Mold-Tek Packaging Limited (533080) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Mold-Tek Packaging Limited Q1 FY '21 Earnings Conference Call hosted by Nirmal Bang Institutional Equities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Navalgund from Nirmal Bang. Thank you, and over to you, sir.

Thanks, Steve. Hello, everyone. I welcome you all on behalf of Nirmal Bang Institutional Equities on 1Q FY '21 earnings call of Mold-Tek Packaging Limited. We have with us Mr. Lakshmana Rao, the Chairman and Managing Director of the company. Without further ado, I would request Lakshmana sir to start with his opening remarks. Post which, we can open the floor for Q&A. Thank you, and over to you, sir.

Good afternoon, everybody. Thanks for joining our Q1 financial results call. And I hope all of you are keeping safe in this pandemic times. So coming to the results. As anticipated, we also had a long lockdown of about 1.5, 2 months. Though our food packaging production started right in the beginning of April, majority of the paint, lubes and other product -- packaging products could start only somewhere in the middle of May, as the lockdown started opening up. We still have the challenge of unavailability of labor in necessary quantum and quality. But with the good commitment and determination of our staff at all the units, they're able to bring in the new employees quickly on board. And from June onwards, the operations are more or less at normal level of output. April was severely affected. May partially, and June is as good as normal. That's good news. But overall, the numbers have fallen sharply. Sales are down from INR 116 crores to INR 65 crores on Q1 to Q1 basis. It's about 42%, 43% down. And the net profit after tax has come down from INR 9.37 crores to INR 1.51 crores. Initially, during the beginning of the quarter, we were under the impression even achieving a profitability would be a challenge, but thanks to the quick turnaround and our plants getting back onto action, especially in the month of June, we could declare a nominal profit of INR 1.51 crores. And coming back to the prospects. July started well. It's at par with what it is last year. Sectors which mainly contribute to our sales, that is paint and lubricants, are still lagging. Paints leader, Asian Paints, is back in normal levels, at least from June onwards. And the rest of the paint leaders are catching up one by one. Lubricants also same situation, a couple of leaders like Castrol and Shell and Mobil, their numbers have improved since June, and others are catching up now. So like anywhere else, the industry is slowly coming back to normalcy. And our numbers are also coming back to the last year numbers starting from June, July onwards. I hope that the same trend will continue because people are now learning how to live with COVID. And although the cases are still increasing, the number of discharges and the treatment for the COVID have also improved, which is -- probably will ensure that we don't go back to the worst days like in April. With that hope, I still feel that company can continue to catch up the lost numbers. And with some little help here and there and some good luck, probably we will still try to catch up with the last year full numbers by doing better in the next 9 months. One of the positive aspects or steps that company has taken is setting up a manufacturing facility for manufacturing pumps for sanitizers, hand wash and such liquids. Already, some imports are being done to meet the requirements of our clients. But the internal production will start only from October, November, once the molds are procured and assembly lines are put in place. Though this year, it may not contribute significantly, next financial year, probably this will also add to our numbers. And this is one action I hope in this tepid days can take the company forward for the future. Coming to the COVID impact on the employees and units. We are very fortunate till now not to have any major incidence of COVID positives. Very stringent steps of social distancing, sanitization and even providing vitamins support to the employees, including the entire subcontract laborers have been taken up at all the plants, including the head office and supporting their insurance and family in case any of the family members get into trouble, we are also extending the help to the contract labor, who are may not be covered under such protection. So also company did a lot of CSR activity in the COVID time during the last 3 months in the villages surrounding our plants. We have kept a total amount of INR 50 lakhs towards CSR activities under the COVID, and majority of it has been used in supporting the groceries and essentials for the workers or also the citizens or -- I mean people around the villages and the plants where they are located. All said and done, this is one disastrous period in all our lives, never I have seen it in my -- since last 60 years of my life and neither none of you might have seen such disastrous pandemic. But it's good to see that all of us are pulling together and coming back to normalcy. And very soon, there'll be a vaccine, and we'll be back to normalcy at least towards the end of this year. So I think more discussion can take place in the question and answers. I hand over back to the event manager to proceed with the question and answers.

[Operator Instructions] The first question is from the line of Archana Gude from IDBI Capital.

