Time Technoplast Limited (TIMETECHNO) Earnings Call Transcript & Summary

Good evening to all of you. Welcome to the Time Technoplast Analyst Day Event 2021. I still see there are people joining in. So as people join in before the start of the proceedings, a short corporate film on Time Technoplast, won't be more than 2.5 minutes. Please enjoy this. [Presentation]

So without much ado, let's begin the proceedings now. Let me begin by introducing the management team from Time Technoplast that will take us to the proceedings today. We have Mr. Anil Jain, the Managing Director; Mr. Bharat Vageria, our Director of Finance and Group CFO; and Mr. Raghupathy Thyagarajan, Director of Marketing. They are also joined by Mr. Sandip Modi, Senior VP, Accounts and Corporate Planning; and Mr. Hemant Soni, Head, Legal and Company Secretary. As far as the agenda goes, we will run through a presentation that will highlight the company overview, talk about the company updates and certain strategic overview of the company as we see it right now and round it up with the financial overview. [Operator Instructions] I would like to remind you that our discussions today might contain forward-looking statements. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflects our opinion only as of this date of this presentation. Please keep in mind that we're not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. This meeting is being recorded. A transcript of the meeting will be available 5 days from the close of the meeting. With that said, I'll now hand over the floor to Mr. Jain. Over to you, sir.

Thank you very much, [indiscernible]. I welcome all the participants. I don't know if you remember. We met about a year ago [indiscernible] 2020. It was an analyst meeting which was very well attended. Unfortunately, we could not do anything in between because of the COVID situation. But I think this analyst meet of the -- meeting with investors is going to be now on calendar every year, and we will try and increase this interactive participation process. So let's start the presentation. Thank you. Next one, please. Right. So let's start with who we are, of course. You know a little bit about the company already. But even at the cost of repetition, I would like to bring you up to the speed because there are a lot of changes that might have taken place in the interim period. So we would like to think we are a leading global industrial packaging company. As the statistics are available, we are the fourth largest industrial packaging company worldwide. We hired 3 giants, namely Schutz, Mauser and Greif. Schutz is a German company. Mauser and Greif are U.S.-based company. All 3 of them are more than 100 years old and have built their business over a period of time. So we joined them, of course, at the fourth position with the gap between the third and the fourth one. But then if you look back at the history of the company, there have been 3 the things that have been common to all that we did. One was technology, innovation and polymers. And that is exactly what we say, that we bring polymers to life. In terms of technology and innovation, we have done a few things in the past. We were the first one to launch Type 4 composite cylinders on LPG for the first time in India. And we are the second largest producer of composite cylinders worldwide. We are the second largest producer of MOX film, that is technology-based product, multi-axis oriented, multi-layer film. We are the second largest in India. We have in the last few years that we came into the pipe business have assumed a significant position. In so far as the industrial packaging is concerned, there have been our mainstay. We have more than 60% market share. And the interesting is that we have is we have retained our market leadership in all of 20 years or a little more than we have been in this business. As you know, that we actually ventured out of India, and we have got manufacturing locations in 11 countries. I think this short period that we were there, we have assumed market leadership in 9 out of 11 countries that we have a presence in. And then we also launched intermediate bulk containers for the first time in India. And with the efforts in India and also overseas, we are now the third largest producer of intermediate bulk containers. When it comes to large-size plastic drums, we like to think that we are the largest in the world for the large-size plastic drums. So we will see that today's presentation will cover the company's overview, company updates in the strategic outlook and the financial overview. Just to touch upon our business at a glance. We categorize our products into 2 groups, one is established products and other one is value-added business, which is relatively new. Industrial Packaging is our mainstay. It is about 67% of our total revenue. Infrastructure-related products, as we have identified on the [ HDPE pipes ], energy storage devices, et cetera, that has 9% of the share of our business. And Technical & Lifestyle Products, [ 74% ]. In the value-add business, which is 20% of our total revenue -- so the established business is [ 80% ]. The value-add business is about 20%. Intermediate bulk containers comprise about 10% of our total business, composite cylinder is 6%, and MOX film, or Techpaulin, as we call it, brings 4%. Now if you look at our business in India and overseas, 69% of our business comes from India, all put it together. And overseas, which is largely industrial packaging business, brings in 21% of our total business. Like I said, we have got presence in 10 different countries, especially in Asia and MENA region. We have 14 recognized brands and over 900 institutional customers globally. And what makes us do this is that we have a very strong R&D team, which keep developing new products and new processes. As a matter of principle and policy, we spend 1% of our revenue on R&D every year. That keeps us ahead of everybody. Industrial Packaging, which is, like I said, the largest business, we cater to the industrial type specialty chemicals, FMCG, construction chemical, pails, pharmaceuticals, food products and lube oil and additives. So you can imagine, we are -- our customer base is widespread, and we do not have over dependence upon a particular customer segment. These are just a collage of some of our key customers, but there are many, many more, like I said, 900, and wasn't possible to account that on one single sheet. But we did talk about some of the top multinationals, they are our customers in India and other countries. Also in India, we are servicing almost all the large companies who are using one or more than one of our products. Before I move into this slide, I would also like to tell you that the -- like I said, we do not have over dependence upon a particular market segment. I would also like to highlight here that no single customer of ours has more than 4% or, maybe maximum, 5% of our total revenue. If, on a given day, if they don't like this color of our skin or the size of our [ hose ], they can still remain in business. As to my co-promoters or the founder of the company, we have Mr. Bharat Vageria sitting next to me. He is our Whole-Time Director of Finance. He has a degree in commerce and a Fellow of Institute of Chartered Accountants. And he has been in this industry for almost as long as the company has been there or even more. So Raghupathy Thyagarajan, he is our marketing -- Director of Marketing. He is a graduate in Science and Business Administration. He has been there from the inception of the company. Now he cannot, unfortunately, could not attend today, could not be present today because of some prior engagements. But he is an engineer and has [ passed off ] from IIT Delhi. He has been for 30 years in the company, right from the inception. So Bharat, Raghu and Naveen, they are the co-founders of this company. As to me, I did my graduation in science. I did thereafter engineering. Don't ask me, I have almost forgotten what engineering was it. And then I did my business management and was the first one to start this company almost about 30 years ago?

Yes.

It's about 30 years ago. If you look at number of people, the total employees, 3,850 worldwide. I am very pleased to tell you 11% of our total employees are of foreign origin because we have overseas operations. 455 are the professionals, which includes engineers, chartered accountants and MBAs. I would like to highlight 30 people are from the research and development. R&D, like I mentioned, that is the backbone of this company. And we spend 1% of our revenue on R&D. And normally, when we try to economize our other activities, we normally have a fight as to why we aren't spending enough on this particular activity. What is interesting is that the company is fairly young. If you see the median age of the people, that's about 32.5 years, which -- and probably the average year of employment could be somewhere between 17 to 18 years. So once our people come into the company, they tend to stay and work harder for the company. This gives me -- or which make me believe that we must be doing something right, that people like to stay and work with us. And then the interesting thing is that we can [indiscernible] what it is. There are many, many more years to contribute to the growth and prosperity of this company. [ Next slide ]. So I like I mentioned, we are present in 11 countries, going on one side, Taiwan, Malaysia, Indonesia, Vietnam, Thailand. Of course, India is the main center. On the other side, we go to UAE, we have got a factory in Sharjah, Bahrain, Saudi Arabia. And also, we have got a presence in Africa, that's in Egypt. But last 3 years, we have moved to United States of America, which happens to be the largest market for the industrial packaging, and we are very focused and excited about the business prospects of U.S.A. So we are continuing our -- the downfield growth there and also adding some new production facilities. Next please. Just to -- a quick look at what we do for our product portfolio, drums and containers, jerry cans, Conipails, HDPE pipe, DWC pipes and energy storage devices. That is polymer products, which are our traditional business. We also have rain flaps, plastic fuel tank, which was the first one that we launched, and some lifestyle-related products. On the value-added products, like I mentioned above, the products that actually bring us larger EBITDA margin, which is composite IBCs, composite cylinders and MOX film, that is that Techpaulin I mentioned to you about. And just one moment, please. Right. So our focus has always been on innovation and technical oriented polymer products. We were first to launch steel drums for the first time in India. We were first to launch tubular gel batteries. We are the only manufacturer of anti-spray rain flaps in the automotive industry. We have launched plastic fuel tank, which we continue to supply to some of the key OEMS. We launched IBC for the first time in India and it assumed market leadership, which continues. And for the composite gas cylinder, we launched it. We are the market leader and the second largest worldwide. Now we are moving into the high-tech products that I will deal with separately as well. But in that one, we actually are there with [indiscernible] tanks. As we know now, it is compulsory that all the commercial meter must have [indiscernible].

