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

Ladies and gentlemen, good day, and welcome to Mold-Tek Packaging Limited Earnings Conference Call, hosted by Emkay Global Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Nitin Gupta from Emkay Global Financial Services Limited. Thank you, and over to you.

Thanks, Hina. Good evening, everyone. I would like to welcome Mr. J. Lakshmana Rao, Chairman and Managing Director, and thank him for giving us the opportunity to host the call. I shall now hand over the call to him for his opening remarks. Over to you, sir.

Good afternoon, everybody. Thank you very much for participating in our Q2 and H1 results of Mold-Tek Packaging Limited. I'm very glad to inform you we have a decent growth in volumes. As you all know, Q2 and Q3 are typically our low-volume season. And a lot of rains in the last 4, 5 months has impacted movement of goods and sale of some of the food products like ice creams and yogurts and also paints. But in spite of that, we have posted a decent 12% -- 9.65% sales value up and volume-wise about 7%. And EBITDA is also up by about 8.37% compared to last Q2. So, in the overall H1, we have registered EBITDA margin of 40.6 per kg as against 36.73 last year, registering a healthy growth of 10.5% in EBITDA terms. And most heartening and a very good indicator for me is the growth in pharma packaging sales, up by a massive 45% compared to Q1. While it was INR 7-odd crores in Q1, it's gone up to INR 10-plus crores in Q2, which is a 45% growth in pharma packaging sales. So we are on track to reach our target of INR 35-plus crores in pharma and with a much higher sale price and EBITDA margins. And that is very heartening observation in this quarter apart from other sectors, like food and FMCG also has registered a decent growth. So now I think most of the questions -- through question answers, we can exchange more information. I'll leave it to the coordinator to start with the question and answers.

[Operator Instructions] The first question is from the line of Darshita from DSP. [indiscernible] has been disconnected, we will move on to the next question. The next question is from the line of Dipak Saha from Nirmal Bang Institutional Equities.

Am I audible?

Yes, yes.

Sir, just a couple of questions. Now you mentioned on your media remarks that GST impact should have positive thing. But just wanted to understand for the quarter gone by, that is Q2, did you have any adverse impact because of the announcement, any dispatches that got delayed and your volumes number could have impacted or could have grown much more better than what you have delivered? Just some color on that.

Yes. Definitely, GST being announced a month ago, that's somewhere in August, I think, and made it effective from September, there was some lull in the pickup in the month of September, and orders started flowing only after the GST impact has been really affected. So there was some lull due to that factor also.

Okay. And given that situation, sir, do we expect that to come back in Q3, Q4? Because if you look at your 43,000 kind of guidance that you earlier alluded to, so you still maintain that because of this shortfall whatever we have seen in Q2. So where do we stand now? And -- because then we have to deliver some extra miles in Q3 and Q4, right? And typically, Q3, Q4 lag Q1 numbers. So -- and on that number to reach 42, we have to do a bit better, slightly on the double-digit side for Q3, Q4. So if you can give me some understanding that where do we stand on the volume side for full year?

Yes. Always our Q2 and Q3 are typically low in a year, and Q4 picks up momentum, and that's how it will be in this year also. With GST getting implemented now, I should wait and see. October is still like September, it is moving a little bit slow, but we are on the positive side. And November indications are pretty strong. So I hope November, December should be decent enough to pull us up for at least a double-digit growth. And the fourth quarter, I'm very confident because already our food and FMCG production started in Panipat and some of the orders also being executed there. So fourth quarter definitely will pick up on these two counts. And some of the orders and molds, which have been coming in for pharma in this third quarter, will become productive in the fourth quarter. So we'll be running in all these 2, 3 segments. But paints, it still depends upon the rains and when the rains stop because even now we have cyclone going on in Telangana and Andhra for the last 2 days and extending another couple of days. So -- but hoping that paint segment starts picking up. That's an indication given for November. So hopefully, we'll be back on track to achieve 10% volume growth. Here, another point I want you to observe. Maybe we were always talking about volume growth. Here, the growth is coming in thin wall and food and FMCG -- sorry, pharma. That is where the weight of the components and the tonnage sale is less in terms compared to heavy products like paints, that is paint and lubricant buckets. So it may look like the volume growth is less. But if you look at closely, while the volume growth is 6.8%, sales revenue growth is 9.65%. That indicates better value addition or improved selling realization because of the product mix shifting towards food and pharma.

