Knack Packaging (NSE:KNACK) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Knack Packaging Limited Earnings Conference Call Q1 FY 'twenty seven. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. Before we get started, I would like to point out that some statements made or discussed on today's call may be forward looking in nature and must be viewed in conjunction with the risks and uncertainties that we face. The company does not undertake to update these forward looking statements publicly. I now hand the conference over to Mr.

0:45 Alpej Tulsipari Patel, Chairman and Managing Director from Knack Packaging. Thank you, and over to you, Mr. Patil. Good afternoon to everyone. It gives me immense pleasure to welcome all our stakeholders, analysts, investors and member of the investment community to Knack Packaging Limited's first ever earnings conference call following our successful listing on the National Stock Exchange and the BNC. On behalf of the Board of Directors and the entire Knack Packaging family, I sincerely thank each one of you for the confidence and the trust you have placed in our company. Listing on the Indian capital market is an important milestone in our journey. While it is a significant achievement, we view it not as a destination, but as the beginning of the much larger journey.

1:39 Since this is our first earnings call, I would like to spend a few minutes introducing our business and sharing what makes Knack Packaging a differentiated company. Packaging is one of the leading integrated, innovation oriented, export led and sustainable oriented packaging solution provider, offering a diverse range of packaging solutions, including printed and laminated woven polypropylene bags named as PLWPP side And to of We are pleased experience and today stands as one of the industry's leading player across the globe.

2:32 Our solution enhanced brand visibility on packaging, reduce the risk of counterfeitening and improve the operational performance. We offer a comprehensive portfolio of bulk packaging solution developed over more than three decades through continuous technological innovation and deep industry expertise. Our value proposition extends beyond core packaging product to include a wide range of customized add on solutions such as circular and vaccine construction, half full and registered window, zigzag cut, heat cuts and blade cuts. This brief offering enabled us to deliver tailored packaging solution positioning us as one stop partner for our customers.

3:22 Our differentiation was not built overnight. Since in 2004, we identified a gap in the market, while brands invested heavily in the look and feel for small retail pack, there was a very limited scope to present the brand identity on bulk industrial packaging from five kilograms to 50 kilograms packaging. We spent close to two years on R and D and become first company in India to introduce typical printed bag that carries the same branding up to 50 kilograms bulk bag as on smaller consumer packs. This great start has translated into a genuine first mover advantage. Due to our expertise today, we serve leading companies from industries such as rice, dal, lentils, flore and spices, sugar, salt, fruit and nuts, animal and pet food, agriculture, seeds, charcoal, detergent powder and granules, fertilizer, chemical, etcetera in both international and domestic markets.

4:26 One of the core strength of our business is our integrated manufacturing model. Our capabilities span the complete value chain from tape exclusion to weaving, to previous printing, to lamination and final bag conversion. This integration gives us a greater control over quality, turnaround time, manufacturing efficiency, while allowing us to offer customized solution to our customers. We are currently operating at more than 48,000 metric tons per annum capacity with our including rented facilities and translating into an approximately 91% capacity utilization. This reflects healthy utilization level for our operations and demonstrate efficient use of our manufacturing capacity while providing a strong foundation to support future growth.

5:19 Innovation is one of our strengths. We cater to the companies who believe to invest in brand, in packaging as a strategic differentiator. We continue to invest in new product development and leverage our first mover advantage across multiple product categories. Strong and deep customer relationship is reflected in our customer retention ratio, which is as high as 90%, nine-zero. This is not an extension. It is built over a four key pillar that define our approach to customer service, quality, commitment, responsiveness and transparency. We are committed to deliver high quality products, ensuring on time deliveries and responding promptly to customers' requirement and queries.

6:09 Through our digital portal named Knack Galaxy, customer have easy access to product information, order related updates and other relevant details, enabling greater transparency, seamless communication. Together, this pillar has helped us build long term customer relationship consistently on that trust. Because our packaging incorporate proprietary color formulations and SOPs that we do not disclose any deviation in quality when a brand change packaging vendor can be immediately visible to the end consumer and may adversely affect brand perception and reputation. Importantly, packaging typically represents less than 1% to 2% of our customers' end product price, making it relatively small investment compared with the significant role it plays in product presentation, shelf appeal and consumer protection.

