Atam Valves Ltd (543236) Q4 FY23 Earnings Concall Transcript

Atam Valves Ltd (BSE:543236) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Vastupal Shah — Associate Partner at Kirin Advisors and Investment Banker

Amit Jain — Managing Director

Analysts:

Rahul Yadav — Nibiru Finance — Analyst

Sahil Garg — Corporate Capital Ventures — Analyst

Supriya Kirkal — Cogen Finvest — Analyst

Meet Katrodiya — Niveshaay — Analyst

Harish Sait — Individual Investor — Analyst

Aditya Sen — RoboCapital — Analyst

Akhil Kumar — Individual Investor — Analyst

Hiran Ranjith — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Atam Valves Limited Q4 FY23 Results Conference call, hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Vastupal Shah from Kirin Advisors. Thank you and over to you Mr. Shah.

Vastupal Shah — Associate Partner at Kirin Advisors and Investment Banker

Thank you. Good afternoon, everyone. On behalf of Kirin Advisors, I welcome you all. As this is the first conference call of the company, there will be a brief introduction about the company and industry, followed by a financial update for the Q4 and FY23 and then followed by Q&A.

Now, I would like to welcome Mr. Amit Jain, Managing Director of Atam Valves Limited. Amit ji, welcome to the call.

Amit Jain — Managing Director

Thank you. Thank you, Vastupal Ji. Hello, everyone. This is Amit Jain, Managing Director, Atam Valves Limited. Conference call are an opportunity for us to interact with our investor community. On behalf of the company, I welcome you all to the first conference call of Atam Valves Limited.

As we are connecting for the first time, I would like to brief about what we do. Atam Valves Limited is one of the leading manufacturers of industrial and plumbing valves and fittings. The company is known for innovation and product quality and manufactures gate, globe, check, valves, butterfly, steam traps, boiler mountings and accessories and other industrial valves and fittings.

Company’s valves are used in many renowned industries like oil and gas, refinery and petrochemical, chemicals and pharmaceuticals, marine, mining, water and wastewater, textile, sugar and HVAC industry. Company’s facility is spread over 63,000 square feet. The company has three foundry shops. One for non-ferrous, stainless steel and carbon steel, carbon and alloy steel with multiple molding foundry processes. Atam Valves Limited is an existing 35 year-old entity with three generation working towards our mission of becoming the leader of manufacturing and exporting industrial valves, fittings, and boiler mountings.

Today we have 500 SKUs, serving over 300 clients. Our current staff strength is 500 people. We have a dealer network of 750 members, which we intend to take to 1,000 members. We serve over 300 clients and few of our marquee clients are Thermax, NTPC, HPCL, BPCL, Adani, Dinesh Industrial Suppliers, Universal Mill Stores, Raman Steel [Phonetic], Global Floor, Cheema Boilers. Our top 15 clients contributes 80% of sales. Our international presence is 3% with presence in South Africa, USA, UK and even Asia. The company intends to increase its presence in the United Arab Emirates, Saudi Arabia, Tanzania, Kenya, Russia.

To talk about revenue contribution from our business vertical, boilers contributes to 30% sales, domestic contributes 40% of sales, hydro projects contributes 10% of sales, other products contribute 20% of sales. I’m happy to announce we are entering into new business vertical of bathroom faucet and allied items. We plan to invest INR30 crores and launch of bathroom faucet and allied items project, either for the first operating quarter of FY 2023 — ’24. We are confident that this expansion will have a significant positive impact on our overall revenue and growth.

Now let me give you industry perspective of valves as well as boiler industry. Firstly, valves. The global industry valve market size is estimated to be $80.4 billion in 2023, which is expected to rise at a CAGR of 4.4% to $99.8 billion by 2028. Asia-Pacific held the largest share of the industry valves market in 2022. India has significant market share in industrial valves after China.

Demand drivers of valves are healthcare and pharmaceuticals, establishment of smart city globally, the rapid deployment of connected network to monetize valve remissions and predict system failures are the major factor driving the growth of industrial valves market. Industrial valves market dynamics, increasing need to establish new power plants and revamp existing ones, rising demand for AI-integrated valves for intelligent water supply. globe valves held the largest share of industrial valve market in 2022.

