Mold-Tek Packaging Limited (533080) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Mold-Tek Packaging Limited Q3 FY '26 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 Mr. Mohit Dodeja. Thank you, and over to you, sir.

Yes. Hi. Good evening, everyone. I would like to welcome Mr. Lakshmana Rao, Chairman and Managing Director, and thank him for this opportunity. I shall now hand over the call to him for the opening remarks. Over to you, sir.

Good afternoon, everybody. Thank you very much for joining in our Q3 results call. You might have already seen the results published on BSE and NSE that we have the EBITDA by almost 20% in the 9 months compared to the previous 9 months, and sales are up by around 12% in value terms. And however, in the Q3 to Q3, the sales volumes are up by 6% and EBITDA is also up by 14%. You know traditionally, every year, Q3 is our weakest quarter, but things started moving up right from January itself. We have more than double-digit growth in January this month, just this January. And order book looks pretty strong for February also. So going forward, I think we will be back to normal level of 12% to 15% volume growth, which is possible in Q2 and Q1 -- Q4 and Q1. So going -- next 6 months is our busy season. So things will start looking up, and we hope to catch up with the busy demand as we are well geared up in our terms. As I mentioned in my press release, we have completed mostly the consolidation of manufacturing units in Hyderabad, where we used to have 5 units. And now that's going to be only 2 units, Unit 1 and 10. The printing unit is also now accommodated in one of the blocks of Sultanpur Hyderabad unit. And Unit 4, which is a small unit catering mainly to Asian Paints is also moved to Sultanpur B block. So now the 5 units are going to be only just 2 units starting from -- already 2 units are absorbed, but the Unit 4 will be absorbed from March onwards. So this will reflect better operational efficiencies, cost controls, reduction in movement of goods and also personnel. So these impacts will be visible hopefully from next quarter. And also another positive sign is the Vibe Generation with whom we have signed an MOU for unique -- I mean, for developing their product patents and ideas in India for closures and other applications. We have received the first 2 component drawings and designs have been started and pilot modes will be ready by end of this month. One of them will be ready by end of February, one by March and their commercial feasibility will be tested thereafter. And hopefully, by end of Q1, we'll be having commercial molds producing these components for not only European markets, but these products can also be sold to Indian market under our MOU with Vibe. So this is another development. And coming to pharma, we are now have more than 25 clients cleared our premises, audited our premises and cleared them for production. However, only less than half of them started commercial pickup and the rest will start in the next coming months, ensuring a good volume growth in the coming quarters for pharma as well. This is the future outlook, and I think more can be discussed over the question-and-answer session. I put this call back to Anishka to arrange for the question-and-answer session.

[Operator Instructions] We take the first question from the line of Dipak from Nirmal Bang Institutional Equities.

So sir, the first question is on the MOU that we have signed with Vibe Generation. If you just can spill little bit about the nature of the product, what we understand [indiscernible] and does it have anything similar to do with, say, the new products where the leakages are very critical in terms of that we deliver in terms of safety of leakages in terms of the dust particles. So if you can just elaborate a little bit on the nature of the product. Then secondly, on the MOU signed with Swiggy, do you see that kind of a product more of a -- the churn would be materially higher compared to the churn that we have, say, on the other categories of food. So these are the first 2 questions.

Yes. Vibe product details, now I can't divulge because under the MOU, we need to develop the molds, establish the product quality before we make any announcement. But I can tell you that this product also has applications in India and our client segments as well. And this is adding quite a bit of value in terms of application and user friendliness. So once these products are established and developed probably in by April or May when we discuss our Q4 results, probably I'll be in a position to throw a better light. But I can tell you, the products are definitely -- extremely user-friendly, adding high value, and they are patented by Vibe, and we have the right to use the patent here in India, and we see applications very much welcomed here also in Indian industry. However, I don't say that this is hundreds of crores of worth of value. But certainly, it will be tens of crores, which over a period of next 1 year, we can see its potential.

Got it, sir. Sir, secondly, coming to the overall volume number, at the starting of the year, we were of the view, say, 43,000 to 45,000 total volume, you can see it. 9 months, we are say 31,000. Now looking at Q4, even if you go say a little bit of only double digit, is it fair to enough we would be, say, of the guided range of 43,000 to 45,000 would be on the lower -- closer to the lower threshold of the guided range? Or do you think since you highlighted the momentum is strong at the starting of the year that we can have a little bit of a better quarter than expected and Q4 numbers can be relatively better than what we had in Q1 in terms of volume?