[indiscernible].

Yes, so for the new Euro 6 norms, they must add AdBlue to the fuel. That would mean actually the urea [ trend ]. So we developed that for the first time. We have also developed CNG Cascades. We have been talking lately about this to the investors as well. We have also done CNG cylinders for onboard applications, and we are now developing composite air tanks. As you know, the buses and trucks, they require a lot of air tanks for air brakes, et cetera, which are made out of metal. So we are trying to replace those tanks with composites. And then, of course, oxygen cylinder. As a subject, this is very dear to my heart. We have developed a featherweight, a very lightweight Type 4 composite cylinder for oxygen. And it can bring medical grade of oxygen, absolutely clean, to individuals and also the institutions who take care of public health. So these are the new products that we are working on. Now, as you see, we talk about time to change. The company is at an inflection point. We are shifting from tech-based products to high-tech products with focus on composite. And there is a reason behind it because we do believe composites is the material for the future, especially in high-performance application areas. So you will see a tectonic shift in our business profile from now on. On one hand, we will be harnessing new growth opportunities in existing businesses. We are very excited about what we are doing. And then we'll be launching new products with huge business potential, mostly in the area of composites. Going forward, we would like to think ourselves to be the leading composite product company in the country, and we are taking steps in the direction both in terms of setting up production facilities and also developing newer products. As we will deal with it further in this presentation, but some of these new products will not only give us a lot of business in future, but it will also improve our margins. And these are essentially -- they require industrial working capital, so we will be able to manage overall working capital with the introduction of these new products. It is not -- it is just not just expectation or aspirations, it was built on the fact that we were the first one to launch composite cylinder for LPG, almost about 8 to 10 years ago. Few million of these cylinders have gone out in the marketplace and are performing exceedingly well. During this process, we learn the technology, we learn the product design and all the final nuances of composite and the manufacturing processes to develop newer products. So the change is what we have started and just continuing. So these are the composite cylinders for LPG that we launched. This is actually technology that came from aerospace. We got it from Europe. We have a capacity of 1.4 million cylinders per annum. That's what we can manufacture. And we have innovative options for domestic commercial PU boards, forklift composite cylinders. So there are many, many applications. We are supplying into 42 countries already, and new countries are being added, too. The advantage of this composite cylinders is that they are explosion-proof, lightweight, they have a long-life -- useful life, no corrosion. And they are translucent so you can see the level of LPG inside of the cylinders. I know a natural question I would ask, is India included in these 42 countries that we are supplying it to? The answer is yes and no. We have supplied it to...

HPCL.

HPCL, to GoGas, [indiscernible] et cetera. But now it is gathering momentum. We have reasons to believe Indian Oil Corporation will be coming out with a major tender. But until now, not much of a breakthrough has been made in the Indian market. And the reason is simple. Composite cylinders are about 30% more expensive than the metal cylinder. And for some strange reasons, this public sector oil companies are not wanting to invest in this new technology. My heart goes out to about 50,003 people who have lost their life between 2009 to 2019 due to cylinder explosion and related accidents. I think the time has come and we must save those lives. And I think it is dawning on upon oil marketing companies, who have started looking at composite cylinders with interest. In so far as we are concerned, we have the right sizes and the design available. And the moment OMCs are ready, we'll be very happy to fill in the requirements.

We export it to some many countries.

Yes. So we are export it to 42 countries, like I mentioned. And those cylinders are performing exceedingly well in most difficult handling and environmental conditions. Next, please. Now what is a composite cylinder? Let me just touch upon that. It essentially -- and we are talking about composite -- the cylinders are made -- are in 4 categories. One is Type 1 cylinder, which are all metal cylinder. Something similar to what EKC or NAMA people make. So they're all steel cylinder. The other one are Type 2, which is metal in lineup with a small layer of composite material. The third ones are where you have fully wrapped fiber, but the inliner is made out of aluminum or any other metal. And then we have Type 4, which is the most advanced and the best one, where the inliner is made out of polymers, and you have the winding -- the fully wrapped with the winding of blast fiber or carbon fiber. So it is made of material so that there is no permeation of gas inside. There is a Bosch on one side, so that the valve could be fitted in. So there is a shell, there is a winding and the Bosch side. The advantages is that it increases gas carrying capacity, is 70% lighter in weight. There is fuel efficiency, obviously, because of the weight reduction improves. They are totally maintenance-free because they do not have any metal parts. So there are no rusting or corrosion, right? And then there is a very long shelf life or the useful life. The reason is, again, most of the tank cylinders actually are discarded because of excessive corrosion or rusting or the deformation that takes place because of tough handling. And needless to say that composite cylinders are completely explosion-proof. So no matter what application these are used in, they are safe all around. There is a distinct method in which we are working. New CNG business is in consonance with government policy. As you know, the government has come out with a policy wherein they've laid out the future plan for the use of -- vital use of CNG in India. So the CNG -- so we are actually looking at cylinders which can be used for and in relation to storage and transportation of CNG. So they are for CNG gas distribution, that's one area where you require them for cascades, mobile refilling, it is -- I will deal with these specific applications further in the presentation, compresses biogas plants. So that is a major thrust area with the government, and gas generator for telecom tower. As you know, telecom towers today have to have a generator sets, which are run on diesels. There is a pilferage of diesel, and it's very expensive to run it. Most of the companies are going to -- the tower people are going to switch over to gas generators, wherein it will require CNG to be brought into them, to the tower, where they will generate their own electricity. This way, the pilferage of CNG will be avoided, and the cost of operating the [indiscernible] actually will reduce dramatically. If you take the payback period for gas generator, is between 8 to 12 months, depending upon the size of the gas generator. On the onboard application, we are looking at roof-mounted buses. I will show the pictures later. Chassis-mounted trucks. So for the buses, it has to be mounted on the top. Then we have chassis-mounted trucks. So for the commercial vehicle, it can be mounted on the chassis. That's also for the -- the cabin-mounted trucks. So behind the trucks, I will show you the picture again. In the bus, also for the passenger cars, though I must admit, we are not focused right now on passenger cars. And also there is a use for 3-wheelers and 2-wheelers. Next slide, please. Now what is a CNG cylinder cascade? I'm sure you have seen them on the roads. You normally have a gasification unit, where LNG is converted into CNG, and found gasification in it, that CNG had to be brought to the gas stations where it has to be dispensed for the vehicle. So the battery of cylinders, which actually is called as cascade, they are mounted on a vehicle and they are instrumental in bringing in CNG from the gasification unit to the dispensing point, right? So in Type 4 composite cylinders, instead of steel cylinders, but mostly cascade up to now, have been made out of metal cylinders. If you use the Type 4 composite cylinder for the cascade, you can bring in almost 2.2x more gas because the tail gate of the cylinder is much less. And therefore, with the same carrying capacity of the truck, you can bring more CNG. And this reduces the per kg CNG transportation cost significantly. And normally the problem with gas station is because of the limited capacity of the cascade, they have a dry out during the peak hours and have to wait for the next cascade to come in. Because we can bring in 2x the gas in the same cascade, you can completely avoid the dry outs. These cylinders and also the cascades are approved by PESO. I'm very pleased to tell you that in August -- sorry. We got the approval for our composite cylinders and some of our customers who are making cascades have actually also got the approval from PESO. Currently, we just started offering cascades recently. We have order of about INR 53 crores, which are under execution. And several of our cascades are in operation, and we have received a very positive response from the user industry. If you go by a number of cascades and/or which are in the process, I think the business is many, many times more than what you already have got. Next, please. So this is typically a cascade. So carries double the quantity of gas. And the operating cost is reduced to half. Now if you take the cost of the cascade, and also the cost of the truck on which it is mounted, you would find that despite of the cost of cascade being higher, the overall capital cost is quite comparable with Type 1 cyclinder cascade and the truck. So the capital cost is more or less the same. At the same time, the operating cost is less than half. So there's no-brainer that people would like to switch over to our Type 4 cylinder cascades for the requirement of CNG in the future. I don't know whether you watched the newspapers but there have been several news items wherein only recently, I think 3 or 4 days ago, on June 8, Honorable Minister of Petroleum and Natural Gas, Mr. Dharmendra Pradhan, has launched what we call as mobile refueling unit for CNG. Now one might wonder what is this mobile refueling unit. Up to now, you had to go to the gas station to get the CNG. Government is now changing it completely. What they're saying is, we will bring CNG to your doorsteps. So this mobile refueling unit is nothing but a Type 4 cylinder cascade as the major part of it. And there is a compressor mounted on the vehicle so that the gas exchange can be filled on the vehicle. Each MRU can fill in something like 300 or 400 vehicles a day. You don't require a very premium location for the CNG station. It could be by the side of the road, like you have the PUC trucks waiting on the road side. It can be on the highway. And the interesting thing is it can actually bring CNG to people who presently do not have an access. So for example, if there's a fleet owner, this can bring CNG to his yard where they can fill in all their trucks or buses. Their school buses, it can be filled in and [indiscernible] itself. And boats, they obviously can't come out of the water and come to the gas station. So this MRU can actually reach them out. And another advantage of that is that it shaves off the peak hour rush. So for example, if a gas station is running out of CNG during the peak hour, this MRU can reach there and share their burden or load. So MRU is going to be a very, very interesting concept. And the government is very sure that with the advent of MRUs, the reach of CNG will improve dramatically. So talking about CNG cylinder for the onboard application. On the first one, you can see the dump trucks, which is for garbage. They are chassis-mounted trucks. So even the commercial vehicles, it can be mounted on the chassis underneath. We can also have cabin-mounted trucks, where behind the cabin there could be a compartment that can be created and the cylinders can actually be placed inside of that one. You see the roof-mounted buses. You see about 7 or 8 of these cylinders, which can be mounted on the top. Up till now, there are buses which have these cascades on the -- sorry, the modules of CNG cylinders on the top of the bus, but they are metal cylinders. The problem is if you have got 8 cylinders, you are talking about a dead weight of about 1.2 to 1.4 metric tons. Now imagine loading 1.4 metric tons on the top of the bus, and it takes a sharp turn because the [ CT ] has already moved up, the bus can actually turn over, which is very risky. So therefore, you need to have something which is lightweight and can carry the requisite amount of CNG. So we can reduce the weight by almost 80%. And therefore, this is going to be very, very popular for the bus stops. Of course, this is equally true for the commercial vehicles also, but we will come to that a bit later. Of course, the changes have started taking place for the boats. As you know, in the constituency of the Prime Minister of India [indiscernible], they are changing all the boats from diesel to CNG so to reduce pollution. So they can be mounted on the boats. Also in the cars, of course, cars can be a big user for Type 4 CNG cylinders. It can even go to 3-wheelers or 2-wheelers, both at the level of OEMs and also in the aftermarket. Just to give you an idea about the potential. If you look at this document, which has been published by government of India, the new CNG stations have been allotted under the ninth and the tenth round. So the new CNG change stations are going to be about 8,181. They have to be rolled out in the next 8 years' time. Number of cascade per gas station is going to be minimum 2. Of course, some of them may still get a pipeline, but that is a little far-fetched. So the number -- the total number of cascades acquired would be in excess of 16,000. If you take the average cost of the cascade to be 70 lakhs [ per piece ], that generates a business of about INR 11,400 crores over the next 8 years' time for the cascades alone, similar to what we see in the picture here. As you can see, the table down below is an excerpt from the government policy document, in which you can clearly see the total number of gas stations are going to be 8,181. In this cascade, you can see that in our cascade, with type of composite cylinders. Okay. The demand potential for MRUs. Right, the government has said that total -- the total gas stations are going to be about 7,300. Out of which...

