Shaily Engineering Plastics Limited (501423) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Shaily Engineering Plastics Limited Q4 FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Sanghvi, Managing Director, Shaily Engineering Plastics Limited. Thank you, and over to you, sir.

Thank you very much. Good afternoon, and a warm welcome to all the participants to the post results earnings call of Shaily Engineering Plastics. I hope you're all keeping safe and healthy. I have with me Mr. Sanjay Shah, our Chief Strategy Officer; and SGA, our Investor Relations Advisers. I hope you had a look at our investor presentation that is uploaded on our website and the stock exchange. I'm happy to share that we have registered the highest quarterly revenue in Q4 FY '22 and recorded highest ever revenues on a yearly basis in fiscal year -- financial year '22. This has been on the back of improved traction seen across segments and ramp-up in projects. The visibility we have across various businesses gives immense confidence that we will be able to scale up further and grow. Revenue growth has been aided by growth in business across verticals, especially the Healthcare and the Toy segment. We've added new SKUs in the Home Furnishing segment as well and also in Devices. Deepening our foray in the intellectual property related products for health care. Health care is now our second largest revenue contributing segment. During the year, we've added 12 drug delivery devices in commercial production. During Q4 FY '22, IP has been acquired for another pen injector. I'm also happy to announce that Shaily -- that the product manufactured by Shaily for Sanofi has been the recipient of a sustainable design award at the Pharmapack exhibition last week in Paris. We've also finalized the contract for pen injector with a leading Indian pharma company. We have built a scalable model, which should help us achieve 2 to 3x revenue growth in the coming 5 years. Through Shaily U.K., we cater to global markets today. We're deepening for a cross contract manufacturing of medical devices, own IP developed products and specialty packaging. Our ability to develop IP and our own injection system platforms is finally paying off. The scope of business is large in this area and we aim to scale up in the coming months and years. On the toys front, we received orders from global players and have started ramping up capacities. In this business, our clients have plans to source significantly from India, and we have essentially limitless opportunities to grow with that. Under the Automotive and Engineering segment, we have started commercializing the orders received and expect ramp-up in the current year. During FY '22, the company has raised funds. We started utilizing it to expand our core business of home furnishings, also utilizing it towards toys and health care. We're planning CapEx spend of approximately INR 200 crores over the next 2 years, out of which more than half of the spend will be towards pharma business. I'm further happy to share 3 additional developments. We are now listed on the NSE. We've also added Mr. Samaresh Parida and Mr. Sangeeta Singh as Independent directors to our Board. Their profiles are part of our presentation, have been uploaded. I request you to go through that. We've also appointed [ Mr. Ashish Somani ] as the new CFO of the company. Ashish is a qualified chartered accountant and a law graduate and has extensive experience working with various MNCs across the manufacturing segment. This is all from my side. I shall now hand over the call to Mr. Sanjay Shah, our Chief Strategy Officer, to give you the operating and the financial highlights. Thank you very much, and over to you, Sanjay.

Thank you, Amit. Good afternoon, everyone. I should share with you the highlights of our operation and financial performance for Q4 and FY '22 following which we will be happy to respond to your query. During the quarter, we processed 5,562 tons of polymers, which accounts 4,356 tons in Q4 FY '21, an increase of 28% year-on-year. For FY '22, we processed a total of 19,474 tons of polymers as against 14,602 tons in FY '21, an increase of 33% year-on-year. Machine utilization rate was 53% in quarter 2 FY '22 and 60% in FY '22. Exports during FY '22 stood at 76% of total revenue as compared to 74% in the same period last year. Now we should briefly understand further results highlights. Revenue stood at INR 152.6 crores during Q4 FY '22 as compared to INR 109.8 crores during Q4 FY '21, a revenue growth of [indiscernible] 29%. This is our highest ever quarterly sales. Even higher payable yearly sales. For FY '22, revenue stood at INR 565.9 crores as compared to INR 360.6 crores during FY '21, a growth of 57%. EBITDA stood at INR 21.6 crores during Q4 FY '22 as compared to INR 22.1 crores during Q4 FY '21. EBITDA margins stood at 14.1% for Q4 FY '22. Margins in Q4 were under pressure due to increases in input prices, especially on the raw material front, polymers, packaging, steel. These costs will be part of -- in the coming 2 quarters to customers based on the arrangements which we have. For FY '22, EBITDA stood INR 89.8 crores as compared to INR 62.1 crores during FY '21, a growth of 45%. PAT stood at INR 7.4 crores during Q4 FY '22 as compared to INR 9.7 crores during Q4 FY '21. PAT margin stood at 4.8% for Q4 FY '22. For FY '22, PAT stood at INR 35.1 crores as compared to INR 22 crores during FY '21, a growth of 60%. Cash PAT for Q4 FY '22 was reported at INR 14.3 crores as compared to INR 15.3 crores during Q4 FY '21. For FY '22 cash PAT stood at INR 61.6 crores versus INR 41.5 crores in FY '21. During FY '22, working capital has increased mainly due to increase in inventory levels. This is mainly on account of logistic issues, which we are seeing and we have taken a conscious decision of having a little higher inventory, but as the situation improves, we would basically bring down the inventory level. This is all from our side. Now we can open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Aarti Sharma from [indiscernible] Investments. We will move on to the next question that is from the line of Ankit Agarwal from ARC Capital.

