Bigbloc Construction Ltd (BIGBLOC) Q1 FY23 Earnings Concall Transcript

Bigbloc Construction Ltd (NSE:BIGBLOC) Q1 FY23 Earnings Concall dated Jul. 28, 2022

Corporate Participants:

Mohit Narayan Saboo — Director and CFO

Mohit Saboo — Director and Chief Financial Officer

Manish Saboo — Marketing and Strategy

Analysts:

John Matthew — Individual Investor — Analyst

Karan Thakker — Analyst

Anika Mittal — Nvest Research — Analyst

Pranay Jain — Dealwell Capital — Analyst

Shyam Garg — Niveshaay — Analyst

Saumil Mehta — Mehta Advisors — Analyst

Shraddha Somani — Individual Investor — Analyst

Suhrid Deorah — Paladin Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Bigbloc Construction Limited Q1 FY’23 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Karan Thakker. Thank you, and over to you, sir.

Karan Thakker — Analyst

Thank you. Good afternoon, everyone. This is Karan Thakker on behalf of S-Ancial Technologies, I welcome you all to Bigbloc Construction Limited Q1 FY’23 earnings conference call. From the management we have Mr. Narayan Saboo, Chairman and Executive Director; Mr. Naresh Saboo, Managing Director; Mr. Mohit Saboo, Director and CFO; and Mr. Manish Saboo, Marketing and Strategy.

I would request you to refer to the investor presentation that has been uploaded on the exchange, which will throw much more light. Starting with statuary declarations, certain statements in the con-call may be forward-looking. These statements are based on management’s current expectations and are subject to uncertainties and changes in circumstances. These statements are not guarantees of future results.

May I now request Mr. Mohit Saboo to take us through his opening remarks, subsequent to which we can open the for the Q&A session. Thank you and over to you Mohit ji.

Mohit Saboo — Director and Chief Financial Officer

Hello, good afternoon, everyone. I’d like to welcome all of you to the Q1 FY’23 conference call for Bigbloc Construction Limited. Bigbloc Construction Limited is India’s premier AAC blocks manufacturing company and we are currently involved in manufacturing of AAC blocks as well as other materials which are block jointing motar, ready mix plaster as well as coming up with AAC panels soon.

Currently we have two plants installed in Gujurat, one of them at Umargaon near Vapi and other at Ahmedabad. So, from the Umargaon plant, we are catering to the markets of Mumbai, Pune, Vapi, Silvasa and from the plant near Ahmedabad the market of Ahmedabad, Baroda, and Indore and some regions of MP.

AAC blocks is a green building material, which is used as a direct substitute for red brick. And it is manufactured using fly ash, which is 65% of our raw materials. Fly ash is a waste from the thermal power plant, and that is the reason that it is called a green building material. The other additives used for manufacturing the product are cement, lime, aluminum powder, gypsum and some other additives.

Coming down to the quarterly performance, so Bigbloc Construction has seen a revenue growth of almost 100% from INR282 million in Q1 FY’22 to INR555 million Q1 FY’23. The EBITDA has gone up from INR33 million in Q1 FY’22 to INR122 million in Q1 FY’23. Also, the volume sales have increased by 33% from 96,000 CBM to 1,27,000 CBM and the EPS has also seen a phenomenal jump from 17 paisa per share to INR1.19 paisa per share.

This was a phenomenal quarter for the company because in this quarter we have seen phenomenal growth in terms of volume as well as revenues and also the profitability has seen a tremendous jump. Also, during the quarter, we have acquired land for our planned expansions at Wada. So, we are coming up with one more plant at Wada which will be one of India’s largest AAC plants, when it’s fully commercialized.

We have bought land of 9.5 acres, the plant will be installed in this land, the construction has already begun and the plant is divided into two phases of 2.5 lakhs each. The reason we are installing the plant at Wada is there are huge subsidy benefits also in this region because it is not an industrially developed region. We have placed order for majority of the machines to be installed at this plant and we intend to start commercial production at this point by December’22.

Also, we’ll be coming up with one more expansion which will be in a JV with the Thai company Siam Cement Group, SCG. In this plant we’ll be manufacturing AAC blocks as well as panels. The JV company is already incorporated and the capital infusion is done for the same. We are currently in the process of land identification and land acquisition for the JV company, which we intend to complete in the running quarter.

Also, we would like to make one announcement that we generate carbon credits as we are using fly ash, which is a waste for the thermal power plant. And the carbon credit generated are still in stock, we haven’t disposed them off. I think we can open the floor for some questions and everything now.

Questions and Answers:

 

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of John Matthew, an Individual Investor. Please go ahead.

John Matthew — Individual Investor — Analyst

Hi. Am I audible?

Mohit Saboo — Director and Chief Financial Officer

Yes.

John Matthew — Individual Investor — Analyst

Okay. So, I have few questions. Have you seen any capacity increase done by any unorganized players in this quarter and second, is there any major difference between prices of our blocks vis-a-vis an unorganized player?

Mohit Saboo — Director and Chief Financial Officer

So frankly in this quarter we haven’t seen any capacity increase, but there is a bit of a capacity increase upcoming from a few competitors as well in the upcoming quarters. And regarding, what was the other question?

John Matthew — Individual Investor — Analyst

Do you see any major differences between the price of our blocks versus an unorganized player?

Mohit Saboo — Director and Chief Financial Officer

So generally, we are, one of the oldest and the organized players in the industry and that’s the reason that our prices are a little bit higher than the unorganized player by approx 3% to 6%, depending from time to time.

