Time Technoplast Limited (TIMETECHNO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Time Technoplast Limited Q2 FY '22 Earnings Conference Call hosted by PhillipCapital India Private Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital India Private Limited. Thank you, and over to you sir.

Good afternoon, and very warm welcome to everyone. Thank you for being on the call of Time Technoplast Limited. We are happy to have management with us here today for Q and answer session with the investment community. Management is represented by Mr. Anil Jain, Managing Director and CEO; Mr. Bharat Vageria, Director Finance; Mr. Sandip Modi, Senior Vice President, Accounts and Corporate Planning. Before we start with the question-and-answer session, we'll have some opening remarks from the management. Over to you, sir.

Thank you, Vikram. Good afternoon to all the attendees. I have with me Mr. Bharat Vageria, Mr. Sandip Modi, who have been already introduced to you. We are here essentially to talk about our results for Q2 and also H1 FY '22 and outlook for the rest of the year. The results are already announced, but I will just walk you through some of the key financials and operational highlights. Before I do that, I need to apologize to all of you for missing the last investors meet due to some sudden urgent engagement for our CNG cylinders. So I apologize for not being there last time. And that even today, when I'm speaking to you there is a big delegation from MGNL visiting our factory who wanted me also to come, and they have a fairly large requirement of cascades going forward. But I said this time around, I must really talk to my investors. Overall recovery has been quicker after the COVID-19 second wave. The company has seen significant improvement in the performance in the second quarter and the first half of FY '22 despite an increase in price of key raw materials and logistic costs, which will get reflected in our numbers as I explained. The key numbers are, on a consolidated basis in Q2 FY '22, there have been a significant improvement in performance with revenue growth of 21% as compared to previous quarter and as compared to Q1 FY '22 -- sorry, and 23% as compared to corresponding quarter last year. During the Q2 FY '22, corresponding on a consolidated basis, the net sales stood at INR 915 crores as against INR 744 crores. EBITDA reached INR 131 crores as against INR 93 crores, and the profit after tax has been INR 50 crores as against INR 24 crores. So in terms of percentage, the net sale increased by 23%, volume increased 16%, EBITDA increased 42% and PAT increased 106%. The EBITDA margins were 14.34% as against 12.44%, increased by 190 basis points. That is essentially because we have come out of the ill effects of EBITDA -- sorry, the COVID. The net profit margin also increased by 220 basis points, so that's about 5.5% as compared to 3.3% during the previous period. During H1 FY '22 on a consolidated basis, the net sale is at INR 1,670 crores as against INR 1,220 crores. EBITDA at INR 232 crores as against INR 147 crores and profit after tax, INR 79 crores as against INR 13 crores. In terms of percentage growth, net sales grew 37%, all inventories 32%, EBITDA by 58% and PAT increased by 517%, that is basically because of a smaller base last year, which was affected by COVID. In H1 FY '22, EBITDA margin was 13.90% as against 12.03%, increased by 187 basis points. And net profit margin also increased by 367 basis points, that is about [ indiscernible] as compared to 1.05%. Again, as the larger volume and the larger revenue, you'll see that the overheads have been diluted on a larger number. Therefore, the EBITDA increased and also the net profit improved as our EBITDA margins went up. Share of business, established products versus value-added products, value-added products grew by 35% in H1 FY '22 as compared to H1 FY 2021, while established products grew at 37%. The share of value-added products is 21% of the total sale in H1 FY '22 as against 22% in H1 FY '22. So we always welcome when value-added growth -- value-added product, the growth is higher. Share of Indian overseas business, which has always been hovering around 70-30 or thereabout. In H1 FY '22, which is 65% and 35% as against 70% and 30% in FY '21. So it is overseas business 35% as against 30%, but the domestic business hasn't grown at the same pace. EBITDA margin in India and overseas are 13.94% and 13.83% Historically, also, they have been more or less at the same level with the difference of 1.4% here and there. Total debt as of 30 September 2021 stood at INR 832 crores. Net debt at INR 735 crores correspondingly as against INR 817 crores as on 30th of September. Total CapEx incurred during H1 FY '22 was INR 73 crores, which included INR 40 crores towards the capacity expansion, reengineering and automation. And for the established products and about INR 33 crores towards value-added products, including CNG cylinders, which are seeing a remarkable growth in terms of order book. I would now like to open the floor for questions so that we could answer the specific queries, please. Thank you very much for your listening.