Now let me talk about boiler industry. The global industrial boiler market size was estimated at $13.31 billion in 2022 and it is expanding around $23.5 billion by 2030 with a registered CAGR of 5.5% from 2022 to 2030. Growth drivers, the rapid industrialization and stringent government regulation pertaining to carbon and other harmful emissions are expected to be the major driver of the global industrial volume market. The rising end-use application of the industrial boilers across various industry verticals such as food and beverages, textile and consumables is causing market growth across globe.

The shifting focus of the government towards the development of large capacity industrial boilers is fostering the growth of the global industry boiler market. The exponential demand for the industrial boilers in the chemical industry is the major driver of the global industrial boiler market. Asia Pacific is estimated to be the most opportunistic with the rising government initiatives to attract FDI. The presence of a huge population is offering growth opportunities with the manufacturers of various industries like food and beverages, chemicals and textiles.

The boiler market in India is growing fast at a CAGR of 24.53% with an ever-increasing energy requirement of the nation. The thermal power plant, that is coal and gas base generation are the key drivers of this growth of the Indian boiler market. Other than them, it’s the biomass power plant, which drive a small segment boiler market. The outlook on this segment is positive as the nation is poised to increase its installed capacity, thus creating new business avenues for the equipment manufacturers.

The company entered equity market by SME IPO on BSE SME engaging INR4.5 crores in July 2020. Today, I’m happy to announce that the company has migrated to the main board of NSE and BSE from BSE SME on 10th May, 2023. Migrating to the main board is a big milestone for the company. This will boost — this will provide a boost to the growth of the company and attract more investors and provide further growth capital to help the company for future business growth.

Now, let me take you through the performance of the company during Q4 FY23 and FY23 as a whole. For Q4 FY23, the company reported revenues of INR19.82 crores, up by 193%; EBITDA of INR4.50 crores, up by 369%; PAT of INR3.30 crores, up by 432%. For FY23, the company reported revenues of INR49.25 crores, up by 141%; EBITDA of INR11.16 crores, up by 246%; PAT of INR7.67, up by 460%.

Now I open the forum for the question-and-answer session.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Mr. Rahul Yadav from Nibiru Finance. Please go ahead.

Rahul Yadav — Nibiru Finance — Analyst

Good afternoon. First of all, my heartiest congratulations on stupendous performance. And my first question is that, when are we planning to launch the bathroom fittings range?

Amit Jain — Managing Director

Thank you, Mr. Rahul. As I said earlier, we are anticipating in the first and — first-second quarter of this financial year ’23-’24.

Rahul Yadav — Nibiru Finance — Analyst

Okay. Thanks.

Operator

Thank you. Our next question is from the line of Sahil from Corporate Cap Ventures. Please go ahead.

Sahil Garg — Corporate Capital Ventures — Analyst

Congratulations, Mr. Amit ji for reporting extraordinary performance in this year. We have observed that the company is reporting very good margins in this year. So, I just wanted to check how sustainable they are in the future.

Amit Jain — Managing Director

Sorry. Can I — can you repeat your question please? Thank you.

Sahil Garg — Corporate Capital Ventures — Analyst

We have observed that company has reported a very good margins; operating margin and profit margins in FY23. So, just wanted to check how sustainable these margins are in future.

Amit Jain — Managing Director

This is achievable, very much achievable, because the way we are expanding, the way we are expanding our network, along with the product range, so this is quite achievable. It’s not going to be a big problem.

Sahil Garg — Corporate Capital Ventures — Analyst

Okay. Okay, that’s great. I have another question on bills receivable as well. We have observed that the bills receivable has been constantly increasing on a year-on-year basis. So, is it the industry-standard that the generally the bills receivable days are pausing with this range or I mean, maybe you can just throw out some commentary on it.

Amit Jain — Managing Director

As far as this question is concerned, we have observed in the last quarter that there was a quite steep in the — increase in sales. So accordingly, the market that takes about 90 to 120 days. So that’s why you can you know see quite a difference in the [Indecipherable].

Sahil Garg — Corporate Capital Ventures — Analyst

Okay. So, are we expecting some lower days in the coming periods?

