Apollo Pipes Ltd (NSE: APOLLOPIPE) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Sameer Gupta — Chairman & Managing Director
Arun Agarwal — Joint Managing Director
Unidentified Speaker
Analysts:
Harsh Pathak — Analyst
Utkarsh Nopany — Analyst
Pujan Shah — Analyst
Neha Taneja — Analyst
Rahul Agarwal — Analyst
Bhavin Rupani — Analyst
Karan Bhatelia — Analyst
Rishab Bothra — Analyst
Aditya — Individual Investor
Akash Shah — Analyst
Manan Madlani — Analyst
Chinmay Nema — Analyst
Presentation:
Operator
Thank you ladies and gentlemen, good day and welcome to Apollo Pipes Conference Call hosted by Emkay Global Financial Services. 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. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note, this conference call is being recorded. I now hand the conference over to Mr Harsh Pathak, Emkay Global Financial Services. Thank you and over to you.
Harsh Pathak — Analyst
Yeah. Thank you, yes,, and good morning, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr Sameer Gupta, Chairman and Managing Director; Mr Arun Agarwal, Joint Managing Director; Mr Ajay Kumar Jain, Chief Financial Officer; and Mr Gupta, Group Chief Strategy Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Sameer Gupta — Chairman & Managing Director
Thank you. Thank you. Good morning, everyone. This is Sameer Gupta, CMD Apollo Pipes here. I, along with my colleagues, Arun Agarwal, JMD, AKGen CFO; and Anuva Gupta, Group CSO. Welcome everyone to the Apollo Pipes Q3 FY ’25 earnings call. It’s been an interesting quarter as the macro factors related to infra and retail demand remain weak. However, Apollo has given its best-ever quarterly performance following 37% growth of 40% Y-o-Y and the result and in that. We of growth. We in. This will provide and last seven quarters, we have our capex of INR430 crores. We a plan to over the next three years to finish and figure our total is 3.6. And fund this investment, we got in the industry, INR1800 crores at almost 30% premium to today’s market price. We this upgrade and conviction in our business model from their side. I want to reiterate that here, our core price will always remained three, which helped us to rise any slowdown smoothly. In Q3, our profitability negatively impacted due to decline in EBITDA margin mainly due to some consolidation. At API the level, margins remained stable around 9% appreciation costs further precise our net margins. However, we are not much concerned over that as we are of a very strong view that once we ramp-up our capacities, the margins that reached low-teens in the — on the back of better mix and operating leverage gains. The current focus is to gain market-share aggressively. We expect good demand for agri and cements for the last quarter. The entire talent has been seeing the continuous pause in PVC prices. As the prices reached a low-level, we expect demand recovery in Q4. Anyway, Q4 is always a seasonally strong quarter in the last quarter for competing infrastructure projects. Some green are visible in terms of in consumption activity. We expect common trust importance of and hoping to return after some important elections over. Our return policy — our return provided in terms of ROE and ROCE looks biggest as of now due to results such as one, low realization, second, expense, first, margin better than four, the macro-environment. However, we are confident of achieving 25% of ROCE in next two years as we increase our sales volume, 25% year with margin improvement. This is from our effect. Now we are glad to take questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&Y on the on telephone. If you wish to remove yourself from question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Novani from BOB Capital Markets. Please go-ahead.
Utkarsh Nopany
Yeah. Hi, good morning, sir. Sir, I wanted to go on the margin performance for the quarter. So we have seen a sequential contraction in our margin in December quarter. What is the reason for the sale? And have we booked any interim inventory loss also in December quarter?
Sameer Gupta
We had. So if you can the Q-o-Q comparison, it is — it is not — it’s not comparable because in Q2, the volumes had fallen pretty sharply and OBEC had started contributing to Q2, which was like higher as a proportion and that carried very-high margin as a product profile. So in Q2 when we increased our revenue from INR220 crores to INR310 crores on quarter-on-quarter so the overall product sales mix, which was there until I think Q2 rang up, right? So that’s why the margins, I would say, are more normal now at around at around 10,000 rupees per tonne at level right and Kissan anyways is ramping-up. So is at 4,000 rupees per ton so blended, we were at 8,500 rupees per ton, which is like 8% at percentage level and this is better and we compare it with Q1 or last year.
Utkarsh Nopany
Okay. And so we haven’t put any income inventory loss in December quarter
Sameer Gupta
Very, very, very nominal, very because the fluctuation was very little during the quarter. So no as such an MDM.
Utkarsh Nopany
Okay. And so what would be the margin guidance for both and for standalone operations, say, for FY ’26?
