Mold Tek Packaging (NSE:MOLDTKPAC) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the MOLDTK Packaging Limited q two FY twenty seven earnings conference call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing 0 on your touch tone phone. Please note that this call is being recorded. I now hand the conference over to mister Rajesh Kumar from MT Global Financial Services Limited. Thank you, and over to you, sir. Good evening, everyone. I would like to welcome Mr. Jay Laxman Rao, Chairman and Managing Director of MOLDTKPACKG. We thank him for this opportunity.

0:45 I shall now hand over the call to him for his opening remarks. Over to you, sir. Good evening, everybody. Thank you very much for showing interest in our quarterly con call. I'm very glad to inform you that the sales volumes of the company in the Q2 have gone up by 10.1% compared to last Q2 and profits have zoomed by 36% resulting in a very heavy EBITDA per kg of 46.5 So when you compare to the EBITDA per kg of last Q2, which was somewhere around INR39, there is a jump of almost 18% in EBITDA margin, which is a healthy sign considering the geopolitical situation around us.

1:39 All the segments are doing very good in this quarter. And one of the main most important quarter segments for us is pharma is growing by 26.3% in volume. Food and FMCG is up by 23.7%. Paints are also up by almost 9%, while the lubricant pack continued to be a drag with a 12.3% decline. So the quarter turned out to be a very good performer in view of better segments, better contributing segments have grown at a faster rate compared to the other segments like lubricants and paint and thereby improving the profitability of the company. And I mentioned in my previous calls, our consolidation of the units at Hyderabad resulting in single unit producing entire IML labels under one roof has resulted in considerable savings in the cost and improved efficiencies.

2:43 And also removal of couple of production units and clubbing them in the Sultanpur unit has resulted in overall improvement in the performance and cost controls. Going forward, company is very positive about the food and FMCG because the polypod plant started picking up clients and the numbers are slowly getting added. And by next season, from January, February, I think we'll be seeing good numbers witnessing coming from the Northern Region to Punnipat. And another good news is that IODEX project, which has been on hold for more than three years, has been cleared with some changes and the chain molds are also getting ready by December, November and probably in December or January we'll be starting commercial production of IDEX BOM TEX.

3:33 They run into millions of pieces a month. And again, coming to another three new products have been under development for three MNCs of sizable quantities and they all will be launched somewhere in the end of December or January contributing towards the growth of food and FMCG further in the next coming years also. This is briefly the highlights of the quarter. I think we can share more details on question and answer session. Over to the operator. Thank you very much. We will now begin the question and answer session. If you wish to remove yourself from the question queue, you may press star and two.

4:23 Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shireesh Pardeshi from Moti Lalotwar. Please proceed. Good evening, mister Rahul and team. Thank you for the opportunity, and congratulations. Sir, starting with the volume growth in the paint, I think paint industry is expected to deliver a good number, and there is a price increases also has been happening. But when we look at the volume growth in this quarter, which is lower, so two questions here. What is work then?

5:11 Is there any backlog which is getting shipped in quarter three? No. The paint volumes have grown up by 8.6%. Value wise, they're up by 26%. So 8% to 10% is a general growth of the paint industry. So I feel comfortable growth has been already achieved in paint. And going forward, things may improve further because we are now at Cheyyar started taking orders from nearby clients in the South, which are adding numbers gradually. And hopefully, this may come close to double digits in the second half. Okay. My second question is on food and FMCG.

5:57 I think the volume growth is picking up. But then I just... You mentioned that there are some more clients which is getting added. So is this volume growth momentum will continue in second half? Yes. I'm very confident that the volume growth will continue to grow at a healthy level because not only the current orders are being executed and the new malls are being added, And three or four new products are on the pipeline, which are getting into production in November and December, which will certainly add value to the food and FMCG sector in the coming quarters. Okay. That's helpful. And last on the EBITDA per kg, now we are reaching towards about 40 plus rather this quarter we have done 46.

