basis. Working capital efficiency helped to reduce overall borrowing and in turn, lower finance costs despite increasing interest cost. Net profit for the quarter at INR 355 million has improved to 5.5% of sales, driven by one-off reversals of accrual for an unwritten tax provision on account of favorable tax ruling. EPS for the quarter at INR 470 paise is higher by 44% year-on-year basis. We have talked about the top line contractions; in fact, Dhananjay has emphasized the top line contraction, and that's mainly because of volume. And it was due to multiple factors. And having said that, this is also one of our key priority by targeting responsible and profitable growth business. Except top line, if you look at all other financing indicators for the March quarter are pointing upward or positive trend, be it EBIT, which is at 6.5%, PBT at 5.4%. And if you talk about profit after tax, it's around 5.5%. The company even committed to its stakeholders, focusing on technology-enabled innovation and operational performance and realization of value for its products by engaging [ onsenty ] with our customer. We believe this will help the company remaining competitive in the long term to drive responsible and profitable growth. With that update, I will hand over the call to Hitesh for Q&A session. Thank you.

[Operator Instructions] Our first question is from the line of [ Manan Poladia from MKP Securities ].

Congratulations on a good set of numbers. Sir, my first question is based on the press release, the disclosure we just put out about the liquidation of the land in Thane. Is there any ballpark number that you can give us as to what will be realized by that liquidation?

Okay. I'll take this question. So it's very difficult at this point of time to talk about any ballpark numbers because it's still -- I mean, if you look at we had [ released a booklet on ] disclosure on 17th of March, and one of the times are engaging in the good reason for this is going on. So [ we're saving ] numbers for a time.

Okay. I understand sir. Also, another question, regardless of whatever the proceeds are from that day. Do you intend to utilize them to pay back the long-term loanings that you have from the parent?

Again, it's too early to comment on that point. But definitely, once we'll get into sort of a certainty over the transaction. We can work it out what is the right uses of that consideration.

Okay. I just have another follow-up question on that. My question is, sir, do you -- like for the next year or 2 years or so, are there any CapEx lines in the offing whatsoever? Or any acquisition like -- it could be either CapEx or acquiring other companies, whatever will be the case.

I think CapEx is a basis of ongoing sources and you continue to invest for second level based innovations, and we are doing that, and that's going on already, and it will continue to be in that CapEx mode. But anything talking about acquisitions at all at this sort of time, at least we are not in any such acquisitions.

[Operator Instructions] Our next question is from the line of Priyank Chheda from Vallum Capital.

So my -- I have a strategic question. So we have seen flat volumes in whole of CY '22 while most of the OEMs that we track have grown in terms of value or -- and even in terms of volumes, plus they have aggressive plans to grow further. So in this context, I mean, what are your long-term growth plans? And we, as an investor community, how do we track that your growth plans are aligned with your OEMs?

Yes. So one thing -- let me share our strategic position. And we position ourselves as a solution provider to our -- all the OEMs in terms of innovative and sustainable and differentiated product structures, which helps them, our brand owners, to introduce their product into their respective categories. So coming to your first question, which is the flat volume growth. Yes, we observed that there is a very accelerated commoditization, which is happening, and that is where we are creating a differentiation by introducing and by launching the new innovative products, and that is where we are launching the blue loop, which is the differentiated mono structures, which will create a differentiation in the market. So these are the product lines which are strategically positioned to take care of the future.

Right, right, right. Yes. So Mr. Dhananjay, so you've been appointed in this company over the past 4, 5 months. I mean, I would be glad to hear what are your priorities in the near and long term? And how are the strategic coming or talks going on with the parent? How do they look India as a growth opportunity as an engine for the [ group ]?