Congrats on a quite decent set of numbers in spite the challenging times going on. Sir, my first question is on the capacity utilization. You said now things are getting back to normalcy. What kind of capacity utilization we are running at, let's say, in July?

See, our capacity utilization always been in the region of [ 72% ] to 75%. I explained many times that in the injection molding achieving such numbers is the best possible because of under-optimal utilization for production of items like caps compared to...

Mr. Rao?

Yes. Can you hear me?

Yes, we can hear you now, sir.

Yes. It's better now.

I'm sorry. So typically, the capacity utilization used to be around 70% to 75% is the best capacity utilization on the rated capacity. This first quarter, we ended up at 42%, and now we are back in the region of 70%, 72% in the month of July. So I can say we are back to normal capacity utilization of pre-COVID times.

Sure. Sure. Sir, in Q1, we took prudent cost-cutting measures that has really supported the EBITDA margins. So do we essentially in the same kind of cost cutting for Q2 onwards? What kind of sustainable EBITDA margin guidance you would like to quote?

Leaving this quarter aside, we will be back to normal in all terms, not only in top line, but also in EBITDA lines, we'll be back to our INR 33, INR 34 per kg kind of a value addition, EBITDA. And I would rather say there could be some savings in transportation, travel and other staff costs because of -- it's almost near impossible for people to travel and meet the clients, everything is nowadays happening on videoconferencing. So there could be some marginal improvement, but I would rather keep it there between INR 33 and INR 34 per kg will be the future EBITDA margins in kg terms.

And sir, the third question, if I can. Sir, the Asian Paints management gave good guidance. They were like June volumes were almost 14% up Y-o-Y for them. So do you think that now for paint segment, even we should be back on the track and that should start contributing like it used to pre-COVID levels?

Yes. Asian Paints case, we see that numbers picking up really from June. Even in July, it is as good. But that's not the same with the rest of the paint industry. They are still maybe a month or 2 lagging. People are talking about improvement in July -- sorry, August. Some companies like Berger improved in June for us, but -- July for us. Akzo Nobel is indicating stronger August, which is supposed to be, let's say, taking it about 100, now currently it is around 70. So it will be reaching 100 in August is what they are saying. I need to wait and see. So -- but it's -- I would not say that the paint industry will be back to normal, like Asian Paints. In the case of other leaders, it might take some time. But the trends are positive. So hopefully, if it sustains, we'll gain contraction and at least meet the last year numbers.

[Operator Instructions] The next question is from the line of Ankit Merchant from Reliance Securities.

Can you just help us out with the volume growth for each of the segment and the value growth?

Yes. It's rather drop, you can say. Yes. In the main segment, the drop in -- the contributions are here, 42 -- yes, 51% drop in paint segment, 55% in lubes and 27% in food and FMCG. In food and FMCG, the drop is least because the overall drop is 43.6%. In food and FMCG, it is around 27.7%. Basically, that also is due to the drop in sales of ice cream containers. The summer, which is typically used to be a huge rise in demand for ice creams, this summer turned exactly the reverse. Ice cream has been considered as a taboo, and many people stopped consuming ice cream. Though the sector was open to production in April, May, June, the numbers are very, very minimal. I would say, not even 10% to 15% or 20% of what it was the year before. So -- but for the ice cream segment, the food industry sales of last year would have been sustained. But due to the particular segment got drastically down -- demand reduction is found, we have ended up food and FMCG segment also down by 27%.

Sure. Can you repeat the lubricant part? How much drop did we witness?

Yes. 51% in paint; lubricant, 55%; and 27.7% in food and FMCG.

This is a volume decline, right?

Yes. This is -- in terms of rupees. In volume, it is 46.6 -- 44.6% in paint, 51% in lubes and 16% in food and FMCG.

Okay. Okay. That's very helpful. And your gross margins have pretty much remained at the last year level itself. And what we have seen that the employee cost, to an extent, has gone up. So is that because primarily due to lower utilization and over a period of time as a percentage of sales, employee cost will come down. And...

Yes. Obviously. Because employee cost has gone up because we can't reduce the cost. Most of the employees were on long term, and they will be paid. And they will certainly come down as the top line grows or the number of tonnes of sale increases. So it will be normal level only. In fact, directors and top managers continue to take a pay cut for a further period of 3 months, whereas other employees being paid full once the company started improving its numbers in June onwards. So the cost of -- per employee costs will certainly be at par or a little less than last year in the remaining 9 months.