John Matthew — Individual Investor — Analyst

Okay. Well, the price for bricks and blocks both have come down a little in this quarter. So how do you see it for let’s say this financial year?

Mohit Saboo — Director and Chief Financial Officer

So, the prices for bricks and blocks both have come down, one reason is you know the overall costing has also come down for lots of things because cement and aluminum powder, all the metals have also witnessed some slow down and that is the reason that prices for both of things have come down. But going further, I don’t see any further corrections in prices and moreover, the way real estate and the upcoming demand is shaping up, it doesn’t seem to be challenging at all.

John Matthew — Individual Investor — Analyst

Okay, okay.

Mohit Saboo — Director and Chief Financial Officer

Just to address it more, we are replacing red bricks, which is happening at a much faster pace now. Red bricks are still at a share of almost 85%, 87%, whereas AAC blocks are at a share of 8%, 9% and red bricks today is still expensive then AAC blocks on a peer-to-peer comparison without counting the advantages of AAC blocks.

John Matthew — Individual Investor — Analyst

Okay. Are you looking for any organic or inorganic acquisition or any plans to increase capacity by outsourcing from unorganized players?

Mohit Saboo — Director and Chief Financial Officer

We are open to those ideas of organic and inorganic acquisitions, but regarding the contract manufacturing from unorganized players frankly that doesn’t seem to be very viable or practical because we’d rather do it on our own. That’s what we feel. Because the other manufacturer also, if we try to get a contract manufacturing done from them, nobody has a spare capacity, as most of everyone’s capacities are sold out.

John Matthew — Individual Investor — Analyst

Okay. Well, the earlier question as you said, that the prices of bricks and blocks have come down. So, if I talk about this financial year, do you see it coming down or what will be your target in terms of profits?

Mohit Saboo — Director and Chief Financial Officer

Currently, the prices that have come down, that is only because of the reduction in cost. So, we don’t see any further reduction in cost also because everything seems to have been stabilized, whether it’s steel, cement or even aluminium powder and everything. And again, once the monsoon finishes from September onwards we further see upper trend in pricing, because cement and also is bound to go up because of infra demand and everything, which is a little slow in this quarter.

John Matthew — Individual Investor — Analyst

Great, okay. One last question from my end what is your current working capital cycle?

Mohit Saboo — Director and Chief Financial Officer

Approximately at around 50 to 55 days.

John Matthew — Individual Investor — Analyst

Okay, all right. Great. Well, that’s all I need for now and thank you for your time and wish you all the very best.

Mohit Saboo — Director and Chief Financial Officer

Thank you so much.

Operator

Thank you. Next question is from the line of Anika Mittal from Nvest Research. Please go ahead.

Anika Mittal — Nvest Research — Analyst

Hello? Am I audible sir?

Mohit Saboo — Director and Chief Financial Officer

Yes, could you be a little louder?

Anika Mittal — Nvest Research — Analyst

Yes, sure. Sir, my question is from [Indecipherable] basically. As we know, fly ash constitutes 65% of our total raw material consumption, and currently we are getting free of cost, nevertheless this situation may not continue in the future as you know, bidding for fly ash has already started for some of the thermal plant. So basically my questions are, one, whether we are going to make payment for the fly ash in the near or in the long term and in that scenario, how we are going to control our margins. And second one is as you know, due to the renewable energy, taking over the thermal power, it is likely that the thermal plants will be facing the shutdown in operations in the future. So that may lead to the problem in the supply of fly ash, so what are the alternatives and how we are going to tackle that scenario?

Mohit Saboo — Director and Chief Financial Officer

We’ll take it in two ways. One thing is fly ash, so we are using pond ash. We are not using fly ash. So, pond ash is a ash which has been accumulated in the pond or near the thermal power pond since the last 20, 30, 40 years, since the thermal power plants have been running. And currently we are not paying anything for that. And I don’t even see that pond ash will be saleable material because the use of pond ash are very limited and coming down to the other point that solar and other energies, we see that the green energy and everything is rising and there’s no doubt about it, but still in India, there have been recent various articles, which are always mentioned that India is facing tremendous power shortage and all the thermal power plants are been run in phenomenal capacity in the last quarter.

Manish Saboo — Marketing and Strategy

Also to address your question. So, at one of our facilities, we are already making sand based blocks as well, other than fly ash. So just in case five years, 10 years down the line, there is any scarcity or unavailability of fly ash, our plants can always shift to sand instead of fly ash. For your information, majority of AAC block plants in Europe are running on sand and not fly ash because those countries don’t have fly ash.

Anika Mittal — Nvest Research — Analyst

And what is the source of this sand basically? Is it an environment friendly source or something else?

Manish Saboo — Marketing and Strategy

So basically it’s river sand.

Anika Mittal — Nvest Research — Analyst

River sand, you are saying.

Manish Saboo — Marketing and Strategy

Yes.

Anika Mittal — Nvest Research — Analyst

And currently how much basically, how much of the total capacity we are producing from this river sand?

Manish Saboo — Marketing and Strategy

So, at our Ahmedabad unit, we are approximately anywhere around 20%, 25%, we are making sand based.

Anika Mittal — Nvest Research — Analyst

And you are saying five years down the line if that happens, means fly ash is not available or they are charging the prices. So sand ash is also free of cost or not?

Manish Saboo — Marketing and Strategy

Sorry, sand is?

Anika Mittal — Nvest Research — Analyst

Sand ash is also free of cost for us?