Sameer Gupta
And so see, I mean, right now, if you know standalone is making around INR10,000 per EBITDA, right. Given that given that — given that I mean the high-margin and will contribute significantly in FY ’26, so margin could be better by about like INR50,000 at minimum, right? And then we also need to see that what is the intensity of market in FY ’26 because as of now, the macro factors continue to remain pretty sluggish, right? And if at all the demand at end level does not pick-up, does not pick-up much. So,, so the rest of our sales policies. But also, yes, I mean, we are confident that improvement of INR1,000 to INR1,500 per ton is definitely only cars right and at level, right now we are making like 3,000 to 4,000 right so I’m sorry, yes at Kissan level, we are at 3,000 to 4,000 rupees a ton the business plan what we have made-for Kissan is that we shall run this up to INR7,000 to INR7,000 a tonne over the next two to 2.5 years because we just took charge of the operation, right? And anyways, the company was at negative EBITDA, which we have brought it to positive EBITDA within like a span of 3/4. So in next four to five quarters, you will keep on seeing a jump-in the margins.
Utkarsh Nopany
Okay. And sir, for standalone operations, just wanted to confirm, you are saying that we are expecting an improvement to around INR11,500 to 12,000
Sameer Gupta
To INR1,500 a ton improvement should be there given that there is some pool demand, because right now, like I said, the macro-level demand has been very, very sluggish, right? And so industry is under pressure on selling price, right? Everyone is trying to gain market-share here. And so even if we get some pull from the macro, which we should — which we should Q4 we are already seeing some green shoots. So yes, this much of improvement is doable.
Utkarsh Nopany
Okay. And sir, lastly, sir, how much capex we have incurred in Nine-Month FY ’25 and what is our capex outlook for the current March quarter and for FY ’26?
Sameer Gupta
Right. So in nine months, we have — have so-far spent around INR130 crores. Okay, which includes like addition in gross block plus capital advances what we have paid. And for next two to three years, including the greenfield South India plant, we may be investing another INR350 to INR400 crores which is which is receivable capex across the categories for us plus the new greenfield South India plant. So how we’re going to fund it is that, of course, you must-have seen that there is a INR100 crore pref which has come in from Omanus fund, plus INR250 crores to INR300 crores will be our operating cash-flow generation over the next two, 2.5 years?
Utkarsh Nopany
Okay. Thanks a lot, sir.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press R&1 to ask a question. Thank you. Next question is from the line of Purjan Shah from Molecule Ventures. Please go-ahead.
Pujan Shah
Sir. My first question would be on the OPC side. So we are seeing a in Niger with a few players are coming also with the China.
Operator
Can you use the handset mode? Yes, very clear.
Pujan Shah
Am I audible now?
Operator
Yes. Please go-ahead.
Pujan Shah
Yeah. Sir, my first question would be on the OPVC side. So we are hearing more on the side that many Chinese lines have been coming and disrupting the market. So could you just state your views and what are the current industry dynamics and what would be the potential dynamics could be changing out in next two to three years?
Sameer Gupta
Asking about OPVC,.
Pujan Shah
Yes. Yes.
Sameer Gupta
So it’s a very — it’s a very new product segment which has emerged in India in last one-to-one and a half years, right? It’s a replacement of the tile iron pipes in-the-water infrastructure projects. If you look at the transition of PVC piping industry over the last 10, 15, 20 years, it’s always been the shifting of metal pipes to PVC pipes, right, because of better handling, low-cost, easy to install, etc. So wherever — wherever like earlier the transition was in the low dire pipes in plumbing and agri. Now it is coming to large dire pipes, which are being used for the water infrastructure projects. So it’s a national transition which will keep on happening, right, from metal pipes to PVC pipes and OPVC is one of the outcomes of this transition and government focus on water connectivity, as everyone knows, has been pretty high in the country for the last two, three years and that remains very-high for the next four, five years. So, so we saw this opportunity and we and we got license from a from a player for the machine suppliers who is authorized with or registered with Indian government. We got the capacity, right? We ordered three machines. Two machines are operational. One machine shall get operational in next two months. OPVC has already started contributing just about like 4%, 5% of our revenue at APL level, right, and itself increase to 7%, 8%, 9% over the next one to two years as the order book builds up and we ramp-up our capacities. So sogesh, it’s a new segment where very limited number of players have access to technology right from the registered vendors and we shall ramp it up as order book starts building up.
Pujan Shah
Okay. So on the three machines which we have currently which are planning to ramp-up, is it related to the Spain technology or we have any domestic procurement as well.,
Sameer Gupta
You want to take this up?
Arun Agarwal
Yeah so these are all Spanish technology and there were only two manufacturers globally. So these are the best — best-in-class.
Pujan Shah
All right. So any — as we are planning to go to 7%, 9% of the revenue, so what are the plans ahead? How many lines we have been trying to focus on the this company and what would be the what would be the timeline of that potential line to get commissioned?
Arun Agarwal
So already two lines are commissioned. The third-line has already arrived and it will take almost a month more to get commissioned. And it — the business has already started contributing in a smaller way, almost as already communicated, around 4% it is contributing currently. And we hope next year it should be contributing somewhere around 8% or so with the current lines in also in-place. So as of now, the market is growing at a rapid pace. So any new — and currently, there are not too many capacities existing in the country. Whatever capacities will get added, will we still be a shortfall in the near-future?