[indiscernible]

Sorry?

Till 2024.

Yes, this is till 2024, right? And out of that, 2,200 will be converted into what we call as MRUs. So the total existing and committed new CNG stations in India, 2024, are going to be 7,300, converted to MRUs about 30%, so that's about 2,200. It would take the cost of the cascade in MRU at 60 lakhs. The total business potential in the next 4 years is going to be INR 1,320 crores. Incidentally, and I forgot to mention earlier, that our Type 4 composite cylinders, we are the only manufacturer in the country. Of course, there are some people who import and try to sell it. But worldwide, the key manufacturers are Agility, Hexagon U.S.A., Luxfer, Indoruss. They are either in U.S.A., and one of them is in Korea. The Type 3 cylinder, there is aluminum inliner. There's a company called Worthington in U.S.A., Luxfer in U.S.A. and Quantum in U.S.A. So there is no one who is manufacturing Type 3 or Type 4 composite cylinders in the country. And consider the fact that the cascades made out of Type 4 composite cylinders have numerous advantages the I have enumerated just now. There are no [ maths ] for guessing that the business will actually get diverted into Type 4 composite cylinder cascades, and we will be the biggest beneficiary. The potential I've just enumerated to you, both in terms of MRUs and also for the gas stations. Next one, please. Now the compressed biogas. This is one of the biggest areas that the government is looking at, especially if you remember the [ rally ] and the biowaste, solid waste, et cetera, is a big problem to dispose of. The government has come up with a ambitious plan that, that gas can actually be used for generating biogas. And government is giving permission for the biogas to be dispensed from the gas stations owned by OMCs or by their MRUs that I just talked to you about. So the total CBG plants by 2023 are estimated to be 5,000. Number of cascades required per plant is minimum 2, one for dispensing and one for going back and bringing CNG to the location. So the total number of cascades will be about 10,000. If you take the cost of the cascade to be about 60 lakhs each, that can be a business of about INR 6,000 crores in the next 3 years' time. I talk to you about gas generator for telecom towers. Total telecom towers are about 1.8 lakhs. We expect 20% of them will convert over to the gas generators. That will be about 32,000 telecom towers. The MRUs required, either it will be an MRU or a stationary Type 4 cascade for each telecom tower. Then the total demand would be about 8,000 MRUs. We will take 60 lakh as the cost of cascade inside the MRU. That'll be about 60 lakhs. So that alone can be a business of about INR 4,800 crores. Next slide. This is the picture that I was talking about. You can see the cylinders on the top of the bus. Normally, if you take interstate buses, they're required to run about 1,000 kilometers in 24 -- or less than 24 hours' time. So at the depot, still they had to fill in adequate CNG, which can be -- which can suffice for their onward and return journey. So the number of buses on road, up to 2024, are estimated at 210,000. We expect the buses which will convert to CNG, and that is part of the government estimates, 85,000 buses will convert into CNG. Of course, there are enabling -- [ advising in structures ] for the Supreme Court of India in one of their judgments. Number of cylinders per bus is going to be about 8. So the total number of cylinders required is about 6.8 lakhs. If we take the cost of each cylinder as about INR 78,000, that generates a business of about INR 5,300 crores, right? And needless to say, that this will -- if that only buses change over to CNG, like the running cost saving will be about INR 9,000 crores and the incremental conversion cost would only be just INR 3,300 crores. So you can imagine the amount of savings that both the bus owners will have and also the government will be able to save in foreign exchange. Next, please.

[indiscernible]