Amit Jain — Managing Director

Yeah. We are introducing some new schemes, like we are offering the cash discounts or turnover discounts, if customers are paying earlier. So, we are anticipating that we can achieve it in 90 days.

Sahil Garg — Corporate Capital Ventures — Analyst

Okay, perfect. Thank you.

Operator

Thank you. Our next question is from the line of Supriya Kirkal [Phonetic] from Cogen Finvest. Please go ahead.

Supriya Kirkal — Cogen Finvest — Analyst

Yeah, thank you sir. Sir, I just wanted to understand that, you into valves, industrial valves and with your son, that’s how you envision coming into the business, you’re are entering into the faucet business. So, going-forward, what will be the vision of the company and what will be the focus of the company?

Amit Jain — Managing Director

See, as company — every company wants to grow. With the third-generation getting into act, we want to become more — you know biggest brand all over India, which is known all over India. And to have our presence in the bigger cities. That’s our morale — motto that we want to achieve.

Supriya Kirkal — Cogen Finvest — Analyst

It’s fair. But then, you already have a pan-India presence in the valves and faucet is altogether totally a different business as connected with the valves? So why conjugate into this business?

Amit Jain — Managing Director

See in the valves, we are known among those who are actually using valves. And the with faucet, we’ll be known among everybody, even the household people. Every person would know what Jaguar is, right? So, Atam Valve will be known among those who are using valves in their pipeline or their industry. But with the faucet you are known among everybody, so that’s the whole criteria.

Supriya Kirkal — Cogen Finvest — Analyst

So you mean to say that with your existing customer, you wanted to target for your faucet business also?

Amit Jain — Managing Director

Not the existing customer, but yeah, those who are into plumbing business, yes they can help us.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, I just wanted to understand, coming on to your main business of valves. Can I have a breakup for whatever you received the revenues from the boiler or the domestic appliance and hydro projects, that segmental revenue breakup. Is it possible for you to give us a sense?

Amit Jain — Managing Director

Yeah, in my opening speech, I have already given the data about boilers, they are contributing almost 30% of our sales goods. With the domestic, we are getting 40% sales, hydro projects a 10% and other products, 20%.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. And sir, what will be your top 10%’s contribution?

Amit Jain — Managing Director

Around 40%, 50% from the top-end customers.

Supriya Kirkal — Cogen Finvest — Analyst

40% to 50%?

Amit Jain — Managing Director

Yes.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, Isn’t there a risk of concentration there then?

Amit Jain — Managing Director

Sorry?

Supriya Kirkal — Cogen Finvest — Analyst

Isn’t it a risk of a concentration over there? Risk of concentration over there.

Amit Jain — Managing Director

No, no, no. That is going to be a total separate line and my son is going to control that. So, we have separate network for those and we have separate teams to sell the products.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, I have few more questions, but I’ll come back in the queue.

Operator

Thank you. Our next question is from the line of Meet Katrodiya from Niveshaay. Please go ahead, sir.

Meet Katrodiya — Niveshaay — Analyst

Hello sir, am I audible? Hello.

Operator

Yes sir, please go ahead.

Meet Katrodiya — Niveshaay — Analyst

Yeah. So sir, what is your guidance for the topline and margin in the future?

Amit Jain — Managing Director

Sorry, you have to repeat your question, sorry?

Meet Katrodiya — Niveshaay — Analyst

Yes sir. What is your guidance for the topline and margin in the future?

Amit Jain — Managing Director

We are anticipating at least INR25 crores for this current year from this new [Phonetic] range.

Meet Katrodiya — Niveshaay — Analyst

Okay. And sir, will you be able to give sector-wise revenue breakdown of top line? That means, how much of revenue coming from petrochemicals, chemicals and pharma sector?

Amit Jain — Managing Director

Yeah, we can provide you with that but I need some time for that. If you allow me to have your email ID, I can email you all the details.

Meet Katrodiya — Niveshaay — Analyst

Okay sir. My next question, are you able to compete and gain market share from the other competitors like there are [Indecipherable]. So what is our future plan and what we are doing something new to compete with them?

Amit Jain — Managing Director

See, we are focused on the quality products and we are trying to get our products approved in all the big businesses like NTPC, BPCL, HPCL and once you satisfy these big customers, you get a regular business from the other client as well.