Probably we'll be matching Q1 in the Q4. We were not able to cross it. The Q1 is pretty strong. We had 11,400 tonnes production and sale in the quarter. Hopefully, we'll match it and bring it to 42,500 is as against 44,000, 45,000 what we initially projected. But still, that will be somewhere around 11% volume growth, a bit less than what I anticipated due to extended rainfall in the first -- especially in the second quarter.

Got it, sir. And sir, on the pharma side, if you see the traction remains strong and only 9 months already you have done, say, INR 25 crores. And I just want to understand the Q3 seasonality trend that we have, does it apply to pharma as well? And given that 4Q, we should go back to the, say, normal run rate of INR 10 crores, INR 11 crores that you had given that INR 35 crores kind of earlier target that we had should be I think?

Yes. We will be achieving INR 35 crores, though we are at around INR 25 crores in the first 3 quarters. As you correctly said, Q3 is a dampener for pharma as well. This time, it is a little more because of the uncertainty of tariffs from U.S. There was some uncertainty of volume pickups from the pharma industry. But I think now that it is clarified, it might start picking up really good. And whether it is done or not for the Indian market also, winter months are low for EV tubes, which are the major segment which have impacted in Q3. But looking at the strong order book in January, middle of January onwards, we feel we may be able to cross or at least reach the figure of INR 35 crores for the full year. And next year, we kept a target of INR 50 crores to INR 55 crores. That is again a 40% to 45% growth on the current year number we have taken. And that will be adding sizably to the bottom line as well because we are now way above the breakeven point.

Got it. Sir, last question before I follow in the queue. On the lube side, if you can call out -- I mean, on the volume side, we are seeing continuous decline. We know this is a space where we have faced some challenges, but any incremental sign as per the discussions that we had with clients of volumes growing a little bit on the higher side or improving here on? Just the last question.

Yes. Lubricants, we are noticing a dip -- a considerable dip actually. Even in this quarter, we ended up with a minus 10% volume growth in lubricant. It's basically because we are not actively participating in the very low-grade lubricant market of DEF lubes, which are mainly urea-based lubricants. So those areas have become very low-cost product range where Mold-Tek is not inclined to keep its capacity. So that's one of the reasons. And the general trends in lubricant this year is down. I don't know much about how the lubricant company per se has performed. But due to 5 to 6 months of extended monsoon this year, the movement of goods and hence, lube consumption has dipped is what the news I have. Whereas the clients like Castrol, we still have growth -- positive growth, but there are clients where we have noticed a dip in their volumes. So that may be universal reason. Another reason, as I said, is we are letting go some of the low-end lube opportunities.

We take the next question from the line of Shanskar from Eraya Capital.

So while you have shared some color around how the growth trends and shaping up, can you just share more color around like as you said that 11% volume growth, but what kind of sales growth we can expect in Q4? And if you can share a further outlook for next year, if we are in a position. So that's my first question.

Yes. This year, we may close the year at INR 870 crores top line. So for next year, we certainly have a target to cross INR 1,000 crores. That is capital -- I mean the internal target is to cross INR 1,000 crores comfortably. So that's close to 13%, 14% volume growth. And going by the trends of the Aditya Birla Group, ABG, which has grown around 21% in Q3, we are confident with their Mahad plant also going full stream, we may continue to see a good double-digit growth in Grasim. And with the RCP issues with Asian Paints being settled, we also started seeing volumes of Asian Paint picking up from January onwards. The RCP, they want 40% to 50% recycled plastic in their paints due to the government statutory obligation. So we have successfully developed that formula and able to start supplies from December. And in January onwards, it will give them confidence that Mold-Tek will be pioneered or at least first -- one of the first paint manufacturer to meet the statutory compliance. So with that being done, we hope Asian Paints, which is hardly 3%, 4% volume growth, can go into double digits in the next financial year, which will be a big pull for the rest of our other segments, which are all definitely in the double digits -- healthy double digits. So we are confident next year also, we are aiming 12% to 15% volume growth. And once we achieve that, we may probably cross the benchmark of INR 1,000 crores top line. And this year, EBITDA will be -- now as you know, for the 9 months, it's INR 125 crores. And hopefully, we close this at around INR 170 crores is the target for the current year, up from INR 144 crores last year. So that's, again, a 20%, 22% EBITDA growth. And next year, we will comfortably cross INR 200 crores or maybe INR 215 crores -- INR 200 crores to INR 210 crores EBITDA.

Understood. And from EBITDA to PAT, can you share some color around growth, like where this operating leverage you are expecting to flow in from EBITDA to PAT level.