Manish Saboo — Marketing and Strategy

No sand again, we’ll have to pay some transportation costs otherwise the costs are quite negligible, not much. And also the pond as Mohit said fly ash pond, which have accumulated fly ash for the last 20, 30 years, still I’m sure there is so much Ash in them that there is no issues for the next 10 to 15 years.

Anika Mittal — Nvest Research — Analyst

So, are we the only player who is producing AAC block via this pond ash you are saying?

Manish Saboo — Marketing and Strategy

So we are not the only players. There are other players who are making, using the pond ash, but still thermal power plants, they still have so much ash when they’re running that they still have to you know dump these ash in the pond. So, we don’t see any issues for the next 10 to 15 years, at least. And in case still there is an issue. There is a sand always available in ample.

Anika Mittal — Nvest Research — Analyst

And you are saying the cost of that is very negligible?

Manish Saboo — Marketing and Strategy

Yes, cost is negligible. But in case, you know, if the cost also goes up, it will go up for all the manufacturers and the same will result in the increase in the selling price as well.

Anika Mittal — Nvest Research — Analyst

Okay, understood. And second question is if we see around the industry competitive intensity is growing up and a lot of players are building up the capacity. So, my question is what gives you the competitive advantage? Obviously apart from your strategic location I’m asking in the terms of product quality or innovation size, based on which we can claim that yes, we have the monopolistic advantage in the industry, because if you see capacities are building up at this rate and with the low entry barrier, as we know, so what shall give us the pricing power sir?

Manish Saboo — Marketing and Strategy

So, as you said, we already have location advantages and with the unit coming up at Wada, we’ll be almost in the heart of Mumbai. So anywhere in Mumbai, Pune market, we are the nearest supplier. Other than that the subsidies will always play a big role helping the bottom line of the company. And we are coming up with the AAC panels as well. So that will be a new material and that also is coming up with a partner who’s already established in this field and they have plants in various countries, SIAM cement. So, I’m sure this innovative new material will again help us keeping our bottom line on track.

Anika Mittal — Nvest Research — Analyst

I understood as per your earlier con calls also, you are saying AAC panels, we are the only manufacturer apart from that Magicrete you were saying that has built the capacity in recent past. So, what I’m asking is what is the growth scenario you are looking for this AAC panel?

Mohit Saboo — Director and Chief Financial Officer

So frankly in India also the labor costs and all such things are increasing, material handling and everything is all getting difficult. So, panel will be much faster in construction and also the labor costs will go down drastically. So eventually from AAC blocks, the other alternative material will be panels. And apart from that, the consumption of red bricks is also supposed to keep on getting reduced day by day. So, conversion from red bricks to AAC blocks and from AAC blocks to panels is what we see in the upcoming future.

Anika Mittal — Nvest Research — Analyst

I understood this thing, but your existing facilities that are producing AAC blocks, so can these facilities also be used for producing the AAC panels, because if the shift happens, then what will be the use of the existing capacity you are having?

Mohit Saboo — Director and Chief Financial Officer

We can upgrade our existing plants also for manufacturing of AAC panels. We will have to do some technological modifications and install some additional machinaries for panels. That’s what will be required, as simple as that.

Anika Mittal — Nvest Research — Analyst

And this AAC plants you are producing via your new plant JV in Ahmedabad, right?

Mohit Saboo — Director and Chief Financial Officer

Yes.

Anika Mittal — Nvest Research — Analyst

And when will be the expected commissioning?

Mohit Saboo — Director and Chief Financial Officer

So, we are currently in the phase of land identification and acquisition and tentatively, we intend to start commercial production at that unit by June ’23.

Anika Mittal — Nvest Research — Analyst

June ’23 you are saying. And in the recent part, you have provided the revenue guidance of 500 crore, approximately by the end of FY’24. So, looking towards the existing utilization we should be at the volume level of 10,70,000 approx for 500 crore top line. So that is around 77% utilization and I hope by financial year ’25, we can grow based on the remaining utilization. So, my question is regarding your plans after financial year ’25, how we as a company are going to shape?

Mohit Saboo — Director and Chief Financial Officer

So currently we have presence in Western India region only, and post completion of these two units, one at Wada and the other plant is in JV, near Ahmedabad, we intend to go pan India by setting up a plant in north as well as in south.

Anika Mittal — Nvest Research — Analyst

Okay. You are targeting the north and as well as south. After 2025, you are saying?

Mohit Saboo — Director and Chief Financial Officer

Once we commercialize both the existing plant expansions, then we’ll take up the other locations of north and south.

Anika Mittal — Nvest Research — Analyst

The expected ramp up I think it should be by the end of financial year ’25?

Mohit Saboo — Director and Chief Financial Officer

By FY’25, FY’26, yes.

Anika Mittal — Nvest Research — Analyst

’25, ’26, you are saying. And little bit confirmation on that side only, since you’re saying you are producing from the pond ash and you are not in the near future, you are not going to pay for the fly ash. Am I right in getting that point?

Mohit Saboo — Director and Chief Financial Officer

Yes. We have been producing from pond ash since the last 11, 12 years and we have our people visiting the ponds also frequently, every 15 days or something. And there’s enough stock at the pond from where we are procuring in such a way that at least for the next five, seven years, we won’t face any challenges with that. For the Umargaon plant or for the Wada plant, we have ash available from the Dahanu thermal power plant which belongs to Adani, plus the Nashik thermal power plant, or the Ukai thermal power plant. And similarly for the plant near Ahmedabad, we have Wanakbori thermal plant near Baroda and plus there’s another thermal power plant in Gandhinagar.