Pujan Shah
Right. But we are hearing about the Chinese guys is also entering with this machine lines. So do you have any idea it could either impact the margins or it could impact the industry dynamics as such.
Arun Agarwal
Economics always plays like that. Whenever there is a high-value contribution from any product or technology, in the long-run, yes, it will get even out, but not in the short-term.
Pujan Shah
Okay.
Arun Agarwal
It requires a lot, lot of effort actually because it’s a B2B government supplies mainly. So — and most of the governments are opening up. Only eight states approximately has currently started and another few are in the pipeline. So India being a larger market, are we think at least for the next few years, the demand should be good.
Pujan Shah
Okay. And do we see any challenge in terms of fund flow challenge from the government and due to as the CapEx has been slowed down, there is a slowdown from the government end. So do you feel any impacted on that part?,
Arun Agarwal
Government capex funding has been slower for the last almost seven, eight months now. So — and it cannot remain like that. And it is impacting across business segments in the other building segments also. So it has to change. How much time does it take? It’s a matter of question to be just sorry. But we hope from May onwards, things would start improving.
Pujan Shah
Okay, sir. And just one more question. Do we — is there any anticipation in the EVC side that there could be an anti-dumping duty. So do we feel any challenge out there due to might — there would be a spike in our RM that could impact our realization? Is there any view on that part or it would be a stable sustainable margin because we can able to pass-on to the customers.
Unidentified Speaker
No regime, please take it up if you see the margins of the PVC resin manufacturers, they are not enjoying very-high margins. And because the world market is not working very aggressively. So we don’t see very steep hike in the PVC regin prices in the near-future, first of all. Secondly, that anti-dumping impact will also be not very-high, maximum to the tune of INR6 to INR8 per kg will be impacted as per the initial guidelines issued by the this year for anti-dumping. So we don’t see very steep hikes. And so because of that, we don’t see any major margin impact because of the rising prices.
Pujan Shah
And any expectation of implementation of ADT during like any
Unidentified Speaker
Overall waiting for that notification. We don’t know when it will come, but it should come in the next one to two months.
Sameer Gupta
Okay, sir. Okay, sir. Thank you so much and all the best.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press R&1 on your phone now we’ll take our next question from the line of Nehar Taneja from Nuvama. Please go-ahead.
Neha Taneja
Hi, sir, this is here from Nuvama. Firstly, congrats on good volumes. Just wanted to say this particular quarter specifically, we have outperformed the industry. If I look at the volume season mix of, it’s coming up with around INR13 Y-o-Y growth. What is it leading to outperformance and versus the industry-leader who was already giving a number out? And how confident are you in terms of outperforming over the next two to three years? Some insights would be helpful. Thank you,,
Sameer Gupta
There are like two, three factors here, okay. One is that, I mean if you look at our trade sales volume growth over the last two, few quarters has been pretty strong, right, but on — but when you report the numbers because of poor demand from the water infrastructure, the numbers had been looking pretty bad, right? But our trade sales volume growth has always been in like high-single-digit or low double-digit in the last three, four quarters when you saw that our overall volumes were not growing. It’s not that water infrastructure demand has revived, right? It has not — that segment still contributes less than 5% of my overall volume of which used to contribute 15% like at its peak in FY ’24. So what has — so the focus was always to be aggressive in the trade, right, and continue to gain market shares, like what we saw is that in Q2, the larger players are because of aggressive sales price strategy, right, they were gaining like you know, they were doing better like for last two, 3/4 and then and then at some level market also like absorb like whatever price cuts would have been taken by the larger players and then and then and then like we were always growing, right, without much of price cuts, right? So that traction was always there, right? It is just that Q3, the other players got a bit soft and green on the window because they had like pushed the channel with lower pricing strategy. So that got normalized and then we got our space, we got our window to place our products, right, plus, see, as the demand scenario has been bank, right? So the smaller players, players below us, right, at number seven, number eight, number nine. So they also started to struggle, right, because the industry is not doing good. So as a stronger player, right, you tend to take market-share from the smaller companies as well, smaller competitors also. So this is what — this is what has driven to the quarter three sales jump, right? And what gives us confidence for 25% revenue CAGR for the next two to three years is that still our Varanasi plant is yet to contribute, right? My OPVC just started, it’s contributing only 4%, 5% to my overall revenue, which will ramp-up. Then window Profile segment, which we will start in next three, four months, that will start contributing to my revenue. Hisan, it’s been 3/4. We took the position. It’s ramp-up in FY ’26, FY ’27. So — so we are fairly confident that in bad environment, we have been able to we have been able to demonstrate whatever you see as our numbers, these three drivers will keep our momentum up and 25% revenue CAGR looks very much possible over the next two to three years.
