Time Technoplast Limited (TIMETECHNO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Time Technoplast Limited Q3 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 expectations of the company as on the date of this call. These statements are not 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 now hand the conference over to Mr. Vikram Vilas Suryavanshi from PhillipCapital India Private Limited. Thank you, and over to you, sir.

Thank you, Vivian. Good afternoon, and very warm welcome to everyone. Thank you for being on the call of Time Technoplast Limited. We are happy to have the management with us here today for question-and-answer session with investment community. Management is represented by Mr. Sanjay Kulkarni, Chairman and Independent Director; Mr. Bharat Vageria, Managing Director; Mr. Raghupathy Thyagarajan, Whole-Time Director; Mr. Sandip Modi, Senior Vice President, Accounts and Corporate Planning; Mr. Hemant Soni, Head Legal. Before we start the question-and-answer session, we'll have some opening comments from the management. Over to you, Mr. Sanjaya Kulkarni. Sir?

Thank you, Vikram. Good afternoon to all of you. I have with me Bharat Vageria, who is the Managing Director of the company; Raghupathy Thyagarajan, Whole-Time Director; Sandip Modi, who is Senior VP, Accounts and Corporate Planning; and Hemant Soni, Head of Legal. It is with deep sadness in a heavy heart, we inform you about the sudden demise of Mr. Anil Jain, who is the Co-Founder and Managing Director of the company on the 6th of February 2022, while he was on his way to the U.S. for a business trip. Mr. Jain played a big role in the growth trajectory of Time Technoplast Limited. He was a promoter Director, and the company has immensely benefited from his vision and leadership. The Board met on Sunday, 6th February immediately after the news of his death and immediately appointed Mr. Bharat Vageria as the Managing Director. Mr. Jain and his other 3 co-promoters have started the company 35 years back. And today, the company has footprints in 11 countries and employs over 3,000 people. The promoters have worked together for 35 years. At the same time, we also had meetings with the senior team of the company, both in India as well as abroad. At the Board meeting on Saturday, February 12, Mr. Vishal Jain, son of Mr. Anil Jain has been appointed as an additional director. His responsibilities will be decided shortly. He is 37, an engineer and has done an executive finance course from IIM Bangalore. He has been running the business for the past 12 years. I would also like to inform you that the shares held by Mr. Anil Jain are being transferred to his wife and no shares are going to be sold. Thus, the promoter shareholding will remain unchanged. Some shareholders have written to us and raised questions about my involvement that I was a friend of Mr. Anil Jain and whether I will continue on the Board or not. I have been on the board since 1994, and I'm a friend of not only Mr. Anil Jain, but also all the other 3 promoters at Time Technoplast. So there is no doubt that I will continue to be involved with Time Technoplast. Mr. Jain's vision and leadership will continue to guide us and the values that he wanted to inculcate will continue to motivate us through the path and growth of the company. We are all overwhelmed with the love and affection that we have been receiving from our well-wishers. On behalf of the Board and the management, I'd like to thank all our valued investors, bankers, suppliers, customers and associates for their strong support. I now ask Bharat Vageria for his remarks, and then we will take you through the financial numbers. Thank you.