Anika Mittal — Nvest Research — Analyst

And there is accumulated ash available and you are not seeing any problem for next five to six years?

Mohit Saboo — Director and Chief Financial Officer

Yes, that’s right.

Anika Mittal — Nvest Research — Analyst

Okay, sir. Understood. Thank you for your time, sir, and all the best.

Operator

Thank you. Next question is from the line of Pranay Jain from Deal Well Capital. Please go ahead.

Pranay Jain — Dealwell Capital — Analyst

Thank you for the opportunity. I have about three questions, the first one is on pricing and margin. It’s great to see that the margin trajectory continues to climb up and from 20.5% we are at 22% plus right now. So just wanted to understand what should be the sustainable margin for the year. I understand from season to season, there can be some softness but otherwise what’s the range that you’re looking to maintain?

Mohit Saboo — Director and Chief Financial Officer

See frankly the margins that we have announced in the last two quarters, these seem to be sustainable because in spite of the slowdown that we witnessed in Q1 FY’23, our margins have been maintained accordingly and going forward the real estate and overall infra and everything is supposed poised to grow. That’s what this government is concentrating on and that’s why we see the margins to be at least sustainable at this level or it could further go up as well.

Pranay Jain — Dealwell Capital — Analyst

So currently are we at optimum utilization of our facility?

Mohit Saboo — Director and Chief Financial Officer

Yes, we are at optimum utilization. We are at almost 85%, 90% plus utilization. There has been little lower utilization in the current month because of torrential rains in the Western region in the July month, but we are at around 85% to 90%.

Pranay Jain — Dealwell Capital — Analyst

And you believe that post this monsoon quarter, there’s a chance as activity picked up, pricing perhaps can also improve a little bit further after the softness that we have seen.

Mohit Saboo — Director and Chief Financial Officer

Yes, because I mean frankly it is poised to go up, because red bricks is still expensive and if you know, just try and match those files, then we can still see anywhere between 10% to 15% price increase as well going ahead.

Pranay Jain — Dealwell Capital — Analyst

I read a Guajarati notice or circular that was passed around where the body was seeking relief due to the GST burden and many units which manufacture red bricks were shutting down. So just wanted to understand are we seeing closure of several such units, which enables us to increase our market share? And what is the market share you anticipate over the coming one, two years for our product, from where it stands.

Mohit Saboo — Director and Chief Financial Officer

So, frankly the market share is poised to grow up continuously because the product is reaching far and wide. Earlier, it used to sell only in cities and towns like Bombay, Surat and everything, but off lately quarter over quarter, we have been witnessing demand from small towns and small cities as well. And as we mentioned earlier, that we are doing contract manufacturing for Ambuja also. So because of their presence, the awareness in rural areas and because of their dealer distributor networks in small towns, the demand from there is also increasing. So, it’s just that the penetration is being done through them, but overall and large, we are also benefiting from the same.

Pranay Jain — Dealwell Capital — Analyst

So, what would be our market share as of FY’22 close or presently?

Mohit Saboo — Director and Chief Financial Officer

Market share compared to red bricks as per our understanding would be somewhere around 80%, 85% whereas the AAC block somewhere would be around 8% to 10%.

Pranay Jain — Dealwell Capital — Analyst

So, we are 10% approximately of the AAC industry?

Mohit Saboo — Director and Chief Financial Officer

Yes, but that is pan India. We don’t have exact bifurcation area, not such accurate reports available to be very frank.

Pranay Jain — Dealwell Capital — Analyst

And it could reach say 15% in a couple of years’ time as a result of not just our clients, but also our own distribution efforts, is that possible?

Mohit Saboo — Director and Chief Financial Officer

I think it should definitely reach that because government is also trying to push towards more organized and greener construction and like introducing GST on red brick manufacturers, which is like a cottage industry and they don’t know the compliance and everything for GST. So, as you mentioned earlier that they have read the article that they’re telling that they won’t do manufacturing any further and all, so looking at all those things and looking at the support from government it seems that we should be able to reach to at least 15% in the upcoming couple of years easily.

Pranay Jain — Dealwell Capital — Analyst

And with regards to the additional capacity that’s coming up, I know our Wada plant should be ready by December, but overall, when we are looking to add 8 lakhs by when do you see it coming on stream or are we tracking sometimes?

Mohit Saboo — Director and Chief Financial Officer

So, we are doing Wada also in phases, and phase one, we are doing 2.5 lakhs, which should be commercialized by December and phase two will be another 2.5 lakhs, which should be commercialized by tentatively June ’23. And similarly, the Ahmedabad plant will be 3 lakhs, which will be tentatively commercialized by June ’23. And I think entire capacity ramp up and you know fully utilization of the new installed capacity should also happen by December ’23 or March ’24.

Pranay Jain — Dealwell Capital — Analyst

So, between now and December ’23 what is the potential from new product introduction that we are pencilling, whether it is panels or magic or anything else that is in our R&D team what percentage of our revenue, or what size do you see possible in the next 18 to 24 months?