Neha Taneja
Understood. Just a couple of follow-ups. When you said demand from water pipes, that’s related to HDP demand. That correct?
Sameer Gupta
One of your products, yes, water infrastructure, that’s right. Yes.
Neha Taneja
Another two things. What would be your pricing at this point of time versus leader because you mentioned that there was intensive price competition. So where are we versus leaders in terms of pricing, maybe in one of the few geographies you can mention?
Sameer Gupta
Yes. So depending on markets and depending on the product segment, you are like — like at retail level, my pricing is not very much different, Sniha, right? The pricing differs at the distributor level right at retail level, if you go and if you go in the — if you go in and buy for bola file product or my completed product, right, the pricing will not be too much before.
Neha Taneja
And what I understand is that distributor level, can it be something like double-digit difference also? No, no although that does not translate into retail.
Sameer Gupta
Like I said, it’s very market-specific. In North, right, I would be at par with any of the top competitors in West South where I am building my market, right? So there the difference could be 3%, 4%, 5%.
Neha Taneja
I understood. Understood. Secondly, coming to your Windows Profiles division, you said you’re starting revenues next year. How is the competitive intensity in that particular space which are the large odd players? Do you see basically capacity is increasing here? What is the margin look like? Some flavor here on that particular segment would be helpful.
Sameer Gupta
The strategy to go there is to extend our building material portfolio, right, our home segment portfolio. Now in — like you would be tracking the construction materials sector and so what matters is, number-one, one capacity yes, but then more than capacity, what we require is the brand and then the distribution network, right? So, so obviously, we know who is number-one, right? And he is by — and he is the distributed leader in this segment okay and after number-one then there is a big gap okay that’s where we came and plugged ourselves in that number-one leader has built a market size of INR700 crores to INR800 crores, right, there is a potential for like pan-India player to reach INR100 crore, INR200 crore kind of numbers in two, three years if we have the right product, right mix, brand and network we already have. So we leverage on that, right, and we build-on to the capacities. So idea is to remain in like top three, top four in next two, three years as we start selling or once we start our product sales. We have got a very good team to drive this business for us and we are fairly confident that the way OPBC is going to give us revenue same way Window profile will be a top-selling segment for in coming years.
Neha Taneja
Understood. That was helpful. Thanks. Thanks and team. All the best.
Operator
Thank you. We’ll take our next question from the line of Rahul Agarwal from Asset Management. Please go-ahead.
Rahul Agarwal
Hi, good morning. Thank you for the opportunity. A few questions. Firstly to start with South India greenfield project. I just wanted to hear your thoughts on the broader thought on the complex, which you think should come up whenever you decide the location link or how would you want to take this — take-up this project? Can we do better in terms of offerings in supply-chain input-output ratio for production and stuff like that? So just broader thoughts before the project actually gets finalized, what would you want to do in South India and what kind of products will you offer and things like that, please?
Sameer Gupta
Yeah. So Rahul, so this is also part of our overall strategy, which we have been following for the last two to three years, right? So if you look at Apollo in last five years, okay, we had one mother plant in North India, tons, okay, where we were among like top two, top three players in terms of market-share in terms of pricing. Then we had a smaller plant in West India in Gujarat, very small plant with capacity of 15,000, 20,000 ton even lower than that. Then Kissan in South we acquired in Dumkur, right, which had capacity of like, 15,000 20,000 tonne, we did some brownfield there. Now the capacity is like 35,000 ton there and then Vaikur in East India, Central India again which was like 10,000, 15,000 ton plant for us. So three years ago or I would say two years ago, what we decided is that we must-have similar scale of plants and India what we were having in North India, right? So that’s why came in, right? That’s why we acquired Kissan, right, to cater to the West market. And now we feel that in South India also if we have to — if we have to be a like pan-India player compete with like top-five players who are much stronger and who have been present into industry much before than us, right? So we need similar scale of plant in South India also to make a company with like if not 4 lakh tons, but 3 lakh 60,000 tonne capacity, capacity right by FY ’28. So South India plant is part of that growth — growth strategy, right? And as far as the location is concerned, it should be — it should be somewhere near like Bangalore, right from there we can cater to all the four, five major states in the southern part. Now we have started looking for the land right in next, now that we have like a funding commitment with us, right, we will be more aggressive because we already had like INR250 crore INR300 crore of receivable capex for the ongoing projects. We were a bit slow till last quarter, but with funding commitment, now we want to do — lock the land deal quickly. And in next two to 2.5 years, we want to see that plant up and ready
Rahul Agarwal
Right. So you know I thought 286,000 tons was the plan including brownfields in Varana. So when we’re talking about 3,60, the difference is basically around INR70,000 is what the size should be for the plant is that understanding right.
