Mold Tek Packaging (NSE:MOLDTKPAC) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the MOLDTKPACKGLIMITED Q1 FY twenty seven Earnings Conference Call hosted by M. K. Global Financial Services Limited. 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. Should you need assistance during the conference call, please signal an operator by pressing star, then 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister Rajesh Kumar from MK Global Financial Services Limited. Thank you, and over to you, sir. Good evening, everyone. I would like to welcome mister Jay Laxman Rao, chairman and managing director, and also thank you for this opportunity.

0:52 I shall now hand over the call to him for the opening remarks. Over to you, sir. Good afternoon, gentlemen. Thank you very much for your interest in our company's quarterly results conference call. I'm glad to inform you that we have made a historical quarter. The turnover gross INR300 crores partially helped by increased raw material costs. However, one of the most important points here is the per kg EBITDA has shot up to INR46.7 per kg, which is historically around forty-forty 2 was the best in the last several years. So this is a good turnaround because of the increase in sales in pharma and food and FMCG, which are high value add products and also mainly driven by the consolidation efforts we have taken up in bringing down the number of units in Hyderabad to only two units from five units earlier.

1:50 So this consolidation and improved sales of high margin products has enhanced our EBITDA margins considerably in spite of the economic disturbance all around the globe due to the war situation. So that's fairly a good quarter where in spite of the price hike we could successfully pass on the raw material price hike to all the clients and with internal efficiencies and consolidation we could improve our profit margins considerably. This is briefly the introduction, and I hope we can discuss more on questions and answers. Over to operator. Thank you very much. We will now begin the question and answer session.

2:36 Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment for the questions you have. We take the first question from the line of from Asset Manager. Please proceed. Hello, sir. Thank you for the opportunity. So my first question is, over the last few years, the company has diversified beyond, like, decorative prints. And looking ahead, this, What would be the ideal revenue mix across, like, what portion will we accept our decorative things over the next few years?

3:29 It is currently value wise 46%, but volume wise is around 50% paint alone. And probably it will start stabilizing around there or it might come down to 40% over the next two, three years because of the increase in food and FMCG and QPAC is much sharper than and pharma are much sharper than growth in paints. So I hope in three, four years paints as a segment might contribute around 40% from current 50%. Okay. And any other segment in which we are looking to enter? Yes. We are already growing in food now. Food is now contributing to almost 24%. And if you consider QPAC also, it is around 28%, 29% of their products are sold in food.

4:20 Pharma is only 2% in terms of weight, that is volume, but about 3.5% in the overall sales. So these numbers will shoot up rapidly, like say, percent, 50% CAGR for next three, four years. And food and FMCG might grow at least around 18% to 20% CAGR. So whereas the paint might grow around 8% to 10%, currently it is 10%. So at that rate, print will slowly lose the share from 51% currently to probably 40% in next three, four years. Understood. And could you help us understand like what percent of incremental revenue this quarter comes from new customer, any addition?

5:07 New customers, several customers have been added in food and pharma, not one or two. In paint, of course, it's a more matured market where we have the top brands with us for the last several decades, I can say. So in the paint and loops, there's not much of new additions. But in the food and FMCG and in the pharma, there are several clients I can't list. There'll be more than 10, 20 clients added in this quarter. Okay. And in percentage terms, can you give, like in food and pharma, how much has been came from new customer? Percentage terms, probably if you can send a mail, we'll reply to you. There may be 3% to 5%. But overall Food and Thin Wall growth is 24.2%, which is considerably much better than what it was in the last two, three years.

5:58 Okay. Thank you, sir. Thank you. We take the next question from the line of Deepak Saha from Ashika Institutional Equities. Please proceed. Yeah. Hi. Thanks for the opportunity. Am I audible? Yeah. Go ahead. So just a couple of questions. First, on the volume side, if you can help us understand this growth. Is it because did we apply a new selective approach as far as the current market conditions are concerned? Is this the reason that the volume growth was relatively low? And second, on the EBITDA per AV side, how sustainable this number is because one part is obviously new guys come down and mix has changed, but if you can share some color and attribute the reasons behind this EBITDA per kg improvement? These are the first two questions.

6:51 Yes. Volume growth is tempered a bit because of drop in lube segment. Loop segment has dropped by 17. It's mainly because of base oil unavailability with couple of private companies who could not due to the war in Iran, their base oil procurements have been affected, which impacted their sales and volumes and which in turn affected our sales in lube segment. So lube being almost 17 to 20% of our sales, 17% drop has impacted almost directly 3% to the volume growth. So the 6% volume growth what we achieved would have been 9% had even lube remained at the same level.

