Apollo Pipes Ltd (APOLLOPIPE) Q3 FY23 Earnings Concall Transcript

Apollo Pipes Ltd (NSE: APOLLOPIPE) Q3 FY23 Earnings Concall dated Jan. 27, 2023

Corporate Participants:

Sameer Gupta — Managing Director

Ajay Kumar Jain — Chief Financial Officer

Anubhav Gupta — Group Chief Strategy Officer

Analysts:

Ashish Poddar — Systematix Institutional Equities — Analyst

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Udit Gajiwala — YES Securities (India) Limited — Analyst

Avadhooot Joshi — Newberry Capitals Pvt. Ltd. — Analyst

Mahek Talati — YellowJersey Investment Advisors — Analyst

Aman Agrawal — Equirus Securities — Analyst

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

Achal Lohade — JM Financial Institutional Securities — Analyst

Aasim Bharde — DAM Capital Advisors — Analyst

Hardik Shah — Banyan Asset Management — Analyst

Devansh Nigotia — SIMPL — Analyst

Rahul Agarwal — InCred Capital — Analyst

Bhavin Gopani — Investec — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Apollo Pipes Limited Q3 FY ’23 Earnings Conference Call hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Ashish Poddar from Systematix Institutional Equities. Thank you and over to you, Mr. Poddar.

Ashish Poddar — Systematix Institutional Equities — Analyst

Yeah, thank you, Miguel. Thank you, everyone, for joining Apollo Pipes Limited Q3 FY ’23 earnings conference call. From the management side, we have Mr. Sameer Gupta, the Managing Director; and Mr. Ajay Kumar Jain, the Chief Financial Officer.

I pass on the call to Mr. Sameer for his opening remarks, and then after that we can open the floor for Q&A. Over to you, sir.

Sameer Gupta — Managing Director

Thank you. Good afternoon, everyone, and thank you for joining us on our Q3 FY ’23 earnings call to discuss the operating and financial performance. I’m sure you all had the opportunity to go through our results presentation, which provides details of our operational and financial performance for the third quarter ended 31 December 2022.

As you all know, the PVC industry witnessed a sluggish cycle in the first eight months of FY ’23 and started to the remount from the month of December. Our performance also mirrored the similar trend. Except the fact that our Q3 sales volumes of 18,000 tons was the highest-ever sales as we continue to expand our market shares aggressively, even for nine months, with additional volume growth of 28% Y-o-Y, beating the industry trend. In a scenario where when PVC prices were collapsing, Apollo Pipes strategized its business operational resiliently. We worked upon three-point strategies: first, prevented Apollo Pipes from inventory write-downs to the extent possible; second, post volume to continue market share gains; and thirdly, increased share of value-added products to boost margins. The current PVC price levels have started recovering after a sharp fall this year. This suggest that correction maybe over. This should instill confidence in our channel partner and will lift volumes in coming quarters.

In our Q2 FY ’23 earning call, I highlighted that we are on track to achieve 5,000 tons of monthly sales volume. However, I am glad to share with you that our monthly sales run has increased to 6,000 tons. This implies that we are on track to achieve 25% to 30% revenue growth over the next three years. At the same time, we are improving our share of value-added products such as cPVC pipes and fittings, PVC pipe fittings, etc. We are continuing with our capex program as planned earlier. We have spent INR64 crores in last nine months. I would like to remind everyone that this ongoing capex is majorly for a greenfield plant, which is 100% dedicated towards value-added products. We expect the new production to start in FY ’24.

To conclude, I would like to state that the tough time seems to be over, we are holding our fort through market share gains that is growing at an expected rate.

Now, I would like to invite Mr. Ajay Jain to run you through the key financial highlights for this quarter ending December 31, 2022. Thank you.

Ajay Kumar Jain — Chief Financial Officer

Good afternoon, everyone. I will briefly cover the financial performance during the quarter and nine months ended December 31, 202. The Company delivered a strong operational performance during the quarter. Sales volume for the quarter stood at 18,011 metric tons, reporting a growth of 16% as against 15,465 metric tons in Q2 FY ’23. Sales volume for nine months FY ’23 stood at 47,882 metric tons as against 37,440 metric tons, up by 28%.

Revenue from operations for the quarter stood at INR236.7 crores as against INR207 crores in the Q2 FY ’23 and INR190.8 crores in Q3 FY ’22 was up by 14% Q-on-Q and by 24% Y-o-Y, respectively. In nine months FY ’23, nine-month revenue from operations stood at INR662.6 crores as against INR536.6 crores, up by 23%.

On the profitability front, EBITDA for the quarter increased to INR16.1 crores versus INR2.5 crores in Q2 FY ’23 and INR21.6 crores in Q3 FY ’22, up by 545% Y-o-Y and declined by 26% Y-o-Y, respectively. EBITDA for nine months FY ’23 stood at INR36.6 crores as against INR55 crores, lower by 41% Y-o-Y. Margin for the nine months ended December 31, 2022, stood at 5.8%, were compared to 12.1% in the corresponding period last year, lower by 629 bps. Going forward, we anticipate EBITDA margins to be stabilized. During the quarter, we witnessed a sharp increase in rising raw material cost from the last two quarters.

Depreciation cost, which stood at INR7.4 crores in Q3 FY ’23 as against INR7 crores in Q2 FY ’23 and INR6.7 crores in Q3 FY ’22, up by 6% Q-on-Q and 12% Y-o-Y, respectively. Finance cost was at INR2.1 crores during Q3 against INR2.2 crores in Q2 FY ’23 and INR0.8 crores in Q3 FY ’22, respectively.

The Company reported profit of INR4.9 crores for the quarter compared to a loss of INR4.8 crores in Q2 FY ’23 and a profit of INR11.4 crores in Q3 FY ’22, respectively. Net profit for nine months FY ’23 stood at INR8.9 crores as against INR34.2 crores in nine months FY ’22. Net margins during nine-month FY ’23 stood at 1.3% as compared to 6.4% in nine-month FY ’22, lower by 503 bps.

On the balance sheet front, our net debt position improved significantly to INR15.1 crores from INR45.6 crores in H1 FY ’23. On the working capital front, our continuous endeavor improved our overall working capital cycle to 52 days from 66 days in H1 FY ’23 against 76 days in nine months FY ’22.