6:49 So when this mix is tilted over certain CG and which is a high value, high matching product, is it safer that the full year we'll be able to maintain more than 45... The range of $45.50 rupees per page? Yes. We are confident we'll be maintaining now anything around $45.46 range for sure, because even this third quarter started on a strong note and we feel that the momentum going forward only can help it. But I'll be very happy even if we do 46%, which is a big jump from 40.7% for the full year last year. So it's almost something like around 16%, 1715% growth in EBITDA margin. Considering the apart from that, a double digit growth is still possible in the volume, we'll be witnessing a healthy bottom line growth.

7:50 Hello. Thank you. The next question is from the line of Sharma from Equinox Capital Ventures. Please proceed. Yeah. Hi, sir. Very good evening, and congratulations on good setup number. Just want to get an update. Like, in the last call, you have told me about some something that you are seeking in your upcoming project in the pharma, like, and all. And you are finding some partner for that that would reduce your time from three years to one year. So any development in this area? And you are also working in semiconductor trades and also any development in all the value added product that we are proposing to launch or proposing to enter in the near future?

8:39 Yes. In case of ophthalmic hydroperfects, we have already ordered the molds and some molds are being made in house. And I think by January, we'll be having the molds ready. And then dry runs would take at least two months. So by March, product will be ready for testing and commercial production. And hopefully in the next financial year, we'll see the numbers coming in from ophthalmic range of packs. I think they're coming in three stages. And then apart from that, we have some good headway in semiconductor trade packaging. We are now in touch with the all three or four top semiconductor companies that are coming up in the country. We have met them, started talking about the specifications and sharing information, their volumes and their timelines.

9:25 Accordingly, we are getting prepared to be there when the semiconductor products start in India, which is expected to be in a bigger way in 2028, '29 onwards. And we are in touch with couple of partners who can be a probable JV or at least technology providers. And in that direction, we are traveling in next month to China and Korea. And hopefully, some clarification I mean, some clarity will come by end of this quarter. These two are developing simultaneously. As I said, semiconductors is a business for next 2028 onwards, but we are getting ready right now to find good partners and start a product range that will be most suitable because different semiconductors will have different applications and different types of trace, direct trace they use. So we need to deeply understand the needs of the client before we go for the molds and machinery.

10:29 So that process has already begun and at least three semiconductor companies have invited us to for discussions and we are meeting them and taking it forward. Currently, the major manufacturing country, semiconductors are mostly China, Taiwan and all types of? Yes, Taiwan, Korea and China also are active in the directories, which are basic packaging carriers for semiconductors. And we're in touch with at least two, three of the players who are active. And that would be cost competitive as well in case as compared to the other countries we manufacture here and supply those OEM? Compared to Europe and The USA, there is a huge manufacturer, but their costs are very high. So, definitely Asian peers will provide most cost to company to advantage.

11:24 And here, not only the costing, what we understood from the study, what we did in the last three months is that there's a variety of trajectories that are required. It's not that you can have five or six varieties and that range is enough. You will need to make several molds and several changes. So that exists because Mold-Tek having the very good tool room and mold knowledge will be able to make a differentiator. That can be a differentiator between us and any other competitors who may enter this field. So having molds and having more variety of products is always exciting to MOLDTK because that is where our strength lies. And as you said in the pharma, the dosing price that revenue would come in the next year onwards?

12:13 In pharma, you're saying or in pharma. Pharma, yes, next year, we should be seeing some revenues coming from ophthalmic range of products. On the dosage trends, we are still in talks and some samples evolution is going on. I don't see much happening in the next six months at least in that direction. But ophthalmic, yes, it will start contributing from at least Q1, Q2 onwards for the next year. And semiconductors is a long shot. It may go into '28, you have one more we have one more line of closures, specialty closures through Vibe, which is now under testing to commercial going for commercial moulds by April, May. So hopefully, Vibe will be starting contributing revenues in the next financial year.