Mohit Saboo — Director and Chief Financial Officer

So, the Wada plant that we are doing is this just for AAC blocks currently. And the JV plant that we’ll be doing with SCG near Ahmedabad will be for panels as well as blocks. We’ll be having the option of manufacturing both at that location. Block being the product, which is replacing red bricks, because what will happen is panels is a much advanced and superior product and comparatively expensive as compared to AAC block as well. So, it will be first adapted by the more organized and the bigger builders, which includes the likes of L&T or Lodha, whereas AAC block will be used for conversion from red brick users and looking at the percentage of the share of panels. So, I think the plant will be of 3,00,000 CBM and in the initial years we just see in FY’23 panel utilization of almost 20% to 30%.

Pranay Jain — Dealwell Capital — Analyst

Understood. Also with regards to our longer term plan what is the increase in distribution efforts we are taking whether it is on ground presence or to large builder project because I see that, that is an important pillar of our sustainable plan. So other than products entering new markets with new products, we just wanted to understand how strong are we on that plan, if you could give us some color, some numbers, some names?

Mohit Saboo — Director and Chief Financial Officer

We have been concentrating on increasing our sales either to the large players, which includes the likes of Lodha, Runwal, L&T, BG Shirke and [Indecipherable] and also contractors because they have huge upcoming projects, and that’s what we concentrated on and giving them the best quality product, as well as timely services, because timely delivery of product is also very big aspect in this industry and regarding tapping new markets and all, so we are trying to increase our team as well, so that and we have already increased few of our team who are joining us slowly and gradually to reach far covering markets, including the markets of Nashik as well as further going down in Mumbai, near Roa, Raigad as well as Alibagh and all such locations.

Pranay Jain — Dealwell Capital — Analyst

Got it. So just lastly you expect the second half to be again, seasonally stronger part of the year?

Mohit Saboo — Director and Chief Financial Officer

Yes, definitely because in the first half from April to June, because of Holi and everything there is somewhat labor shortage and from July to September, because of monsoon, there is a little bit of slowdown because the rains in this region are sometimes torrential which we have witnessed in the current month. And from October to March it is considered to be the most peak construction activity period. So that time we definitely expect it to be better.

Pranay Jain — Dealwell Capital — Analyst

Thank you. Thank you so much.

Mohit Saboo — Director and Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of our R Shraddha Somani, an Individual Investor. Please go ahead. Ms. Shraddha, please go ahead with your question. Ms. Shraddha, If you have muted yourself from your phone, please unmute yourself. Since there is no reply from the line of Ms. Shraddha, we’ll move to the next participant. The next question is Shyam Garg from Niveshaay. Please go ahead.

Shyam Garg — Niveshaay — Analyst

Hello, sir. Thank you for the opportunity and a very good set of number. My first question is with respect to what is the order book do we have right now?

Mohit Saboo — Director and Chief Financial Officer

Sorry, Mr. Shyam, can you come again on the question one?

Shyam Garg — Niveshaay — Analyst

Yes. What is the amount of order book do we have right now?

Mohit Saboo — Director and Chief Financial Officer

So, we are currently running at an order book of almost 7 to 10 days which is current order book pertaining to torrential rain and everything.

Shyam Garg — Niveshaay — Analyst

Okay. So in value terms, what would be the amount of the order book? Hello? Yes. In terms of —

Mohit Saboo — Director and Chief Financial Officer

INR7 crore, but what happens in this industry is you know it’s a bulky material and people don’t have storage space at their sites as well because at construction sites, it’s almost cramped up in cities like Bombay, as well as Ahmedabad, so that’s the reason that we don’t have huge running order books. So people give us orders and they expect delivery to be reaching with them in the three to five days. That’s how the industry works. And only to torrential rains in the last 10, 15 days in Ahmedabad as well as Bombay both the regions, all the sites were a little slow and they had to do a lot of efforts in maintaining their sites. But this order book in Monsoon season seems to be pretty good for us as for monsoon.

Shyam Garg — Niveshaay — Analyst

Okay. With respect to distribution channel, contact with a few luxury project builders like Lodha and other builders. So, what is the payback period from them? From how much time do we get the payments from them?

Mohit Saboo — Director and Chief Financial Officer

So, generally these big builders, which includes the likes of Lodha, L&T, Runwal generally we end up getting their payments on average around 70 to 75 days.

Shyam Garg — Niveshaay — Analyst

Okay. So, with respect to the north region so there are few luxury high end project builders who were saying that they are moving back to red bricks again while bringing this AAC block they founded the block is not that strong for the inside walls. So, they are shifting back to red bricks. So can you give some outlook on that?

Mohit Saboo — Director and Chief Financial Officer

Currently, we haven’t come across any such things as two people are moving back to red bricks again, but with regards to the product and everything so what we have witnessed in the last one, one and a half years is the more organized or the stronger players are somewhat moving from AAC blocks to Mivan structure in some aspect, but that is again, much more expensive and also for the internal walls even in spite of using Mivan structure, they are using AAC blocks only as partition.

Shyam Garg — Niveshaay — Analyst

Okay, thank you.

Operator

Thank you. Next question is from the line of Saumil Mehta from Mehta Advisors. Please go ahead.

Saumil Mehta — Mehta Advisors — Analyst

Hi. Am I audible?

Mohit Saboo — Director and Chief Financial Officer

Yes, please.

Saumil Mehta — Mehta Advisors — Analyst

I just have a quick couple of questions. I just want to know what is the progress on the plant with SCG international? And I believe the plant with SCG as well will be commenced in a phase wise manner. So, could you just tell me how much will they contribute in terms of margin initially?