Yes. In the 9 months, we have declared 18% PAT increase, up from INR 44.3 crores in the last 9 months to INR 52.25 crores and earnings per share also gone up from INR 13.3 to INR 15.75. So we have a healthy growth at PAT level also, which is around 18%. And probably, hopefully, next year, it should hit 20% growth. This is for the 9 months period. So hopefully, for the full year, we'll be in a position to reach somewhere around INR 70 crores, INR 75 crores, INR 73 crores to INR 75 crores PAT, up from INR 60 crores last year. So that's around 20% PAT growth, similar to EBITDA growth. So similar growth, we can anticipate for next financial year also as well.

Understood. So you are saying that similar 20% growth we can expect for both for this year as well as next year at the PAT level. Is that correct?

Yes.

Got it. And can you share some color around the CapEx that you would be closing this year? Are there any changes in your guidance as you stated earlier on CapEx for -- if you have any estimation for next year?

Yes. We have made our budgets during the last month for the next financial year. And the good news is the CapEx is going to come down considerably next year because all greenfield projects are more or less completed, but for a little bit work at Mahad. So next year, the major expansion will be in pharma, wherein we anticipate to spend at least around INR 25 crores, and we may enter into a couple of new products like eye droppers and maybe nasal droppers towards the end of the year, nasal sprays. So these 2 products already eye droppers is in a pilot mode development stage, but the project will be out only in the second half of '26, '27. And towards the end of the year, we hope to enter into nasal sprays based on our market research if there is a positive demand gap. But for ophthalmic, we are definitely going ahead. Already pilot molds are under development. And as we go forward, pharma will at least keep growing at least around 30% thereafter after we hit INR 50 crores to INR 55 crores next year. Thereafter, we have a target of 30% to 35% volume growth coming from pharma. And very heartening thing is majority of our clients who have started buying commercial, they're very happy with our quality and timely supplies. And a couple of them are even asking us to set up warehouses near their plants to enhance our business. So these trends give me a lot of confidence that we can become a reasonably big player in pharma in the next 2 to 3 years' time.

Understood. Can you just repeat the CapEx...

Sorry, I didn't tell that. Last year, CapEx was INR 140 crores. This year, it will be close to INR 120 crores. And next year target is INR 80 crores to INR 85 crores.

This year will be INR 140 crores, next year is...

No, no, no. Last year was INR 140 crores. This year, it is closing at around INR 120 crores. And for next year, the target is INR 80 crores to INR 85 crores.

We take the next question from the line of Abhishek Navalgund from Centrum Broking.

The first question on ABG Paints. In the last earnings call, you mentioned that I think in 1H, we have done around 2,900 tonnes of volumes, broadly 30% of the total paints volume, and we have guided for around 6,500 tonnes by end of the year, I mean, full year number. So where are we after 9 months? I mean, what's the number in broadly 3Q? Because you mentioned about some 21% growth in this quarter, ABG. But broadly, tonnage-wise, where would we stand?

Yes. ABG this quarter was around 1,480 tonnes. And so far, it is around 4,400 tonnes, and we hope to hit the 6,000 mark in the -- by end of this year.

Sure. And the 10,000 tonnes capacity that we mentioned about ABG, so this includes even the Mahad one or it is only the existing 2?

Including Mahad.

Including Mahad, right?

Yes. So currently, this year, we may be utilizing only 60% of that capacity. And we hope next year onwards, it will be about 70%.

Sure, sure. And since we'll be moving ABG to Mahad, have we -- I mean, got some indication from Asian Paints also because you mentioned the RCP thing. But apart from that, I mean, the volume -- Satara plant was like underutilized for quite some time earlier. So do you expect that the ramp-up from Asian Paints will be far stronger from maybe upcoming quarters once we move the production for ABG to Mahad.

Yes. Once that RCP issue has been resolved, the numbers started going up, and we could kind of develop a recipe, which is adopting 40% RCP, which is the government statutory compliance. Thereafter, we are now seeing the numbers moving up, and we hope we will gain a double-digit growth in Asian Paints in the coming year.

Sure. Any possibility for market share gains there? Because you said you are the only player who has cracked that 40%...

No, no, it's not necessarily. The others also will be simultaneously cracking that recipe because obviously, the suppliers will go to all the manufacturers. Hence, it will be a couple of weeks, plus or minus. So it won't be a great advantage as such. But once this particular thing has been done, we've been -- we are confident that we'll get back our old percentage.

Okay. And the CapEx for Mahad broadly out of INR 80 crores, INR 85 crores, how much would be Mahad broadly?

