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

Ladies and gentlemen, good day, and welcome to the Supreme Industries Limited Q4 FY '21 Earnings Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aasim Bharde. Thank you, and over to you, sir.

Yes. Thanks, Malika. Good evening, everyone. And on behalf of DAM Capital, I welcome all of you on the Q4 FY '21 earnings call of Supreme Industries Limited. I hope every one of you and your loved ones are safe and doing well in these trying times and wish that all of us come out of this well. From the management side, we have with us Mr. M.P. Taparia, Managing Director; Mr. P.C. Somani, Chief Financial Officer; and Mr. Mr. R.J. Saboo, Vice President, Corporate Affairs and Company Secretary. We will start the call with brief remarks from the management side and then open the floor for questions. Over to you, Mr. Taparia.

[Audio Gap] of The Supreme Industries Limited. I along with my colleagues, Shri P.C. Somani, Chief Finance Officer and Shri R.J. Saboo, Vice President, Corporate Affairs 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 March 31, 2021. The stand-alone results and the consolidated results are already with you. I'll give you brief on company product, operating performance and other highlights. The company sold 111,238 metric tons of plastic goods and achieved net product turnover of INR 2,049 crore during the fourth quarter of the current year against sales of 103,200 metric tons of plastic goods and achieved net product turnover of INR 1,380 crores in the corresponding quarter of previous year, achieving volume and product value growth of about 8% and 48%, respectively. The company sold 409,109 tons of plastic goods and achieved net product turnover of INR 6,177 crore with year under review against sale of 411,521 tons and net product turnover of INR 5,408 crore in the previous year, resulting in volume degrowth of about 1% and product value growth of about 14% respectively. Total consolidated income and operating profit for the fourth quarter of the current year amounted to INR 2,088 crore and INR 584 crore as compared to INR 1,405 crore and INR 276 crore of the corresponding quarter of the previous year, recording increase in consolidated income and operating profit of about 49% and 112%, respectively. The consulted income and operating profit during the year under review amounted to INR 6,361 crore and INR 1,435 crore as compared to INR 5,487 crore and INR 862 crore for the previous year, recording increase in consolidated income and operating profit of about 16% and 66% respectively. The consolidated profit before tax and profit after tax for the fourth quarter of the current year amounted to INR 528 crore and INR 450 crore as compared to INR 219 crore and INR 114 crore for the corresponding quarter of the previous year, recording increase in profit before tax and profit after tax of about 141% and 295% respectively. The consolidated profit before tax and profit after tax during the year under review amounted to INR 1,212 crore and INR 978 crore as compared to INR 636 crore and INR 464 crore for the previous year, recording increase of about 91% and 111% respectively. The business scenario of all the product segment of the company for the year ended March 31, 2021, as compared to previous year has been as under: Plastic Piping System business degrew by 2% in volume and grew by 19% in value terms. Packaging Products segment business grew by 7% in volume and 8% in value term. Industrial Products segment business grew 7% in volume and 13% in value term. Consumer Products segment business degrew by 11% in volume and 8% in value term. The Board of Directors has recommended payment of final dividend at a rate of INR 17 per equity share on 127,026,870 equity share or INR 2 each for the year ended March 31, 2021, which together with interim dividend paid at INR 5 per equity share, aggregate to INR 22 per equity share in the previous -- in the current year; previous year, INR 14 per equity share. Total outflow for dividend shall absorb a sum of INR 279 crore as against INR 214 crore, which included dividend distribution tax in previous year. The overall turnover of value-added product increased to INR 2,480 crore as compared to INR 2,070 crore in the previous year, achieving growth of 20%. The company has become debt-free during the year and had cash surplus fund of INR 759 crore as on March 31, 2021, as against net borrowing of INR 217 crore as on March 31, 2020. With expected growth in the business of several verticals, the company took steps to put new production unit and also expand capacity in several of its existing units and incurred CapEx of INR 314 crore in the year 2020 and 2021 and further committed CapEx of about INR 198 crore, which shall fructify for production and usage during current year. During the current year, that is 2021-2022, the company envisages new CapEx in the range of about INR 400 crores including carried forward commitment of INR 198 crore at the beginning of the year, mainly on the following: Putting new unit at Assam to manufacturer PVC pipe and roto and blow molded product; putting up a plastic product complex near Cuttack in Odisha where required land has already been purchased and taken possession thereof; putting up a plastic product complex near Erode in Tamil Nadu. The company already taken possession of about 33-acre land from SIPCOT; establishing capacity to manufacture olefin fitting and PEX Piping System at Jadcherla; expanding capacity of its bath fitting products at Pondicherry; adding variety of new injection molded fitting product and its Plastic Piping product division; to add new model of injection-molded furniture, crates and pallets in the company's range of furniture and Material Handling product; adding several capacity of Water Tank molds and additional rotomolding machine; to increase capacity of industrial component molding at various locations in view of increased business opportunity; to add necessary equipment at its Protective Packaging and Performance Packaging division; to install rooftop solar energy generation plant at various location; to install balancing