Mohit Saboo — Director and Chief Financial Officer

So, for the plan with SCG, we are still in land acquisition and identification phase, and we intend to complete the land acquisition in the running quarter by September ’22, and with regard to the commencement or installation of that plan so it won’t be in the phases. We’ll be doing that plant at on shot altogether where we’ll put up a capacity for 3,00,000, but that plant will again be expandable to five lakhs in future.

Saumil Mehta — Mehta Advisors — Analyst

Okay. And could you share some light on how much will they contribute in terms of margins?

Mohit Saboo — Director and Chief Financial Officer

So, the company is already incorporated and sharing ratio is 52% is being held by Bigbloc and 48% by SCG and equity contribution will also be in the same ratio.

Saumil Mehta — Mehta Advisors — Analyst

Okay. That’s it from my side. Thank you so much.

Mohit Saboo — Director and Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Pranay Jain from Deal Well Capital. Please go ahead.

Pranay Jain — Dealwell Capital — Analyst

Thanks for the opportunity again just a couple of quick questions. One is just wanted to understand what are the carbon credits that we’ve accumulated at present and how do we intend to monetize it in the future? Just for a lay investors’ understanding.

Mohit Saboo — Director and Chief Financial Officer

So, we are registered for carbon credit because we are using fly ash and at our unit at Umargaon, we are generating 60,000 units every year and the audit is done for the same and we have accumulated almost around 40,000 to 45,000 units for a period till August 2021 and for the next audit, we are just appointing the consultant for the same and we should begin the audit, which takes a period of about three to four months. And we have held on the credits right now and not folded because of the Russian war and everything the carbon credit prices had come down, but now again the upward trajectory has started on the same. So, once we see the pricing to reach a good level, we might end up monetizing.

Manish Saboo — Marketing and Strategy

And also we from our past experiences, we have seen that the prices remain better in the second half of the year and the best the prices we can get maybe is in the last quarter. So, we’ll monetize it at the best possible time.

Pranay Jain — Dealwell Capital — Analyst

Got it. So just for simple understanding, let’s say we have one lakh carbon credits right now. What would be the present value of the same?

Mohit Saboo — Director and Chief Financial Officer

Currently the market prices around $4 approximately, but we are looking at, we are expecting that it should be anywhere between $5 and $6 in the next couple of months.

Pranay Jain — Dealwell Capital — Analyst

And this of course would be tax efficient or would it attract a pretty high taxes?

Manish Saboo — Marketing and Strategy

Same taxes.

Mohit Saboo — Director and Chief Financial Officer

Current taxation is 10%, but I think there is also cases going on somewhere in Supreme court for the same.

Pranay Jain — Dealwell Capital — Analyst

Got it. And second thing that I saw in the investor presentation is we are now actively looking at export opportunities. I mean, there were two regions named like Sri Lanka and middle east. I don’t know what’s possible in Sri Lanka given the current affairs, but what do we anticipate in middle east?

Mohit Saboo — Director and Chief Financial Officer

So frankly the freight rates are coming pretty high, but you know once the freight rates keep on going down, we might be able to explore export opportunities also. And earlier in the past, we did some experimentation by sending out some samples to UK and European markets, but then the freight rates increased drastically, so that didn’t turn out viable, but we got our product approved and everything that way.

Pranay Jain — Dealwell Capital — Analyst

So, in the next one year, do you see our products landing in middle east and parts of Europe?

Manish Saboo — Marketing and Strategy

It really depend on the freight rate. And you know as a new Wada plant is also coming up, which is very near to the port, the Navashiva port so we definitely have an opportunity, but once freight stabilizes, we can definitely try and explore those.

Pranay Jain — Dealwell Capital — Analyst

Okay. But maybe the inquiries or demand is such that domestically, it will get absorbed.

Manish Saboo — Marketing and Strategy

The demand is pretty good, but then yes, we should definitely try and explore the opportunity in case we get one.

Pranay Jain — Dealwell Capital — Analyst

Okay. So looks something which is for next year, perhaps not much for this year.

Mohit Saboo — Director and Chief Financial Officer

Yes, definitely after our Wada unit starts.

Pranay Jain — Dealwell Capital — Analyst

Okay, thank you.

Mohit Saboo — Director and Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Anika Mittal from Nvest Research. Please go ahead.

Anika Mittal — Nvest Research — Analyst

Hello, thanks for giving the opportunity again. Basically, my question is regarding what is your expectation regarding EBITDA margin, depreciation and interest cost on full year basis for FY’23 and FY’24 going forward?

Mohit Saboo — Director and Chief Financial Officer

So, FY’23, FY’24, the EBITDA margins that we reported in the current quarter those are easily maintainable but we can even see some upper trajectory in the same in the later half of the year.

Anika Mittal — Nvest Research — Analyst

So, it is 22%. Are you sure we are able to maintain that in future? EBITDA margin.

Mohit Saboo — Director and Chief Financial Officer

Yes, because even though Q1 was a little slow in spite of that we have been able to maintain those margins. And apart from that, as we mentioned earlier, that later on the second half of the year, the demand and everything is much more better than this, and we even see the pricing to go up.

Anika Mittal — Nvest Research — Analyst

Understood, sir. And what about the depreciation and interest cost on full year basis?

Mohit Saboo — Director and Chief Financial Officer

So, the depreciation interest course would continue to remain on similar level as it is in this quarter.

Anika Mittal — Nvest Research — Analyst

This is basically around historically 10 crores accumulating. So, you are saying, this will be 10 crores only because you are doing the capex. I think it should increase in the terms of that depreciation.