Let's go back, please. Right. I would like to put in 2 disclaimers here. That while there is a huge potential for Type IV composite cylinder for commercial vehicles and also for passenger vehicles, we are not counting them in just now because it might take a bit longer for them to convert. But that business is as big as the cylinder -- that business that I've just talked to you about. And the second disclaimer is that in the projection that we are making for our future of till 2024, we have not considered the business that will be coming out from CNG cylinders or cascades or the related products. So that has not been counted in. I'm sure we will include them as and when the business materializes. Next one, please. If you look at CNG cascades, we said that the total business potential is INR 11,453 crores in the next 8 years' time. So that's about annual of INR 1,432 crores. We have said conservatively, we will be able to convert 50% in composites. So for us, the business potential is about INR 716 crores. In the case of MRUs, the potential is INR 1,320 crores in 4 years' time. One year -- every year, INR 330 crores. Will it take only 50%, our market share, that's about INR 165 crores. Compressed biogas, which is about INR 6,000 crore business, we -- in 3 years' time, so about INR 2,000 crores in a year, we are taking a lower percentage here because the turnout might be a bit slow, about INR 400 crore per year. Gas generator, INR 4,800 crores is the total business potential in next 4 years. INR 1,200 crores per year, and that's about INR 240 crores per -- for us, if we convert only 20% into composite Type 4 cylinders. And CNG for intercity buses, which is a very large segment, INR 5,300 crores, 4 years, and about INR 1,326 crores per year. And that amounts to about INR 663 crores per year. So you can imagine from [ these segments ], we can expect a business of about INR 2,200 crore, where we would be favorably disposed [indiscernible] let certain advantage of going in with composite cylinder. Like I said, commercial vehicles and passenger vehicles will have the same or probably more business potential. We have not factored in because the data has not been assimilated yet, but I'm sure we will be discussing that when we meet next time. Right. Okay, oxygen cylinders. We call them featherweight oxygen cylinders because we are talking about weight reduction by 80%. They will be in medical-grade oxygen. So there will be no corrosion, no rusting. So therefore, there will be no black fungus or any impurities in the oxygen. And we expect like Japan and some -- and U.K., people will, in future, require what we call as HOT, that is home oxygen therapy, right? So there's going to be the requirement -- future requirement of oxygen, especially for those people who have suffered during COVID and may still have some after effects after they are fully cured. But in any case, we will also be supplying it to hospitals, nursing homes, et cetera. With a much lighter weight, they can straight away go ICUs and all and can stand in the corner without any problem of handling, et cetera. So we have made a prototype. We will undertake the trials now, and we are expecting in the next 3 to 4 months' time, we will probably be closer to getting an emergency clearance for the use of Type 4 composite cylinder for oxygen for medical oxygen purposes. I talk to you about -- so these are the new products that we are still developing. What I discussed about up till now the Type 4 composite cylinder for CNG, that has already been done. Development work has been done. Now we have to kind of lay it out in the marketplace. These are the new products, which are at various stages of development. Oxygen cylinder, I just talk about. The compressed air tanks for buses and trucks where they will be replacing metal air tanks to the composite air tanks. Advantage is no rusting, no corrosion, and light weighting of the vehicle, which is the prime requirement of commercial vehicles, passenger cars and buses. So therefore, they will look at the possibility of replacing metal air tanks to the composite air tanks. I'm sure you would be aware of hydrogen cylinder for fuel cells. Next 10 years' time, we will see a lot of vehicles which will be running on hydrogen. So the hydrogen on the vehicle will have to be stored inside of cylinders, which can be light in weight and can withstand the bus pressure of up till 1,200 bar. No steel cylinder will be able to do that. So Type 1, 2 and 3 cylinders are completely out of that. The Type 4 composite cylinder is the only one which can meet the requirement. So what happens is that you use hydrogen, then you have a fuel cell where the hydrogen and oxygen is converted into electricity, and the vehicle is then is electrical vehicle. So there's going to be a large requirement. It will not be proper for me to mention, but one of a very large company in India, or the largest corporate in India, are already looking at hydrogen cylinders for presenting for their requirement for telecom towers and also for later on for vehicles. And then we are talking about composite water heaters. As you know, the water heater, or the geyser, as we call them, are made out of metal. Then after 2, 3 -- 1, 2 or 3 years, they get rusted and start leaking. So nobody gives you a guarantee for more than 3 years. We have now come out with a composite tank for the geyser, where the manufacturer would be able to give a lifetime guarantee for the geyser. We are working with 2 big geyser manufacturer in the country, and they're very excited about it. In this one, the rollout is not entirely in our control. We are developing the product because geyser companies at some stage would like to launch, and pass on the benefits of the technology to their consumers. Next, please. Right. So let's talk about the strategic outlook. Please, next slide. I think it will be more of a repetition, but I would still cover it up. What we have achieved. We have achieved 9% CAGR in 10 years' time. We are the leading global industrial packaging company. Like I mentioned, fourth largest in the world. We are among 600 BSE companies by the market cap. Well, of course, it could have been a lot better. We are market leaders in industrial packaging in 9 out of 11 countries. That shows the caliber of the people and the quality and service of our products. And then we are expanding in U.S.A. We already have 3 operations in U.S.A. U.S.A. is a very big market, and these 3 locations that we are there, we are able to sell everything that we produce every day. So we are looking at expanding our production base. So there will be a long [ field ] expansion there. And we may add 2 new locations in U.S.A. during the current year. We'll be able to tap on a huge business potential that has arisen there. We achieved a revenue of INR 3,000 crores last year. Of course, a year or two before, we were about INR 3,500 crores. PAT last year was INR 103 crores. Of course, was lower than the year before that. Like I mentioned, that the plastic drum, we are the largest in the world, second largest in composite cylinder. [indiscernible] we are the third largest. And we are a significant player in HDPE pipes and the MOX film. The strategic partners -- so the core business is strategic partnership worldwide for global chemical companies across 11 countries. So we are one-stop shop for all these multinationals where they can have a contract with us and buy in any country of their presence. That's a great advantage they have. No single customer for us is more than 5% of our revenue. That shows that we have spread out our stakes and not concentrated on particular customer or a market segment. Long-standing relationship with over 25 years with customers, we virtually lose no customer. Once the customer is in our pool, we only keep adding more to it. I don't recall having lost a customer. And then we have got 20 locations in India and 10 countries. You see, when I showed you the map, we are concentrating more on the West side because that's where the capital industry is. But I'm pleased to tell you that none of our major customer is more than overnight journey from one of our production facility. So we are in the position to offer just-in-time deliveries to our customers. Next slide, please.

[indiscernible]

Yes, so future growth segments. We are increasing popularity of IBCs. We will be tapping on to the sewage business, HDPE pipes. We are expecting, because of government's thrust on bringing drinking water to every home, composite cylinder business is going to be further expanding as we explore new markets. And of course, India, switching over, even in part, to composite cylinders for LPG, then the capacity that we have will be minuscule as compared to the demand that overseas might actually have, right? And then we have a huge business potential out of Type 4 CNG composite cylinders and more. But that has been our result. We have not factored that in, in our business plans already. Yes. So if there a few foundation stones on which the company stands today, professional and experienced promoters and a professional management team, along with established in-house R&D. So that is key to whatever little we have been able to do. We keep inventing or bringing in new products which can give us better margins, excite our customers and, of course, help us reduce our working capital. So we are focused on innovative -- on innovation and new products. We are going to be [indiscernible]. So the growth shall be funded mostly by internal approval. After the IPO in 2007, we raised equity capital only once after the listing. That was in FY '17. So we have not diluted or raised capital. We have been managing it from within the resources that are generated by the company. Like I mentioned that we are at an inflection point, moving from technology-based product, that I talked about, to high-tech, futuristic businesses, largely around composite and related products. What probably we have missed out during these years is that economy of scale. We actually have to build up further on this one. Our ROC has been below our expectations. So it had been below 20% that was our target. We have not been able to fully realize the economy of the scale overseas as well. And now we are tapping into the global opportunities that I have mentioned to you about U.S.A. and some other companies. Working capital, indeed, has a lot of scope for improvement due to -- we started improving upon it, but due to weak economic growth, regulatory changes and certain black swan events, the improvement has not been as significant as we had expected to. But like I mentioned, all of our new innovative products and also futuristic products are designed in a way that not only they will have higher EBITDA margin, but even the working capital requirement will be lesser in those businesses. Also, we had carried a study as to how we should reorganize our business. We've been talking about it. We used the help of an outside agency as well. And so we are now looking at consolidation of business and disposal of noncore business. So we have identified certain assets and some businesses, which we will like to disinvest in and use those proceeds for our growth of the existing business or expansion into the new products. Next slide. Right. So the next few years, our key priority areas are: maintain growth momentum, so we have a lot of growth opportunities, even our existing businesses; and also tap the high-tech business that I've mentioned to you about; improve our ROC; enhance shareholders' value. One area where we have missed out completely is our interaction with our valued investors have been rather low key. We would now be coming back to investors and excite them about what we are doing more often and be open to suggestions or advice that might be coming our way. Of course, there have been one point that have been nagging us and also for our investors that part of our promoters shares [ or plus ], but that [ diffused ] to be at some point in time, something like 16%, 17%, is now to about 12%. I'll cover that in the subsequent next slides. Next one, please. Just about maintaining growth momentum of the past. I would say that we are looking at the chemical, pharmaceutical, food, beverages, that these industries are going to grow significantly. The interesting thing is, China, which has a very large companies in the segment that we supply of industrial packaging, right, is the largest market. If only 5% of that market shifts over to India -- and there are a lot of people who do believe that some of the business from China will get shifted over to India. And we can see the early signs of that because some of our customers are now adding products for exports, which otherwise are being sourced from China. And the multinational companies who have been in China and also are there in India, they are shifting some of their products from China to India, and they will be getting into whole of Asia or Europe and North America out of India. So that would mean that the need for packaging will increase substantially out of India. So we are -- by fiscal 2025, we expect to be more than INR 5,000 crore company, again, without including our composite business. There are a huge growth opportunity for global industrial packaging market, I mentioned to you about, right? Now if the business shifts from China, it would mostly go to the Asian countries, and we are uniquely placed by having manufacturing facilities in countries like Taiwan, Malaysia Indonesia, Thailand, et cetera, which are going to be the direct beneficial. And if that happens, like not only our business in India will grow, but our overseas business in Asia and MENA region will also go significantly. RBC will be bringing a lot of growth. And because of the metal prices being higher, we expect that some of the metal packaging will shift over to the polymer disk packaging, right? I will still skip that CNG-related business, which has an potential of INR 2,200 crores. We will start tapping onto it. And I'm sure, by 2025, it will be contributing significantly to turnover and EBITDAS and will also improve our overall EBITDA margins and ROCE. I would ask Bharat Vageria to take you through the next slides, please.