7:03 Packaging is often first physical touch point between brand and the consumer and can materially influence purchase decision, particularly in high competitive categories. Consequently, customers have a strong incentive to maintain consistent packaging quality once a packaging supplier has demonstrated reliability, consistency and understanding of the brand requirement. We are present in both domestic and international markets with our international footprint continuing to export steadily. As of quarter one fiscal year twenty twenty seven, Knack Packaging has established a presence across 74 countries spanning six continents, representing an expansion of our global reach from 71 countries in fiscal year twenty twenty six.

7:54 We support this global footprint through our on ground sales and marketing presence, enabling us to build relationship with customers across geographic and address their evolving packaging requirement. Our expanding international presence has enabled us to add new countries and globally renowned brands to our customer portfolio, further strengthening our position in international market. In a volatile macroeconomic environment, our resilient supply chain is a key competitive advantage. We have a strong in house logistic capability that has been built over the years and it gives our customers the confidence that we remain our dependable partner. Turning our growth plans, the primary objective of our IPO was one in setting up a new manufacturing facility.

8:46 At the time of listing, our installed capacity stood at approximately 43,300 metric ton per annum. Once new plant funded by IPO proceeds its commission, which remains on track for October 2027, our total installed capacity will reach approximately 70,000 metric ton per annum. The upcoming manufacturing facility will future strengthen our long term capacity, but it will not slow down our growth in the interim. Until the new plant become operational, we will leverage rented facility for semi furnished good production, while the value added processing will remain at our existing manufacturing facility. This asset light approach allow us to continue scaling the business without compromising on product quality or customer service.

9:39 The recently leased facilities provides us the necessary infrastructure, while the operations are being by own and operations being managed by our own trained workforce. This team will eventually transition into new plant once it is commissioned, ensuring seamless ramp up of operations with an experienced workforce already in place. With these steps, we remain committed to expanding our portfolio, strengthening our market position and sustaining our growth momentum. Before I conclude, I would like to thank all our customers, suppliers, bankers, business partners, employees and most importantly, our shareholders for their continued trust and support since our listing. We remain focused on building a business that delivers sustainable innovation led growth while creating long term value for our stakeholders.

10:32 And we look forward to a long and transparent relationship with investment community. At last, I would like to assure everyone that Knack Packaging will continue the growth and innovation both for their customers and for our industry. With that, I would now like to invite our Chief Financial Officer, Doctor. Ajay Kumar Dubey, to walk you through the detailed financial performance for the first quarter of fiscal twenty twenty seven. Thank you. Thank you, L. K. Zai. Good afternoon, everyone. I will take you through the financial performance of quarter one financial year 'twenty seven and highlighted the key operational and financial drivers.

11:17 Our consolidated revenue for quarter one financial year 'twenty seven is stood at INR2647.71 million compared to INR1871.71 million in quarter one financial year twenty six, registering a year on year growth of 40.50. The strong growth during the quarter was driven by higher sales volume, improving capacity utilization and continued ramp up of recently commissioned capacity. We witnessed broad based demand across end markets, including foods, grains, pulses, pet food, fertilizers, agrochemicals and consumer end markets supporting balloon growth across our product portfolio.

12:11 Our total sales volume for quarter one fiscal year twenty twenty seven stood 10,940 metric tons compared to 9,047 metric tons in quarter one financial year 'twenty six, representing a year on year growth of approximately 20.90. Moving to EBITDA. Our consolidated EBITDA for quarter one financial year 'twenty seven is INR 2 and 91,730,000 compared to INR 386,410,000 in quarter one financial year twenty twenty six, representing a year on year growth of 53.14%. Our EBITDA margin improved to 22.35% versus 20.65% in quarter one financial year twenty twenty six.

13:04 The improvement in the EBITDA and margin was primarily due to operating leverage and a strong cost management discipline. Coming to the bottom line, our consolidated profit after tax for the quarter one financial year twenty twenty seven is to INR305.28 million compared to 206,330,000 in quarter one financial year twenty twenty six. Registering a year on year growth of approximately 47.96%, our FAT margin improved to 11.53% compared to 11.03% in quarter one financial year twenty twenty six. The improvement in profitability is also reflected to our return ratio, sum up key our ratio, financial year twenty twenty seven versus quarter one financial year twenty six were followed.

13:57 Quarter one financial year twenty seven ROAC, return on capital employed improved from 46.05% to 57.73%. Return on equity improved from 37.04% to 37.45. Overall, quarter one financial year twenty seven was a strong quarter for the company with healthy revenue and volume growth, improved EBITDA margin and stronger profitability. We remain focused on ramping up our commission capacity, improving utilization, maintenance cost discipline and strengthening customer relationships while continue to efficiently manage raw material price stability.

