TCPL Packaging Limited (523301) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to TCPL Packaging Limited earnings conference call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Jenny Rose from CDR India. Thank you, and over to you, Ms. Rose.

Good afternoon, everyone, and thank you for joining us on TCPL Packaging's Q3 and 9M FY '25 Earnings Conference Call. We have with us today Mr. Akshay and Vidur Kanoria, Executive Directors; and Mr. Jitendra Jain, Chief Financial Officer of the company. We would like to begin the call with brief opening remarks from the management, following which we will have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the results presentation shared with you earlier. I would now like to invite Mr. Akshay Kanoria to make his opening remarks. Over to you, Akshay.

Thank you. Good afternoon, everyone, and thank you all for joining us on our earnings call. I will initiate the call by taking you through our business highlights for the period under review, after which we will open the forum to a Q&A session. We are pleased to share that we have achieved yet another record quarter, driven by the solid performance of our core segments, paperboard and flexible packaging. Both segments have benefited with favorable product mix, operational efficiencies and a continually expanding customer base. In addition, after a weak corresponding quarter last year, we have bounced back strongly, resulting in significant year-on-year growth. On a sequential basis, growth has remained healthy, highlighting sustained business progress. For this quarter, our consolidated revenues grew by 32% year-on-year, reaching INR 480 crores. Our EBITDA grew by 29%, reaching INR 71 crores, with margins steady at 15%. Our PBT grew 71% to INR 48 crore, while both PAT and cash profit posted strong growth of 101% and 46% on a year-on-year basis, respectively. Our flexible packaging segment continues to perform exceptionally well in the domestic market, supported by robust demand across key end user industries. Additionally, better utilization of our newly commissioned line has contributed to growth, further enhancing operational efficiency. At the same time, our core paperboard packaging segment has recorded stable growth domestically, along with stronger performance in international markets. This broad-based momentum, coupled with our focus on operational efficiencies and product innovation, has enabled us to deliver solid results. With domestic trends expected to improve further in the coming quarters, we are confident in maintaining our long-term growth trajectory. Moving on to key developments. We are excited to announce our exclusive manufacturing agreement with VENTiT, a pioneer and patent holder in ventilated pizza box technology. This collaboration will enhance our presence in the fast-growing food packaging and food delivery segment by introducing an innovative value-added product. VENTiT's patented die-cut vent technology allows steam to escape while retaining heat ensuring that pizza, garlic bread and other dry food items maintain their optimal quality even through long-distance transportation. This solution will initially cater to premium pizza outlets in Mumbai, Delhi, Goa, et cetera, with plans for a nationwide rollout driven by demand from national QSR chains and also national food delivery chains. We are also pleased to welcome Mr. Aniket Talati to our Board as an Independent Director. Mr. Talati is a senior partner at Talati & Talati LLP and has served as the President of the Institute of Chartered Accountants of India, ICAI, for '23-'24. With his expertise in finance, regulation, digital transformation and sustainability, he will be an invaluable addition to our leadership team. He also holds prominent roles on several prestigious boards, including the Government Accounting Standards Advisory Board; and the Insurance Regulatory and Development Authority of India, IRDAI. His experience will help guide TCPL's strategic direction and strengthen our governance framework. Lastly, we are proud to share that TCPL has received 5 prestigious awards at the Indian Flexible Packaging & Folding Carton Manufacturers Association, IFCA, awards 2024, recognizing our excellence in packaging design across both flexible and folding carton packaging. These accolades celebrate the creativity, functionality and innovation behind our award-winning SKUs for customers and brands, including BellaVita, Dark Fantasy, Olivia, Kido and Aquatic Science Pouch. This achievement is a testament to the expertise of our R&D team in developing cutting-edge packaging solutions, and it further strengthens our position as one of India's leading producers of sustainable packaging solutions. Additionally, my grandfather, Mr. K K Kanoria, the Chairman of TCPL, was honored with the Hurun Award for the most respected entrepreneur and leader in sustainable packaging, reinforcing our commitment to sustainable innovation and environmental responsibility. And finally, to conclude, we are excited about the completion of our greenfield facility near Chennai, which is dedicated to manufacturing paperboard cartons and set to be commissioned in the current quarter in a few weeks. This expansion will enhance our logistics and service capabilities, strategically positioning us to serve key industrial hubs across the region and further accelerate our growth. It also represents a significant milestone in our long-term growth strategy. We remain focused on driving sustainable growth, expanding our capabilities and capitalizing on emerging opportunities. With a strong foundation in innovation, strategic investments and a commitment to sustainability, we are confident in our ability to create long-term value for all our stakeholders. Thank you for your continued support.