No, Mahad is hardly anything because already those machinery have been installed at Satara. So what is happening there is only the shed and auxiliary equipment worth around maximum INR 5 crores. But the other plants, tool room itself, replacement of molds itself around INR 20 crores, INR 25 crores for every year and injection molding machines worth around INR 9 crores are planned for all the plants put together, especially for North plant where we are seeing a good traction for our thinwall and Qpack. So that is causing our confidence to go up to capture the North market. So there is injection molding enhancement of capacity in Panipat, not for ABG, but mainly for the sake of Qpack and food and FMCG products. And around INR 25 crores to INR 30 crores will go towards pharma. That is why the next year CapEx could be controlled between INR 80 crores to INR 85 crores.

Sure. And last question from my side. I mean, since you mentioned Panipat F&F facility, so where are we in terms of the client engagement there? Because have we finalized any clients there?

Yes, yes. Several clients, not one. We have at least 8 to 10 clients already started buying from us. And we -- in this season, we expect it to go up to 25 to 30 clients in both Qpack and thin walled put together. And we are expecting the numbers to double in this coming season.

Any categories which you would like to highlight, if not names?

All the categories, be it confectionery, be it yogurts, ice creams, protein powder, edible oils, cashews, basmati rice like Qpack, in the case of Qpack. So there are several -- ghee, all these features. We are introducing to start with 6 thin walled products immediately and another 6 by June, July. That is for the festival season. So there will be 24 molds, that is 12 sets operating in the North by June, which will be -- which is currently 4 sets. So there will be a huge increase in the food and FMCG in that segment, I'm expecting. Already, we are seeing a very good trend in Qpack sales, which are established 6, 7 months ago. And you all know that thin walled started only in September, October. So that also is picking up, and we see a good improvement in the coming season.

Okay. So the element of seasonality will be relatively lower, right, from Panipat F&S?

Not necessarily. Again, Q3 will continue to be our bad -- I mean, least season because all the consumption of paint you name it, or sweets or ice creams, they all come down in winter. So generally, Q3 continues to be our weakest quarter. Next weakest will be Q2. But this year, it was pretty little worse than previous growth rates because of extended rains. Otherwise, Q2 also would be moderately good. And always Q3 is the worst quarter, and that is over now. So hopefully, next 3 quarters, we'll be seeing a good volume rise.

Okay. And sorry, Sultanpur capacity utilization as far as F&S broadly would be 50%, 60% or lower?

It is around 60% low, and it will go up now. Yes. But it has to go up now because all the machinery have been erected in one premises. And there will be fungibility in case of some machines are idle, easily molds can be put on and then other products can be produced. So this gives a lot of fungibility and better capacity utilization at Sultanpur.

We'll take the next question from the line of [Pratyush Damani] an individual investor.

Just one question. Once all the greenfield plants are up and all your factories are running, what would be the peak revenue potential?

Peak level, we can -- with the current machinery and plant itself, we can reach INR 1,200 crores, INR 1,250 crores. But what happens is the capacity utilization would be steady beyond 75%. Typically, beyond 75%, 80%, you will tend to have mismatch of jars and caps. And typically, in injection molding, anything above 75% is excellent. So I can safely say with the machines that are currently there, INR 1,000 crores can be reached. And we are adding 21 more machines in the next 3 months and first 6 months of next financial year. So that will further add another 10% to 12% of the capacity. That means up to 1,150 crores to INR 1,200 crores -- INR 1,200 crores, you can easily say is possible with the existing and planned emissions.

In injection molding?

Yes.

Yes sir. I'm saying, you mentioned that around 75% plus is a very good number for injection molding. So just wanted to understand what kind of difficulty do you face or do manufacturers face to scale up utility beyond 75% in injection molding?

Yes. What happens is the product mix won't be perfectly matching your machinery capacities, and jars and lids are not completely fungible. Manufacturing a lid and a jar machine is not viable. You can do it, but it is expensive and won't give the yield. So sometimes you may have to use a bigger machine for a smaller component, thereby capacity utilization effectively will come down. So that is why anything above 75% injection capacity is considered good. And also, you don't use the entire machine capacity. For example, a machine is rated to produce 1,200 grams component. You may produce from 700 to 1,200. So effectively, your output volume will not be as good as your capacity. And sometimes the width of the mold or depth of the mold component is different, then you need to use a bigger machine, but you get a lower productivity. So all this makes in injection molding capacity utilization, anything above 75% is a very good deal.

Okay. And in pharma, what would be the idle capacity utilization level?

Same. Again, there also injection molding and IBM machines are used. IBM is injection blow molding machine. There also, you have similar limitations. So anything above 75% is a good utilization.

We take the next question from the line of [Akshay] from Canara Mutual Fund.