Sameer Gupta
So 40,000 50,000 tons will be like the plant coming up, right? And then 20,000 30,000 ton will be brownfield expansion in existing products, right? Will do well in OPVC. We do well in window profiles, right? So nothing stops us from expanding those capacities right in North also we water tanks, right, we are adding capacities so yes, I mean so now like from 286,000 ton we want we want capacity of 360, 370,000 tonnes in two, three years
Rahul Agarwal
Got it. Related question was, obviously, we go out of our core market, we enter South. We obviously we are there, but still need to build a lot of the land and customer fulls. Any thoughts because even if I map out, let’s say, a 1 lakh ton production or sale today going up to 2 lakh tons, let’s say, in three years, so we’ll still be very small from overall pie perspective, right? We’re talking about like 3.5 million tonnes of entire market size in India. So just to get more customer pull and improved brand perception because when we do channel checks, Apollo doesn’t figure out into top three across India in terms of brand persption. Can we work around that and have more customer pull? Any thoughts on that? How does that work?
Sameer Gupta
Yeah. So Rahul, see, that’s why I told you, okay, that we were not ready with our capacities to attack West India, to attack South India, to attack East India or Central India, right? We had very small plants there, which were not having complete SQ range, right? Most of the products were being set for my mother plant, right? So it had freight issue as well, right? When I would go to a customer distributor, right, my sales team was not having the full SKU range right with itself to go and push for the product, okay. That’s where we changed our strategy and became aggressive that we — is it larger, not similar to what we have in West India, right? So when you have — and in last four, five years, you see that, I mean, last year without, we closed at like INR1,100 crore kind of revenue, right? Out of that, INR600 crore was from North, but INR500 crore contribution, INR0 revenue contribution came from my — like these small plants. So we already have our foot in the door, right? It was just that we did not have relevant capacities to go aggressive and try to take position like what we had in in in in North India. So with capacity capacities, right, we are much more confident with capacity
Operator
I’m sorry.. So the last part was not audible. We were losing your audio. Can you just repeat the last part again, please?
Sameer Gupta
All right. I’m sorry. So with capacities with capacity, is much more confident that
Operator
Voice again ladies and gentlemen, we request you to stay connected, please. Mr, you can go-ahead, sir.
Unidentified Speaker
Sorry, Rahul, some single problems. Right. So what I was saying was that now with capacities with us, right in all the major parts of the country, we are much more confident that we will be able to replicate our market-share positioning in other parts of the country, what we have in North India. Because last four, five years we have been selling like INR400 cro INR500 crores worth of revenue of products there with very smaller-sized plants, right, with larger size plants, we should be doing much, much better. It.
Rahul Agarwal
And lastly, a question on the obviously, the top-level is pretty much there. Just one-level below that, let’s say, as heads the execution is something which is going to be the major dependence on whatever plan we have. Our capital obviously has been taken care of. So now we have capital to boost our production and sales. Just in terms of people, where are we in terms of heads, what are we thinking? What else do we need to ramp this up and achieve our targets.
Unidentified Speaker
So I will — I will let ji answer this, but just before that, okay, so how we — how we — how we have segregated the team is that — so we are growing, one is geographically new plants and one is new and one is and one is new products, right? So, so new — so new geography, right, we have Arun Ji, right, who joined us like now two, three years back. So he’s taking care of all the like-new projects, including Kissan, which we consider like a like a new geography for us, right? Then, then we are hiring the right people, right, to drive the new products, OPVC is there when the profile is there. And so since we are growing like a geography-wise and product-wise, so we have — we are hiring team to manage that specific location or that specific product, right? That’s how we have hired team in the last one, years. So Niji, you want to talk about like-new hiring as a — yeah, let me answer.
Sameer Gupta
Rahul, actually if you see our structure that it’s not like that, only few people are managing the show and rest of not their existing. But actually each and every team members in our company, they are involved in each and every activity that is properly defined and distributed amongst the team, the top-level and then the type of plant to the top-level and again after the business heads or the product heads and the regional heads or you can say we are disputting that production into various parts sales, into various part other activities such as HR, IT, finance, they all are distributed. It’s not like that one single person of few people are completely managing the complete show, but it is a group of people that is show. But few people are actually coming in front of you. That’s why you feel like that, but it is not like that. It is a group of people that is managing the show. And we have got very experienced professional people in our team who are — who are managing the show and they know that there has to be a succession planning along with that, that experienced people and new blood into the group so that we can fresh you can say results from them and have the, you can say result of their experience, whatever experience we have people with us who have got experience of 30 years or 25 years in the team who are managing the show. Like in Window profiles also, we are moving in the same direction. We are trying to catch the best from the industry and trying to create a best team so that we can get results at as early as possible. So don’t — you don’t worry about that. We are actually taking care of the team and apart from that infrastructure also we are investing too much like in IT or in other parts. So we are taking care of that.
Rahul Agarwal
Absolutely. I appreciate that. So where are we in the journey
Operator
Request you to join back the queue please as we have other particips from meeting?
Rahul Agarwal
Okay, sure. Thank you.