Yes. So a very good follow-up question. Wherein our parent definitely sees India as a very exciting market, because the next new 1 billion consumers are going to be here. And our recently, in fact, coincidentally yesterday, we had our global Huhtamaki Oyj has updated the strategic intent in terms of our 2030 ambitions and strategies. And our strategies are clearly aligned with our parent strategies. And essentially, what we are focusing on as a strategic priority is one, overall, enhancing our customer experience, that is customer centricity, then driving innovation, then accelerating our world-class operations. So these are the 3 clear strategic priorities what we have articulated. And along with that, in order to execute those priorities, we -- the enablers such as talent pipeline and digital. These are the enablers which we are driving. And these are consistent with our parent company.

Got it. Got it. Last question. So over the years, we understand that the raw materials have been -- I mean, have been volatile. So how do you see your gross margins moving ahead directionally and even in what would -- if you can share what would be your long-term targets, where do you see your gross margins settling down from the highs of 32-33, we are down to 26-27. It would be great if you can highlight on that.

So commenting on directly on a gross margin would be kind of speculative, but at the same time, to answer your question, yes, I mean in this in India is going to remain the market which is most competitive. And that is where we are focusing on having the right balance of our product portfolios, business portfolio and product mix. So going forward, we definitely anticipate that the volatility, what we have seen in the past in our raw material prices shall stabilize and will help -- will kind of give us opportunity to make a long-term plan in terms of our product business portfolio. Hello, are you there?

Yes, sir. We are moving to the next participant. The next question is from the line of Mr. [ Nischal Bokadia ] from NV Alpha Fund Management.

I wanted to ask you firstly that in a growing economy where the volume growth is at least 5%, 6%, this company with the best lineage and like best sort of clients has remained at a flat EBITDA for almost 6, 7 years, from 2015, '16 to [Technical Difficulty] date. In your brief trend of 5 months, could you attribute the key reasons to why this company has underperformed so many other packaging companies in India, very briefly. This is my first question.

So if you see the overall market in India and the packaging companies. Very difficult to pinpoint the volume growth or organic growth of any particular player. So most of the time, what we see is the -- it's the combination of organic or inorganic growth. So coming to Huhtamaki India as a proposition, why volumes have been either flat or so on. So essentially, I will go back to my first comment, wherein we position ourselves as the company who is into the innovative, sustainable and differentiated products, wherein of late, as the time horizon what you mentioned, we have seen the rate of commoditization increase over a period of those 5 to 6 years. And that is one. The second, the biggest opportunity in flexible packaging in the past used to be the from the conversion from a product format from rigid to flexibles. And I think we are seeing the -- it is maturing over a period of time. And those 2 things are definitely seen as a challenge in my last 5 to 6 months' tenure. And that is the -- that is where we are aggressively launching the sustainable packaging solutions in terms of our Blue Loop brand, which will help us to cater to our customers' ambitions, which are introducing the recyclable packaging solutions by 2025, which most of our end customers have pledged to. And that is where we said that we are increasing our relevance. So that should help us to maintain our position of differentiation.

This recyclable and sustainable packaging that we are planning to launch, is that also having a large enough addressable opportunity in India? Or will it remain a niche business?

This would have a large addressable market. I just -- you would have heard in my comment that the product range what we are going to launch is going to serve the broad range of product, right, from food, personal care, home care, industrial applications. So it is definitely going to have a larger addressable market.

Thank you, sir. Sorry to interrupt. [ Mr. Nischal Bokadia ], may we request that you return to the question queue for follow-up questions as there are several participants waiting their turn. [Operator Instructions] Our next question is from the line of Piyush Khandelwal from Bank of India Mutual Funds.

So question is, I mean, addition to what the previous participant asked, if I look at last, I mean, 5 years, our growth -- volume growth, especially has been very [ patchy ] and our major growth has come from the acquisition. I mean in last 10 years, we have done a couple of calculations with the majority of acquisitions that we did in 2015. So how should we look at that, let's say, next 2 years, 3 years down the line, would organic volume growth or maybe volume growth as a whole for a company, will it be like again, acquisition-led or will it be organic growth?

Yes. So whether organic or inorganic or acquisition, I think that would be slightly speculative. At the same time, the product range what we are offering to our customers, which is in line with their 2025 ambitions, which is basically introducing recyclable structures. I think that is where we are focusing on, supporting even new edge structures.