Good evening, gentlemen. This is -- I'm continuing this and as improving ROCE and enhance shareholder value. As Mr. Jain mentioned, we'll become a INR 5,000-plus company in 2025. So you see that we have done the analysis of this [ micro ] graph. We'll see 2025, we are accepting the ROCE around 20%. This is the whole of the target we have. And in these projections, as Mr. Jain has already said, we have not factored the business of the CNG cylinders. Now how we -- because every time I have been asked questions by the investor, so therefore, we have analysis ourself how to get these ROCE, which is currently apart from this COVID year, earlier, we had a 16% in 2019. This is renewal year. I'm keeping the apart this corona factor 2 years, but then from '16 to '19, how it will be. We'll do the improvement in the 3 areas: target to improve the current ROCE from 31% to 4 years, increasing the share of high-margin value-added products. As the current high-margin product, we have already mentioned the IVC business, the indoor business and [indiscernible] business. So that percentage of this business is going to be increased. Other things in high-value-added products, it is not a established business. We are not required to give the -- all of the industry norm, and we are not required to provide the number. So we'll follow -- we set out the new guidelines, and that will help us in guiding the margins. Working capital, again, as we have mentioned, in value-added product, we are going to set the new guidelines. We will reduce the inventory cycle type. We'll reduce the receivables. So the working capital cycle time, we also will review. I will cover this in my next slide also. Then as we have mentioned, disposals of noncore business and assets. As Mr. Jain has already mentioned to you that we have identified areas where we can do some kind of removal of these assets, and they can use that money for our use of this expansion. Now as you will see from this chart, improved share of value-added product, how it is increasing from FY '16 to FY '25. The business, which in FY '16, is the established business is 88%, which is -- and other related product was 12%. In '25, you will see 78% to 22%. Percentages increased by more than 50%. And how is value-added product margins will improve because the EBITDA margin, which is 14% in the product, where in value-added product, it's around 20%.

State businesses will also grow.

State businesses will also grow.

Share of the business.

And share of the business will -- the established EBITDA margin, 14%, 20%. Stabilized product, already we mentioned, the existing [indiscernible] but these all are established businesses in auto components. When you have products, IBC, composite, minerals and the [indiscernible]. Again, this business -- as again, high value-added products, which potential, which Mr. Jain has already mentioned, but we are not after with this business plan currently. Next. Now this is the working capital cycle. You see the earlier, we take the 18-month approval cycle time on 86 days and 90 days, but apart from 2021, we are targeting net working capital days by 80 days in FY '25. This will help us company increasing the ROCE. And that how it is possible that down the slightly mentioned, one was the treatment reducing the debtors, inventories and negotiating longer momentum with the creditors because we have now established our financial in the overseas market. So we're able to get some longer bidding from the supplier. And other things. In receivables, we will use the new products, which is available by the banking of -- banking channel and use it to build this company, negotiate lower payment terms, low credit period of our value-added products. Inventory, yes, we are working out because we have some of the products, some of the raw materials we need to improve in the present scenario, but we are very closely working our -- R&D team is working in the local manufacturer of polymers, and we are developing some products. So the inventory transit time that will help us introduce the inventory levels here. Creditors, yes, as I mentioned to you, overseas business in India, a move capital side to negotiate longer terms without [indiscernible]. Now disposal of noncore business and assess that -- as my company management is identified. Now how we will do it? Management has decided, exist of noncore business of medical equipment, furniture business and matting business. In below the slide, INR 60 crores, as identified as held for sale. It is absorbing the matting business because the present scenario cannot estimate the value of the matting business. It is again dependent as to what time it will take it because it's the ongoing business will be tech-based. And even as a battery business as an independent today, it's a self-sustained company. There is number of the business except this corona period. Yes, we know it, they are not giving the required ROCE, which management targeted, but we hope once we're able to get our initial value in terms of value money, will be used for the other main assets. Now the assets, which is INR 60 crores identified is the building which company at one point of time required while for looking at the expansion in the different locations. But company management had then decided to consolidate operation at a particular location to reduce the administrative cost. So that lands and buildings are available, which can be planned for -- as the market normalizes, real estate market can be encash the value. More and 2 limited medical businesses, which we have. It's a good time because many companies, many hospitals need some kind of the 3 items supplying along with their medical products. So it will help them to get this ready and wialways heavy lift and with all the approvals that's also available. Other items, in any case, the company had took the business-related furniture business, once upon a time, facility was very good, but not in almost 80, 20 years old and nontechnology business to management and decided to out of. But again, I'm clarifying the injection-molding machines, which are the older machines or manufacturing of the packaging accessories or manufacturing of some conical things, that will continue to remain with the company, but molds and tools, which are -- can mix disposed of. Now this is the capital road map allocations. This is just giving us an idea. So in the -- from last results have been even up to March year ended '21. This is the projections estimated from March 22 to 25. What will be the cash generation after the tax is INR 235 crores. Without considering any increase in the GAAP pool from the funds, same [ INR 235 ] revenue, then the net tax assets after the depreciation will be INR 105 crores, including net current assets because of the growth, because of the expansion, INR 230 crores, repayment of the debt, INR 195 crores. Application of funds, [ INR 532 crores.] Year-to-year is available. So by March -- estimated that by March 25, the total surplus available is INR 705 crores, which will be towards the payment to the dividend, which we decided time to time. Share buyback, development of the new products and reduction of the debt. That's dependent on the every year situation, the management and board member will decide and the decision will be taken. As internal cash generation remains strong, which is visible from here and [indiscernible] self sufficient, no need to extend that just for the call. Target net debt to EBITDA will remain in the range of recently 0.1 to 4x, assuming net debt is maintained at the current level in the absolute number. Leverage somewhat below 0.3x. CapEx -- average gross CapEx, which is in the range of INR 175 crores, less depreciation of INR 150 crores approximately. Net working out, [ INR 28 crores ] have been considered here. Large capacity to increase the dividend payout, so a buyback as well as line reduction, but we will do next year. Projected surplus, cash of INR 700 crores, which is visible here. Now the main key priorities, which always existing and investors, and we are also concerned. They move from [indiscernible], reduction in surplus. It has reduced from 18% to only 4%, and aim to make promoter holding in place right at the earlier possible time. I'm clarifying here, the shares is given as a collateral security. A prime security is land and building, which has a value of more than the loan taken from the lending company. Now the more focus is required, enhanced investor interaction, application and investor relations [indiscernible], which is already done. Dedicated in-house Investor Relations that already we have appointed a buildup since last 1.5 years, increased the visibility to attending internal and domestic conferences to organize a new investor and analyst meet regularly. As Mr. Jain has already mentioned, last year, it was held in February, and that was physical. But today, we thought with the advice of all of our valued investors and agency, we were not waiting from the physical. We're thought it's better to do on the -- also this virtual. Then to more intervention with the investor, take their advisers to facilitate the plant visit. Now this is the financial overview, which, in any case, available, as we already mentioned media group in the last 7 years is 8%. As we did mention, from '18 to '25, it will be this year of 8%. EBITDA margin, see it is increasing. It was exceptional in '21. It was down to 13% of projection because of the value-added products are coming. The percentages are increasing, so reaching back like 2005 of 15.5%, around. This is the test coverage ratio. Company has a very good interest coverage ratio. And having accident rating. Interest debt to EBITDA times and the total outside liability, these are the calculations made from the results of this already and on the return on equity. I'm handing over to Mr. Jain.