Right. Sir, it's really helpful sir, thanks for this detailed answer, it's visible on the numbers. Because of the mix change, the realization improvement on Y-o-Y, that's clearly visible. Sir, just one last question on the sweet pack side, the additional capacities that we're adding. And we're expecting Q3 onwards, that should overall impact the F&F number, food and FMCG number in a positive manner. So you have started seeing those traction on the sweet packs -- how specifically the sweet packs, if you can highlight with the realizations and the margins will also be relatively better in that category. That would be my last question, sir.

Yes. Sweet packs have picked up in spite of GST or otherwise. September and even in October, because it's a festive season, there was quite a big -- good demand, and we did fairly well. And even that production has started there in North, that's in Panipat. So sweet box has not impacted, not much. People didn't bother to buy sweets. So that way, there is not much of a drop or flattening of demand. That's doing good. And in North now, we have signed a couple of decent contracts with dairies in Delhi, Delhi NCR area, and that should add numbers from February onwards. So as I said, our Food and FMCG growth will be sustained with the Panipat operations coming into production.

The next question comes from the line of [ Keval Yabang ] from IIFL Capital.

Congrats on good set of numbers. So, my question pertains to the weakness that we have observed in paints during this quarter. So, like last quarter -- in the first quarter, we posted near about 20-plus percent growth in terms of value in paint. But this quarter, we posted around 3.36%. So, could you just elaborate on that?

Yes. Paints, certainly, when the rains are all around, I don't think anybody will paint their houses or offices or whatever. So, in the Q1, we have seen a decent growth. But in Q2, it's muted. In spite of good jump in ABG numbers, we ended up with a 2.6% turnover growth or 3% volume growth. So that's much less than our average, which is around 11% for the 6 months. So, this is where the numbers have impacted due to heavy rains in the last 4, 5 months. Last year it was -- last quarter, it was 21% growth in paints. It's now hardly 3%. So that is one of the major drawbacks, I would say, in bringing down the volume growth below 10%. But if the rain stop, there will be pent-up demand and activity picking up for summer and [ marriage ] season. I think the paint demand will go up from November, December onwards.

Well sir, didn't we have any seasonal impact in Q1 as well? Despite that, we posted near about 20% plus. So, like what exactly would be the possible reason for such a steep decline in growth?

Yes, that's what I said. One of the main reasons for decline in growth compared to Q1 is seasonality. And this time, the monsoon was so heavy that the paint and lubricant sections, both of them have done -- paint is at least 3% growth, but lubes is down by almost 13% compared to Q2 last year. So obviously, the movement of goods and materials slowdown in monsoon affecting the lubricant demand. So that is where we see our packaging also taking a beating. But food and FMCG, if you look at it, I'm very happy to see the volume growth of 19% and Q-Pack also up by 20% and pharma, of course, 900%, that is on a small base. But on pharma, you look at last quarter, where INR 7.42 crores we have done, we have done INR 8.8 -- INR 10.8 crores, which is almost 46% growth in value terms and about 35% growth in tonnage terms. That shows that we are able to even get better pricing in pharma products in this quarter compared to last quarter.

Understood. Understood. This is very helpful. Just one last thing I want to just add on that question. Are we seeing any decline in the terms of the demand from, let's say, players like Opus, like those which are driving the growth in the paint sector? Or is it like balanced across all the players?

It is balanced across all the players other than Birla Opus because Birla Opus is on the growth trajectory. And in fact, we have a very positive growth even in this quarter. We grew by around 16% in value, 17%...

This is for Opus specifically sir?

Only for Grasim.

Okay. Understood. Understood. So, there's no specific slowdown as such, right?

There is a slowdown. The rest of the people are in the negative or flat.

Okay. But not for Opus though?

Opus is the only -- in terms of our sales to them, they've grown very handsomely.

The next question comes from the line of [ Darshita ] from DSP Asset Managers.

My first question was regarding the EBITDA per kg. Despite a better mix that we have seen from first quarter to second quarter, our EBITDA per kg has come down from INR 41 to INR 39. Is there -- are we seeing any reduction in our EBITDA per kg within the F&F space? Is there any pressure there? Or is it largely because of lower volume growth?

It is due to lower -- not only volume growth, reduction in the capacity utilization. In Q1, the capacity utilization was as high as 74%. It has dipped to 63% in Q2. So obviously, all the overheads will go up, affecting the EBITDA. So, in Q2, typically, it wouldn't be that bad. But due to several areas, severe rains and GST announcement, there was a lull in this quarter, which has impacted the capacity utilization. When the capacity utilization comes down, obviously, the costs go up, affecting the EBITDA. But I'm very glad it is much better than what it was last year. Last year, it was only INR 36.38 which has now gone to INR 39.4. That's almost INR 3 gain. That's mainly because of pharma and food products.