14:44 With this, I would like to open the floor for question and answer session. And participants are requested to use handsets for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Raman KB with Sequent Investments. Please go ahead. Congratulations on a good set of numbers. I just have two questions. One is with respect to ROCE.

15:31 I I just want to understand why is our company's ROCE so high. Is it... And, like, also on the asset turn model... Asset turn side, the company's asset turn is, when we compare it to peers, is very high. So can you explain that metrics? Basically, sir, we are incurring continuous profit based margin. And today, due to this capital market, whatever we have proceeds received from INR $3.20 crores, which will be incurred in our coming products, coming this plant. So based upon that margin is good and our network is good. So basis on continuous improving the return on capital employed and similarly improving our return on equity as well.

16:26 Sir, my first question. I would add as we come to this question. So we are like a textile packaging company. So we have always two types of machinery, type of machinery. One is like a textile kind of things. Firstly, produce the tape and then weaving. So it is a broadly plastic technical textile specialized fabric. So for that, we also invest a lot of money on that area. And then after making the pinch bottom bed like a specialized bed. So on that area, we also have a very used European machinery. So for that, we have invested a lot of things and investing into the bottom line like the finishing line and then we can have a good margin over there. So that's how we have two type of investment, specialized both the sites. So that's why our at the time over rate is little bit over.

17:25 So but when I'm comparing with the industry peer, on an average asset turn is 1.5. And if it's a good quarter, it's around two. Ours is around four to 5x. I just want to understand why is the there is a superior asset quality and we are able to still... Despite doing that, we are able to maintain 20% margin, which is like industry leading margins. So is this because of we have a rented facility or something else going on? Sir, basically in effect and if you are calculating that is basically two way. One, if you are calculating based on the gross loss that is almost 1.98% in previous and 2.53% as current 06/30/2026.

18:15 If you are comparing from the net block, that would be around 4.12%. You are comparing gross block that is 2.53 and net loss, so 4.12. That is the effect. Yes, sir. That's what I'm telling. The industry average is around 1.52 x. Ours is on a net block is around four to five x. No. Perfect. I just want to understand what are we doing so different from the industry that our asset turn is so high. Sir, asset turn, basically, we are we we are just just on the two type of machinery. One, we are incurring further manufacturing of our fabric and other part of finishing parts.

19:02 So finishing part material, material more profitability that was generated from more profit compared to other. So we are pinch bottom basically our premium product and pinch bottom nothing we have already installed. So that's why our asset turn is improving day by day. And one more thing, most important, sir, to be very honest, there is a more genuine PR compared to Knack. Like they are into the packaging. Packaging has a wide range of the packaging material, but this is we have specialized packaging material. So this is the kind of printed laminated poly woven bag. So it is a required different kind of set of machine and different kind of product and everything.

19:47 So like this is a would be like a 2.3, 2.1 and other company, two point one point five something. And our company gross growth is a 2.53. That is a 4.52 is from the net block. So we compare it to gross growth to gross growth. So it is a 2.50 kind of thing. Understood. Thank you for that. My second question is on the raw material side. The prices of our raw material, which is basically polypropylene has been has risen significantly since the war. So how is that impact? How are we dealing with that? And, like, what's the usual timeline to pass the raw material prices to the customer and, like, end users?

20:33 So can you explain on that aspect as well? Yes, sir. First, I have a request for for the previous question. For this year, we are comparing to this asset turnover. So please just give me... If you have any details, then we have give you more detail on this point. And secondly, for the pricing of polymers and crude price, yes, it is 100% right now. There is a lot of things are going on, but we are very good. First of all, we have a thirty year experience. So we have a first of all, we are working on SAP as for HANA. Company is very much transparent and very long vision company. So we have a very good forecasting system. So for that, have always we get a very good forecast internally.

21:20 Secondly, India has a very good refinery. India has a lot of refineries, many refineries and we have a thirty years experience with them. So we never faced any time this kind of problem. And due to that, our figure, you can see our net margin like a 47% increment of this year. Same to same EBITDA like 53% increment. Revenue, we increased 41% compared to last year previous year, quarter one financial to this year financial quarter one. So we have very good hold. I can say we have very good purchase team, planning team members, local support, local refinery and third year access. Altogether, we will get the good relationship on this and we can get the advantages of it. Even we can get the more discount as well with our supplier.