Sure. Just another question related to the debt. Has the debt increased over the last 3 months for us?

Debt increment is not there. We have not borrowed any long-term debt. The working capital, bank borrowings keeps varying. That also stayed more or less at the same level. Now in fact, we have invested for some of the machines which were ordered last year. They were already arrived. And to a total of around INR 7 crores company has already paid towards those machines. Paid after April is around INR 3.5 crores, without any borrowing.

Okay. Just last question. Are we seeing any problems related to our receivables from any of the manufacturers?

Our what?

Our receivables from any of the manufacturers? Or the payment continues to be on time? Yes.

Most of our clients are all blue-chip clients in different industries: Paint, lubes or food and FMCG. And in case of medium-sized companies who are new to our business, they generally pay in advance. But yes, there could be a small number, like few lakhs can still become bad debts in the current quarter compared to the previous quarters. But that's not going to be sizable.

[Operator Instructions] The next question is from the line of Naushad Chaudhary from Systematix.

Question is on the CapEx side, sir. We have -- for this year, we had around INR 18 crores to INR 20 crores of CapEx plan. And including this new thing which you have announced, sanitizer pumps, which I believe will need around INR 12 crores of CapEx, so this is including in our INR 20 crores of CapEx plan or is it additional on INR 20 crores?

No, no. This is inclusive. Maybe it may move up, up to INR 25 crores because as the things become normal, we need to add some balancing equipment for our food and FMCG lines and also maybe a new additional building block, so in which case, the CapEx can go up marginally to INR 23 crores to INR 25 crores. This is inclusive of the project cost for the pumps.

Okay. 2 questions here on this sanitizer pump CapEx plan. How much of revenue potential you see from this CapEx? And would this line be fungible for other products? Or suppose tomorrow if you don't have much demand of these pumps, would you be able to use it for some other products?

Yes. The beauty of injection molding is the machines are fungible, 100%. Only the molds becomes specific for a particular product. So the molds in case of drop in demand may become redundant. But we see that not only for sanitizers, these same pumps can be used for hand wash and other liquids. And there's a severe shortage of pumps capacity in the country. So even if the COVID is passed and we all back to normal days, there is sufficient demand for good quality pumps in India, which were previously being imported from China majority. So we still feel that there will be reasonable demand to continue the business on the long run. In case of negative developments, like sudden drop and lack of demand in this segment, those machines can be completely used. So almost say, 70% of the investment is fungible, and the rest of the 30%, 35% of molds and assembly lines may become redundant.

Okay. And what kind of opportunity -- what kind of revenue this investment can generate for us?

See, at full capacity, it can definitely add around INR 40 crores to INR 45 crores turnover at the top line with a decent margins -- EBITDA margins close to INR 35, INR 37 per kg. But this year, I don't expect that. It may be only for 3, 4 months. So it will take a lot of learning and a lot of stabilizing the operations. But next full year, we see a decent contribution from this segment.

So commissioning of this plant is done, and we are doing stabilization and other stuff, right? Or when do we expect commissioning?

Commissioning will happen by end of October -- middle of October, and supplies may start partially in October, but mainly from November onwards. But different products and different applications, different clients required to stabilize the pump fitments and various quality tests they have to pass through. But once that happens, the numbers can shoot up.

Okay. So we should expect by 4Q some revenue should start coming in?

Exactly. In the fourth quarter, the numbers can start coming in.

Lastly, on the margin side, sir, despite such a steep drop in our revenue, we have maintained quite a decent margin at EBITDA level. I believe it is -- this is due to benefit of our product mix. Apart from this our cost reduction, is there any other factor, which is also playing for our margin like a raw material benefit or something one-off, which has helped on the margin?

Not really. The most important thing is we never compromise on pricing. And especially in food and FMCG we are in a position to command a decent premium, which we continue to do so in the -- in this quarter also, especially so because many companies were going for packaged food in these days. And they find all these years, they were mainly looking at cost savings and not able to spend on packaging for their packaged food. But today, they identified that importance of good hygienic packaging like IML. So some segments, there is improved demand. But one of the major setbacks as I explained is ice creams, which has really impacted the food packaging numbers this year. Otherwise, things would have been at least normal, given the surge in demand in -- from other food packaging -- packaged food segment.