With this, I would now request the moderator to open the forum for any questions or suggestions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] First question is from the line of Dhananjai from ASK. Please go ahead.

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Sir, I just wanted to understand what would be your forecast or your — how our company would look at our realization growth for the next few years, considering we are — realization is lower compared to competitors?

Anubhav Gupta — Group Chief Strategy Officer

Hi, Dhananjai, Anubhav Gupta this side. So, if you look at the realization, right, I mean, we have been targeting revenue growth of 25% to 35%, right, over the next three years [Technical Issues]

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Hello?

Operator

Sir, can you help us?

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Not exactly.

Operator

Participants, please stay connected while we rejoin the management back to the call.

Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.

Anubhav Gupta — Group Chief Strategy Officer

Great. So, I was mentioning that to achieve revenue growth of 30%, 35%, we need volume growth of 25% and 5%, 10% growth coming from the improvement in NSR. And NSR improvement will be backed by incremental volume of or incremental volume from value-added products, like cPVC pipes and fittings and water tanks and bath fittings, right, where we are seeing a very high growth already. So, yes, I mean, you can expect 5% to 10% improvement in NSR. Irrespective of how PVC prices behave, if you take that factor out, then product-wise NSR should improve 5% to 10% year-on year.

Dhananjai Bagrodia — ASK Investment Managers — Analyst

And then that competitively against other players would keep us at how much discount if we improve 5% to 10% improvement in NSR?

Anubhav Gupta — Group Chief Strategy Officer

Then you’ll have to compare products like-to-like, right? So, for example, if you compare PVC pipes of Player A versus Apollo Pipes, right now the pricing difference should be like 4% to 5% depending on, like, different markets. So I’m sure that gap will narrow down. Four years ago, it used to be like 8% to 9% also in some pockets, right, so now it’s down to 4%, 5%. In North, we sell at par. In North, there is no discount versus Apollo pricing or any player A, B, C pricing, right. But in South, we have to be vary of the market conditions, right, where we are expanding our market share. So we sell at a lower realization. But, I guess, I mean, if you look at the value addition, I don’t know which company you’re referring to, right? For example, you take company A, where the cPVC portfolio could be like 40%, 50% of their total sales, right? For us, it is only 15% today. So for us to reach to 50% it will take many years, right? So I think it depends on like — 15% is value.

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Okay. Value of the cPVC, so your volume would be around…

Anubhav Gupta — Group Chief Strategy Officer

Yes. So, I don’t think it is correct to compare NSR of multiple companies with Apollo. There are two things which you should compare. One is, the pricing of similar product in same market, right, what is the price gap. And the second, how Apollo Pipes is improving it’s overall NSR, right, year-on-year.

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Sure. And sir, any — just ballpark what would be the breakup between our revenue — like region-wise?

Anubhav Gupta — Group Chief Strategy Officer

So region-wise, North market continues to dominate for us because we have got our mother plant here, right? And we have very strong market share in the Northern region. So that’s like 65% to 70% of our revenues coming from North. Then we have got South market where we started our plant operations two years ago, that’s ramping up quite well. So 15% sales are coming from there. And then rest is between West and East, which are slowly ramping up with our Raipur plant getting commissioned one year ago. So that’s contributing. That has started to contribute. And it will keep on growing. But now we have another greenfield plant, which is coming in North India again, right? So, I guess, North will continue to dominate in terms of production, but yes, from that greenfield plant for value-added products we will also sell material across India, right? So production-wise, North will dominate, but sales-wise, other markets will take up.

Dhananjai Bagrodia — ASK Investment Managers — Analyst

Okay. Sure. Thank you. I’ll come back for some more questions.

Operator

Thank you. Next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Yeah, good afternoon, and thank you for the opportunity. My first question is that, in the presentation there has been a mention that number of SKUs will increase from 1,500 to 2,500 in the medium-term. So, when are you targeting this? And if you can elaborate on what is driving this increase in number of SKUs? Which categories?

Anubhav Gupta — Group Chief Strategy Officer

So, Bhargav, there are like two things to this. One is, we are bullish on our upcoming greenfield plant, right, which will start operation in next 12 months. We have already spent a good amount of capex so far. And in next two, three quarters we’ll try to complete the construction, etc., and production should start next financial year, right? So, a lot of value-added products, SKUs will come from that front. And also in the existing facilities, right, we are getting new molds, dyes, right, so that our SKU range keeps on expanding. So it’s a continuous process, and it will get major boost from our new plant, which will start over the next 12 months.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Sir, total targeted capex for this plant spent is INR64 crores in nine months. But what is the total capex and what could be the asset turn at peak utilization?

Anubhav Gupta — Group Chief Strategy Officer

So for total, if you see the total capex outlay for this particular plant is INR150 crores, right, INR65 crores we will spend this year, right? And next year should be around INR80 crores, INR90 crores, and we’ll try to complete the plant capex.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

And what could be the asset turn at full utilization?

Anubhav Gupta — Group Chief Strategy Officer

So here, because of value addition, it will be minimum 3 times.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Okay. 3 times. I understood. Great. Next question is, if you can quantify the growth in cPVC and bathroom fittings, so what has been the growth?

Anubhav Gupta — Group Chief Strategy Officer

So, cPVC for us has been growing above 50%, right? And even in bath fittings, the growth has been above 50%.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

And what is the size now of bath fittings broadly?

Anubhav Gupta — Group Chief Strategy Officer

So, super value-add portfolio for us, which consists of water tanks and solvents and bath fitting, it is under 10%.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Sorry, hundred and…

Anubhav Gupta — Group Chief Strategy Officer

It is under 10%.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Under 10%. Okay, okay. And lastly, is it possible to share what has been free cash flow generation in nine months FY ’23?