Thank you, Chairman, and good afternoon to all of you. The sudden and unexpected passing away of Mr. Anil Kumar Jain will be a great loss to us and the company. But his vision, memories of strong leadership and hard work will continue to motivate us. We all convey our deep sympathy, grief and condolences to his family. We are here to talk about our results for Q3 and 9 months of financial year 2022 and outlook for the rest of the year. The results are already announced, but I will just walk you through some of the key financial and operational highlights. Though COVID-19 reemerged this quarter with new Omicron variant, the company continued to strengthen its market position and achieve the sustained momentum and good growth across the businesses. During the 9-month FY '22, we have already achieved our pre-COVID performance, and we are confident of surpassing our target set for the full year. I mean to say, because many times I received calls from investors, are we going to achieve our revenue on the pre-COVID level, which was there in 2019/'22 -- 2019/'20. We have always said yes. We are going to achieve this year. And then next year onwards, that will be the growth part of the company will be there because during this intervening period over the last 2 years, company has developed so many other products, which has a very, very high potential. And some of the value-added products, which company has did in the past, but looking to some recent developments, it is going to have a large potential of the business. Now the key numbers are on a consolidated basis in Q3 FY '22. Revenue grew by 13% as compared to corresponding quarter last year, that is Q3 FY '21, and 3% as compared to previous quarters, that is Q2 FY '22. During the Q3 FY '22, the corresponding Q FY '21 numbers in the bracket on a consolidated basis. Net sales stood INR 943 crores as against INR 835 crores. EBITDA was INR 137 crores as against INR 113 crores. Profit after tax was INR 54 crores as against INR 38 crores. Key highlights in terms of the percentage here. Net sales increased by 13%, which is a combination of India, 13%; overseas, also similar 13%. Volume increased by 9%; India, 8%; overseas, [ 3% ]. EBITDA increased by 21%, PAT increased by [ 40% ]. The EBITDA margin was 14.5% as against 13.5%, which increased by 100 basis points compared to previous year. But as we all are aware that the previous year EBITDA percentage was down because of the COVID [indiscernible] in the previous year. Our net profit margin also increased by [ 110 ] basis points, 5.7% as against compared to 4.6%. During the 9 months FY '22, the numbers on a consolidation basis are net sales INR 2,612 crores as against INR 2,055 crores; EBITDA, INR 369 crores as against INR 260 crores; profit after tax, INR 133 crores as against INR 51 crores. Key highlights for the 9 months compared with the corresponding period in terms of the percentage [ sales ] increased by 27%. Volume increased by 22%. EBITDA increased by 42%. PAT increased by 159%. Now in 9 month FY '22, EBITDA margin was 14.1% as against 12.6%, increased by 150 basis points. Net profit margin also increased by 260 basis points, 5.1% as compared to [ 1.5% ]. Share of the business between established products and value-added products. Value product sales grew by 31% in 9 months as compared to the previous year same period. While the established product grew by 26%. The share of the value-added product is 22% of the total sales as against 21% in 9 months of FY '21. Our share of the India and overseas business is in the ratio of the 67-33 as against previous year in [ FY '20 ] was 70% and 30%. EBITDA margin are in the same range of 14% around for India and overseas. Debt stood on the same level, there is no any major increase, and the total CapEx incurred during the 9 month '22 towards the brownfield expansion, reengineering, automation was around INR 127 crores, which included established product and the valued added product. Value-added products comes that intermediate bulk containers, MOX film and especially composite cylinder with LPG and the CNG cylinder, which has a large [indiscernible]. Now I would like to open the floor to answer the specific questions referenced to the results, which have been put on the table.

[Operator Instructions] The first question is from the line of Sandeep Khanna from Emerge Capital.

So I have 2 questions. One is regarding working capital and second is about the CapEx plan. So regarding the working capital, if we see 10 years back, our number of days of inventory used to be 90 or around 90. But for FY '20 and FY '21, it is more than 120, right? So are there any steps that are taken to reduce the number of inventory days, because I see that we have a lot of growth opportunities. But in terms of shareholder value, this working capital management is the key impediment in that journey.