Okay, sir. Lastly, 2 quick bookkeeping questions. You have shared the volume growth number. If you can share the absolute number, how much tonnage of sales we did in this quarter?

This tonnage is 3,713 as against 6,300 Q1 last year.

And how much was from paint, lube and F&F?

It is 1,814 paint, 900 lubes and about 1,000 food and FMCG.

Okay. Same -- the revenue number, if you can share, of paint, lube and F&F.

Revenue numbers of paint this 27.5%, lube is around 14%, food is 20.1%.

[Operator Instructions] The next question is from the line of Sonia Varnekar from Equentis PMS.

Sir, I have a small question. You mentioned that our -- we are facing manpower issue, and the attendance is around 70%, 75% lower -- sorry, is at 70% to 75%. But still, we have managed to reach our pre-COVID capacity utilization. So how are we doing that? And what strategies we will be going ahead with to increase this manpower to get more people to work?

See, as far as a reduction in the manpower is concerned, it is there everywhere, and utilizing them more effectively is what we are able to do. We could -- our people like the supervisors are also getting involved in the critical activities like quality checks, especially, where being of mass production, we used to have a lot of people working on visual inspection. So that area, some of the staff numbers are taken over and releasing people to operate on the machines. And wherever it's possible and people are ready to do, we have made them work on 12-hour shifts with over time. And we are providing both lunch and dinner. Earlier, it used to be one meal, but now we are offering all the people, whether they worked 12 hours or not, they can have both subsidized lunch and dinner so that they're also motivated to work for 12 hours, and have both meals, which are cooked hygienically with better protein and better mix of all ingredients that are needed in this time of the day. So these small, small things are enabling us to run the show even at 90% of normalcy, with 75% of the actual labor present. And going forward, we are also now providing medicines or vitamins for all the employees right up to the subcontract labor, some -- how many lakhs of tablets we are getting? Some 1.5 lakh vitamin tablets are being procured and distributed right at the gate on a daily basis to all the employees who are entering their premises to ensure that their immunity system improves. These small things are also making a difference in a more labor or mainly the subcontract people coming over to work with Mold-Tek compared to the other nearby industries. So not great tricks of the trade, but basically to make sure that they are also safe, and they will keep our interest also in their mind. So that is what is helping us to attract -- slowly the improving in the attendance.

Sir, by when you expect this to normalize?

That's a big question because the cases are still increasing. Only thing is what I hear from the news that the impact of COVID in terms of the kind of death rate or the criticality is coming down, thanks to the medicines availability and care that is being taken by people in general, especially in Telangana. If you see, the mortality rate is very low here. So probably the ability to face the pandemic is improving in the people, and that's what is everybody hoping. That's the day when we can see normalcy. But I think it will continue for at least 4 to 6 months before we see a relief -- total relief.

The next question is from the line of Akhil Parekh from Elara Capital.

My first question is on the containers for the hand sanitizers which you mentioned. So mostly these containers, if I am not mistaken, are the blow-molded containers, right, while our expertise lie in the injection-molded containers. So would you be able to shed some light on this?

Yes. The edible oil spare containers, we made some minor corrections in the caps and make it suitable for fitting a pump. So some sanitizing companies are finding it very user-friendly because it looks elegant and can be kept right in the office desk or in a mall where mass consumption of sanitization -- sanitizer is required. So a couple of them are successfully launched in the last month, and another big brand is introducing in this month. But these numbers are not very big to talk about, but that will add whatever new applications for our existing pack. So this is basically our 5-liter edible oil pack which we have modified to suit to the pump of a sanitizer.

Got it. And sir, any visibility are we seeing? Because you mentioned that we are putting up an additional line, and we are procuring -- we are building molds for the containers, for the pumps. So any of the big clients have hinted us that they will procure from us?

Yes. Yes. We have a couple of clients in principal committed to us. One is Asian Paints, another is Wipro, and we're also in talks with ITC, Apollo at various stages of finalization. But everybody is looking forward to the samples before they give their final commitment. But they -- definitely, everyone showed interest to go with us.

Got it. And sir, this will be a margin accretive or dilutive product compared to, say, food and FMCG product?

It's equivalent. More or less equivalent to food and FMCG.

Equivalent to FMCG product, you say?

Food and FMCG, yes.

