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

Ladies and gentlemen, good day, and welcome to The Supreme Industries 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 from DAM Capital Advisors Limited. Thank you, and over to you, sir.

Yes. Thank you, Malika. On behalf of DAM Capital Advisors, I welcome all our participants on Supreme Industries Q1 Results Conference Call. I sincerely hope you all are doing fine and well, and I also thank the management for giving us the opportunity to host them on this forum today. From the management side, we have Mr. M. P. Taparia, Managing Director; Mr. P.C. Somani, Chief Financial Officer; and Mr. Rajendra Saboo, Vice President, Corporate Affairs and Company Security. I will now hand over the floor to Mr. Taparia for his opening remarks and post that, we can open the floor for Q&A. Thank you, and over to you, sir.

Thank you very much, sir. Good afternoon. I'm M.P. Taparia, Managing Director 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 participant who are participating in the discussion of the unaudited stand-alone and consolidated financial results for the first quarter ended 30th June 2021. The stand-alone results and the consolidated results are already with you. I'll give you briefly on company's product, operating performance, and other highlights. The company sold 71,264-ton of plastic goods and achieved net product turnover of INR 1,310 crores during the first quarter of the current year against sale of 91,451-ton and net product turnover of INR 1040 crores in the corresponding quarter of previous year, resulting in volume degrowth of around 22% and value growth of about 26%. Total consolidated income and operating profit for the first quarter of the current year amounted to INR 1,346 crores and INR 257 crores as compared to INR 1,056 crores and INR 113 crores for the corresponding quarter of the previous year, recording increase of 27% and 136%, respectively. The consolidated profit before tax and profit after tax for the first quarter of the current year amounted to INR 213 crores and INR 170 crores as compared to INR 55 crores and INR 41 crores for the corresponding quarters of previous year, recording increase of 287% and 315%, respectively. The business scenario of all the product segment of the company for the quarter ended 30th June 2021 as compared to corresponding quarter of previous year has been hedged under. Plastic Piping System business degrew by 36% in volume and grew by 9% in value terms. Packaging Products segment business grew by 13% in volume and 30% in value terms. Industrial Products segment business grew by 99% in volume and 184% in value term. Consumer Product segment business grew by 40% in volume and 71% in value term. The overall turnover of value-added product increased to INR 560 crores during the current quarter as compared to INR 378 crores in the corresponding period of previous year, achieving growth of 37%. The company had surplus fund of INR 381 crores as of 30th June 2021, as against cash surplus fund of INR 759 crores as on 31st March 2021. Business outlook. During the first quarter of the current year, the business was severely disrupted due to second wave of COVID-19. This time, the infection was widespread in rural areas. April and May are the peak season for PVC Pipe System for Agricultural application. As the rural market was badly affected by the pandemic, the Agricultural demand took a big hit resulting in huge volume loss of business in Piping segment. The company was thus required to carry forward the pipe inventory, which was kept ready to meet large seasonal demand of Agricultural pipes. Plastic Piping System does -- saw a volume degrowth of 36% compared to corresponding quarter in the previous year. PVC prices have started going up now after a drop of INR 19 per kilo since April 2021. The demand in Construction segment has now revived, company expects the first quarter loss in volume in piping system, not only we recovered but we saw a growth in full year. The upcoming unit to make Plastic Pipe System at Guwahati will be operational by October 2021. The company taken in hand to put the Plastic Product complex in Orissa with an outlay of INR 121 crores in the current year. The same may be operational in last quarter of 2021, 2022. Total CapEx planned for the year has now increased to INR 521 crores from the earlier INR 400 crores, including tariff for commitment of previous year. Compression molded oil field fittings have gone into commercial production at Jadcherla in June compared to the growing demand in Nal-se-Jal scheme. The second wave of pandemic and the resultant localized lockdown adversely affected demand supply chain during the first quarter, which is the peak demand period for Tarpaulins. The production has also taken a hit during the first quarter due to scarcity of labor on account of large infection in rural area. The silver lining is that exports have gone up by around 50% in the quarter compared to the first quarter of last year. With the waning of second wave, the laborers are back, and the production is now running at full capacity. The good run in export is continuing. The value-added product shares in Polymer Products segment has gone up to INR 53.26 crores compared to INR 13.41 crores in the same quarter of last year. This division is working on digital campaign on several media sites such as Facebook, YouTube, Instagram for brand promotion. Business scenario remained bullish in Industrial Component Business barring the initial disruption during first quarter. The division is working with its existing customer for new business apart from developing new customers, companies putting needless capital expenditures to meet increased business requirement. Material Handling Product being intermediary to supply of essential products have done good business both in terms of value and volume. Division is now working to introduce various new product/applications from Injection Moulding and Roto Moulding process. Expansion of capacities at its plant in Lalru in Punjab and Gadegaon in Maharashtra is nearing completion and shall be operational by July-August 2021. In Composite LPG Cylinder business -- division, repeated orders from existing as well as new customers are continuing. Domestic Oil Marketing Companies at the Indian Oil Corporation and BPCL have also floated enquiries for purchases which augurs well for the long-awaited introduction of Composite Cylinders in the Indian market. Overall, business scenario for this product looks encouraging. Protective Packaging Business has shown good improvement over corresponding quarter of previous year. New products for export market have been well received. Its retail division for fitness products is also picking up well. Division is focusing on customized solutions and value addition to its original equipment customers. Beginning of the current year, all the price -- Polymer prices have shown softening trend. However, after reduction between 13% to 16% during the quarter, prices have again started firming up and expect to remain range bound. The company is committed to increasingly meet its energy requirements from Renewable sources and investing a sum of INR 35 crores in the current year to install Roof top solar energy generation plants at its various plant locations. The same shall be operational by October-November 2021. This is a brief and overall summary for the first quarter of the year under reference. Thank you for your presence. Now I and my colleagues, Shri P.C. Somani and Shri R.J. Saboo, are available to reply to various queries you may have. Thank you very much.