7:39 So lube is a disappointing performance this quarter, which is beyond our hands because of the input problems of oil base oil to the some of the private players. So they could not get their oils in time and in turn we lost the volumes. So that is about the volume growth. But I also told you in the last quarter as pharma growth is 38%, but it won't reflect too much on the volume because they are lightweight containers, lightweight components. So on the volume side, will now anything around 10% is a great volume growth given the worst scenario. But what I am very glad about is the EBITDA growth that has been achieved through consolidation of our units and improved efficiencies and a little bit better capacity utilization compared to the last financial year. So all these three are long term in nature. And as you asked, we are bullish that we may able to cross our projected INR42 million, INR43 million EBITDA for the year marginally.

8:49 Maybe we are now aiming at INR $44.45 for the full year. Got it. So the way to look at is that incremental Y o Y EBITDA per kg growth would more normalize from 46% that we have seen in the current quarter. In the Q2, Q3, Q4, we'd have a little bit of a normalized growth on the EBITDA per kg side compared to last year. Is that the right way to look? It will be better than last year, certainly, because Q2 and Q3 of last year, it was below 40, but we are aiming still at around forty five days because the cost advantages and the consolidation benefits will continue to accrue. And we have other areas of automation, which we have started recently, which also start contributing in couple of quarters.

9:37 So things are looking brighter because actions what have been done are long term in nature. Consolidation of units is a onetime thing, but its benefit will last forever. That's why we are confident. Increase in the food and FMCG and pharma, we are confident to sustain momentum in the EBITDA. Got it. One last question on the paint side, 11% volume growth, 30% revenue growth. This 20% value growth that we have secured, if you can just share some color, is it more one off or this is more looking sustainable? How should we look about volume and value growth going ahead on the paint side? No, no, no. This 31% growth rate in paint and 10% in volume is basically eaten away by the raw material price rise. So the sustainability of this will depend again on the raw material movement. If the raw material stabilizes comes down, this gap will surely come down. So whatever what you should appreciate is company could immediately get the price rise due to the war. The raw material shot up from 110,105 range to almost 155.

10:49 So the company could get that money with quick time frames from their clients and able to sustain or enhance our EBITDA. Otherwise, we would have seen EBITDA affected. So this shows the relation what we have with our top clients in the paint or lube or even food industry. And also the confidence they have on Mold-Tek. So we are able to pass on the price rise as and when the price rise happened and able to sustain our margins rather improve our margins. Got it. That's really helpful. Thank you and all the best for upcoming quarters. Thank you. Thank you.

11:35 We take the next question from the line of Raj Shah from Fident ANC. Please proceed. Hi. Thank you for the opportunity. My first question is on our QPAC volumes. So they have come down sharply, growing at close to 20% last quarter to 2%. So what was the reason for the same? Secondly, yes, in terms of And secondly, on pharma also, I mean, on a quarter on quarter basis, our volumes are up like 23%. So how do you see this ramping up? And in terms of our target of close to 55 crores of revenue from pharma, so I mean, what kind of growth do you see in the next couple of quarters? Yes. Fact, the price rise in sorry, the growth is only 2% mainly because QPAC is a little price sensitive segment.

12:29 It is mainly used for edible oil and cashew and edible oil industry has been under stress because of the increased freight costs and oil prices on one side. And with such a short up of raw material price from 100 level to 150, they were little hesitant to increase their sales and volumes. So that is one of the major reasons, even companies which have moved into our SquarePACs have gone back to tin or other forms of packaging tentatively. And that is one of the reasons why QPAC is a little growth is disappointing. But now we set up our QPAC facility at North, which has started adding numbers and also in South in Cheyenne. So we hope that coming quarters we'll see double digit growth in QPAC again.

13:22 That is your first question. Coming to the second question, pharma, we reached 41% growth, which is a sizable growth compared to last year's Q1. Even in the volume terms, is a 38% growth, which I'm sure you will appreciate is a big jump given the scenario. And at this stage, we already have about a quarterly projection of INR11 crores to INR12 crores, which can go up to INR14 crores, INR15 crores towards the end of the year. So we are still looking at a INR50 crores, INR55 crores target for our pharma. So which will be like almost a 50% growth over the last year number INR34 crores what we achieved. So in pharma, we are definitely on a strong wicket and we also have plans to get into ophthalmic range of products for which trial moulds are completed and commercial moulds may take another five to six months to arrive.

14:22 So hopefully from beginning of next calendar year, we'll be entering into that. And we also are looking at other medical devices like dosing pens for which we are looking at ways to shorten the development period, but no firm plans as of today. But certainly, that is another product we'll be landing in the next financial year. Understood. Secondly, on your finance cost, we have seen a sharp increase on a quarter on quarter basis, close to 20%. So what is the reason? I mean, last quarter, I think we have said that we'll not be increasing debt from year on. So what was the reason for the increase in finance cost? See, increased finance cost is two reasons. One is raw material cost goes up, our working capital needs to go up.