So thanks. We have -- we have done what we intend to do, how things are going to pan out from between now and 2025, both in terms of other product rollout and also in terms of how it's going to affect our performance. Also, we have gone into the details of what steps we are require to take to improve further on the performance. And like I said, ROCE being [ developed here ]. We are all focused in improving thereon. On the ratios, you will find that we are clearly facing. Our debt to equity is very low. Our capital to -- [indiscernible] and so all these ratios are quite visible. So what do we do from here onwards? I've covered partly already in our presentation. Chemical production shifting from China to other Asian countries. I don't know how you look at it because I'm sure you are exposed to a lot of companies in the areas of chemical, petrochemical, [indiscernible], other chemicals, textile [indiscernible], et cetera. That's the market segment that we cater to. But we are seeing early signs of the export of these products increasing substantially from India, and therefore, they would be required to buy the packaging locally. So you do see a lot of growth, not only in India, but also in our Asian operations in different countries will be the beneficiary of business shifting out of China. Number two, the ROCE growing faster because those are used for export of chemicals. We are not dominant so much into the domestic market. So if the export increases. IBC requirement will increase substantially. We already have 3 production sites, and the fourth one is under preparation. So we will be very well placed in terms of capacity and location. We'll be able to serve the requirement of our customers. Polymer and composite products to gain share from metals. Like I said, people have burned their fingers by the price of metal going up through the ceiling. Wherever that is possible from metal, people will shift over to polymers, and we expect that the polymer prices will remain stable as a lot of new capacities have come up. So we will have a chance. We have seen in the past also, whenever there is a surge in the price of steel, we see a definite shift from metal to polymer products. And that is a one way stream. Once they are in the polymer products and experience advantages of the product, they will not go back to metal. As you know, Government of India has a major emphasis on recycling. They have started putting restrictions on multinational companies that certain of their packaging products -- certain percentages of metal has to be a post-consumer recycle. We have placed ourselves in the sweet spot where we can meet those requirements of these multinational companies and reduce the burden of recycled plastics. Of course, we expect that not only it will place company uniquely, but also will help reducing the cost of its raw materials. So with this, I thank you all for your patient hearing. I know we have gone too much of it in detail, but we don't get a chance to meet you all so often, so we wanted to -- and we bring you to the speed of what's happening. I'll leave it to the host to take it forward, please.

[Operator Instructions] The first question comes from the line of Pritesh Chheda.

Yes. Sir, this is Pritesh from Lucky Investment. I have a couple of questions. One, what you mentioned on CNG cylinders, will it entirely be an incremental business for us? Or they -- in our cylinders business, what is the share or what is the revenue from CNG cylinder that we're doing?

Well, of course, it will be an additional business because we are not into CNG composite cylinders. We are only in LPG.

LPG, yes.

Right. So this will be a new business for us in terms of technology. In terms of processes, et cetera, of course, will be an incremental business. But in terms of plant and equipment and other [indiscernible], we will more or less have to bring them in fresh.

My second question is, I appreciate your focus now on the investor value creation, and you have highlighted some assets reduction as well. From your presentation, there were a couple of slides about China shifting India opportunity. And today, more than 50% of our packaging business is from India. So if that is the case, why don't you focus -- or why are you not focusing on India operations by reducing some of your international operations and by rightsizing some of the global facilities, which may also be a way out to improve the ROCE? Now if growth is the factor, then by virtue shift towards India, automatically, higher growth can be generated. So why is this concept or probability not there in your calculation?

Well, you're absolutely right. We are expecting the business to shift from China, and everybody is going to be the beneficiary, India included. But also the countries, Taiwan, Malaysia, Indonesia, Thailand, et cetera, they will also be the beneficiary of business shifting out of China. So we are not doing anything at the cost of our overseas business or an Indian business. We are very well laid out. In India, we have got 20 production sites, and we are helping to almost all the customers that require packaging. So as the requirement comes up, we will keep feeding to that one. Your question is, why don't we downsize our overseas operations? I don't think that will be a right step at this point in time, and we are seeing substantial growth there as well because India is not going to be the only beneficiary. I also will warn you a little bit actually. We, as a country, are known -- and you have seen in the past, we don't need enemy. We become our own enemy at some point in time. We have seen between 2004 to 2014, nothing happened in this country. Whereas, the world moved from one place to another, right? So by downsizing our overseas operation wide we saw the possibility, just in case this won't pan out so well in India. I mean you know that there is a lot of moving pieces on the Indian economy. I mean, can you imagine the availability of labor as a major measure constraint today. We are a level in terms of industry. We can just renovate, and they are refusing to come. Even if I have a requirement today, many times, I'm not able to fill it because I do not have enough people in the plants.

Sir, my last...

Yes.

I understood, sir. So my last question is, from the cash flow perspective, why is it that our net working capital plan shot up so much in the last 3 years? And at INR 175 crore of CapEx per annum, which you have put up in one of your slides, if you are -- if you don't bring down your working capital that you can repay your debt. So -- or you can not repay, you can -- no way that you can reduce your debt. So why is it -- first of all, why is it that it went out of hand so much by about 30, 40 days? And what are we doing exactly to bring it down again to that 90-day or whatever we have forecasted in those presentations?

Like I mentioned in my presentation to you, there are certain things that happened during these last 2 years which have actually increased the number of debtors in terms of days, right? The nonavailability of raw material locally necessitated that we have to import a lot of raw material from overseas, and that actually increased our inventory of the raw materials also, right? So there have been several factors which is -- was in kind of a lifetime situation, where we saw our working capital requirement going up. As the things have started stabilizing, we are bringing it back to the levels that it was there earlier on. Now Bharat already listed out areas as to how we will be able to reduce our working capital in terms of builders counting, reducing the debtor days, negotiating better consumer supplier in terms of credit period. And also, as we go -- as the value-add business percentage grows in the explorer side, we will find that -- and that is less certain capital intensive. So we will be able to bring the working capital down to the realistic. You talked about the debt. Of course, I know it's a very important subject. But sir, I have given you the ratios. And you would find it first. Everybody would like the debt to be reduced, but our debt to EBITDA -- or debt to book value, yes, yes, very, very conservative. If you look at my competitors, right? Now there is about 6.3x -- 6.35x of EBITDA. [indiscernible] is about 3.4. [indiscernible], not anymore because that's not a listed company. So I would like to think that we are within -- we are well within our norms. Now I can use all our resources to reduce my debt, but then, would you like me to miss out on the opportunities that are coming our way?

Just I would add, Pritesh, debt reduction is the cost of the interest is working out where the current set is 9% to 9.5%. When we are targeting ROCE 20% or it is even currently is -- what if we build these models we pay back to the GAAP and not even at the weakness and expansion. Because ROCE target instead -- currently is at 16% ROCE, which was only accepted in this period, which is more than the cost of the fund. So debt payment is not going to increase ROCE. ROCE increase, then the business will have to decide, which we have already -- what we are targeting, how do we able to reduce this, that. And further increasing the value-added products will also help us. Other things, as I mentioned to you, the longer '23 year. You remember, as we have mentioned certain things, what happened in the last 3 years. You are over in India, certain governments have restrictions that put biased credit line suddenly stopped committing. Multiple factors in this government decision affected the credit. In India, the credit rating India government has downgraded. Therefore, the international company is not providing the credit to the Indian customers. And even further, how we will do that. Overseas company now established business in most of the countries, and there, we can now ask because IBC business is there. And we can ask suppliers to provide us the credit now because we've reached the sizable business. Relationship is already developed in the 5 years. So that will help us, and we are trying to reduce that cost multiple ways. These are some factors.

Sir, just last year, on the nature of debtors, I hope -- so whatever is the expansion, the debtor quality, if you could highlight in terms of any greater than 6 months. What would be the debtor in the book?

I can give you one database. If you look at our last 10 years, our bad debt at less than 0.01%. So we have virtually no bad debt now.

The next question is from the line of Harsh Shah. [Operator Instructions]

This is Harsh Shah from Dimensional Securities. Sir, you have highlighted the opportunities that lie for CNG in Indian market, which runs into almost INR 20,000 crore, INR 25,000 crore. Similarly, are you also pursuing opportunities in the overseas market because you have the product? You also have the manufacturing capabilities overseas. And as you highlighted yourself that things are getting accepted faster in the Western world, and even in certain Southeast Asian countries. So are you looking at these markets as well to push your products?

Harsh, you're a -- very, very interesting question you asked. You see, if you look at my overseas business, I've been very careful in taking my most established business to overseas. So if you see my overseas business, they're only thing industrial packaging, which is my oldest business, and we know that business inside-out, right? So therefore, the existing well-established business in a new geography and a new business in our Indian geography where we have all the infrastructure and where with ours. Now if you look at my composite cylinders also, LPG, I could have easily taken them to overseas manufacturing. But look at the value of the product. My freight cost is quite low for cylinders, et cetera, because it was aired less volume base. And secondly, the value of the product is so that your rate of cost is about 2%, 3% or 4% of the product cost. So therefore, it is better to consolidate all our manufacturing with regard to the composite investor whether LPG or CNG in India, and try and export it out of India. Now your question is very valid. For the cascade business and consider that we are one amongst 4 types of composites that do caskets, 1 amongst -- sorry, 1 amongst 3, and 1 amongst 4 of the type 3, you would appreciate that we can have a huge export market which can be tapped. But I can promise you once we are able to tap into the requirement in Indian market, that's the market we could look at. But mostly, exporting it out of India, and maybe at a later date sometime, we will then go and maybe look at international.