[Operator Instructions] The first question is from the line of Nakshita Mehta from Credent AMC.

First of all, congratulations on a good set of numbers. I just wanted to ask about -- a question about the inventories. I can see the inventories are consistently high. So is there any particular reason or...

Yes. Inventory buildup has happened essentially in our PE pipe business as we got the orders and had the urgent requirement of the customers, we need those pipes for them. But suddenly, in several states, the rains continued far beyond what they had -- our customers had anticipated and they asked us to hold the dispatches because if you sell the pipes -- or send the pipes to the site during monsoon, then either they get swept away or they can cause with the mud going inside of that. So that has been one major reason for inventory buildup.

Okay. So you have bookings for these products? Or is it...

Sorry, I couldn't get it Nakshita.

Do you still have bookings for these products...

Yes. We already have the orders and we actually manufactured them.

Okay. Okay. You still do, right?

And then the cost of production has also gone up because the raw material prices went up. Therefore, the value of inventory also gone up because of that reason. So it's a combined effect of both.

Okay. Okay. Another question is on the CapEx. I can also see there is a good amount of CapEx that has been happening. Can you throw some light on -- are we planning for a capacity expansion or what is it?

Nakshita, line wasn't very good. Which particular segment you said -- talked about?

CapEx, capital expenditure.

Yes, CapEx. Okay. I'll explain it to you. We have CapEx divided into 2 parts. One is for maintenance, upkeep, brownfield and internal capacity expansion, et cetera, and the maintenance and automation. So that is one part, which is recurring every year. And then there's CapEx, which is for capacity expansion in the areas where we might find -- may expect larger order. So the CapEx actually -- most of the CapEx is happening on maintenance, et cetera, but there is a certain CapEx which we have done for our new product specialty cascades as we are now flooded with orders, which is a nice thing to have, and therefore, we have to prepare them, though there will be a time gap as we start getting the plant and equipment, they come with a time gap, but we had to take steps so that we would be able to supply those cascades and cylinders on time.

Right. Right. Right. Okay. And so I can also -- my another question is on sales receivables. So I can see there is a huge buildup of trade receivables as well. So can I attribute that to, again, the order problem that you said?

Well, that receivables have been a little bit of a situation as special again in pipes. The state government -- our customers supply the material to the state governments. And state governments keep complaining to them that they haven't received their share of GST from the central government. So they have a policy of funds. Therefore, the payment got a little delayed from their side. But now -- it is a very temporary phenomenon. We see it every year. And especially when the new order is not being executed, then they have a tendency to hold that for a little longer. But as the supplies have commenced, I'm sure that will get regularized. But let me assure all our investors that we are virtually nil bad receivables. In fact, with the other day, we were doing the calculations, it is inside of 0.001% of the total sale until now.

It is very good, sir. It is nice. Okay. So last question is on -- there is an increasing adoption of EV, electric vehicle and all of that. So what do you think in coming years will be the impact on this CNG and a subsequent impact on your business?