Yes. Sandeep, working capital plan, I have mentioned in my these -- presentations also, in the next, I think this working capital cycle time has increased during this corona period in 2021 and '21/'22. But as demand is coming up, especially pipe business, the business is now increasing. Whatever materials we have made it ready. We started to supply some of the government's order, which was held up because of the EPC contractor was not getting their payment which will be now streamlining as central government is [indiscernible] payment. And I mentioned there in the next 12 months' time, I'm also keeping target to come back to the working of the cycle time of 85 to 90 days. There's the internal target we are keeping it. In 2023, day by day, quarter-on-quarter, you will find that improvement. In reference to the CapEx, which you have mentioned, you are right. As we have mentioned that normal maintenance CapEx as the depreciation amount is almost around [ INR 130 crores ] and we are 25 years old company. So normally, we take the maintenance CapEx to maintain my existing capacity level, automation reengineering. That is in the range of INR 70 crores to INR 80 crores. CapEx balance, yes, we are doing investment where the very large potential in the last conference call also, we had mentioned that we have started CNG business. CNG cascades and CNG cylinder business with a small investment of INR 25 crores, where we can generate the revenue of hardly INR 55 crores to INR 60 crores. We are surpassing that revenue in this current year. But we have to now start because my completion -- project completion time, any expansion I do is take 4 to 5 months' time. So we have started in the last quarter itself to meet the market demand. As we have mentioned in our -- this report also in earnings presentation, we have an order booking of the CNG cascade business and cylinder business is more than INR 250 crores. So to complete that order, we need to do expansion and take the decision right now. Tier 4, because we are quite sure looking to the present response, which is coming from the pending tenders also, we will have a carryforward orders of more than INR 300 crores, which is to be executed in the next 12 to 18 months' time. To meet that market demand and to meet that order -- to execute that order and that comes under the value-added products. So currently, we will -- we are planning in such a way our existing CapEx plus valued-added product will be in the range of around INR 175 crores to INR 200 crores. And further, we have already mentioned here in composite product -- the LPG composite cylinder, where currently we can manufacture 1 million [ sellable ] cylinder, 1 million cylinder even though capacity is 1.4 million. But when we manufacture different sizes of the cylinder, then we can take 1 million cylinders. In terms of the revenue part, we can generate the revenue of around INR 220 crores to INR 240 crores from our existing business. But we all are aware that there is 1 tender, which have been finalized. We are just awaiting LOI. We have mentioned it's a value of 1.5 million cylinders, which is to be supplied in the next 24 months' time. This is 1 of the largest gas distribution company. But there are 2 other gas distribution companies who will also come up. So for India, as again, I would like to tell you, the present market situation of these LPG cylinders are more than 36 crores. Every year, 2 crores cylinders are required. As a replacement and new markets further we led. So we can say around 2.5 crores cylinders required every year, which is currently mostly filled by the metal cylinders. Composite cylinders first time this size of the big tenders come out, because they did various trials. And finally, it is a very, very advantageous as they're explosion-proof, [ life safe ] and easy in handling. And considering the advantage, after a lot of trial in testing, government is coming out with this requirement. So looking to these 2 orders itself, next year, definitely looking to these order conditions for composite products itself will have a business of 500 crores as against -- I think we can get a 100% jump as against current year, estimating around INR 250 crores business of composite products this year. CapEx plan, which I have mentioned to you.

Right. But 1 more question is with regards to the CNG products and LPG cylinders. You had earlier mentioned that the value-added products would be moving to cash and carry model. So this order that you have received for this 1.5 million cylinders, is it also a cash-and-carry basis?

Yes, you are right. Cash and carry basis is right. But again, the minimum time which is required in procurement of the material because most of the components and inputs, which is required for these composite products are imported one. We'll have to carry the inventory. We'll have to carry the raw material inventory. Another thing, finished products, also, we have to keep a minimum lot size because this composite product we can dispatch after getting the approval from outside agency, which is approved by the government authority. And there's a minimum lot size we need to carry it, and it's a continuous process. I can understand when the working capital cycle times required for the normal business is 100 days, that will be reduced in the value-added product, which can go down to 60 days. But I can't take it zero working capital cycle time. Yes, the working capital cycle time has reduced, but as the value-added percentage of the revenue will go up, the working capital cycle time will improve much faster. For example, currently valued-added product is 22%, which as you see in the next 2 years' time, it is going to 30%. And definitely, working capital cycle time will come down.

All right. Okay. And with regards to the CapEx plan, the cost of debt would be? Because currently on gross.

Yes, Sandeep, as far as company is concerned, we have a very clear policy, our debt should not increase more than 2x of the EBITDA. So we'll work out CapEx plan within that range only, because our objective is very clear. The debt should not be more than 2x of the EBITDA, the EBITDA. Number two, working capital cycle time also should we come back to the 85 to 90 -- 90 days. And third, ROC should improve. You had attended my June 2021 analyst meet where we have said very clearly, we would like to have a 20% ROC by 2025.

[Operator Instructions] The next question is from the line of Deepak Poddar from Sapphire Capital.

Deeply saddened by Mr. Jain's demise. So my query is on your growth. Now over the next 2 to 3 years, how do you see growth given the kind of traction we are seeing even on the cylinder side. So any kind of flavor on those front would be helpful.