Sameer Gupta
We’ll take our next question from the line of Bhavin Rupani from Investec. Please go-ahead.
Bhavin Rupani
Hi, sir. Thank you so much for the opportunity. My first question is related to OPVC. So you mentioned that we have two lines operational and one-line will be commissioned in next couple of months. I just wanted to understand how much capex that we have incurred for these three lines.
Sameer Gupta
Close to 100,
Bhavin Rupani
Yeah, go-ahead, sorry, close to 100,
Sameer Gupta
Yes. Hello.
Bhavin Rupani
Close to INR100 crores?
Sameer Gupta
Yes.
Bhavin Rupani
Okay. And how should one understand the margins of this OPVC segment? It will be obviously better versus what we are clocking right now.
Sameer Gupta
But it’s a bit — yeah, it’s a bit sensitive issue, right? We don’t want to give the exact profitability numbers, but it is much more than what our other products are making and this investment we plan to like the return like on this investment is like two to three years payback
Bhavin Rupani
Okay. Sir, it would be fair enough if we say that margins are in a similar range of CPVC.
Sameer Gupta
We don’t want to comment on this, please.
Bhavin Rupani
Got it. And sir, can you throw some light on competitive intensity over here? How many companies are getting into this segment?
Sameer Gupta
Yeah. You want to take this one?
Unidentified Speaker
Yeah. Let’s not there. Yeah, actually, right now, if you see the technology, which is available with two major players, one is from Netherlands and other is from Spain, where we have got our machine from, it is from Spain. And some of the Chinese — these — first these two companies have limited number of you can say its customers, they are not giving their machines to each and every customer. So molecule from whom we have taken the technology, they are limited to seven customers across India and the other company, they are linked to only one. Apart from the Chinese companies are now coming into the picture, but the quality is still a question from the products that are manufactured from their machines. They are still not up to the market and lot of challenges are there and the higher dire pipes in those machines are still not okay. So there are more challenges in the, you can say products. So right now, if you compare apple to Apple, only four to five players are there who are working aggressively in this product. Apart from that, some more three to four more Chinese machinery manufacturers, they have entered the market, but they are still to establish their product. So in the coming days, you can say 10 to 15 manufacturers will be there, but with the repeated manufacturing manufacture of this moleco machines, only five to six numbers are there.
Bhavin Rupani
Got it, sir. Sir, last question is related to dealer financing. Can you — can you give the amount of dealer financing as on Q3 and how many dealers are covered Right now and what it was in the previous year.
Sameer Gupta
So right now around 10%, 15% of our dealers are taking channel financing, that’s all.
Bhavin Rupani
And what was it in the previous year?
Sameer Gupta
5% to 10%. Now it’s time to
Bhavin Rupani
Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Karan Batelia from Asian Market Securities. Please go-ahead.
Karan Bhatelia
Hi, good morning. Am I audible?
Operator
Yes, please go-ahead.
Karan Bhatelia
Yeah, team with respect to the inventory levels in the channel now that PVC prices have not seen that much of volatility starting from November. So how do you see things at the inventory level?,
Arun Agarwal
You want to answer this?
Sameer Gupta
Yeah. If you see that the PVC prices are almost near to bottom. So the inventory levels right now, still there is a fear in the mind of our distributor or dealer segment. So inventory levels are quite low with them. They are not keen to keep any high inventories or high-level of stocks with them. So it is normal or below normal, not high.
Karan Bhatelia
All right. And one last question from my side. Sir, our operating margins on the standalone business is holding good because the infrastructure contribution has come down significantly. But if government capex was to come back-in next six months, you think our margin estimates look a little aggressive on that part.
Sameer Gupta
But then our other more profitable products like OPVC and window profiles, they should start contributing?
Karan Bhatelia
Right. Right. Okay. That’s
Operator
Thank you. Before we take the next question, we’d like to remind participants to press R&1 to ask a question. Thank you. Next question is from the line of Rishab Bothra from Anand Rathi Shares and Stock Brokers. Please go-ahead.
Rishab Bothra
Hello. Good morning, sir. I just wanted to understand if possible, can we have the revenue-share from these? And do you think there could be meaningful contribution in the coming quarter because of the?
Sameer Gupta
On which product you asked?
Rishab Bothra
Overall, overall company revenues from UP Oktra Pradesh, yeah.
Sameer Gupta
Yeah, all right. So see, North has been our main market as of now, 65% of our sales come from from North obviously with Kissan, the Western market started to contribute to our consolidated numbers. Whom Kumb is not been too much driver for infrastructure spending. In fact it brings a lot of disruption in movement of in movement of material right for whether it’s residential housing, construction private or it’s government infra. Of course I mean for last 1-2 years government had been focusing on modernising the railways there, right, the aviation airport, etcetera, where we did supply material, but then, but then overall we wouldn’t say that there was, like you know, in revenue or volume from Pradesh because of it only brings disruption and movement of the materials.