13:04 Got it, sir. Thank you very much for this. You. You. The next question is from the line of from Keynote. Please repeat. Yeah. Thank you for the opportunity, and congratulations to the entire team for great set of numbers. So my first question is related to the lubricant segment. If I'm not wrong, after losing one client, our expectation was that in use, would be doing about 600 ton volume on a monthly basis. However, it is slipping down further. So as per you, if you could guide us, what can be the normalized situation for the leads? See, if you notice, this is a trend that is going on from Q1 onwards.

13:50 There used to be one or two plus or minus percentage points, but this time it has gone to almost 15% in H1. That's mainly because of the couple of our major private companies, private loop companies having input issues. And public sector, we have never been with public sector. So that is why our paying is visible in the lube industry, having lost couple of clients in their volumes. That is why lube continues to be in the decline. And what you are seeing now is the decline of last year to this year. So last year, there was no such war or any disruption. So whereas this year, I think every quarter, you will notice some decline rather than a positive number coming in growth number coming in loops.

14:42 Got it. So what will be the fair to assume like if we look at the mix in terms of revenue or volume related to paint, food and pharma, so how are you looking at the mix down the line two years, three years? Today paint is continuing to grow at 9%. Probably it will catch up to 10%, 11% in the full year if possible because the indications are good. Paint industry is picking up at least for the last couple of months and their indications are positive for the next coming season. Of course, the season is we are in the middle of the season. So, in paint, we may still see a possibility of a double digit growth. Food and both QPAC will certainly see very good numbers because several new products are being added with backup orders and IODEX also is starting. So Food and FMCG will witness similar or better performance in the next couple of quarters or even beyond that because Panipat plant is all set now and some clients have been regularly being added, additional clients are coming in. And we hope next year real growth in food and FMCG can come through Panipat plant. And QPAC is also picking up very well.

16:03 QPAC business is now growing into other segments in a big way, especially the surgeons. And there we have another major player given us an order. I can't give you the details today, but the supplies have to start from end of November. Already the artworks have been shared and labels are under development. So this is another new development in the QPAC segment, which can add considerable numbers in the coming quarters. So it's very encouraging to see food and QPAC doing pretty good. And pharma, as I said, we are aiming at somewhere close to INR50 crores turnover. We are on track. I think we reached a turnover of INR24 crores for the first half, and we hope we may continue to grow at a good pace and reach the 50 plus crores turnover in pharma as projected.

16:57 So my confidence grows more because of the food and the QPAC. Mean demand is growing rapidly and new products in the food and FMCG domain, which are having big volumes, I can't share the names now, but you all know the brands in the country. They've been very famous brands we are introducing in November in December. And these products range will contribute to better numbers in the coming quarters. Very helpful, sir. Sir, next thing, generally, if I'm... If my if my understanding is correct in this business, we keep about four months of inventory with us. And if I look at the way the raw material prices have moved, is it fair to assume that the kind of gross profit per kg that we are making is expected to be slightly higher than what it should be?

17:52 No, no, nobody keeps four months inventory in this industry. Even if you consider the SFG, FG and raw material put together, it will be maximum one month because they are very voluminous and carrying our carrying time is fifty two days. Now currently it is fifty two days because the raw material may be half of it, let's say twenty five days is raw material. SFG and FG will be remaining twenty five or twenty seven days. So there is no need to have four months inventory, neither we can have space because they are acquiring they acquire a lot of space, the finishing goods and semi finished goods. So we always have limited stock of about a month material and the rest is SFJ and Got it. Got it. Sir, if you could help me understand the kind of product that we are making for Vibe and how much that it can translate into numbers for the next year?

18:52 Yes. Vibe, we are making specialty closures, spouts for Vibe. Already set of seven products are developed and approved by Vibe. And in this month of November, they are going for commercial, I mean, client trials. And if the trials are successful, which I'm sure they will be because we have already tested them thoroughly. There will be orders and then we have to make the commercial moulds, which may take another four months. So sometime in March, April, we may start commercial production. The volumes may start gradually picking up to become a considerable size in one or two years' time, but I can assure you the EBITDA margins will be far better than even pharma. Okay. Okay. Great. Great. And if you could just highlight a ballpark understanding like how big it can be like two years down the line, how much are we expecting to?