15:10 So on that on a higher volume of material cost, we will be paying the interest to the bankers. So overall working capital, the raw material cost is short of if you compare it to last year, fourth quarter is INR97 average price is INR130. So almost 35% there is a jump in the raw material costs. So our raw material inventory costs and carrying costs also will go up accordingly. So that is one of the major reasons why the interest has gone up. It's not because of term loans. Term loans also of course are there, but not to the extent of this much difference. This 20% rise, what you see there compared to the Q4, 20% rise is mainly due to the cost of raw materials and goods, which shot up in the war period. So that has to be that is the reason for increasing finance costs.

16:03 Sir, lastly, just on Vibe, is there any update in terms of after JV? I mean, do we see volumes Vibe, going we have developed the three products now, which they have got applied for patent and another six products three products, which consists of six components are also getting on to the pilot stage, probably in the next two months, they will also be ready. And together they want to go for they already applied for IP for these three products and another two products also they want to go for IP and they are already taking the call on IP expenditure and marketing efforts. And even they have agreed to participate in the new MOLD cost to the tune of $50,000 So all this augurs well, but as I said, it is a long call, probably towards the third quarter, we'll be starting some commercial products for Vibe.

17:02 Understood. So any target for this year? This year probably couple of crores we may do in the last quarter because these products are very high value add. They're even better than it is equal to pharma products in terms of EBITDA. So once they are launched, the volumes also can shoot up and probably next financial year we'll certainly see decent numbers coming from wide book. Thank you so much. Thank you. We take the next question from the line of from Equinox Capital Venture Private Limited. Please proceed. Hello. Yeah. Am I audible, sir? Yeah. Yeah.

17:49 Very good evening, sir. I just want to understand that you you selected that you have passed on the prices, but if I see your quarter on quarter market and your revenue growth, your revenue growth is around 36.8%, but your gross profit is down around 12% and EBITDA is down 16%. So there is some cost of the absorption. So there is drop in gross margin from 46.641.31%. So what is the reason of this? No. If you notice, our EBITDA shot up by 12%, which is a very big jump from R40.7 per kg to R46.7 compared to Q the last full year. So that is a very considerable achievement.

18:41 The price the revenue rise looks high because of the inflationary trend in the raw material, which we could successfully collect. Otherwise, it would have impacted our EBITDA per kg. So EBITDA per kg has gone up because of the efficiency and consolidation what we have taken up in the last financial year. So these are the reasons and we could effectively pass on the price rise for raw material from if you notice the raw material cost, it was in the Q4 for the full year, 107 in Q4, it become INR130 now. So the revenue growth is partly due to the inflationary raw material price. But the proof of the pudding is EBITDA growth. So EBITDA growing by almost six over the last year number is a big relief or proof that our efficiencies and consolidation are adding to the bottom line.

19:37 Got you, sir. And could you please explain what kind of value added products in pharma that we are going to launch or planning to launch Yes. Currently, we have three set of products, you know that bottles and caps, variety of caps. We have EV tubes, fluorescent tubes and canisters. And now currently, we are working on some other products including dosing pens wherein IP requirement is there. So we are trying to work out with a suitable IP holder who will be able to give us the IP rights and able to bring the product here in India. So that will cut our development time from three years to one year and enable us to get into this business within a year's time. Even some imports can be done during this period to do the market seeding. So that way we are going sorry?

20:34 Yes, please, sir. So that is one product wherein we are putting efforts. We are also looking at semiconductor trace. That will be a little longer shot because by the time semiconductors and chips are made in India, they will be needing lot of packaging support and this packaging is very high end, if you I mean accuracy and high end raw material requirement, understanding of the technology is very much needed. So that is one very high end value add product we want to look into in the coming years. What kind of EBITDA margin for? Is this a new product? Be very high, something like INR $25,200. I guess we are still having basic data.

21:19 And that again depends upon the capacity utilization, but it will be at least double that of pharma is my guess, because the material used, the dimensional accuracy required and temperature characters, all that are very demanding. It is a step ahead of pharma. So there are very few players in the entire world who are doing this, but Taiwan and Korea are the main countries. Of course, China also there are suppliers with good technology. We are trying to find some good technology partner to enter into this. That is a little longer shot. But PEMs is one area where we are focusing now and hope to get into that business in a year's time.

22:05 And so what kind of capacity are we putting for this PEMs? What is The the current capacity requirements are shooting up in India, not only for diabetes, but also for semaglutide and other products that are expected to move into disposable pens. So once that volumes come up, the volumes in this country or even exports to the African and other countries can be of sizable numbers. So we are still at the timetable stage now depending upon the plans, it could be 1,000,000 tonnes per month will be the minimum capacity we'll be starting with. And this revenue will come from the next financial year, right, as you said? Yes. It will take at least one year to get the validations and clearances from clients.

