AVRO India Limited (AVROIND) Q3 FY23 Earnings Concall Transcript

AVRO India Limited (NSE:AVROIND) Q3 FY23 Earnings Concall dated Feb. 13, 2023.

Corporate Participants:

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Analysts:

Supriya Madye — Kirin Advisors Private Limited — Analyst

Raj — Arjav Partners — Analyst

Devesh Shrimali — DS Investments — Analyst

Miraj Shah — Arihant Capital — Analyst

Himani Ubhan — Suraj Research — Analyst

Sandeep Mane — SM Research — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Results Conference Call of AVRO India Limited, hosted by Kirin Advisors Private Limited. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Ms. Supriya Madye from Kirin Advisors Private Limited. Thank you and over to you ma’am.

Supriya Madye — Kirin Advisors Private Limited — Analyst

Thank you. Good afternoon, everyone. I welcome you all on behalf of Kirin Advisors to the conference call of AVRO India to discuss the performance for Q3 and nine months. From the management, we have Mr. Sushil Kumar Aggarwal, Chairman of the company. For opening remarks, I’m handing over the call to Mr. Sushil Kumar Aggarwal. Take it forward, sir. Over to you.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, Supriya, and very good afternoon to you all, ladies and gentlemen. It’s such a pleasure again connecting and I know — I hope that we keep connecting like this every quarter. And I hope everybody is in their peak of the health. So I welcome you all to the third quarter FY ’23 conference concall.

AVRO India Limited is one of the largest manufacturer of plastic molded furniture in North India and amongst within the country. The product portfolio of the company includes household and office wear [Phonetic] molded chairs, tables, stools, almirahs and so on, so forth. The products of the company are mainly known for its quality and durability, along with the long-term warranty services. In fact, we are the only company to be offering three-year guarantee on couple of our plastic chair products and all the teapoy tables, which none of other company the country have been able to offer, that being hallmark of our quality, and our furniture is sold in two established brands, Avro and Avon.

As the third quarter is festive season, we normally see a good demand in the third quarter and fourth quarter. This strong demand helped us to grow and report 11% growth in the total income in the third quarter in comparison to the corresponding period of previous FY and contributing to the 37% growth in total income for nine months in comparison to the corresponding nine months of previous financial year.

While the company has seen a rise in total income, our initiative of recycling plastic in it enabled us to control cost and report an operating margin of 10% plus. We have commenced our new recycling plant with a capacity of 300 metric tonne per month at Ghaziabad with effect from 22nd December, 2022. We have started using recycling plastic granules as our major raw material requirement. On full utilization of recycling unit, the benefits will be seen in terms of savings and cost, recycled plastics at 20% to 30% cheaper per kilo contributing to significant cost savings and improvements in profits, which, of course, progressively we will witness as we go by with the expansion of our capacity.

The demand for plastic material has been constantly increasing across several industries like food and beverage, automotive, packaging and healthcare. The development of these industries can be accredited to rising population, increasing disposable income and continuous product innovation.

The problem with plastic lies not in how it is used, which is generally harmless, but in the end of life management of products made from it. India produces approximately 6 million metric tonnes of plastic waste every year, and this is expected to rise to 34 million tonnes by 2031. And this particular plastic goes into the roads, rivers, chokes, [Phonetic] drains etc., and animals are killed. Therefore, it is highly important to reduce this scale for a sustainable environment and less uses of plastic and plastic recycling as the solution to this issue.

Products manufactured from plastics are usually non-biodegradable in nature and can lead to various environmental concern, and in fact, it could be lasting for hundreds of years. Thus, recycled plastic helps us to reduce the amount of waste disposed at landfills site, thereby lowering the amount of greenhouse gas emissions released from landfills or manufacturing of fresh material.

Further, high manufacturing cost of virgin resins had less instituted the use of recycled plastic products, thereby bolstering the growth of the global recycled plastic market and in fact, if you had seen and noticed that due to the disruption in supply chain management for quite some time, the price volatility in the commodity has been [Indecipherable] reached high and huge, and it’s been — it comes without any alarms. So this is a challenge that most of the manufacturers are facing.