[Operator Instructions] The first question is from the line of Rahul Agarwal from InCred Capital.

Sir, I had 3 quick questions. First is this volume, which are lost in the first quarter. You are saying obviously that pipe volume will recover in the year and actually it will grow. So overall, for the full year, given the favorable base last year, should we assume that a 20% volume growth is a fair number for the company?

I don't believe that, because anyway we can't forecast a correct number because there's already a fear lurking of COVID third wave. But as the demand has started coming up properly, we believe last year, we sold 294,000-ton Plastic Pipe System. This year, definitely, we will improve our -- all the numbers. Beyond that, we cannot comment today.

Okay. And sir, similarly, because of the volatility in PVC pricing, could you help us any sense on the EBITDA per ton? Last year, it was about 30,000 tons -- INR 30,000 per ton. Will it be similar, flat, Y-o-Y this year?

Last year, if you recall, we had [ INR 180 crores ] inventory gain. If you reduce inventory gain, it was around INR 6 per kilo.

Okay. So will that be maintained Y-o-Y?

Very difficult to calculate the numbers.

Okay. Fine. And my last question was on CapEx. So this INR 520 crores of CapEx, it looks like the highest number in the history of the company for any given year. What kind of sales can it add to turnover?

What type of?

How much turnover can this CapEx of INR 520 crores add to the top line?

Normally, in a greenfield project, we get INR 1.5 to INR 1.7 per ton investment. And a brownfield around INR 2 per ton -- per rupee invested. So out of this INR 521, around INR 200 crores will be greenfield. Somani am I right?

Yes. Yes, you are right.

Yes. Yes, right.

And INR 320 will be brownfield. So if you multiply by the number of what I told you, it may be around INR 900 crores and the full production isn't going to be next year.

The next question is from the line of Bhargav Buddhadev from Kotak Asset Management Company.

My first question is on whether there was any inventory loss in the quarter? Because if you look at the pipe EBITDA margin, it has held up well at about 21%.

There were some inventory loss as we stated in our opening remarks. We have to carry pipe inventory for the second quarter, and we could not exit in the first quarter.

Okay. But sir, despite such a sharp volume decline in inventory loss, how come our EBITDA margins are still held up at about 21%? Is it that there is some reset in terms of the pipe margin?

There was more sale of value-added items, less sale of HDPE item, HDPE Pipe, HDPE Pipe is low-margin business and there was a good growth in our CPVC system.

In our CPVC system?

Yes.

Okay. Sir, can we expect this trend to sort of continue...

It was combined factors of giving a reasonable operating margin in the first quarter.

So sir, as our CPVC business -- has our CPVC business seen growth? Is it possible to quantify what has been the growth in the CPVC business?

In the first quarter, we had a growth of 42%.

42% volume growth in CPVC.

Compared to previous years.

Okay. And for the full year, we can expect a double-digit volume growth in CPVC, sir?

Yes. We expect like that.

Okay. Secondly, sir, given that PVC prices were falling in the first quarter, how is the channel inventory? Is it fair to say channel inventory could be one of the lowest in the pipe segment as of now?

You are very right. Generally, inventories are mostly empty at the godowns.

All right, sir. Okay.

They could not buy also.

Sorry, sir?

If they're required, they could not buy also due to lockdowns.

Okay. Okay. And how is the situation now, sir? Because now PVC prices have started rallying back. So are you seeing channel also starting to buy now?

Generally, it's still not gone too bullish. There's no reason to go too bullish. There's no reason the price to go back to the same old level. But PVC is structurally short, and the freight costs are high from Far East and Southeast Asia to India. So the landed cost in India increased substantially due to increased freight cost of the containers. And today, you cannot get large material from either USA or South America or Europe.