22:55 If any tie up happens with a couple foreign suppliers we are working with, in that case probably some imports can be done in this year itself. Otherwise it will take at least a year to get into the business. Got it, sir. Thank you very much for answering my question. Thank you. Thank you. We take the next question from the line of Shireesh Pardeshi from Moldilan Uswal. Please proceed. Good evening, Mr. Rao, and thank you for the opportunity. As usual, your surprises. I just wanted to check few things. This quarter, our volumes were lower. And because of that, our EBITDA has shot up to 46.5.

23:43 Now what I'm trying to understand, if you can give me a number, what is the lubes quarter one EBITDA per kg? And in future, once lubes order comes back, will this EBITDA looks like towards 45 or will it be lower than that? Loop as it is not a bad contributor. It is average somewhere around 35 to 40 level. Yes, lube coming down is not the reason for improving the EBITDA. Improving the EBITDA is mainly due to consolidation of our units, which has reduced overheads, wastage, inter unit transfers and rejections, which were happening in printing especially, because our printing units were spread in three locations.

24:29 Now we brought them under one roof in Sultanpur. And also couple of units closure reduced our overheads considerably, right from power cost to the supervisory and managerial staff, they could be used elsewhere or we let go some of the people. So the overheads have come down considerably, inter unit transfers have come down and raises and rejection rates have come down. So these are long term in nature. So that is why we are confident about a consistent EBITDA growth in the current year in spite of moderate volume growth. And you must appreciate that in spite of the worst situation all around other than loops all our other segments have done well especially pharma and food and FMCG grown by 3824% respectively and paint by 10.8%, which is a fairly good number. So only loops are down due to the decile disruption in couple of our clients' locations. They could not get the base oil because of their dependency on Middle East.

25:36 And of course, QPAC, as I explained, is a price sensitive market, Edible Oil and QPAC are main users. And so they were little hesitant when the raw material shot up by INR50 per kg. But they are coming back now. We are seeing the trend is returning for at least a modest 10% growth in Q2. Okay. My second question, our core business, Paint has grown about 11% and Food and Infantry just grown 26%. However, there could be an ambition because quarter one overall volume growth was about 6%. Now in this setup, how we should think about the full year volume growth? Because I think the core business will continue to grow at that speed. So I just want to understand, is this price is now settled and the growth looks better in second half for volume?

26:29 Yes. For volume growth, as I said last time, we are aiming at 10% to 12%. Even today, I still feel 10% is possible because in spite of the war, we are very the clients are sticky with us and rather some more clients who left us are coming back because they know Mold-Tek can afford to maintain the material, produce at good efficiency and ensure supplies in time. So when any disturbances there in the markets or general atmosphere around, they will fall back more on MOLDTK. And the trend of IMO adoption in paint industry is growing because the leader has started using more and more IMO brands and Ajitha Birla also using more than 25%, 30% of their fields in IMO.

27:20 The trend is spreading into the loyal players also and they are coming back to us and hopefully paint and paints especially, we will see a double digit growth for the full year. If paint remains at that level, if loops even come back to a zero level of growth, food and pharma will pull up the numbers to make sure we are at 10% volume growth at least for the year. What you should appreciate is pharma numbers are weight wise, they are very less compared to pales. So even if growth is 10%, it's equivalent to a growth of 15% volume if pharma is growing at 40%, which I think the trend is already in line with that.

28:08 So now more than volume, I would look at one is definitely volume up to even 9%, 10% volume growth is equal into 14%, 15% of the past volume growth. And EBITDA growth of INR5, we achieved INR6 in fact for the compared to the last year, full year at 40.7%, we did 46.7% is mainly due to the consolidation and efficiencies and better capacity utilization, which will be long term in nature. So that's why I'm confident this year we'll be crossing our target of 42%, 43% we set for the full year. Okay. That's really helpful. My last question, have we taken any further price increases or passed on any raw material increases in the month of July?

28:56 You see, whatever happens in the month, we pass it on in the next month. So if July, the prices have come down in the beginning, and again, last two weeks, they have gone up. And now today, they are back to 145,146 compared to the peak of 155 they reached in end of March. So again, the price is rising, but we don't know if the war comes to an end, I'm sure it will come down to 120,145 at least. Yeah. I understand. The reason why I'm asking because you also eliminated the in house printing levels. So there is a cost lever also setting there, and there is a margin lever also setting there. So I was just saying that 46%, you're saying 43%, 44%.

29:41 But I would expect the margin to remain stable the same level at 18.5%, 19%. I hope so. Okay. Okay, all right. Yes, thank you and all the best. Thank you. Thank you. We take the next question from the line of Chirag from Keynote Capitals. Please proceed. Yeah. Thank you for the opportunity. So my first question is related to the price pass on that we are talking about. Tomorrow, if the price reduces, will it will it be fair to assume that our gross profit per kg would still remain in the range of 100 rupees? Gross profit per kg at 100 rupees? Where are you seeing that?