Okay. Okay. Sir, on the IML and non-IML part, if you can, please, give tonnage wise, how much we did and the value wise as well for the quarter.

IML -- food and IML regular has become around 62.5% as compared to 60.8% last year.

This is for IML?

IML.

Okay. This is volume wise?

62.5% in tonnage. So there is a gradual improvement over the last year Q1. But this is not really -- this quarter is not a quarter to really make comparisons because the sales are not really in line with what they used to be.

Correct. Correct. Sorry, if I didn't catch up. You said 62.5% in tonnage wise you're saying it, IML?

Tonnage wise, from 60.8% last year.

Okay. And value-wise, how much it would be, sir?

Value-wise, INR 64 crores, more or less same.

More or less same. Okay. Okay. And sir, have you seen any drop in the price realization across our category because if I see the volume drop is slightly lower, while value drop is on a higher side across all...

Because the difference is the bigger containers of edible oil are sold in this quarter than ice cream containers last year. So the ice cream containers are small, but they add more value. Whereas the food and FMCG sales of edible oil have improved in this quarter compared to the previous quarter. Whereas the ice cream has really beaten the dust down by almost 70%, 75%.

Got it. And sir, would you be able to highlight how much we are expecting from this edible oil segment because I'm assuming it is largely unaffected by COVID. And if I remember correctly...

Exact number, I don't have, but it is certainly better than what it was last year, edible oil sales.

No, I meant how much is the guidance for the year for the edible oil?

It has increased to INR 9.8 crores from INR 9.1 crores. It was INR 9.1 crores in the Q1 last year. It is now INR 9.8 crores. And volume-wise, 560 tonnes has become 630 tonnes. So there is an improvement of around 12%, 13% in the edible oil packs -- sale of edible oil pack.

The next question is from the line of V.P. Rajesh from Banayan Capital Advisors.

Just very quickly, if you could repeat the numbers for Q1 for the business from FMCG and lubes?

From FMCG?

And the lubricants business?

Yes. In terms of revenue, the lubricants was INR 14.39 crores and food and FMCG was INR 20.1 crores.

Okay. And you were saying that you would be able to potentially post the same numbers you did in last year. So is that in terms of both revenues as well as the EPS? Or if you could just give some more color around that, how do you see the next 2, 3 quarters shaping up?

That's our target, to be very frank with you. We [ have ] to cover whatever INR 50-odd crores loss we -- loss of revenue in this first quarter, we wish to cover in the remaining 9 months. That maybe itself a long call. But if the pumps business starts in October, November, and they start adding about INR 10 crores to INR 12 crores per quarter, that is hardly for 1, 1.25 quarter left in this year by the time. And if the numbers in the paint industry grows up as projected by M/S Asian Paints, we may still be able to reach somewhere near the top line number of last year. So that is the internal target. I'm reasonably confident we'll be able to do that unless situation change and things again go back or any further damage happens through this pandemic in terms of labor availability, in terms of demand or drop in demand, which today we can't guess.

Sure. Sure. And lastly, how much of the impact do you have...

Mr. Rajesh, sorry to interrupt, but your voice is breaking up, sir.

Okay. Let me repeat my question. I was asking that how much lead time do you have from your customers in these various segments. Is it like 30 days, 60 days or longer than that?

The credit period, we always have is average around 60 days. And that continue to be the same. There are a few bad debts happening in the small sector, especially. But we are generally protective in terms of taking advance from smaller clients. There are delays of -- to the tune of maybe 7 to 8 days on average. What is our debtors number of days now compared to last quarter? It became 54 to 58. It's around 3 to 4 days overall increase in the debtors days.

I see. That's helpful, but I was actually asking about the order lead time, let's say, if Asian Paints is placing an order, then they do it 30 days before you have to deliver it? Or is it longer? If you could just give some color on that?

Oh, that's very fast, actually. They give twice in a month. Majority of the clients give twice in a month. They call it first phase and second phase. First phase orders come generally at the end of a month for the next month, and the second phase come in the middle of the month for the remaining part of the month. So let's say, around 25th of this month like July, we will be getting to know the first half demand in August. And by around 15th, 18th of August, we would know the demand for the second half of August. So the frequency is pretty short. It just -- I mean, the time gaps are around 15 days. Some clients keep even weekly call-ups because the orders are open-ended, volumes are indicative. And the real numbers will be given weekly by some clients, like Valvoline, for example. They give weekly call-ups. Other major clients give typically twice in a month.