Okay, understood. Okay. Okay. And sir, my last question is on the Valves business. So in the annual report, you have mentioned that you are manufacturing valves like butter slice, Swing Check, et cetera, et cetera. So how big will be the valve of business for us? And are we doing any CapEx in this business as well?

We are investing some money more into -- increasing the range of valves.

And how big will be this business, sir, as of now?

It started building up and we expect the business will go on growing. Besides, number, not possible to say.

And this business also be qualified as a value-added product, sir?

Yes, it is all value-added.

The next question is from the line of Girish Choudhary from Spark Capital.

So a couple of questions. First is on the volume, just to better understand this. You mentioned that the main reason is due to agri business. So how much of this agri business declined in volume terms? And then generally, first quarter is a peak season. So how much is the agri mix in the total business?

No, total agri pipe and borewell and column pipe will mostly turn over about 24,000-plus turnover. Now out of 24,000-ton, some quantity used in housing also. And housing also, there were complete lowdown in South India. So I precisely cannot say how much is agri pipe business, but we can be safely say that out of 24,000-ton loss in business, 22,000-plus are lost due to poor demand in the segment. Measure wise it is a pipe loss.

Okay. So sir, this quarter, basically, you're sort of mentioning that you lost 22,000 tons in the agribusiness?

Our second quarter is not agri season. Agri season may start by last week of September, and then we may see some impact only from the third quarter and both in demand agri market. July-August is rainy season.

Okay. Okay. Yes. So second is that on the Packaging Product. We have seen -- this is the only segment where we have seen a decline in margins from the first quarter FY '21 level. So margins falling from 15% to 12%. Any reason for the same? Is it due to lower -- ceil falling sales or any pricing pressure here?

There are 2 reasons. One, the lower production in the April-June quarter of Silpaulin. And secondly, the south market was mostly remained growth and south is big market during this season. And thirdly, the company consumed high cost raw material because this Silpaulin is a company making all from imported raw material, and we had continuous commitment, which we keep it for nearly 3 months of our requirement. And their pressures are falling, but we do consume that high-cost material. These 3 factors combined have reduced our margin of Cross Laminated Film product.

Okay. And then looking ahead, where do we see the margins settling in the segment?

Looking ahead, we remain quite optimistic.

Okay. Okay. As in -- and can it go back to the 15% levels?

[indiscernible] number we can say, but in the next step we will scale our margin fully. We have now restored fully our margins. And our Protective Packaging segment also, our fitness products are picking up very well. Our exports are picking up very well. And in Protective Packaging film, we are getting more and more value-added items and we are increasing our export also. So we believe our operating margin for the full year will be quite satisfactory.

Got it. Sir, just one more question on the balance sheet. We have seen the cash balance coming down to INR 380 crores as of June versus INR 750 crores in March. So just wanted to understand what has led to this decline. Is it CapEx or higher working capital?

Due to buildup of inventory and also CapEx or more wide buildup of inventory because we could not exit in first quarter. So we had to carry the inventory in the second quarter.

Okay. Okay. So we can expect this to sort of roll back as and when the sales...

We hope so.

The next question is from the line of Kashyap Jhaveri from Emkay Investment Managers.

Congratulations on quite a strong show in a challenging quarter. I have just one question.

Mr. Jhaveri, sorry to interrupt, sir. This is the conference operator. There is a disturbance coming from your line, sir.

Just give me one second. Thank you. Just give me one second, sir. Is it better now? Okay. Sir, congratulations on quite a strong show in this challenging quarter. I have just one question, which is with respect to some of the comments that we have in annual report. We have spoken about the opportunity opening up in the fire sprinkler system with respect to MS and GI pipes. If you could quantify what's the total size of that market? I'm not asking what could be potential for us, but what is the total size of the market there? And the differential between CPVC, GI, and MS pipes as of today?

No, fire sprinkler our total market size, we cannot participate. Because there are several types of fire sprinkler required mostly the vertical pipe system. We cannot participate. We can only like fire sprinkler system only we can participate. And fire sprinkler, we can get full advantage only if we get up all the BIS approval, which will be as -- BIS it is still not formulated for fire sprinkler. But our company is seeing that our business is increasing for fire sprinkler month after month. We expect this year, business will be better than previous year, but still we are not able to get a larger volume of business because we are all working for several BIS Certification program, where it is still under the painting process in the government of India.

Okay. And a differential between the cost if you can -- if you have it handy?

Yes. Cost is actually -- CPVC fire system is not exclusively in my detail. But our CPVC fire system is really effective. In mild steel remaining under pressure of water, the pipe gets corroded and at the time of fire, it could be after 7, 8 years, the matter will not come out of that sprinkler. So this is not a cost-effective purpose. This is more from the part of safety of the human being living in that building. So our system in Europe and U.S. has now we widely spread. They don't use this mild steel fire sprinkler system, more and more shifting taking place to CPVC. But India system is to be fully in place from the BIS level. But business is growing quicker, and we expect that our business is growing every year.