Rishab Bothra
Got it. And secondly and lastly, we have brand initiatives. How do we map what kind of contribution or growth momentum is there because of brands ambassadors.
Sameer Gupta
What — sorry,
Rishab Bothra
Brand. So we have — we have brand ambassadors who market our products right in terms of advertising spend. So how do you monetize them? What kind of threshold do we have in terms of revenue achievability?
Sameer Gupta
So see, I mean, how we see this as our ROI, right, whatever we invest, it’s not just one banker business, right, whole lot of package comes with it, right? You have to make a ad film, okay, then how do you promote that ad fill? You go on costly media, which is television, you go on cheaper media which is which is print media, right? Now social media is available, right? You want to go outdoor. So we don’t — we don’t evaluate as like how much we’re paying to one celebrity. No, it’s a complete package. So if you look at our brand spends, right, they have been like under 1 — like just over 1% of our revenue, right? And again, it is divided into two-parts. One is ATL, which is above-the-line, second is BTL below-the-line. Because of stress in the demand stress on the margins, we decided that it doesn’t make too much sense to go above-the-line. So our focus has been on below-the-line BTL where we are adding more plumbers to our network. We are doing in-shop branding at our retailer counters at hardware shops, right, then we are engaging with our channel partners, right, to support the outdoor holdings near the main markets, right? So overall investment has been pretty low on branding in last two years because of market situation. And based on that, we think that the ROI on these spends is matching our overall company ROC where we need to achieve 20% 25% return profile.
Rishab Bothra
Okay. Thanks. I’ll come back-in queue.
Sameer Gupta
Thank you. Ladies and gentlemen, to ask a question, please press R&1 on your phone. Thank you. We’ll take our next question from the line of Aditya, an Individual Investor. Please go-ahead.
Aditya
Good morning, sir.
Operator
Aditya, can you use your handset mode, please? Your voice is not no, not really. Can you speak now? I’ll just check.
Aditya
Yeah good morning, sir.
Sameer Gupta
Please go-ahead.
Aditya
So my question is related to OPE features. Sir, are we facing some trouble — challenge in the market? We were hearing from rumors that we were delisted from Panama list relation criteria through your experience criteria. Is it correct? Are you facing this problem in other states also,
Sameer Gupta
If you could understand, can you repeat the question first?
Operator
Aditya, your voice is not clear. Please use your handset. Oh, is it? No, it is not can you switch to your handset mode, please? Aditya. Okay, Aditya has left the queue. Ladies and gentlemen, to ask a question, please press R&1 on your phone. We’ll take our next follow-up question from the line of Pujan Shah from Molecule Ventures. Please go-ahead.
Pujan Shah
Hello. Yes, please. Yeah, yeah. Sir, my follow-up question would be on the OPEC side. So we broadly understand that the Spain or the technology has been — the capacity has been limited and even we — and Ravi say that the Chinese companies machine are not up to the mark. So do we feel that in the coming years ahead, we will start procuring from the domestic company which might which they claim that they have correct the technology as well so do we start procuring from them and what could be like? Is there any consideration for that
Sameer Gupta
Yeah, I will this answer. Yeah, Pujan, actually if you see the technology is evolving and that right now as of today, the difference between technology what Spanish or the European manufacturers are giving are way above than what we are getting from the Chinese manufacturers. So it is — you can see it will take some time right now for them to evolve and get them to the level of — to the level of European manufacturers. Of course, they will get to this level in the coming years, but for the next two to three years, we don’t see significant, you can say, upgradation of the Chinese machines to the level of European manufactured machines. So we hope that you can say that differently is there, then we will definitely ship. But right now, as of today, the difference in the quality, the productivity level, the — you can say the accuracy level is much higher in the European machines as compared to the Chinese manufacturers. And right now, in India, they all are doing hit and drag to produce such machines, but right now, nothing has been established technology has been there in India. So we are just waiting and watching the developments that is happening around us and continuing with the European manufacturers only.
Pujan Shah
Okay. And is there any clause or something from that spend technological partner that you can only proper from them or it’s like non-exclusive you can procure from even Chinese and even domestic, is it open for any?
Sameer Gupta
Yeah. As of today, is definitely across that the Chinese — sorry, the European manufacturers, they will not be supplying to any other manufacturer other than the seven licensed partners that they have identified in India. And along with that, we also are not allowed to buy from any other machine manufacturers apart from them during that tenure. But as the market will evolve, as the market will grow, we think that there should be some change in the license, but right now, we are restricted to take supplies from them only and they are restricted to give supply to us only. So it’s a bio both phase contract. So both are banded to each other for the supplies and the procurement.
Pujan Shah
Sir, can you just state the timeline what would be the cost timeline if there would be any modification on that part. So is there any timeline till this date you have to procure from them?
Sameer Gupta
And as of date, there is no timeline, it’s a contract between both the parties and we are buying to each other for the procurement or selling all the sales.
