Mold-Tek Packaging Limited
9,287words
131turns
14analyst exchanges
2executives
Management on call
Abhishek Navalgund
NIRMAL BANG EQUITIES
Janumahanti Lakshmana Rao
CHAIRMAN
Key numbers — 40 extracted
20%
company and its performance. I am glad to inform you that in the Q3 the revenues are up by about 20% and PAT is up by 11% and in the nine month period the PAT is up by 54% percent and revenues are u
11%
ormance. I am glad to inform you that in the Q3 the revenues are up by about 20% and PAT is up by 11% and in the nine month period the PAT is up by 54% percent and revenues are up by 42%. This was
54%
e revenues are up by about 20% and PAT is up by 11% and in the nine month period the PAT is up by 54% percent and revenues are up by 42%. This was the quarter again where the raw material were ruling
42%
PAT is up by 11% and in the nine month period the PAT is up by 54% percent and revenues are up by 42%. This was the quarter again where the raw material were ruling very high in spite of that the p
18%
or rather little improved over the Q2 but compared to the Q3 of last year there is a comfortable 18% up from 36.5% to almost 43.05%. So that is a sizeable improvement in the EBITDA per kg was achiev
36.5%
ittle improved over the Q2 but compared to the Q3 of last year there is a comfortable 18% up from 36.5% to almost 43.05%. So that is a sizeable improvement in the EBITDA per kg was achieved. Thanks t
43.05%
r the Q2 but compared to the Q3 of last year there is a comfortable 18% up from 36.5% to almost 43.05%. So that is a sizeable improvement in the EBITDA per kg was achieved. Thanks to the robust growth
Rs.110
nts including all the raw materials? J. Lakshmana Rao: The blended raw material cost is about Rs.110 for the Q3 compared to it was the Rs.85 last year that is almost rise of 30%. Rahul Jagwani: O
Rs.85
J. Lakshmana Rao: The blended raw material cost is about Rs.110 for the Q3 compared to it was the Rs.85 last year that is almost rise of 30%. Rahul Jagwani: Okay so on a per kg basis our RM is Rs.11
30%
ial cost is about Rs.110 for the Q3 compared to it was the Rs.85 last year that is almost rise of 30%. Rahul Jagwani: Okay so on a per kg basis our RM is Rs.110? J. Lakshmana Rao: Yes Rs.120 pe
Rs.120
se of 30%. Rahul Jagwani: Okay so on a per kg basis our RM is Rs.110? J. Lakshmana Rao: Yes Rs.120 per kg, the blended cost after affecting the SFG, FG all that is coming to Rs.110. Rahul Jagwani
15 Crore
J. Lakshmana Rao: I just do not have the exact numbers but Amul I know is close to about 15 Crores, initial orders and PVR is for starting order. So Bio-Shad and PVR and others are just starting.
Guidance — 20 items
“So without wasting idling capacity we will be in a position to start off with FMCG and OTC products right from April May onwards hopefully May onwards and by end of the year, we will get the clearances from pharmaceutical companies and by then our expanded Sultanpur facility will be able to take up those orders.”
“How much you are spending for these the one which is like will be operational by March 2022 and the second by December 2022?”
“The May 2022 the pilot plant is hardly around nine to ten Crores but the major plant which is constructed in a 40000 square feet area is a Greenfield project that will gradually in the year 2022 and 2023 together there will be investment close to around 35 Crores to 40 Crores.”
“As the demand increases will be in a position to quickly add the machines but the buildings will be ready to have the facility by hopefully around September or October 2022.”
“Probably if you send a mail I will ask my finance department to give you that breakup but roughly if you want I can say that the paints EBITDA margins will be somewhere around Rs.30 to Rs.35 per kg, lubes also will fall in the same category, square packs also fall similar to maybe better Rs.35 to Rs.40 and then thin wall products it is as high as Rs.80 to Rs.90 or even Rs.80 to Rs.100 per kg.”
“He brought in a lot of currencies especially Hindustan Lever, Proctor & Gamble, GSK are brought in after he has taken out the marketing in the last couple of years and they are also involved in project management, selection of the moulds and the machinery.”
“I think they are getting well groomed and I am confident they will be a position to succeed and take the company forward.”