Okay. And if I can squeeze in just one more question. In Material Handling, what would be the contribution of e-commerce now?

Somani any idea? I have no idea.

No. You see our products are not through the e-commerce route. But what we are doing, we are...

No, no. Material Handling Products, which are going to e-commerce segment. Material Handling Products.

Yes. Yes, yes. E-commerce companies or third-party logistic companies who are ultimately doing the work for the e-commerce companies.

Right. Right.

So yes, so market is definitely growing up, and this is a reason of this business doing well even in this pandemic period also. Because the e-commerce deliveries are happening more where the products are required. Now exact quantum on the value is not known. But yes, this is the focus area where we are working, and we are really finding the fruitfulness.

Sure. And again, congratulations on quite a strong show in this challenging quarter.

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

Sir, my first question was a clarification. Did we say that out of 48,000 tons on the plastic piping side, 24,000 tons was agri? Did I hear it right, sir?

We shared just as the demand was 24,000 tons. Compared to previous year same quarter, the demand destruction was 24,000-ton due to lower sale of agri pipe, column pipe, and borewell pipe. Out of which, majority has been -- were to be used by farmers 22,000 tons. And 2,000 tons might have been used in housing.

Right. So sir, if one had to break up broadly, agri and non-agri, how much should the decline be? Like did the agri part of the business declined by something like 70%, 80%? How should one understand it?

Agri business declined by 60%.

Around 60%. Okay. Sir, this means that the EBITDA per kg, what we have shown on the plastic piping side, it is really, really good. And it will be more like touching what probably CPVC EBITDA per kg would be. So sir, just trying to understand, has the PVC CPVC mix drastically changed? You did indicate that the growth for PVC was nearly 42%. Is this the only variable or are there any other factors like higher sales on tanks, valves, fittings? That is also what contributed to this healthy EBITDA per kg in the plastic piping business, and this is a more sustainable number. Sir, if you could help -- explain this?

CPVC 42% growth has come due to lower base last year. Last year if you recall April was completely closed. And May-June was also very much closed in housing, right. Because of -- the workers have migrated. So there is no construction worker available. I'm recalling you the last year first quarter. Here migration of worker was not there, and construction activity started. And April was not closed this year.

Correct. Sir, has the ramp-up on tanks and valves or fittings been significant, which has also held on a very healthy margins over here?

So business is good. We are doing all of those business where the margins are healthy.

Correct. Sir, what I'm trying to understand, is this a structural shift in the product mix going forward?

Sorry, say it again.

Sir, is this a structural change in profitability in the Plastic Piping business? This is what you are looking at?

The structural change in the company's business profile. We are intending to go on increasing the share of value-added item year after year. We are intending to increase the share of export market year after year. This is not reflected different this year. This is going on for the last 4, 5 years.

Okay. That's helpful. And sir, just I had 1 more question. In the press release, you have indicated Moulded Olefin fittings , which have gone into commercial production. I just wanted to understand the end application on this on the agri side. Is this something which is specific and new?

Not for agri pipe, this goes in house connection. It's polyethylene pipe. Nal-se-Jal scheme is going throughout the country and government is committed to connect the maximum number of houses by 2024. So connecting the pipe to the house require fittings.

[indiscernible]

Thin pipe. Yes, yes. Bleach.

Sir, how is this product different from what we already have in the marketplace? Is it something new and unique to us?

See basically unique to our company, and definitely it is different than -- it cannot be built on PVC pipe. And for the housing connection, they are using polyethylene pipes. On medium density polyethylene pipe, and for that, you will require different type of fitting. It's a very different type of fitting.

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

Sir, my first question is you -- in the opening comments, you said that you are hopeful of recovering the loss in volumes with the full year prospectively showing a growth. Sir, what could be the key steps that we envisage to take into -- for showing this growth in plastic pipes? For example, any new launches or increase the distribution, et cetera.

All things together, distribution launching new product, that is now varletry moulded fitting we have heard. We are going to launch [indiscernible] polyethylene fitting, which are required for burning the pipe for infrastructure. We are going to introduce best piping system, which is required for housing for getting hot water. We are building more capacity in our furniture, more capacity in our Material Handling System, more capacity, industry component and more sales we expect from our Composite Cylinder. More sale we expect from our Protective Packaging division. More sale we expect from our Protective Packaging Product. Every segment, we are seeing better demand prospects now. We are seeing this happening in this month only. So I think COVID third wave, maybe how much severe could be no bigger idea. Suppose they will become more severe than second wave and anything what we are saying may go caput. But in that situation, vaccination is going on with 5 million doses per day and may go to 8 million to 10 million in next month per day. And the vaccination and sero survey is showing that we are developing herd immunity. We remain optimistic. We keep positive thoughts. The business condition are going to be better.