So I have a question on the Home Furnishing business. So sir, any development on the addition of customer in home furnishing? And any particular geography those customers are from?

So we basically are shipping to our home furnishing customer, and we supply them across the globe. So we continue to grow the business with this customer.

Okay. And sir, the next question is like with additional contribution from pharma employee coming into the business. What kind of overall margin improvement that we could see in the next financial year?

Ankit, we typically don't give out margin like this. What we have said in the past is as the business grows and as we see volume growth, we basically see margins improving on an overall basis, whether it's at an EBITDA level, at PAT level or even at an ROC, ROE levels. So that's what I would reiterate. We'll not be able to give margin guidance.

The next question is from the line of Aman Vij from Astute Investment Management.

Yes. My first question is on the new plastic facility. If you can talk about what was the utilization in Q4? And when can we see peak utilization in that facility?

So Aman, good afternoon. The new plastic facility, we don't report individual numbers, but we had fairly good recent utilization levels close to what we have reported. One of the challenges which we faced in quarter 3 and which continued in quarter 4, which -- I'm sorry, [indiscernible] on my speech was the availability of containers. And we continue to face a similar situation in quarter 4 also where [indiscernible] of containers and logistics hamper the lower production and expansions in revenue. In fact, [indiscernible] EBITDA achieved a much higher revenue if containers were available.

Sure, sir. So the situation is still the same or has it improved in May or in June coming?

It's improved marginally, but we're still seeing some challenges. So [indiscernible] we've seen some improvement.

Sure, sir. And sir...

We see some improvement but it was -- it's still taking some time.

So on FY '23, what kind of utilization levels are we targeting? Can we achieve that 75% plus kind of utilization?

We would be looking at somewhere on those lines. [indiscernible]

Sure, sir. That helps. Next kind of question is on the CapEx plan. So we have 2 CapEx plan. One is another, I think, additional facility and one is pharma expansion on the pharma unit side. If you can give a time line for the start of this CapEx as well as by which quarter can we see the commercialization of these 2 new plants?

So pharma, we've already started the work and we expect the pharma facility to be commissioned by the end of this year. Some of it will get spilled over to the next year in terms of developments and everything which we are doing. But the facility would be ready by the end of the year, the current financial year. On the home furnishings and toys and rest of the businesses, we have seen [indiscernible] a discussions going. Once we target that business, we would be looking at starting construction, but my sense is we'll probably be looking at starting something by quarter 4, is when you would start constructing them.

Sure, sir. So until we start this new facility. So in toys division, like last year, we had a good visibility. We ended up doing -- we had orders of $10 million and so have you seen any increase or uptake in orders on that base?

Aman, I'm sorry, I lost you somewhere in between.

Yes. I was saying in toys...

Could you please repeat your question?

Yes. In Toys segment, last year, we had an order book and visibility of $10 million, which I think we would have achieved if not experienced that. So for this year, have we gotten similar orders or even increased orders given they would have seen our work and maybe given us more orders.

Yes, we're already executing on 2 projects for some customers. 3 Projects for the 2 customers we have, and we are in discussions for other new projects with them.

So for FY '23, do we see growth on that FY '22 whatever sales we did in toys, do we see a good healthy growth on that high base also?

It's a little too early for me to comment on that. But I think the numbers that we did in FY '22, we will probably do similar numbers in FY '23. And we also have projects under execution, which is why it's a little early for us to comment.

Okay. But at least we'll maintain that number, if not improved, right?

Mr. Aman Vij, are you done with your questions?