[Operator Instructions] The first question is from the line of Nishant Bagrecha from InCred.

Congratulations to the team for a very strong delivery this quarter. So particularly, I have 3 questions. So firstly, on the growth part. So again, on the domestic business front, so I just wanted to know that wasn't a volume of prizing-led growth that we saw this quarter. Like again with Godfrey Phillips India posting strong volume growth this quarter also. So did we see some benefit in our folding carton segment from this particular client?

You want me to answer one by one or give all 3?

One by one is fine, sir.

Okay, fine. Yes, so we had a healthy volume growth even in the domestic segment in this quarter. And I mean, we don't share the breakup and exact numbers, but it was very encouraging and better than the market, I'd say. But obviously, last year, same quarter was a very bad quarter. I mean, we had a degrowth. So compared to that, certainly, I mean, there's a base effect. But generally speaking, we had a pretty good quarter.

Secondly, sir, so we have delivered a very strong export growth this quarter as well. So what was this led by again? Is this some new client addition or new geographic expansion? Again, which categories are you seeing better growth here?

So again, without getting into too much specifics, I'll just say that, I mean, no significant new geography or client addition as such in this quarter compared to any other quarter, but it's an overall improvement in our export performance.

Okay, okay. So do you expect this momentum to continue, particularly in the export market?

Yes. So I mean, obviously, can't guide for like any rate of growth or something, but performance has been quite consistent last few quarters or last several quarters, and we hope to continue.

Okay. And sir, lastly, on this new foray into the pizza boxes. So what kind of revenue potential do we see from this? And again, which facility will the production take place in?

So basically, this is a specialty pizza box technology. Essentially it is meant to solve for the issue, which you may be having, but you don't really realize it is when you get pizza on a food delivery, after 20, 30 minutes in the bike, by the time it arrives at your house it tends to get soggy and it also tends to get cold. So this addresses to a great extent that challenge. So even today, they are already working with some of the small, very premium pizza outlets all over the country. And now the time has come to scale up because the food delivery, home delivery pizza has really taken off and I think now it is a very large chunk of the market. So we are starting with some of the medium-range pizza chains, like the slightly higher priced guys, and helping them to expand Pan-India. So this will not be any one particular region or geography. That's the kind of advantage we are bringing because we have factories Pan-India, so we can deliver to these national chains and the depots Pan-India where the VENTiT was not able to do that. So that's why they came to us. And together, we are approaching even the larger chains. But there is an [ on-cost ] on the box. So it's really up to the brand that do they want to take that hit in exchange for better quality. So we are hoping that as the mid-market kind of shifts to this technology, even the mass market guys will be pressured to follow. And it is a superior technology. There's a significant improvement in the temperature and the taste of the product when it's packaged in a VENTiT box versus a traditional pizza box.

Okay. So again, so how are the margins versus the folding cartons here?

I can't comment. It is customer-specific and job-specific. It's a new product for us, which is starting. So I can't comment. But it's a good addition to our basket. And even if it doesn't yield as much as we hope for in terms of business, it certainly gives us an in with these large chains to sell our other packaging as well. So it's a good technology to have in our belt.