Let me tell you that we are fully aware and are keeping a close watch on what's going to happen on electrical vehicles. First of all, government has a counterplan for CNG. They have contracted certain areas to the private city gas distributors and the schedule has been given. So from 1,400, 1,500 gas stations there, they are going to go up to 10,000 gas stations. So that is where we will require a lot of cascades. And as the CNG becomes available, then we would expect that a lot of these car manufacturers will go for CNG vehicles because the CNG footprint will increase substantially. Let me just give you another comparison. One is these are the electrical. Let me be honest with you, the electrical vehicle cost is going to be much, much higher than the CNG vehicles. So -- and then the cost savings will certainly be there in operating cost, but capital cost goes up. And up till now, if you leave aside, there's some people in USA, lithium-ion batteries have not been able to prove themselves in India, especially on automobiles. Again, the lithium-ion batteries need to come from China, where the prices are going up every day. So I don't know really how long electrical vehicles are sustainable. Besides for electrical vehicles, you need a very large infrastructure so that you could have a quick charging or a swap system of the batteries. I would like to think that it will take a little longer. But let me interestingly tell you, the more relevant comparison will be with hydrogen vehicles. Hyundai and another company have taken permission from PESO that they would like to come with hydrogen vehicles. The operating cost of hydrogen vehicles will be much less than even electrical vehicles. And secondly, it will be easier for having hydrogen available in different locations. That is a replica of how CNG vehicles are operated. I drove a vehicle, which is running on hydrogen with fuel cells. Believe you me, it is a pleasure to drive such a vehicle. But -- and we are now knowing that reliance and some other people have taken a very aggressive approach towards hydrogen. But hydrogen also will require composite cylinder. The difference is that a CNG composite cylinder has to have a bus pressure of 470 bar whereas hydrogen cylinder will have a bus pressure of 1,250 to 1,300 bar. So steel cylinders are completely no, no for hydrogen. We have started working for hydrogen cylinders also as and when the demand comes up. We have been able to go up to the bus pressure of an extra 1,000 bar, but to go to 1,200 or 1,300 bar is not really going to be a problem. So if switchover takes place, let us assume one day from CNG to hydrogen, then we are still in good business.

[Operator Instructions] The next question is from the line of Nilesh Shah from Arrow Investments.

Hello, can you hear me? Hello?

Yes, Nilesh Ji, we can give hear you clearly.

Congratulations Anil Ji, Bharat bhai and the team of Time Technoplast for a great set of numbers. My first question is on the LPG cylinders. We had received an order from [ Indian Oil ] and I just want to know in subsequent order book what is the position after the first 30,000 cylinders. Whether they have been delivered? Or is it an ongoing process?

Okay. Between my investors and I, I am willing to share some important information. After the first order within a month, we have received another order from Indian Oil Corporation, which is under execution now. I believe as they launched these composite cylinders in 30 different locations in the country, the response had been very warm. And therefore, they had to place orders for another, I think, 30,000 or something, which is now being executed. But that's not exciting. The exciting thing is that we are working very closely with [ them ] for preparation of tender specification for 14.7 lakh cylinders. So even if you get half of it, that will be close to about 720,000 or 725,000 cylinders. And we are told that inquiry would be out by end of this month. And since we have already supplied cylinders successfully in the past and they've been received well with the customers, we see no reason as to why we would not be able to get a significant part of that inquiry. Now that is only Indian Oil Corporation. Let's not forget there is Bharat Petroleum, and also Hindustan Petroleum have also bought some cylinders in the past, composites cylinders. And they are very encouraged by the data that they are receiving from Indian Oil Corporation, their cousin. So I wouldn't be surprised [indiscernible]. But let me tell you, it's not just the liking for the composite cylinder, there is another factor which plays the role. In the former time, [ steel ] cylinders used to be for INR 1,400 and we were selling composite cylinder about INR 2,200. So there was a significant price difference between both. Though all these companies acknowledge that the composite cylinders had great advantages over steel cylinders, but because of the price differences they were not willing to go aggressively for them. In the meantime, as the steel prices have gone up, steel cylinder prices have gone from INR 1,400 to about INR 2,000, whereas composite peers are more or less at the same level, plus minus. But for the difference in the price, from 40% has come down to like 10% to 15%. And with all the advantages the composite cylinders have, the lightweight, explosion-proof, no rusting, no corrosion, et cetera, et cetera, I think it is only logical that the oil companies will now look at switching from steel cylinders to composite. So exactly we don't even have to worry about the new -- rollout of the new connections because they have a total population of about 36 crore cylinders countrywide. And normally the life of the cylinders is 10 years but they sometimes go to 15. So you always have a replacement demand every year, which earlier were being replaced by steel cylinder but now they are going to look at composite. So most of these composite will go as a replacement to the steel cylinders.