Got it, sir. So my second question is, you mentioned about this Nal-se-Jal. We understand that during COVID, there was a certain gap between the progression of this project. But any updates in terms of which states have already rolled out Nal-se-Jal and what is the kind of progress on this?

Now all districts have become active. All the states have become active to start Nal-se-Jal scheme. All are rushing to see that this scheme can be completed if not by 2024, definitely by 2025. All are moving very fast. All the states.

Got it, sir. Got it. And my last question is, could you help us understand what is your rural versus urban mix in terms of your overall sales? Because we understand that you said that construction demand is looking up quite well. So is construction mainly urban or rural/semi-urban for you?

Demand is much better than Tier 4, Tier 3, Tier 2 town also. Actually good in rural area also. Construction is good now in-house in other metro cities also. Now construction we have -- to our mind most of the country. Money is available at lower cost and the salaries are also increased. EMI is manageable. So I think things are looking quite positive.

So sir, for our overall sales, what could be the rural versus urban mix?

No idea. We have a distribution network throughout the country.

The next question is from the line of Achal Lohade from JM Financial.

My first question is in terms of the market consolidation in the Plastic Pipe business, I just wanted to check your thoughts. Are we seeing most of that consolidation played out? Or given the issues, the smaller guys space in terms of getting a material or working capital or whatever, are we part of that consolidation or there is a long way forward?

We have not heard any merger taking place in plastic pipeline. We have not heard.

Well, I was more asking from unorganized to organize shift, sir. From that perspective, sir.

No unorganized also is a role to play, so they will also go on doing business. And we organized player also will go on growing. They also have role to play, so they will also remain in business. We believe that.

Right. But some of them, did they face issues in last 4, 5 quarters? So are you saying they're coming back, or they are still lying low as of now?

We don't keep track of organized sector. We know definitely the PVC price have gone up too high. Our polymer price have gone too high. Some of them are struggling for working capital. But we have not had any great pain.

Understood. And secondly, sir, with respect to the valves, what would be the market size? What is the opportunity here in terms of the aggregate industry level?

Of this piping segment?

The valves. You have -- yes.

No. Valves -- valve is a big market where more material valve only. Precisely what is the size of plastic valve market, we have no clarity. Once we get clarity, we can share with you. But metal market worldwide may be more than $60 billion. Worldwide, our type of industrial valves market may be $60 billion.

The next question is from the line of Rajesh Ravi from HDFC Securities.

I have a few questions. First, a few housekeeping windows, sort of. How was the average PVC pricing for you in first quarter and versus fourth quarter and the current pricing? And similarly, if you could share some trends on the CPVC in Q4, Q1, and Q2, that would be helpful.

Sorry to interrupt Mr. Ravi, there is a disturbance coming from your line. [Operator Instructions]

Your words were also not clear. Please.

Yes. Am I audible now?

Now, for me you are audile.

Yes. Okay, sir. Sir, I just wanted to get some sense on CPVC -- PVC prices in Q1 and in the preceding fourth quarter and how is the scenario now? And also, if you could throw some light on the CPVC pricing trend over the last 2, 3 quarters, including Q3?

The PVC price was a peak in the fourth quarter of last year. And in this quarter, the PVC price have gone down by INR 19 a kilo. Now beginning second quarter, they've gone up by INR 2 a kilo.

Okay. On an average level, how was the pricing change for you, sir, in fourth quarter versus Q1?

Overall gone down by INR 19 per kilo. So you can take your average maybe INR 12 per kilo.

Okay. That is what you saw in now? Okay.

Average on 3 months. Average...

Average, okay. And on the CPVC side, how has the price volatility?

CPVC prices remain quite high level. There is not much change.

Okay. And not moving up also?

No. It is going up only, it doesn't coming down.

Okay. So how much is the prices increased in 1Q or in Q2 as we stand?

There are many suppliers, every supplier quote their own pricing. There are 3 for big suppliers in the world, and they've got their own pricing. Every pricing is very classified information.

Okay. Okay. No issues. And you talked about the inventory loss. Hello?

Yes, please.

Yes. Inventory loss possible to quantify that we have booked in first quarter.

Some inventory loss we must have incurred in the first quarter, but major inventory loss we have carried forward for the second quarter. Exit for the stock of pipe.

Okay. So if prices don't go up, that will lead to an inventory loss booking in Q2?

Depends.

Yes, obviously. Okay.

For the full year, we are not factoring much thing about it.

Okay. Okay.

Remaining volatile always.

Okay. And sir, you talked about the volume trend across plumbing and agri segments for you, Y-o-Y. However, if I have to look on a Q-on-Q basis, how would these numbers would have played out, the agri and plumbing both growth or decline versus fourth quarter?

First quarter is not a agri season. You can see on the agri season compared to last year this quarter. April, May, June are the peak month for agri demand. As we told you, our company lost 22,000-ton business last year due to disruption in demand on agriculture pipe system. Pipe system means more category pipes.