And in fact, government measures are expected to further facilitate the growth of recycled plastic market. Government is implementing policies and regulations for controlling waste production, encouraging the reuse and recycling of plastic waste and encouraging systematic waste treatment. Government is also enforcing landfill taxes, waste disposable taxes, recycling credit scheme, deposit refund systems, etc., to promote effective waste management. In fact, they are also implementing something called as EPR, which is extended to do with responsibility whereby every brand producer or importer or manufacturer and owner all have to comply with the EPR regulations, and if they don’t comply, then by FY ’24 100% is the regulation and if they don’t comply, they’ll have to pay penalty to the government. So this is the kind of enforcement that is happening in terms of recycled plastic to be used as many number of times as possible and bottle-to-bottle circle economy needs to do promoted or produce the product.

And the global plastic recycling reached a volume of 72 million tonnes in 2021, growing at a CAGR of 4.9% during 2016 to 2021. It is expected that the global plastic recycling market will grow at a CAGR of 7.5% during 2022 to 2027, reaching a volume of 111.5 million tonnes by 2027. In 2021, Asia Pacific represented the largest plastic reycling market, accounting for 49.1% of the total plastic recycling market followed by Europe, North America, Middle East and Africa and Latin America.

Indian plastic recycling market reached a volume of 2.4 million tonnes in 2021, growing at a CAGR of 7% during 2016 to 2021. Studies indicate that the India plastic recycling market is supposed to grow at a CAGR of around 8.6% during 2022 to 2027, reaching a volume of 4 million tonnes by 2027.

In 2021, North India plastic reycling market reached a volume of 404,000 — I’m so sorry, 400,000 tonnes in 2021, representing a CAGR of 7.3% during 2016 and 2021. Increase in industrialization and urbanization in Northern region of India had a great impact on plastic demand, which augment the growth of plastic recycling markets. Furthermore, the rising construction activity in the region is another factor contributing to the growth of market. Increase in residential, industrial and commercial activities leads to more usage of plastic, which further propels the plastic recycling in the region.

Looking forward, North India plastic cycle market is expected to reach a volume of 686,000 tonnes by 2027, representing a CAGR of 8.8% during 2022-2027. Rise in automobile and construction sector across North India are expected to fuel the plastic recycling market growth over the forecast period. Evolving lifestyle and rising disposable income of consumer across the region have fueled the demand for food products and beverages, where plastic is a crucial, which augments the growth of recycling market in Northern India. Uttar Pradesh represented the largest plastic recycling market in North India, accounting for 42.1% of total North India plastic recycling market.

The increase of lightweight plastic components and awareness of plastics’ negative effects on environment are driving the plastic recycling market. Furthermore, consistent support from the government and increasing penetration of recycled plastic products is presenting lucrative opportunity for the plastic recycling market.

Product portfolio expansion and cost minimization are the key drivers for future growth of business and its aspiration to become a market leader in coming times. I’m happy to inform you that your company has been awarded with the Pride of India Award 2023 organized by exchange4media agency at Gurgaon on 19 January, 2023. This award will continue to drive us getting more quality deliverable in future and being a part of Make in India.

So let me take you through financial performance of reported quarter and nine months of FY ’23. So the key financials at a glance are this is third quarter FY ’23, total income is at INR21.82 crores, which is up 10.65%; EBITDA is at INR2.29 crores, up 73.48%; EBITDA margin at 10.49% versus 6.69%; PAT at INR1.19 crores, up 138%; NPM at 5.45% versus 2.4%; EPS at INR1.17.

And nine months FY ’23 results are, total income is at INR63.69 crores, up by 36.88%; EBITDA at INR6.55 crores, up by 148.11%; EBITDA margin at 10.28% versus 5.67%; PAT at INR3.28 crores, up by 252.69%; NPM at 5.15% versus 2%; and EPS at INR3.25 [Phonetic].

Now, ladies and gentlemen, I open the floor for Q&A and all yours. Thank you very much.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Raj from Arjav Partners. Please go ahead.

Raj — Arjav Partners — Analyst

Yeah. So wanted to know how much of the sales come from online, Flipkart and Amazon?

Operator

Sorry to interrupt Mr. Raj. Sir, your audio sounding very muffled.

Raj — Arjav Partners — Analyst

Okay. Now, it’s fine?

Operator

Sir, I’ll request you to use the handset mode while speaking.

Raj — Arjav Partners — Analyst

Okay. Okay. Yeah.

Operator

Thank you.

Raj — Arjav Partners — Analyst

It’s good now? Can you hear me?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

That’s a bit louder. Yeah, go ahead please.