Yes. Final question is on the Pen division. So sir had talked about maybe for FY '23, we are targeting around 3 million own IP pen. So if you can talk about the same, are we still sticking to that guidance? And we've also talked about maybe achieving 20 million own IP pen in the next 2, 3 years. So if you can talk about from which quarter, can we see own IP pen scaling as well as are we dependent on 1 or 2 customers to achieve that 20 million pen sales or they are maybe 10 customers so that at least if 1 customer is not performing, we have backup plan. But if you can talk about the Pen business.

Amit, can you get that?

Yes, yes. We still -- the guidance given earlier still -- or not guidance, the number given earlier holds true. We are in the process of supplying -- we are already supplying in the current year and the numbers are increasing. So I think we're well on track for the current year. You always have a potential a couple of months spill over, which is expected in such a business. And then getting -- scaling up to $20 million -- yes, it's not a 2-year thing, but more like between 3 and 4 years. But yes, it is with more than a couple of customers. So we have a healthy pipeline of customers. Given that we're servicing the generic market here, which means we cannot simply rely on one customer. So there is a healthy pipeline of customers, which leads us to believe this volume build up.

The next question is from the line of Nikhil Jain from Galaxy International.

I just wanted to ask one question on the health care side. So specifically with respect to the Pen division. So are you working with some of these key customers who have already kind of filed and are mitigating in the U.S. market? So can you just give a qualitative indication on those? Or are our customers yet to file and obviously then you have to get approval?

Such information, specific information is highly confidential, but of course, some of our customers have filed. Some are in the process of filing. But almost all the supplies that we would have made for clinical batches would essentially either be 5, or will be close to 5.

Yes, yes. And so your point is that it's not only pen, which is a critical component in that kind of business. So there are other process. So where the companies may kind of get into problems or may have a change of plan due to delays and other thing. That's where I was just trying to understand because you know at least the 3 -- top 3 ones have already kind of filed and are mitigating [indiscernible]

Sorry, we can't hear you. I can't hear you, I don't know about the others.

Okay. No, what I was saying was that just trying to...

[Operator Instructions]

Yes. No, what I was just trying to say, sir, was that in this kind of business, obviously but the filings can get delayed due to many reasons and hence, that was the reason for the question. If you are already like working with companies who have already filed so that was the thing. So my second question actually was related to the -- I'll probably just back to what Amit said. So we have some molecules we have multiple customers on [indiscernible] molecules. So we would basically -- we would be somebody who would be doing the filings is what I would say.

Okay. That's good to know, yes.

Okay. And any guidance, sir, that you want to give for FY '23? Or it's as you said, too early to do that?

I think we would refrain from giving a guidance.

But you would still stand by whatever we have said at the end of FY '21 that we look at -- if you look at 3 to 5 years, we basically look at somewhere between a 20%, 30% [ CAGR ] growth.

And on the margin side, do we expect whatever has happened in the last 2 quarters. So would be normalized over the course of the year, let's say, in FY '23 hopefully? [indiscernible]

Yes. We do expect the margins to go back to normal levels.

[Operator Instructions] The next question is from the line of Yash Bajaj from Lucky Investment Managers Private Limited.

Sir, Just one question I had. What [indiscernible] is the home furnishing and pharma business in FY '22?

We actually don't report individual numbers. But we've seen growth across most of our -- all of our business segments in FY '22.

Okay. Okay. So in line with the overall growth of the company would be a fair way to understand the growth of risk perspective business?

So there will be different businesses, which will have seen different levels of growth. So all the [indiscernible] small level in FY '21 but still we've seen fairly decent numbers on toys. We have seen similar, we've seen growth on our pharma business. We see growth on our FMCG business, we've seen growth on our Home Furnishing business or even on our other businesses. So but every business will have varied levels of growth.

Or just to understand, either the home -- like the Home Furnishing business and the Pharma business would have grown on a faster pace as compared to the other 2 businesses? Would that be a correct understanding?

As I said, probably this year, toys has grown -- toys has been -- from a percentage level toys has been...

As a percentage, yes. But as a value, of course, the baseline are very different for the home furnishing than the other 2.

[Operator Instructions] The next question is from the line of Aman Vij from Astute Investment Management.

Sir, on the Carbon Steel business, if you can talk about the same, we were facing some issues, are the issues resolved? And do we expect full utilization in FY '23?

So as we speak, we have already commercialized all the products, and we are looking at a ramp up. So we should be very close to the utilization levels during the year. I'm not sure whether we will see the same overall utilization number being a full for the whole year, but it will be ramped full before the end of the year.