22:12 So for that, we are managing this raw material all the year. And we are already the cash, so we also get the good discount on it. Both banks also we are referring. So on that area, we will get and the same way we transfer the price to customer because this is a possible diesel price nowadays. So every our customers know very well. The crude price goes up, so polymer price goes up and your bag cost goes up. So they are very easily to sending to increase the price. So this is the system is already set. So not much more difficult to get the good price from the customer. They know very easily increase the price increase. Decrease the prices, ten days we decrease the price.

23:02 Thank you. Mr. Raman, please reach on the queue for more questions. Next question comes from the line of Dananjay Pagarodia with Alchemy. Please go ahead. Hello. Yes. Firstly, sir, congratulations on a fantastic set of results and congratulations on the IPO too. So I just wanted to ask you one question a few questions. Is that basically where crude is going up and a lot of your input costs are going up, how are we able and tariffs going up, how are we able to keep our margins steady? Are we passing on to customer or efficiency just to understand? Sir, I would like to give you answer on this. We are very long term contractual customer, like Kargil is one of them. We are working with Kargil into the like eight countries, then our total sales revenue comes from like 60%, 70% comes from the.

23:55 So we have a conversion like a basic price, not conversion. So basic price is the commercial price plus conversion cost system. So almost complete 45% to 50% customer as of the conversion basis customer, like KNACK in India, that was going into big brand. They are a lot of our customer and they are a fixed up with the conversion cost. So price go up, price will go. But we remain above margin or above conversion cost remains same. And another thing, other 50%, 35%, 50% customer is like a very small players like coming out to connect with either small rice mill or fertilizer company. So we are the entire packaging cost, there is only one below 1% costing of the packaging cost of our product.

24:44 So they are not much bothered about that cost. And that obviously, we are also very transparent with that kind of customer. But there is a very low quantity like 25,000, 50,000 bags a month. So they order at the time, other time they price, we convert and fix the price and we make the bank and transfer same price to that. So both the way we will get the good conversion and the same remains same conversion, we will manage it. And now we are adding our new product like a pitch button product. So it is a high value added product and very few suppliers and very that product they want to use for that packaging of price, speed that what is as a running and there is better good branding out of it. Like Stitcher bag, there is only four type branding, but the pinch bottom there you get the six type branding.

25:34 So as there is a pre for pinch cut, pinch bottom bag, that is a very good margin product for the company. So that's increasing in the company. Last quarter, we installed two machines. So we get a good revenue from that area as well. Okay. So sir, let's assume, let's say, six months a year hence, if commodity prices were to input prices were to reduce, would that would we pass on that benefit again to customers? Or would we keep that input or would we keep that margin with us? It's a good way we are going to want it. Sometimes, it depends on the situation and sometimes like we have a 50% pass on and 60% we will get it as it is there.

26:23 Okay. Fine. Wow. So thank you so much. Super result. Thank you. Thank you, sir. Thank you, Tanami. Thank you. Thank you. Next question comes from the line of Aniraj Jamodhya with Annual Wealth. Sir. Good afternoon. Sir, a few questions to ask. Sir, when I see our volumes in FY 'twenty four, I think they were close to around 30,000 tonnes and FY 'twenty six was around 38,000 tonnes. So when I compare the realization, it were almost same, but our EBITDA per kg jumped from INR33 to INR45. And I think in Q1, we had already at INR54 a kg. So if you can just give based breakup in terms of our PL, WPP bags and pinch bags, what were they in terms of volumes in FY 2024 and FY 2026, that would be helpful.

27:19 Yes, yes, Mr. Venkat. That is I think you are already aware. We have a good range of the product like things what PLWPT and PLWPT plus inch per comeback. So just in the last quarter, we introduced two machines for the PLWPP plus things will come back. So that is a good margin on PLWPP plus things will come back. Even the solar, we already installed rooftop solar windmill and last to last quarter, we started the solar farm, 11 megawatt solar farm at the Kid Brahma. So in the previous data, you can check, there is no solar benefit, much more benefit like 11 megawatt. So there is additionally solar plant already started. So for that, we get the good margin and good ratio over there from solar and pitch bottom. There is a major pricing.