19:44 Yes. Two years down the line, we should be able to see at least $5,000,000 to $6,000,000 let's say INR50 crores to INR60 crores top line with a very strong EBITDA somewhere around 30%. Got it. Got it. Thank you so much, sir. I'll join back the queue. Thank you. The next question is from the line of from Equity Master. Please proceed. Sure. Hello. Hello. You may proceed with your question.

20:38 Due to no response from the current participant, we move on to the next The next participant, from Prime Investor. You may proceed. Hi. Thank you for the opportunity. I just wanted to follow-up on the pen injector plans that you have. Could you throw some more light on when we could see these translate into actual business, your estimate of that? And also, like, what kind of customers are you targeting for these products, domestic, export? Are you planning to play into the GLP one opportunity, or is there something else? Any No. You're talking about the white products? No, I'm talking about the pen, the auto injector pen.

21:29 Auto injector pen, I just answered that the development is still on, samples are being assessed by the client, and we are working with a couple of patent owners in China and it might take some more time to talk about numbers. More progress is happening on Vibe, which is a caps and closures line of business, which we entered in a JV with them. They while Vibe take care of marketing, we are developing the moulds and production. That is mainly meant for U. S. And Europe markets. So the Pengs do, I mean, will we get more clarity on it in FY 'twenty eight? Is that something realistically something we can Yes. Europe, Pengs are not 'twenty eight. We may have to come into agreement with a couple of JV players we are trying to approach and make a deal.

22:25 As I said, in December, there is a travel to Cheddar and hopefully some talks may happen. But nothing in the hand will in the next two to three months, it won't happen. Even if it happens, it will start as a trading. Mean, representing them and selling their products here in India for next six months or so. Then we'll be looking at manufacturing them here back in India. Okay. And these are targeted at domestic pharma companies in India? These are domestic... Targeted for the domestic pharma companies, which will be manufacturing either diabetes or the semaglutide kind of Okay. Products. Okay. Thank you. Thank you. The next question is a follow-up question from the line of from.

23:20 Yeah. Thank you for the opportunity again. Sir, if you could just highlight the mix of IML and non IML and volume adding terms for the quarter? Yes. IML volumes, I think, are close to 77% now and non IML, that's labeled products. And non labeled products are 22.68. There is a small improvement for that. Last year, last Q2, it was seven It's become 77 now. So, IMO still continue to grow. One of the happening points is in Asian Paints, the IMO adoption is increasing, which is also one of the reasons why we see a healthy growth in paint industry.

24:09 And value wise, would it be seventeen and twenty one? Yeah, value is 78, up from 76, 78.25. It. Got it. Sir, naturally, if I look at the current capacity and the kind of workings we are doing, we are soon to reach the 70% of utilization again. So will it be fair to assume that another 10 percentage of the size CapEx is expected to be there for FY 'twenty eight? Another what you said? Another 10%. Means today we are at around 57,000, we would be adding another Not 6,000 to seven much. We are already added in this year capacity and some more machines are on the way, which might take it up close to seventy eight sixty eight thousand, 69,000.

24:57 And hopefully, the next year we'll be starting with less than or around 70,000 capacity. Got it. And as I said, always 70% utilization of the capacity is always very good. And anything beyond 75,000 is generally not workable in an injection molding unit, given the complexities of molds and underutilization of the machine capacity. Anything around 75 is a great number. Correct. That was the only reason I was asking that we might be requiring an additional capacity expansion for the next year. Yes. 6,900 will definitely become 70,000 by beginning of the next financial year. And that again, we'll be aiming at least somewhere close to 50,000 tonnes from somewhere around 42,000 last year and probably this year, we may end up around 46,000, 47,000.