And do we need to add any products or those products which we have is enough to fully utilize and achieve a peak turnover in carbon steel?

The numbers that we talked about, the 6 products, which we do -- the volume on that is basically the numbers which you talked about and ensuring that we get to the utilization levels which we [indiscernible].

Sure, sir. On the number of SKUs for [indiscernible] ICE as well as the number of employees. If you can give the current number?

On the home furnishing front, we basically have added the relative [indiscernible]. So we have said probably currently at about [indiscernible] 3% to 6% of SKUs on the home furnishing customer on the plastic side. Aman, I lost you on your second part of the question.

The employee count currently?

So number of employees varies depending on the requirements in terms of contract workers and everything. But it will be somewhere in the region of about -- anything between 1,800 and 2,200 people on a month-on-month basis. So if we put together a blue collar, white collar on those [indiscernible]

Yes. Because the presentation talks about the same 1,500 number, I'm not sure it is updated properly and even the SKUs, it was...

The presentation would not have been updated. So that's the reason for that. You're right.

Sanjay, I thought we will have that correction done.

Sure, sir. So sir, FY '23, among these 3, 4 segments, where do we see the strongest growth and where maybe there will be a little flattish kind of growth around the 3, 4, 5 segments we have?

We will see growth on home furnishing, we will see growth on carbon steel, we will see growth on pharma. We will probably remain at a flattish level or with some growth on the toys because a little bit large projects last year, we are still working and then we increase to see how the business evolves. But then we are looking at building up the pipeline for next year in that. We will see growth on some of our other segments also. So I think some of the business which we do well from a percentage level, there still will be some growth. But overall on that business it's pretty small so. So you'll probably see growth in different percentage level growth as well you'll see growth across all segments. And a couple of things which you need to take in account as we started the new plastic facility end of September. So we basically have 6 months of revenue where we had [indiscernible] continue. So that facility will be running for the full year. So that's something which we -- the growth coming in from that. Similarly, we are looking at better ramp-up on the Carbon Steel business as well as what Amit talked about in terms of whatever we're doing on the pharma part of it in terms of commercialization in defense. So these are 3 areas that we see from a value perspective growth coming from these 3 areas.

Okay, that helps. On the customer addition front, if you can talk about what was the new customer we added in FY '22 as well as any big customers who are -- we are in engagement and maybe they are big customers where we then ramp up our [indiscernible]

So on some of these [indiscernible], we would be on the engineering you will not be able to name customers, but we have added, I would say, some large names on the pharma front, and we also added couple of names on the toys front where we have been ramped and everything with these customers. So we have been adding customers. And we would be looking at adding more customers. But what we're also looking at is growing with our existing customers.

Just one clarification. On toys, there are like 3 big giants. And we are engaged with only 2 as of now. Are we talking with the third person also? Or are there smaller such customers available in the Toys segment?

We currently do with 2 customers, as you rightly said. We are in discussions with 3 or 4 other players also in this market.

Final question from my side, sir. There was some selling from the [ Bharat Sanghvi's family ]. If you can talk about, are they actively involved in the business anymore or they are...

[indiscernible] has been living in Canada so he's not been involved in the business right from inceptions. So [indiscernible] and his family has been based here and before something which we wanted -- Amit, you want to talk about it? So I think you can talk about it.

So the family has a bit of a health condition and which is why [indiscernible], my uncle, wanted to basically relinquish his holding. Of course, some of the holding was kindly give by him to my father and some was relinquished.

[Operator Instructions] The next question is from line of [ Aarti Sharma from PCK Investments ].

My first question is in respect to Toys business. How many do we really have with respect to Spin Master and Hasbro?

We currently do around 6 SKUs for our customers in the toys, typically along the Indian customers. We currently do 6 SKUs for them.

Okay. So it's been a year that we have started to supply to Hasbro. So how the feedback from the customers and what kind of increase orders should we expect from existing customers?

So Aarti I think the -- I think the feedback has been overall growth. In fact, we did one of the largest product out of India last year, and that was the global launch, which happened from Indian for business. So -- and regarding the questions, you then see how we can grow the business further.

Okay. That was helpful. And the last question from my end. What is the competitive edge as compared to other Indian suppliers for the Toys business?

I think what Shaily brings to the table is a unique set of scope in terms of understanding of complex manufacturing assembly, ability to manage high-volume production, which is a very, very important thing. We have had a team which basically understand molding molds and decoration and various things and ability to manage logistics. So that's what we bring on the table, and that I think can became into a competitive advantages.