You are asking relating to the [ spot ] prices?

No, in terms of growth, top line growth over the next 2 to 3 years, how do you see that?

Yes. Yes. Deepak, in fact, you know that last 2 years, we could not achieve the rate, we have just reached to the pre-COVID level, okay? Now if you take with the next -- by 2025, we had made our internal plan, how we can go further from INR 3,600 crores to INR 5,000 crores business in 2025. So that is possible by the way, including the composite products and when we'll achieve a growth of more than 15% every year.

More than 15% growth. And what margins we are looking at?

I tell you, we have 2 types of the products. One is the established products and the value-added products. Established product margins are in the range of 11% to 14% and the value-added product margins range, I can say, 18% to 22%, but sustainable will be in the range of around 19% or 20%. So combined the EBITDA margin we are predicting, I think pre-COVID last year, it was in the range of 13%. So this year, we are estimating average of [ 14.3% ]. What we are seeing as the value-added business is increased. There is an improvement by 20 basis to 30 basis points there. So we are expecting the reasonable EBITDA margin in the range can be 14.5% to 15.5%.

14.5% to 15.5% at INR 5,000 crores when you're value-added?

That's our internal estimate. Yes.

And what is the share of value-added we are targeting maybe next 3 years?

Yes. It's a good question. By 2025, we are targeting a value-added product business, in spite of existing business will also grow but it leads to around 32%.

Okay. Okay. Understood.

Because currently, it is 22% will go up to 32%.

[Operator Instructions] The next question comes from the line of [ Menal ], an individual Investor.

And again, sorry for your loss. My condolences. I just have very 1 quick question. What's your gross debt at the [indiscernible] level?

Yes, gross debt is INR 837 crores. And net is INR 740 crores. So therefore, I mentioned the same in the last quarter. There's not any major changes taken place.

Okay, sir. I just want to clarify, so when I'm seeing the consolidated balance sheet in your presentation, when you are doing some gross debt, it is including the lease liabilities also and just long-term borrowings and short-term orderings.

Lease liability is separate because lease liabilities, you know that the [indiscernible] has been changed. So those properties on landers building, which are the long-term rentals, which have to show under the lease liability.

So it's basically just long and short-term borrowings, correct? In your gross debt number?

Yes, yes.

So when I've seen a consolidated balance sheet in your presentation right now, it seems to add up to like close to INR 716-odd crores. So has it gone up in this quarter to INR 837 crores? Has it gone up by INR 100-plus crores?

Yes, yes. No, no. The repayment business is accounting only. The repayment within next 1 year has been shown under the current liability.

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

Yes. Sir, really sorry for the demise of Mr. Anil Jain. When I spoke with him last time, he actually is very upbeat on the company's expand very really. Really, we miss him a lot.

Yes, yes. We all are missing him. We all are with you. We know that when we are sitting here in the same boardroom and we were talking. And I know very well, which you are feeling the same feelings we have also. Thank you. Yes.

Yes, sir. Okay. Actually, I see the IOCL website already. We are the lowest bid for [ 7.4 ] lakh cylinders. So did we get this order, sir?

I tell you, there is a procedure of the every government tender because it is a government company, the process means what in December month tender had come, we submitted. Other bidders were also there and you -- we had the last time also there in India, the 2 manufacturers are only there. Out of the one, we have the largest capacity in India. So tender process is completed. We are [ L1 ], that's right. yes, but we are expecting the LOI soon because it is under their committee process for signing after avoiding that thing. So we should expect -- and in expectation of that we are expecting to -- will supply in this month itself. We are keeping ourselves ready.

Okay, sir. Okay. If we get this order, actually, Mr. Anil Jain, he told last time, maybe we need to ship some -- we need to make some plan in outside India to cater the capacity from our external orders. So what is our plan?