Perfect. The second query is basically on, again, on the LPG part itself. There have been exact production that we have 14 million cylinders per annum. We are exporting to 52 countries worldwide. So that is still going on? And is there an incremental revenue that is coming in from those areas, those markets?

You have touched my raw nerve because we are also contemplating that if the oil companies wake up, it looks like as if they are, right, we will have to calibrate our exports to different countries because we still have fairly large orders from some of the nearby countries, in Africa and Caribbeans. So we right now have a capacity of 1.2 million, which -- that's the nameplate capacity. But in real production, this is closer to about 1 million. And if our friends, the OMCs take away, let us say, 750,000 or 800,000 cylinders out of that one, I will be left with little for the purpose of export. And I have a good, solid order booking, which of course we have been cautious about in anticipation of this local order. We'll have to -- we will have a difficult time in kind of matching our preferences with the capacity.

All right. So that's good news in a way.

Yes, that's a good problem to have.

Yes, that's a good news to hear. And last question, sir, is on this battery division and the molded plastic furniture division, we were looking for exiting these businesses. And I think it's, again, a work in progress. And I just want to know any development on that side.

I would like to take your advice because we have got -- we have started getting orders from Tesla.

You have started getting orders from Tesla for batteries?

The batteries, yes.

Wow, that is -- there's no announcement on that front anywhere. So that's very good to hear and very...

Yes, and they promised that -- we have just started supplying and they are saying that they will be giving significant order. So there are 2 things. Of course, we still are stuck on letting this business go. But with these order books with companies like Tesla, et cetera, I think the valuation will be more to our liking. So that is still a work in progress. But in the meantime, we have not given up because it is a good business for us. And some of these guys like Tesla and other people coming in, I think we can pick and choose on the prospective buyers.

Perfect. That's actually very good news again. So the NED Energy division, and there was a merger that was supposed to take place between 2 companies, one in Bangalore and the NED at Hyderabad. Is that…

We wanted to reduce the overheads, et cetera, so that part has been done already. And it makes a little more attractive for a prospective buyer because our offering from both the locations put together is quite large. And our Bangalore unit had been the blue-eyed boys of railways. And suddenly, railways has gone in for modernization. I'm not talking about railway stations, which Prime Minister is inaugurating as of this time. But even in terms of their coaches and operating parts, which require a lot of batteries, which our Bangalore unit specializes in. So I think this is a good advantage and when we make an offering, it will make it attractive for prospective buyers.

But we are still looking at exiting these businesses? We are still evaluating an exit?

We will exit from the business sooner or later.

[Operator Instructions] The next question is from the line of [ Suresh Varan ], individual investor.

Okay. Sir, how many players -- regarding HDPE, DWC Pipes, how many players are in the Indian market? And what is our ranking? And is there any export opportunities for these pipes? DWC pipes and HDPE pipes.

Somehow the line is not again good. But which segment are you talking about the competition, you're talking about composite cylinders?

Composite cylinders. Yes, yes.

Okay. Good.

No. HDPE and DWC pipes.