Sir, is there any target in your mind that you will be looking at, a mid-single-digit kind of a volume growth, which is -- I mean, FMCG market grows in India. So is there any targets in our mind that you're looking that you should be hitting at least this kind of a growth?

So we will be looking at responsible growth, responsible and sustainable growth. So I mean, okay, Jagdish, do you want to comment?

Yes. Yes. So I just want to add a couple of points to [ what Dhananjay ] talk about. First of all, if you look at like 2022, we had a 14% value growth. If you're going through our financials of 2022, we have talked about that our top line has increased from INR 2,625 crores to INR 2,982 crores. So that's a 14% growth. Now talking about volume, if you look at -- I mean I was looking at the report which talked about the 2022, the FMCG volume growth was in to negative 0.03%, and that's a reference from one of the published reports -- the consensus is challenging. If you look at last year, it was driven -- impacted by the high inflation and all. Having said that, our, strategically we are trying to address a key problem, what is sustainability, and we are engaging with our customers, trying to solve the bigger problem and I'm sure that long-term things, probably we won't be able to see individual [ equities ], but specifically, we are stating outlook [Technical Difficulty] and as a responsible solution provider. We're solving the problem of our customer, at the same time driving our growth in a more long-term and sustainable manner.

All right. All right. Understood. Sir, even if I exclude, let's say, I mean, the COVID impacted or, let's say, I mean CY '22. I mean the volume growth has not been very sustainable, which we expect, let's say, from companies like you like a sustainable, which are catering to the FMCG market. So that's what not has been witnessed. So I mean just trying to understand what was the issue? Is it like the change, which you said that the change in packaging, let's say, from flexible to [ retail ] that kind of trend that you are witnessing, I mean, going forward and hence, this kind of volatility has been [ weak ].

Not like that. I mean like I said, if you talk about overall FMCG volume growth of 2022, that was slightly negative. There were no growth in the volume for 2022 calendar year. Now when you talk about Kusama Kaken. We talk about that, we are differentiated. We are working on a sustainable led innovation. And definitely, we are focusing on the long-term growth, working very closely with our customer. And another point to note is that the hyping competition that are in the market, which some of the applications are getting commoditized. So our focus would be to address the bigger challenge, which is like impacting the private environment, we have sustainable packaging solution. And that is going to help us have a long-term growth and sustainable growth. And that is our focus here right now.

Our next question is from the line of Mr. Naushad Chaudhary from Aditya Birla Sun Life AMC.

Sir, firstly, I just wanted to understand you on the overall business margin profile. So see, historically, also we have seen in the raw material, there has been the volatility. But despite that, we have not so much on the either gross margin or EBITDA margin, but this time from last 2 years, I think we have been signaling we understand that there has been a raw material pressure and other cost pressures. But given the nature of our business, do you think this should not be -- the correction which we are seeing should not be there in the margin? So is there -- has there anything else has changed in the business, which used to be 2 years before versus now? Can you explain this? And if volatility remains same in the future, will we experience a similar kind of volatility in the margin as raw material volatility remains similar in the future?

Yes. So first, let me talk about our EBITDA margin. We have reported for the March quarter 8.9%. And if you go back to December quarter, we have reported 6.7%. So the increment in our EBITDA margin between December quarter to March quarter. The second thing is that part we are focusing is that we are working on a world-class operation. We are driving operational excellence through innovative solutions and on. So we are trying to work on the things, which is going to help us with long-term sustainable competitiveness and where we are out focusing. I hope that definitely the [ really be this try we ] started to continue, and we continue to focus when the opportunities what we have on hand. Having said that, we are focusing on growth in the top line as well as the bottom line. And that's what it reflects, that is what reflecting to the March quarter [ it is ].

And adding to Jagdish's point, you also asked about the -- what's the plan around managing the volatility. I think the volatility what everyone observed in the last 2 years was actually not experienced before. So I think most of us are now ready to manage such kind of volatility going forward. So hopefully, systems and processes are placing themselves for managing them. But hopefully, as industry trends are indicating, raw material and such volatility should be stabilized going forward.