I was there, I tell you. As we are currently exporting cylinders at the current capacity, and I know that he has mentioned, I was also there, we will do the expansion of LPG cylinder in the previous [indiscernible] after execution of this order, because we will begin -- this order itself, we have to supply for the at least the next 2 years. We have to supply it. And it is only the 1 company order. As I mentioned in my previous clarification also, there are the 2 other government companies who are also in the gas distribution line, because in trial quantity in the month of September and October, we had supplied to the other company, [ Bharat, HPCL ] also we have supplied. Hindustan Petroleum also we have supplied trial quantity. And the parallel we have supplied to Indian Oil Corporation also. So this company have finalized early and other will also come. And definitely, first, we -- in fact, I can say we have a order book of entire capacity as on today, I can say. So after supply of these cylinders, and we will do definitely expansion next year because we have to continue more than 48 countries our cylinders are accepted, and we are doing the export to that countries.

Okay, sir. Okay, what is the development on -- actually last time, I told Hydrogen cylinder although, already we reached 100 bar -- sorry, [ 1,000 bar ]. So any update on this, sir?

As far as I tell you, in composite cylinder, LPG, CNG is already developed. And we remember all the other oxygen cylinder also development is ongoing. We will come back. Hydrogen cylinder, it's a long process. It's an internal development is ongoing. But I can tell you the development process itself is a 6 to 8 months' time. I was not able to give immediate comments on the Hydrogen cylinder.

Okay. Okay. And I see in Mahanagar Gas website, actually, still, they are tendering for Type 3 cylinder and type 1 cylinder -- CNG cylinder. So what is the price difference between type 3 and type 4? Why still they're tendering for Type 3 cylinders?

There is a 4 type of the cylinders are there.

No, no. Why we have advantage already Type 4 is the advanced one. So why still they are going for Type 3?

They know very well. I think Mr. Raghupathy will answer you this [indiscernible] Director.

Conventionally, type 1 cylinders have been in use for CNG. Subsequently, we got an option to try the Type 3 cylinder, which was being imported and then it was reviewed by many [ CGD ] companies. We were still in a development stage at that time. I'm talking about 3 to 4 years ago. So some population of type 3 cylinders have been induced by the CGD companies there was a good advantage of using Type 3 over type 1. But after we have been able to launch the Type 4 cylinders, which rightly identified as a technologically advanced model, that's when all the tenders have been backed by our company, Time Technoplast, and we have been able to convince the CGD company of the good performance as well. So all the tenders are coming by our way. Type 3, whatever residual markets are there, they are basically historical nature. And as I say, going forward, they should be history.

Okay, sir. Okay, sir. And what is the update on the U.S. business, sir? Actually, last 2 con calls actually, there was no update on U.S. business.

Hello?

Hello?

Yes, yes. You answer it.

Yes, the U.S. business, actually what is the update on the U.S. business? Actually, last con call actually, there was no update.

Yes, yes, right. You are right. As far as U.S. business is concerned, as we had informed earlier, we have a plant in 3 cities in U.S., that is Chicago, Houston and Iowa. And there, we are doing only the packaging products that is packaging products, part of the packaging product I can say, that is intermediate bulk containers and large-size containers. U.S. business is yes, economy is growing very fast, and we are also expecting the good growth there. Last time we did the business of around [ 18 million ] we did. But yes, we can definitely expect 100% growth this from overseas business this year because all plants are operations with the good capacity and good demand is there.

Okay. Sir, 1 more thing. Actually, now Mr. Vishal Jain actually is in the Board. So is he part of our company now? Or is -- no, the first is coming. Actually, he's already part of our company or not, sir? Mr Jain?

As far as Vishal Jain is concerned, our Board members and including this, we have appointed him as additional director. Till now, he was doing his own business. He was in e-commerce line business. He was supplying some industry components. So he has a business experience of 12 years, because we were not expecting this kind of the sudden demise of Mr. Jain, but we have inducted him. And definitely, we also grow him to take over the features of this business. And he will based on his responsibilities, he will be inducted as for his wish and he will become on whole-time directors and executive director positions also, we will take him as [indiscernible] he settled his position.

The next question from the line of Nishit Shah from Aequitas Investments.

Yes. Sir, the visit was very insightful. So I saw our plant locations, so the Daman plant and everything is very huge. And how all this CNG cylinders and this cascades and everything are made. So with the help of robots and everything, so that was also very good to know. And I understood about that process and everything. So I understand it took a lot of years for us to develop these processes to understand the customer's requirement and our products need to be [ feel ] safe. So there are no leakages of chemicals and adjacent. So these are very critical. Yes. So it was very insightful sir.