Just one question. This is regarding the MOU that we have signed with Swiggy. Sir, can you just talk a bit more about it, like what is the incremental opportunity that we get from here? And also what kind of margins can we expect from here? Would it be like, say, F&F kind of margins or it would be like a paint kind of a margin?

Which one you're talking about, Vibe?

Swiggy, sir. Swiggy.

Sorry?

Swiggy, sir. Swiggy MOU pact we have done.

Swiggy will be similar to our food and FMCG margins. Basically, they are buying restaurant packs and food packs for their brands, which they promote. So they preferred -- they put us as a preferred vendor for packaging products. So they will be directing their restaurants and partners to buy the packs from Mold-Tek. So we have been selected as a preferred vendor for Swiggy restaurants. So that will be similar to our restaurant packs, that is Food and FMCG EBITDA, which is around INR 70 to INR 80 per kg.

And any volume estimate or assumptions that we can have for 100 tonnes or so? For the next year.

Next year, again, we are planning -- hoping to do around 12% to 14% volume growth. That's why from INR 870 crores, we are hoping we'll be crossing the INR 1,000 crores benchmark.

Okay. I was looking more from the Swiggy perspective, like what incremental volumes can come from?

Swiggy, I can't say now because it's just a very recent MOU. They have to spread the news and some of the restaurants have to be contacted. And it will be like one more client. I don't think it will be a very huge addition unless we see it for next couple of quarters, I can't comment on it. But the reach will be very big, and this will enable us to reach more and more restaurants and food delivery partners more rapidly. So wait and see. Just it was done a month ago, 15, 20 days.

We take the next question from the line of Shiv, an individual investor. We will proceed with the next participant. We take the next question from the line of Amit Khetan from Laburnum Capital.

You talked about the decline in lubricant segment. How much of that is sort of cyclical and should come back next year? How should we look at the volumes in the lubricant segment for FY '27?

See, actually, I missed one point when I answered that question. Here, I want to add it. One of the reasons why we have a dropped in the lubes segment is we lost the tender for BPCL. BPCL tender was completed last year. And this year, BPCL tender has not come in our favor. So that is one of the reasons why there is a decline in the lube numbers, especially in this quarter because till last year, second quarter, I mean, a few months ago, the tender has been completed, and we couldn't get the tender for the current year. That is one of the reasons for the lube drop. But I think overall, 9 months, the drop is not as steep as 10%. It is somewhere around 6%, 7%, I guess. So hopefully, next year, we should come back to at least recover this loss because we have added Veedol recently, and they started picking up volumes for the last couple of months. And it may not be as big as BPCL, but to some extent, they can -- it can fill up the gap.

Understood. And can you talk a little bit about the competitive intensity in general and specifically in food segment?

As I mentioned to you in the last couple of quarters ago, there is a competitive activity in IML segment now. But with our variety of robos and a huge range of products and multi-locational supply, we are in a position to retain most of our clients and even add several of them in this current year. Last year, we suffered the shortage of printing capacity, which we have completely eliminated by adding quite a bit of capacity in printing and lamination, which has now become a handy and enabling us to deliver goods in time, which has again gained confidence of even smaller and midsized companies. And the growth is again back to mid-teens. So going forward with North coming in picture -- into production full swing, we'll be sure of mid-teen growth in food and FMCG, while Qpack has continued to grow around 25% to 30%, basically because the court cases we have put on competitors copying our patented design are bearing fruit. And recently, high court bench has given an order in our favor, stopping 3 of our competitors who have infringed our patented model.

Understood. Lastly, if you can -- it will be very helpful if you can share what is the EBITDA per kg for the different segments, just a rough sense?

I think I've been sharing that. For the paint and [indiscernible] and even Qpacks, it is in the region of around INR 30 to INR 35. And food and FMCG, it's close to INR 70 to INR 80. And pharma, it's about INR 120 to INR 140 depending upon the product range.

And lubricants would be higher than 30% to 35%, right?

A little better than paints.

We take the next question from the line of Chirag from Keynote Capital.

Sir my first question is related to the Paint segment. What will be the volume growth in Paint segment ex ABG?

Overall growth is 10.3%. In that ABG alone has contributed about 21%, that is around 250 tonnes. So out of -- ABG has contributed 21% of the 50%...

If you could provide the volume of ABG last year?

4,800. So 250 means about 5%. Out of the 10% growth, 5% growth has come from ABG. Rest is from Asian Paints and others.

Sir, second question is related to the same. Will the RCP, which will be added and the raw material for us would lead to decrease in EBITDA per kg in Paint segment?

No. What will happen is the RCP will be purchased at a little lesser price and the same benefit will be passed on to the client. So it will not impact our EBITDA at all.

