The Supreme Industries Limited (SUPREMEIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Supreme Industries Limited Q4 FY '20 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kashyap Pujara from Axis Capital Limited. Thank you, and over to you, sir.

Thank you, Nirav. Good evening, everyone, and thank you so much for standing by. It's a great pleasure to have with us, Mr. Tapariaji, Mr. Somani and Mr. Saboo from Supreme Industries to discuss Q4 and FY '20 results. I now hand over the floor to Tapariaji. And Tapariaji, many congratulations for a good set of numbers. And over to you, sir.

Thank you very much. I'm M.P. Taparia, Managing Director of The Supreme Industry Limited. I, along with my colleagues, Shri P.C. Somani, CFO; and Shri R.J. Saboo, Vice President, Corporate Affair and Company Secretary, welcome all the participants who are participating in the discussion of the audited stand-alone and consolidated financial results for the quarter and year ended 31st March 2020. The stand-alone results and the consolidated results are already with you. I'll give you a brief on company's product, operating performance, and other highlights. The company sold 103,200 metric ton of plastic goods and achieved net product turnover of INR 1,380 crores during the fourth quarter of the current year against sale of 113,921 metric ton of plastic goods and achieved net product turnover of INR 1,487 crores in the corresponding quarter of previous year, achieving volume and product value growth -- degrowth of about 9% and 7%, respectively. The company sold 411,521 ton (sic) [ 411,521 metric ton ] of plastic goods and achieved net product turnover of INR 5,408 crores during the year under review against sale of 397,983 ton (sic) [ 397,983 metric ton ] and net product turnover of INR 5,437 crores in the previous year, achieving volume growth about 3% and product value degrowth about 1%. Total consolidated income and operating profit, excluding construction business for the fourth quarter of the current year, amounted to INR 1,412 crores and INR 276 crores as compared to INR 1,534 crores and INR 205 crores of the corresponding quarter of the previous year, recording decrease in consolidated income of around 8% and increase in operating profit about 35%, respectively. The consolidated income and operating profit, excluding construction business during the year under review amounted to INR 5,518 crores and INR 862 crores as compared to the INR 5,539 crores and INR 752 crores for the previous year, recording increase of about 0.5% and 15%, respectively. The consolidated profit before tax and profit after tax, excluding exceptional item and construction business, for the fourth quarter of the current year amounted to INR 219 crores and INR 114 crores as compared to INR 161 crores and INR 116 crores for the corresponding quarter of the previous year, recording increase in profit before tax of about 36% and decrease in profit after tax about 2%, respectively. The consolidated profit before tax and profit after tax, excluding exceptional item and construction business, during the year under review amounted to INR 636 crores and INR 464 crores as compared to INR 556 crores and INR 379 crores for the previous year, recording increase of about 14% and 22% respectively. The business scenario of all the product segment of the company for the year ended 31st March 2020 as compared to the previous year has been as under: Plastic Pipe business grew by 8% in volume and 9% in value terms. Packaging Products segment business degrew by 2% in value -- 2% in volume and 8% in value terms. Industrial Product segment business degrew by 13% in volume and 24% in value term. Consumer Product segment business degrew by 3% in volume and 4% in value terms. The Board had declared 2 interim dividend aggregating to INR 14 per share against total dividend of INR 13 per share given in the previous year. The Board has not recommended any further dividend on equity share. The total dividend outgo during -- during the year under review, including DDT is INR 214 crores as compared to INR 199 crores during the previous year. The overall turnover of value-added product increased to INR 2,070 crores as compared to INR 1,944 crores in the previous year, achieving growth of 6%. Total net borrowing of the company stands at INR 217 crores hedged on 31st March 2020 as against INR 162 crores as on 31st March 2019. Average net borrowing level during the current year remained at INR 205 crores against INR 266 crores in the previous year. Average cost of borrowing as on 31st March 2020 increased to 8.35% per annum as against 8.23% per annum as on 31st March 2019. The company has divested its whole 20.67% stake in Kumi Supreme India Private Ltd. to Kumi Thailand Co. Ltd. for a consideration of INR 24.32 crores, and consequently terminated the existing joint venture agreement between the company and Kumi Supreme India Pvt. Ltd. As an outcome of sale, Kumi Supreme India Pvt. Ltd. now ceases to be an associate of the company. The company addressed and settled the issues regarding the complaint of Composite cylinder from Bangladesh during the financial year. Newly designed product samples sent to customer at