“See in lubes if you notice, we never hope lubes will be a great winner because lubes are getting more and more stagnant and in fact by getting into our public sector that is BPCL is where we have seen growth, the main reason for our Q3 growth in lubricants is public sector companies which we generally do not get tenders we got the tender from BPCL six months ago and they started picking up the numbers from September October onwards.”
“So that is the one reason for lubes growth but in lubes through QR code we anticipate growth coming our way because once they adopt QR coded container because lubes are the most affected by counterfeit next to paint we can say after lubes it is paints, the number one product which has been counterfeited in the country is lubricants.”
“I am sure once normalcy comes they all will go for it that is when I anticipate growth coming in the lube sector, real growth.”
Risks & concerns — 5 flagged
On that front in the past you have mentioned that the reason for foreign players not entering Indian market is there is not enough traction in IML space but at present there is a lot of opportunities so how do you see the risk of foreign player setting up facilities in India?
— Krishna Yethapu
Our ability and a completely backward integration right up to robots, right up to IML labels because if we make 10 million containers in a month I need 10 million labels and buying 10 million labels at whatever margin or whatever risk of inventory losses would be causing our competitors pricing pain which we can control because we manufacture all of them in-house.
— J. Lakshmana Rao
I think they do not even make their own IML labels so they have to procure the labels there, procure the robots and compete with Moldtek in India in the Indian pricing system will be a much bigger challenge for them than to us.
— J. Lakshmana Rao
One clarification volume growth quarter-on-quarter has a decline of 2.5% right?
— Karan Bhatelia
We have been bogged down with local developmental work and not really concentrated on exports and with the pandemic and concern about China being kept as a single source all these years Americans and European companies are looking at India with more additional interest and the inquiry is what we are getting and the response we are getting from those companies is much overwhelming than what it was few years ago but anyway the fault lies with on our side also.
— J. Lakshmana Rao
Q&A — 14 exchanges
Q
I just had a basic question. So you know in terms our realization what we have in each of the segments what would be our like RM cost per kg like you know against the segments including all the raw materials?
J. Lakshmana Rao
The blended raw material cost is about Rs.110 for the Q3 compared to it was the Rs.85 last year that is almost rise of 30%. Okay so on a per kg basis our RM is Rs.110? Yes Rs.120 per kg, the blended cost after affecting the SFG, FG all that is coming to Rs.110. How are you placing the RM front now, I mean as price is still increasing? RM prices are still stagnant at least for in the month of January there is just Re.1 price hike again. There was a little downtrend in December but again in January they have risen by Re.2. Thank you.
Q
Thank you for the opportunity. I have two three questions so in the press release it is mentioned that you know we have received some orders from Amul, PVR etc., can you throw some more light on for which products and what is the in terms of the value size?
J. Lakshmana Rao
You are talking about the from the companies like PVR and others? Yes. I just do not have the exact numbers but Amul I know is close to about 15 Crores, initial orders and PVR is for starting order. So Bio-Shad and PVR and others are just starting. There could be opportunities of one to two crores per annum to start with. Amul I know because it was a bigger tender we won so it is around 15 Crores. Also we do understand this paint is slightly subdued in Q3 uh but then how is the scenario in like you know in the beginning of January, is there any improvement? Also can you just quantify like how
Q
My question is regarding the raw material. (Inaudible) 11:20?
J. Lakshmana Rao
Your voice is not so clear I understand you are asking about use of recycling material. Is it correct? Yes. Yes we have started actually with the consent of some of our clients like Asian Paints and some of the FMCG clients. We have started using a recycled material which is completely cleaned and provided in a very what you call clean and dust-free and hygienic manner. Of course the material cost difference is not much maybe 15% 20% but that material is so clean and segregated that we do not have any problems of processing and slowly companies who are very conscious about cutting down or maki
Q
Thank you for the opportunity Sir. I have two questions first can you have the EBITDA margins for all the categories like IML, Non-IML and IBM and second can you throw some light on company succession plan if we have any? Thank you.
J. Lakshmana Rao
See coming to the EBITDA margins on a segment-wise I may not able to provide right now but the EBITDA margins of thin wall food are the highest among all four sectors that is paint, lube, square packs and thin wall packs. Probably if you send a mail I will ask my finance department to give you that breakup but roughly if you want I can say that the paints EBITDA margins will be somewhere around Rs.30 to Rs.35 per kg, lubes also will fall in the same category, square packs also fall similar to maybe better Rs.35 to Rs.40 and then thin wall products it is as high as Rs.80 to Rs.90 or even Rs.80
Q
Thank you for the opportunity Sir. My first question pertains to overall volume growth during this quarter or overall volume if you can give us?