30:29 You're So calculating minus Yeah. Dividing gross profit by the volume. Because this is the entire path on us. Right? If we are passing or if the price increase in raw material is about 30 rupees from 100 to 130, and we are selling it $1.50 rupees, so it increases by 30 rupees. It's $1.80 to increase from $1.50 to $1.80 due to which by eyes we looked at the margins are down. However, on unit economics business, the realization is still better. Yes. Yes. That's why I always encourage people to look at the EBITDA per kg, which is a current sign of profitability in our line of business. Because raw material is a variable, which is not in our control. And the price goes up or down, we pass it on to the client in the following month.

31:20 So that is still happening. So tomorrow, if the prices come down, it will come down and the percentage looks higher. But if you look at the absolute figure EBITDA per kg, that is what matters. And that's where we are I'm very happy that we got almost 12% jump compared to the last year's number in spite of the war situation and in spite of the loops being impacted due to war. So this is through consolidation and efficiencies, which are long term and permanent in nature. Right. Got it. So second question, like we are talking about the leads as a segment. If I'm not wrong, In q two, we lost a big client in last year q two, which led to a normalized rate of 1,800 to 2,000 metric ton volume on a quarterly basis.

32:07 So one thing is that it is still a normalized level. Second, I wanted to know was the... If if our... The QPAC segment's volume normalizes, which was... Which wasn't any good because of the competitive intensity it has, that is the reason why you're talking, you that the EBITDA per kg, which is around 46 rupees, will come down to about $44.45 as a range. Yeah. Yeah. Because not only that, when the capacity utilization remains at the same level or maybe a little less, you will automatically EBITDA per case will come down. So I'm sure that loops will compensate this quarter. They're not if not fully back, they're improved a lot. Maybe they made some alternate arrangements of the base oil. So a couple of clients who are impacted during the war are now back into market in terms of quantities.

33:02 And we hope loops will get back into shape in this quarter. So that will overall reduce the I mean, improve the capacity utilization at the 75% level. If that happens, again, we may reflect on similar set of EBITDA per kg. Otherwise, probably marginal reduction here and there. But overall yearly projection of 42, I gave last quarter at the end of last year will certainly be surpassed in this year. Right. So next question is related to the new lines that we are getting into, the ophthalmic and looking to get into the dosage. Wanted to understand what kind of size this industry has. And, like, even when you started to get into pharma, the quality requirement that the plastic products should not mix with the ingredient, maybe the the capsule or something else. We feel that it should bring up to that quality. Similarly, I guess that this is similar for the dosage spend too because there is an API, liquid API included in that. Right?

34:09 So just wanted to understand the learning curve that would be required. And as you're saying that once the IP will will... We will get the IP done, the time frame can reduce from three years to one year. Just wanted to have a ballpark view of how you are looking at this. No. What I'm saying is that in case we find a partner who is willing to share his IP and the validation data, which which is like a tech support or a tech understanding. Then the time frames can come down from three years to one year itself because then the testing already some of the suppliers abroad we are in touch with, they already are in Indian market at the various levels of testing. So if we tie up with them, things can go faster like few months or next one year.

35:04 If that fails and we have to come out with our own design and IP, it will certainly take two to three years. So at this stage, it's too early to comment, but we are on a track to see both options. And the assets, sir, is there any issue? Or would we have a new plant and machine for this? No. That, you know, we already have the land, so we'll be needing at least 50,000, 60,000 square feet of area to start with and that will be around INR10 crores investment and the machinery to start with would be also in the region of around INR10 crores to INR15 crores. So minimum INR25 crores to INR30 crores minimum plant size is required in the beginning and which need to be ramped up depending upon the growth in the business.

35:50 The pricing and EBITDA margins are double more than double that of regular form of products. Right. Right. And for this ophthalmic product that we are talking about, for that, we can make it on the same asset that we have today with us? Yes. Ophthalmic, we don't need any special level of safety or the ambience. Our current facility where we are now already has taken up a construction of over 25,000 square feet area, which will be completed in six months' time. So that is where we'll be setting up the ophthalmic range. The new land, which we acquired a year ago, will be kept for devices. It is mainly pens and some other there are some more devices under consideration, but we'll be too early to comment. We are working on feasibility and market demand.

36:42 But let me assure you, Mold-Tek is now focused on pharma and diagnostics in a big way and devices in a big way. And coming forward in the years or quarters, if not quarters years, there will be certainly more focus and growth in those in that segment. It's a huge potential area and we just touched the tip of it. So we have a long way to go. Right, right. Just last question from my side, Generally, after reaching a 75% of capacity utilization, we generally look for a new capacity addition. We are currently at about 77,000 MTPA. If you could just highlight what kind of 67,000, I guess. Our total capacity is 67,000. Correct. 67,000. Right. So what are we looking at the...