Pujan Shah
Okay. Thank you so much. Thank you. That is from me. Thank you.
Operator
Thank you. We’ll take our next question from the line of Akash from UTI Mutual Fund. Please go-ahead
Akash Shah
Yeah, hi. Sir, am I audible?
Operator
Yes, please go-ahead.
Akash Shah
Yeah. Just wanted to ask how is the traction in plastic faucet tap and shower that we have launched, any thoughts there? Just wanted to just wanted to hear how that business is doing business
Sameer Gupta
So Akrash, we started that business three years ago, right, and we made a small investment to test the waters, okay, and we did build a business which started contributing a little to our overall revenue, but then we realize that it requires much more bandwidth, much more investment into multiple SKUs, multiple molds for for the complete SQ range right and we just like decided not to invest further in that segment right because the focus shifted more towards like larger volume products which we found OPVC is one of those or window profiles and then expansion in Varana Sea and South India. So, so we just thought let’s give a pause for
Operator
For yeah,
Sameer Gupta
Can you hear me now?
Operator
Yes, please go-ahead.
Sameer Gupta
Okay, yeah, so I’ll repeat. I’m sorry. So what I was saying was that we stopped ourselves from making further investments into that product segment because it provides more bandwidth, more investment to have the complete SQU range, right, and more focused approach. So we thought that let us first get into more voluminous products, which we found in OPVC and profile, right, and then expanding geographically and South India. So once we finish with these expansions, then we’ll see that how we want to take the baskettings as a category. And in-between, we were evaluating some inorganic opportunities also, right? A lot of small mid-tier brands are available in the market. So, so there could be some potential opportunity if we see that, but — but yes, I mean, organically, it is a bit slow to drive significant revenue on for our company. So yes, going-forward, we are open for the inorganic opportunities we find associable.
Akash Shah
Sure, sure, sir. Thank you.
Operator
Thank you. Thank you. We’ll take our next question from the line of Manan from Wealth Management. Please go-ahead.
Manan Madlani
Yeah, hi, good morning. Thanks for the so my question might be repeated because I joined the call lately. So what was the reason behind this hello
Operator
Can you repeat your question and use your handset mode, please?
Manan Madlani
Hello. Am I audible now?
Operator
Yes, please go-ahead.
Manan Madlani
Yeah. Also, I was asking what was the reason behind this prep tissue? I mean, how are we using the fund so,
Sameer Gupta
We have — we have a capex outlay plan of INR400 crores for the next two to three years as per our business model, we shall be generating operating cash-flow of INR300 crores in next two to 2.5 years and balance receivable INR100 crores, which was less. We thought it is better to have a equity infusion rather than going for any debt, you would appreciate that we have invested INR400 crores in last two years so-far and remain the — and yet we remain debt-free. So we want to remain as a debt-free company, right, while building capacity, right from, like you know, the origination of the group where we don’t want to have debt on the books, because whenever there is a downturn in the, in the industry, revenue is under pressure, the margins are under pressure at operating level and then interest cost also interest cost also brings companies down, right? So we are very clear that we don’t want to invest into capacities by taking bank loans. So that’s why we take this small equity potential wherein our capex is sorted for next two to three years. And then we don’t believe that now company will ever require equity infusion because once we utilize our 3,000, 70,000 tonnes of capacity, we shall be generating INR300 crore-plus EBITDA on every year and with 2025 days of working capital cycles, 25% ROCE, all the future growth will be self-funded after this.
Manan Madlani
Okay. Fair enough, sir. That’s it from my side. Thank you so much.
Operator
Thank you.
Sameer Gupta
Yeah, moderator, we missed one question from the participant. If he is there, we can take it, otherwise, let’s wrap it up please.
Operator
Do you mean Aditya, the investor?.
Sameer Gupta
Yeah, or yeah. Or we take the last question. If Adity is not there, we take the last question.
Operator
Is not in queue. We have Chinmai Neima from Preshient Capital. MR.
Sameer Gupta
Okay. Last question, please.
Chinmay Nema
Yeah. Good afternoon, sir. Just a quick question., could you give some color on the receivables from the agri side? Do we operate on a cash and carrying model or is there a credit cycle involved in that?
Sameer Gupta
So I mean, see, I mean, 90% of our products are sold through dealers,, okay. Now whether they sell to housing players or they sell to agri players, that’s their for, right? If you look at our receivable cycle, that’s around 30 35 days, which we have with our dealers. So yeah, it doesn’t matter to us whether my dealer is selling in agri or is selling in-housing. We don’t offer more than 30 40 days of credit perio to our distributor. From there, 90% of our sales have been written.
Chinmay Nema
Sure, sir. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you.
Sameer Gupta
Yes. Thank you, team, MK and Goras for conducting this con-call. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarification or would like to know more about the company, please feel free-to contact our team. Thank you once again for taking the time to join us on this call.
Harsh Pathak
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us and you may now disconnect your lines.