equipment at various locations. As a result of the nationwide lockdown imposed by the Government of India, the operation of the company were temporarily disrupted at its various manufacturing facilities, impacting production and dispatches from the second half of March 2020. The company had resumed operations since last week of April 2020 or first week of May 2020 in compliance with the guideline issued by respective authorities and is continuing to take adequate precautions for safety and wellbeing of colleagues at all levels. In view of the recent surge in COVID-19 cases, few states reintroduced some restrictions and the company continues to remain vigilant and cautious and shall take all appropriate steps to mitigate the resultant impact. The year under review was the toughest in the history of the company. It started with an extreme negative outlook. The company had to keep operations of its 24 plants closed for most part of the month of April 2020 and could begin in a gradual manner from last week of April 2020 onwards. In the last 10 days, just before closing of the year, the business has again witnessed tough situation as COVID-19 second wave started affecting the general public with alarming speed. The situation has become further volatile due to steep increase in polymer prices. The increase in PVC prices were steepest. In the last 40 years, international price of PVC have never reached to the level seen in April 2021, especially in India. The company, however, has come out of the 2 extreme adverse situation with unparalleled performance where the profit of the company was highest in its 79 years of operation. This was partly supported by more than INR 200 crores inventory gain on account of raw material price increase which accrued in its operation for the year. Even with the temporary setback, which the company is experiencing in the month of April 2021, the company has not reduced its CapEx plan for the year '21-'22. In the current year, not only there will be a brownfield expansion of capacities and new product at the existing plant, but company has also embarked on putting up 3 new greenfield plant in the state of Assam, Odisha and Tamil Nadu during the current year. The government at the Center and State has put the priority focus on Jal Jeevan Mission, Swachh Bharat Abhiyan, sanitation and affordable houses to all and development of 100 smart cities on all India basis. NITI Aayog has declared following as growth drivers across the country: Government infrastructure spending; increasing construction; increasing industrial production; rising demand from irrigation sector; replacement of aging pipe; providing affordable house to all; heavy investment by government in irrigation, housing and sanitization. All the above are growth driver, which will boost the business of plastic piping system. Cross laminated film product demand will boost in the coming year as weather forecast by Skymet, the monsoon in India is predicted to be normal with no La Nina scare. The thrust in coming year in exports will be mainly on developing newer applications, entering new markets and targeting chain stores and supermarket for sale through their online portal. The company is also increasing its capacity from present 27,000 tons per annum to 30,000 tons per annum and expects the export to grow further in the coming year apart from increasing the sale of Made Up products. The company's furniture range is sold on various e-commerce portals through a few dedicated channel partners. Its e-commerce business grew by 100% during the year and consumer behavior during the year showed a major shift toward online shopping. The company, along with its channel partner, geared up its infrastructure to meet the sudden rising demand. The company is focused on increasing its online presence and product offering and sees this as a future growth driver. In Industrial Component division, business conditions are not clear due to huge surge in COVID cases in the country necessitating to put across stringent curbs by various State government. However, company feels that business scenario remains bullish in medium and long-term with business-friendly policies by the government. Company has thus planned need based capacity expansion to handle the projected increased demand going forward. In Material Handling division, company has shown good growth in essential commodities, retail industry sector, fruit and vegetable segment, e-commerce, FMCG, fisheries, jumbo crates, dairy segment and injection molded dustbins. The company plans to introduce new model in pallets, crates and ice boxes sales in rotomolding and well poised for growth in the current year. In Composite LPG Cylinder division, the updated component design and improved plant processes following Poka-Yoke system have yielded excellent results with no customer complaints received since third quarter 2019. Repeated orders from existing as well as new customers stood testimony to the excellent quality of the current product offering. The largest Indian oil marketing company, M/s. Indian Oil Corporation Limited purchased small quantity of composite cylinder in March 2021 for marketing trials in 4 cities in India. This augurs well for the long awaited introduction of composite cylinder in Indian market. In Protective Packaging division, good growth is shown in civil and export sectors. New variant of interlock mat for various sports application has been developed by using recycled material. The company expects good business in the coming year. Performance packaging film being part of intermediary to essential product category has done well, particularly in dairy and oil industry. Continued effort to develop new product will help the division grow better and add more value-added product in its fold. With available production capacity, improved product mix and focus on increasing customer base, the company expects to achieve volume and value growth in this business in the current year. This is an overall summary for the quarter and 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 questions which may be asked by you. Thank you very much for your patience. Thank you.