Okay. And sir, lastly, on this, again, on the pizza boxes, so how we added pizza boxes this quarter? So do we plan to enter any other segment going forward, particularly in the QSR segment?

See, we are, at any point of time, 5 or 10 different projects that we work on. Out of that, 1, 2, 3 maybe get commercialized and we are very picky. But we are always working and traveling and trying to find new technology to bring to the market. So this is an ongoing endeavor. When something pans out or doesn't pan out, those things are sometimes not in our hands.

[Operator Instructions] Next question is from the line of Sagar Shah from Spark. Due to no response, we move to our next participant. Next question is from the line of Monish Ghodke from HDFC Mutual Fund.

So if we see the packaging board prices, the raw material prices are quite low. I mean, there is a price correction in paper and paperboard. So what kind of -- does it act as a tailwind or headwind for us when the RM prices are low? And what kind of impact does this have on our margins?

Yes. So these prices being low or high does help on a short-term basis, I would say. Largely, we get pass-through or we have to give a pass-through to customers. So it's a temporary effect, if anything, and our business is quite agnostic on the raw material price because we work on -- we pass through the raw material price increase or decrease. Now obviously, to what extent we pass through or we can get away with not passing through depends a lot on market conditions, supply and demand in our end-use industry. But any effect is usually like a temporary one, it's either to the upside or downside.

Okay. And I understand you don't share this volume guidance or anything. But what kind of growth should we assume? I mean, what is your capacity utilization as of now? And on a, let's say, 2- to 3-year basis, what kind of growth volume or in value terms we should assume? And in terms of margins, should we continue to expect these similar margins?

So last question first. The margins are dependent on, obviously, the raw material pricing, et cetera, but they're also dependent on the product mix. Flexible packaging tends to be a lower-margin business, but you get a similar return on capital because it's a higher asset turn. But -- so as that grows to that extent, margin can come down a little bit, but effectively, it's the same thing. And as far as the capacity utilization is concerned, we are at -- we're at about 80%-plus kind of level. Now we're just adding Chennai and we just added some capacity in Goa. In the coming year, we have a few CapEx plans. But broadly, 80-plus percent sort of level. We have still some headroom for further growth, no problem. And as far as any guidance is concerned, I mean, yes, you said it at the start, we don't give. But like we really target just continuing our long-term average growth rate and what is our growth dependent on, to great extent, it is dependent on the market growth. That is our end-use segment, which is the consumer product demand. Consumer demand has been a little bit weak in India the last few years, and the growth rate has been in the very low single digit. We have grown, thanks to diversification of product mix, flexible packaging, export, new geographical addition, which is continuing. But I mean, obviously, this domestic market growth we're really banking on that coming back in a bigger way. Now with this new tax cut in the budget and hopefully inflation seems to be moderating somewhat, so these 2 factors, I think, should help with driving further consumer demand growth, which is a positive for our industry.

[Operator Instructions] Next question is from the line of Nitish Rege from ChrysCapital.

While Y-o-Y margins have remained flat, just wanted to understand the reason behind the decline in EBITDA margin on a quarter-on-quarter level. Is it because of mix or flexible being a higher share or pricing?

So again, looking at it quarter-on-quarter is a bit misleading. But a little bit of everything. First of all, Q2 is typically always best quarter because we have the festive season demand boost, which helps the business. And secondly, yes, the flexible packaging performance was a bit better than usual in the Q3. So that has brought down the total margin. Pretty much these 2 factors only I would point to. I mean, there's not really anything very significant that's changed apart from that.

Got it. And could you give an update on Creative, what's the current revenue run rate? Have you onboarded any new customers? And the earlier customers, which we had onboarded, how have they scaled up?