The next question is from the line of Nikhil from PIA.

My first question is around when you record the utilization rate as, I mean, according for your capacity, how is this calculated? Because for Q4 FY '21 and Q1 FY '22, we have reported 56% capacity utilization, while the volume in Q4 FY '21 was INR 4,356. And in Q1 FY '22, it was INR 4,093.

So Nikhil, there are 2 things here. One is when we look at capacity utilization, we basically take capacity evaluation of the number of machines which we have. We Have added machines last year. We basically commercialized the new facility in September. We added machines for toys in quarter 4 of last year. So every quarter, we have been adding some capacity. So when we look at the capacity evaluation, what also needs to be look at is what's been added and that's the way to look at it.

That is -- I mean, understandable, but when the volume process is lower than the previous quarter and if we've added more capacity, the capacity utilization should be lower than the previous quarter.

No, again, it depends on the product which we do.

Okay. So, yes, this is what I wanted to know.

That is what machines are tangible and a lot of it will depend on the type of products which we do.

Got it. Got it. So it's like the chemical business. And one more question is, did we -- do we have any competitors in Russia or Ukraine, I mean, probably because of which -- there are new opportunities that are emerging?

If we were to come across any opportunity as of now, as we speak now, that we will be evaluating if there are some opportunities there.

The next question is from the line of Yash Bajaj from Lucky Investment Managers Private Limited.

I just wanted to understand the rationale behind the INR 200 crores CapEx, which we are planning for the next 2 years and especially towards the Pharma segment? Is it like a new customer addition or new orders from existing customers? How is it like?

So yes, we have talked about multiple pens and pen platforms which we're looking at commercializing -- if we get permission and you're looking at commercializing. And our customers are doing the [indiscernible] with these things. So we see a ramp-up in this business where we know there are clear part in terms of growth. If we have to meet that growth number, you will need to make these investments. If the investments are not made on the plant is not ready, we will not be able to ship to customers.

The next question is from the line of Virat Shah from Shah Investments.

So sir, I have a question on Carbon Steel business. How does that margin profile of carbon steel business is compared with plastic business?

So when you look at from a margin profile, once we get to better full utilization level, we will have similar little better margins from carbon steel compared to the overall margin in the plastics.

And sir, are we planning to diversify our customer base in this segment any time soon?

We look at [indiscernible] not in the near future. We wanted to be able to ramp up service for the requirements of this customer, then we will decide.

The next question is from the line of Aman Vij from Astute Investment Management.

Yes, sir. One question on the gross margin side. So we used to do 40% plus gross margin 3, 4 quarters back. And now every quarter, it is reducing. So if you can explain how long does it take to pass on? Because if it was 2 quarters, then we had Phase 1, in Q1 and Q2 also gross margin pressure, but till Q4 may be the pressure was even increase. So if you can talk about are there particular segments where the lag of passing is more and, in some segments, we can quickly pass on? If you can explain the margin.

So there are with different customers, we have different parts that could vary from a quarter to 6 months. And the reason why you are seeing this continue if you were to look at quarter 1, quarter 2 of last year. Quarter 1 has seen a huge spike in raw material, where that goes pass-on by the end of quarter 2, quarter 3. Similarly, end of quarter 3 and quarter 4 because of Russia and Ukraine, we've seen crude going up and because of that input price is going up, packaging prices going up, sea freight is going up. The second thing which impacted was the dollar rate, whether the import materials also been impacted by the dollar rate. So most of these things put together impacted in quarter 4. That will get passed on to customers as we speak when we look at quarter 1 and quarter 2. So that will get negated. If we don't see an increase in raw material prices in quarter 1, quarter 2, by the end of quarter 2, we should get back to normalized numbers.

And sir, normalized number, is it 40%? Or is it now 36%, 37%? What is the normalized gross margin for our business?

[indiscernible] you want to get into details because a lot of it depends on the mix of the products which we do.

Okay. But do you think Q4 is the -- if further prices doesn't increase, Q4 is the lowest, 34% gross margin and there is only upside to this number.

Yes, I think I will agree with you on that.

The next question is from the line of [ Asha ] Jain from Jain Capital.

A couple of questions on health care business. Firstly, who will be competing in the U.K. business? So will our clients be our competitor?

Could you repeat your question, please?

On the health care business, sir, with whom we will be competing in U.K. IT business and our clients be our competitors?