Right. Got it. Secondly, within our Paints segment, would you be able to share how much contribution do we have from Asian Paints and ABG versus how was it in the second quarter '25?

Second quarter '25 to -- second quarter of '26, in Asian Paints, it's more flattish. Volumes are maybe 2%, 3% up or down. But there's a considerable jump of around 17% to 20% in Grasim.

But how much do they contribute to our overall paint sales?

In the overall paints -- I mean, I don't have the exact number, but Asian Paints will continue to be more than 60% and Grasim may be around 20%, 25%. And the rest is AkzoNobel, Berger and KNP.

Has the 20%, 25% number gone up on a Y-o-Y basis?

Yes, yes, of course. Last year, the sales were much lesser. So, they have really gone up considerably, 24%.

Got it. And do we -- I'm sorry if this question was already asked, but are we still confident of meeting the INR 90 crores pharma revenue numbers that we were anticipating? I think earlier, we had given a guidance around that number. Are we still in...

No, no. I think you heard it wrong. I never said INR 90 crores. This last year, it was hardly INR 8 crores, INR 9 crores. And this year, we said INR 25 crores to INR 40 crores...

No, no, for '28. No, no, not '25.

Oh '28, yes, yes, INR 90 crores is not a big deal. This year itself, we may cross our INR 35 crores target because we are almost 10-plus in this quarter. So even if you continue the same trend in the next 2 quarters because the new product addition will be happening in Q1, some of the molds are coming in -- sorry, Q4. Some of the molds are coming in this month and next month, and there will be tile supplies and commercial supplies will start in Q4. So even assuming we continue to do at INR 10 crores for next 2 quarters, we'll end up with INR 35 crores, INR 37 crores, which is above our target of INR 35 crores. And next year, our target is close to INR 55 crores to INR 60 crores. I think with the new molds coming in and becoming productive, we should be able to be there. And '27, '28, yes, again, we are looking at another 40% to 50% growth, taking us close to INR 80 to INR 90 crores bracket.

Got it. Got it. And the EBITDA per kg in the pharma segment will continue to be at around 100-odd levels -- I mean 100 to 120 between -- somewhere between 100 to 120, conservatively 100.

Yes, yes, certainly.

The next question comes from the line of Shirish Pardeshi from Motilal Oswal.

So sir, continuation on the pharma, the growth is tremendous and you are looking very strong, convinced. Which particular product is driving? Is it canister is driving or the caps and bottles are driving this growth?

Our EV tubes, caps and bottles at present are driving the growth. Canister just started picking up, a couple of orders from -- I don't want to name them, at least 2, 3 clients, and some bulk supplies also are happening in this month. And once the canisters really take off, the numbers can -- I mean, at least the profitability numbers, if not the top line, would still improve. But keeping that as a conservative level, still the growth is coming from EV tubes and bottles and caps.

Okay. And just a follow-up on this. One of the large customer was doing the stability test and pilot. Has that customer started officially giving us order?

Yes. There are 2 of them actually who are strategic and have the potential to become an at least INR 10-plus crores per annum revenues. They both started giving small -- I wouldn't call them huge orders, but at least order worth around INR 70 lakhs -- INR 50 lakhs to INR 80 lakhs over the next 2, 3 months. So those orders have been just received in the month of September and being executed in this quarter. So that will slowly add. I think in the Q4, they will add -- at least in my opinion, each will add at least INR 2 crores to INR 3 crores per quarter. So, the potential will be realized in the Q4.

Okay. My second question on capacity enhancement at Grasim. So, Cheyyar and Panipat is now fully operational. Is there any further capacity addition which you are going to have? And what is the capacity utilization at the end of quarter 2 for these 2 plants?

See, our total capacity creation for ABG would be around 10,000 tonnes in all 3 plants put together. And this quarter, we have done 1,500 -- sorry, how much we did? About 2,900 tonnes in the H1. So, we may end up around 6,000 tonnes-plus utilization out of the 10,000 tonnes installed. So around 60% to 65% probably will be utilized.

Okay. That's really helpful. The other question I wanted to check, you mentioned in the press release that you have introduced the next-gen IML molding, which actually cuts the production cost. So, is this project completely stabilized or there are some more legs to do it? And what is the cost reduction on this? And what percentage of revenue you are targeting for FY '26?