37:29 For the... By the end of the year, what are we looking at our capacity? And down the line about two years down the line or three years down the line, how you are looking at it? Yes. There will be certainly at least 10 to 12% capacity addition every year that is to capture the growth and better utilization at three units which are Cheyar, Panipat and Mahad. This is where we are now trying to focus by enhancing the product range there. For example in Panipat, we already started test marketing our thin wall products with four machines last year and the response is pretty good. Already goods worth of around INR70 lakhs to INR1 crore are being sold every month. And now we are doubling that from this month, August onwards, to catch up for the first two seasons.

38:19 So hopefully, not Panekapat unit will be utilized better in food and FMCG, QPACs. Already QPACs, we are selling more than INR 1.5 crore worth of Q Packs from Panipot in this last six months. So whenever there is ups and downs in the pain demand, there will be fungibility with the Q Packs. So same thing we are doing at JR. Now a set of molds are going to JR for QPACs and and also paint industry molds, which will enable us to use the capacities in those in that unit also better. So our focus now is utilizing this capacity from 75 to probably 78 or even 80 in the coming years. And apart from that, create another 8% to 10% of capacity to catch up with the growth.

39:10 Perfect. Thank you. Thank you so much. I'll join back. Thank you. We take the next question from the line of Bhargav Budhadev from Ambit Asset Management. Please proceed. Yes. Good evening, team, and congratulations on a good set of numbers. Sir, my first question is that is it fair to say that the things that we would have seen some volume decline? Obviously, because of elevated RM prices, they might be destocking. But now with crude coming off, is it fair to say that we can, in the ensuing quarters, see volume growth coming back in Paint? Paint, actually, we have 10.8% in spite of the severe conditions what we are experiencing.

40:00 The main culprit is lubes. That is where I explained 17% dip compared to the Q1 last year. Volume growth. Yes, yes. Even volume growth in paint is 10.8%. The loops was minus 17%. So that is where the stunt volume growth has been stunted to some extent, otherwise, you would have been close to 99.5%. So the 17% dip in lube is the culprit for our volumes being moderately less compared to what it used to be. And once the war situation becomes normal, even now, I think, Loops, they have found some alternative arrangements of this oil so that their sales will come back to normal.

40:50 And hopefully, in the coming quarters also, we'll be able to achieve double digit growth given our growth patterns in food and the QPAC and Pannipat and JR capacities are being improving utilization being improving. We are aiming double digit growth in the coming quarters. Secondly, sir, with Asian Paints also increasing the IML share and within that, Mold-Tek is also now seeing incremental business given that our capabilities are far superior. Is it fair to assume that within Asian Pain, our gross profit per kg as well as EBITDA per kg should sort of increase from year on?

41:40 Yes, yes. It is increasing because the volumes are increased, capacity utilization is improving, the molds and machines are being kept on better use. I can't singleize I mean, can't tell you the exact number, but we have a very good growth in Asian Paints in this quarter. And their IML share is rising. Is that fair understanding? Yes, yes. IMO share is also rising and their volume growth is very considerably high, which used to be down in the previous couple of years, started positive from last quarter, that is Q4. And this quarter is one of the best growth numbers. And this 10% volume growth in paints, which we have seen in the first quarter, maybe in the next nine months, it should only accelerate. Is that a good understanding?

42:34 It should at least remain at 10% to 15% range. We are confident this time, paint will go in double digit and the signs so far are good. But for at least the war stops in couple of months' time, hopefully, we'll be seeing even 15% growth is possible because of very handsome growth in Asian Paints sale for us. Oh, 15 for the full year, you are saying? Sorry? You are saying 15% in pains for the full year can be a possibility, volume growth? 10% to 15%. Thank you. We take the next question from the line of Shaurya Yatav from Growth Fair Ventures. Please proceed.

43:24 Hello. Am I audible? Yes. Thanks. Sir, I have just one question. Earlier, our team was planning certain visits in China for that tie up related to semaglutide plan. Any update on that? Yes. We are in talks with a couple of them actually, not even one. And there could be some visits in the coming months and talks will start in September. If things work out with at least one of them, there could be some initiative in that direction. Got it. Understood. Thank you.

44:11 We take the next question from the line of Arnav Sakhoja from Ambit Capital. Please proceed. Hi. Thank you for taking my question. So my first question is that we had a strong growth of 11% in volumes for the paints sector. So if you could tell us how much of this growth would be due to our current clients and how much could be due to some new clients that we might have onboarded in quarter one? We don't onboard any new client in paint. This growth is all through our existing clients only. So In paint. And what is what is the total CapEx that we can expect in FY twenty seven?

45:02 Yes. This year, we hope to bring it down from crores, INR135 crores to around INR90 crores. Right. And one of the points that you mentioned in your opening statement was that consolidation of the Hyderabad facility was a major factor in improving the EBITDA per three gs. So is there scope for any other consolidation of some of our facilities or was it just this facility which... In which we were able to do this consolidation? Yes. I think as far as the consolidation of units is concerned, IW is the only location where we had several units earlier, which we brought it down to two.