[Operator Instructions] The first question is from the line of [ Kashyap ] from [ Theleme Partners. ]

Congratulations, Tapariaji and the entire Supreme team for the fantastic numbers on both, Supreme Petrochem and Supreme Industries. My question was on Supreme Petrochem. I think we've seen amazing performance on the back of good spreads in -- between styrene monomer and polystyrene. And already, the quarterly EPS, if I annualize it, we are already at INR 100 earnings per share. And the second player, LG Chemicals is clearly out of the market and not expected to come in soon. I just wanted to understand from you, what is your prognosis of how you see the situation ahead in terms of the environment in the Supreme Petrochem? And has it kind of got structurally better?

[ Kashyapji, ] sorry, say it again, please? Hello?

Kashyap, can you repeat what you told?

Yes, please?

No, I wanted to check what is -- how do you see the environment under which Supreme Petrochem operates in terms of the spreads and also in terms of the competitive intensity.

No, presently, the imports are [indiscernible] on local producer and also imports are coming regularly in a big way. But however, the demand from consumer appliance segment is growing quite robust. Temporarily due to this lockdowns in many local [Technical Difficulty] demand was low. Demand was low in the month of April, May. But going forward, with the new capacity coming up to make consumer appliances, not only for domestic market, but for international markets from India, we expect the demand will go on growing nicely. Based on the expected growth in demand, the company has taken in hand to expand capacity of polystyrene by 90,000 tons and capacity of EPS by 30,000 tons, which are increased capacity of 120,000 tons will be on one after another starting December 2021 by March 2022. The delta between styrene monomer and polystyrene remains robust now. The world market is quite willing to pay a premium on the styrene -- on the polystyrene and HIPS. So we expect to enjoy good delta between styrene and polystyrene for near term market. Hello? Hello?

Yes, yes, we can hear you. [ Kashyap? ]

Yes, please? Yes, please? I think I covered Mr. [ Kashyap ] your questions?

Yes, yes.

The next question is from the line of Aditya Bagul from Axis Capital.

Congratulations on a great set of numbers. Sir, I have 3 questions. First, I'd like to understand from you, how is the near-term scenario, especially given that Q4 and Q1 is very high in terms of irrigation demand. Also we saw that over the last 2 months, there has been a resurgence in terms of real estate. So I just wanted to understand from you how the COVID second wave is impacting our business in terms of the near-term outlook? Also, if you can help me understand what is your thoughts on the PVC trend, the raise in price.

I'll take the second question first. The PVC prices according to us did peak and we anticipate this slowly, but surely, that PVC prices now should start going down. Coming to the demand, the demand was reasonably robust up to 20th March, thereafter, demand slowed down due to that very fast upsurge of COVID due to second wave. The demand remained slightly lower in April than what was normally expected. But as April, May, June was quite weak last year compared to April, May, June, definitely April was far better this year compared to last year, April. May, June, too early to forecast, but we do not know how the country will steer through during the month of May and June. So we don't know whether they will go for some complete country lockdown. We don't anticipate. There are some regional lockdown happening. But with regional lockdown also, we believe that demand for agriculture is now revived and agriculture may still buy our product during the month of May and up to middle of June also.

Understood, sir. Understood, sir. Sir, that's quite helpful. Sir, my second question is more in terms of capital allocation. We have more than INR 700 crores on our balance sheet as pre -- surplus that is available. Next year also, if we have INR 1,200 crore EBITDA, INR 400 crore odd of cash flow, we will have another INR 800 crores that are available to us. So I was just thinking that with such high cash levels, what is our strategy on that?

We will go on deploying the money for any gainful opportunity we are seeing in plastic product. We remain committed to go on growing business of plastic product. We have got several plastic product -- we are operating in several plastic product segment. We see opportunity in all of them, and we will go on investing money as and when required in existing plant and also opening new locations. As you heard me, we have already planned 3 new locations this year. So as on today, we were in 12 states. Now with these 3 new plants, we will be moving now to 13 states by end of March 2022.