28:11 So mostly, we are saving, if we compare from quarter one twenty six to quarter one 'twenty seven, almost 1.1% we are saving in the electricity due to the solar pump. So various other things, a lot of we are working on the cost reduction and cost optimization. So therefore, EBITDA per kg is improving day by day. Got it. Sir, my question was more specific to pinch back. So let's say, with the newer capacity getting commissioned from 10/27/2027. So in FY 'twenty six, out of our total volumes of 38,000 tonnes, how much was the pinch bag volumes? And how do you see those pinch bag volumes moving over next three years? If you can share your thoughts here?

29:05 So sir, right now, as a last quarter and the previous year, previous quarters, we had 2019% to 20% of our pinch bottom back 20 percentage. And currently, we are working on 22.5% to 23%. So that area also we increasing. Price is increasing just because we have added two teams bottom back in last quarter of financial year 'twenty five, 'twenty six. So that's why just the ramp up of that we are assuming this financial year 'twenty seven was the first quarter where we have gained the benefit of the another machine, which was installed in last quarter. Got it. That's great. Then we ramp up ourselves from the pinched water and try to get more and more usage of pinch bottom bag.

30:01 Just to add last question from my side. So you mentioned about the pinch bottom bags and the newer capacities. So like, a, what's our strategy in terms of placing those pinch bottom bags to a higher volumes with the customer? Why the customers would switch from the PLW PP films to pinch bottom bags? And third, once our capacity is commissioned, when do you feel that our total capacity of 70,000 tonnes would be fully utilized? Thank you so much. First of all, would like to answer the first PLW to PLWPC plus two quarterback. So this is a normal practice. People are first, they are using the crude back to PP back, PP back to PLWPC back. And now we almost over 70% of sales into the PLW PP bag. So a great customer, we have got a very good connection with them. They also understand the branding and everything.

31:02 So they are from CLW to CLWPT plus Finch Welcome back with the installation of the smart enterprise machine. So always, they are very two types of things. They are in need for the machines and as well as they will get the good advantages of the pinch bottom bag, the branding. So for that, they are moving to the PLW to PLWPP plus pinch bottom bag. So that is the first thing that we have that conversion ratio, we have very good expertise and we have mastery that's what we are increasing capacity utilization, sir, always you aware of the things, the next packaging, we have a very good order on both. Like today, today, have one of the verticals order in our head. So always capacity today, we are almost using 90% to 91%, 92% capacity.

32:00 Even one more thing, just we added one month back, we added one more plant, rental plant up to the one or two years up to our new production starting. Like it is almost 5,040, 5,000 metric tons capacity we already rented that plant. That trial and everything is going well. So that capacity we are also right now currently we are utilizing 91%. So we hope that's best to increase our sales. So that's what we have increased one more class interest before fifteen to twenty days back. So in future future also, always... We have always good plan for the utilization of our installed capacity. So definitely, we try our best to get the good installed capacity as early as possible.

32:50 Thank you. Mr. Jimuria, please rejoin the queue for more questions. Next question comes from the line of Lakshmi Narayanan with Tungai Investments. Please go ahead. My question is that, I think our largest customer is based in The U. S, right? Am I right? Yes, sir. And what kind of contract we have? Is it and how long has been the relationship? And how do we supply? Do we supply in films? And then are we supplied as finished bags to that customer? Whether we have and how the pricing happens? And is there any foreign exchange gains we have got in the current quarter?

33:42 Yes, sir. I'll give you one more answer. So first of all, our 12% is a card deal customer in U. S. Itself. It is a good customer. We have like started that communication from 2017. And after two years, hard work, we onboard on 2020. At that time, we started like a one country, 40 crores business in 2020. And right now, we are working at actually like a 40 SKU. So crore business, 40 SKU in 2020. Right now, we are working 150 crore business and almost more than 600 SKU. So we have a very good relationship between the Kargil and not even limited to The USA. We have a very good global supplier of the Kargil. So more than like eight countries, we are working with them, and we are working with them. The pricing, initially, we start with The USA on a basis.

34:38 But from last three years, we are into the contract system. There is a one contract. It is a carry two years, one additional year, like the raw material pricing for polymer pricing plus conversion cost. So altogether, they will buy from us and they buy only finished product, not semi finished product, they buy from us from the bag. So they use for the animal feed dog food, pet food industry, the fact that product into our bag. So we manufacture bags over here with all the branding and everything, and we said we sent to them. The first part, just for the information, at the time of 50% tariff, eight month tariff, they continue our business. So even we give their options, we have Oman facility. At that time, we decided we make the new facility Oman facility, but the denying they told us we buy from only make packaging India plant only.