Anubhav Gupta — Group Chief Strategy Officer

So free cash flow, if you see, I mean, we have been able to rationalize our working capital below 50 days, okay, for nine months. So the capex also has been there at INR65 crores. So free cash flow I would say it will be like zero, whatever OCF we generated, that got into capex. So FCF for nine months is zero. But going forward, we are further rationalizing our working capital, okay, from 60, 65 days, we are already down to 50, and March ’23 balance sheet, we target to close to 40. So if that happens then there will be like incremental operating cash flow. And despite capex commitment, we will have a free cash flow generation for the full-year, and next year it will further accelerate. Obviously, this year the profits were depressed because of inventory write-downs in the first nine months. If we go back to our normalized EBITDA per ton of 16,000, 17,000 per ton or 12% EBITDA margin and with working capital of 40 days for FY ’24, there will be substantial operating cash flow generation with whatever capex commitment of, say INR100 crores. We will still be left with good amount of free cash flow in FY ’24. And that could boost our ROCs also beyond 20% easily.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

And fair to say that after this FY ’24 remaining capex on the value-added plant, there is no further capex lined-up for the next two, three years on any greenfield expansion, right?

Anubhav Gupta — Group Chief Strategy Officer

Yeah. Not greenfield but every year — see, I mean, we are a growth-oriented company, when we are targeting 30% revenue growth year-on-year, right, so we must spend INR50 crores, INR60 crores or 25%, 30% of our EBITDA every year, right? So that will continue. But yes, no major capex of INR150 crores, like what we are putting for this new greenfield plant. Unless we see good opportunity for West India, where we do believe that there is a possibility of setting up a second mother plant some time, right, not immediately, but in next two, three years we must have second base, right, how we have not as our base, similar base, we should have either in West or South at some point of time. We will take that call in next 15 months to 18 months.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Sir, just a related question to this, what is the utilization of the West plant?

Anubhav Gupta — Group Chief Strategy Officer

West, right now it is in Gujarat, right? So there the capacity is very little. West when I say it will be in Maharashtra.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

A new plant in Maharashtra. Okay.

Anubhav Gupta — Group Chief Strategy Officer

Yes. Or maybe in South, right. So South is doing well. It was like an acquired unit, as you know, whatever capacity ramp-up we could do we did. But yes, I mean, if we have to grow to the size of, say, INR3,000 crore, INR4,000 crore top line, right, then we need another mother plant like how we have in North India.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Okay. Okay. I’ll jump back in the queue. And all the very best. Thank you for your answers. Thank you, Bhargav.

Operator

Thank you. Next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Yeah, hi. Thank you for taking my question. The first one is related to your volume growth. So can you give some detail, like from which segment you receive higher growth for agri or plumbing?

Anubhav Gupta — Group Chief Strategy Officer

So, Praveen, one data point I’d like to share and I’m glad to have sharing this is that, our sales mix for housing and agri, right, which used to be around 50-50 till first half of FY ’23. Now, for nine months FY ’23, housing is more than 55%, okay? So it is touching 60%, okay, and Agri is 40%. So this is in line with our strategy that ultimately we want to be like 70%, 80% housing sales, plumbing sales company and 25%, 30% agri sales company. So we are pretty much on track to do that. And after our new greenfield plant, we are confident that this sales mix will be achieved. Okay?

So coming back to the question that, I mean, where we got the growth from, yes, housing sales did really well for us as our brand acceptability is improving month on month, right, with our all the ad spends, our promotional activities what we’ve been doing, our sales team expansion, secondary sales focus, etc., right? So all they are — they have started to pay well. Then the new product addition, the new molds, the new SKUs expansion what we have been doing in cPVC, in fittings, in bath fittings, right, so that’s paying well. Then expansion from South and East markets where we started selling after commencement of two latest plants, right, so that’s helping. And obviously some fill-up from the channel filling which started in month of December, right. So these were the four factors, which led to a strong growth overall. But yes, I mean, between this cPVC and bath fittings and fittings, right, these are the segments which are growing faster than the overall growth.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Great. Helpful. Next question is related to the utilization of the plant. If I look at currently overall utilization is around 55%, so — and also the new plant is coming in. So, how your plan to improve this? And if you can give some geographical utilization like in Ahmedabad or Bangalore, how the utilization there?

Anubhav Gupta — Group Chief Strategy Officer

So, Praveen, see, I mean, we are not too much bogged down by like how — what is our capacity utilization. What bothers us is the ROC what we’re generating in the business. Okay? So, in fact, as per our business plan, right, a 50% utilization at our plant can generate 30%-plus ROC for us, right? So as long as we are able to achieve that number, we are happy with 50% capacity utilization. Okay?

We — as a Group, okay, we are always happy to have excess capacity with us, right, so that we can focus on new SKU range, we can focus on market share gains, right, and also the fact that when there is a good season, right, we should have capacity to fill in the supply, to fill in the demand. Okay? That being said, I mean, seasonally, we have seen that because agri one season is good, one season is bad. So we are happy with 50%, 60% utilization levels as long as we are generating 30%-plus ROC.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Got it. And if you can give a color on the current PVC resin prices and your procurement cost?

Anubhav Gupta — Group Chief Strategy Officer

So I’ll request Sameer-ji to answer this.

Sameer Gupta — Managing Director

Yeah. Hi, Praveen. Regarding the PVC prices, right now it is more of a stable type of things, around 15% to 20% has already increased in the last 20 to 30 days, and we hope that the prices should be stabilized in the next, you can say, one or two quarters. Of course, a bit, you can say, recessionary conditions are there in U.S. or China, but I don’t think that will too much bother the prices in India, because of the demand, because if demand is continuing good in our — this pipe sector and we are hopeful for the prices to be stabilized.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Any number if you want to give? Like PVC resin prices at this current moment, what is that?

Sameer Gupta — Managing Director

Yeah. Right now the — if you see, the PVC prices it is roughly around $900 level, $900 to $950 level they’re running at and it went down to the level of $650. So almost in the — if you talk about the international pricing, around 30% to 40% increase from the bottom prices have been there. But, of course, we are — because we are targeting our purchases mainly through, you can say, imports and domestics, 30% from domestic producers. So we’re comfortable right now with all those, you can say, purchases that we have made in the last few months. And in the next, you can say, few months or so, we see that the prices should be uptrend, seeing the international market trend. So it should continue somewhere around $950 to $1,000 in the next few months. So we should be comfortable in pricing for — sourcing for this PVC resin, apart from cPVC and others, they are stable, you can say, as compared to PVC.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Thank you. Thank you for taking my questions. For further question, I’ll come in the queue.