25:51 From 46,000, 47,000, we'll be again looking at 50,000, 51,000 for next financial year. So that volume growth is possible. And one thing you need to understand is tonnage is not the only criteria nowadays because peels are becoming more or less stagnant, only paint industry is growing, lube industry is falling. So overall paint contribution in the tonnage is more or less stagnant, while the entire growth is coming from food and FMCG and pharma, where the weight of the component is less per ton, we get much more value add. Even if the volume growth looks 10%, in my opinion, it's equal to 14%, 15% growth of last three years. Because those days, pills used to be major contributor to our top line and bottom line. But nowadays, slowly food and pharma and tomorrow vibe will start contributing to the growth.

26:49 And they are lighter in weight, but add more value to the both revenues and EBITDA. Right, right, right. So just one last thing from my side, when I look at the finance cost as an expense line item, is it fair to assume that due to this higher... The incremental rise in crude prices impacting the requirement of short term warrants for managing the working capital for now. And as soon as there will be a normalization, requirements of short term debts would go back to the earlier level. Yes, you're correct in guessing that. One of the reasons for increasing interest rate is higher utilization of working capital for higher raw material prices. But if you look at as a percentage, it is moved up earlier from 4.1% to almost 5% now.

27:46 And probably it will come down back to 4%, 4.2% in the future of the total revenue, maybe once the raw material prices come down. But as it looks, unless there is a sudden complete piece in the West Asia, the parameter prices are not expected to drop in a hurry. So for the year, we are factoring almost 4.5%, 4.7 as a finance cost and building up our model. Got it. Got it. And just one last, if I can squeeze in. Sir, based on my understanding, since last twelve to twenty four months, we have been focusing a lot at the export markets too, if I'm not wrong. So any updates on that? Are we getting any clients on boarding for the export market?

28:39 See, exports are becoming again difficult in this scenario for increasing freight costs. But in spite of that, there is a rise in our exports gradually. It's not jumping in huge numbers. But there are exports still happening and we see some steady growth, but no multiple growth due to this conflict and the increasing freight costs. Are now in fact in December expecting a client for our pharma products from Egypt and that is a big opportunity. And they already tested our samples and approved them. So they're coming in for the CPHS show happening end of November. And then they scheduled a meeting with us towards the end of this month or beginning of December. And hopefully, might fluctuate.

29:29 But for that, other side, exports are stagnated, no decline, because there are products like Rescent Pax and Battle Pax, which we export to U. S, they continue to buy. There was a lull in the middle during the war. But again, they also have to sell their products, so they can't get rid of packaging altogether. So again, they restarted and the numbers are slowly inching up. Got it. Thank you so much, sir, and all the best to the entire team. Thank you. Thank you. The next question is from the line of from three sixty one Capital Market Private Limited. Please go ahead. Yeah. Hi. Thanks for the opportunity, and many congratulations, sir, on a strong set of numbers.

30:16 Sir, my first question is in your... In one of the comments you mentioned that the start to the third quarter has been very strong. Would you be able to share some color like how the first month that is month of October has been in terms of overall demand basically? Yes, the demand is pretty good in October and the numbers compared to the last October I'm saying is very satisfying. Maybe it is too early to talk about it, but definitely it's much better than on a what month on month growth wise, October stands out as the best one so far. And need not be the highest among the months, but because April, June, July are our April to June, July are our seasonal demand months, followed by again in March, we'll see the demand picking up in the fourth quarter. But this month started October ended up on a very strong note, I can say that.

31:21 So is it fair to assume we should be crossing double digit volume growth for full year FY 2027? Yes, that is the target still today. Now today we are at 8% for the six months period, up from 7% in the Q1. Now we were at 10.1%. So we are somewhere around 8%. And hopefully, are still positive. It may take us to double digit in the second half. Sir, the second question on the cash. There no opportunities in Food and FMCG. I just explained to one of the inquiries. So I see a strong performance coming up in the rest of the year and hopefully we may pull up the volume growth to 10%. And I also said Akhil that in future more than looking at the volume growth, I would encourage you to look at the EBITDA growth. EBITDA growth is at 35% quarter on quarter and 23% H1 on H1.