Meet Katrodiya — Niveshaay — Analyst

Okay, right. And what is our current capacity utilization?

Amit Jain — Managing Director

Current capacity, as far as numbers are concerned, is INR65 crores to INR70 crores.

Meet Katrodiya — Niveshaay — Analyst

Okay. And sir, will you give more about brief capex. So capex will happen at our existing facility or something new land or..?

Amit Jain — Managing Director

No, we have to have a new land and total new projects.

Meet Katrodiya — Niveshaay — Analyst

Okay. So, project will be completed in — or it is to — land to be acquired or something like that?

Amit Jain — Managing Director

The land we have already shortlisted. So it’s not going to take much more. So, yeah, we have planned for the second quarter. Yeah, thank you.

Meet Katrodiya — Niveshaay — Analyst

Okay.

Operator

Thank you. Our next question is from the line of Harish Sait [Phonetic], Individual Investor. Please go ahead.

Harish Sait — Individual Investor — Analyst

Hello? Hello? Yeah, am I audible?

Operator

Yes, sir. Please go ahead.

Harish Sait — Individual Investor — Analyst

Okay. Congratulations for the good set of numbers. And look forward to the same performance in years to come. Just now you said that INR25 crores will be the turnover for the June quarter, how? I misunderstood.

Amit Jain — Managing Director

I was saying INR25 crores we are expecting from the new business [Speech Overlap].

Harish Sait — Individual Investor — Analyst

Okay, you know if I see your quarterly numbers, in this quarter, we have done nearly INR20 crores, which was only INR10 crores in the December and the INR7 crores in the last market. So, this INR20 crores, what you attained is due to seasonality, year-end or something of that sort or you’d be able to do this run-rate quarter-wise?

Amit Jain — Managing Director

We, every year, if you go through the — you go back and look at the numbers, every year, you know last quarter is best quarter for us and for every big customers. Like, they want to achieve their target. So last quarter is always busy and triples our demand there.

Harish Sait — Individual Investor — Analyst

Correct, correct. Yeah, that’s true. And sir, I’m looking at our balance sheet, the property plant equipment is only hardly INR2.5 crores and we have done the turnover of INR50 crores in this year. So I’m just wondering how it is possible, there’s so much of turnaround of the plant, nearly 20 times of the plant? So, are we buying out some finished goods or how is it, everything is manufactured by us?

Amit Jain — Managing Director

Yes. Almost everything is manufactured by us. In this last year, we had quite a new product, you’re seeing with the pipe fitting, then stainless steel valves, so that has impacted the sale.

Harish Sait — Individual Investor — Analyst

No, no, I understand, sir. But what I’m trying to understand the general ratio, if you see between the property plant value and the turnover, it is looking too high as compared to any other manufacturing company. This is what is my concern. So, that’s why I was wondering whether you are buying some finished goods and selling or it is on manufacturing side? That’s what I was trying to understand you know.

Amit Jain — Managing Director

No, this is all manufactured inside and this is all value added items. So maybe that’s the reason.

Harish Sait — Individual Investor — Analyst

And the working capital management is strained as such. You’re done INR20 crores turnover and INR20 crores on issuable. You said 90 days and all those things are there. But any plan to improve your working capital cycle, because your cash flow also is negative in this year, actually.

Amit Jain — Managing Director

Yes. That’s what I said earlier that, we are introducing some new streams, you know cash discount schemes and turnover discounts, so that customers can pay us a bit earlier than what they’re doing right now. So, we’re anticipating good change in the upcoming time.

Harish Sait — Individual Investor — Analyst

Okay, oaky. Okay, now coming back to your new expansion, you are putting up a factory for the bathroom fitting and I heard that you are going to spend INR30 crores on that, is it right?

Amit Jain — Managing Director

Yes.

Harish Sait — Individual Investor — Analyst

So, what is the source of fund for this INR30 crores?

Amit Jain — Managing Director

I’m going to equity only.

Harish Sait — Individual Investor — Analyst

Equity? So you’re going to raise further equity on this?

Amit Jain — Managing Director

Yes.

Harish Sait — Individual Investor — Analyst

I see, very good. And what is the lead-time for to put up this factory? I heard that by June it will be ready, but still you have not acquired the land also?