Operator

Thank you. Next question is from the line of Udit from YES Securities. Please go ahead.

Udit Gajiwala — YES Securities (India) Limited — Analyst

Yeah. Hi team. Thank you for taking up my questions and congratulations on a stellar volumes for the quarter. So if you can just highlight on the profitability front, like you have said about the top line growth, like given the PVC impact is behind. What would be our EBITDA kg [Phonetic] target for, say ’24-’25?

Anubhav Gupta — Group Chief Strategy Officer

So, Udit, I mean, now that there are no expected write-downs, right, in inventory. So manufacturing-wise anyways in Q2 and Q3 we achieved INR15,000, INR16,000 per ton kind of EBITDA spreads, okay, and it is just because of the write-downs the numbers came like what you see, right, for Q2 and Q3. Q4, we should be like back to normal. The uptake number which you will see should be back to normal INR16,000, INR17,000 per ton, right. And FY ’24-’25 also with the incremental sales coming from value-added products, we will INR17,000, INR18,000 per ton kind of EBITDA spread.

Udit Gajiwala — YES Securities (India) Limited — Analyst

That’s clear. And just secondly, what was our ad spends for nine-month and what will it be for full-year? And any budgeted expectation for next fiscal?

Anubhav Gupta — Group Chief Strategy Officer

So they continue to remain around 1.5% to 2%, okay, of our total revenue. We are happy with this, of course. I mean, going forward we could restart one campaign, right, in — there could be like spike in a quarter, but on full-year basis, I don’t think it will go beyond 1.5% to 2%.

Udit Gajiwala — YES Securities (India) Limited — Analyst

Okay. Got it. Thank you. Thank you for answering.

Operator

Thank you. Next question is from the line of Avadhooot Joshi from Newberry Capitals. Please go ahead.

Avadhooot Joshi — Newberry Capitals Pvt. Ltd. — Analyst

Hi. Thanks for the opportunity. Good to see that we have gained on the volume front. I just want to know in the region mix, whether we have gained any market share in Southern region? That’s first.

And secondly, we manufacture fittings mostly, if I’m correct, that mostly to Tumkur plant. So the new SKUs coming out in the new plant will be totally different from them — from that plant or how it would be? That’s two questions I have.

Anubhav Gupta — Group Chief Strategy Officer

So coming to the question one, the South sales are expanding, right, year-on-year. So yes, we have gained market share and it is on the back of capacity ramp up, then the plant modernization measures which we undertook over the last one and a half years to improve the quality. And third, our distribution network expansion, which we are doing every day in the Southern region. So these three factors led to incremental sales coming from Southern market. And second for South market, the fittings are also going from our Delhi plant, okay, because that plant when we acquired, it had restrictions with the quality, etc. So we are ensuring that the fittings material is being sent over from our Delhi plant.

Avadhooot Joshi — Newberry Capitals Pvt. Ltd. — Analyst

Okay. And the new SKUs will be different in the greenfield plant, which is coming up or some similar overlap would be there?

Anubhav Gupta — Group Chief Strategy Officer

So the new plant has three products, okay? One is cPVC. Second is bathroom fittings and third is HDPE, right? These are the three product lines which are going to be produced from that new plant. And the proportion of these three products today, right, the proportion of these three products today is 30%, 40% of Apollo’s total volume today, right? So this 35%, 40% volume mix will increase — will improve significantly with the new plant. And SKUs will be new, with new sizes, new range of products.

Avadhooot Joshi — Newberry Capitals Pvt. Ltd. — Analyst

Okay. Understood. And lastly, on the imported versus local mix of PVC, whether there is a change in there and how we are improving on that side of business [Phonetic]? Thank you.

Sameer Gupta — Managing Director

Please repeat again, I could not get it. Please repeat.

Avadhooot Joshi — Newberry Capitals Pvt. Ltd. — Analyst

PVC resin imported versus local procurement mix, whether there is improvement over there?

Sameer Gupta — Managing Director

No. Of course, we try to improve the local sources because the prices were getting too much volatile in the past few months. So we have increased it, earlier we were at 80-20. And right now, we are trying to run our sourcing like 70% from imports and 30% from domestic sources.

Avadhooot Joshi — Newberry Capitals Pvt. Ltd. — Analyst

Okay. Understood. Thank you.

Operator

Thank you. Next question is from the line of Mahek Talati from YellowJersey Investments. Please go ahead.

Mahek Talati — YellowJersey Investment Advisors — Analyst

Yeah, hi. Thank you for the opportunity. So two questions. One is, what is the capacity of the new plant which we are expanding?

Anubhav Gupta — Group Chief Strategy Officer

So that will be around 25,000 tons.

Mahek Talati — YellowJersey Investment Advisors — Analyst

25,000 tons. Okay. And second was with regards to the PPRC pipes. So have we started the commercial supply? And how has been the reception if started?

Anubhav Gupta — Group Chief Strategy Officer

Yeah, we have started the PPRC production and supplies in the — you can say, around November — somewhere in November, we have started the production and the supplies and the response is pretty good and the material is pretty good, you can say, accepted in the market. But because as it is mainly for the Northern, you can say J&K market mainly and because of the heavy rain, there’s snowfall. The market guessed, you can say, disturb at least two months, January or December and January. So from the next month onwards, of course, we will get again, good orders from those sectors. And the product is quite well accepted in the market. So we are quite, you can say, upbeat regarding this product.

Mahek Talati — YellowJersey Investment Advisors — Analyst

And last was, any specific reason for significant increase in the PVC prices after a fall of eight months?

Sameer Gupta — Managing Director

Yeah. Of course, the PVC prices went below the costing of those suppliers that they were actually having. So it has to bounce back because, you can say, reasonable prices was around $750 to $800, but it went up to the $650. So we were quite, you can say, thinking that — hoping that the prices will bounce back in the, you can say, near future at the time of November, and it happened like that only. So right now, the prices seems to be stable at this level of $900 to $1,000 levels. And we are hopeful that it should remain stable for the next few months.

Mahek Talati — YellowJersey Investment Advisors — Analyst

Okay. Thank you.