Bangladesh have been successfully tested and meets the required parameters. Company expects good business volume from this customer during the current year. The initiatives taken up-to-date by the Government are gathering momentum. With an expected growth in the business of several verticals, the company took steps to put new production units and also expand capacity in several of its existing units and incurred CapEx of INR 241 crores in the year 2019-20 and further committed a CapEx of around INR 182 crores, which shall fructify for production and usage during the current year. During the current year, that is 2020/2021, the company envisages additional new CapEx in the range of about INR 150 crores and INR 200 crores mainly on the following: to increase PVC pipe capacity at Kanpur, Gadegaon and Kharagpur; to increase polyethylene pipe capacity at Malanpur, Gadegaon and Kharagpur; to increase double wall corrugated polyethylene pipe capacity at Kharagpur; to increase CPVC pipe capacity at Malanpur and Kharagpur; adding several capacities of water tank moulds and additional Roto moulding machine. The company has negotiated purchase of 30-acre land to put up a new plastic piping complex at Orissa. Due to lockdown, the legal possession of the land has been delayed. The company will initiate action to put the complex after the possession of the land in their account. The drawing of various equipment to put up Cross Plastic Film project at Gate Muvala at Halol in Gujarat are under preparation in Romania and Switzerland. Due to COVID-19 lockdown, the process is taking more time to finalize the drawing. The company will move expeditiously after working drawings are frozen to put up the plant. In March 2020, the WHO declared the COVID-19 outbreak as a pandemic, will continue to spread across the world. On 21st March 2020, the government of India has declared this pandemic a health emergency, ordered closure of all nonessential businesses, imposed restriction on movement of goods/material, travel. As the nature of business performed by the company, majorly, fell under non-essential category, these restrictions had substantially reduced its operations at various plants between 25 to 35 days. The company has since, after receiving applicable permissions, partially commenced operations including despatch of goods to its customers at all of its manufacturing facilities and scaling up the same gradually. The company and promoters have shown their commitment as a responsible corporate citizen and stood with the Government authorities in their fight against this pandemic. Supreme Industries Ltd., along with the promoter families have contributed INR 8.35 crores in aggregate to PM CARES FUND and relief funds of various state governments. Although business conditions are very disruptive and uncertain, company is neither looking at any lay off nor any reduction in salaries of its employees which are its biggest assets and strength. Further all regular payments to employees as well as vendors are made on time in normal course without resorting to any deferral. Business outlook. At the end of the year that is beginning second half of March 2020 the business was severely affected due to COVID-19 pandemic. The lockdown has now entered in its fourth stage. As the time passes, the focus of Government is moving to create a balance between health and safety of the countrymen while keeping eyes to revive the economy back on growth path. Government is taking incremental steps every day in different parts of the country to give desired boost to the economy. With the country's preparedness over the last two months to prepare to fight against COVID-19 pandemic which is being suitably supported by various relief measures announced by the central government which is around 10% of India's annual GDP, it is expected that during second quarter of the year 2020-21 the economy may start to revive to serve the country with a higher growth potential. Considering the bright future prospects, the company has not slowed down its investment plans. The same was however delayed due to cessation of activities in different parts of the country as a result of lockdown which still remains partially applicable in various parts of the country. Various initiatives taken by the center and state governments have given desired boost to the plastic pipe business. There is quantum jump in construction of affordable houses. The infrastructure activities comprising supplying drinking water and to boost the sewage system have gathered momentum. Raw material situation is likely to be comfortable. Prices have started showing increasing trend after reaching bottom during the year under review except PVC Resin. Overall it is expected that raw material prices shall remain range bound and affordable. The company expects that by September this year the business should be returning to normal and will move to growth path by November 2020. Friends, this is a brief and overall summary for the quarter and 9 month of the year under reference. Thank you for your patience. Now I and my colleague, Shri P.C. Somani and Shri R.J. Saboo, are available to reply to various queries as raised by all of you. Thank you very much.