When I said in -- the IML integration is what I mentioned during my last call, we brought in all the IML operations under one roof at Sultanpur. And also -- I mean, in-house, we are manufacturing the HTL labels. And that's where we see integrated -- benefits of integration, which might start from any time now. Last month, only in July, August, we closed our unit at Jeedimetla and shifted the machinery to Sultanpur, Hyderabad. So, there operations started from August, September. So probably from Q3, Q4, you will see the benefits accruing in the cost reduction of IML manufacturing.

So, what percentage of cost reduction it will be, about 7%, 8%, 10% or more?

In the consumable cost, yes, not in the overall revenue. It will be -- in the consumables, which are around INR 22 per kg, probably you can see about INR 1 benefit.

Okay. And this will have a larger contribution in FY '26?

Yes, obviously, because -- FY '27, you mean? This is FY…

Yes, FY '27, sorry.

Yes, it will have better addition in FY '27.

Okay. Okay. And the last question, you mentioned that in a weak quarter, the volume is lower and that has reflected into the EBITDA per kg. But then you also mentioned that this is going to go away. I mean I'm not counting too much on the paint, but finally, the Panipat is started rolling. So, is this confidence is that we will be able to maintain 40 plus in second half per kg?

Yes, I'm confident we will be able to maintain 40-plus even in the second half. Q3 may be similar to Q2, but Q4 would again go up to somewhere close to Q1 levels. So, we'll end up 40-plus in the full year from 37.6 last year. It's almost a 6%, 7% improvement in EBITDA.

The next question comes from the line of Shubham Jhawar from Dexter Capital Advisors Private Limited.

I had primarily only a single question. Sir, if I look at our realizations per kilo in our food and FMCG space, this quarter, it is somewhere around INR 295, right? And this used to be around INR 330, INR 340, and it has been -- from FY '22, it has been inching downwards, and it's now below INR 300 per kilo. So, sir, going forward, how is this realization going to be for food and FMCG? And any particular reason why it has dropped below INR 300 this quarter?

See, there is definitely some pressure in competition coming up in corners of food and FMCG sector. Here and there, I told even during last quarter also, there is an addition of a few small-time players in different corners of the country, who are definitely causing some competition. And we being all centralized in Hyderabad and supplying all the products across the country only from Hyderabad, have the disadvantage of both time delays and freight costs. So now that Panipat started and we already captured a couple of big clients in that region, I'm confident next season, we'll be able to command and get back our numbers. But pricing-wise, yes, there is some drop per kg value in food and FMCG. But still, it is much better than our other products.

Got it, sir. And my second question was, I do understand that ABG volumes have started increasing this FY '26 onwards. But wanted to understand the demand forecast that they had given us in last FY, so is the demand in that range itself or it is lower compared to what they had given us in the last fiscal year?

It started slow in the beginning of April, May, but it's really picked up decently well. And -- but for the month of October, which is everybody dipped a bit because festival came early and a lot of holidays in this month, so most of the paint companies are flattish in October, but the projections for November are pretty good. So, I think the numbers will start improving.

The next question comes from the line of Jaiveer Shekhawat from AMBIT Capital.

Mr. Rao, you mentioned that for Grasim, you did almost 900,000 tonnes in the first half. Is that right?

For Grasim, no. I said we have done about 6,000 tonnes -- 2,900 tonnes in the first half. So we are expecting to do 6,000 to 6,500 tonnes in this full year.

This is specifically for Grasim, 2,900 tonnes?

Yes.

So sir, I mean, if I were to -- again, possibly for an annual basis, that will be roughly about 6,000 tonnes of volume that you're saying. I mean last year, you did almost about 18,000 tonnes of volume in the paint segment. So are you suggesting that -- I mean, by the end of the year, if we end up doing about 20,500, 21,000 tonnes of volume, I mean, the rest of the segment would have declined by almost 15% to 20% ex of Grasim. Is that a right understanding?

Not really. Asian Paints won't decline that much. It is hardly 2%, 3% drop for us, at least for us. And in terms of Akzo also, it's not a big drop. Actually, it is flattish, 0. And KNP also, it is just 4% growth. So not necessarily that the numbers will come down in other peers. The dip in Asian Paints itself looks big because they contribute a very big number of our paint sales. So that is the reason why you may see overall growth being tepid in this Q2. But if you look at the H1, still the paint volumes are up by around 12%.

So I'm just trying to understand, in the last year base FY '25, what were the Grasim volume? And ex of Grasim, what is the growth that's happening in the paint segment? I think that's where I'm trying to get to.