[Operator Instructions] The next question is from the line of Karan Bhatelia from Asian Market Securities.

Sir, just wanted a few data points. So how much of sales we did from the new Asian Paint plants at Mysore and Vizag in metric ton and in crores.

Yes. Mysore and Vizag numbers are comparatively better basically because last year, this time, hardly they started. Mysore just started in the month of April, March ending or so. And Vizag is inaugurated towards the end of April last year. So their numbers in the first quarter of last year were almost negligible. But this year, though April got very badly affected, May and June, the numbers have improved. It was INR 6 crores comparative. Current quarter, we did almost -- sorry, INR 11 crores in these 2 units. That's almost 1/6 of our turnover has come from that. Comparative, maybe a couple of crores last year. Last year, it was just the beginning.

And in terms of metric ton?

Metric tons, you take around 300 tonnes production -- 300 to 330 tonnes as against 100 tonnes. 654 tonnes for INR 12 crores.

Okay. Okay. And sir, how are we seeing things on the raw material side because we've seen massive volatility in raw materials in the crude side. So how do we see things shaping up there?

See, as I told you many times, the raw material price is always adjusted within a maximum span of 1 month with all our clients in the base pricing. So crude price movement will not have complete relation with the raw metal pricing. That's only partially -- they are both are linked partially. And whatever happens this month, we pass it on to the next month, either up or down. So raw material prices doesn't matter. Only they matter in looking -- the revenue number may look big or small. That's why we always consider our numbers in tonnes and -- or per tonne basis.

Correct. Correct. Correct. No, I was asking because there was sudden volatility in the crude prices.

But that didn't really result in a very drastic drop. For example, there is a drop. Certainly, there was a drop. For example, the last 12 months average is 85.7 for raw material has become 75.5 in this quarter, from 85 last year to this quarter 75. So there is a considerable drop. But whatever drop, majority, we'll pass it on to the clients.

Correct. Correct. And sir, any clarity on the Kanpur plant that we were talking about?

Kanpur plant, most probably will be deferring this year because it's not possible to go out and build up a plant in this kind of COVID conditions. So we have already intimated both our clients, Nerolac and Berger, that this year we'll not be going ahead with that plant. If things stabilize by beginning of next year, we'll certainly take it up in the middle of next calendar year. We certainly deferred that plant for this year.

Correct. Correct. Correct. And -- sorry, the inquiries for sippers and for Zomato, Swiggy, detergents, dates, so all these are on or even they are delayed given the current scheme of things?

See, everybody is affected, you name it. But companies in the food industry are reasonably better off in April and May compared to others. And these dates, we found 2, 3 clients who are buying detergents, we added a couple of clients. But when things are so dull and their own production is not running, nobody would be inclined towards innovations and trying new tricks in the trade. So generally, the outlook is pessimistic to try anything new. But as we shackle out, things will start moving normal, maybe in a couple of quarters.

Correct. Correct. And sir, last question, if I may chip in. Sir, we were facing several issues with Mondelez. Since last couple of quarters, we've seen sales decline. So now what steps have we taken? And how do we see FY '21 as a whole, not considering the impact of COVID. So can we achieve the normalcy sales that we used to achieve 2 years back?

In Mondelez alone? Or you're talking about the entire company?

No, no. Mondelez.

Mondelez alone, things are not really good. Actually, the deterioration in the numbers is continuing. Their numbers actually in this quarter were pretty low. It is one of the other reasons for the food and FMCG to fall. Otherwise, it would have been at least at same level as last year. Because they are more concentrating on biscuits than on this fancy kids item. And they say that they are going back to the basics for the time being. And probably from the third quarter, they will start picking up better numbers. But the overall numbers for this year will be certainly down compared to last year by a reasonable percentage. But now it is worse.

But we were also planning to manufacture different sizes for Mondelez because they had gone for slightly different packaging sizes. So still that did not...

Yes. They mentioned that, and we even developed the prototypes and all, but they dropped that idea. Last year, towards the end of last, I think, November or so, they mentioned to reduce the pack size to save costs and make the container in more numbers, but they dropped the idea. Now currently, there is no such discussion about changing the pack. It's continuing as it is, but the numbers have come down considerably.