DWC pipe. All right. Okay. So let me first talk about the composite cylinders type 4. We have no local manufacturer at all. And I'm sure, by this time, you know that the Government of India has come up with a new policy for Atmanirbhar Bharat, whereby those companies who have more than 50% of local value addition, they are given 20% price preference in the purchases by government companies. And that includes the CGT companies. So therefore, we will have that advantage until somebody else comes into the country. For LPG cylinders, we have us and, of course, Supreme Cylinders. They are the one. It is good in a way. There is another one because for government purchases, you need to have at least 2 tenders; otherwise, they cancel the tender. So I'm glad that they are there around us. As far as DWC pipes are concerned, I'm afraid they have still not picked up as much as we had expected it to because the government of India is spending more of money on -- for drinking water supply as they call it JLL, I don't know what is the full expansion of that one. But in short, they call it Jal -- Nal Se Jal. So there is a lot of expansion in that area for supply of fresh or drinking water. That's where our LDPE pipes are going. But we are now told that the government is aggressively going to go for sewage and sewage treatment plants for which DWC pipes will be required. And we still remain very optimistic that product will --but insofar as the manufacturer for those products are concerned, I think we have about 1 in Calcutta, 1 in Jaipur, maybe about 4 of them. But let me tell you, when the requirement comes up, any capacity will be less.

Okay, sir. Sir, just I want your opinion on this one. Actually I attended Everest Kanto con call, in Q3 '21. What they're mentioning, composite cylinder is not adoptable in India. They are telling it's only adopted in the U.S. and even now Europe it's not adopted. And also they are telling this technology is easy to manufacture. Any time they can adopt the technology in their factory. So I need your opinion, sir.

What do you expect them to say? I mean we are pushing them out of the market. Some of the cascades, which were type 1, they make type 1 cylinders, we are able to convert them into type 4. So they have every reason to say what they did. Let me tell you, even a common man can understand if you can carry twice the CNG in every trip, right, and -- so why won't -- the operating cost getting reduced to half. Of course, the capital cost is little hit, but that gets [ covered ] over a period of 20 years. I think it cannot be factually borne but the fact that it is only in U.S. and it's not in Europe, that is not true. And Europe has several areas where CNG cascades are being used. And number three, let me be honest with you, if the technology was as simple as one would like to think, you would already see quite a few people jumping into the market as they start losing business to us. As we speak, MGNL is going to be placing order for 100 cascades for type 4 cylinders. And the tender is only for type 4, even type [indiscernible] is not allowed to participate in that one.

Okay, sir. Sir, any update on the oxygen cylinder actually?

Well, we are ready with the cylinders of this cylinder, but in the meantime scarcity in the market has gone away. So if we have a product available, we will be now looking for an alternate use, especially for fire brigade and Navy. So that is the 2 areas where we have [indiscernible] but the sizes that they require are slightly different. So we will be preparing the samples for them and probably approval will take a little bit quite longer. Incidentally, when you talked about type 4 composites, I can quote a very senior officer in PESO who said that the future of CNG is type 4 cascades and type 4 cylinders, and they are not going anywhere for the next 25 years.

Okay, sir. Sir, actually, today, in Mr. Nitin Gadkari's interview, he told in 2 years' time the petrol car price and electric car price will be same. So do you agree with that on sir, actually, is there any -- what is your opinion, sir?

Mr. Nitin Gadkari is a very good friend. Actually, I do meet him often. But let me tell you, you can see a little smile on his face when he says that. He is a very straightforward person though admittedly. Of course, this is what they would like to happen, but I mean, being an electrical engineer who has worked on integral vehicles for some time, I can promise you, it will take a lot longer than what has been promised with regard to the prices being that the same. Please tell me today, our policymaker in the country are slightly confused. First, they have talked about methanol being added to the fuel so that the fuel prices could come down. And a lot of people invested in the methanol hybrid vehicles. Then they came out with the CNG, and we are working extremely hard, and we have brought it to a point where it can take off. Then the government is also talking about LNG for large trucks. I don't know whether you heard, they have already a plan, the copy of which is available with me, which says that they will be doing LNG for large vehicles. So that's a welcome thing. And I quite agree LNG has been gathering momentum. For electrical vehicles, if you were doing it for energy independence, then we tell you electrical vehicles don't make sense. Because lithium-ion batteries are coming and will continue to come from China as all the mines on lithium, especially in Australia, are owned by Chinese people and they move the price based on demand. So I would like to think because of the energy independence point of view and also because of the cost and imports from China, electrical vehicles can wait for a while.