Understood. Understood. And talking about your U.S. market, you said it is one of the largest market for industrial packaging. Currently, I believe we are only doing IBCs there, and even that is manufactured in your overseas plants. So are you looking to export your other products, the industrial packaging part of your products to U.S. markets?

Yes. I mean we can, but we will depreciate, Harsh, that our packaging products are voluminous, right? Many times, say, for example, one truck which is otherwise can take 15 tonnes can only take 300 drums, which will be about 2.4 tonnes. So it's specially transporting year. So beyond a point, you cannot export it because the freight becomes totally prohibitive. Even in India, we have 20 production sites because beyond 300 kilometers, it cannot be very economical to transport the packaging products. So therefore, the overseas market, we will gather from the local manufacturer here, right? The value-add businesses or the CNG services, et cetera, that we'll try and take it to the overseas market one way.

Okay. And just last question. So recently, there was a news that one of your competitors was blacklisted by the government. So do you think you will be benefiting from this? Or are you already seeing any benefits out of this?

Honestly, we don't want to build on the misery of our competitors. But the fact still remains, our oxygen cylinders are excellent, and they have their own merits. For example, much like in ways to clean, no rusting, no corrosion, all of those features. So we will be, in any case, be benefited with this new product and oxygen cylinder. But of course, if the major supplier for oxygen cylinder, the one that you're mentioning about, is blacklisted, obviously, there will be some urgent requirements coming in, and we will be ready to tap that.

The next question comes from the line of [indiscernible].

Okay. Thank you for organizing this Investor Day, first of all. It is very helpful for all of the investors here. And congratulations on your great numbers and outstanding feature that you're showing us. So first question is regarding the IBCs, right? So as you said -- rightly said, there is a lot of shift from China to India for chemical manufacturing world. Can you like give us some number like what would be the IBC contribution for this side of the business in the total revenue that you're forecasting of INR 5,000 crores or so? Is it possible?

Our present business for IBCs is close to -- it's about 10% of the total business. So it is -- but you can imagine, we would be having something like 70% or 80% of the market share in India, right? This process of shifting from China to India is a more recent phenomenon than we experienced in the last 4 to 6 months. But the indications that we are getting from our customers, both the Indian companies and also the multinational companies, is that they will be seeing a significant shift taking place because the customers now, and mostly customers from Europe and North America, they would like to buy their chemicals requirement from countries like India or Thailand or Indonesia or Malaysia, rather than going back to China. And [Foreign Language], if that comes true, where these countries have a mutual cooperation and will focus more buying from each of them rather than going to China, then I would like to think that business can multiply many fold.

And also curious about the LPG side of it. Like all the LPG cylinders are like steel or iron made, so what is the progress on that? Are you getting any insights from the industry to use this caskets that you have innovated in sort of the steel cylinders that we have? Any progress on that?

Yes. I can just give you a brief. We have been approaching OMCs for a long time, but I believe, I mean, they have their own priorities. But interesting thing is, one of this other NGOs have filed a PIL in Delhi High Court where they enumerated that in the last 10 years, there have been more than 50,000 people die because of the steel cylinder explosion for LPG, right? And they wanted -- the court directed that all marketing coverage should be directed to change over the composite cylinder, especially in the areas where these cylinder are used for public -- in public places or publicly -- public places or in the areas where fire brigade or other emergency services are not reachable. High court refused to intervene in the market -- in this matter, but have directed to OMCs that their petition could be taken as a representation and the government should come back within 4 months' time with their views as to how it can possibly be done. And after that, we have seen a certain movement for changing over to composite cylinders because there some tenders are in the process of being project. But just to give you an idea, the buying by OMCs for cylinder is about 50 million a year. In fact, 70 million as well in a particular year. We are talking about our capacity, only about 1.2 million and 100%. So you can imagine, we can also like do a changeover progressively rather than from one day to another if that will cause overcapacity.

[indiscernible] I will also answer to your second part of the question. We've been getting a good amount of responses from many of the CGD companies for 3D caskets as we are moving on to all these CGD companies who are banned to contract from government for distribution of [indiscernible]. They are putting up their infrastructure, and they are in the plans for buying 3D caskets. So we are in active discussions with many of these companies. We've started various models for 3D caskets also and initial auto supply have also started growing.

That's great, sir. One last request, sir, like as you're arranging this investor meet, is it possible for the transcripts to be submitted on the website. So that...

Five days from now, we will have it on the website.

[Operator Instructions] We have the next question from the line of Vishal Rampuria.

Does [ Indras ] receive transfer approval? The answer is -- yes and no. They have got the approval for their cylinders, right? For the assembly of the cascade. Yes, because they don't manufacture cylinders in India and the [ Indras ], they have to get it from Korea. They have to get it from Korea. So we have got the cylinders approval from PESO, but they still have to get the approval for the complete cascade. But incidentally, the import of composites is very expensive because of the import duty and approval process, et cetera, et cetera. So -- and then we are pitching our composite cylinders for the [ CGDs ] and other currencies on the grounds that we are part of the [indiscernible]. And I think the government directives are also very clear, high-tech products, which are available locally in India need to be supplied.

Thank you, Mr. Jain. Vishal, you can go ahead now.

On the entire story about CNG and other areas where you touched upon, so despite having such a bullish commentary over the market size and opportunity, why you guys have not factored any numbers in your forecast?

Because my investment bankers always warn me, promise less, deliver more, right? So I've kept it for myself so that I would excite you every year with some pleasant surprises. But you're right, absolutely. If we factor that in, the numbers can change significantly and more in terms of EBITDA percentage in ROCEs, something that you always love to hear. And by the way, when I'm talking about positive commentary, I'm not talking from anywhere else. I'm talking about this government policy document. They are all listed. If you want, I can actually scan that and have it put out on the site so that you can download it.

Sure. Sure. Sure. So one more question on this. So you said that the entire ROCE and ROE is all going to improve over the next, say, 4 to 5 years. So in the entire projection, what can go wrong? The last 2, 3 years have been quite challenging, so why you think that next 3, 4 years is going to be a massive improvement in your margins and also your ROCE and ROE?

Frankly, as I explained to you, our stakes are quite stable in terms of segments. So it's not that we are going to get affected if a particular segment would slow down. We are widespread in terms of our customer base. Again, we are not going to be hugely concerned if a particular customer or a company or industry goes down. So we have been able to mitigate -- or we have been mitigating some of those risks as a part of our business strategy. Besides India, we have overseas operations also. For some reason, if we in India decided to take a long holiday, right, that we did in 2014, that we still will be able to grow because that growth opportunities will come from our overseas operation. Besides that, I talked to you about my CNG cylinders and some oxygen cylinders, et cetera, but I have not factored them in. So that is my backup, which is available in case something has to slow down in our existing business. So I would like to think that what we have projected is quite attainable.

So one last question to ask you again on the CNG side because that is the entire story all about in today's presentation. So given the surge in the steel prices -- now steel rates are close to $1,000 or something like that. So given the surge in the steel prices, what will be the cost given differential between the steel and the composite cylinders?

The comparison, I've already mentioned to you that if you want to pay x amount of CNG from one place to another, you are required 2 steel cylinder cascade and 2 vehicles. Whereas, you can do the same by 1 type of cascade and 1 truck. So the capital cost, though my cascade price is almost about 2.5x of type 1 cylinder cascade, but in the overall analysis, the capital cost is comparable with each other. Whereas, the operating cost becomes a half.

Okay. But in case the entire CGD player has got a pipeline, in that case, they would not need this extra cascade, right?

Yes, you're right, absolutely. If you talk about pipeline -- but let me tell you the pipeline connection for the CNG gas station is very, very limited, number one. Number two, the government now wants to bring CNG to the doorsteps of the consumer. So you cannot have the pipeline going to the best depot or to the telecom towers of plants. There you will have to bring CNG to that place and that can be only done with the help of a cascade. Yes, in some areas, if you are in a pipeline, you would not require cascades. But you have seen, we have already considered 50% of what the business potential is in our internal calculations. You cannot have pipelines more than that at all. Even today, if you look at the existing gas -- safety gas stations, the pipeline connection is less than 20%, 22%.

What kind of feedback you're getting from the CGD players on this?

I can only tell you one thing that after we have got the PESO approval for type 4 composites in the cascade, there have been a few tenders which have been finalized, but none has gone to type 3, type 4, type 5 cascades. Either they are in whole or they are getting finalize, but we are actively participating and are being considered.