35:33 Then we realized why they continue to sell because this pack any product into that bag, it is almost cost of $20 $40.50 dollars material into the $0.25 So it is a less than 1% cost of the entire product. So for 05%, point 75%, percent cost will not change the supplier. So at that time, we understand this scenario. And thought that we are continue the business with the Kargi. But from that entire costing, it is a less than 1% cost of the packaging material. And compared to local, local, I think the 22.53% costing of the local buying instead of that when you get the good price from India and the price from the next packaging, so that's what we are continuing this business from very long and very good long term concept here. And for this is for The USA business, currently, last year, we closed 140 plus for business business.

36:41 In continuation of this, your answer, INR 1.6 crore foreign currency gain during the first quarter of financial year twenty twenty. Got it. It. And we are on this product, have seen our dominant product, right? In the dominant product, what kind of competition, what kind of market share we actually have in India? For example, we have almost 43,000 tons in terms of capacity. How large is the next competitor in this space in terms of size? Yes. Organized, sir, to be very ordered, the pinched bed and PMW PP bed, There is the see, PP beds and juice beds and the bulk packaging, India have a lot of companies.

37:32 But the product mix is a different. See, packaging company for the packing of the grain and pulses, fertilizer, animal feed, cattle feed, There is a lot of option available, food bag available, then PP based, taxographic printer bag. So we are the company's innovative this VOP printed laminated bag. But I will give you one example, like we are using the rice one kilogram, two kilogram, five kilogram, there is a blending winter bag. But before 2004, they have to pack 25 kg same rice, then there is a low branding availability in the market. So our company's initiated this branding into the 25 kilograms bag, also 10 to 10 like one kilogram pound branding. So for that, our company journey will have started. And then after continue the growth on the brand, we decided our customer is 100%, those who are willing into the brand. So right now, company, our like more than 2,000 customers and 13,000 SKU more than 13,000 SKU.

38:29 So for that, we are making the best for that brand only. So our each and every customer has their own brand, we print on it and then we get supply to those. So for that, we have no presence for this kind of issue. And sir, market share, basically, as confirmed by, is no competitive peers on listed with us. And that's why we cannot compare apple to apple with them. Basically, in pinch bottom, we are the leader in the market in Indian market. And other P and W people also are very good. So we continue growing and our customer demand is increasing day by day.

39:17 Sir, I am adding only like 10.1% market share as per the Technotech last year one report. We have the industry report. So we have the 10% market share of the entire packaging this kind of bag. And our majority of 55% export and only 45% is a domestic sales. So our actually compared to peers, so that is the Q3 company, one is Thailand, one is Cambodia and China mainly. But China and the company, so they are not directly competitor to us. So Thailand and Cambodia is a direct competitor to us to not even make direct to India as well. But the labor cost and electricity cost is much more higher than the India. So you can check online everywhere. You can see the whole production cost. Comp... Compared to Thailand and Vietnam, India is a lower production cost. The most important, not even the mix packaging, entire industry, this kind of product, textile product, this kind of packaging, textile, technical textile, specialized packaging, India cost is today is a raised cost of all over the globe. Secondly, yes, we have a competitor in USA like a Polytech is about pure, exactly pure.

40:31 They are into The U. S. With the manufacturing back into The USA. And they are 100%, we can say the competitor and pure. But their price and our price is a very huge difference. I can give you one example. They are selling dog food bags, one bag almost like a 0.7 times, 0.75 times. And the same day, we can sell from 35% of 2 point rupees next to next. So that kind of difference we showed there here, but pricing, we are very good in India. Thank you. Mr. Lakshmi Narayanan, please rejoin the queue for more questions. Next question comes from the line of Nihal Shah with Prudent Corporate Advisory. Please go ahead. Nihal Shah? Thank you for the opportunity and congratulations.

41:21 So this EBITDA per kg of 54 Mister, sorry for interrupting. We cannot hear you. Can you come... Can you speak a little louder? Am I audible? Yes. Please go ahead. Hello? Yeah. Yes. So this 54 rupee per k... EBITDA per kg, is the future guidance for this number? I guess this is a pretty strong number as it is. So do we see any further scope of improvement here? And what is our volume growth guidance for FY 'twenty seven? Sir, thank you for asking question. Definitely, sir, we try our different ways to work hard and our specialties is a making back and profit will come automatically. So always our focus in good value added products and always export good focus export. Last quarter, we have 71 countries. Currently, we are reaching into 74 countries. So obviously, I think that new countries, new product, new customers. And like right now, we have 55% of our exports. And like our other major is the things gotten back. And yes, last quarter, we installed two machines in the finishing area. And it's a very expensive machine like 20 crores, one machine cost.