Mohit Saboo — Director and Chief Financial Officer

Till December we expect the capex to be completed until then everything will be amortize in the cost of plant or anything and thereafter from Jan onwards we expect to start commercial productions and from that plant also, we expect to get similar margins. So interest and depreciation cost will increase, but at that point of time, similarly, the productions and the volumes, as well as the stability will also go up.

Anika Mittal — Nvest Research — Analyst

So more or less, what are our sustainable PAT margins for future?

Mohit Saboo — Director and Chief Financial Officer

So the current margins that we are witnessing in the current quarter is easily sustainable.

Anika Mittal — Nvest Research — Analyst

I’m talking about the PAT margins?

Mohit Saboo — Director and Chief Financial Officer

Sorry?

Anika Mittal — Nvest Research — Analyst

PAT margins. Not EBITDA margins, I’m talking about PAT margins.

Mohit Saboo — Director and Chief Financial Officer

So that’s what, as I said, that even though the new plant is coming up and that interest and depreciation will go up, but we’ll even start to get the volumes immediately once we begin commercial production from December.

Anika Mittal — Nvest Research — Analyst

Okay. So, can we expect it to own an average on 9% to 10% PAT margin as historically we are able to maintain?

Mohit Saboo — Director and Chief Financial Officer

I think we can expect better PAT margins of somewhere between 12% to 15%.

Anika Mittal — Nvest Research — Analyst

12% to 15% you are saying. Okay. And what is our effective tax rate?

Mohit Saboo — Director and Chief Financial Officer

Around 25%, 26%.

Anika Mittal — Nvest Research — Analyst

Okay, understood, sir. Thank you very much. Thank you and all the best.

Mohit Saboo — Director and Chief Financial Officer

Thank you.

Operator

Thank you. Thank you. Next question is on the line of R Shraddha Somani an individual investor. Please go ahead.

Shraddha Somani — Individual Investor — Analyst

Hi. So, what I wanted to know is which other regions in which we, have the highest sales, it would be helpful if you could specify in terms of percentage?

Mohit Saboo — Director and Chief Financial Officer

So, Bombay is one of our biggest markets and the sales from Bombay almost at around 50%. Ahmedabad being almost the second biggest market with the sales of almost 30%, Baroda being the third biggest with the sales of around 5% to 7%. Vapi and Pune also contributing anywhere around 5% to 7%, and other small town contributing another 5% to 7%.

Shraddha Somani — Individual Investor — Analyst

Okay. And are we planning to expand in other regions then what we currently are present in?

Mohit Saboo — Director and Chief Financial Officer

So, we currently have two planned expansions. One is Wada and JV company with SCG near Ahmedabad and post these expansions we intend to go north as well as south, one plant near Delhi and the other near Hyderabad or Bangalore.

Shraddha Somani — Individual Investor — Analyst

And if you could provide with any potential capacity for them?

Mohit Saboo — Director and Chief Financial Officer

Sorry?

Shraddha Somani — Individual Investor — Analyst

Any potential capacity of those plants, what would that be?

Mohit Saboo — Director and Chief Financial Officer

So, we haven’t taken up those expansions on hand, but more or less, principally, we’ll be putting up a plant of five lakh cubic meters only at those location this way.

Shraddha Somani — Individual Investor — Analyst

Okay. Thank you.

Mohit Saboo — Director and Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Suhrid Deorah from Paladin Capital. Please go ahead.

Suhrid Deorah — Paladin Capital — Analyst

Hi. Good afternoon. I have two questions. Firstly, could you tell me what is the aggregate capacity in India for AAC plants?

Mohit Saboo — Director and Chief Financial Officer

The total capacity pan India would be somewhere around 1.5 crores CBM to 1.8 crore CBM, pan-India.

Suhrid Deorah — Paladin Capital — Analyst

And do you know what is the approximate increase that one could see in the next two, three in capacity installed?

Mohit Saboo — Director and Chief Financial Officer

It’s not possible for the next two, three years because we don’t know if everyone’s planned expansions to be very frank, but in the upcoming one year, I think we can see a capacity increase of somewhere around 15% to 20%.

Suhrid Deorah — Paladin Capital — Analyst

So, 20% of this would be about 30 lakh?

Mohit Saboo — Director and Chief Financial Officer

Yes, approximately 25 lakhs to 30 lakhs. That’s what we see in the upcoming of 12 to 15 months.

Suhrid Deorah — Paladin Capital — Analyst

And the current installed base is fully utilized more or less or there’s enough room for those at an aggregate level.

Mohit Saboo — Director and Chief Financial Officer

Yes. Currently you know, all the majority of the capacities are all running at capacities of more than 70% to 80%. We are running at almost 94%, 95%, but the industry would be running at more than 80%, but it depends on plant to plant as to what are their operational levels and everything, and what are their efficient capacity utilization levels limit.

Suhrid Deorah — Paladin Capital — Analyst

So, in this business, I’m assuming that you can only service like 200, 300 kilometer radius from your plant, right? Is that fair assumption?

Mohit Saboo — Director and Chief Financial Officer

Yes, 200 to 300 kilometers is the most ideal, but yes, we can go up to distance of 400, 450 kilometers as well, but the most ideal is 200, 300 the max.

Suhrid Deorah — Paladin Capital — Analyst

So, it’s a very localized business. So, in your area, are you seeing massive additional capacities coming up in the west? Like in the Bombay, Ahmedabad region?

Mohit Saboo — Director and Chief Financial Officer

There are a few upcoming capacities in Bombay, Ahmedabad region as well.