Raj — Arjav Partners — Analyst

I wanted to know how much of your sales come from Amazon, Flipkart and all those online channels?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Approximately — I don’t have the clear data in front of me, but approximately 15% of revenue comes from the online Flipkart and Amazon, Meesho, Jio and so and so forth besides the big-box store like METRO and others, which we are also selling at this point of time, but approximately 15% of revenue.

Raj — Arjav Partners — Analyst

15% comes from your online sales, right?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Correct.

Raj — Arjav Partners — Analyst

And how does the pricing goes over there, like how much you need to give to Amazon, Flipkart?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

So there are different commission parameters, certain companies like for example, let’s say Flipkart [Phonetic] might charge 40%, but in case of Amazon, we actually hand it over to their DCA where they take care of everything. We don’t have to actually do it directly to consumers. So we are giving them at a price, which is far better than our distribution price that they sell it to the market. So — and we don’t have to worry about whether they are actually giving a predatory pricing, reducing it or increasing it depending upon the kind of Big Billion Day sales and all the things that they do, that they take care of that.

Raj — Arjav Partners — Analyst

All right, understood. And regarding FY ’24, so can you give an approximate, like how would your sales and everything is going to look like?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Mr. Raj, I would put it this way that whatever last two, three years have been — it’s been very, very tough for the entire industry for that pattern. In spite of that, fortunately, our country has been able to grow sectorially. So we believe for the best is yet to come for us and as you rightly said, in FY ’24, we expect a stellar growth in terms of top line and bottom line growth, because we are likely to pick up volumes.

Why we are able to pick up the volumes is because we were only North India-focused company at some point of time, but now with expanding our footprint across entire India, we have set up our base in Bangalore, Karnataka, Tamil Nadu, Kerala, including Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, Orissa, West Bengal. These are the kind of markets, which were actually not building or not selling earlier, but we started expanding.

So we believe in the next two quarters or so, we expect that this distribution will certainly get established and then, progressively the volume that will get — drive into that, will add to the top line. Besides the recycling, since we are doing in-house ourselves and the entire production has been consumed — self-consumed, we’re not actually selling it right now. So what happens is our cost of raw material procurement goes down.

So one way that increasing the top line because of the sale in the increase in the production. Second, we’re also reducing the cost of the raw materials. So when it becomes integrated process system, we will be the only company and I’m saying again we’ll be the only company in the entire country to have this value chain from post-consumer plastic scrap to the final product at, let’s say, even in the Jio Mart, Meesho or even distribution or retail model for that matter.

Raj — Arjav Partners — Analyst

All right, understood. And how much cash do you have currently as on Q3 end?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

I did not see that, but I believe whatever cash flow that we have — I’m not very sure, but I would put it this way that normally we don’t have too much of cash in the bank. We keep selling it to the suppliers, because we are ready to ensure that the chain continues and we ensure that our suppliers, for example, our suppliers, our [Indecipherable] very low at this point of time, because we believe in paying and paying in time and getting the material at the cheapest possible price. So, we normally don’t keep large surplus cash with us. We deploy it either for procurement in the raw material or we deploy it in terms of sundry debtors to expand our footprint or expand our business or top line growth.

Raj — Arjav Partners — Analyst

All right, understood. And regarding your expansion plan, so how much of investment are you going to need?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

We are actually even on a huge expansion plan in terms of the recycling for that matter, number one. Number two, we are also expanding our product portfolio. So I would put it this way that we are looking at close to about INR5 crores to INR10 crores, kind of investment that probably FY ’24 should be in terms of these two areas. We’re also looking at probably some amount of expansion that could happen in the sundry debtors as well as branding. So we are — we are step taking baby steps. We want to go step-by-step to ensure that we don’t — sorry, you can’t hear me?

Raj — Arjav Partners — Analyst

Yes. Go ahead.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Can you hear me now? All right. So we want to take a baby step. We do not want to go [Indecipherable] in terms of establishing and ensuring that all our stakeholders get payments in time, so that’s our priority. And that’s how keeping that in sync and in, in line. We believe anything between INR5 crores to INR10 crores with minimal investment and it can also definitely go up depending upon how much — how fast we can want to go ahead and we are actually looking at probably expanding our footprint across India for furniture as well adding certain other products, which can piggyback on the existing infrastructure.