32:26 If you compare last year to this year, Q2 to Q2, the H1 and the EBITDA sorry, PBT has gone up by 35% and EBITDA as an absolute number has gone up by almost 30%. So this is where we'll be we should be focusing in future because volume numbers depend more on pails, which are heavy, like a 20 liter pail is about one kilogram weight, whereas you come to thin wall ice cream cups, there may be 18 grams, 20 grams, 25 grams each. So as the growth is coming more and more in the light wall, light thin wall section products, we will be noticing the volume growth may not look 14%, 15%, but the bottom line growth will be higher because of the better margins.

33:17 So I would encourage you all to look at the EBITDA growth, which will be a correct reflective of the company's performance. Sure. This is very clear. And my second and last question is on the cash flow front, right. If I look at our EBITDA, we did around INR 100 crore plus EBITDA in the first half and we kind of did similar kind of operating cash flow for first half almost INR 93 odd crore. So assuming we double our EBITDA for and we kind of do around INR $2.10 crores to 20 crores of EBITDA for full year, how should one look at it operating cash flow with respect to because we have seen a sharp improvement, should we expect similar kind of improvement in cash flows to sustain? That is one part to my question. And second, given that our CapEx requirement will not be more than INR 70 crores, 80 crores, so is it fair to assume we will generate reasonably good free cash flow for full year FY twenty twenty seven?

34:16 See, the cash flow will we are aiming at doubling the cash flow from INR107 crores to INR215 as I mentioned in the beginning of the year. So I'm still standing on that. I hope to we hope to see an EBITDA of crores compared to INR173 crores last year. That's a handsome growth of more than 2023%, 24%. And coming to the investments, as I said, investments have been under, I would say, lower levels compared to the last three, four years. And they should be ending up somewhere around INR75 crores for the full year. Already INR60 crores has been spent in the first seven months. And rest of the machinery and one more printing machine and some other balancing equipment and molds will be adding up to somewhere around INR75 crores to INR80 crores for the full year.

35:14 So there will be adequate cash in the system after removing the interest and income tax. So we still have somewhere around INR46 million plus INR86 crores inflows on the depreciation I mean dividend outflows, you remove, somewhere around 105 crores, whereas the outflow will be somewhere around INR 80 crores, 85 crores. So this time, it will be a cash surplus, and then you may see the long term debt or debt as overall start coming down at least in this year end of this year. Thank you.

36:05 The next question is from the line of Mold- an investor. Please proceed. Yeah. Good evening. Congratulation on good set of numbers. Yes, sir. The... I wanted to ask some few questions. The new land which we have purchased, when it will be operational? Just a week ago, we got it reset. I think last two, three days ago, the land has been registered. There was a long delay from the industrial department in leasing the land, which got registered So just few days we have just taken the position of the land and now the work has to start. Meanwhile, Sultanpur B Block itself, are setting up our ophthalmic product range.

36:52 So because we can't wait for months to get us already, we waited almost a year. So now the construction activity started in the B Block and that production has said will start by March and commercial production by April, May next year. So this new area is fully available for our future growth into either the auto injector or semiconductor trays or both of them. So we have not yet taken a call on that as of now. Okay, okay. Sir, one more question. Total, how many robots we have and how many we are planning to add more? I lost count. I think the robots more than 120,125 robots we must be having because most of our products are now shifting towards IML and our machine capacity. Missions have become more than 200 recently.

37:51 We must be having at least 130 to 140 lumas. Okay. Sir, sir, one more thing. How many molds in wipes and pharma are in process? Sorry, in what? How many molds in Wipe Wipe generation and in pharma are in process? In Wipe, there are seven more molds that are under process. Seven are already approved by client and we are awaiting that signal for commercial molds development, which might take another four months, as I said in the last quarter. It is progressing well. Another seven molds, two or three are already ready and another four components will be ready by end of December. So by end of this year, we'll have 14 components ready and we may get the approval for commercial moulds for seven of them, which may be ready by April next year. That's why I'm saying why numbers will start trickling from next financial year.