Amit Jain — Managing Director

But we have shortlisted the land and hopefully by this month we’ll be ready with everything. We have already ordered all the machinery which is required. And to start with, we want to do the trading first. We are going to procure some products from China, Italy or whatever the market. We are currently shortlisted and — so first two quarters will be the trading one, and by the end of third quarter we’ll be ready with our own in-house capability.

Harish Sait — Individual Investor — Analyst

Okay. Thank you very much and all the best for the future. Thank you.

Amit Jain — Managing Director

Thank you. Thank you.

Operator

Thank you. Our next question is from the line of Aditya Sen from RoboCapital. Please go ahead.

Aditya Sen — RoboCapital — Analyst

Hi, congratulations on good set of number, sir. You just said that INR25 crores revenue is expected from new business. So I’m pretty much new to this business itself, can you please help me know which new business are we referring to?

Amit Jain — Managing Director

Bathroom products.

Aditya Sen — RoboCapital — Analyst

Sir the capex that we are just talking about?

Amit Jain — Managing Director

Yes, yes.

Aditya Sen — RoboCapital — Analyst

Okay. So, the capex itself is of INR30 crore and we are expecting revenue of INR25 crore at full potential?

Amit Jain — Managing Director

Yes.

Aditya Sen — RoboCapital — Analyst

Okay, understood. And also, I’ll just confirm the Q4 revenues are not recurring, like this is sort of a seasonality impact, right? So any — and also the previous participant asked, if we have any topline guidance, did you say 5% or 25%. I heard it wrong I guess.

Amit Jain — Managing Director

Sorry. You have to repeat that.

Aditya Sen — RoboCapital — Analyst

Yeah. I’m saying the previous participant asked about the topline guidance — revenue guidance and you replied I guess 5% or 25%. I couldn’t follow exactly what you said. Can you please come back on that?

Amit Jain — Managing Director

It should be 25%.

Aditya Sen — RoboCapital — Analyst

25% revenue growth YoY?

Amit Jain — Managing Director

Yes, yes.

Aditya Sen — RoboCapital — Analyst

Okay. Thanks a lot.

Amit Jain — Managing Director

Yeah, thank you.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Akhil Kumar [Phonetic], Individual Investor. Please go ahead.

Akhil Kumar — Individual Investor — Analyst

Good afternoon, sir.

Amit Jain — Managing Director

Good afternoon.

Akhil Kumar — Individual Investor — Analyst

Sir, my question is regarding to your new expansion plan where you’re entering into bath accessories. You are going to spend some INR30 crores capex and as you said, first two quarters will be a trading quarter. So it is, after spending INR30 crores, what would be the full 100% — at 100% capacity utilization, how much it can generate the topline?

Amit Jain — Managing Director

See, with the INR30 crore we are — we can go up to INR100 crore.

Akhil Kumar — Individual Investor — Analyst

So 3 times to 4 times of asset utilization?

Amit Jain — Managing Director

Yes.

Akhil Kumar — Individual Investor — Analyst

Okay, but your exiting segment, you are doing some 20 to 25 times of your asset utilization, right? If I’m not wrong. Okay, and the margin profile is also going to be same into this business?

Amit Jain — Managing Director

Almost, yes. It may be a little bit more, but overall manufacturing margin will be this only.

Akhil Kumar — Individual Investor — Analyst

So, around — somewhere around 15% to 20% into the new segment?

Amit Jain — Managing Director

Yes, yes 15%.

Akhil Kumar — Individual Investor — Analyst

At EBITDA level?

Amit Jain — Managing Director

Yes.

Akhil Kumar — Individual Investor — Analyst

And regarding working capital of new business. Right now you have a good number of debtor days. Is it going to be same into the new business, because you are just starting or it is going to be like little less, because again it’s a trading business?

Amit Jain — Managing Director

See, it’s actually more of investment prone business because you need to invest on the branding, marketing and all. So, the working capital is going to be utilized on those areas as well. But With our existing valve business, we don’t have to spend much on these, you know marketing and branding. [

Akhil Kumar — Individual Investor — Analyst

No, that’s — working capital was okay, but again, my question — one of the aspect of the question was, the debtor days are going to be seeing for the new segment also?