I can answer the first one, that is Grasim's growth, and I can't give you the details of all the rest. Grasim has grown from, let's say, 1,250 tonnes in the Q2 last year -- this year from 995 the previous year. So that's a growth of 24% in the quarter. So in the half year, it was 1,560 last year, it is now 2,900. So that's a growth of about 86%.

Understood. Understood. So ex of -- as you rightly said, ex of Grasim, I think the growth has been quite tepid. And with respect to the guidance that you had earlier said on volume growth about 12% to 15%, I mean on the first half, you have managed to do around 12%. So do you sort of stick to that? Or is there going to be a revision downwards on that?

We are aiming to do that. I think we may at least stick to 12% because when I say probably the volume growth will come more in pharma and food and FMCG, so in terms of tonnes, we may still see a growth of close to 12%. But in terms of sale value, we are aiming to try to hit at least 12% to 15% bracket, so which is now currently at 13.88% for the first half. So sale value-wise, we'll still be in 12% to 15%. Volume growth-wise, we will be trying to maintain the 12%, I think it's possible.

And sir, lastly, on the Panipat F&F expansion, is that up and running? And then over there as well, I mean, have you started receiving larger orders? What is the capacity utilization for that?

Yes. Now the capacity utilization is hardly anything because it is a very new plant. We have about 40 lakh sale in the month of October so far. That is hardly anything. But it is now picking up. And we have signed one major contract, I can't reveal the details. That should add at least INR 4 crores to INR 5 crores turnover next financial year from one client. And the molds are under manufacturing. They will be ready -- up and running from February. So that will be one big addition for food and FMCG from Panipat. And there are several small and medium orders are also coming in. And I'm sure the next season, that is the Q1 of next year, we'll see some decent addition from Panipat for F&F.

Sir, so overall, on the F&F side, do you expect you will be able to maintain that 15 to 20 percentage growth? Again, something that you've already guided earlier to the market as well. Does that change in any way? Or do you think you can maintain that?

No, we are still confident we'll maintain 15% to 20% growth.

Understood.

If you look at the 6 months, it is 17% so far.

No, I mean, even in the coming year as well, '27 and '28, do you think your capacity will supply...

I can't see '28, but at least in '27, we can because North will start contributing handsomely in '27 and even '28 also probably, but definitely in '27.

The next question comes from the line of Chirag from Keynote Capital.

Lakshmana sir, my first question is related to the volume value mix of IML and non-IML for Q2 FY '26?

Yes. I think they have now improved further again. From Q1, it was hardly -- I mean, moved a little bit. It was 75.02%, IML and other label HTL together, and it's now 75.11%. So, it just moved a bit.

This was from the perspective of volume terms?

Yes, in volume terms.

And what about value terms?

Value terms is more or less similar. It's 77% last year. It is now 76.2%.

Okay.

Last quarter 1 and Q2.

Got it. And sir, I missed one of the earlier participants answer, which was related to a drop in realization for F&F segment. Could you just repeat that once?

It is -- what he was saying is the drop was very marginal. It was INR [ 309 ] per kg in Q1, and this is around INR 300 in Q2. The product mix changes and also there is some competition in the nooks and corners is the reason what I had given. So it was INR 309 in Q1. It has now become INR 300, INR 301 or whatever in Q2. So I think he was referring that.

Got it, sir. Sir, my last question is related to the significant drop in lubes as a segment. You have mentioned that the major reason behind it was the rainfall. So can I expect that the earlier 2,000 plus volumes to -- as a run rate on a quarterly basis to come back for -- specifically for lubes? And for paints, it is expected to come back to 4,800 to 5,000 tonnes per quarter level?

Paints, I'm confident. But lubes, it's always -- I'm skeptical because whether the movement of goods will pick up in the GST direction and that might drive lubes growth. As I said, lubricants are coming out with more and more mileage per liter. So definitely, though the economy is increasing in terms of movement of goods, the lubricant consumption may not grow in tandem. So probably you will still have a lag in growth in lubricants. That's my view. Whereas paints, as the rains subside, and people badly need it now because with rains washing away whatever paint or it's already there or not there; definitely, the movement of paint will pick up in the coming months once the rains subside.

Fair enough, sir. Any guidance on CapEx going forward?

Yes. CapEx again continue to be strong. We already completed INR 60 crores, and we have on annual another INR 30 crores, INR 35 crores. Probably we will end up with about INR 100 crores CapEx this year also, down from INR 140 crores, INR 130 crores levels in the last 2 years. Last 3 years, it was averaging around INR 140 crores. So probably it will end up around INR 100 crores, INR 105 crores in the current year.