Suhrid Deorah — Paladin Capital — Analyst

But you’re not concerned that could impact your sales or your pricing?

Mohit Saboo — Director and Chief Financial Officer

It wouldn’t impact much because the conversions from brick to block is also happening in that pace and also the construction activity is increased that much.

Suhrid Deorah — Paladin Capital — Analyst

Okay. And is there a rule of thumb for the capex per meter cube or per 1000 meter cube. How much money would one have to spend typically for 1,00,000 CBM plant.

Mohit Saboo — Director and Chief Financial Officer

You weren’t very audible. Can you come back on the question please?

Suhrid Deorah — Paladin Capital — Analyst

Is there a rule of thumb for the capex required for let’s say 1 lakh meter cube plant? I’m just trying to understand what it would — if there is a general number that one could assume?

Mohit Saboo — Director and Chief Financial Officer

So frankly speaking the machinery there’s no thumb rule that way, but just for your brief understanding. So, for a plant of 5,00,000 CBM, you need a land of almost at least eight to nine acres. Secondly, if you install Chinese machinery, then the capex is much different. And if you install German machinery, then the capex is very different. But for us, for a 5,00,000 CBM capacity city plant, the capex would be somewhere around INR60 crore to INR70 crore. But for larger organizations, these capex end up going much higher. Like we have witness in the past that people like Hyderabad Industries or Ultra Tech had installed German plants and the capacity of the plant was around 3 lakh cubic meters and the capex went up to almost 120 crore to 130 crore.

Suhrid Deorah — Paladin Capital — Analyst

So, you are using Chinese machine and they are using German machine?

Mohit Saboo — Director and Chief Financial Officer

Sorry?

Suhrid Deorah — Paladin Capital — Analyst

You are using Chinese machine and they are using German machine?

Mohit Saboo — Director and Chief Financial Officer

No, we are buying Chinese machine and off lately the last plant that Hyderabad Industries put up, they installed Chinese machine.

Suhrid Deorah — Paladin Capital — Analyst

I see. Okay. And I wanted this, just the clarification. Could you just summarize the various plants you have and their capacities and the new plants coming up and their capacity? I think you mentioned it earlier, but I didn’t catch all of these.

Mohit Saboo — Director and Chief Financial Officer

Yes, we have currently one unit near Umargaon, which is a near Vapi. And this is a capacity of 3,25,000 cubic meters per annum and other plant near Ahmedabad the capacity of this plant is around 2,50,000 cubic meters per annum. These two are the currently operational plants. And the other two plants that we are coming up with is one in Wada in Palghar district, which will be a 5,00,000 cubic capacity plant, but that will be in two phases. So, 2.5 lakhs in the beginning, and 2.5 lakhs in phase two. And one more plan that we are coming up will be again in the vicinity of Ahmedabad itself which will be another 3,00,000 cubic meter in the beginning, which is in the JV company with the SCG. And in that will be manufacturing AAC blocks, as well as panels.

Suhrid Deorah — Paladin Capital — Analyst

You said 300,000 in phase one in the Ahmedabad plant, so what would be the phase two capacity be?

Mohit Saboo — Director and Chief Financial Officer

Sorry, it wasn’t very clear again.

Suhrid Deorah — Paladin Capital — Analyst

You said 300,000 in Phase 1 for the new Ahmedabad plant?

Mohit Saboo — Director and Chief Financial Officer

Yeah.

Suhrid Deorah — Paladin Capital — Analyst

So, what were the Phase 2 capacity be?

Mohit Saboo — Director and Chief Financial Officer

So, we have right now just signed for 3,00,000, but the plant that we will be installing will be expandable to 500,000.

Suhrid Deorah — Paladin Capital — Analyst

Okay. And could you repeat the timeline for Wada Phase 1 that will be ready by December’22, right?

Mohit Saboo — Director and Chief Financial Officer

Yes. Wada phase one by December’22, tentatively and Phase 2 by June’23. And the JV company plant near Ahmedabad with SCG by June ’23, again Phase 1 that is 300,000.

Suhrid Deorah — Paladin Capital — Analyst

And you’ve got the money in place to do all of this capex?

Mohit Saboo — Director and Chief Financial Officer

Sorry, I didn’t get it again.

Suhrid Deorah — Paladin Capital — Analyst

You have the funds to do all of those capex?

Mohit Saboo — Director and Chief Financial Officer

Yes. So, we have got the bank finance done for the Wada plant, but majority of our share of capex, like we have already land acquisition, placed orders for machineries given the advance to the supplier began commercial construction activities at the plant. So, all that is already done from our sources.

Suhrid Deorah — Paladin Capital — Analyst

And you don’t need to raise equity in the near future for any of these expansion plan?

Mohit Saboo — Director and Chief Financial Officer

For these planned expansions the generations that we are getting from the company are sufficient enough, but we are open to raising equity as well, if there’s some good equity partner willing to sit with us for a long period as we’ll be coming up with more expansion, in North as well as South in the upcoming future.

Suhrid Deorah — Paladin Capital — Analyst

Okay. Thank you very much.

Mohit Saboo — Director and Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions] As there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Mohit Saboo for closing comments.

Mohit Narayan Saboo — Director and CFO

Thank you everyone for attending the Q1 FY’23 investor call of the Bigbloc Construction Limited today, as you have seen a phenomenal quarter with amazing growth, we intend to continue this growth in the upcoming future. Thank you so much.

Operator

[Operator Closing Remarks]