45:49 The same thing is not possible elsewhere because everywhere we have only one unit. But there are a couple of other areas where we can still see improving the margins and efficiencies. One is automation, wherein we can reduce the manpower and improve the accuracy and rejection rates reduce the rejection rates. We are working on that. A team is currently planning to visit our partner, our good friend in China, who have similar manufacturing facilities running with very lean manufacturing methods. So that study will enable us to implement the same here back in the next couple of quarters.

46:35 And that also should improve our overall efficiencies. Okay. Thank you for answering the questions. Thank you. Thank you. We take the next question from the line of Akhil Parekh from three sixty one Capital. Please proceed. Yeah. Thanks for the opportunity. Sir, congratulations on a good set of numbers. So my first question is, we have seen 19% of our overall value group. Right? There's 6% volume growth and almost 19% growth in sales per kg. Would it be possible for you to bifurcate how much of that growth is because of the price inflation and how much is because of the product mix change? See, if you can see directly that the sale in tons is only 6%, 6.25% increase.

47:24 So the rest of all 18% is mainly due to raw material price increase. It's the inflation rate price increase. Okay. Won't But there be any change because of the product mix as well given that the net of Yes. KG are correct. There will be definitely a change in the product mix, which will improve the net revenue per KG due to pharma increase by 40%. Their per kg rates are much higher. So yes, you're correct to the extent that if the raw material would have been the same level, the difference of 25% would have been somewhere around 1213% because from 6% volume growth, the value add in revenue would have been 10 to 12% at least because of the product mix of food and FMCG and pharma increasing compared to previous quarters.

48:24 Sorry, just to confirm, is it 12%, 13% growth will be because of mix shift? Yes. Volume growth have resulted in at least 10% growth in the revenue. But the product sold The price of revenue. Change what you are seeing, percent to 25% is mainly because of the inflation. At least 15% is inflation in the raw material price. Got it. It. Second, well, listening to your commentary, right, how our nature of business is changing, we are focusing more on pharma and medicine devices and you know, food and medicines, which is also growing at a faster rate. Would it be fair to assume going forward, overall profitability growth or EBITDA per kg improvement should be the right metric rather than rather than the volume growth numbers?

49:20 Yes, I would always encourage people to look at the EBITDA per kg and of course volume growth also as secondary because going forward volume growth might be close to 10%, but EBITDA can grow around 18% to 20% also given our product mix changes and efficiencies that we are bringing in, in our operations. Sure. And would it be fair to assume we should maintain this 19%, 20% of EBITDA growth for rest of the year as such? Yes. Great. And lastly, if you can please share the IMO versus non IMO absolute volume and absolute sales number for this quarter. It's around 75.8% in tons and 77.8 in terms of value for this quarter.

50:13 Great, sir. Thank you so much, and best of luck that. You. We take the next question from the line of Devang Mayur Bhatt from SPARKPWM. I would request Mr. Devang to unmute and then speak. It seems like line has been disconnected. Till then, we'll proceed with the next question. We take the next question from the line of from Keynote Capital. Please proceed. Yeah. My questions are answered. Thank you. Thank you.

51:01 We take the next question from the line of Sandeep Moldy, an individual investor. Please proceed. Yes. Thanks for the opportunity. Sir, I wanted to ask few questions. Total, how many pharma companies have visited and how many are actively giving orders? How many means the number of pharma companies are more than 50 and the current orders may be coming from around 20, 25 companies. Another 10 companies are also slated to be just in the next couple of months. Okay, okay, okay. Yes sir, one more question. 2.5 acres land which we have got and when will the building construction start and when it will be operational?

51:48 As I said, the current growth will be contained within the current premises of our Sultanpur land, old land. And the future growth will be for devices. So probably it will be once we have a plan, as I said, we have two ways of going into devices. One is tying up with existing patent warrant, which will reduce our timeframe. In that case, have to start immediately and complete the billings within a year's time or eight, ten months time. In case we are going for our own internal IP and development, which has a long time period, it could start later. Sir, those are medical devices? Yes, medical devices like dosing pens and other items, similar nature. Okay, okay. Very good. Thank you.

52:40 Yes. One more thing, how many new molds are being made for pharma and why? See, pharma number of molds are increasing every quarter. Let's say, I don't have a count now because number of products have crossed 100 now. Maybe every quarter we are adding at least five to eight new sizes, bottles or caps every quarter. So I think yearly we'll be adding at least 15 to 20 products of different sizes or within the same size, different weights and next sizes. Okay. Okay. Okay. Yeah. Sir, any good news about pharma and semiconductor packaging? Yeah. There are a lot of things happening in the back... Background, and probably in a few months' time, we'll be in a position to talk about it.