[Operator Instructions] First question is from the line of Avi Mehta from India Infoline.

I just had 3 questions. Sir, is the performance likely to be driven by the rural segment. You highlighted agri, right, seen very good growth rate. Are you expecting margins in the pipe and packaging segment to come under pressure because mix will turn towards value in the near quarter-on-quarter, first half?

No, piping segment, the PVC prices started rising. They were falling from 18th March up to 1st May. Thereafter, the resin price have gone up 2x by INR 2 a kilo. So what were maybe some inventory correction and some inventory arrears in the profit we believe the overall margin may be working okay. But we are not in a position to give any guidance because things are very uncertain, very difficult to share the overall margin side.

Okay. Sir, but there will be some gain, right, which should have because of the raw material cost inflationary? Is that a rational thing to expect, sir?

Up till now, there will be loss only because the prices have dropped dramatically from 18th March to 1st May. Previously, resin price had dropped by INR 13 a kilo.

Okay. Okay. And then the increase is only INR 4 a kilo. Okay.

Yes.

Okay, sir. And sir, so why is the mix turning towards value? Or no, that is not the case? PVC prices rest apart the value-added product or low price production is not kind of -- low-margin products are not driving growth rate, right? Sir, it's -- the mix is not changing.

The housing activity has still not picked up.

Okay. So the mix is [indiscernible] to an extent. Okay, sir. Sir, the second question is on the Pipe segment only. Pipe margins are, in this quarter, were among the strongest existing in history. What exactly was the driver for this sharp increase? And do you expect -- was it mix? And if it was, then should it sustain?

Somani, please, can you reply?

You see, the margin, what you've seen in the fourth quarter are definitely best, but not sustainable. The primary reasons for the better margin, aside from the operations, you see, one is the product mix. The better product mix in the fourth quarter, less February and other products more, definitely gives a better margin, which is not the scenario for the year as a whole. Secondly, if you look at the PVC prices from January till 18th March, prices are on the up. So when in the falling prices, you get inventory loss. In the rising prices, you get inventory gain. Company has a lot of inventory in terms of finished goods and raw material commitment, et cetera, so there is a good inventory gain also you got in this quarter. And thirdly, when we fulfill our commitment to lift certain quantities of the raw material annually when we get a handsome support from our raw material supplier, domestic supplier also, which we are not forcing, but you could complete our commitment and we get hands on support from them. So all these put together give us a good margin for this quarter. If you look at the overall margin for the piping for the year, it's close to 16% operating margin. But this fourth quarter margin are not sustainable, definitely not sustainable, this is an aberration from our point of view.

Sir, but the fourth, let's not -- I understand the quarterly aberration, as you rightly pointed out. But even the yearly margins are something which we have probably not seen earlier. So this year, [indiscernible] could you quantify how much is inventory gain related to this full year or no? Would you like to share?

Very, very difficult to quantify that way.

Okay. Okay, sir. And sir, last, if I may. So there has been talk about dealers having lockdown [indiscernible] especially in the red zones, are we kind of having the requirements for extending credit? Or how is that situation in the channel, if you could kind of highlight.

Normally, when the market was closed from 18th of March, then during the lockdown period, we supported our customer by not charging interest for delayed payment. Because market was closed somewhere for 50 days -- 45 days, so in that period, we didn't count in the credit period, in that way we supported all our customers that they were not required to pay interest for delayed payment, it was not their fault, the market was closed. Otherwise, our customers don't require any extra credit period, so we keep proper control on our credit discipline.

And sir, the inventory is essentially increasing...

Sorry to interrupt you, you are welcome to join the queue for your follow-up question.

Can you say it again?

Sir, we move to the next participant. [Operator Instructions] Next question is from the line of Abhishek Ghosh from DSP Mutual Fund.

Sir, you mentioned about the margin expansion in the piping segment. But if you look at across all the segments, packaging, industrial, consumer, everywhere, there is a sharp improvement. So is it to do with the raw material procurement discount? And how should we look at it from that perspective?

Basically due to raw material procurement discount for the whole year are provided because we fulfilled our commitment, so we got the discount and then we got it credited in the last quarter. Apart from that, in each segment, there is always product variety as we have seen our share of value-added goods were better for the whole year also and during the quarter also.

Sure. Okay. Sir, also in terms of -- and we had seen the sharp PVC price declined, almost about INR 13 per kg in the month of April, May, have we passed on the entire impact of the PVC prices to the channel? Or has there been a lesser reduction this time around in the piping segment?

Normally, we give reduction to the extent required in the market. That depends on product to product. We have got more than 8,000 SKU, so -- plus it does not depend on the product segment.

Sure. Okay. Okay. And sir, just lastly, you've mentioned that the Bangladesh composite cylinder orders, now I think the feedback has been decent. If can you just help us update what's the progress there?

So Somani, please?