Out of this, what is maintenance CapEx?

What is what?

What is maintenance CapEx?

Yes, maintenance will be always close to the depreciation, which is around INR 40 crores -- INR 35 crores to INR 40 crores per annum, replacement of machinery, replacement of robos and molds will continue to be there. And the rest will be additional capacities, especially in pharma and balancing capacities in ABG plants. And we already invested on land for pharma expansion in the first quarter, about INR 11 crores. We acquired 2.5 acres of land adjacent to our Sultanpur unit. So that is the only greenfield expansion. It might happen in the next year. But for that, the rest all will be brownfield, wherein it will be addition of machinery to balance the demand.

Right. We're expecting it to increase capacity from 1,500 to 3,000, correct?

Yes, about 2,500 in the next financial year. It might -- it's happening in progression. It's not that it will happen in one shot. Probably in Q4, we will increase it from current level to one step ahead. And then probably by July, that is second quarter, we'll be adding another capacity in ophthalmic and other lines. So gradually, it will be reaching that level.

[Operator Instructions] The next question comes from the line of [ Pratyush ], an individual investor.

So basically, I had 3 questions. Firstly, regarding the pharma segment, I think last quarter, you had given a guidance that around 15 -- 12 or 15 clients were in the pipeline, and they were at different stages of approval. So, can you please give an update on how many have been approved and how many clients will be onboarded in the current financial year?

I don't have a ready answer for that. I think now the total clients who are actively participating in our sales are more than 20, 25 now. And in this current quarter, I have not counted, probably there are at least 5 to 6 additions. And some of them, we have been working with the last 7, 8 months on different trials. So, they started giving small commercial orders. Prominent among them is Laurus and MSN. So, they started picking up small commercial orders. I won't call them huge, but they have huge potential. And they being local, we have advantage to capture the demand.

And sir, when you gave the pharma guidance, then was the assumption based only on the fact that we'll receive orders from the current clients? Or what sort of vendor addition -- sorry, client addition was assumed while arriving at the revenue guidance?

Yes, it is based on marketing feedback that what they feel some of them which are -- who are in trial lots might become commercial and some of them who just completed audit may start giving trial orders. It's an ongoing process and they are cumulative in nature because once they generally adopt a supplier, they stick with the supplier. And as I said last time, due to our innovation and able to develop quick solutions for clients, they are adopting us as a supplier. Once they take us as a supplier for one particular product, they are free to give any other product also to us as long as we match the price and quality. So, addition to stepping into a supplier name in the list of supplier name in a pharma company is difficult. Once you enter there, it's your relations and your quality and timeliness is what makes you garner more and more orders.

Okay, sir. And also, the pharma guidance is based only on the brownfield expansion as of now, right? There's no completely new CapEx, which is considered in this?

Not -- no, not for this year or even for next year also, the gradual growth, what we are envisaging to reach the capacity by end of this financial year, that's March, April, we would be able to meet the next year demand of around 55 to 60 what I projected. So going after that, we need to have additional facility, for which we have acquired land. And probably that will go on stream by July, August next year. But I'm not counting much to come from that capacity for the next financial year.

Okay. And regarding pharma only, there was -- there are mainly 2 streams, right? There was a bottle and there was a cap. So I just wanted to understand whether these 2 products are related and we can expect the volume growth of both these products to always be in line with each other? Or are they unrelated products? And if so, what is the expected share of each of these products in the pharma sales?

First of all, there's no one bottle and one cap. There are several varieties of bottles, more than 40 -- now we already developed molds for more than 40 varieties of bottles. And there are at least 8 to 10 varieties of caps and not necessarily the simple caps what you see on tablet packs, but are also on the eye droppers or on the -- some cough drops, like that. There are different applications of caps we have started making, and some of them are in trial stage, some of them are at testing stage. What we are selling now currently is standard bottles and caps and child-resistant caps and EV tubes, which are contributing mainly to our sale as of today. So, the number of bottle variety is very high. It's more than 40, and it might become 50 we talk next time. So that way, we are able to quickly, rapidly expand our product range. But the majority of sale is still coming from EV tubes and bottles and caps, a little bit from canisters.

Okay, sir. And also, sir, can you please -- is it possible to share the volume data of paint -- goods supplied to paint in the current and the previous quarter?