Go ahead.

Sir, most of my questions are answered. Sir, 1 question I wanted to understand more is about the U.S. business. So what is the kind of opportunity we have over that? What are our current revenue and margins? And what kind of CapEx are you planning for this market?

I think you had gone through our company later on, but initially, I recall our discussion. Initially, the company we made a plan of investment of around USD 50 million, which was done successfully. All 3 locations have been done. But yes, some of the automation work is ongoing because we have started like manufacturing the IBC bottles now to make the complete IBC as the demand is in. But if U.S. parts, definitely, if other sectors, we are growing in the range of 13% to 14%. We can definitely expect on later post stabilize the U.S. business, which I mentioned to you -- the last time we achieved $18 million. This year, we are expecting around $36 million, 100% growth. But definitely, in the 3 years' time, we can expect the revenue of maybe around 80 million to 90 million in the 3 years' time, because good prospects are there. As far as the packaging business is concerned, our products are getting overwhelming response. It's an international product which we are manufacturing there. And definitely, we concentrate U.S. market and other overseas units also. We are only the packaging business, which consisted plastic drums, jerry cans and IBC. These are the main products we are doing overseas countries. So definitely our focus is there and in the 3 years' time, U.S. should contribute good revenue. And EBITDA margins are also concerned, one, because utilization is in the range of [ 60% ]. The EBITDA margin is also in the range of around 13% to 14%, we are getting it now.

Okay. And what is the CapEx, we are planning that?

In fact, it is included in my overall CapEx plan, not graphical. It is included in the -- as normally, we talk 180 to 200 CapEx plan, which includes by including India and overseas plan.

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

At the outset, my deepest condolences and heartfelt sympathies to the family and everyone's time. Yes, so I've been attending quite a few of the analyst calls and in touch with a few people. My first question to you is, sir, there was a vision to divest these noncore businesses in terms of our batteries and furniture part. So any progress has happened? There was INR 60 crore monetization that was going to happen. I think it's been more than a year. Is there any development on that?

Yes. I just clarify you as far as INR 60 crores noncore asset plan is concerned, it does not include the battery business because battery business, my investment itself is the INR 65 crores, which has been done by Time Technoplast Limited. And apart from battery business, this is INR 60 crores is inclusive of land building of -- which is not in currently in use, and the furniture's molds, [ fixtures ] and furniture molds then some of the medical equipment molds. Yes, discussion is on. You know very well the last 6 months, the corona third wave was affected some kind of the decisions, but we are sure in the next 6 months' time, something you will hear about -- this is investment from this noncore business, because as these materialize, talk is ongoing with many people, because we don't want to sell a partly assets. If for example, I'm telling you from a furniture and [ fixtures ] mold, I will sell as a whole because then 1 person can have an entire range. I don't want to sell in the part, part that molds. So my talk is ongoing with some of the people, and decision will come back in the next 6 months' time. And as far as land and buildings are concerned, we have already under discussion with the first big people, those who are in the real estate lines. They have a good network is available all over India basis. So we have provided a detail to them, and that is working out and trying to get down the good buyer at a good value.

So hopefully, by coming financial year, that is '22, '23?

Yes, yes. Of course, Nilesh. You can make sure that next year, by March '23, these all things will come back and will be utilized for my -- when you did product business and expansion of the company.

Perfect, sir. The second part was on the status of the merger between Power Build and Ned. We were having a merger. I think all the procedure was done. So is the merger already approved?

Merger, as far as process is on, I tell you, the process check list, merger approval from the Board is there from these other creditors are there, but the approval from the bankers is need be, that is the under process. And as you are aware that whenever the orders will come, but merger will be effective from 1st April 2021, right? And due to be there, and it is in process. We are sure, because there was some delay from the banker side because they were not attending the office and some internal process were there. But I'm sure that before March, we should be able to get this merger order.

Okay. And any other further continuing orders from Tesla for battery, sir?