No. On this front, you see the last year -- '18/'19, we supplied the material, which met with some technical problems. We had to compensate heavily for that and about INR 12 crores of compensation we provided back to the party. We supplied new design cylinder to them, which they have tested for 4 months period in their plant. And they had given a positive report with those new design cylinders, which they are using. They have assured us to give a good business this year. First, they'll place an order for 10,000 pieces. And once the 10,000 pieces are supplied, then they assured us to buy good quantity every month. Unfortunately, the lockdown started, and everywhere it is the same scenario. So once the lockdown is opened up in India also and there also, then we will see certain business potential from them and we are quite confident we'll get a good business during the current year.

Next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund.

Sir, the margin performance in the packaging business has been improving. So is it fair to say that there have been no price cuts in tarpaulin since September and competitive intensity has also sort of reduced, especially after the COVID pandemic?

There is no erosion in the price of tarpaulin now. And we have changed our product mix in a big way, not only in the product mix, but also in the markets. So we believe that we will -- our margins will not be under pressure. And fortunately, we are enjoying now good demand for our product not only from an Indian market but from global market.

Okay. What is the update on Biofloc, sir? Are we launching it this year?

Which one?

Biofloc, are we launching it this year?

Biofloc, we have already given some 6 pieces at various stage of trial. We have tried first in our plant. It has worked very well. And now they are under trial at various locations. First we want to make a soft launch, which we have done. And after a certain period, when we find it is running very well, then only we'll launch commercially in a big way. We hope that we may be able to launch in 3 to 4 months.

Okay. And secondly, sir, in terms of the tarpaulin business, Q1 seems to be the peak season for this particular product. So assuming that lockdown gets removed by the June mid, can you presume that more or less this season may not get significantly impacted for tarpaulin? Or you think that there will be a significant impact?

First, we will give a real picture. For first 15 days in the beginning of April, our plants were closed down. Afterwards only that we were allowed to open the plant. The fabrication workers, we had 700 workers staying in all our 3 plants. So we could immediately start operation with 700 fabrication workers. Thereafter, the strength of workers is not growing, now only we are seeing influx of more workers coming to our plant. So we hope that within 10, 15 days, we'll be able to run the full fabrication facility. But fortunately, as the plant was closed from 20th of March, we had enough finished goods stock already in our godown. So we are able to meet the requirement of the market by supplying from our stock. But here I may like to say that even today that tarpaulin is declared as an essential item by several states. Tarpaulin shops are still not considered essential in many of the states, so several markets still are not open. We hope that they may open any day because tarpaulin is very essential at this time. And we hope that the market, throughout the country, will be opened very shortly. But we are geared up to meet increased requirements.

Next question is from the line of Sunil Shah from Turtle Star Portfolio Managers.

Sir I have this one question on the Pipes business. Sir, how do you think that the small unorganized players will be able to pass these difficult times because they might have some financial pressures and all that. So we think that they will not be able to survive, and the big organized, the few large ones will be in a position to gain some market share over the next couple of quarters? So what is your sense on that?

Too early to say, but we believe that slowly, but surely, the market is going to shift more and more towards organized sector. Having said that, we still believe in this market, in the localized area, the unorganized player may have a role to play in less functional type of pipe. So they may also continue along with us.

Okay. And sir, the green zones, which have opened up since few days back, sir, how is the demand coming over the -- I mean, how are we seeing the inquiries coming from our dealers, distributors? That is one part. And my second question is the impact of the cyclone, which just happened, if you could give me answers to these questions.

I may differentiate 2 things. For agriculture segment, there is no discrimination. Wherever, whatever maybe the zone, due to demand, the shops are allowed to open, and we are getting a requirement from everywhere. I may say here that this year, the harvest in rabi crop is bountiful. The farmers are getting payment from government very quickly. And we are glad to share with you that farmers are spending money in development of their field. So in agri pipe market, all the pieces with the supplier, maybe our company is fully sold out in this segment. In housing segment, still many markets are not opened. Even Bombay market, Delhi market, Chennai market, they are all closed. Housing activity is very slow to pick up. We don't know when they will pick up because housing is very labor intensive, also construction activity. But surely, this will also start opening up over a period, maybe by second half of next month may start opening up, we believe that. So presently, housing activity not picked up.

Okay. Again, on the service segment of packaging and all those, then there also how is the traction building up?

Sorry, say it again?

Packaging products, how is the demand shaping at that point?

In Performance Packaging Films, there is a good demand in Indian market and export market. Except Film, the demand is quite okay. On Protective Packaging Products, demand is low. It goes for -- actually a lot of debt goes into industrial application, goes for insulation, goes for construction because they also use infrastructure in business. Really the demand has come, but demand is quite slow. And there are 3 segments of packaging in our company.