Raj — Arjav Partners — Analyst

Understood. Okay. Thank you. Have a good day, bye.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, Mr., thanks a lot. Thank you.

Operator

Thank you. The next question is from the line of Devesh Shrimali from DS Investments. Please go-ahead.

Devesh Shrimali — DS Investments — Analyst

Yeah, hi, good afternoon.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Hi, good afternoon Mr. Devesh. Yeah, good afternoon. Go ahead please.

Devesh Shrimali — DS Investments — Analyst

Yeah, so just wanted to get your broad demand outlook. If you look at last three quarters, we are sort of in a range of INR20 crore, INR21 crore revenue, about INR1.5 crore PBT. I believe we spoke last quarter and you did say that when the wedding season kicks in, you do expect some demand to pick up. Right?

First, if you could help me understand, how is the demand outlook? Is it to your satisfaction? What you were anticipating in last part of this quarter or how is it shaping up?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you. So you’re sweet. I’m sure you actually touched upon something, which is bothering you a lot. In fact, Q2, Q3 have been very subdued. We were expecting because COVID has gone and economy had opened up, people were moving about and they were pledging on lot of products, but Q2, Q3 had been reasonably subdued. And it has shocked us. It has surprised us because we — in the anticipation of that, we expanded our product portfolio. We added a lot of molds and machines.

We thought that all right things will be brightened up and probably we will be operating at more than 100% capacity or we increased the sales, but actually it did not happen. In fact, this Q4 right now that we’re running into also is very subdued. It is quite surprising, because when you see flights are full, hotels are full, why is it that people are not picking up lapping the product, possibly because it’s taking some time, but I believe that FY ’24 should be very different year because whatever programs, plans people have kept on hold, though, they have a lot of surplus money, restart stratifying and resulting into [Indecipherable], volume pickup and all the things.

So we certainly see that and that’s also because now we have gone into recycling plastic and that’s how our cost of production will certainly go down, we’ll become little more predatory, we will become predatory in the pricing, so that we will be able to offer aggressive price and due to that, our volumes will increase. So we believe that these two factors should certainly contribute demand, which is organic demand, plus our predatory pricing. These things should certainly adapt and I’m sure, all these forecasts that we do are in disruption that economy is forward looking and over this thing of the past and everything seems to be going good and great. And I’m sure India as a country is the most insulated and the most fastest-growing economy in any case. So we believe everything seems to be going right, but somehow certain things are not being able to pick up, not since we are expanding our footprint, we believe that the result will start fructifying and hope in turn we will get the benefit of that.

Devesh Shrimali — DS Investments — Analyst

Right. So if I get it right, I mean, you are quite optimistic on FY ’24, but for reasons that we are not able to put fingers on demand sort of in very short term is — still looks subdued, right. That’s a right way to look at?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Absolutely. It is still subdued because that buoyancy where people say, all right, Malini, [Foreign Speech], that doesn’t seem to be happening. We are asking people, [Foreign Speech], what happened, give me your orders, whereas it used to be that we have to switch the phone off because there were so much demand. So there is a second or lull [Phonetic] in that. But we believe probably this is happening across sectors with the various industries. Let me speak to other suppliers, buyers, etc., because I’m also National President of Furniture Manufacturer Association. So I keep speaking to my peers and friends, etc., what are they doing and I’m also Chairman of CII, Western UP. So I keep tracking with other industries also when I speak to them. Inevitably, there’s is a settlement of tone that says all right, things are not picking up the way it should have been. Probably economy has not picked up sectorially. Probably certain things have been doing too good, but certain things are not. Maybe hospitality seems to be doing great, but it may not be happening you think, but we believe over the period of time it should all stabilize.

Devesh Shrimali — DS Investments — Analyst

Got it, got it. And if you could also throw similar light in terms of margin. We have seen two quarters of sort of sequentially falling margin. Is it because of lower capacity utilization, and that’s what is causing sort of overheads to play higher?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Yeah, both. What happens is because cost goes up when we expand our footprint across country, branding and so on, so forth, besides, of course, the commodity prices have been playing havoc. And it is so uncertain, half a times there is a loop. We’ve had so much loss, we don’t know when how the commodity prices jump overnight. So that is certainly keeping us on the tender books. But nevertheless, I believe that these things will be a marginal difference plus and minus, here and there. But now, we want to get out of this particular cycle. So that’s how this particular venture of our recycling in-house with their post-consumer. I want to say [Indecipherable] it is not post-industrial. Post-industrial is again volatile as fresh commodity, as the post-consumer is almost stagnant and flat.