Operator

Thank you. Next question is from the line of Aman Agrawal from Equirus Securities. Please go ahead.

Aman Agrawal — Equirus Securities — Analyst

Yeah. Thank you for the opportunity and congratulations on good numbers. Sir, when you say we expect the plant capacity to be 25,000 for the new upcoming plant, does this include the 6,000 MTPA that we already commissioned in first half of ’23?

Sameer Gupta — Managing Director

No.

Aman Agrawal — Equirus Securities — Analyst

Okay. So it is excluding of that. And post this commissioning of 25 MTPA, which is essentially entirely value-added product, do we see any revision in our margin guidance or EBITDA per kg guidance after ’24?

Anubhav Gupta — Group Chief Strategy Officer

No, when we had given the initial guidance, right, so that was considering this plant as part of our business plan.

Aman Agrawal — Equirus Securities — Analyst

Okay. And this plant, we continue to expect this plant to be fully funded by internal accruals, right?

Anubhav Gupta — Group Chief Strategy Officer

Of course, yes. I mean, this year INR60 crore capex in Q4, like whatever will be done, plus INR100 crores next year, there won’t be increase in debt.

Aman Agrawal — Equirus Securities — Analyst

Sure. And lastly, on the East plant, how is the ramp-up for — how is the penetration we are witnessing for the Eastern and the Central markets through that plant?

Anubhav Gupta — Group Chief Strategy Officer

So East plant is pretty small, okay? It’s the capacity is less than 10,000 tons, right, annually. So that much volume, we have been able to ramp up, right, because it is catering to MP, Chhattisgarh, Central India and East India belt pretty well. And, I guess, see, I mean, going forward, our strategy is to sell more and more fitting products and other value-added products, right? So they are being catered from our mother plant from North India, okay? So, even if we don’t expand capacity in East and South, right and West, still you will see volume and revenue both going up because they will be fed — these markets will be fed from our North plant.

Aman Agrawal — Equirus Securities — Analyst

Understood. Understood. That’s it. Thank you. That will be it from my side. Thank you.

Operator

Thank you. Next question is from the line of Kuber from IDBI Capital. Please go ahead.

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

Yeah. Thank you for taking my question and congratulations on the numbers. Few questions from my end, I would like to know about the channel partners. Have you added any channel partners in this quarter? That is the first one.

Anubhav Gupta — Group Chief Strategy Officer

So it’s an ongoing process, right? I mean, distributors, channel partners, every month, every quarter, we have to keep on adding because we are growing our volumes by 25%, 30%, right? So simple logic says that, yes, I mean, we have to keep on aggressively adding new channel partners.

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

So any numbers if you can just give some color on that?

Anubhav Gupta — Group Chief Strategy Officer

So see, I mean, what we internally believe is that, the — right now, see, the number is around 600 distributors, direct channel partners, okay?

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

Correct.

Anubhav Gupta — Group Chief Strategy Officer

This number has to go up by 5% to 10% every year, right, the new addition. And then there will be like some deletion also, right, some — so net-net, we want to add 30, 40 large channel partners, good channel partners, good distributors, strong distributors every year, right? And we are on track, which is just, obviously, the first nine months was not a good time to go and aggressively add new distributors because everyone — all the channel partners who were going through low sentiments, PVC prices were going down, they were having inventory write-downs, right? Now the environment has become conducive to go out in the market and start approaching, right? And our sales team is on the ground, they keep on adding [Technical Issues]

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

Okay. Okay. Okay. And secondly, I wanted to know about the EBITDA per kg for value-added products and commodity products. I mean, if you can just give some number?

Anubhav Gupta — Group Chief Strategy Officer

So it’s blended, the Company says INR16 a kg, right? The value-added products are above INR25,000 and commodity will be like less — lower than INR12,000.

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

For this quarter, right? For Q3?

Anubhav Gupta — Group Chief Strategy Officer

No. Overall, Q3 blended EBITDA is INR8 — INR9 but that’s also because of the inventory write-down, right? I’m talking about the manufacturing EBITDA, normalized EBITDA of INR15, INR16 a kg.

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

Okay. Okay. Okay. And secondly, sir, would like to know about the demand, like for cPVC and bathroom fittings, how you are looking at it for Q3, Q4 and for FY ’24? That would be my last question.

Anubhav Gupta — Group Chief Strategy Officer

Right. So we are pretty bullish on these two products, right? In fact, our capacity constraint is there. That’s why we are adding new capacity in the new greenfield plant, right, which is coming in North India. Both these products are pretty much like customer-centric products, right? You sell your product like a brand and happy to share that the brand acceptability is improving day by day. That’s why we have been able to consistently grow our cPVC revenue at 50%. Last year, the growth was 100%. This year, it has been 50%, right? So this clearly suggests that consumers and influencers or what numbers in this case are accepting our product, our brand, right? And we are also working hard to make the product available, right? Availability plays a big role. So both these products have performed pretty well for us. Now we are utilizing like full capacity for these products and new capacity will only boost the revenue.

Kuber Chauhan — IDBI Capital Markets & Securities Ltd. — Analyst

Okay. Yeah. That’s it from my side. Thank you.

Operator

Thank you. The next question is from the line of Mr. Achal from JM Financial. Please go ahead.

Achal Lohade — JM Financial Institutional Securities — Analyst

Yeah. Good afternoon. Thank you for the opportunity. Just a couple of clarifications. In the — one of the answers you mentioned that even at 50% utilization, the ROC is in excess of 30%. So I just wanted to understand the underlying assumptions, what is the margin assumption there? And what is the capex assumption on a per kg basis?

Anubhav Gupta — Group Chief Strategy Officer

Sure. So Achal, see, today, my gross block, okay, stands at INR400 crores, okay? And my working capital for — my normal working capital will be around, say, 40 days, 40 days of working capital and, say, turnover of INR1,100 crores with 2.5 times asset turnover and EBITDA margin of 12%, I’m considering. So if you do this math, my total capital point will be gross block plus 40 days of working capital cycle, okay, on INR1,100 crores, INR1,200 crores turnover with 12% EBITDA margin, you can calculate the ROC, which should come near this number.