38:51 If all 14 products catch up with the commercial production, there can be a sizable contribution that we can expect in the second half of next year. Okay. Okay. And sir, pharma, how many companies we are strongly we are getting orders, Any good news about pharma? Yeah. Yeah. In pharma, we are adding clients very rapidly. Even today, as we speak, Mr. Rana and Mold- are on trip to Bangalore beating five clients there. And every quarter we are adding two or three big hands and going this rate, we'll be able to maintain our projection of INR50 crores plus in the full year this year and probably INR75 for the next financial year. Okay, okay. Any details about the strategic agreement for expanding business in Egypt and Vietnam?

39:47 No, there's no strategic alliance or anything we are seeking. We are working with an export importing company in Egypt who are looking at our products and already tested them. They are coming here in the first week of December to inspect our facilities and probably some export opportunities may start based on their visit. Okay. Sir, any new sectors we are planning to start? Yes. We are looking very seriously at auto inject defense that is in pharma and then semiconductor trace, direct trace. Also, we are planning the regular trace for diary and other applications, which will add well to our mission area, especially whenever we find ideal time, these trace can be built up as a substitute product.

40:44 But semiconductor trays and auto injector pens are very high value add products, which require a specialized skill set and mold making capabilities and some cases, patents also. In the case of auto injector pen, we need a patent for which we are looking for a partner. The case of semiconductor trays, there's a variety of molds, variety of products are very high, and they're very high cost products requiring very high accuracy and dimensional stability. So, this kind of challenging projects will be where MOLDTEXTKPAC can be used. We are very excited about these new opportunities. But they may take one or two years to rectify. Yeah. As I said, I got this news from the analyst board. So, Mr. Sandeep, maybe request you to join the question queue as there are several other participate...

41:35 Participants waiting for their turn. Okay. Thank you. The next question is from the line of Raja Gurwal from Equity Masters. Please proceed. Yeah. Hi. Am I audible? Yeah, Raja. Go ahead. Yeah. Hello. Good afternoon, sir. So my question is related to, the investment that we are planning in VIBE. You could just give us a data about what kind of investment involves in machinery to reach that INR 50 crore kind of mark that you have highlighted? Yes. See, the advantage of injection molding is all the machinery is fungible. So we may not invest anything on the machinery until we have some firm commercial orders whose clarity will be coming to know by end of this year.

42:23 So based on that, the investment will be in the tune of around INR10 crores to INR15 crores in the Phase one, which will be sufficient to give us a turnover close to INR40 crores to INR50 crores. So around INR15 crores you can take would be a requirement of wide both in molds and the machine side. And some of the machines which are found idle can also be used for these machines for the production of these components because they don't require any special conditions other than a clean room, which we already have. Okay. And sir, my second question is related to the raw material costs, considering that the crude prices are growing up and if this scenario continues, I mean, could you just comment on the willingness of the customer to accept higher prices?

43:13 I know that we are helped by the product mix, but purely on the gross profit margin itself, what kind of openness is there for the customer to accept the price hikes? See, Richard, you have asked me a good question. If the clients are not willing to participate in the price rise and they want to stick on to their whole price, you would not see this kind of performance from Mold-Tek. This is the ability of Mold-Tek to get the price rise actually faster than previously agreed terms because they were equally worried about not having the product packed in their end. See, end of the day, packaging, especially rigid packaging is not fungible. Nobody can go back to a metal tin or a glass bottle while they are selling their products in the plastic containers with IMO decoration.

44:05 So whatever happens, let the price I'm not saying that the price should go up further. It's already gone up by 60% in this last six months raw material price. But everybody is ready to accept and agree with the reality that the raw material prices have gone up and they are ready to bear the cost because no Molder can bear that cost for the sake of retaining a business. After all, this business has to go on and they are now aware of the raw material price increase. And whenever the price decreases, they take the price benefit. We don't keep it in our pocket. So this is a long term agreement going on for the last thirty, forty years. Hence, there's no doubt in your mind about whether our ability to get the raw material price hike as and when that happens. If that is not the case, you would not be seeing this kind of performance. While our volumes have grown up by 10%, our bottom line is shot up by 35%.