Yes. Fair enough. Sir, just want to get some things on the cyclone impact on our company?

Sorry?

The impact of the cyclone on our company?

Impact of what -- impact of?

Cyclone, which came.

You know, the West Bengal cyclone. The cyclone which came just 2 days, yesterday and you know. Any plants that have got affected for us?

Any plant? No. No, no, all the plants -- no, all the plants are opened.

Nothing.

Okay. Yes. Wonderful. Okay sir.

We have the plant in West Bengal, but we are not affected by the cyclone.

Rest with our plant, the current plant was affected for 1 day due to cyclone.

Okay. No, no important -- no significant losses for us or any such thing? No damage to us?

Fortunately, no damage to us. But there was a big devastation in Bengal.

Right, sir. But -- okay, so it was not affected -- it has not affected our plant. That's fair enough. All the best.

Next question is from the line of Madhav Marda from Fidelity Investments.

I just wanted to understand this quantity discounts which you mentioned, that we got from the resin supplier. Is this -- isn't this something you receive every year? Why is it helping profit only this year in Q4?

No, we did not see resin supply. We see our polymer buying.

Polymer buying, okay.

We not only buy previously resin, we buy polyphyllin, we buy polypropylene. And we have an ample quantity. So all the raw material makers are under pressure. This year was slightly -- they were more favoring the customer. We're big buyers. We are big buyers of the Indian company.

Okay sir. And sir, because of the COVID impact, we were able to fulfill the requirement and others could not, so they give us a speciality, I believe, is that what you think?

Somani, do you want to say. Somani ji?

No, you see this year, the business was not growing the way we have committed in the first few quarters. Baseline, we were not sure ourselves whether we'll be able to commit to the whole quantity what we have committed. So baseline, we were not setting those annual discount scheme whether it will be eligible or not.

And are quarterly working earlier.

Quarterly working earlier?

Yes, yes, yes.

So we did it for the whole year. Only in Q4 the book...

Correct. Correct. Correct.

Yes, yes, correct, correct

And is it sir that you do it for every quarter's book, this time it is only in Q4? Is it right?

Correct. Correct.

Correct.

Okay. And how much is that amount? Is there any amount that you can share with us?

We cannot quantify.

[Operator Instructions] Next question is from the line of Ritesh Shah from Investec Capital.

Sir, my first question is what is the sort of inventory levels that we maintain for our key polymers?

Sorry?

Sir, what is the number of days of inventory that we maintain for our key polymers, say, something like PVC, HDPE, LDPE?

What you want to know?

Inventory levels. Can you...

Number of days that inventory...

It will depend on product and product, and where from we are sourcing. Now PVC, we import quite a volume. So the inventory may be high. CPVC, 100% imported. So the inventory will be high. Polyethylene, all will buy mostly from local. So we may work with low inventory. Depend on product to product. We use different grades of polymer for our product in the country.

Right. Sir, is it possible...

We keep the inventory based on our commercial requirement.

Correct. Sir, last time, you had indicated that for PVC you maintain around 3 weeks of inventory, and this was towards Q4. Sir would that number be correct or would it have changed? Basically, I'm just trying to get some sense on if you can help on the number of days point of view? Broadly, it would be quite useful, sir.

No, we have no way out because our business was stopped by middle of March only. And that is start of our peak season. From middle of March to middle of June, that's the peak season of piping division. So you can build and keep high inventory either locally or import material in pipeline to meet the requirement of not buying in the month of April and May. And people have not purchased, it will then become short now in the month of May.

Okay. Sir, can you give some indication of how the product mix would have changed? You did indicate that we did less [ non-agri ] in this quarter, and we did more of agri . Sir, can you give some color over here, it would be quite useful to understand?

It is a simple thing. In January-March this year, the agri demand was very poor. Our agri -- we are a very effective player in the State of Maharashtra, the demand was more compared to last year in agri market. But overall, we can say our value-added business in the last quarter has gone up to 40% compared to 37% in the previous year in the same quarter. Overall, for the full year, our value-added business has gone up to 38.28% compared to 35.76% of last year. In absolute quantum also, it has gone up to INR 2,070 crore against INR 1,944 crore in the previous year.

Right. Sir, is it possible if you could provide with the mix of agri versus non-agri only for the piping part, sir?

Not possible because many customers in many areas, they buy agri pipe to use in housing.

Sir, my second question is on...

Sorry to interrupt you. I request you to come back in the question queue for a follow-up question. Next question is from the line of Sneha Talreja from Edelweiss.