Okay. And that would have largely played out in April and May. So June and July, things would have started to normalize for you.

Demand partly June also. June, July hardly -- but demand agriculture segment is ending throughout the country.

No, no, overall in the CPVC and all, has the normalcies been achieved in the month of July?

CPVC are normal in June also. CPVC is that you do in rainy season.

Okay. And sir, on the CapEx that you have chalked out INR 520 crores total. So what would be the year-end capacities across various categories by FY '22 end?

Somani?

You see, our present capacities on March '21 were about 697,000 metric ton compared with 509,000 of plastic piping, which will increase to about 550,000 now after this CapEx of the current year is 550,000. The industrial product, which was 71,000 at the beginning, they go up to 80,000 by the end of the year. Packaging Product, nothing much from 86,000 to 88,000 because we are not expanding packaging capacity as such, except the Silpaulin capacity by 2,000 metric ton. And consumer from 31 to 33. So major expansion in capacity will come in the piping and investor product.

Okay. Okay. And anything specific in the Consumer, in the Furniture segment and in the Industrial segment? The sharp declines that we have seen in this quarter, if I'm looking on a Q-on-Q basis, which you see will more of a short-term nature and things will recover. I'm asking this because in Furniture, you've also been in your presentation, you have been mentioning that the industry is consolidating. The industry size is shrinking, and you have been gaining market share. So how should we look at that segment, though it is small for you, but because that's a large high-margin business for you?

Which one, Furniture business? We had growth first quarter now.

Okay. No, I'm looking at Q-on-Q basis, the sharp decline.

Sorry to interrupt, Mr. Ravi, but I would request you to rejoin the queue for follow-up questions.

Looking at quarter 4 and quarter 1 now.

Our business is not sequential growth business, not sequentially degrowth also. We can compare quarter-to-quarter, update -- last year to update during this year. We always compared with just to our previous quarter, we are not a bank, we're not an IT company. So very difficult to give us any sequential comparison.

[Operator Instructions] The next question is from the line of Sneha Talreja from Edelweiss Securities.

Sir, just two questions from my end. Firstly you mentioned that your exports have gone up by 50%. What is the percentage of exports in our total revenues? And is it only in the Packaging division that we understand?

They have gone up in Pipe division and Packaging division and also in Cylinder also Packaging, Cylinder, and Pipe, all the 3 divisions there is a growth in exports.

And can you quantify the percentage of total sales in each of these divisions also? Just to see how much are we exporting in each of the divisions?

In each of division I don't remember. Somani. Do you know otherwise you can overall I think we have $5.5 million, how much?

Our overall exposure was $5.9 million for the quarter.

Sure. I'll calculate the other thing, sir. And sir, my second question is related to the tank business. So I think you have been doing reasonably well. Is it fair to assume that the business has reached a sizable size of -- I mean, if at all, you can give a qualitative statement here that what would be the size? Is it beyond INR 150-odd crores to store right now? Is it fair to assume that number?

No. We can only say that we are going on intensifying our reach in tank business. Then the 2 new plants which are coming also will be making tank. So by end of the year, we'll be making tank at 7 plants. So our reach should make it very comfortable to our user, the freight rate will be lower, and customer can do business with lower stocking with them because this can require huge storage area. And we'll store for them, and we'll be serving them very efficiently from our 7 plants.

Sure. But any revenue or targets that you have for this particular division?

That is classified information.

The next question is from the line of Utkarsh Nopany from Haitong.

Sir, the first question is like our total sales volume degrew by 16% in April and May month, and it has further gone down by 31% in the June month over previous year. So just wanted to know from you, like, how is the demand scenario in the current July month over previous year? Is it much better now in the positive territory? Or it does sell down?

Anyway, there are 10 more days to go for July. But up till now, our sales in July in volume also are better than last year July.

Okay.

It's not too early, about 20 days.

Sure, sir. Sir, second is, like you have mentioned that all the states have become quite active on Nal-se-Jal program. So just wanted to know, like are you seeing good demand traction from Nal-se-Jal program on the ground currently and it yes, what would be the expected market opportunity to be created out of this program? And which pipe segments are expected to benefit? Is it uPVC, CPVC, plumbing pipe or SW HDPE pipe?

HDPE pipe, MTP pipe, PVC pipe, and fittings, all will be benefited and CPVC pipe also. All are benefited. Now the shares have become active, and it is going to come add the previous code. We can talk more and more number properly in the month of April next year, but we are seeing that the demand is being generated now in most of the states on Nal-se-Jal scheme. They are all getting active. And require varieties of pipe made from various materials.

And sir, lastly, like, sir, you had mentioned that the PVC resin prices have started moving up and it is expected to remain firm. So do you see any risk to the agri pipe demand, say, for second half of FY '22 if resin prices remains high?