Amit Jain — Managing Director

You mean, the dealers?

Akhil Kumar — Individual Investor — Analyst

Debtors, receivables for the new segment.

Amit Jain — Managing Director

Yeah, you can say that.

Akhil Kumar — Individual Investor — Analyst

Okay. So somewhere around 80, 90 days would be the debtor days in the new business also?

Amit Jain — Managing Director

Yes, yes, yes.

Akhil Kumar — Individual Investor — Analyst

Okay. Any plan once you start your manufacturing of new business, any plans for going to OEM business or you will sell only your own brand?

Amit Jain — Managing Director

No, no, we will sell our own brand only.

Akhil Kumar — Individual Investor — Analyst

That’s it. Okay

Amit Jain — Managing Director

As of now, this is what we have decided because we want to build our new brand and we want to market that. So, as I say, it depends on the market. The capacity, you know still unused capacity, then we can look at OEMs also, but initially we have decided that we want to develop our own brand.

Akhil Kumar — Individual Investor — Analyst

Okay. And sir, we have existing facility of valve manufacturing, how much turnover it can generate at 100% utilization?

Amit Jain — Managing Director

Like I said, our total capacity of INR65 crores to INR70 crores.

Akhil Kumar — Individual Investor — Analyst

So, do you also looking to expand this facility in near-term?

Amit Jain — Managing Director

We are. we are thinking of that.

Akhil Kumar — Individual Investor — Analyst

Yeah, because we are already in around INR50 crores.

Amit Jain — Managing Director

Yes, we are thinking of that because we are developing new products as well and hopefully, by next year, we’ll be requiring more line for this area as well — for this existing factory as well.

Akhil Kumar — Individual Investor — Analyst

Okay. But this time, for the new expansion the capex proportion will be completely on a higher side, not like 20-25 times compared to that? is it that?

Amit Jain — Managing Director

Your voice is not clear.

Akhil Kumar — Individual Investor — Analyst

So, new — while expansion — okay, that’s all. I got your point. I got it. That’s all from my side. Thank you very much.

Amit Jain — Managing Director

Thank you. Thank you.

Operator

Thank you. Our next question is from the line of Supriya Kirkal from Cogen Finvest. Please go ahead.

Supriya Kirkal — Cogen Finvest — Analyst

Yeah, thanks for the opportunity once again. Sir I just want to understand how big is the unorganized market in the valve business?

Amit Jain — Managing Director

It’s quite big. Numbers won’t be possible as of now, because unorganized market, when you look at the market like Pune, then Ahmedabad, then Jalandhar, we have around 500 manufacturers. So, everybody is coming and there is a big opportunity in unorganized market as well.

Supriya Kirkal — Cogen Finvest — Analyst

So sir, isn’t it a big threat?

Amit Jain — Managing Director

Not really. Because, like I said, we believe in getting our brand approved so that customer stick to us, and we are providing good-quality, good service and deliveries are fast. So, most of our customers are from 12 — 10, 12 years. So we have a good repeat business. So there is [Speech Overlap] sorry?

Supriya Kirkal — Cogen Finvest — Analyst

No, no, you go ahead, please.

Amit Jain — Managing Director

Yeah. So, we have never faced these kind of problems, because we have set ourselves at some level. So we don’t go down that level.

Supriya Kirkal — Cogen Finvest — Analyst

So the [Indecipherable] and this will be our strong holding on the business.

Amit Jain — Managing Director

Yes.

Supriya Kirkal — Cogen Finvest — Analyst

Sir, and what would be our market-share in the organized market?

Amit Jain — Managing Director

We are contributing, as far as India is concerned, I can say that we are doing about 5% to 6%.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, I also wondered, are you also showcased your product in exhibition and event and that also contributed comparatively a significant amount to your cadence. So can you please help us understand this line of business?

Amit Jain — Managing Director

See, there was an exhibition like Boiler India. All boiler manufacturers where there, all good boiler manufacturers were there. So, we have — we exhibited there. So we got good response. Those who are new to the boiler business, they’d come to know what Atam is and then we showcased our existing clients. We showed them that these are our happy clients that already is using Atam Valves.