Okay. So irrespective of the volatility in the raw material prices in the future, we should not see this kind of volatility in your gross margin. Is that the correct understanding?

Again, see, if you're talking about -- there will always be impact on intranational deflation on any financial. It's like a time lag. Normally, we contract with our customers at the same time we do have a contracted with our suppliers as well. And any time lag and the frequency of that contract is definitely having impact. But yet, it's a kind of impact quality we haven't seen since 2021, so that was [ an outlet ] we all expect that kind of a severe impact, but the size impact will be there related to plus or minus.

Our next question is from the line of [ Dewan Shah from Naishi Investment Advisors ].

My question is, can you please give a brief of revenue breakup industry-wide, I mean each sector contributed to major revenue?

Mr. Dewan Shah, I will mute your line as there is some kind of a disturbance or static from there. I will mute your line while the management answers the question. I will unmute it once they are done.

So I mean we [ glean ] all segments, whether it's a personal care, whether it's food and beverages or confectioning and all, [Technical Difficulty] I think we have play into -- but yes, some [ sectors ] have a high significant share of our business is the food advantages and personal care and...

Can you provide some number? I mean basic percentage by number, which sector contributes major revenue?

We don't do it by [ segment ] but I have to put 2 big sectors for us, definitely food and beverages, and personal care.

Okay. And can you provide some insights about raw material mix? The packaging [ sector also ] is goods so cans and coils and this combination of all these raw materials.

Sorry, you're not audible.

Is it okay now?

Yes, sir, please go ahead.

Yes. So the general raising any flexible packaging is involved around the region, sales and price.

Okay. And about operational efficiency, in your TPM policy [ improve ] your operation efficiencies that you were talking about?

Yes, in TPM. So yes, we have launched a total productive manufacturing in our plants, and we are seeing improvements in terms of operational efficiencies in our plants.

May we request you to join the question queue for follow-up questions. Our next question is from the line of [ Kush Gosrani from Enferred Asset Management ].

Just wanted to understand, are we looking to introduce fiber packaging as well, which has been the fastest growth segment [ of our path ].

So Huhtamaki India -- we are into a flexible packaging business, whereas fiber and fiber goods business is another segment, and it's an independent entity in India. So yes.

Okay. And sir, in terms of -- as you highlighted, there has been inventory destocking by our customers. So has the situation normalized now? Or is it going to still take time for us? What is the comment for the question?

Yes. So I think we are seeing 2 things [ piling in ]. So one is, of course, inventory pipeline correction or destocking. And second is also seasonality. So while inventory pipeline correction, we are seeing some moderation coming back to the stability, but significantly not only at our end customers, but at the, their distribution centers and so on. So that impact as well as seasonality is yet to be asset. Like just 1 point in case is typically December season. There are some product portfolios which we service is for a beverage industry. Now, because of the untimely rains across India, this summer season has been kind of delayed a bit. So we are yet to ascertain the impact of those seasonalities until.

Our next question is from the line of [ Mala Che from Quest Investment Advisers Private Limited ].

And I hope that in future, we'll continue this rainy season also. Sir, my question is relating to this blue loop technology, where you said that it will completely replacing the flexible edging. So is it mandatory for the older flexible player or it will be optional. That is one. And if that is going to happen, what will be the new raw material and what changes that we need to make in our manufacturing processes and how cost competitive will it be?