45:05 So that kind of volume grew 36%. So that shows very clearly that there is no impact of raw material price on our performance. Had the material being little lower, let's say 120 or 115 level, we might have got some more business and that would have added further to our numbers. But nobody stops buying packaging because their entire product cannot go into the market without packaging. Okay. That was helpful, sir. So just one more related point, like maybe a few quarters ago, you were witnessing heightened competition. But with these higher crude prices, are you also seeing like that the other players maybe getting phased out or something like that? No. Don't think nobody will be phasing out at any stage because as I said, whatever applies to MOLDTK will I mean, more or less applies to other molders also.

46:00 It's basically our ability to expand our product range, consolidate our operations and bring efficiencies in the costing has what really brought us a better bottom line compared to maybe compared to other side of the competition. But it's not true to say that because of the raw material price rise, somebody will be shutting shop. They will also be able to pass on if they are a reliable supplier. All right. All right. Thank you so much and all the best. Thank you. The next question is from the line of Tushar from Omega Portfolio Advisors. I just wanted to know the management aspiration to increase the EBITDA per kg from INR46.40 for the next three years with gold. And in terms of the pharma business, the trends which you're talking about, so what are the discussions happening on ground on that regard? And when can that materially contribute to our EBITDA?

47:17 I think, as I said, our EBITDA shot up a clean 15%, 18% in the last two quarters from 40.6% last H1 to 46.6% in the current H1. So it's a very big jump looking at the past data. But we are still positive that these numbers can still grow as exports and sorry, mainly pharma and food and FMCG sales are increasing and VIBE also start contributing. So as you said, in two to three years, it is nothing wrong to hope for a INR50 EBITDA margin in the coming two, three years. So that is what is our internal target is.

48:04 And that will be a sizable number because if you notice the last five years, we have never crossed INR 40 or 41. From there to 50 EBITDA is a big call, but I think we are on track on our product range. If semiconductors and those are things also are added in next two, three years, it may not stop at that level also. It can go further after two, three years. So let us hope everything, I mean, is moving good now and if things fall in place as plans, 50, you can keep it for two, three years as a short term goal, and it can be better once in case we succeed in semiconductors and injectables.

48:53 Sir, I just wanted to understand that what users call confidence in terms of semiconductor trade. I understand it's a consumable product. So any what is the right reason in this market? No, semiconductor trades are at a very nascent stage in the country today. It is better to be there and start making understanding the product, understanding the process, which we have already done. And now we are in talks with three semiconductor companies that are the top names in the semiconductor industry who are starting or started recently. And we are in touch with them and understood the criticality of the space and the volumes and the pricing and the material that are to be used and the variety of molds that are required.

49:41 So the knowledge is now being imbibed and we feel confident that such a product is where MOLDTK can shine because where there is a complexity, accuracy and several new molds are required, our strengths in tool room and designing and in molding presses, we will be able to contribute. So this is an exciting field, but nothing really is going to happen in next two months or six months. It may take a year or two to really see the numbers coming in and how our semiconductor industry fares in the country. But it's an exciting field. And again, here also fungibility is there. Most of the injection molding machines, which we have recently bought in the last five years at least, they're all suitable for manufacturing this kind of precision components.

50:27 So what is required is molds and then clients. So once that clarity comes in with the material that is already available in the world, compound materials for semiconductors, our processing team can easily master that technique. So we are awaiting for more clarity from the clients and also the industry itself, and we are ready. That's what how much I can say. But how it fans out, how quickly, it all depends upon how the industry fares in the country. But as I said, our side, only the molds are required, and even the clients are ready to wear the molds cost. So, it's a kind of really an exciting new industry, which is coming for us at this juncture.

51:18 And if that does well and we do well, that EBITDA margin of 50% can easily be crossed. For the closing comments. Over to you, sir. I take this opportunity to thank Rajesh and MK for arranging this conference and also thank all the participants for the spending their time. And I sincerely hope that we all will have better future, not only in this in our company, but also in general. And I take this opportunity to wish all of you a very happy Diwali and a great year ahead. Thank you very much.

52:10 On behalf of MK Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.