Understood, sir. So sir, we are not looking at either an inorganic addition or we are not looking to increase payout, nothing on those lines at the moment?

Nothing on?

Sir, my question was, are we looking at an inorganic addition? Are we looking at an acquisition or increase in payouts, either of the 2?

First, I'd say increase payout. Definitely, as you heard me, we've increased payout from 14 -- from INR 14 dividend, we have now increased to INR 22. That INR 14 was also added by the dividend distribution tax. But when you combine together also, we are now paying INR 279 crore against INR 214 crore last year. And we are -- for inorganic acquisition, if we find right fit and remaining in our product portfolio. We don't want to go in any inorganic acquisition if it is outside our line.

Understood, sir. Sir, 1 last question from your end -- from my end. I just wanted to get your sense on what do you think is the PVC raise in consumption on a pan-India basis. What I'm trying to understand is the magnitude to which we would have gained market share in this year.

The PVC market last year, countrywide, had a degrowth of 15.66%. Our company had a degrowth of PVC consumption by 3.47%. So net-net, we are able to increase our market share in PVC Piping system last year.

Understood, sir. That's very helpful. Congratulations once again for a great set of numbers.

The next question is from the line of Maulik Patel from Equirus Securities.

Sir, Maulik [Technical Difficulty]

Hello?

Particularly on a great performance in the industrial segment. Historically, the volume has been in the range of around 9,000 metric ton, 10,000 metric ton per quarter. This quarter, it has gone up substantially higher. Sir, what could be the reason for the same, sir?

We had a very better demand -- all our plants are fully loaded. We have better demand from all our customers. The consumer appliance market was booming in the fourth quarter.

Sir, is it, I mean, likely to be sustained in -- or you have gained some market share in the new products or something which has been launched in this quarter, which has gained significant market share for your consumer, something like that, which can attribute to such a high growth?

Industrial product, we are only supplying components to our customer and definitely all are having ambition, all are -- the new plants have come up, all are expanding capacity. As I said earlier, not only they are expanding for local market, they are expanding for world market also. As the demand -- as their production capacity goes up, our business of supplying component will also go up. And accordingly, we have planned additional investment in the current year.

Sir, I think an earlier participant has asked a question on the market share gain. You mentioned that our volume was down by around 3% to 4% whereas the PVC consumption in the country was down by 15%. But sir, has this been trend even was persistent in the March last quarter also?

Last quarter, we had a growth of 8%.

Sir, our pipe volume was down by 2%, sir?

Overall, degrowth apart from PVC, CPVC [indiscernible] plastic piping system from polyethylene also, from PPR also. We use various material for our plastic piping system.

Okay. And sir, what do you think about, sir, this year, the unorganized players which were there around, let's say, 35%, 40% of the pipe market, pre-COVID, and probably this year it has been down by a significant number. Do you think that is there any scope for these players to come back or the organized will continue to gain market share even if the PVC price come down substantially from level of INR 135 per kg right now to, let's say, about INR 100 per kg or INR 110? Do you think that unorganized will not -- will come back or not come back?

We believe the plastic piping system is a very functional product. So it will go on moving from the unorganized sector to organized sector, slowly, but surely. The business will go on moving away from unorganized to organized. Unorganized, in a local, small way, they will go on operating, but all India level, the business will go on growing of the organized players.

Sir, what do you -- what is the estimate by you, what could be the market share for the organized players in this financial year?

I am not made any number. Last year, we found that it was around INR 40,000 crores overall market of plastic piping system. This year, we have not still made because the value of -- the quantum has gone up due to the increase in raw material prices. Raw material prices have gone up in PVC, has gone up in CPVC, gone up in polypropylene, gone up in polyethylene also. So we have not met the number of the last year up till now. So I cannot tell you in precise terms.

Sir, just last question from my side. Sir, you mentioned that agri demand was good till 20th March. Sir...

Agri -- no, sorry. I say agri demand? No, I said overall demand was good till 20th March. Agri demand did not pick up, up to March. Now we are seeing some signs of coming up, which is not coming to the normal level, but definitely April, the agri demand was better than the previous quarter. The demand is there now, but demand has still not come in a big way, more due to localized lockdowns. Now the shops are open only for 4 hours. So there's a big restriction on the demand growth in all the markets. Every market, there is 4 hour operation. So they are not able to buy what they are requiring to buy. But normally, May month is the peak month for agri demand. So May only started, so I can't say today.