All right. But then, sir, reducing the pack size, won't it benefit us because smaller the pack size, we are better off at the margins level?

Agreed. But it is the final call to be taken by Mondelez. So they decided to continue as it is. So we couldn't push them.

Any yearly numbers can you guide? Maybe number for FY '20 rupees in crores? Or what was the average 5 years back or something like that?

They are down considerably in these first 3 months is what I can say. I don't -- you can send a query, and I'll ask Ram Babu to answer. But in the first 3 months, the numbers are considerably down.

Next question is from the line of Shailee Parekh from Prabhudas Lilladher.

Sir, I have just one -- I have 2 questions. One was, I just wanted to reconfirm the volume number that you shared for the Vizag and Mysore plants for this quarter. Did you say 654 tonnes for Q1?

650 tonnes for Q1, and the sale number is INR 1,172 crores -- INR 11.72 crores.

Got it. And this number, last year, you said in value term was just a couple of crores and in volume terms was...

No, no. It's exactly not so less. It is around INR 8 crores. So it's gone up by almost 50%.

Okay. And in terms of volumes, did you say 100 tonnes last year?

INR 8 crores means it must have been around 450 tonnes.

Okay. Okay. So that was my first question. And my second question was, you did share the volume and value breakup for the edible oil segment. Could we get the same data for the thin wall, that's the curd and the ice cream segment as well?

The other than edible oil sales, the numbers have fallen in the ice cream segment considerably. I think it is down by almost 26%, put together -- the rest. That means other than edible oil, in the thin wall segment, the drop is around 26%.

In value terms, you're telling me?

In terms of value and volume, more or less same, 24% in value and 26% in volume.

The next question is from the line of [ Mehernosh Panthaki ] from Dhanki Securities.

Actually all my questions have been answered. Only one I had just wanted to know. You had even had plans to enter into the agrochemical segment. And around a couple of quarters back, you had given in the press release that we are in talks with several clients, and in the agrochemical segment, you are citing a very strong opportunity. Now quite understandable that currently, there is a slowdown. But just wanted to get an update on the same. Is the project completely on hold? Or we are progressing on that front as well?

Actually, when we started that, this COVID started in a big way, and we are still in touch with a couple of them. That is not a very huge segment by itself for pails because they mainly use roto-drums and blow-molding containers in their overall segment of packaging. The drums and blow-molded containers occupy almost 80% to 90%, which we are trying to gradually replace with pails. So that process of change in this period is becoming more tough. But we are still in touch with them. Those numbers may not improve this year because the ability to meet the clients, conduct these various tests and transportation tests, nobody has neither the mobility nor the time and resources to do such experiments now. So those things will be on back-burner at least for the time being. But the moment normalcy comes, we still have that in mind. And the molds for that are already being made at least 1 set of 20-liter mold is made and being tested at our end, which is found to be suitable. But the clients are in not really a great mood to do any tests now.

Sir, this, you're talking about the agrochemical space, right?

Yes. Yes. Agrochemical and pesticide.

So sir, just wanted to understand that when the things normalize and you'll be progressing on the same, what kind of sustainable or potential margins is there in this business going forward?

No. Margins will be similar to paint and lubricants. There won't be much higher pricing for them because other than feeds segment, agrochemical segment is also a kind of industrial lines, and they are very much particular about pricing. But the numbers could be reasonably good. Let's say, the potential could be to the tune of INR 50 crores to INR 60 crores per annum in terms of rupees. So up to that much of volume can be created in a good year had it been introduced by now. But this year, I don't see any contribution coming from that segment.

The next question is from the line of Ankit Merchant from Reliance Securities.

My question is related to our investment, which we are doing in the pump segment for sanitization. Now I understand that we could be starting somewhere in October. And till the time of full effect comes, it will be almost quarter 4. So it's just that we are spending close to INR 12-odd crores into this segment and almost close to INR 25 crores of CapEx we are planning for this particular year. So do you think it is quite a valid argument given that we have done our investments in RAK also and that has also has actually turned bad and are there any chances that this also could turn bad, considering that this could be a very short lived sort of a phenomena?