Okay. So RCP currently is available at a lesser pace than our current raw materials?

Yes, of course, more than at least 10% to 15% cheaper. So that's one of the reasons why we were not so competitive because we could not effectively use 40%. Now with the new recipe, we are able to do that.

Got it. Fair enough, sir. Sir, my next question is related to the Food and FMCG segment. Just wanted some understanding related to once the printing press came -- once the printing capacity came into the last quarter, what has actually restricted us for growing at more than 15 percent in this particular quarter?

Yes. This time, it is around 11% growth in food and FMCG, 54% in bulk packs. So put together, it is close to around 12% volume growth. But pack, we grew at 25%. The food and FMCG also is a tepid quarter, Q3, but Q4 looks pretty strong. Already in January, we found it's more than 17%, 18% growth we achieved. And going forward, the season starts for ice creams and yogurts as the summer picks up in March onwards. So from -- right from February, we expect a takeoff in thin walled sales.

But I guess there is some issue related to the numbers that you have said. The growth in Qpack was around 34% for the quarter Y-o-Y basis. You have...

Quarter you're talking. I'm talking about 9 months.

Okay. Got it, sir. Got it. Next question is related to the labor cost that you have included in employee benefits. What was the entire cost included for this quarter itself or it is going to be an incremental cost, which would be coming in the next few quarters?

No, the additional employee costs are already absorbed. There's no extra coming up. It will be...

The onetime effect has been on employee expense.

Yes, it has been already taken.

So going forward, we are expecting -- can I expect that going forward, the employee cost would be lesser -- comparatively lesser than current quarter?

Yes, maybe Comparatively, it will be lesser because this quarter absorbed a little bit extra provisions of the previous 2 quarters. So going forward, it may marginally come down.

Fair enough. Fair enough. And sir, just for the understanding perspective, like we have signed an MOU with Swiggy. Generally, the containers, the plastic containers would require a significant volume from the client purchase. So just wanted to understand, within this MOU has been there any kind of talks that they are asking you to set up certain plant and machinery into certain parts of the geography of India?

No. At current level, they are also not very clear how the volumes pick up. Maybe in future, once the volumes really pick up, our North plant, our West plant is also equipped with capability to produce thin walled products. And what mainly they will be looking at is restaurant and packs. And in that, we are actually introducing some more variants in this March, April. So probably as their volumes grow up and if they really want to have capacities, we have plants across India now. So additional capacities or molds can be created and production can be effectively made from those areas. But I think I would wait for a quarter to comment upon this.

Fair enough. Sir, one last question from my side. In the oil business, we used to do annual volumes of about 9,500 tonnes to 10,000 tonnes MT. Currently, if I look at the run rate, which is around INR 1,800, it has significantly dropped from that level to almost 7,000 tonnes to 8,000 tonnes. So are we losing...

Sorry, what you said 9,500 is what?

We used to have an annual run rate in MT for oil business around 9,000 tonnes to 10,000 tonnes. So quarterly run rate of INR 2,400 to INR 2,500.

You mean the edible oil part of Qpack sale?

No, no, sir. The oil -- which is included in the lubes -- the lubes.

For lubes, you're right, okay.

Yes. So lubes are...

Lube is now currently per quarter, this quarter, we have 1,800 tonnes. Yes. So that means about -- already in 9 months, we did 6,900 tonnes.

So earlier the run rate used to be -- so after losing BPCL after Q2, what kind of run rate should we expect? Like it would be around INR 2,000 crores. So we would be doing around 8,000 volumes from lubes for the next year?

Yes, we'll be somewhere around 8,000 tonnes for lubes. That's all.

Got it. Got it. And sir, last question, are we seeing a pickup in volumes from ex ABG in paint segment in high single to low double digits now?

I would say from last -- just 1 month onwards, we are seeing good numbers from Asian Paints, which are more than 10%. From Berger and Nerolac, we have maybe 5%, 6% kind of growth. But there is an indication from Berger that they may move into some of the IML packs. If they do that, probably with there also, we can expect a double-digit growth.

We take the next question from the line of Shanskar from Eraya Capital.

So you said that we lost a tender to BPCL this year. Can you highlight any particular reason for that? Was the price was any reason for that?

Yes, price is the only reason because we don't want to go below a certain threshold of profitability and pricing. But there may be some couple of aggressive bidders who wanted to go at a lower price. That is the reason.

So are we seeing similar competitiveness in other tenders and contracts from other companies?