Sir, our -- for us, agri demand is 20%, 25% of the volume, right?

Sorry?

For Supreme, the agri demand is around 20%, 25% of the pipe volume?

No, our main business is housing.

Yes. That I know, sir, but sir, agri would be what percentage? 20%?

No, we don't know percentage because we are seeing that people who are buying agri pipe, they are using for housing also. So precisely, I cannot say.

The next question is from the line of Sonali Salgaonkar from Jefferies India.

Sir, congratulations on a great set of numbers. Sir, my first question is could we have the segment-wise capacities of us as of March '21?

Somaniji, could you help, please?

Yes. You see the capacity -- installed capacity per annum of plastic piping products is about 509,000 metric ton; industrial product is close to 72,000 metric ton; packaging products, about 86,000 metric ton and consumer products, 30,000 metric ton. So all put together will be 697,000 metric ton total installed capacity as on 31st March '21.

Right, sir. Sir, and next year, by March '22, with our expansion in line, where could we see this?

You see the normal CapEx of around INR 300 crore to INR 400 crore what we are talking right now, the capacity will increase by about 40,000 metric ton. I'm not counting right now the Odisha and the Tamil Nadu plant. Once we freeze those specifications of the plant [ and emphasize ] expansion of those plants, then we'll update you in the next quarter meeting. But with the present CapEx of about INR 400 crore in the current year, which includes carryforward CapEx of INR 198 crore, it would go up by about 40,000 metric ton.

Understand, sir. Sir, my second question is regarding the demand scenario. How are you seeing the demand of rural versus urban? And how much percentage of our sales approximately emanate from rural India?

No, the demand was reasonably okay. But now in the month of April, we have seen the lowdown [Technical Difficulty] and in the month of May also [Technical Difficulty] So demand is going to be definitely subdued in this quarter. But April last year -- last year also, April, May, June was a disaster. So...

Sir, she was asking about rural versus urban. Any idea on the rural versus urban?

No great idea. We don't see any miseries in rural area by migrant workers as we saw last year. We don't see any great misery due to migration of rural worker -- migrant worker. Rural worker, the crops are good. The harvesting is very good, but we are reading in the paper, the crops coming in the market is very bountiful. And as we told you earlier, the forecast for monsoon is also normal. Normally, rural India, you -- agriculture segment is overall looking quite okay.

Understood. Sir, my third question is, would you be able to quantify the inventory gains in Q4? I know you have quantified for the full year, but any idea as to how much inventory gains were there in Q4?

Somaniji, can you reply?

Yes. You see the larger part of inventory gain was in Q3 and Q4. Very nominal part was in earlier Q2 because most of the price rise has started from September onwards or August onwards, you can say, in a steepest way. Third quarter, we had given an estimated inventory gain of about INR 80 crores...

No, third quarter, we told INR 80 crore and this [Technical Difficulty]

Fourth quarter will be say, again, INR 80 crore to INR 100 crore. [Foreign Language] you can say, which is INR 80 crore to INR 100 crore. Very difficult to precisely quantify that way. But since the prices were rising, so out of INR 200 crores or so, you can say INR 80 crore to INR 100 crore in the fourth quarter also.

Understand, sir. Sir, and last question, PVC prices currently are at about INR 135 per kg. Sir, how much were they at the start of April this year? So want to understand how much they have risen from year -- over April?

They've gone up by around INR 70 a kilo.

April -- which year April you're asking?

April '20 she is asking.

No, no, this year. April '21.

April 1, now they're -- in the last month the increase was very nominal. Now the -- most of the increase took place up to March 2021. They started rising-- prices of PVC started falling from March 18, 2020, it went on going down, then from May 18, 2020, the prices started rising. In the first 2 months the prices dropped by INR 13.5 and then they increased by INR 70. So net-net, it has gone up by around INR 57 compared to beginning of March 2020.

[Operator Instructions] The next question is from the line of Jigar Shah from ICICI Securities.

Congratulations for the good set of numbers. I wanted to know about how was your CPVC mix this quarter and overall FY '21. Like how much growth you did? And did you do any price hike in last quarter or April month for -- in CPVC segment?

What you want to know in PVC?

He is asking about CPVC, but actual, Jigar, we do not give different -- actually, we do not give separate figures for ICI -- for CPVC because we give a combined figure only. We...