Before I get to that, one thing I'd point out is that if you look at a 9-month to 9-month comparison, the margin is pretty much the same. Like there's not any much change. It's just this quarter-on-quarter, [Foreign Language] But if you look at it on an overall basis, it's pretty much the same. As far as Creative is concerned, look, we are adding new customers, no doubt. This electronics industry has seen a lot of swinging and up and down in the last 2 years. If you see, a big part of our optimism was driven by the large explosion of this wearable industry like the smartwatches and the headphones, which really took off in India last couple of years. But that has really moderated last year. The industry has actually had a negative growth in 2024, which was a very significant headwind, and there's been a shift in the segment to -- if you look at the value, even the electronics value growth is still there, but volume growth is not there because people are moving upwards in the -- that smartphone value chain, but that's not helping in terms of volume. So that has -- these are 2 headwinds that we've faced in the last 1 year. However, we are seeing increasing tractions in the consumer products business with high value-added packaging becoming more and more the norm. We have like penetrated into this perfumes category, cosmetics category. So there, we are quite optimistic. So overall, we've grown in high double digit, but not high enough. And we hope to continue a high double-digit growth in Creative. And as far as the profitability is concerned, it's mainly constrained by the low base of revenue which, again, through the growth, I think, will get corrected, but it's a low sort of drag on the overall company. So we are hoping it will improve and become a contributor in the coming years.

And any guidance on the revenue run rate, current revenue run rate?

No guidance as such, but I think this year we'll do about INR 50-odd crores. So in the coming year, we hope to definitely increase that in very high double-digit rate, but dependent on market, of course.

Next question is from the line of Harsh Shah from Bandhan AMC.

So first is on your CapEx.

I can't hear you. Please, can you be more clear?

Can you hear me now?

Yes.

Yes. So the first question is on your CapEx initiatives, could you talk more about it? As in now that the Chennai plant is on stream, what do you envisage over next 12 to 15 months, both in terms of how much capacities are you planning to add? And what could be the quantum of CapEx?

Yes. So see, we have over 20 printing lines today and Chennai is going to start with 1 printing line. So on the overall capacity, we'll be adding less than 10% to the overall capacity. But that plant has a lot of room for further growth. So as the market over there picks up and we are able to fill up that capacity, there's a lot of room for further growth. And the new CapEx that will come there will not be so onerous because the fixed component like utilities and the building work and all of that is already sort of taken care of. So further capacity over there will come very quickly and much cheaper. As far as the rest of the company is concerned, in the past year, we have invested significantly in increasing our factory area in a couple of our plants, that has taken up a fair bit of cash. And we have also expanded our capacity in 1 or 2 of our plants. In our flexible packaging plant also, we are expanding the room and we are putting new generation of sustainable boilers to lessen our carbon footprint and also expand the room in the factory. We are also doing some further expansion in the ancillary segment, which we will declare soon. And yes, these are the basic capacity additions that we've done in the last year. As far as the coming year is concerned, this new CapEx, which I alluded to, that will get completed. And we will also have some couple of more announcements, hopefully, to make in coming months where we are planning a few new investments. As far as the domestic -- I mean, the folding carton business is concerned, now we have Pan-India, we have a reach all over. So [ basis ] the utilization at any particular point of time, we can add capacity without too much of a lead time because we have the space so we just have to sort of plug in the machinery. So not to tell you as such in detail.

Yes. What do you mean when you say ancillary? Any CapEx to put up in ancillary?

We'll get into that in the coming quarter, I think.

It's something planned, but something you wouldn't announce as of now?

Yes, yes.

Got it. And even the quantum, if you could kind of -- or even that is something which is -- what is budgeted in terms of CapEx for, let's say, FY '26?

So FY '25, we've got a spend of about INR 150-odd crores for the whole year. And FY '26 budget has not been finalized yet because a couple of these projects are still in the planning stage. So once it gets more, how shall we say, more -- once we have some more flesh on it, we will come back with you.

Got it. Got it. And in this flexi packaging space in terms of Innofilms where we had some teething issues, I think, last year in terms of getting the machinery up and running, where are we -- what's the progress there?

Yes. So Innofilms, we merged into the flexible packaging -- I mean, into the company only. So now that doesn't get reported separately, but the performance has improved and we are quite optimistic on the output.