No, only from -- these are government tenders. And now today, more or less, our government lubricant sales have become 0, not even Indian Oil, not even other lube oil companies. None of them are buying from us, HPCL, BPCL. BPCL was the last to go. We let it go. And actually, in fact, we may start adding another private sector vendor. Last year, we added Veedol. This year, one more client is in the final stage. Their CEO also visited our plant recently. And if that happens positively, probably next quarter onwards, we may have one more private sector lube company joining our list.

So what kind of growth are you seeing in this segment for next like 1 year or 2 years down the line? Or are we seeing it?

I would rather think it will be more stagnant or growth of the private sector lube companies will be directly can be related to Mold-Tek because now public sector is completely -- I don't think in future also, we may able to compete or get into that kind of price war. So probably we'll stay out of it unless we get an opportunity. So having said that, I would be neutral on lube growth. It will be again back to 2% to 3% annual growth that is what is common with the private players.

Understood. And just following up on my previous question around PAT and EBITDA growth. So you told that the PAT will be in line with EBITDA around 20% levels only. So we would -- we are expecting the depreciation would also be on similar levels as it is right now, around 20%, 25%. So when can we see depreciation coming off? Or will it stay at similar levels? Or is there something that I'm -- as you said that CapEx will be significantly low next year. So another year after that can depreciation come off? Or will it be around at similar levels only?

Yes. I think another couple of years, the depreciation levels will be high because of the huge CapEx we did in the last 4 years. And it may taper down now because next year, it will be around INR 80 crores. And I think in future, it will be equivalent to depreciation, which is almost INR 70 crores -- INR 65 crores, INR 70 crores per annum. At the current level, it is around INR 15 lakh crores per quarter, so around INR 60 crore -- I think it is picking up now. It may stay around that level or maybe a little higher for next 1 year. And then it will start coming down or at least equal to stay at this level. Once we reach there, the PAT growth will be better than EBITDA growth, probably instead of 20%, if EBITDA grows 20%, the PAT might grow around 25%.

No, obviously, like if your depreciation comes off and if that comes off, let's say, 2 years down the line, so then we can see a higher PAT versus EBITDA. So just one last question. Can you share utilization levels of your current capacity in totality and across segments as well?

Yes. As I mentioned, our overall capacity utilization is around 67%, I think, in Q3, it is less than 70%, for sure -- one second, let me tell you. It is now down to around 62.5%. It was 74% in Q1. It fell down to 62.5% in the last 2 quarters. And hopefully, in Q4, it will cross 70% plus. And next year, due to increased utilization of all ABG facilities and North thin wall and Qpack, we hopefully stay above 70% for the next full year.

We take the next question from the line of [Deepak] from Sundaram Mutual Fund.

Am I audible?

Yes, yes.

Sir, I have 2 questions. So my first question is regarding this MOU, which we have signed with Vibe Generation. So could you just elaborate what is the commercial arrangement in this MOU? And let's say, what is the margin profile of this safety caps and closure? And when do we expect the revenue to flow through in our P&L from this arrangement? And is it mostly related to, let's say, pharma segment of the caps and closures? That's my first question.

No. It is mainly to chemicals, lubricants, oils, high-end chemicals, also lubricants. So it is something to do with -- nothing much to do with pharma -- maybe pharma chemicals, what we call it, ingredients may use it, but not for pharma application, but it is also used in lubricants. And these caps and [indiscernible] are high value-add products. I guess at least the range of EBITDA will be in the range of 80 to 100 -- can be better. But the volume pickup will be progressive. It will not happen overnight because the time is -- developmental time is longer. Their patents need to be developed first into pilot modes. And once the pilot mode samples are approved, we have to go for commercial molds. So the first 2 products started pilot mold development. End of this month, one product will be out. And second month, probably end of March, we'll have both the products, which are related products. They will be ready by end of March. And once we start marketing effort by Vibe from April, probably its commercial volumes can only go out in Q2. So from Q2, if the numbers start coming in, by end of the year, we can see or at least in the Q4 -- Q3, Q4, we can see some numbers adding in a few crores. That will be the beginning. But once the relation is established and they gain confidence on us, they have several products to offer, and we are also eager to do it because they are very challenging products, also good value-add products. Even in Indian application, we are -- under the MOU, we are allowed to sell them in India by paying them some small amount. So that enable us to explore the Indian lube market or Indian chemical markets, where some of them are still importing some of the closures, not in huge volumes, but it's picking up in India. And if its in lubes, the volumes are tremendous. So there is a good opportunity, but it is little time taking. And value add, it is pretty good value add.

Okay. So the EBITDA per kg, you said it is between INR 80 to INR 100 per kg, correct?

At least.

Okay. And sir, I just wanted to understand like as of now, then how much of these products are import dependent and how much is catered to domestic manufacturer? And who will be our competitor here, let's say, from a local manufacturing point of view?