No, but I can -- no, I can give the number of CPVC.

Yes, yes.

CPVC county-wide had a degrowth of 11.63% last year. And our company has a growth of 3.68%. So our market share in CPVC has gone up.

Okay. Great. And have you taken any price hike recently?

No, I don't -- we go on changing the price based on the rupee-dollar movement and based on the internal prices. So the price has gone -- price has gone -- as the cost goes up, we go and transfer the increased price to the product.

Okay, sir. And my, sir, next question is on tanks capacity. So what would be the current capacity of tanks? And how much expansion are we expecting this year in tanks?

Somaniji, what capacity he is asking, Somaniji?

Tank capacity.

Tank?

Yes.

About 20,000 metric ton.

The next question is from the line of Chirag Setalvad from HDFC.

Sir, congratulations for a fantastic quarter and a fantastic year as well. Sir, I had a few questions to ask. The first was, if Somaniji could give the fourth quarter margins by segment, because you've given it for the full year, but you've not given it for the fourth quarter.

Okay. For the fourth quarter, the margin in Piping segment is about 27.8%. You want the revenue figure also for the quarter?

No, sir, just the margins. You've provided the revenue numbers. I just needed the margin number.

Yes. And for Packaging Product, it is about 15.8%. For Industrial Product segment, again, 15.6%. And for the Consumer product, it is 25.6%.

Okay. Mr. Taparia, 2 questions from my side. One is, obviously, we've seen a big improvement in margins this year. Some of it has been driven by improvement in Silpaulin, some of it by inventory gain and so on. Historically, the company has always guided for 15%, 16% kind of margins. I wanted to get your understanding, your perspective in terms of what do you think is a sustainable margin going forward?

You see our overall margin was 20% or 20.07%. We believe, out of the margin, 3% was due to inventory gain. So 17% -- 3% by inventory gain, 17% was the yield margin which company enjoyed in its product. And that 17% margin, we came by increasing our business of value added product and by reduction in expenses, which quite a large part of it happened by default. Nobody was traveling and then many other expenses were curtailed due to the COVID situation. But as you rightly asked, very difficult to give a forecast on the margin, but definitely, our aim is to improve the margin, and we were happy with the margin what we got last year.

Sir, if you take this 20% margin and remove the 3% inventory gain, you come to 17%, as you said. And as you mentioned, you would have had a number of costs, including travel, et cetera, which would have been on the lower side this year. So is it fair to say that the stable margin is actually a little bit lower than 17% because a lot of these costs would not have occurred this year, but will certainly come back at some point in the future?

Maybe you can count 15.5% to 17%, maybe. Maybe we are -- after all we are going on adding the value added item. And our focus is to go on increasing the sale of value added items. We are really glad that our value added item, purchase wise, also gone up by 2%.

All right. And sir, the last question from my side was, keeping in mind...

Sir, I would request you to rejoin the queue for follow-up. The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

Sir, this is a follow-up to Chirag's question. I was going to ask that only. So this is -- if you look at [Technical Difficulty] way from percentage margin perspective or from the EBITDA per kg perspective. It's a fairly higher number. And when I looked at your CapEx per ton cost or CapEx per kg, you said that 40,000 ton capacity would come at about INR 400 crores. And if I have to take what margins you reported in quarter 4, or -- it tells us that it's now 2-year payback period for an asset creation. Or even if I take margins worth to report it for FY '21, then it's just a 3-year payback period. These are fairly short payback periods for industrial businesses like our. So is it good to refer that what we were doing historically at about 15%, 16% margin is more sustainable in nature, if you look at slightly lower term in our business?

Yes. We [Technical Difficulty] sustain a margin of around 17%.

Okay. We'll sustain a margin of about 17%...

We are moving in that direction.

Okay. Okay. Okay. And lastly, sir, on the piping market side, so you gave out 2 figures, which mentioned that there was a piping market decline of about 10% to 12%, both in CPVC and PVC. And we are either flat or growing in one of the segments. Now this market in your opinion, what should be the organized -- unorganized market share left in the market? And second, at what rate do you think the piping market should grow incrementally for the next 2, 3 years?

Piping market should go on growing higher than the GDP growth. And definitely, incrementally, this small -- way the share of unorganized players will go on sinking and share of organized players will go on growing because there -- where new and new -- large systems are going to plastic piping system. Steel pipe also has become very expensive. And more and more [Technical Difficulty] introducing in piping. [Technical Difficulty] huge business in international side also. So we believe that the business is going to slowly shifting from unorganized to organize share for sure.