Agri pipe, this is not a quarter now for agri pipe. Agri pipe peak quarter is gone. Now July-August is rainy season. Agri pipe will start reviving a little bit from last week of September and partly in October. So do the farmer require pipe, they require pipe, but when the farmers were getting infected, they were not leaving their villages, there were no development that took place this year.

The next question is from the line of Priyansh, an individual Investor.

Yes, sorry. My first question is that in the balance sheet as of 31st March, we have cash and cash equivalent of INR 760 crores and which is mainly invested, for example, you can say, in the liquid mutual fund. Seeing the current trend in the market, like don't we feel that a certain portion of this, for say [ 20% ] if we invest in the like blue-chip company sales, which are performing good and like the good sector, the return can be maybe 30%, 40% per annum at least as compared to 8% to 10%, which may be like earnings from the liquid. And we have seen that many -- if you have seen that certain companies in the market, they are investing the surplus in the good companies there. So what's the strategic initiative on this?

We don't invest in share market.

Sorry?

We don't invest in share of any company. All companies are good. We don't invest.

So you are saying that you are happy with the liquid mutual fund and you're happy with this one?

Yes, definitely happy.

Yes. But like what I'm saying that even the government is promoting to put 20% of their cost of PF in the share market. So for this certain portion if we invest, I think, the return will be more which will be good for all the shareholders, including your promotor also.

We are not government.

Okay. Okay. And my second question, that is -- we have seen this -- the new plant of Cylinders, this plastic cylinders for the last 5, 6 years ago. And so we would like to know that, for example, in this quarter, what has been the effective utilization of the capacity and what your target utilization as you have mentioned in the press release that now IOCL and BPCL they are also floating tenders. So what is your target lesson for this capacity during Q2 -- sorry, like during April Q2?

Well, the best part is now the division has gone to EBITDA plus no more EBITDA minus. And when the Indian consumers start using our cylinder, we are very confident they would like to switch over from metal cylinder to composite plastic cylinder. We not only ported them from an -- in peripheral from any shortage in filling. It ported them from their life because this metal cylinder burst, and people die. Composite cylinder burns out, it doesn't blast. So it protects the life also. So we are very confident. Our capacity today is between 450,000 to 500,000 per annum. We hope that very shortly, we should be able to share quite substantial portion of the capacity.

And sir, what is the current utilization -- all in FY 2021, what was utilization?

In the first quarter, we sold around 8,000 number per month. Now second quarter, we expect much better. It is a long way to go.

Yes. Yes, yes. And sir, my next question on the CPVC. As you all know that the margin in CPVC is very good. So we would like to know that what was the -- our volume -- sorry, like what was the turnover of CPVC in 2021? And what's our targeted turnover for 2022?

It was that in the first quarter, we had a growth of 42%.

But sir, like that was because of this like lower base. So better to have a full year number. So what was the full year number for 2021, and then we can achieve this growth?

We expect it will be able to grow between 20% to 25%.

But sir, what was the volume -- but sir, what was the volume for 2021?

Volume is classified information.

Okay. Okay. And then, sir, like are we taking any strategic initiative on this CPVC part? Like, for example, Lubrizol has come in the market and they have signed some call basing with some other companies?

Sorry to interrupt Mr. Priyansh, this is the conference operator. I request you to rejoin the queue for follow-up questions. The next question is from the line of [ Mohammad Mansour ] from Optimum Securities.

Sir, my question is regarding Supreme Petro. So if you could give a brief overview of the product vertical-wise performance and the trending in the polystyrene and styrene monomer prices and what are the spreads right now? And the second question would be, sir, on the CapEx. Are we confident we'll finish the CapEx of PS and EPS in quarter 4 FY '22, like by end of this financial year? And sir, in the AGM, you mentioned about the tie-up for mass ABS. So it's been 2, 3 weeks. So are we expecting an announcement soon?

We have 3 questions and out of 1 question, but I can reply all of them. That first part of the CapEx. Petro CapEx, we planned around INR 250 crores for polystyrene and EPS capital expansion. We are confident that are being placed first quarter '21, '22. All the verticals are doing well. The polystyrene and EPS demand were very weak in the first quarter dramatically. But fortunately, we had a good demand in export market. So polystyrene capacity, we could run flat out, and we could export it. EPS capacity had to get plugged because EPS it is not easy to export. And for mass ABS, our negotiations are going on very properly, and we hope that maybe before end of August, we will be able to make announcement.

The next question is from the line of Chirag Shah from Valuequest.

Sir, my question was on first on volume. So you mentioned that by the end of this year, you hope to achieve last year's volume, at least. So this recovery will be led by more agri or piping? Where are you seeing the most traction?

Now, the recovery will be every segment. The demand restriction took place to place. After we share agri pipes throughout the year, but July, August are a very lean month. But generally, March are better months. So we are very confident not only that we will achieve the last year number of 294,000 tons, but we expect our business to grow then 294,000 tons for the year. And we are maximum player in the housing segment and our segment will remain quite optimistic.