So I mean, would growth in flexi packaging some of it be attributable to Innofilms?

Not much. It's a general organic market growth, but this Innofilms is a very positive thing for customers. So whenever we are trying to get into new customers, this is like a marketing tool, which helps us even if they don't really take any much output out of it, but the customers want to have the possibility of this sustainable solution. So in the last couple of years since COVID, this whole sustainability story has sort of taken a backseat to just generally preserving the market share at our customer's end, I'm not talking about us, but everyone is very cognizant of the fact that this is going to be a big theme in the coming years. So people are transitioning 1 or 2 small brands at a time or the premium brand to these sustainable solutions in preparation for a larger play later. So the guys who are leading in that effort today will reap the benefit in coming years when that shift really happen. So we've seen that in a couple of other industries where certain peers of ours made investments in advance and they are getting the benefit now after a few years. At the time, people said that why are you investing so aggressively in these areas. That's what we are sort of taking a view that these things are going to be the order of the day in coming years.

Got it. But the teething issues are behind us now?

Yes, yes. More or less, yes.

And why -- so now the subsidiary is basically your Creative Offset, right? That's the only subsidiary, which we have, material subsidiary. What would be the margin profile there?

Yes. The Middle East also, that's the other subsidiary .

Okay. Okay. And what would be the margin profile of -- I mean, trend-wise on a sequential basis improving?

Sorry, a little bit of your voice cut, I couldn't understand.

Yes. I'm saying the margin profile of your subsidiary business on a trend-wise, is it improving?

So the Creative is the EBITDA breakeven and a small cash loss that we see improving in coming months as the utilization improves further. And the other subsidiary is mostly like sort of a trading company. It's essentially just a marketing company. So that doesn't really have any much EBITDA or margins. It's just to facilitate the sale in that region. It's not really a business as such.

Got it, got it. And just one more on a structural basis, we've entered this packaging to Creative Offset. Now we also have this agreement in place VENTiT as well for pizza boxes. What do you think in terms of segments or white spaces where -- as a category where we still have a scope to kind of grow and make it, let's say, from a 3- to 5-year perspective? Is pharma something you're looking at or something of that sort, if you could throw some light on what is the thought process there?

Number of opportunities in hand at any given time or very large market. Everyone's crying that India market is not growing, which is true, and it does add pressure because the competition, which is not as innovative or nimble as us, they may be just looking to copy our mainstream products and do it at a lower price. So with that in mind, we constantly try to do something new and then hope that, that grows into a substantial part of the business. The challenge is to pick and choose what is not a drag on your time or not a drag on your effort and on capital. So there's a lot of opportunities. There's merger and acquisition opportunities are coming on our doors every other day, but then it has to pass muster either in terms of valuation or asset quality or management quality. So most of the things sort of die over there only. And then we have a lot of other inorganic expansion opportunities, a new technology, new products. We are constantly working, nothing specific I would like to pinpoint until we have something really specific to tell you, I mean, or rather more concrete to tell you, but we are always working on new opportunities. Obviously, there should be either something very promising in terms of the growth or it should be very synergistic to our existing business. One of these two things has to be there and it has to fulfill our basic criteria that it gives us a high double-digit return on our capital. So these criteria are there and we are always evaluating, but we are very conservative. We don't have any target that we have to grow every year at a certain rate. We want to sort of steward the capital ready responsibly. And yes, so that's why -- and also we have to be cognizant of our bandwidth that's not getting stretched. So I mean, I'm trying to give you a flavor for how we think, but yes.

Got it, got it. That's very helpful. And just one last question. In terms of our exports, right, what would be a ballpark difference between our landed cost in that country versus manufacturing in our own country?

Meaning, how -- are we cheaper than the local manufacturer, is that what you're asking?

Yes, yes, yes. And how much the ballpark costs?