Okay. So I think you have asked me 3 things. One, we intend to continue these communications ongoing. Yes. So second one on the Blue Loop, maybe I had to again explain, it is not going to replace the flexible packaging. Basically, currently, if you see the packaging is, this is the requirement of the product. It can be termed as a multilayer packaging or polyolefin best packaging or monolayer packaging. So just point in case, like multilayer packaging is neither of the 3, so which makes that packaging in product after use unrecyclable or nonrecyclable. Like if there is a usage of paper, polythene or paper and either PP or P [ are point ], whereas our polyolefin is basically, it involves PE and PP, which still slightly recyclable, but not fully recyclable, whereas mono layer, which is either the packaging which is made by PEP or PPCP, is considered as a best for recycling. So what we are introducing is the laminate or flexible packaging, which is made out of mono layer which is basically either which is based on PE only or PP only or paper goods. And that is a technology we have been developed along with our partners, and that is getting launched. So that's the second one. The third one, whether it is mandatory for everyone. So that we -- you can refer to the -- and the regulatory changes what have been happening in India as well as in other parts of the world, whereas there is a lot of impetus now on the post-consumer recycling, which is called PCR, then the end-of-life recycling and so on. So yes, the government is also making certain changes, which will definitely regulate the brand owners to add up to this. And then lastly, it is also because of the brand owners or the line FMCG or consumer packaging goods company are also pledging their -- themselves in terms of their sustainability goals. So many of our large customers have pledged that by 2025 their -- majority of their product portfolio will be in the recycle structure. So that's where our new structures will be helpful to our customers.

Sir, and related to that question, will it be more cost competitive or it's [ aligned ] slightly? And is there any change in the manufacturing process or raw material part will be there?

Yes. So while we can't put a number to it, but I guess I think -- I mean I will say this way, that the product which we are going to launch structure there are 3 discrete combination. One, protection, which is for any product which is getting packed, whether it's a food or nonfood, it requires the shelf life, the protection and the sell price. So the product which we are going to launch, there will be no compromise on that shelf life. And then the barrier properties, which are required. The second one is the recyclability, which will be fully recyclable. And third is affordability. Yes, we are making sure that it is affordable within the sustainable packaging options available right now, and that was the [ purposes ]. So while we are working on all the ecosystem to make sure that it is affordable for all the customers and the consumers in the end.

Sir, in connection that can I please take 1 or 2 more questions, please?

Go ahead.

Okay. You said this will be -- so now, but a large part of the flexible packaging also has moved to rigid. So is that our potential or market size is reducing?

No, I said vice versa. So in the past, there was a clear movement from moving from rigid to flexibles. So [ a comment ], not the opposite.

Okay. On the paper side, also, how do we see? Same thing?

So there are certain customers which are introducing the paper-based packaging also -- at the same time, it depends [ the vet ] which they are launching, considering the barrier requirement and shelf-life requirement.

Mr. Bharat Sheikh, may we request you to return to the question queue for follow-up questions. Our next question is from the line of [ Nimish Maheshwari from RSPN Ventures ].

My first question is related to the tax rate because there is too much volatility in the [ excision ] in the last 3 to 4 years. So how we can see the tax rate in FY '24 and '25 as well as -- and my second question is contingent liability, which increased from INR 5 crores to INR 23 crores. So what is the management view on this? And how [ are we looking to ] this?

Let me first answer your question on the effective tax rate. If you talk about the first quarter, definitely, first quarter, we had some favorable rulings in this to have an impact on our effective tax rate. So typically, you have your update for lower tax, normal tax [ is happen to question ]. But if there are some developments that help us on certain favorable judgments, that might help. Otherwise, we continue to, are going to have 25% is a tax rate for us. Contingent liability, what is the probability of getting [ vitalized into probable cases ] I think it has already had been accounted for in our financials. So we don't see any further challenge on that front.

Okay. What is the other income comprised of? Why is the last quarter it was negative?

Okay. So we had one-off reversals in March '22 quarter. So on a comparative basis, it might be looking -- otherwise, there is no [ tally ] stuff in that.

[ There is, what is it? ]

Sorry? So we have -- so in March 2022, we had a 1 of the liability which we have reversed in March '22 because that was not getting [ neutralized ]. That helped to improve our other income in March '22. So on a comparative basis, when we look at the March '23, it looks negative.

Our next question is from the line of Mr. [ Vipul Shah from Sumangal Investment ].

So my first question is regarding the stability of the management. So now the management, top management has stabilized? Because there's a lot of management changes.