Sir, Sneha here. Sir, since the time you've started the operating facilities, just wanted to know on the progress in each individual segment. Example, you said that piping, you're almost operating at -- I mean, your orders are completely full for the agri division at least. So what must be the operating rate there? And what is the scenario at other segments? Like consumers, I believe, must be down because of the discretionary nature of the business. Could you explain us that?

Somani, can you share, please?

Yes, yes. We've already given a detailed note on the COVID business impact, which clearly mentions the piping sector is doing well because of the agri demand. So we are -- for any product, we are running full capacity. But as overall piping division, you can say between 50% to 60% capacity. For the new product, the demand is not there or not -- the market is not yet opened up. Shops are closed. So we are running only for mere building items which are required for the inventory build point of view between 20% to 25%. Packaging segment, yes, demand has picked up on Performance Packaging Films, Cross Laminated Films and demand is slow for the Protective Packaging. So on an average, you can say we are running at 50% to 60% capacity. And for Industrial Component, less than 20% because our industrial customers have not yet opened up their operations. So very -- whatever that have been required, some assemblies are required, those are going to be done, so it is less than 20% capacity.

Sir, that was helpful. Secondly, my second question was related to the margin. So this quarter, we have seen significant improvement in margins. Of course, you've given many reasons for it. But what would be the sustainable margin that you're looking at? Because for the complete year also we have seen a good amount of margins. In fact, if at all, we want to take this impact of discounts to the whole year, the margins in all the segments would be pretty good. So what is the sustainable level of margins in individual segments that you're looking at?

For the full year, not possible for us to give the margin guidance this year as on today.

The next question is from the line of Nehal Shah from ICICI Securities.

Sir, couple of questions. One on the Cross Plastic Film technology as to what is the scope and the potential here as far as Indian market is concerned? And second is the performance of CPVC Pipe segment in the last quarter as well as in the running quarter as well?

Our Cross Plastic Film, as stated, that our technology had been perfected now to build their machines, the clients are under preparation in Rumania and Switzerland. They expect that drying will be ready during the month of June. Then we will be giving the drying to our machinery supplier to give us a quote. So we hope that everything goes smoothly. Then in '21/'22, it should be in production in India. On CPVC, this year, the demand was quite low because the housing demand has still not started. We don't know when the demand will start. Presently, demand is very low, right? Last quarter also, January-March, it is not possible to give because the business was -- hardly there was any during the month of March. Normally, we get good business in the month of March, but this year, after Holi on 10th and 11th of March, and thereafter, there was COVID-19 influence. So business was quite weak thereafter and the element in '20 is almost the lockdown started in Maharashtra.

Okay. And sir, on the opportunity, as far as the Cross Plastic Film is concerned, what is the opportunity we are looking at in terms of scale and the application?

Sorry?

What kind of opportunity are we seeing-- will be seeing in the Cross Plastic Film product? What would be the typical application of that product?

There are many applications. When we launched Cross Plastic Film, we drawed attention to all our friends, all our partners.

Next question is from the line of Ashish Poddar from Anand Rathi.

Yes. So my question is related more with the long-term outlook. So while today we are talking about rural market, urban market, then -- and then construction activity, aggregated activity. You are a very old company. You have seen many such cycles where the economy was not good, consumer sentiments are pretty weak. What is in your assessment in the next 2, 3 years, how will the scenario evolve given the lockdown prolonged for the next 3, 4 months and the impact on the urban areas will continue? How do you see situations in the next 2, 3 years? Is it possible that urban will again come back at the normal levels and start creating good demand for the industry?

Urban is bound to come back. The country is moving towards more and more urbanization. It's bound to come back. We should not get into too much depth of this fear and negativity. We believe that India has got a bright future and we have a very high growth path. And with this structural change, so many structural change announced by our finance minister for 5 days if you bring transformation into many big business. We remain quite optimistic for the future growth. Even during the COVID-19, the plastic has played a great crucial role, not only in face mask, but in PPE gowns which is used by all the health professionals. So plastic -- to this extent, plastic is a wonder material of the 21st century. We remain quite bullish and optimistic about the growth prospect of plastic product.

So you don't see any structural changes in the business model in the next 3, 4 years even if the situation will again come back to the earlier level?

Structural change market, plastic will continue to grow. And our company is going to grow continuously.

No, structurally, in the sense, from your strategy perspective, whatever strategy you were working with earlier, you will continue with the same strategy? There will not be much change in the strategy?