Much and all now, obviously, that customer will always say you are more expensive. But end of the day, they're giving me the order. So I don't know how much. And it depends, job to job, customer to customer, region to region. But obviously, if we're getting the orders because they are seeing the difference. But I would just like to say that it's not price-led as such. Price is an enabling factor. But if your business is purely price-led, it's not sustainable. We have over years of effort developed a good reputation and developed a reliability in terms of quality as well as service. Even in the COVID time when there was no material in the market, our lead time landed to customers overseas was lesser than their local suppliers because we had better raw material availability here. That also, I think, stays and registers in the customer's mind. So even if on a particular quarter because of some sea freight or some differential in the paperboard or some other input pricing, even if we are slightly more expensive, still customers know in the long term they find us to be reliable. And of course, there's the quality service, all of these aspects, which are intangible. So our market is not like very price driven. But of course, we have to be very competitive, otherwise why would anyone import.

Got it, got it. And what would be our top 3 geographies for us in exports?

So again, I don't want to get into specifics, but we are exporting to Europe, Middle East. We are exporting to Africa, now U.S.A. North America has also been added. We're exporting even to Southeast Asia. We are exporting to our neighboring countries. Yes. So I don't want to get into specifics.

Got it. The previous question was again land versus spend. So even when you export to North America, the landed cost is, I mean, would be steeper compared to, let's say, local or, let's say, some local manufacturing, right? Definitely, it's not more about the price, it's more about the relation and the quality and service.

Yes, a bit of both.

Including freight. Yes, okay. Got it.

Next question is from the line of Shaukat Ali from Monarch PMS.

I wanted you to share a little more light on this arrangement with VENTiT. So how we are going to benefit? Are we going to share some royalty -- based on royalty on the technology that we are deriving from them? Or are we setting up some JV through which we will be delivering these products?

So it's a manufacturing partnership agreement. There's no shareholding, anything. They are a small and closely held company. And they are basically working in a very small scale right now, servicing some of these premium outlets in Bombay, Delhi, Goa, Bangalore. And for them to scale up and service these larger national food delivery chains was a very daunting task and was not really feasible, and it was crimping their growth opportunity because they can't feasibly go to one of these chains and tell them buy from me because they don't have the capability to produce. So with that in mind, they came to us and we got along very well, and we've been working together in an informal way for a few months. So now that some business has materialized, we have made this agreement and we will be basically either selling through them and then they sell to customer or we will sell directly to the customer and they will get some royalty. That's the...

Got it. So for that, we will be using the existing manufacturing resources, our own resources?

Yes, yes, yes.

So we may have to earmark some capital?

No capital to be -- only working capital. That's it.

Next question is from the line of Rohan Kalle from InCred Research.

Congrats on a strong set. So just to further on the previous question from previous participant, so you mentioned that you already service some chains in Mumbai, Delhi and Bangalore. So is it safe to assume that now with respect to our agreement, will we also be serving these chains? Or will we incrementally be targeting new clients here? And second part to that is, would the sales effort be solely from their end? Or would we also be a part of that?

Without getting into too much specifics, we'll do what makes sense for somebody like us to do and they will continue doing what makes sense for their scale of business to do. Like very small chains and all, we may not service so well, so we don't want to mess up this business. But they can't do very large scale. So good sort of marriage of convenience. And the sales is obviously, to begin with, they are making the main effort, but we are also now gearing up and trying to contribute.

Got it. And just a second question. In terms of our packaging products as we make both folding as well as flexible, do you have some kind of sense on, let's say, how much of our end products go into the quick commerce channel? If yes, what would that growth have been for us? And what would be the contribution there?

No, we -- it's very difficult for us to know because as far as we know, the artworks and the product grammage and those kind of things are like totally the same. So we wouldn't know. There have been 1, 2 customers recently who have been changing product format and pack sizes to be suited for quick commerce. So like selling like a 20 gram, maybe they're selling a 15 gram, but we don't really necessarily know that. That's something they just tell us informally. It's not something which we -- it's not our business, right, because we are making as per the customers' requirements. And these customers have so many formats now that they have to plan for the e-comm, quick com, modern trade, general trade. So it's difficult for us to tell really.