Okay. So one more thing again on this. So what is the raw material for this? And whether it is sourced locally or it is imported?

That's a very interesting question. You see, I told you that the cascade comprises of in-liner, which is the same material as polyethylene, the same one that we use for our industrial packaging. But glass fiber necessarily has to be imported. We import it from Japan or Korea. This is a restricted item, and you can only get this carbon fiber after a lot of due diligence that takes less because we can use this carbon fiber on making rockets on the side or even hand-held guns or rocket launchers. We just have to make sure that this carbon fiber does not fall in wrong hands.

Before we take the next question, I think there is one on the chat board, which from Suresh [ Paramesh ], asking, is there any innovative products in packaging coming up?

New product?

Yes, new products in packaging, innovative products.

We are coming out with what we call the flexi can where we would be using the polymer shield to pack liquid and powder products. I will -- very impressed at this. Can we just get this outside? Right. So the flexi cans -- can we -- but I'll tell you, that's is not a very significant product. It might give some INR 8 crores, INR 10 crores of business in a year. So it's not a game changer for us. But for industrial packages, we're asking worldwide, is there any major change that's taking place. The answer to that is, no. And normally, industrial packaging going to take several years to develop and get accepted by the customers. So we don't see anything in the next 8 or 10 years new coming up. This is the one item that we can see. So this is like a jerrycan, but a flexible one. So you can imagine, in a jerrycan, it can use x amount of plastic per meter of packaging product, it is 1/5 of the plastic use. So it is cost effective and reduces the best plastic to place.

I'll take the next question. It's a follow-on from the line of Pritesh from Lucky Investment.

Sir, I have 2 follow-ons. One, if you could share that tonnages -- how much tonnage did we sell on plastics in FY '21 over FY '20? And my second question is, a lot of the chemical companies did grow in India this year. One would have suspected with 50% of your sales being packaging in India, you shouldn't have seen such a big volume trend -- sorry, revenue trend. So if you could help us assess why there was a large double-digit revenue decline for us.

Why would decline took place, right?

Yes. Because see, chemicals in India grew. There was inflation in a lot of polymer pricing this year. The pipes industry did grow in India this year, yet we had a double-digit revenue decline.

Okay. Let me tell you, so far as the packaging business is concerned, the chemical companies -- I don't know, you must be having some data available with you...

You know what we will do is investigate the whole [ data ] also. From '21, '20 onwards, we are going to give you -- because we have certain things considering the number. So we are going to try to give them incentives in data quarter-on-quarter from this year onwards.

In terms of tonnages.

In terms of the tonnages.

I'm answering a different question now. What I was saying is that the chemical industries have been growing, it might be we see a decline in double digits. Frankly speaking, it is on both accounts. My information, maybe a little incorrect, we did not see that significant growth in value because we understand chemicals cannot be bracketed in one. There are certain basic chemicals which go into tankers or ISO tankers, et cetera, for export, and there are some fine chemical or value-add chemicals. Our packaging goes into fine and value-add chemicals, right? So we haven't seen that kind of growth in this segment, but of course, we are seeing -- after this -- in the current financial year, we have seen the growth already, which is getting factored in. And we are seeing now that we lead back to the levels of 2019, '20. So 2021 was a decline. And you can see most of the year went past where either our customers didn't have enough people to do the packaging and send the products out or we didn't have enough people to produce and supply to them. So that got impacted twofold.

In addition, most of the chemical companies have gone from the revenue growth is sheer volume growth because prices of chemical have increased substantially.

Right. So that could be even, but we had seen some growth...

Not really. Only -- most of the prices of segments that we cater to are not doing good. They are -- with COVID, they approximately...

Heavily impacted.

And then the headwinds are very, very strong on the economy looking out and much of the [indiscernible].

Good thing there is an acquisition -- there is consolidation that is taking place in the chemical industry. And also, we are seeing some of these international companies are expanding their operations in India. All of that is an indicator that the growth will be quite substantial in the coming days. And as a leading industrial banking company in the country, we should be benefited. I remember you mentioned about pipes also.

Yes, sir. So pipe industry did grew. There was a polymer inflation overall that polymer prices have gone up in the second half of the year.

No, I beg to disagree. The pipe business does not grow at all because the government -- state government and the central government didn't have enough resources to be able to carry out the purchases. Most of the pipes are bought -- or projects that are commenced by state governments, they didn't have any money to even pay through their contractors. And we did not want to supply to the contractors when they were not having enough funds to be able to pay. Some of the central government projects continued, but also because of the labor not being available, the laying of pipe was not taking place. So they placed the orders, but they did not take the deliveries.

And what is the significance of chemical industry in our packaging business? So what contribution that industry would have to your packaging business?

The chemical business.

The chemical industry, yes. Should it be more than 50%, 60%?

I'll just give it to you. Right. So the specialty chemical is about 31%; FMCGs, 29%; Construction chemicals, 13%, which was roughly 0; paint is 12%; pharmaceutical, 6%; food products, 5%; new polymer packages is only...

Sir, a bit slow. So chemicals is 31%. FMCG is 29%.

29%.

Then construction chemical is 13%. Then what you mentioned was -- pharma was 5%, right?

6%.

6%. Anything else that I missed out?

Food products, 5%.

Food is 5%. So this explains 31%, 60%, 73%, 80%, 85%. And anything else that's major?

Paint is 12%.

Paint, okay. Yes, this explains also.

And lubricating oils are about 4%.

Okay. Lubes are 4%. Okay. So sir, when you look at this mix also. So FMCG, pharma, food, paint and lube has grown. In our calculation, even chemicals has grown by volume. What matters for you is volume. Yet, your packaging business has seen decline. So any comment there?

The packaging business declined? Yes, we've seen a decline in packaging of about 12%. Sorry?

Too much lockdown period.

The lockdown period, we do not have people to carry out any manufacturing.

Okay. I'll take this separately, sir.

Yes, you can get it whenever.

[Operator Instructions]

Okay. But in any case, if something is left out, we are always available. We can do one-on-one or answer those questions if there's -- in a meeting.

A gentleman by the name of [ Nilesh Haiger ].

This is Nilesh [ Haiger ]. I'm an investor, and I have been with Time Technoplast for a couple of years. In the shareholding pattern, you find HDFC and NT Asian owning a substantial stake in the company. So are you having regular investor meets with these investors? NT Asian, in fact, holds quite a bit of a 15% stake in the company. And have they asked for any Board representation? Or why are they having such a large stake in this business?

Well, that's not a question for me to answer.

Why they invested...

But maybe because they like the story of the company. Actually, the assets we are holding went up -- in 2017, we had [indiscernible]. HDFC has been an investor for a fairly long time, but we have a very regular interaction with them. Not physically, but otherwise. We used to go and meet them. But otherwise, on the phone. And also, we have a separate video every time [indiscernible].

So they are not interested in being a part of the Board?

They haven't asked us.

No, because they have many companies they have investment more than in our company. They have investment of 9%. I think such type of our company, they might have a very big large fund.

No, no, they have only 3 investments in India, and one is the Time Technoplast. The other 2 are again, SLPropak and Hotamaki, which are both in packaging -- in different kinds of packaging. They don't invest in any other companies in India. They have only 3 investments in India, and your Time Technoplast being one of the largest.

Now that's quite likely, but like I said, that has never been discussed. So I would say about the Board signal.

You're open to giving them more equity as well, if funds are required for additional...

That is the question we'll ask -- we will answer to the investor because they will not like us discussing that in a public forum.

Given there are no further questions, I'm going to hand it back to Mr. Jain for his closing comments. Over to you, Mr. Jain.

All right. Thank you, friends, for finding time for us to talk to each other. We enjoyed bringing in our presentation to you. And I thank you also for your indulgence, which is represented by very interesting questions have been asked. I suppose we have been able to answer most of them, but if something is left out, please feel free to write to us, and we'll be very happy to answer them. Like I said, we will have regular interaction, and also, we will let this COVID subside. We will also look at the possibility of the factory visit so that you can see some of these changes, cylinder and cascades, et cetera, that we talk about and the potential that exists. Thank you very much for your participation and support of the company. We look forward to exciting you in the future. Thank you.

Thank you very much.

Thank you everyone from the management, really appreciate your time and patience in answering the questions. And thank you so much, investors, for patiently hearing. In case you need anything else, you can please write to us. And as mentioned, the transcript will also be put up on the website within 5 days. And also, you can look at it after 5 days, and it will be available on the website. Thank you so much. Stay safe, and have a good evening.

Yes. Thank you.