Achal Lohade — JM Financial Institutional Securities — Analyst

Okay. So you’re calculating on EBITDA pretax. That’s how you mentioned 30%, right?

Anubhav Gupta — Group Chief Strategy Officer

Yeah. That’s right.

Achal Lohade — JM Financial Institutional Securities — Analyst

This INR400 crores for what capacity in terms of…

Anubhav Gupta — Group Chief Strategy Officer

The current capacity of 140,000 tons.

Achal Lohade — JM Financial Institutional Securities — Analyst

140,000.

Anubhav Gupta — Group Chief Strategy Officer

135,000, yeah.

Achal Lohade — JM Financial Institutional Securities — Analyst

Understood. I’ll work on this and come back for any questions. And secondly, in terms of your incremental capex is coming at what cost? Would you be able to clarify that? What capacity at what cost? Incremental?

Anubhav Gupta — Group Chief Strategy Officer

Yeah. So incremental, again, it depends on this greenfield plant, which is like value-added products, right? So here, we are, say, spending INR150 crores, right, and the capacity, which we will get is 25,000 tons. So here, the math will be, say, INR6 lakhs, right? And right now, if you look at my gross block of INR400 crores, which gives me 135,000, so that’s around INR400 crores. So incremental greenfield plant is 40%, 50% extra. But brownfield, whatever we do, right, in the existing plant. So that will be less than this math [Phonetic] of INR400 crores, right? So — but this incremental INR600 crores, it is like 40%, 50% extra EBITDA margin also there, right, and even asset turnover will be higher.

Achal Lohade — JM Financial Institutional Securities — Analyst

Understood. And just a clarification. If I look at a simple math of the realization per kg in 3Q, it was about INR131. And if I look at the average PVC price, the ratio comes to about 1.6 times, 1.6x. And historically, it used to be around 1x to 1.2x types. Would you be able to clarify as to — if it is entirely driven by the new products? Or it is — even in the core pipes business, there is increase in the pricing power, so to say?

Anubhav Gupta — Group Chief Strategy Officer

So majority, I would say, 70%, I will rate this to new products, value-added products, cPVC water tank, which sell at higher NSR. And 30% I’ll ascribe to the improvement in realization in PVC pipes.

Achal Lohade — JM Financial Institutional Securities — Analyst

Understood. And just last question, if I may, with respect to cPVC mix for third quarter in terms of volume and value?

Anubhav Gupta — Group Chief Strategy Officer

So volume, we don’t share, okay? Value-wise, it was around 17%.

Achal Lohade — JM Financial Institutional Securities — Analyst

17% value mix.

Anubhav Gupta — Group Chief Strategy Officer

Yes.

Achal Lohade — JM Financial Institutional Securities — Analyst

Understood. And for nine months, sir?

Anubhav Gupta — Group Chief Strategy Officer

Nine months, it will be around, similar.

Achal Lohade — JM Financial Institutional Securities — Analyst

Got it. Thank you. Wish you all the best.

Operator

Thank you. The next question is from the line of Aasim Bharde from DAM Capital Advisors. Please go ahead.

Aasim Bharde — DAM Capital Advisors — Analyst

Yeah. Hi, everyone. So first question, can you just talk about housing level demand for pipes currently in your existing markets? So is the consumption actually happening on the ground? Or was the December channel stocking-led growth, which may possibly peaker [Phonetic] out of the housing construction still sluggish?

Anubhav Gupta — Group Chief Strategy Officer

So, Aasim, see, I mean, even we are happy to share that in Q3, right, this volume, what we did 18,000 tons, right? When we talk to our distributors, even they are not ready to fill their warehouses yet, right, even that fear is still there because they are sitting on such huge losses in the first eight months. And there’s still like uncertainty on like how prices will behave, right? So that means that all this 18,000 tons, which was bought out by our distributors, it got sold in the secondary channel as well, okay? So this is one good silver lining for us to have the confidence that next two quarters could be really good if prices stay stable, forget going up. But even if they stay stable then the channel filling will kick in at some point, right? And we could do better than like this run rate of 7,000 tons — 6,000 tons which we did in Q3 on a monthly basis.

So when we talk about strong secondary sales, yes, I mean, a lot of projects, they are nearing completion before Q4 ends, right? So good demand from the project side for our distributors, real estate demand. And housing also, the independent homes, which are under renovation during festive time, etc. So it did boost the sales. So, I guess, when majority of my growth is coming from housing sales and my distributors are still not filling their warehouses. So this is good to assume that secondary sales for real estate is good for us.

Aasim Bharde — DAM Capital Advisors — Analyst

Okay. Okay. Very interesting that the channel is still not — still light, if I can use that. Okay. Thanks. Second is just to reconfirm the capex number. For FY ’23, all put together, it should be around INR80-odd crores. And in FY ’24, INR100 crores to INR105 crores.

Anubhav Gupta — Group Chief Strategy Officer

So INR60 crores, we have done so far. INR60 crores, INR65 crores, we have done so far, right, maybe another INR10 crores in Q4. So, yes, it will be like under INR75 crores and INR100 crores next year, yes.

Aasim Bharde — DAM Capital Advisors — Analyst

That includes the normal maintenance of brownfield capex, the 25% of EBITDA you’re talking about.

Anubhav Gupta — Group Chief Strategy Officer

Yeah, that’s right. That’s right.

Aasim Bharde — DAM Capital Advisors — Analyst

Okay. Okay. Thanks. Those were the questions.

Operator

Thank you. Next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Yeah. Thank you for my follow-up questions. First is related to the value-added. How you define value-added products?

Anubhav Gupta — Group Chief Strategy Officer

So anything which gives us a margin of INR25 per kilo at EBITDA level and above.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Okay. And second is related to what you had said related to the realization, 30% improvement is because of our PVC rate — PVC pipe realization. So is that because of the raw material prices higher?

Anubhav Gupta — Group Chief Strategy Officer

No, no, no. The narrowing down of pricing gap between Apollo and other brands, other stronger brands.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Okay. So basically, you had taken some higher price hike or so.