So we want to pick up that and then, use it for our product. So we will be insulated as far as the raw material, let’s say the variation itself is in the raw material cost. So if that being the case, naturally we can play around and you will not see that kind of, let’s say, expansion, expenses, etc., that probably at this point in time [Foreign Speech] why is that margins are not going up. They would certainly start looking up once volume picks up and naturally. the recycling picks up. Both will go hand in hand in sync. It will start getting noticed.

Devesh Shrimali — DS Investments — Analyst

All right, sounds good. Thank you for your openness in replying. Thank you and all the best.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, Mr. Devesh. Thank you much.

Operator

Thank you. The next question is from the line of Miraj from Arihant Capital. Please go ahead.

Miraj Shah — Arihant Capital — Analyst

Yeah. Thank you. Yeah, good afternoon sir. Thank you for taking my questions. Just national question. So you spoke about two things in the start. One of them was the government policy regarding systematic waste treatment. I missed on the part. If you could repeat that again, though you were explaining something that was some 100% penalty. If you could explain that again. And the second one — sorry, we can — I will tie it together.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

This is very interesting, Mr. Miraj. Let me make it very clear. 2016 Plastic Waste Management Act says, which is enforced by Government of India, Central Government, it says that extended producer responsibility, EPR. This is the word. Now, all the brand owner and producers will have to compulsorily take an EPR approval, validation, which means, let’s say if, for example, ITC consumes 10,000 tonnes of plastics every year, is this strategic and so on, so forth?

So now ITC by FY ’23, 70% of that particular consumption, which is 10,000 tonnes will have to be purchased from open market, recycled plastic at the rate of virgin rate. I won’t repeat this, it’s at the rate of virgin rate, so that they mitigate whatever they had done or whatever they had actually used and 70% is taken back from market and consumed in-house, but since ITC cannot consume that, they have to pay penalty to the Government of India, EPR. It can range from INR5 to INR20 a kilo. And now, from FY ’24, it will be 100%.

And in fact, about three months back in Uttarakhand, more than 1,700 units were asked to be shut down by High Court of Uttarakhand, because these people did not — they were not compliant to the EPR regulations. They’re all plastic manufacturing, 1,700 units in Uttarakhand alone, which is a small state. So that is the kind of enforcement that is happening.

So what will happen is that people like us and this is again applicable to post-consumer plastic being recovered, recycled, EPR credit taken and that’s how they get — they can actually walk away, but it is not post-industrial. We as a company today are not only brand owners and producers, so we are self-consuming 100% ourselves. So we get insulated from there. Number two, we don’t have to pay any penalty to the — for EPR. But we can also give a lot of credit to other people. Let’s say if I consume 10,000 tonnes of my own plastic myself, and if I’m producing 50,000 tonnes or 40,000 tonnes, that 30,000 tonnes I can send it to them and/or tell them, all right, on your behalf, I’m giving to some producer, and I’ll give you EPR credit, so you pay me INR5.

So I believe that I Avro India Limited over a period time will be a company, which will start taking the credit of EPR benefits on the basis of the sales that will be doing on behalf of these brand owners and producers. That’s a golden, let’s say, lining that we have at this point of time, but it’s too early, because I think it will take another one year or so for us to get into the mainstream and start selling those products.

So this is a great revolution that is happening and this is happening because Government of India realizes or recognizes that unless otherwise, they penalize the brand owners and producers both, in fact, today — yesterday onwards, another regulation has come that anything — any import coming to the country, any customs, anywhere, any part of India, if at all is wrapped with plastic and all that, they all will have to take approval on — from the Government of India on EPR regulation and they have to pay penalty if at all these wrapped in plastic. So that is a kind of level of enforcement that is happening.

And I want to tell you one thing, Mr. Miraj, that is the most of the industries today in the country are actually unaware of this regulation, except for these large corporates. If MSME don’t even know there’s something like EPR that is there and one day when they get the High Court order or judgmental or legislative judiciary issue, then they will certainly face brunt of it, but fortunately for whatever reason, we were actually thought that we will reduce the cost of production even to post-consumer plastic recycling, but that has added as a benefit that — and the EPR benefit also, we will be able to take not only for ourselves, but to give it to others also. So this is something, which we are riding on over a period of time.