Okay. This INR 400 crores, which you mentioned for 40,000 tons, it's an integrated complex setup for our plastic products business. This includes everything?

Major [ business ] would be plastic piping. Plastic piping is big business. If you see our overall turnover of plastic piping, turnover grew around INR 4,100 crore.

Yes, I know that, sir. But this includes everything, right? If one has to create our asset for doing this business, it's about INR 100,000 per ton.

Somaniji, can you reply what he is -- I don't know the per ton is.

Sir, 40,000 ton needs INR 400 crore CapEx. So obviously, per ton of capacity creation, I just tried to look at it that way.

We don't capacity-wise, but we believe that in INR 400 crore turnover, we should generate a turnover of around [ INR 800 crores. ]

The next question is from the line of Sneha Talreja from Edelweiss.

Congratulations on great set of numbers. Sir, my question is more pertaining to volumes basically. I just wanted to have one sense that you, of course, mentioned qualitative statements that April is down, but Y-o-Y it will be higher because last year was a shutdown. But can you quantify something versus March, how much are we down given that rural areas that we are hearing is much more impacted?

And even March is always a booming month because our customers -- we borrow some business in the month of March from April. So I can't -- there is no purpose to compare from March number to April. April is always slower than March. So April -- this year, April was reasonably okay. As I told that we are definitely better than last year. This year, in the month of April, we sold INR 497 crore product, compared to last year April was INR 145 crore. Last year April [indiscernible]

No, sir, that was helpful. Just one more question. Since you said that in March, generally, you sell higher, and Q4 is one of the stronger quarters for us. So each year, we see Q4 volumes being higher than Q3. What was the reason for plastic pipes volumes this particular quarter being down on a Q-o-Q basis? So Q4 this quarter is actually down versus Q3. I'm talking only about the Plastic Pipe segment.

I don't -- what's the question, Somaniji?

Plastic piping volume of Q4 are lower compared to Q3 volumes.

Right. And generally, historically, what we see is it's generally on a higher side.

See it depends upon about the products mix.

Not only that Q4, the demand was normally coming properly from agriculture segment, as I told earlier in the month of January, the agriculture demand was quite slow in January-March this year.

Sir, it was basically because your agri demand was low. Is my understanding correct?

Agri demand was very weak in January-March compared to any January-March. At least...

That's because of, sir, significantly higher PVC prices?

Sorry?

That's because of significantly higher PVC prices?

You are right. Yes. But thereafter, now in April, people have started being used to the high price. So people started buying agriculture pipe in April, not with the same speed as they bought last year, but the demand has slowly started coming in agriculture market in April.

Sure. Got that, sir. Sir, just an extension to this particular question. You, of course, mention a lot about plastic pipes demand being higher for the agri side this particular year. How was the demand from other segments like packaging and all. How is it seeing this trend, particularly in the month of April, given that there are restrictions, shutdowns state-wise? Sir, any flavor on other segments as well with respect to demand?

Packaging is essential product. Packaging demand will not go down. Packaging is essential product. Packaging [Technical Difficulty]

Okay. Sir, we may see impact in Industrial and Consumers is what you...

Yes.

And even last year April was very poor.

The next question is from the line of Ritesh Shah from Investec.

Sir, I had 2 questions. One is, sir, can you give a list of products wherein we do more than INR 100 crores of sales, including, sir, something like Silpaulin valves, toys, and DWC tanks? That's the first question. And sir, second question is, can you, sir, please provide an update on key few products, sir, something like Silpaulin Star, Biofloc? And earlier, we had indicated that we will be more aggressive in tanks. So how the progress has been, sir? These are the 2 questions.

On Silpaulin Star, it is very well accepted. And our Biofloc tank, it is -- there are some -- many technical issues. So unless we adjust it, we are not marketing it at all as on today. And so -- I think I replied to your point, the Silpaulin Star demand is very good. And Biofloc tank, we have to still adjust some technical issues.

Okay. And sir, can you highlight the list of products wherein we will be doing more than INR 100 crores of sales?

INR 100 crore, we -- I mean, water tank, we are going to do INR 100 crore plus. Bath fitting will be -- bath fitting also will go INR 100 crore plus.

Okay. Sir, something like toys, valves, DWC, these are segments that we are already in there. These are huge opportunities, which are available to us. So are we already crossing INR 100 crore plus over here? Or do you see the visibility that we will go...