Anubhav Gupta — Group Chief Strategy Officer

Yeah, because brand acceptability is improving, right? We are becoming strong contender in the PVC piping industry. So our realization improves, right? I mean, we start — in a market we start with a discount of 5% to 10% to the number one player. When we become a stronger player in that territory in one, two years’ time, then obviously the gap will reduce.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Thank you. Thank you and all the best.

Operator

Thank you. Next question is from the line of Hardik Shah from Banyan Asset Management [Phonetic]. Please go ahead. Hardik, may I request you to unmute your line from your side and go ahead with the question, please.

Hardik Shah — Banyan Asset Management — Analyst

Yeah, hi. I just wanted to ask a question in regards to the raw material. Just wanted to understand in regards. Has it cooled off? Or do you still expect it to be at write-down compared to last quarter?

Sameer Gupta — Managing Director

No, the prices, I think it’s much more of a stable type. It should not go very high also, and should not — it should be range bound between you can see $850 level, $850 level to $1,000 level. It should be between this rate only, if we talk about the PVC prices. The rest of other prices, if we talk about this cPVC prices, they are much more stable and you can say other polymers they are also on the stable side, a bit on the upward trend.

Hardik Shah — Banyan Asset Management — Analyst

Okay. Thank you so much. All the best.

Operator

Thank you. Next question is from the line of Devansh Nigotia from SIMPL. Please go ahead.

Devansh Nigotia — SIMPL — Analyst

Yeah, sir. Thanks for the opportunity. Sir, congratulations on great scale up in — on all the new products, especially cPVC pipes. Just wanted to know, do we make the compound here? Or what is our sourcing strategy? And also cPVC resin, are we exporting it or it’s domestically procured? And the price at which we are competing here because — also, if you could elaborate more on the value proposition here because the scale-up has been really strong?

Sameer Gupta — Managing Director

Yeah. First of all, if you talk about our cPVC pipe, of course, we are making our own compound. We are not buying compound from outside. And the resins that we are buying, it is mainly you can see from our imports. We are sourcing a bit of, you can say, smaller segment from — for our South plant from India. But majority of the, you can say, sourcing is from imports. We are importing from this plant. So all the cPVC resin that you are seeing in our Company we are importing.

Devansh Nigotia — SIMPL — Analyst

Okay. And your price at — and price at which you are competing against, let’s say, the top one, two players?

Sameer Gupta — Managing Director

Price of you can — you’re talking about the cPVC resin?

Devansh Nigotia — SIMPL — Analyst

Yes, cPVC pipes. Yes, the price at which you are competing in cPVC pipes against our competitors? And how much are we priced at in discount?

Sameer Gupta — Managing Director

Yeah, it is, you can see region to region, it varies, if you talk about North India, we are pretty much, you can say, around 3% to 4%, you can say, subsidizing our prices. If you talk about, you can say, Western or the Southern India, it is around 5% to 7%. If it — this is — this I’m talking about cPVC only. Rest of the products behave differently. But if we talk about cPVC, it is roughly around from market to market, it is varying from at par or 3% to, you can say, maximum of 5% to 7% or maximum of 8%.

Devansh Nigotia — SIMPL — Analyst

Okay. And because earlier perceived to be like only a few players could make cPVC compound, but now a lot of pipe players have started making their own compound. So if you can just share your perspective on the technological, how difficult or easy it is to make cPVC compound [Speech Overlap]

Sameer Gupta — Managing Director

Devansh, earlier it used to be a very, you can say, tedious job to make the compound. But right now, over the period because we have launched cPVC around five, six years back and many other companies have also started, you can say, manufacturing. So that technology is not so, you can say, hidden technology, so that the industry doesn’t know. So it is not much more of a technology side, but it is much more of a, you can say, marketing side that how to market or place your product.

Devansh Nigotia — SIMPL — Analyst

And in case of new products, like faucet, showers and solvent cement and storage tank, can you just elaborate a bit more what is our value proposition here? What are we competing on? And also on the product acceptance, how the scale up is happening? And the sales mix for the same for the last — this quarter and nine months?

Anubhav Gupta — Group Chief Strategy Officer

So value proposition lies on one fundamental, which is to be able to get into like complete plumbing solution, right, for a housing segment. And all these products, which we keep on adding, they should be sold through similar sales channel, right, where the cost to achieve these sales is not high, right? It’s not more. So that’s the basic principle, basic foundation of getting into these products. And as Apollo, as a brand becomes stronger and stronger in the overall plumbing solution, so these products get automatic fill up, right, and gives us incremental sales, right? So that — so this is the basic fundamental. And so far, like I said, from zero, these products are now contributing a little less than 10% to our overall sales revenue, which is growing quickly anyways, right? So we have already established a strong foundation to launch these products, and acceptance is getting better day by day. And we are confident that these products could be like 20% of our total revenue in next three, four years.

Devansh Nigotia — SIMPL — Analyst

Okay. And storage tank, we shared a 2% sales in or…

Anubhav Gupta — Group Chief Strategy Officer

So like I said, all these three products put together are under 10% today.

Devansh Nigotia — SIMPL — Analyst

Okay. Got it. Thanks a lot.

Anubhav Gupta — Group Chief Strategy Officer

Solvents, tanks and bath fittings.

Devansh Nigotia — SIMPL — Analyst

Okay. Thank you, sir, for answering all the questions.

Operator

Thank you. Next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead.

Rahul Agarwal — InCred Capital — Analyst

Yeah, hi. Good afternoon and thank you for the opportunity. First question, Anubhav, essentially was on the industry imports for PVC resins. I think the larger reason for the price bounce back was regarded to that the price actually fell below production cost for global supplier. There is also a reason of some disruption on plant shutdowns globally, and hence, it also bounced back. Related to Apollo, what I want to check was, do we have fixed vendors here from which we import? And do you think that, that disruption is largely over and non-supply [Phonetic] on stream now globally? That’s the first question.

Sameer Gupta — Managing Director

Yes. First of all, we have fixed suppliers for some of our quantities from overseas suppliers, you can say, around 50% to 60% we buy from our fixed sources on a regular basis, we are buying from them. So we can count every month on them for the countries of supplies. And it is not a very big challenge right now to source PVC resins. We have links. We are working in this industry for the last many years. So we have got good links, and we have met them personally all across, you can say, the manufactures all across the world. So we have got good relations with them. So sourcing for Apollo for PVC resin is not a big challenge.