Definitely. Among various products we made, we made 30,000, 40,000 related product. Some product may drop and some product may remain, but basically, we remain in plastics.

Next question is from the line of Shantanu Mantri from Optimum Securities.

Sir, my question is regarding your Supreme Petrochem. Sir, could you please share the pricing trend for styrene and polystyrene for the last 3 months?

In styrene, we can only change the price, we started in the month of April like 2019 from $1,075 per ton and then decreased to $520 at the bottom. And current price of styrene is $665. Now the pressure, upward bias, the demand for polystyrene in world market is better. In India market demand is still to open up because polystyrene is used in quite a big way in consumer appliance segment and mostly growth. They are giving plan that they may start working from the month of June. So -- but international market, we have good export demand. This month also we are going to make good export also. And we are -- we issued expansion plan for our several capacity. We got environment approval and pollution board approval. So we will be taking up the expansion plan over the period and make the product vertical going forward.

Sir, could you give me some details on how much will be the amount of CapEx in this expansion plan?

No, that is over a period of 5, 7 years. This year, we are investing INR 61 crore in Supreme Petrochem.

All right. All right. And sir, could you -- this quarter, it seems that there has not been any inventory hit. So...

In Supreme Petrochem?

Yes sir, yes sir, in Supreme Petrochem.

Big inventory, prices came down from $1,075 to $520, how can you avoid it? But my suppliers and my purchase people were very alert, so we could avoid huge loss, but still loss is there.

Next question is from the line of Laxmi Narayan from ICICI Mutual Fund.

Sir, a question regarding your capacity expansion. In the last presentation it was mentioned that the capacity to be enhanced by almost 700,000 MT by 2021 with a CapEx of INR 700 crores to INR 800 crores, right? Now in your presentation, you had actually mentioned that you will be planning to spend almost INR 100 crores to INR 150 crores across various things. So how do I read that number with this? Or is it that it has been pushed to the next financial year?

Somani, can you tell about our capital expense, please.

Yes. So you see there are 2 things to it. First, let me tell you our present capacity, resource capacity as of 31st March 2020 is about 6,36,000 metric ton among various segments. This year, we have made INR 241 crore CapEx in -- on the ground. But another INR 182 crore CapEx is already committed. Others is in place. And we believe that the equipment will start in due course. And -- actually INR 150 crore to INR 200 crore CapEx with new effect, we will be committed. So the total CapEx for the year from the balance sheet point of view, would be INR 182 crores plus INR 100 crores to INR 200 crores. So again, INR 350 crore plus. By the end, this CapEx addition, we will reach to the capacity of close to 700,000 metric ton.

Okay. And in which places, what is the -- no, in Plastic Pipe, how much you're actually adding capacity?

Major CapEx is in Plastic Piping only. Because that is the best division and growing division in potential. So 70% to 80% CapEx is for Plastic Piping.

Okay. So how much is it going to expand in Plastic Piping from what we closed with the capacity in March 2020 to what is the number?

Yes. From 440,000, it will go close to 500,000.

By 2021?

Correct.

Okay. The second question I have is that you have close to around 1,000 channel partners. Now what is the number of channel partners currently we have in Plastic Piping?

In Plastic Piping itself 1,240.

Okay. So that is almost increased by close to around 20% over the closing figure of last year?

We have 167 new distributors who would run our family.

Next question is from the line of Achal Lohade from JM Financial.

My first question was with respect to CPVC. Would it be possible to give some color in terms of has it meaningfully improved in the year of FY '20 versus FY '19 for CPVC in the classified division?

There are some improvement in business in '19/'20. This year, business is yet to start. But anyway, we are expanding capacity of CPVC in various locations this year.

Right. Would it be fair to say our revenue mix of CPVC could be between 25% to 30% for the full year, for FY '20?

FY '20, the gross was only 15 days of the month of March only.

No, no. I think the mix of CPVC.

There is already a mix, we do not really classify it commensurately between CPVC and PVC.

All right. And in terms of the price, you said the PVC prices had declined to INR 13 from INR 18 still for the month of May. How much price reduction has been taken on an average if you could help with that?

Only from -- on PVC only price started eroding. So erosion of price is 11%. From 18th March to 1st May, prices have dropped by 11%, appreciating.

And how much have we reduced in terms of the end product prices?

It depends product to product.

Okay. Okay. And just last clarification, you said DWC, you're planning to add capacity in your opening remarks. So I was just curious to know what is the current utilization. Because in the earlier call, we had indicated that DWC continues to remain challenging. So if you could shed some...