Our clients are not our competitors. We primarily compete with companies like Ypsomed, Owen Mumford, SHL, Nemera. These are [indiscernible]. These are a few 5 or 6 players dominant in the industry for offering injection system platforms.

Okay. Understood. And lastly, so you've acquired IP for pen injector as well as finalized contract for the same. Just wanting to understand what is the progress scope of business to them.

I mean, when we create platforms, platforms are suited for multiple molecules. And on those multiple molecules, we also have multiple customers. So the scope is quite large as we keep modifying the platforms to adopt newer molecules, we increase the scope of our offering substantially.

Ladies and gentlemen, that was the last question -- I'm sorry. We have one other question in queue. That is from the line of Kunal from [indiscernible] Asset Management.

I have a question, particularly for the Toys business. So Toys business, whatever little I understand, is a very complicated business and within that there are multiple parts that had to be made. Also the frequency of -- I mean, it keeps changing. It's not like a Home Furnishing business or for that matter, appliances business where things stay constant but at the same time, China was a very big player in toys, right? So how do we see the scalability of this particular business for us in the sense that's in that sense, different from what we have been doing.

Kunal, you're right. Toys is a business which needs new products added every year otherwise, the life cycle on toys is not what is there in the Home Furnishing business. And there are a number of components which are there. So in the last project which we executed last year, one had 126 plastic components. The one which we are doing right now has 176 plastic components. So we are doing very complex projects in very large projects. We have discussions with customers to scale this business up. We see a lot of potential on this, especially what you said. Customer is looking at shipping out of China to India. So we see a lot of potential there. But it will take -- and excluding volume. So we are working with our customers and team how we can grow that business.

So what I'm trying to understand is the life cycle of a product in toys, how that stands in comparison to what we have right now. The second is, obviously, there is business, but how do we scale it up. I mean just trying to understand. I'm pretty sure there is no [indiscernible] business opportunity available. Business opportunity is there.

So what we're looking at is we did this -- so there are some products which have a life cycle, some between 1 to 2 years. There are some toys which are evergreen toys, which have a life cycle of 5 years, 10 or 15 years, which are typically games in those type of products. But you like to look at the balance of some products where you can have those running on a regular basis on a year-on-year basis. And then every quarter, maybe 6 months we may be able to do some launch of new products and everything. So we will be working on the strategy with the customer on something in these lines.

So right now, basically, we have a mix of products, which will have a life cycle of 1 or 2 years. At the same time, we have a product which has got a life cycle longer than that. Is that a fair understanding as of now?

Yes.

Okay. And just one further step for this. I mean, how long it takes to get 1 product approved by the vendor for whom we are manufacturing the same, it's a 6-month duration or a 9-month duration? Or how does that work?

Depending on the product, but once you start to develop it, it's specifically a 6-month process.

Okay. Okay. And I believe that we don't develop just try to do what they say or we're given a prototype to us?

Yes. But then we get involved with the customer and the model being developed. So from that perspective, you need be involved at the time of the whole development.

Okay. And just trying to understand what portion of our facility presently would be dedicated specifically for toys. I mean, with all the facilities that we have I'm pretty sure the facilities would not be tangible, right? So what percentage of...

The facilities are tangible. The facilities are tangible across businesses.

Even for pharma, sir, the facilities are tangible? I mean the pharma 1 can be used...

The pharma facility can be used for manufacturing home furnishing. The pharma facility [indiscernible] manufacturing facility. So if I don't [indiscernible] it's more expensive -- yes.

It's very expensive to manufacture other products in the pharma facility because as a factory, we have to maintain compliances regardless of what we run there. So if we're running a clip in the pharma facility, we still have to maintain all the compliances, it will run in a clean room. There's higher electricity consumption because of the climate conditions and the humidity conditions. So it's tangible, but we -- there isn't the need to manufacture other products in the pharma facility right now.

No, no, sir, just more from the point of view that the toy facility, which we have dedicated probably we can use it to other products as well more from that perspective.

We are [indiscernible] So as and when we had capacity peaks on certain products in a given month or a given quarter, we do end up using cross capacity. So it's not 100% dedicated capacity.

Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.

Thank you, everyone, for joining the call. We hope that we've been able to answer your questions adequately. For any further information, I request you to get in touch with SGA, our Investor Relations adviser. Thank you, and have a great evening.

Thank you, everybody. Thanks.

Thank you. Ladies and gentlemen, on behalf of Shaily Engineering Plastics Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.