Ankit, I agree, there is always a risk in any business, but we have did our homework better this time. And especially not only for the sanitizers pumps, which might not have a long life in terms of the huge demand, which they are enjoying now, but hand wash and other liquid applications also need pumps like shampoos, for example. And in India, there are only a couple of medium-sized players who are active in this pump segment. And any time, if there is any shortage of volumes, people were used to import from China. Given the anti-China sentiment and maybe probable import duties or additional costs that may be associated in the future, some of the clients in India are now looking at local sources. And we are trying to talk to them and make some arrangements for 1, 2 years of commitment, which, of course, are subject to business conditions. But that kind of safety we are trying to take from at least half of them, half of the capacity. And hopefully, by next quarter, when we talk, I'll have more clarity about how deeply we could get commitments, how much volumes we could take commitments to safeguard our interest. And I again answered a question previously that most of the investment now, about 70% of them go into injection molding machines, which are generic. That means they are fungible. They can be used for any other applications. They can even replace some of our old machines, which, generally, every year, we keep changing at least 7, 8 machines per year, of which half of them are small size. So 4 to 5 machines a year, we keep changing, replacing because of the more than 10 years, 12 years, and they become -- they are consuming more power, they're increasing maintenance costs. So these 12 machines -- 9 machines we are adding now won't really go waste. In a couple of years, they can be used for our own in-house in case this project doesn't take off. So that risk of project not taking off is there with any product. But the 70% of the investment, that's about INR 8 crores, goes into the basic building and basic machinery will be certainly useful. Only the molds and assembly lines costing around INR 4 crores to INR 4.5 crores, INR 5 crores, maybe INR 5 crores would be at risk.

Okay. That's helpful. But that was more related to our capital allocation as a policy. So that was my main question for you. So that we don't end up creating the mistake which we have committed in the past. So I was just little cautious on that front. That's it.

I take your point of view, Ankit. We discussed this, and a lot of thought has gone into -- before going for this project. It's not that sanitizer is going to stay forever. But shampoos and hand wash will certainly be there. And there is a clear gap of demand/supply in this segment for some quality pumps. So we hope we can have a sustained demand.

Next question is from the line of [ Deepak Mehta ], an individual investor.

Yes. Actually, my question is already asked and answered. So I will ask something related to private labels. So in private levels, what kind of demand we are seeing from small companies and all, sir?

Yes, certainly. The small companies, which were earlier reluctant to go for IML and costly packaging solutions are now looking at IML containers, even they are expensive, because as the consumer is going more and more for packaged food, the awareness about IML and -- not only for decoration, but the hygienic way IML is produced and how it differs in the shelf compared to a traditional screen printed or a stickered container is making even the small players to shift towards IML. And now that we have added our flexographic machine, small runs also are possible. That means we don't need to keep a minimum 50,000 orders to make it IML compatible. We can even take out of 15,000 or 10,000 also and give them effective pricing. So there are -- there is a shift and the number of small players asking us for -- especially food and FMCG containers are on the increase.

And my next question is that. So due to anti-China sentiment, so what can be the potential market opportunity for our company if we try to figure out?

Actually, nothing, what we manufacture, comes from China because containers occupy a lot of space, and they will be very expensive for anybody to import them from China because that cost of transportation would itself be in the tune of 15% or more. So there is nothing much happens by stopping imports from China. Hopefully, the pumps is the only segment, where there's considerable imports because pump don't occupy lot of space. That is the only area where we might see some benefit due to any curbs on Chinese imports, not in our regular products.

The next question is from the line of Karan Bhatelia from Asian Market Securities.

Sir, I was under the impression that the investment in mold is done by the OEMs?

Yes. In case it is -- any product is made for a specific client, then the molds are made and borne by the client, like Mondelez. But in case we generally develop a container like our edible oil container, and we sell it to everybody, then those molds investments are also on us.

Correct. Correct. Sir, I missed the value number for IML and non-IML for this quarter. Can you, please, repeat?

Yes. It is -- IML is 62.5%, non-IML is 37.5% compared to 60.8% and 39.2% last year. Sorry?

I'm talking in terms of value.

In terms of value, it is 64 and 36.

As there are no further questions, I now hand the conference over to Mr. Abhishek Navalgund for closing comments.

Yes. I would like to thank the management for patiently answering all the questions. And also thanks to all the participants for joining the call. Stay safe and take care.

Thank you. Ladies and gentlemen, on behalf of IIFL -- on behalf of Nirmal Bang Equities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

Thank you all. Thank you. Bye.