Yes. I mean, yes, you can see this -- we have started this communication under confidence that we continue this [ entity ]. And myself, Dhananjay are well-intentioned to this company. He's now 1 year, more than a year, and I'm kind of getting reborn, 9 months. So yes, we intend to continue. And there is a good stable key management personnel also, we call them leadership team. Yes, your question, I can affirm in yes.

And my second question, sir, can you quantify the drop in the volume. So in terms of percentage.

Yes, slightly higher than the revenue drop.

No, no, not in rupee terms, I mean volume terms, I'm talking the world.

Yes, yes. So around 15% to 16%.

Our next question is from the line of Dhavan Shah from AlfAccurate Advisors.

So I have a question on the new look technology. So if I look at the parent presentation plus our annual report also, I think we are very much focusing more on the Blue Loop one. So how do you see the next 5 years growth once we launch this new look technology? So what do you foresee the overall financial performance, how it, will it change just because of this technology? And plus the market size, market share, anything if you can highlight based on the addressable market plus what will be our confidence against the other peers [ availability ] market, if you can share thoughts on this thing?

Yes. So maybe directly commenting on the market share or what is our -- the plans in terms of realization will be kind of a [ speculative too ]. But at the same time, I can answer on the confidence level and competitive positions what we have in the marketplace. As I articulated earlier, the Blue Loop products which we are launching are going to service the broad spectrum of the requirement, right, from food, pharma, nonfood, industrial, home care, personal care and so on. So per se, the addressable market is going to be -- I mean, what we are selling now or maybe slightly larger, [ that's ] one. Second, it will be -- the confidence is coming from the fact that this is a global innovation and the technology what we have developed is basically is along with our key partners and global experts. So there is a confidence behind the success of the -- not only technology but also the outcome. So we are pretty confident on introducing this which are going to replace the nonrecyclable solutions, and that's where the confidence of -- coming from.

Our next question is from the line of Jeetu Panjabi from EM Capital Advisors.

One, I really appreciate you all coming out at all and talking. I think that's a great thing. It would be great to continue this. Now my question is, in an earlier question, you asked related to the 3 key priorities, areas that you'll be doing, customer centricity, strategic stuff and innovation. My question is, if you were to try and look forward, look at the [ tea leaves ] to try and understand [Technical Difficulty] [ what ] you are putting to work in terms of people and resources to execute on what you just articulated. Can you just give us some color on what resources and people, as well as non-people resources you are putting to work [Technical Difficulty] to change the journey going forward?

Yes. So I think you heard it very well, that 3 priorities and 2 enablers. So talent remains 1 of the enabler. And so -- we have talent pipeline, which is definitely helping us to do this innovative and differentiated -- introduce these products. And -- these are now back with our global reach. We have R&D labs in Germany. We have the marketing help getting across the globe. And then there is a reach in each market, which is having some specialized portfolio reach. And that is where we are kind of also getting certain help. So on top of what we have a resident icon, residential knowledge in Huhtamaki India, which is basically -- in fact, we are the institution, which is known for the talent in [ packaging ] industry.

Our next question is from the line of Himanshu Shah from Dolat Capital.

Sir, just a couple of questions. One, are we looking to sell any further plants because we have too many manufacturing sites and besides [ Sane ], would we be looking for consolidation of our manufacturing footprint, which will bring some more efficiencies and scale of operation?

So we continue to look at our customer relevance. I mean, everything what we do is going to revolve around the customer requirement. And if you see in the last few years, there has been changes in terms of GST regime, the transportation efficiencies, road infrastructure, the new customer sites, the new supplier sites and so on. So we continue to look at the network as an overall, not only the manufacturing side. So we look at the -- what is required from our customers. And we keep on taking the view -- and that is what you would have seen in our actions, like what we have taken a view on a [ tannic ] unit or tannic plant. So at this moment, I mean, we keep on evolving the options available in front of us and take a view on an ongoing basis.

Our next question is from the line of Priyank Chheda from Vallum Capital.