So we get good opportunities like that. Now, there is a same kind of exhibition — exhibiting in Kenya, Boiler World. Then there is Boiler India again in Delhi. So these kind of exhibitions give us boost and we get to know you know new upcoming boiler manufactures or customers and they got to know what Atam is.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, any product pipeline for valve business for any specific industry or any specific client?

Amit Jain — Managing Director

You want to know the clients?

Supriya Kirkal — Cogen Finvest — Analyst

No. I wondered if you have any products are in the pipeline, the new launches are the in a pipeline?

Amit Jain — Managing Director

New launches?

Supriya Kirkal — Cogen Finvest — Analyst

Yeah. New launches in the valve business for the new customers or the changing in the industry, like this power business and all, they are really [Indecipherable]. So any new requirements are coming up valve business?

Amit Jain — Managing Director

Yeah. Every day we are an innovative company. We’re doing new products for — so nuclear power, it’s a new upcoming projects which are coming in nuclear world. So now we are getting into those line as well.

Supriya Kirkal — Cogen Finvest — Analyst

Okay, and when it will be marketed first?

Amit Jain — Managing Director

So, it’s going to take time. It’s still in the initial phase like we are in that drafting phase as of now. So, it will take another six to seven months.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, if I understood it correctly. The previous co-colleague of mine asked you like what is the maximum revenue can be generated from the valves. So, you said I believe you said it is INR65 crores, whereas on the faucet business, you said that 100% capacity utilization the business will contribute around INR100 crore. So does that mean that the going-forward the faucet business will be the growth driver for the company?

Amit Jain — Managing Director

Yeah, you can say that.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. So, it is too early to ask the margin, but are the margins better than the valves business?

Amit Jain — Managing Director

See, when we have all facilities in-house, then getting the manufacturing done. We are anticipating that we’ll get about 15% to 20%.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. And what are the margin in the valve business, it’s around 22%, right? So currently, the margins are better.

Amit Jain — Managing Director

Yeah.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. So the [Speech Overlap] is 22%, so that is not sustainable.

Amit Jain — Managing Director

Sorry?

Supriya Kirkal — Cogen Finvest — Analyst

So for fourth quarter, I believe you reported around 22% margin. So that is not sustainable and 15% to 16% is the overall yearly margins percentage.

Amit Jain — Managing Director

Yes, average is 15%, yeah. 15% to 16%.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Sir, and five years down the line where do you see this company?

Amit Jain — Managing Director

As I said earlier, we want to become the biggest brand which is known all over India and to have a presence in every city. I don’t want to say any number but we are also INR1,000 crores.

Supriya Kirkal — Cogen Finvest — Analyst

Okay. Thanks. And once again congratulations for the good set numbers posted for the Q4 and full-year, and all the best for your future. That’s it from my side.

Amit Jain — Managing Director

Thank you. Thanks a lot.

Operator

(Operator Instruction). Our next question is from the line of Meet Katrodiya from Niveshaay. Please go ahead.

Meet Katrodiya — Niveshaay — Analyst

Yes sir. You are guiding for the topline growth of 25%, right? So it will — 25% will be on INR50 crores, an additional INR25 crores will come from new business, right?

Amit Jain — Managing Director

Sorry, 25%?

Meet Katrodiya — Niveshaay — Analyst

You are guiding for 25% growth on top line, right?

Amit Jain — Managing Director

Yes.

Meet Katrodiya — Niveshaay — Analyst

And — so, this will be from our existing business, right?

Amit Jain — Managing Director

Yes.

Meet Katrodiya — Niveshaay — Analyst

And also INR25 crores topline from new business.

Amit Jain — Managing Director

[Speech Overlap] INR25 crore from — profit yes.

Meet Katrodiya — Niveshaay — Analyst

Sorry, can you repeat it please?

Amit Jain — Managing Director

So, 25% growth for existing products and INR25 crores for the new business.

Meet Katrodiya — Niveshaay — Analyst

Okay, okay. Got it. Thank you.

Operator

Thank you. Our next question is from the line of Harish Sait [Phonetic], Individual Investor. Please go ahead.

Harish Sait — Individual Investor — Analyst

Hello. I’m again on a follow-up question. Can you share the revenue from the largest customer in the current year?