Got it. Just the last one from my side. One is on the pharma packaging side, how have things been panning out? And 2 last couple of years, there was a little bit of a decartonization on the liquor side. Has there been some kind of revival of any sort in that segment? Or are we incrementally using that fleet of capacity now to cater to like the other FMCG companies?

So on the pharma, we are a very small player in this field. We mostly service like OTC. Like the branded sort of pharma where you can recall the name of the product, like a pain relief or a gas relief, those sort of things where someone says -- uses the name of the brand and then there's a recall. So those are the kind of products that we are servicing because those are more FMCG in nature than the prescription medication. The prescription medication is a field, which we are not very big in because it requires some level of specialization and sort of dedication of time and resource, which we have not managed to do. So this is something, which is a good prospect for us in the long term, but we're not really strong in it today. As far as the liquor is concerned -- before that. As far as the OTC part is concerned, yes, that's growing and we're quite optimistic. And there is a good offtake and customers are really appreciating the better quality and better sort of print finish and things that we are offering. So there is a growth there. As far as the liquor is concerned, the decartonization has not really reversed, but brands are launching new offer pack and launch like rebrandings and all with the carton, but 90% of the volume has sort of gone from that segment. So we have made up for that loss with new customer development, increasing share in existing customers. So if this liquor decartonization hasn't happened, then, of course, we would -- our growth would have been much better, but it's a reality.

Next question is from the line of [ Kushan ] from [indiscernible] Research.

I was just looking at your asset turnover, fixed asset turnover ratio over the last 5 years. Maybe slightly more time, you have consistently increased that from ranging to about below 2x to now roughly 2.5, 3x. So just wanted to get some understanding whether the new CapEx, which we have done over the last 2, 3 years, have they yielded better fixed asset turnovers at the same margins? Or how do you think about this?

So we've not done any much greenfield in the last couple of years. It's been mostly brownfield expansion of existing units. So for us to pinpoint on exactly whether it is that CapEx that's panned out or like the earlier machine is getting more utilized is a little difficult. But I would say pre-COVID, the utilization in general or even during COVID our utilization in general was a little bit on the lower side. That has corrected in the last couple of quarters. Last, I don't know, 2, 3 years, I would say, our overall utilization has improved. So I suppose that has had an impact on the asset turn. Yes, overall utilization has improved. So hope to continue this happy trend.

Can you just throw some light on the utilization levels currently and during the time of COVID, maybe you give out a capacity utilization percent number?

COVID, no point giving you because there were so many waves up and down that utilization kept swinging in the first quarter of COVID, which was like 30% utilization or something for a few months and then it swung to 80% because the customer started restocking. And then it -- again because they weren't able to sell what they were restocking, then you had delta. Again, it dipped, then again, there was restocking. So there was too much fluctuation in the COVID time. I think let's forget COVID for a few minutes. But if we look at the company as a whole, we're at 80%-plus right now. And where were we a year back, it's a bit difficult. I don't have that data with me, but off hand, slightly lower, yes. We've added capacity also, that has happily gotten utilized.

Next question is from the line of Pulkit Singhal from Dalmus Capital.

Congrats on a good set of numbers. First question is on your thought process of evaluating various opportunities that are coming up. Just trying to understand the lens or the rationale behind them as in you have expanded into flexible, into mobile packaging and also into Innofilms. And I would presume you have enough opportunity to use the same capital within existing businesses as well. So how do you think about these various opportunities where to deploy capital and where not?