I don't have the paint alone number, but as a total paints -- paint alone, yes, I have. It's about -- in this Q2, we have given 4,688. Is that correct? Sorry, 4,845 tonnes is the paint sale out of 10,000 tonnes.

Sir, previous quarter?

Previous quarter, it was 5,593.

Okay. And last question, sir. Is it possible to share the optimum capacity utilization for each business segment, pharma, paint, everything?

See, optimal is always 100, but nobody can reach that because as I said last time, machines meant for bottles or jars will give you a higher productivity compared to the caps because the caps are always lightweight, but they need similar machines because of the surface area. So, when you calculate capacity utilization in injection molding, if somebody crosses 75%, 80%, that's really excellent. So, we are somewhere around 74% last year -- last quarter. But this quarter, it dipped to 63%. So overall, for the 6 months, it is 69%.

The next question comes from the line of Pratham from Quantum AMC Private Limited.

So, you just mentioned that some new products are being added...

Pratham, we are not able to hear you. Please increase your volume.

" /> Yes. So, I was talking about that you have added some new products in the pharma segment. So, this essentially expand the earlier discussed INR 5,000 crore TAM? Or are these products already included within that TAM estimate?

What is INR 5,000 crores?

INR 5,000 crore TAM, which we have earlier mentioned in the last -- previous calls. So...

You mean the overall market demand in the country?

Yes, for pharma demand.

Yes. The overall pharma packaging demand is around that. But what products we are making also are part of that universe. So some of them are innovative in nature. Some of them are just replicas or replacement of such products. So with this, we are not going to change the overall size of the market. But certainly, it will give us a part of the market share.

The next question comes from the line of [ Sandeep Modi ], an individual investor.

Okay. Yes, sir, I wanted to just ask one question. Some case was going on regarding copying of our certain products, patent right, et cetera. Did we get any compensation for that?

See, we don't get any compensation from courts or anybody. We can, at the most, make them stop their production and seize their molds. That we did for 2 or 3 erring companies. So we don't get any compensation.

Okay. Okay. One more thing, sir. Total how many pharma companies have visited our premises? And how many are active and any good news for pharma, et cetera?

Yes, yes, there are more than 60 -- I think, 50 -- at least more than 50 visited and at least 20, 25 started buying from us in small or medium quantities. None of them contribute 100% or 20% of the sale. Everybody is spread across, let's say, maximum sale, maybe 10%, biggest client, maybe in EV tubes. Coming to bottles and caps, now we have started at least with 7 or 8 decent sized clients. And those numbers for them will be somewhere around INR 25 lakhs to INR 30 lakhs per month for each. So those numbers will start accumulating as we go forward. And the remaining 30 clients who have visited also approved our facilities, audited facilities, but the commercials and trial runs will take another few more quarters.

Okay. Okay. And sir, how is the pump business going on?

Pump is not great. We are not seeing any major traction, but still it is in the plus side. We are able to sell about INR 30 lakhs to INR 40 lakhs worth of goods to both the pharma side and cosmetic side.

Okay. Okay. Any export orders canceled regarding the tariff, et cetera?

Not really. So far -- anyway, we are not great exporters to U.S.A. Hardly, we sell about INR 2 crores to INR 3 crores per annum. And that's continuing irrespective of the tariff. Maybe they were expecting us to dip the price a little bit by 4%, 5%, which we are mobilizing. But that's not -- it's a negligent factor as of now.

Okay. Sir, the land which we have acquired, when will that be fully ready with robots, et cetera, and start production for pharma?

Yes, there won't be any robot in the pharma. On for EV tubes, we have robo. And we are not planning to add any more robos in EV tubes for pharma. This whatever we have is sufficient. The new facility, we are now yet to get the plant's approval because the land was just acquired 3, 4 months ago. And now we have approved -- applied for plan approvals. Probably we'll get it in December. And hopefully, we'll start in December, January, the construction activity. And during the next financial year, maybe second half or July, August, we'll be able to bring it to a shape. And as I already answered, those quantities and the capacities are not counted for next year projections.

Okay. And sir, how is the business for Birla Opus?

Birla Opus is doing good. As far as the -- we are concerned, from us, they are giving us a good growth.

The next question comes from the line of [ Varun Singh ] from [ PMS ].

Just wanted to clarify that 12% volume growth which you talked about, so that was meant for only paint business or for overall volume?

No, no, overall volume.

Overall volume. Okay. Okay. And secondly, like over next -- in second half, is it fair to assume 4% to 5% realization improvement?

Maybe.