Okay, sir. Sir, my next question is regarding the hydrogen cylinder. Actually, you told 1,250 bar...

I just forgot to tell you that the policymakers are again confused because even before they could talk about electrical cars, they've started talking about hydrogen initiatives. And let me tell you that is the best thing that can happen to this country. Because normally, you have hydrogen vehicle at the operating pressure of 400 bar and therefore, the bus pressure of the cylinder has to be 1,200 bar. But for 1,200 bar bus pressure a steel cylinder weight will be so much, you can't even move the vehicle. But it has to be a composite cylinder and that too can withstand 1,250 bar. We have crossed to the other side of 1,000 bar and God willing, by end of this year, we should be close to about 1,200 bar. We are closely in touch with the Reliance. As you know, we have a 2-way relationship with Reliance. We buy a lot of polymers from them. And we are -- we have told them that we have the capabilities to do hydrogen cylinders. So if we switch over from LNG or CNG or any other alternate fuel to hydrogen, we wouldn't have to worry about the same capacity can be used for making hydrogen cylinders.

Okay, sir. Sir, the hydrogen cylinder, is there anywhere adopted substantially in the world now, right now?

Sure. I mean I have seen vehicles with the hydrogen fuel in U.S.A. I think there's nothing but electrical vehicle. What you do is you generate electricity by way of a fuel cell, fuel cell uses hydrogen and air. And therefore, it generates energy and the bioproduct is distilled water. And that energy -- electrical energy is used to run the car as an electrical car.

[Operator Instructions] The next question is from the line of Mahendra Jain from Way2Wealth. [Foreign Language]

On new segment or any new innovation we are planning like apart from CNG, as our top line is saturated around INR 100 crores. And I don't know the raw material prices right now, but seeing -- looking at the metal pricing and all these things, so do we expect in 2 years like top line to grow by 30%, 40%?

Mahendra Ji, let me give you a macro situation. Right. Small composite cylinders are a replacement of metal cylinders. Metal cylinders are called type 1 and composite printers are type 4 cylinders. So steel prices being what they are, I suspect that the steel prices will go up, even in the future. As you know, China does not have energy. They have no power, electricity available. All steel plants have been closed down there. So there is a huge capacity that has been taken off the market. Secondly, the steel producer was USA. USA has announced the infrastructure expenditure of almost $3 trillion their infrastructure is very old. And a lot of steel is going to go into making bridges and roads, et cetera, in USA. So therefore, no matter what happens, the steel prices are going to stay up. People who did not switch over to composites in the past because they still -- the price between steel and the composite is quite large. They are now rethinking whether they should go back to composites. So I'm confident that the advantages associated with composites are so many that product will keep replacing metal in high-technology areas. Because you reduce the rate by 80%, they're the explosion proof. And they also have a long useful life, and there is no corrosion, no rusting. So I see no reason why composites will not be the material of future. As we have started seeing, composites are replacing metal in automobiles in a big way to make it lightweight. And so long as the concerns for the pollution remain and which I believe will remain because everybody seems to have signed on Paris agreement whereby you have to bring down your emission levels to the level of 2005 -- year 2005. Now China had to close down a lot of their thermal power plants because of the same reason. Light weighting of the vehicle is going to be the priority going forward, and that can only be done by composites, which has the strength of steel and 80% less weight.

I agree with you. That's why I'm asking are we are going to focus totally on automobile or any new opportunities into these price rise of steel and scarcity of steel, are we planning any new innovation? Or are we are going to focus totally on automobile?