Yes. So it is a bit of gut feel. But look, like, for example, we put the factory in Chennai. That is like our core business, right, monocarton business. So we are very clear that, that business, we can't jeopardize in the pursuit of new opportunities of growth -- or new avenues of growth. We don't want to cannibalize or rather distract from our core segments. So if that is a worry with investors, I would like to state that, that is a worry with us also and we don't want to jeopardize our core. So that we will continue to grow and we will continue to invest. The growth rate in the core segment has come down because the consumer segment itself is a little sluggish these last few years. But India, in general, there are so many opportunities. There are so many new segments. There are too many export-oriented sectors that are coming up in the economy. So we try to find ways to participate in that growth. And as I sort of spoke about earlier on the earlier person's question, we are looking at either something, which has a good future growth prospects or which is synergistic to our existing business, one of the two. So ideally something consumer industry oriented and not too far away from something we understand or there should be some very significant upside in terms of growth potential. Now everything you do doesn't always pan out, but one has to keep trying.

Understood. And from a return on capital perspective, these are -- I mean, the company itself is at 20%-odd now. So these would be more accretive to that? Or generally, you find them at the similar levels or even lower?

So similar level only, not lower. We don't want to go -- we don't want to reduce our return, but there's not so many businesses in the world, which have returned more than 30% or something. So it's not easy to find that kind of opportunity. But we are looking always so we hope to do always better only, but we have a minimum threshold that at least it should theoretically get us a return of above 20% on our capital. So if there's no way it can get that, then why to invest and we'd rather return that money to shareholders.

Understood. And in the pursuit of these opportunities, are you largely looking to fund them through internal accruals? Or are you even looking to consider external capital if required?

So far, we have managed without and we would always prefer to manage without, but it depends on the timing of said opportunity or opportunities. Like if there's more than one that's coming at the same time, then it depends. Do we want to let the opportunity go or are we happy to have a partner for that? But till date, we've never had any external funding for particular projects. So something new for us, but it depends on the opportunity.

Understood. On the margin profile front, I mean, last 3 years and I'm including the 9 months of this year, we have done roughly around 16% kind of EBITDA margins. Prior to that, 3 years were more like 14%, 14.5%. Now when we look at the next 3 years, and I understand it's a function of product mix, raw material, but there's also a function of scale and competitive intensity. So how should we think through this over the next few years? I mean, any sense of whether we are operating almost at the peak or there's -- because the latest quarter is 14.7% and it kind of becomes a bit hard to understand how to think through this. Should we look at annual numbers or look at the latest quarter while thinking through?

So to have answered that question earlier, that like let's not get swayed quarter-to-quarter and look at the overall picture because 1 quarter is a little difficult to go by because there are so many factors like, for example, post Diwali, there's a bit of a lull in the domestic market and it dragged the quarter down. Or like I suppose there's some foreign exchange benefit that we get, then that improves the performance. So these kind of things are very -- quarter to look at it is a little difficult. But overall, as a company, I can't really guide for margin, but certainly we don't see the margins doing anything dramatic, are very difficult and there are so many factors that are at play over here.

Yes. Understood. Just last question is on the growth. Even if I adjust the base, you've grown at a healthy 20%. I'm just making the base to be INR 400 crores. And that itself is quite healthy in a very weak domestic market kind of thing. So that would imply that exports or flexibles, either one or both has grown way higher than 20% for this to happen. So just trying to understand, would you like to call out some underlying drivers that have suddenly picked up that you are seeing in each of these segments like that might continue in the future and it is good for us to know, that could be helpful.

No, I would not like to point to anything specific, but we are overall happy. There's very little to be unhappy about in this last quarter. Things were quite benign everywhere. So we're quite happy. Sentiment's good. It has to continue. I don't know if at this rate of growth is something we can guide for. But even if this run rate continues, it's quite positive.

Ladies and gentlemen, we'll take that as our last question. I'll now hand the conference over to the management for closing comments.

Thank you. I hope we have been able to answer all your questions. Should you need any further clarifications or if you would like to know more about the company, please feel free to contact us or CDR India. Thank you again for taking the time to join us on this call. We look forward to interacting with you in the next quarter. Thank you.

Thank you very much. On behalf of TCPL Packaging Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.