No, no, no. Currently, there is nobody in India making this or using it in a big way. Even in the lubricant industry, our competitors are current competitors. But this product, what we are developing, once it is -- the details are completely out and we are able to demonstrate its capability, it will be definitely a different ball game in terms of its functionality and which may give us good growth back in lubricant industry also if it is adopted by them.

Okay. And sir, one final question on cost item. So this quarter, we have seen that other expenses saw a sharp decline of 8% Q-o-Q. Just wanted to understand what led to this? Is it one-off? Or is it more sustainable number going forward? I mean to say in terms of operational efficiency.

These are definitely due to operational efficiencies, you will keep seeing it improving. What do you mean by other expenses? Can you help me with that? What the other expenses come down, he's saying? There's some power incentives rebates we got. That's what -- that might have brought down the other expenses. And as I said, once the units are consolidated, the interunit transfers will come down considerably. That's also classified under other expenses. And we are also going for solar. More and more solar plants have been getting operational at all the units. Hopefully, by June, July, most of our units will come under solar power, which will also save us power cost.

We take the next question from the line of Dipak Saha from Nirmal Bang Institutional Equities.

Just one question on what would be the mix for IML and non-IML for the quarter?

Yes, it's around 75% IML and HTL label containers, 25% is non-IML, plane or screen printing.

We take the next question from the line of [Pratyush Damani], an individual investor.

Sir, just one question that I see that we've been giving dividend for the past 3, 4 years, maybe around INR 15 crores, INR 20 crores per year, which is around 0.4%, 0.5% in terms of dividend yield. But if the same dividend was directed to repayment of interest cost, maybe we would have saved INR 5 crores, INR 6 crores in interest cost annually. So that would have added 1%, 1.2% to ROE. So can you just explain the rationale and trade-off between paying dividend and repayment of debt? Because I think shareholders might be a little happier with repayment of debt so that free cash flow and return on equity is better for us.

Yes, we have taken that suggestion from various investors, not only individual investors, but also funds. And if you notice the dividend outflow has come down considerably in the last 3 years and to safeguard the ROE and also to reduce the debt. So the similar trend will continue in future too.

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

Just one question. Since last 8 quarters, ex pharma, if I'm able to see all the 3 segments, food, Qpack, paint and lube, what I'm able to see is that our realization or revenue per kg is on a declining trend. This quarter, it is at the lowest of the last 8 quarters. So just wanted to understand, is there any kind of raw material cost passing taking place? Or is it because of the competition that impacting us.

See, there is a reduction in the overall cost per kg, I agree with you in the last few quarters. But if you look at our raw material cost, the mix is also coming down. The raw material cost in Q1 was INR 94 per kg has come down to INR 86.67, now almost INR 8. And the sale price has come down by around INR 9. So the delta is hardly INR 1. And in Q1, generally, our food and FMCG will be highest as a percentage of sales compared to Q2 and Q3. So whatever is the raw material cost come down, we are generally passing it on to the clients to stay competitive. So we are not going beyond into our own means to reduce our profitability. Otherwise, we can't sustain growth in EBITDA per kg. If you look at the EBITDA per kg, last year, 9 months, it was INR 37.6, and this year, 9 months, it is -- last year's full year is INR 37.6. And this year, 9 months is INR 40.24. That's a clean INR 2.5 increase in the EBITDA per kg. So that shows the company's ability to sustain its margins in spite of competition.

I totally agree to the point that our EBITDA per kg is remaining constant and in an upward trajectory. But if I'm not wrong, in the last conference call, you have mentioned that you are facing some kind of competitive intensity in the...

Sorry to interrupt Mr. Chirag.

It is a follow-up question, ma'am.

Yes, yes. Definitely, competition in all the fields is increasing. There's no doubt about it. Our ability to retain the clients comes with our timely supplies rather than pricing because most of the food and FMCG companies are seasonal demand in nature, and they want in-season good service from the suppliers of packaging products. So there they can't bet on anybody who has 2 or 3 robos and running a few product range when compared to Mold-Tek with more than 120 robos and 200 injection mold emissions in 10 plants across India. So definitely, our ability to service them is much better. But for last year, when our printing capacities have been somewhat misplanned. So going forward, we may very rarely lose a client. We certainly lose here and there, but we are able to add much faster also.

Ladies and gentlemen, due to time constraints, we take that as the last question for the day. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you very much for all the participants actively participating in our third quarter results investor meet. And I also thank Emkay Global for arranging this call. And also thanks to Anushka. You all have a great day. Bye. Thank you.

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