Now we are seeing the customers are preferring quality product. So many original players who are very conscious of our quality, we started getting business from them. To balance our end, because we were not making small diameter, so now we are putting a plant to make a small diameter also from 40 millimeter. Otherwise earlier, we started production from 90 millimeters and above. Now we'll be supplying by adding this machine from 40 millimeters onward.

Any particular application, if you want to highlight like?

Many, many application. The DWC pipe all goes into many applications.

Next question is from the line of Tejal Shah from Reliance Life.

Just one question from my side. If you could help me understand the product mix of the packaging division with regards to revenue and EBITDA, that will be helpful?

Somani ji, why don't you? Somani ji?

Yes, separate segment numbers we don't give, we give only the segment. We don't give the breakup of the individual product mix that is classified.

Can you give the market share of Silpaulin, that would be helpful. Some color on the market share gains, if you could highlight that?

Silpaulin market share?

Yes, sir.

Silpaulin market share is with home. The woven Tarpaulin big market were Tarpaulin. But Silpaulin and not only Tarpaulin, it has many other products. There is no market share. We are the largest producer of Cross Laminated Films in the whole world.

Sir, with regards to...

Our generation is very special in all the woven product. So if we compare with home, because the idea should be woven Tarpaulin -- is woven tarpaulin. Our product is nonwoven tarpaulin. Tarpaulin is one of the applications. We make many applications from our Cross Laminated Films. We are in production of Cross Laminated Film and we are the largest producer in the world. Our capacity is 27,000 ton per year.

Sir, but when we compare it with Time Techno and Shalimar and players like that, how much...

They are all marginal players.

Sir, how much would be our utilization for the Silpaulin currently?

Sorry?

How much would be our utilization in FY '20 for Silpaulin currently?

FY '20, we sold only 17,000 tons. For 27,000 tons, we should have exactly pulled 25,000 tons. And we sold 17,000 tons, so maybe around 70%.

Okay. And sir, one more. If you could help us understand on the pricing aspect for Silpaulin and how has that been currently?

No, we are not dropping any more price.

Okay. So the price -- going ahead it should be...

I was told the difference between us and our competitors are between 10% to 15% and that is lower than us.

Okay. And sir, one last thing, if you could help us with the regional sales mix also, and if the Kerala market share has increased for us, could you help us understand that?

We are just a permanent player in this product in Kerala.

So would our market share have increased in Kerala, sir?

I have no numbers, so I cannot say -- I cannot share. I cannot share.

Sir not number-wise, sir, if you could just help us...

Not possible, please.

Sorry to interrupt you. May I request you to come back in the question queue for a follow-up question.

Yes, absolutely right. Some information is not to be shared.

Next question is from the line of Ankur Sharma from HDFC Life Insurance.

Yes, sir. I will be leaving. So just 2 questions. One, will it be possible to quantify how much of sales was lost in March because of this lockdown? If you can give us a number there?

How much is?

How much sales was lost or could not be good, how much of revenues were not good because of this lockdown between the mid of March?

April is a big month. April sale was quite poor.

No. He's asking in the month of March, how much sales we could have lost...

I think my guess was only 40% or normal March sales. Because in March, we borrow business from April. So no question about worrying or anything. And in March [ retirement ] also we couldn't sell.

Okay. Okay. But any number, sir, any -- would you have any number?

I can only well remember that when you are seeing degrowth in our Packaging business and Consumer product, there would be no degrowth if March was fully available to the company.

Okay. Okay. Understood. And second question, sir, would be, as you said, we have close to about 1,200-odd distributors across the country in Plastic Piping, would you be able to tell us how much is in rural areas and how much are in urban areas? And so I'm trying to get a sense of how many of these are actually open already and selling?

And in the rural area, you can see in town also, in small, medium capability, nobody can afford to be our distributor. In a big city or Tier 2 town, Tier 3 town, Tier 4 town. Majority of our customer are in Tier 2, Tier 3, Tier 4 towns.

Ladies and gentlemen, due to time constraints, that was the last question for today. I will now hand the conference over to Mr. Kashyap Pujara for closing comments.

Yes. Thank you, everyone, for being here on the call. And apologies that certain questions couldn't be taken only because there was a huge amount of people in the queue and we had to restrict the number of questions asked to ensure that maximum people get to ask questions. Taparia ji, Mr. Somani, thank you so much for being on the call, sir.

Thank you very much Kashyap ji.

Thank you very much.

Thank you. On behalf of Axis Capital Ltd., that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Thank you, sir.

Thank you.