I think you remember the name of the Tesla Nilesh, right? As I told, I mentioned in my last call, I think when we were talking the last call that at that time, we had received the order for INR 5 crores value. Afterwards, we had mentioned at that time, again, they will give some quantity of the order. They have given, yes, INR 2 crores value-added they have released, the earlier quantity we have supplied. And further, we are developing with them some kind of -- as we have mentioned, the lithium-ion batteries also development is ongoing. That is for the solar sector. And they are assuring because whatever batteries we have supplied them, no complaints [indiscernible] and good quality, they are getting it and the business is going to be announced from April 2022 onwards.

So we may not divest the battery business?

So I'm not saying no. We are not saying no. Let us first come out with the business because the utilization, which was lower at that time 40%, which we are expecting, we can get a good value when the business will be at the 60% to 70% level, which we are expecting in the next year time. But we are keeping our eyes open because the good development that is done by the company. We are coming on the, I can say, '22, '23, we will have a sizable business, maybe in the range of around INR 180 crores business, we can have a net itself. Come back they will depend on their foot -- their foot itself. Just keep eyes open. If any good value, we'll get it. We are not a distressed seller at the same time because a lot of development has taken place in the last 18 months' time.

Okay. Have they visited the plant, sir, Tesla officials?

Of course, yes, yes. Their CEO, their CFO, their -- I think business heads 3, 4 people have visited the plant. Their system is for the vendor approval. They have a long process which have passed already.

Congratulations on that, sir.

Nilesh, I advise you, you are in Bangalore. You can go at any time and see the plant.

Definitely, I will.

I told you, you can go to [ Dobbaspet ] plant, how people are working there at least.

I have spoken to the plant manager. Maybe I'll make a visit. I'll keep you [indiscernible].

Yes, yes. We'll see that. Thank you.

And last question I have on CNG, sir, these which are used for OEMs, basically at Maruti and all who have got CNG vehicles. Have we started receiving orders on the CNG type cylinders from them for their sales? I think 4 lakh vehicles per year on CNG side, you have any development on that, on the OEM side?

Yes. Raghupathy will answer this question because you know that how order position we have for these cascades and what is our [indiscernible].

Even how we tie up like CNG like [indiscernible] retrofitters, basically who convert the diesel types to CNG, I think there's a lot of demand. So I don't know whether we have started addressing and tying up with dealers across India for that.

Yes. Thank you very much. We addressed the CNG market in 2 steps. First, we have gone in for the requirement of CNG cylinders, which are basically for cascades, and that is an area of high growth that is taking place. As you would follow the supply chain also, basically, they have to ensure that the CNG gas is available across the different retail outlets, et cetera, as has been outlined by the government of India. So that is going on, and that is where the CNG cascade will be put in place. So we have booked as of now. We are expanding some capacity et cetera, whatever as Mr. Bharat Vageria has told you. Parallelly, we are also working with OEMs and even the retrofitters for development of the onboard cylinders. We have got the cylinder approved by PESO for onboard applications. There's a very good demand at an opportune time and period, we will definitely launch these onboard cylinders also for use or conversion among these passenger cars or buses, et cetera. So that's an area also which will come in the coming year itself.

Okay. No. But right now, we had done a trial run to all -- we did a channel check on a lot of dealers of CNG, and I think most of them have got orders, but they don't have inventory. They don't have stock of the CNG cylinders.

Correct. We have only done a little -- I will put it better the [ feed ] and found that a good response. But in fact, when we are ready, we will definitely launch it full-fledged. As of now, we wanted to ensure that the initial part of the demand that we are catering to we are able to fulfill their requirements. We will come to the onboard application slightly later. We are focusing with the OEM companies, whether it is Maruti, Tata Motors, Ashok Leyland and others, et cetera. to get the CNG approved for their own requirements. Once that also goes in, then the next priority probably would be retrofitting. We have certain steps of priority, which we will address to launch these products.

So discussions are going on with these companies?

Yes [indiscernible].

Any orders? Have you got any visibility on the order potential in that line in the next 1 year?

It will come through. It's a long cycle of development. It takes anywhere between 2 to 3 years of development time frame. So we are -- the samples have been submitted. There are trials going on, so it's a little too early for us to talk about the order with the OEM order for vehicle manufacturers would also come in.