J. Lakshmana Rao
Volumes are flattish because there was a big drop in not a big drop, drop of 6.3% in paint which contribute more than 55% to our company. So there is a drop of about 2% to 2.5% drop in volumes in this quarter compared to the Q2 and whereas the volumes have gone up in the case of thin wall there is a 12% is compared to Q2 in the food segment that is thin wall segment whereas other segments have registered, paints have registered minus 12% in volume terms, lubes have registered positive actually they have gone up by 15% so overall net it is around 2.5% 2.6% drop in the volume compared to Q2. We
Q
The first question will be if I have to look at the EBITDA per kg last four quarters I mean it has been on the improving side only I mean 41.6% to 42.2% and then 42.5% and now 43% so but at the same time even the RM was on the inflationary trend. So assuming that the RM stabilizes then how should we see as a sustainable EBITDA per kg I mean this is the question before the pharma starts because pharma will again have some positive impact on the EBITDA per kg, so just your comments on that that will be my first question.
J. Lakshmana Rao
I will answer this EB increase is mainly due to the increased sale of food and FMCG in spite of drop in volumes of paint in overall quarter why we could make a better EBITDA margin was there is a jump of 38% in tonnage wise compared to Q3 and Q3 in the segment of thin wall food and FMCG. So that is the main driver of our growth as of today and pumps is the second segment which will add to higher EBITDA margin as high as food and FMCG or may be better and as you correctly said once we start pharmaceutical or even OTC products in IBM that is maybe starting from May June onwards we will certainly
Q
Thank you for the opportunity. Congratulations to the entire team of Moldtek. What is the capacity of the mold which we are setting up for Berger and when will it start and are we in talks with Grasim for their paint division?
J. Lakshmana Rao
Sorry your voice is not clear. Are we in talks with Grasim for their paint division? Grasim, Aditya Birla Group. Yes the capacity for Berger plant at Lucknow will be decided in next few months, but the construction of the new plant will start only from middle of this year because they also deferred their production plans I think to the second half of this year so by then we will be meeting their needs from our existing leased premises already set up near Kanpur and at Sandoli, where we have taken land next to Berger plant that plant will be constructed during the financial year 2022 to 2023 an
Q
Could you actually give us a more better idea of the timeline for the expansion in Mysore and Vizag and how much we are taking our capacity ahead for that was my question number one? And question number two Sir if you could give us a broad how we propose to use the 100-odd Crores that we have raised from the QIP given that you know already the business was throwing about 60 Crores to 70 Crores of cash every year so do we see that you know QIP amount also going into additional capex and how do you propose to use that?
J. Lakshmana Rao
Actually in Mysore and Vizag the expansion is already underway, the buildings are ready and will be added as and when Asian Paints indicate their growth and at Vizag we are even planning some of the products manufacturing for Castrol, Calcutta which will be supplied directly from Vizag to Calcutta which will save freight and time for supplies. So these two plants expansion might involve about 20 Crores to 25 Crores in the next one and a half year. In this year probably half of it in the next six months or nine months and then followed by the balance 50% in the next nine months because by 2023-
Q
Good evening. Like high tech and paints do you see any large competition from food and FMCG space?
J. Lakshmana Rao
Definitely competition will be there in all segments. It is not that we are monopoly in even food and FMCG. There are a couple of players as I said Caps and Cones in the north and couple of players in the west are there for last five six years, but we have the best backward integrated facility which any MNC or any volume business player will be looking at because having an IML robots or having a mould is not just enough to ensure double free supplies. In injection molding the machines, robots they all work in very high temperatures, very high pressures and they run 24/7. so they are all prone
Q
I am Siddharth here. I have a few questions. My first question is dispenser pumps are a commodity item there are a lot of manufacturers of dispenser pumps in India and there are Chinese import also in this competitive segment what advantage do you have and how will you compete with your competitors in this segment and in three years what kind of revenues and EBITDA margin can we expect from dispenser pumps?