Amit Jain — Managing Director

Larger customer is our, dealer — distributor in Ahmedabad, Kiran Enterprises.

Harish Sait — Individual Investor — Analyst

Okay. What are the credit terms with him?

Amit Jain — Managing Director

90 to 120.

Harish Sait — Individual Investor — Analyst

Okay. And just I now saw your press release on BTF chain [Phonetic]. Thank you for that and I would appreciate if you’d give it well in advanced. After the conference call started you’re given that release.

Amit Jain — Managing Director

We’ll you take care of this next time?

Harish Sait — Individual Investor — Analyst

Better, you know we can go through that and we can ask appropriate question out of that.

Amit Jain — Managing Director

All right, we’ll take care of that.

Harish Sait — Individual Investor — Analyst

Thank you guys. Thank you. All the best, sir. Thank you.

Amit Jain — Managing Director

Thank you. Thank you.

Operator

Thank you. [Operator Instructions]. Our next question is from the line of Hiran Ranjith, Individual Investor. Please go ahead.

Hiran Ranjith — Individual Investor — Analyst

Hello, am I audible?

Operator

Yes. Please go ahead.

Hiran Ranjith — Individual Investor — Analyst

Okay, thanks. My question is more from a strategic perspective, you have been manufacturing valves for, as you said, number of years and you are third-generation. I was just wondering what makes you feel to move away from valves and go into faucets? So, did you did some kind of a market survey and why only faucets why not something else? Since faucets and valves are not directly correlated neither the customer nor the manufacturing etc., I would like to know your thought process of going into this completely new business, because you’ll have to set-up a new distribution network, completely new customers. So, it can take a lot of bandwidth away from your current business. So, just wanted to know where you’re coming from.

Amit Jain — Managing Director

Thank you for your question. First of all, mine is second generation. My son is joining. So that would be third generation. So, he’s going to lead the plumbing business. So why thought of bathroom faucets, because you know that’s more you know of, what to say, it’s like its usable for everybody. You are known among the market once you get into these bathing faucets. And I mean the valve business, we are happy with it. But we have a network of around 750 dealers, we wish to increase that by 1,000 numbers. But with the bathing faucets, we get to — you have a distributor, you have a new set up and the growth is quite prominent in bathing faucet business than in in valves business. So, that’s the main reason.

Hiran Ranjith — Individual Investor — Analyst

Okay. And you said, you’re going to fund it from equity. So, have you thought about — is this going to be a rights issue, is it going to be QIP or is it going to be financial warrants? What kind of equity dilution is going to happen?

Amit Jain — Managing Director

We’re thinking of preferential.

Hiran Ranjith — Individual Investor — Analyst

Okay. And one more question, if I look at your past history, the sales were pretty stagnant, I would say. maybe INR15 crores, INR16 crore going up to INR20 crores, up to INR22 crores. And this year was the major change, from INR20 crores it jumped to INR49 crores, which is around INR50 crores. So, what was the main reason for this big change happening in this financial year?

Amit Jain — Managing Director

First of all, we have increased our sales network, the salespeople. And we used to have four or five, now, we have around 15. So we are more approachable in the market. And second of all, we have introduced new products, like I said earlier, stainless steel pipes or stainless steel valves and high-pressure valves and plus 150 – 300 dead globe check. So those have contributed a lot with our existing clientele, like Thermax boilers, they were doing about INR80 lakh, INR1 crores business with us. Last year, they have done about INR3 crores. So these kind of changes we have done, that’s why those sales had gone up.

Hiran Ranjith — Individual Investor — Analyst

Okay, thanks. That’s all from my side. I wish you all the best.

Amit Jain — Managing Director

Thank you.

Operator

Thank you. That was the last question of our question-and-answer session. As there are no further questions from the participants, I now hand the conference over Mr. Vastupal Shah from Kirin Advisors for closing comments.

Vastupal Shah — Associate Partner at Kirin Advisors and Investment Banker

Thank you. Thank you, everyone, for joining the conference call of Atam Valves Limited. If you have any queries, you can reach us at research@kirinadvisors.com. And once more, many thanks to management team and participants for joining the conference call.

Amit Jain — Managing Director

Thank you. Thanks a lot.

Operator

[Operator Closing Remarks]