Miraj Shah — Arihant Capital — Analyst

Thanks a lot for the detailed answer, sir. It’s really helpful. My second question was in the start, you also spoke about the facility in recycled plastics that you were talking about, if I’m not wrong. You did mention some capacity, in terms of volume also. So if you could just speak about that once again, if you could just re-highlight that ones.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

I’ll put it one thing. Whatever I have said, I have gone through the document, let me now talk about that. Even my own perspective today, right now, approximately 6 million tonnes of plastic, which constitutes PP, HD and LD. These are the branding that we have. It is not ABS, PVC and so on, so forth. So this particular 66% of the 6 million tonnes actually get into rivers, oceans, drains, chokes, animals, etc., or thrown in the resorts. This is something, which can be recovered.

I’m not talking of something from the solid waste management that from — comes from the drains, which are being picked up by the municipal corporation at a cost there, that’s been paid by municipal corporation and that is segregated that particular plastic is actually off-loaded to various people for them to use that into making of bricks and making of roads and all the things, that goes for free. I’m not talking of that. But I’m talking of post-consumer. Let’s say, you have milk pouches in your house, you have a saree cover, shirt cover, etc., you just dismantle, dispose it to dustbin and somebody comes and picks it up and then, they are taken to the municipal corporation place where it is segregated, dry waste, plastic waste, so on, so forth or [Indecipherable] or crockery and so on, so forth.

When they segregate that, that is something that we get it picked up through our supply chain management system, where we have deployed people, we have already tied up with some people, we are also trying to use over a period of time, use [Indecipherable] technology where we will certainly use blockchain technology over a period of time to create traceability, so that once it comes to EPR benefit, Government of India is going to certainly challenge and tell us that all right, give us a trace from where did it come and where did it end, so that naturally, we’d like to be as safe as possible as for the comparisons are concerned. And if that’s been the case, this 6 million tonne, which is available to us, and of which 66% is PP, HD, LD is something that we can consume, both these — all these three products. And if we can consume, that particular item is available in the market and that’s a price, it is only the collection costs. And there are very few caretakers or very few people who can actually process this in terms of the standard processing of washing granite and creating — converting that into granules and usable product to manufacture, so that consumers can take it. It’s not a food product. It will be for non-food products like furniture or let’s say, making of [Foreign Speech] and pots and such kind of products. There are a lot of those things, which can be made. So this will be something, which will be used. So this is something, which is right now available. And this is likely to grow because there’s a consumption pattern, which is increasing over a period of time. So I was mentioning that this will increase dramatically or per capita consumption of plastic is going to rise. So, naturally, this disposable post-consumer plastic will be available and accessible. And at this point of time in the country, very few companies are doing fantastic manufacturing of post-consumer plastic, which we are one amongst them.

Miraj Shah — Arihant Capital — Analyst

Understood. Thanks a lot for the detailed information, sir. And so, this capacity of recycled plastics that you spoke about with us, how much would be?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Right now, we — I said the 300 metric tonne is what we are producing at this point of time. So we have a production ability, which is far beyond that, but I do not want to mention on the call here, because once we start actually manufacturing it, then I would certainly be able to say, all right, we are doing this. But over a period of time, by FY ’24 ending or so, we would certainly increase despite many number of times. We will not stay at the 300. This is just a finite over a period of time. Once we start doing, saturating our own consumption self-demand, then we will also be able to offload material to the other people because the commodity excels on cash. We will be able to do that.

Miraj Shah — Arihant Capital — Analyst

I understood. Thanks a lot for answering my questions, sir. If I have any, I’ll get back in the queue. Thank you.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, Mr. Miraj. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Himani Ubhan from Suraj [Phonetic] Research. Please go ahead.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Hi, Himani.

Himani Ubhan — Suraj Research — Analyst

Hello, good afternoon, sir. Very good afternoon, Himani. How are you? Sir, my question is, is any new product introduced in furniture portfolio?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Sorry. No. What’s your question, Himani. Can you please repeat that?