Because in first half, we have seen around 3%, 4% kind of an improvement in the overall realization. But having said that, I think the base in 1Q FY '25, the -- it was more favorable because that time realization was INR 200 per kg.

It's not because of the INR 200 or INR 203, it again depends upon the raw material pricing. It will be due to a product mix. The product mix and food and FMCG and pharma increases, per kg realization increases. So what you said is 8.3% is the growth in EBITDA margin in the H1. I think we will continue to see somewhere around that and deliver EBITDA margin of INR 40 to INR 41 even in H2, which was INR [ 41.6 ] for the last full year. So there's a big jump of more than INR 3 or at least INR 3 in EBITDA per kg.

Right, right. So in second half, maybe around INR 42 to INR 43 EBITDA per kg is a reasonable assumption. That will be correct, sir, given our expansion was 41...

No, last year, last year, second half, it was hardly INR 37, INR 38. So on that, assuming 5%, 6% growth, we may be INR 40, INR 41 for the H2 also. So full year, we may come somewhere around INR 40, 50 [indiscernible], INR [ 40.17 ] level, which is up by more than INR 3 compared to INR 37.6 for the last full year.

Right, right. So -- but since -- in that case, I think we would be cutting or reducing our guidance from INR 42 to INR 40.75.

No, I said our guidance is INR 40 to INR 42, depending upon the growth. With the tepid growth in Q2, we feel that we will still do INR 40.7, maybe INR 41 at the best.

Understood. And sir, one last question regarding GST and the confusion regarding shipment. The benefits of that flowing into this quarter, which is Q3, so I mean, given that and of course, I think rain and the cyclone which is happening in Andhra, that will have a role to play; but still, do you think that overall 12% volume growth in Q3 would be a reasonable kind of an assumption? Or do you think that's too high?

I think, in Q3, we may have growth similar to Q2. But in Q4, I'll be confident we'll be indefinitely in double-digit growth.

Double-digit volume...

Seasonally, Q3 is the least, Q2 and Q3 are the lower seasonal months. But what helps our pharma growth and our growth in food sector in North. So hopefully, profitability might remain intact. Volume growth expectation in Q3, I would be close to Q2. And in Q4, definitely, it will be back to double digit.

The next question comes from the line of Vishwa from PL Capital.

Yes, yes. I had a similar question for the second half, EBITDA per kg. So it has been answered.

The next question comes from the line of Sanyam Shah from Solidarity Advisor.

I wanted to understand what is the steady state EBITDA per kg that we can look for food and FMCG segment? And does this number factor in the decreasing realizations that you are seeing?

Yes, I answered that. There is a small reduction in the realization per kg in food and FMCG with competition hotting up in corners of the market. And this can be effectively handled at least with a growth number through our plant in the North, which will be able to cut down the supply cost and supply time in the northern region. So, the growth of 19.5% for Q2 and 16.97%, that is almost 17% growth in H1; is very positive for us. And we will be able to maintain that momentum by our North plant starting operations. So, while EBITDA per kg might take a dip in food, but the overall growth rate of 17% is really heartening.

I just wanted to understand, sir, what is the steady state number, normalized number for EBITDA per kg for food and FMCG?

Food and FMCG, we have -- I mean, as of now, the segment-wise data is not available, but that remains to be in the region of INR 70 to INR 75 per kg. Probably it was earlier INR 75 to INR 80. So, INR 3, INR 4 per kg EBITDA might have come down in food and FMCG. But as I said, the volume growth will offset through better utilization, and that can sustain the EBITDA.

Okay, sir. And sir, for the pharma segment, once we expand the capacity to 2,500 tonnes, what is the peak revenue that we can do at that capacity?

You can take about INR 350 to INR 360 per kg as a sale value, so probably around INR 85 crores to INR 90 crores.

Okay. And sir, if I take a slightly longer-term view, specifically for the pharma business, maybe 4 to 5 years out, FY '30 or FY '31; do you think pharma can be an INR 150 crores to INR 180 crores business in terms of revenue for us?

This is a long-term view to give, but certainly, it is possible. We are definitely looking at such figures 5 years down the line.

As there are no further questions from the participants, I now hand the conference over to management for closing comments.

So, I take this opportunity to thank everybody who has shown interest to participate in con call of our Q2 and H1 results. And I'm sure that as the company has plans to geographically expand and improve its segment-wise growth in food and FMCG and pharma. The future looks bright. And better utilization as the rains subside and demand picks up due to GST reduction should improve the numbers going forward. And I wish all of you a very happy evening and good future. Meet you later. Bye-bye. Thanks.

On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.