Well, say, to be honest with you, we have a fairly large product portfolio in composites. Like I said, we have LPG cylinders, CNG leader for cascade, CNG cylinder for onboard application, also for oxygen, right? So we have worked on that. There are several other products, which can be made out of composites, but we will go to that a bit later as we have done justice to what we have created so far. But if you want to know what are the other applications, let me tell you, armaments, all these arms, which are using steel can be converted into composites. So your shoulder-held rocket propeller is made out of composites. Your -- most part of your fighter plane, they have composites. And we are now looking at product called exoskeleton. For example, third arm and some other devices whereby it can help people do their job a lot easier, especially for the Army in high-altitude areas. So those are the kind of things that are the future of composites. And as this industry develops. I'm sure a lot of new avenues will open up, and it will be there.

Any explanation on inventory gain this time, in this quarter like?

Any?

Inventory gain part of profit, what you sold, there is an inventory gain like...

No, not much because we carry the inventory of 80 to 90 days. But it's -- based on that we have also the all contracts we have to serve that. So therefore, the EBITDA margin in the range of 13.5% to 14.5% we have seen. Yes. No, I said increase in composite, is raw material gain [indiscernible]

But I tell you, interestingly, we are expecting some additional capacity for polymers to come in India. As Bharat will tell you that Mittals have come -- are coming up with a fairly large plant. And they will be making the grades that we use for manufacture. So probably, advantage would be that if you are buying it locally and not importing, then you don't have to carry a very large inventory.

Currently, [Foreign Language], what happened with too much imports. We have almost 60%. We have to import the material because local manufacturers are note there. And you said that currently, the container problem is coming, we have to keep the inventory because of the specialized product but especially large [indiscernible] where the new manufacturers as Mr. Jain has said, [indiscernible] coming but this time, I think, next year, they will have a ready production. So I can say in the next, I can say 12 months or 18 months, definitely, some inventory levels will go down as we use our larger production, we have a large segment in the large [indiscernible]. I think that we will come in the next 12 to 18 months' time when the production is stabilized by [indiscernible].

Then is our projection from the later working capital in the future is based on these or advanced payment...

You have seen in my last presentation of August, when investor presentation was also done and analysis also. We are coming back to the inventory, net working capital cycle time of 85 to 90 days, which currently has increased these levels because of import containers problem, some supply situation problem. So I think by '25 definitely, we have presented in that thing, in the last analyst day revenue-wise also, we have said that we should reach to around INR 5,000 crores and net working cycle time will be still around between then improvement and will be net of 85 days.

Mahendra bhai, I'm sure you know these days that the ocean freight has gone up 5x, and the availability of shipping container is so difficult and to get material from overseas on time is a logistic nightmare. So I think gradually more and more dependence would be there on local production. So we are encouraging local polymer suppliers to adopt the grades that we use, we need for our high-tech products. And hopefully, they will listen to us, yes. Thank you, Mahendra bhai. Thank you for your questions.

[Operator Instructions] The next question is from the line [ Hemal ], individual investor.

I have 2 questions, sir. One, I just -- since several quarters since 2019, have been observing that in our India's capacity utilization is close to 67%, 70%. I just wanted to understand if you make so many different products, which is the -- like what is the range generally like in terms of certain products? What is the cause of this being sub-70% in India in our capacity utilization? What product is -- is it our regular product or some other product that is leading to this lower use of capacity?

Low use of capacity as you're expecting. First of all, you cannot have capacity like more than 80% in our kind of products because we are just-in-time delivery situation with the customer. So you don't want to have a situation where you're already 80% and then something happens to the plant, and then you start defaulting on the deliveries, number one. Number two, this is -- when we talk about the capacity, there's the nameplate capacity. But there is some idle capacity, which is part of our process. So for example, I'm making on the same machine and mold 200-liter drum, but next order is for 150 liters. So I have to stop the machine, take the mold out, put another mold in and start up, that could be about 24 hours. Now that capacity is not being utilized. So eventually, when I calculate my capacity utilization, that shows a negative effect on the capacity utilization. But I might turn around and say, hey, I'm using more or less my entire capacity. Secondly, the power outages. Every time I have a power outage, I have to wait for at least 10 hours for the machine to restart because it has to come to a certain temperature and stabilize. Now most places, they say, oh, we have got surplus power and there are no outages, but there are outages because of some circuit breaker tripping at some place or some wires snapping at some other place. So every interaction for us is not just the 5 minutes interruption. That is because we have to reset the machine and then [indiscernible] stabilize. So probably, that is the reason why you don't expect our capacity utilization to be 80% or 85% above. And the moment we see the capacity utilization in that, you'll see that we have got expansion on brownfield that CapEx. So we add another machine so that we don't run into the situation.