Got it, sir. And sir, second question was on inventory losses. So is there -- I mean, you mentioned that on a full year basis, you are not expecting major inventory loss. Is that statement correct?

We remain optimistic on that part because market conditions are very volatile on polymer pricing. And we are optimistic that we may not end up with any inventory loss. We're even optimistic. We can't be 100% certain I cannot say.

There will be some losses. Is that understanding correct? Because of higher cost inventory?

We don't say it will be a loss. We say we will try to quit. But definitely, last year, we gained INR 200 crores. This year, there is no gain. As on today, it doesn't look like. We can't sell -- we are handling all competitive polymers and price is going rising and going down many times. Polymer prices by the local makers are changing 17 to 20x in a year.

Right. Sir, was there any price reduction taken by you in month of May and June?

These reflect the reduction made by the local makers. And as I told earlier, in PVC prices went down by INR 19 per kilo.

The next question is from the line of Kashyap Jhaveri from Emkay Investment Managers.

Am I audible, sir?

You are very much audible.

Just one question, a clarification. When you said that CapEx has gone up from INR 400 crores to INR 525 crores, our annual report already mentioned about that Odisha CapEx. So what is incremental CapEx in Odisha about?

Orissa?

Yes. You just said INR 400 crores CapEx has gone up to INR 525 crores.

In the INR 400 crores...

Around INR 21 crore is Orissa. It's the first phase.

Additional INR 120 crores is because of acquiring of the existing slots that you were mentioning about?

That is already there with us. Now we are putting the investment in building and machines.

On this additional land?

No, no. No additional land in Orissa.

No, no. Just let me clarify...

Sir INR 400 crores CapEx, where we are spoken about Odisha was only line cost.

Yes. INR 400 crores CapEx does not include Odisha and Tamilnadu project. Those are -- excluding those 2 projects, these are the INR 400 crores what we have committed already, and we have planned. Now one by one, we are not taking up those projects in hand. Now Odisha, we have capitalized, and we are taking hand now. And therefore, [indiscernible]

[Indiscernible]

The next question is from the line of Vipul Shah from Sumangal Investments.

Sir, my question was how -- what is the price differential between metal cylinders and composite cylinders? So...

There is a quite difference in that. Composite cylinder prices are expensive than metal cylinder.

Can you comment by how much in percentage terms?

We initially didn't check. They are 2 different products.

If they are pricier, then oil marketing companies may not go for it because it will be costly for consumers.

I think costs they even pay more deposit because it is more safe for them. And they are given full quantity if you buy composite cylinder.

Okay. Okay. So are we planning any major CapEx in this area, sir?

Which CapEx? Which area?

Composite cylinder.

First, we will sell out the capacity.

Okay. It is around 5 that you said, per annum.

450,000 to 500,000 pieces, which we are staying with there for the last 6, 7 years. Let us sell the capacity and we are good enough brand. We could earn a potential to increase capacity. And we have a plan to increase the capacity market going in a full way. India buys huge quantity of cylinders, ours is very small quantity.

The next question is from the line of Sailesh Raja from B&K Securities.

Sir, my question is pertaining to Supreme Petro. Sir, we are creating PS EPS capacity of 1.2 lakh tons and also 60,000 tons of our ABS. Sir, in your view, how long it will take to fill this capacity? And what is the incremental revenue you are targeting from this new capacity?

No, revenue will relate to the price of we are charging. So very difficult to talk about revenue, but we believe that in polystyrene capacity, partly we will sell in domestic and partly, we will export. And EPS capacity, we are expanding very small way only 30,000 tons. We should be able to load the plant very quickly.

Okay. Sir, we can fill it in 2, 3 years, sir?

I think we should share everything by '20 to '23.

Okay. Okay. Sir, is it fair to assume a blended sustainable EBITDA of INR 20 per kg for this PS EPS and the ABS product? And with INR 600 crores CapEx, what is the payback you are targeting, sir?

What INR 600 crores, we told INR 260 crores only.

Sir, including ABS?

ABS up till now, the technology tie-up is not frozen, so we have not announced the investment.

Okay. Okay. Okay, sir. Sir, now Supreme is closer to INR 1 billion company. Can you please host a separate Investor call or some press release that would be very helpful, sir? And also, sir, can you please share quarterly product-wise volumes in 1Q FY '22 and 4Q FY '21?

Petro?

Yes. Petro, sir. Yes.

We will share the revised Supreme Petro later.

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

We thank very much to all the participant for their very intelligent question. We hope we satisfied them. We thank them for taking great interest in the working of our both the company. We thank all of them very much. Myself, my colleagues Shri Somani and Shri Saboo, we all thank them all very much. And we wish them very safe and healthy journey going forward.

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.