Not in DWC because DWC, [ there were ] players with all very lousy quality. We are making all very proper quality, and our quality is slowly and surely being accepted to more and more markets. We definitely will go on growing in DWC pipes [indiscernible]

Right. And sir, valves and toys?

Sorry?

In valves and toys?

Valves, valves.

Valves, valves, sir.

Valve. Industrial valve or butterfly valve.

No, industrial valve will still not go into INR 100 crore, it is going to go to INR 100 crores plus. What you call, industrial valve, was very small, it is going to cross INR 100 crores.

Interesting. And sir, if we also include toys, which is a very big segment. There is an export opportunity also in toys of the segment. So sir, how are we looking at this particular segment?

Somaniji, can you follow it?

Toys -- you are talking about toys?

Yes, sir. Toys, toys, yes.

Yes. So toys is a very small business. You see part of it Protective Packaging Product. The base material is packaging product what we're manufacturing. Out of that, we have created the small division for toys. It is very small at this moment, very long to go to reach INR 100 crore that way. And it is made from the foam -- polyethylene foam product.

The next question is from the line of Shrenik Bachhawat from JM Financial.

Sir, could you please throw some light on how was the infra segment demand for plastic pipes in 4Q '21? And my second question is what is your outlook on PVC resin prices, do we expect it to soften anytime soon?

What you want to know?

Outlook on infrastructure demand.

Sorry?

Infrastructure demand and PVC prices outlook.

Infrastructure demand is quite brisk. We cater to polyethylene pipe and also DWC pipe and PVC pipe also going for infrastructure, and the demand is quite robust. Hello?

Sir, I'm -- and sir, what is your outlook on the PVC resin prices, sir? Do we expect it to soften anytime soon?

Now that PVC price have at least plateau, we expect the prices will start falling. It may not go back to the old level, but definitely, it will not now remain at this high level also.

We move on to the next question, which is from the line of [ Vipul Shah ] from [ Sumangal Investment. ]

Sir, can you comment on the performance of Supreme Petro, my line was disconnected. I think somebody had asked that question. But what is your view on polystyrene prices and overall performance of Supreme Petro, sir?

Supreme Petro, you are asking of what?

Yes. Supreme Petro.

Supreme Petro?

Yes, sir.

No, no. We have taken it in hand. We expand our capacity, our present capacity is fully sold out. Our capacity to make polystyrene and expanded polystyrene, both are sold out. So we have taken in hand to expand both -- capacity of both the product. Polystyrene, we are increasing by 90,000 tons and expandable polystyrene by 30,000 ton, and the investment is going briskly. And we hope one after another, starting from December 2021 by end of March 2022, which should be complete with our expansion plan. And we expect demand, maybe, it's a very temporary [indiscernible] but otherwise demand for the overall year remains quite okay.

So what is the CapEx for this expansion, sir, for...

In Supreme Petro, we have committed CapEx of INR 260 crores.

INR 260 crores. And these prices are sustainable, sir, of polystyrene and expandable polystyrene?

The prices are always linked to the price of styrene monomer. They remain always volatile, but present delta what we are viewing today may remain good for some more period. We can't say how long it will continue. Presently, we are doing better delta due to the international demand is quite brisk.

[Operator Instructions] The next question is from the line of [ Mohammad ] from [ Optimum Securities. ]

Yes. Sir, this was regarding, again, Supreme Petro. Sir, in the last annual report, you had mentioned about postponing the mass ABS project for some time due to COVID restriction. So are you bringing that project live again? Or it will take some time or you'll take it up after the PS and the EPS expansion?

No, no, no. They will go simultaneously. We are moving ahead with our mass ABS project. We are now discussing [ a technology cooperation ] with some company, and we hope that the [ technology cooperation ] agreement may be finalized in next 3 months, and then we will move ahead with putting up mass ABS plant. It will go simultaneously. We have no reason to slow it. There is no plan to slow it.

So this will also come to stream by March '22 or it will take some time?

No, no, it will take time, dear friend. It will take time. Once the [ technology ] agreement is fully signed and delivered to us, then we will inform the -- our investor partner what is going to be the schedule of that mass ABS plant to start. [indiscernible] will be announced. The investment is still on our radar.

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you for all the questions. Thank you very much, and we wish all of you very safe and -- very safe during this COVID time.

Thank you very much.

Thank you all.

Thank you, everyone.

Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.