Sir, just a suggestion and more than a feedback since we have been doing this call after a long time. Going ahead, it would be better if you get more clarity about -- there are a lot of other aspects which are unclear yet: the landfill quantum, how we would use the proceeds; the CapEx plans, I mean, how do we plan to get back the gross margin; sector break up, a lot of other data points which we are discussing now yet are unclear. And in case -- I mean if you can help me with 2 more further data points. One is on the utilization levels. Where are we right now? And what are the plans to scale up the exports?

So well, the utilization depends upon the technology and the product structures what we make. So it still remains at what was there in the last -- in line with the last quarter utilization. And the next question probably, what was the follow-up question? I kind of missed it.

I mean, how do we plan to scale up the exports?

Exports, yes. So definitely, the exports remain our key market, and we have -- you would have seen in our annual report as well, we are servicing almost 70 countries by the way of exports. And that remains one of our key levers. And we are using our 3-pronged approach, I mean, from a product point of view. One, of course, leveraging our product strength. The second, our global reach in terms of reaching to the market -- destination market, I would say. And third, the now more and more India as a country also we are getting more and more impetus to make in India. So all these 3 [ views ] are definitely going to get used to enhance our exports. Yes, anything further?

Yes, Mr. Ramakrishnan from Equity Intelligence Private Limited.

Sir, we have been -- what percentage of our sales is coming from export? And going forward, what is the -- what kind of percentage is domestic and these exports we will have? And whether the export is also equally profitable to -- as well as the domestic market?

So the -- we do approximately 30% of our revenues comes from exports, and we continue to look forward to enhance that. At the same time, we want to also grow in domestic market also. So the percentage really, would not be really a matter, whereas in both the market, we want to grow. And answering your question on the exports profitability, yes, it is accretive to our business.

Our next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investment.

Look for the total land that we have put up for sale, what is the size of the total land? Is it like 14,000 acres?

I mean that is something which probably over 8 acres, 8 or 9, more than that.

Yes. I mean. Mr. Vaibhav, could you repeat that, please?

Yes. So is it like around 10 to is like what is the exit size can go you said, but is it like 10, 12, 14, how many such are there?

No, I think we'll let you know once we -- some due diligence is going on and surveys going on. So definitely, we'll come back at the right time to you on that.

Our next question is from the line of Pulkit Singhal from Dalmus Capital Management.

For the domestic market within your current categories, certain questions. Number one, how many competitors typically participate [Technical Difficulty] in the RFQ that you're participating in? And the second is that do you typically have to kind of match the pricing? Or are you able to get some kind of pricing [ premium ] for the product?

Yes. So in RFQs, I mean, it depends upon the structures and the products and the lots. But I would say there are some team competitions. I mean, if you are to ask numbers, probably can be ranged from typically 8 to 12 to almost 20. So that's the intensity of the competition. And the -- whether to manage the prices or not, it depends upon the company to [ compete ] customer to customer -- but of course, as the RF nature itself is that. So the digital lines with participants where they want to put and really want to hold on to. And the last one comment what you asked for, the premium. This is where I already mentioned that the pace of commoditization in the flexibles packaging has accelerated over the last few years. So -- and that is where the new product introduction is going to play a very important role, to again demand that premium.

Understood. My second question was on the new product [ competition ]. And typically, such changes when a company is going to relook, they will consider all kind of products as well as the related to paper packaging as well. So wherever you're competing with paper, where there are barrier [ prices ], that is, competitive [ such as trying ] requirements. What is the kind of pricing difference that is there in the [ second user's ] paper? I mean is it a premium, a discount?

From that point of view, you see the plastic -- I mean, flexible packaging, which is nonpaper, that is one of the most competitive structures available. Wherever there is a paper involved, it will be of premium structures. So as compared to the current flexible structures.

Due to time constraint, that was our last question for the question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Yes. Okay. Thank you, Hitesh. So thank you, everyone attending the call and asking the questions, which are also helpful for us to reflect and take certain inputs, and we continue to engage with the community going forward. So thanks, everyone. Thank you, Jagdish, for joining me today to attend this call. So thank you, everyone.

Thank you.

Thank you. On behalf of IC [Audio Gap]