42:34 And our focus is to sell pinch bottom bags into the market. So definitely, as the past experience and past financial figure, the same way we are going into the future as well. Okay. And what is the margin difference for our export orders and the sales that are made domestically? Sir, mostly 5% to 6% always as per the previous data, always 5% to 6% always different will be deducted. Domestic is return low margin and export, we can get a good margin up to 5% to 6% GP. GP. Okay. Thank you very much. You. Next question comes from the line of Ashish Suni, Family Office. Please go ahead.

43:27 Sir, next two, three years growth will come from what sort of product category as well as from geography? So if you can give a breakup, that will help. Ashish, definitely, I mean, most of the three, right now, we are working on 74 countries. So we are always adding the new country, new countries. And geographically, we are already in Europe, many countries like African countries, Gulf countries, you have to North America, South America. All the places we have already presence over there. But, you know, geographically, always, those countries have a cost of the labor, normal labor 500 and above customer country because this product is a very huge labor like today we are almost onboard on the contractual labor more than 2,000 labor.

44:17 So definitely, this is the laborious product in packaging. You never had like this kind of numbers on paper. But this is 100% laborious product with the high end technology. So that's what we get the good advantages. And this country over 500 cost of the production. More than that, they are from my customer countries. So we are geographically we are adding. So about the product, yes, just we recently innovated twenty seventeen, 2018, Peach Bottom Back, and we started our baby step on 2021. So this is the Peach Bottom Back is a still new product innovation in this kind of thing. In 2023, we have got it ten percent and 2024, we get the sales of 16%. 2025, we get the sales of 20%.

45:04 And currently, we get the 23%, near the 22% to 23%. So always our focus that is a value added product and always our focus to increase our pitch bottom bag. And we are starting this IPR journey with the pitch bottom back expansion and all the things. So definitely, our focus on more in that area. And more than that, always companies innovative. Always, I can say, we try new innovation, new innovation and new innovation. So always we try to get the new innovation and also we are on that development area we never start on packaging. So the same way as past always come up with the new, like a new customer and new area. So then maybe grow for Thurley. Thank you. Mr. Soni, please rejoin the queue for more questions. Next question comes from the line of Nitin Babulal Gandhi, Innovus Advisors Private Limited. Please go ahead.

46:02 Thank you, Alpesh. Wish you congratulations on successful listing. Just to share some thoughts on what is the gross block addition in this quarter And INR $3.80 crore expansion, which before that, will you be adding anything in a gross block? And whether the INR $3.80 crore gross block addition in 'twenty seven will also maintain the shutdown of INR 2.5 plus? Thank you. Mr. Dundee, first of all, thank you. Thanks for your wishes. And I will be able to go more faster as possible. So sir, first of all, our CFO, sir, will give you guidance about this gross block. Just one minute. So I'll explain you, sir. Today, as of now 06/30/2026, our total gross block is INR $4.16 crores compared to this previous financial year quarter one, financial year 'twenty six, that was INR $2.73 crores. So that almost we have added INR 141 crores within the one year of time.

47:09 And for quarter one, only the quarter one financial year 'twenty seven, we had added INR 30 crores, INR 75 lakh in our gross block. Thank you. Mr. Gandhi, please return the queue for more questions. Hello? Ashish is there. Hello, is Please go ahead. Okay. Okay. Okay. Because they have one more question, I would like to answer that gross to our continuity of same or not. So, sir, we try our leverage to as much as possible about turnover we can get from the business and the value added product.

47:55 So our our try best try to maintain and better on that situation. You. You. You. Next question comes from the line of Ram Singh, an individual investor. Please go ahead. Hello, am I audible, sir? Yes, Ram Singh. Sir, on good set of numbers. Thank you. Ladies and gentlemen, due to time

49:42 constraints, we have reached the end of question and answer session. I now hand the conference over to Mr. Alpesh Tulsipay Patel for closing comments. Thank you, sir. Thank

51:41 you. On behalf of Knack Packaging Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.