And what was the second question?

Rahul Agarwal — InCred Capital — Analyst

Global supply, is that normalized?

Sameer Gupta — Managing Director

Yeah, global supply, of course, because China is getting back to normal and U.S. and China, they are the major supplier for PVC resin and they are, you can say, getting back to normal. So COVID supply should not be a, you can say, big problem for PVC resin.

Rahul Agarwal — InCred Capital — Analyst

Got it, sir. And just one corrected question was, are these contracts like on spot basis or you’re actually tying up for, let’s say, two years, three years? How does it work really?

Sameer Gupta — Managing Director

No, no, it is mainly on the spot basis, the pricing. The limitation is that, we don’t offer too much quantities to all the players. So whoever the players who are buying regularly from them, they are buying the regular prices to those players only who are buying regularly from them. So it is the quality is much more you get relaxation [Phonetic]. The prices are always on the spot basis.

Rahul Agarwal — InCred Capital — Analyst

Got it, sir. And one last thing, on cPVC, we hear that we have some domestic manufacturing going up on the resin side. Would — are you would be into discussions with those kind of companies to increase your import mix — your domestic mix?

Sameer Gupta — Managing Director

Of course, we are in discussions with those people also. But we need first the quality of those players who were getting stabilized. Once it gets stabilized, then we will be getting quantities from them also. But right now, we are sourcing all our procurements from this — our overseas suppliers only.

Rahul Agarwal — InCred Capital — Analyst

Right. And domestic also is not, like it’s generally on spot basis. It’s not like long-term contracts, right?

Sameer Gupta — Managing Director

No, no. It is never a long-term contract. For any of the polymers is always on the spot basis.

Rahul Agarwal — InCred Capital — Analyst

So I’m talking about the volume, not on the price.

Sameer Gupta — Managing Director

Of course, volume also, I think, said it should be, you can say, as per the ability they will offer.

Rahul Agarwal — InCred Capital — Analyst

Okay. Perfect, sir. Thank you so much. Thank you so much for answering my questions.

Operator

Thank you. Next question is from the line of Bhavin Gopani [Phonetic] for Investec. Please go ahead.

Bhavin Gopani — Investec — Analyst

Hi, sir. Thank you for the opportunity. Sir, you mentioned that you’re targeting working capital days to reduce to 40 by year-end from 56 currently. So, sir, can you please elaborate the factors that will contribute to a decline in working capital?

Anubhav Gupta — Group Chief Strategy Officer

So right now it’s 50, not 56. Nine months is 50, okay? So from 60, 65, we’re already down to 50 as at December. And by March, we target to take it to 40 and ’24, ’25, there will be like further reduction. So now why we believe so is, one is that, in North region where our brand has become very strong, so we are commanding our credit terms with our channel partners, right? On some cases, we have gone cash and carry as well and they are accepted. Then we are tying up with financial institutions for channel financing service, right? That will also help bring the debtors down.

Inventory as our capacity utilization is ramping up, but there will be like rationalization in the inventory levels also on PVC prices will become stable, assuming in 2023 calendar year and 2024. Then obviously, there is no need to stock extra like which we have been doing for last 15, 18 months, including all other players in PVC industry.

Third, on creditor term, as our size is going up, we are becoming more dominant in terms of sourcing, in terms of procurement. So we are also getting better credit terms from our suppliers of any material, right? So all these — so we are working on all these three factors, and that’s why we say that WC will keep on coming down.

Hello?

Operator

Bhavin, may I request you to unmute your line for your second question?

Bhavin Gopani — Investec — Analyst

Hello. Yes, sorry. Sir, can you just elaborate the terms of channel financing? Are we on a course basis? And what is the percentage of the commission they charge?

Anubhav Gupta — Group Chief Strategy Officer

Non-recourse. And second — what was the second question?

Bhavin Gopani — Investec — Analyst

What is the percentage of commission that they charge, banks — bankers?

Anubhav Gupta — Group Chief Strategy Officer

So this will be — see, I mean, that they will charge from the channel partner, not from us, right? We will give a cash discount to our distributor against that. So our CD policy is like 1%.

Bhavin Gopani — Investec — Analyst

Okay. And how much proportion of your debtors are going through channel financing right now?

Anubhav Gupta — Group Chief Strategy Officer

Right now, it is 15%, but we are encouraging our channel partners to take more and more, because right now, there are institutions in the market which are offering channel financing facility, say, at 10%, 11%, right? And if I offer 1% cash discount to my distributor, right, it makes sense for him to take that facility, right? So we are educating. We are — along with the institutions, we are educating our channel partners that we should avail this facility. So this will improve. And it’s all non-recourse, all non-recourse, not even for $1 on Apollo Pipes.

Bhavin Gopani — Investec — Analyst

All right. That’s useful, sir. Thanks.

Operator

Thank you. The next follow-up question is from the line of Aasim Bharde from DAM Capital Advisors. Please go ahead.

Aasim Bharde — DAM Capital Advisors — Analyst

Yeah, hi. Just one quick question. What is the gross debt on the books right now for Apollo Pipes?

Anubhav Gupta — Group Chief Strategy Officer

So net debt, when we say, it’s around INR15 crores, INR20 crores as we stand today.

Aasim Bharde — DAM Capital Advisors — Analyst

But on the gross front, or rather, if you would have the cash number, that would work.

Anubhav Gupta — Group Chief Strategy Officer

INR30 crores and INR15 crores. I mean, that INR30 crores is gross debt, INR15 crores is cash. So INR15 crores is the net debt today.

Aasim Bharde — DAM Capital Advisors — Analyst

Understood. Okay. Thanks.

Operator

Thank you. As there are no further questions, I now hand the conference over to Mr. Ashish Poddar for closing comments.

Ashish Poddar — Systematix Institutional Equities — Analyst

Yeah, thank you. Management, do you have any closing comments?

Sameer Gupta — Managing Director

Yeah. Thank you all. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the Company, feel free to contact our team. Thank you once again for taking the time to join us on this call.

Ajay Kumar Jain — Chief Financial Officer

Thank you, everyone.

Operator

[Operator Closing Remarks]