I have just 1 last to Bharat Vageria actually and to the management as well. Sir, you are aware, our business is definitely much more value than what the market is valuing it for whatever reason. Is there any steps that the company is going to take to enhance shareholder value? And if any large investors like NT Asian or HDFC want to exit, is the company going to participate in that? And kind of buy their shares. Basically, I guess there is a lot of undervaluation in our business, and I'm sure you are also aware, our accumulated depreciation is actually more than the market capitalization as of now. So we are going very, very cheap in the market. So I'm just trying to figure out why the management -- what steps management is going to take to enhance shareholder value, sir?

[Foreign Language] Debt, as I mentioned to you, maximum debt, internal guidelines, 2x of that EBITDA without compromising on the growth plan of the company. But you -- I think you are aware that in 2025, we have projected INR 5,000 crore business, and we have shown from the cash flow also, we will have a surplus fund of INR 750 crores by 2025, which will be available for the apportion on account of the dividends, on accounts of the buyout. And definitely, we plan accordingly with the permission of the Board, how this needs to be used.

So 1 small buyback every year would also enhance our INR 50 crores to buyback will make a very big impact to actually stabilize the stock?

The Board will do. Another thing also I recall, we have discussed, I have -- that promoter company had a loan of this INR 35 crores for -- INR 37 crores, INR 38 crores for the plot value where the collateral security [ place ] of the shares have been even, and we are also under discussion at first, my target to pledge free that shares and the disposal of that plot. And then after any surplus available, that's also we had mentioned, Mr. Jain has also mentioned many times surplus funds would be used because we are also very keen that we know there is undervalue shares, which is there. So if we win the right time, we also can use that funds for the buying back of the shares.

Next year, maybe when we get that INR 60 crore extra for the noncore businesses, you could utilize it to enhance shareholder value. Just a suggestion.

Shareholders, when you can enhance 2 ways. If my ROC improved to 20%, if I will capture the business of around INR 1,000 crores in the next 3 years of my CNG business, is the way of the understanding.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, I just wanted to understand the crude oil prices. So any kind of impact that have on our business as such?

It's a good question, but I tell you the polymer made out -- there is a way of the polymer to made out from the cracking of the oil. And another way is the natural gas, okay? Middle East, most of the plants, if you take the world over, the oil-based plants are 50%, gas-based plants are 50%. Okay. We know that in -- recently in U.S. market also, there is a Shell Gas and Shell Oils were available. In Middle East, most of the plants are the gas-based plants. I can answer your question this way. For example, polymer prices in the dollar U.S., this oil market, $70 a barrel, and the polymer prices was on in the range of $100. Okay? Today, oil is near to [ 100 ]. It is increased by 30%. So polymer prices does not increase -- has not increased by 30%. Some extent, it can keep the effect of 5% or 10% but not a similar ratio because polymer market is, again, depending on the demand/supply gap. And again, for India party is concerned now, if you go back to 5 years back, India, the reliance was only the manufacturers of the polymer in India. Now you have seen after so many expansion of Indian Corporation, ONGC, Opel, Gas Authorities, Haldia Petrochemicals, so many alternate producers come out Mittal Group and another 2, 3 big manufacturing plants in India is coming up in the next 2 years' time. This year also Mittal is coming out with 4 lakh capacity plant. Reliance is also expanding. Indian Oil is also expanding further plant in near Rajasthan. So much expansion is coming. And India, I can say the dependability of the overseas market is reducing day by day. And that is the vision of our Prime Minister also making India reduce the imports. So this, in other words, I can say the oil prices and polymer prices, not direct link. It's a demand supply.

I would like to inform the management, there are no further questions in the queue. I would like to hand the floor to the management for closing comments.

Now I, once again, would like to thank to my all valued investor and participant in this conference call. We will continue this provide insight about the company's call about the earnings and the revenue, and we all missed Mr. Jain in this conference call. But I tell you on behalf of management, my colleague, my entire staff of the company all committed because I tell you, most of the people who are working in organization is for more than 20 years, 30 years, and this organization is built for the future. So I'm thankful again to all my participants. Thank you.

Ladies and gentlemen, on behalf of PhillipCapital India Private Limited, that concludes the conference. Thank you for joining us. You may now disconnect your lines.