J. Lakshmana Rao
In the dispenser pumps the advantage we have started with is the high cavitation, high productivity modes, while our competitors like Ricki and others they have at the most 16 or 24 cavitation moulds we are using 36 and 48 cavitation moulds which will produce much higher productivity for Crore of investment or either way you look at it and another greatest advantage we have started with this the design is compatible to give the best leak resistance and higher number of shots, with standing up number more number of shots and the assembly line which you have adopted is completely automized and r
Q
Thank you for the opportunity. Sir, like I understand you know we see a clear about four times asset turn on the pumps business model so what kind of you know revenue assumptions we have for the QR code and you know IBM project so can you help me with the total investment that we are doing as of now and the peak revenue potential for these two projects?
J. Lakshmana Rao
For the QR coded, the same asset turn is possible like 3 to 3.5 maybe but in the case of IBM the value of the product is not so high so probably it will be in the region of 2.5 but until we really get in and start manufacturing those products I will not be able to exactly give you a picture. For us the QR code is much above 50 Crores, correct me if I am wrong? Sorry. The total capex for the QR code was somewhere around 40 Crores to 50 Crores? No. For QR code it is hardly 10 Crores, for the printing machine which is again a versatile machine. It not only prints the QR code, if you do not want i
Q
Thank you for the opportunity. Sir you alluded to how backward integration allows you to be the lowest cost manufacturer for a pretty low price country. What is preventing us from therefore competing in a global landscape in a much more effective manner? What would be the challenges because we already have relationships with some large inventories?
J. Lakshmana Rao
The point here is trying and exporting from India is the way we want to go forward and that is what I answered in my previous questions that we are looking at exports as a major opportunity hereafter because more and more smaller components the China plus one concept is coming in the minds of Europeans and Americans, there are many more inquiries than there were before in terms of the small components like closures, like pharma bottles or even ice cream and other cheese and butter packs which can go one into the other and thereby saving on transport cost and effective landed cost will be much
Q
I just wanted to understand how is our working capital is shaping up given the fact that many of our clients are midsized and small sized, any major deviation we have seen?
J. Lakshmana Rao
You see working capital, you mean if you mean debtors we make sure that all small and medium players pay either in advance or along with supply so that we do not get into write- offs and major clients they generally demand 60 to 70 days 75 days on average credit and their payments are also completely assured, so if you look at our P&L, l there are hardly any write-offs there will be few lakhs but not sizeable right. While you mentioned the volume break-up of IML and non-IML, can you also help us with the value breakup. Value breakup is 68% is IML and 32% is non-IML, which was 65% last year, 65
Q
Thank you Lakshmanan Sir for taking all the questions and thanks to all the participants for joining in. Now I would like to hand it over to Lakshmanan Sir for his closing comments. Thank you and over to you Sir!
J. Lakshmana Rao
Thanks, Abhishek. and Nirmal Bang for holding this conference and thank you all the participants for your interest in our company and for actively participating in the questions and of course learning more about our company, the future plans and I wish you all the best and take care. I think we are again in the wave of Omicron but it is not so severe thankfully. Hopefully there would not be any more variants and we all live peacefully after a couple of months at least. Wish you all the best and take care. Thank you.
Opening remarks
Abhishek Navalgund
Thanks Raymond. Good evening everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you all to this earnings conference call of Moldtek Packaging for Q3 FY2022. We have with us Mr. Lakshmana Rao Chairman and Managing Director and the entire finance team at Moldtek. Without further ado, I request Lakshmana Sir to start with his opening comments post which we can open the floor for Q&A. Thank you and over to you Sir.
J. J. Lakshmana Rao
Good afternoon and welcome to the conference call of Q3 results of Moldtek Packaging. Thank you all for your interest in our company and its performance. I am glad to inform you that in the Q3 the revenues are up by about 20% and PAT is up by 11% and in the nine month period the PAT is up by 54% percent and revenues are up by 42%. This was the quarter again where the raw material were ruling very high in spite of that the per kg EBITDA margin of the company could be maintained or rather little improved over the Q2 but compared to the Q3 of last year there is a comfortable 18% up from 36.5% to almost 43.05%. So that is a sizeable improvement in the EBITDA per kg was achieved. Thanks to the robust growth in the food and FMCG sector products. I am also glad to inform you that the first order, commercial order for our QR-coded IML Packs has been received from a company which is manufacturing aqua products and nutraceuticals for aquaculture industry in the sizes of one, four I think five, t