53:30 Okay. Okay. And, sir, any CapEx for 2027? Yes, there will be a CapEx of about INR 90 crores for this current year, assuming INR 25 crores to 30 crores for pharma and the remaining for balancing and replacement. Okay. Okay. And only the medical device is a new business we are entering or any other business also we are planning? We are open to consider white goods. We are even looking at electronics and semiconductor packing. These are all long shots. There are the drying boards now. And based on how we tie up or how we get the partners in this field, the time frames can be decided. Okay, okay. And sir, the five to two units which we have consolidated, so now are those three units, what business is going on there right now?

54:23 Currently, lands are available for us probably in a year or two when a good price comes, we may sell off at least couple of them and use the funds. Thank you. We take the next question from the line of Devang Mayur Bhatt from Spark PWM. Please proceed. Yes. Thank you. Thank you for taking my question. So my question was what was the benefit to EBITDA per kg from higher realization? For a higher realization of FMCG and pharma together, it should be at least $3.03 to per kg would have come from those two lines and another INR 3 from the consolidation and efficiencies improved efficiencies.

55:20 Okay. And since our RM cost RM will be higher in near term, so what is your outlook for working capital? Yes, that's what one of the questions. That's what the reason the interest has gone up considerably with increased raw material costs, inventory costs, we end up paying more working capital use more working capital and hence pay more interest on it. So current, my working capital is 1 and 25 crores, which was around INR 110 crores, 112 crores end of March, I think. So it's gone up by around INR16 million INR18 million So you see this continuing for FY 2027?

56:11 It may stabilize there because raw material is now not as much as it was in end of March. It is now currently trading around 10% less than what it was in the peak months. So hopefully it will stay there. It may not decrease much, but it won't increase. It may decrease to the level of 510%, but it may not increase given the raw material price. If the war worsens and further crude prices shoot up, then maybe a different point. But given this current scenario, it looks like it will come down a bit. Okay. And what was your CapEx in Q1 FY twenty twenty seven? Q1 already INR20 crores we invested, I guess, crores, INR22 crores.

57:01 Okay, Okay. Thank you. Thank you. That's it from my end. Thank you. The next question is from the line of Durvind Doshi from NB Alpha. Please proceed. Yeah. Hi, sir. Thanks for the opportunity. Sir, since you mentioned that raw material cost spiked from $7.07 rupees per kg blended in o o q of twenty six to around 130 ish in first quarter of twenty seven, if I heard it right. So sir, just wanted to understand if there's any inventory gains that we got in the gross margin of, say, INR103 per kg from INR97 last quarter? Inventory gains will be there to some extent, but not huge.

57:52 Would you be able to quantify, say, INR2, INR1 per kg? Probably, yeah, 1 to 1 rupee 55, sir, you can say. Understood, sir. Got it. So, and currently, what is the raw material cost you said? Current raw material is 145. The peak was 160, I think, in end of March or early April. Got it, sir. Understood. That's it from my end, sir. Thank you so much. Thank you. We take the next question from the line of Amit Kumar from Determined Investment. Please proceed.

58:41 Yeah. Hi. Can you hear me? Yeah. Yeah. So just one question, you know, what your suppliers are saying in terms of, you know, availability of raw material? Because, again, you know, throughout, you know, this month, which is July... So, you know, just about fifteen, twenty days, you know, state of Hormuz was open. And now, you know, we understand that, you know, US Congress and it they have also sort of passed the bill, which will restrict, you know, imports of, you know, Russian crude oil, you know, also into the global market. So have you had any sort of or have your suppliers have had any sort of conversations with you in terms of supply availability?

59:28 Supply availability, they are not worried about, but the price, they are not able to confirm. That's volatility will still continue. But as of now, PP is calling copolymer, which is our main raw material. Availability is still I won't say it's plenty, but it is available as of today. And even the worst days of March and April, the material was available and there was some shortage and there was some rush to get it from Reliance or other manufacturers. But as such, I think the situation now is better than what it was in March, April in terms of availability. In terms of pricing, yes, it depends on crude, at what price they get the crude and they will change it up or down.

1:00:14 So that volatility is still there. But availability wise, we are much better off now than what it was three months ago. Okay. And in terms of inventory, your own inventory holding as well as your customers, there is mean, sort of lower than normal, higher than normal, how do where do we sort of stand there roughly, if you have any sense? We don't have the details of our customers or competitors, but our standards are around one month inventory, three weeks to one month. If you're talking about raw material or finished goods or total? I'm talking about raw material, including finished goods and SFG, probably one month. Okay. Okay. Understood. One month, one month, few days. Yeah. Thank you. Thank you. That's it from my end.

1:01:06 Thank you. Ladies and gentlemen, we take that as the last question for the day. And would now like to hand the conference over to the management for closing comments. Over to you, sir. I take this opportunity to thank MCTKPAC for arranging this meeting with all the investors who had showing a lot of interest in our company and its operations. I thank you everybody, one and all, and I wish you a great evening. Bye. Thank you, Rajesh. Thank you. On behalf of MK Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.