I See. So is it a fair assumption that we should -- like 72%, 75% is a number that we aspire as in capacity utilization. Like is that -- is there a number in your mind where you...

I would like to -- I have to set a difficult target for my people. So I expect it to be 80% but we are still less than that. That is mostly because of the change of molds and the power tripping.

And just wanted to -- one final question because you mentioned about -- I mean since the past couple of days, you are hearing that even though you're correct due to climate conditions, China may have reduced the steel production, but over the past couple of days, we're hearing that they are again -- because there are a lot of recyclable steel for the recycle plants, which are electric furnace base, they are all coming back and steel prices are like declining in China. But do you see this as a -- my question is not on that, but my question is broader. If the risk is that the steel prices shift back and do in the next quarter or 2 or later start shifting downward, do you see impact on any of your LPG cylinders or composite cylinder business?

No, that is not quite possible. Once the company has switched over from metal to composite cylinder, it is very, very difficult for them to go back because of the customers preference. Okay, number one. Number two, you asked a general question about the price of steel and how do we look at it in future. You see the problem of China closing down their plant is energy. 70% of their energy they make out of coal. All their coal mines are flooded and they have a difficult relationship with Australia. So the coal prices from $110 a metric tonne have gone up to $210, $220. And I don't see the coal prices coming down. That is the largest -- besides iron ore, that is the largest cost consequent for them. If the pollution norms are going to remain the same, I would like to think that the steel prices will be up because it is one of the large energy guzzlers. But you will also see simultaneously countries going for nuclear power and alternate power. But that is not something which comes from one day to another. So if you ask me for the next 3 to 5 years, I don't expect a steep decline in the price of steel. Unless, of course, right now, what we are seeing in China, the automobile production has come down dramatically. So even if they are producing less steel, they still have surplus capacity because they do not have chips for electrical vehicles -- sorry, the vehicles, right? So they have a long waiting for the vehicles. And therefore, the steel is not being used there. So we think [indiscernible] production, they still find that there is steel to export and the prices have come down a little bit. But I would like to think it is temporary. But again, talking about the impact on our business, no, I don't see that happening anytime.

The next question is from the line of Nilesh Shah from Arrow Investments.

Anil Ji, [Foreign Language] Just one more small thing. Can you give us any forward-looking guidance for the rest of the year, for the next 6 months? Will we beat our levels of turnover and...

Yes, I think for his notes from the last conference I said, it will be at pre-COVID level. And I confirm that, that is the direction in which we are going.

All right. So we are looking at profitability of around INR 180 crores to INR 190 crores for the year?

[indiscernible] exact amount, but you are right. I think it will be around that. I know Nilesh ji that overall pre-COVID level, we know the business was around INR 3,600 crores. So I think you're right. But let's come to know the good time in the period ahead. We will try our best to get that one.

And I'm sure we will achieve it...

Okay. I think we have finished the questions. The moderator may take 1 or 2 questions if they're coming. Otherwise, we can close the call.

Sir, this was the last question. You can go ahead with your closing remarks.

Okay. I know everybody is gone, but I thank all the investors who took the trouble of coming on to the call and asking questions. We are grateful to them for their support and for their understanding of our business. We are trying very hard to take the company out of the COVID situation and reach its pre-COVID levels. We can't thank them enough for their confidence in the management of the company. Thank you so very much.

Thank you very much. On behalf of PhillipCapital India Private Limited, we conclude today's conference. Thank you for joining. You may now disconnect your lines.