Himani Ubhan — Suraj Research — Analyst

Is any new products introduced in your furniture portfolio?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Yeah. Himani, I want to tell you this. We had a company, which is refreshing products every day. I would say that in the last six months, we’ve added almost six products. And the next six months, we will be adding almost about 10 to 12 new products. So what we do is we keep churning. Anything obsolete out of the design, out of context, we remove those products and we keep on adding. So right now, when I’m talking, I’m in Mumbai today. And I’m in conversation with my mold manufacturer who supplies machines — molds from China from the world’s largest manufacturer. So we have ordered almost about 10 or more fresh new branded new molds, which are going to be the flavor of the season over a period of time. Because unless otherwise we are in sync with the expectation and aspiration of the consumer, we will become obsolete and we do not want. We will continue to do that.

Himani Ubhan — Suraj Research — Analyst

Okay, sir. My one more question is what would you classify as your competitor’s strength?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Competitor’s strength?

Himani Ubhan — Suraj Research — Analyst

Yeah.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

See, let me put it this way that, for example, Nilkamal, Supreme, Cello, these are three generic brands and they are very large. Supreme is about INR9,000 crores company with furniture adding [Indecipherable] so. Nilkamal about INR2,000 and odd crore, this company with furniture to be about INR650 crores to INR700 crores. And Cello is about INR250 crores — INR400 crores; in terms of top line, it’s about INR150 crores, INR200 crores in furniture.

These companies have been offering a world-class quality products systems into the market and they are the ones who created the market. Here, we are only followers. But over a period of time, because for these companies, they are conglomerate. They had lots of divisions and products. So their focus is not there, whereas this industry is growing 15% CAGR year-on-year. And is that being the case? Expansion is taking place and because this product is so versatile, Himani, in case if you use a plastic furniture and keep it outdoor for ages, for years, 10, 20 years also, over a period of time, that color might fade, it might become a little rough, but it will not break. It is all weather proof conditions. Even in the 250-degree temperature that it can go up to in terms of melting or minus 20, 30, 40, also no problem at all. That’s — because it is affordable, it is usable in all-weather conditions product, I believe over a period of time, furniture industry will certainly keep continue to grow. And these companies have actually established with product category. So hats off to them. And I want to thank them openly it now.

Now, what we’re doing is because the product concept has been established, we are aggressively pushing and pursuing this particular industry in terms of the expansion of reach and just because of that, we believe that we should be able to capitalize on, let’s say, the demand created by these people, all these products showcased by these people, but we are able to sell our product almost at 40% cheaper than these companies. We have already been doing it. In fact, if you were to go on, let’s say, Amazon and check for Avro 9955 chair price, check my price, and then you can also check other, or you can check Nilkamal or Supreme or anybody, and you will find that there is a substantial difference in the pricing of the consumer also. And if comes distribution also, we are 40% cheaper. So that’s how and why we get accepted across all the states in the country right from Bangalore to Guwahati to Srinagar to Burj. That brings the beauty.

So I believe that these competitors have actually given us a lot of edge. They have also given us the advantage of giving their product in the market because they popularize it, but we encash it. So that, I want to thank them. And now, there are, of course, small time takers, there are regional players which are sprung up, but the only problem with them is that they have very, very small product portfolio. Let’s say they may have two, three, five time design, but we are having more than 140 SKUs and we’re adding almost 20 odd SKUs more. If that’s been the case, the kind of good range of products that we are able to offer, not many companies can offer except for these large companies. And I think that’s how we’ve been able to not only labor footprint across country. That’s how we claim to be talking that we are amongst the top manufacturer in the country. So this has been the advantage that we have got.

Himani Ubhan — Suraj Research — Analyst

Okay, okay. Thank you so much, sir. All the best.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, Himani.

Sandeep Mane — SM Research — Analyst

Thank you. [Operator Instructions] The next question is from the line of Sandeep Mane from SM Research. Please go ahead.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Hi, Sandeep.

Sandeep Mane — SM Research — Analyst

Hi, good afternoon, sir.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Very good afternoon. Yes, Sandeep.

Sandeep Mane — SM Research — Analyst

Sir, I have two questions. My first question is you were talking about having the warehouse in Southern India. Can you please provide update on it?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Okay. Sandeep, this warehouse that we have, we do not officially have our own warehouse, but in METRO AG store, we have GST number and that warehouse is used exclusively for us. Okay? So that’s how right, not only in the Bangalore, but in various other places also, we have GST numbers at those places, but we have not owned any warehouse ourselves, because we do not want to add up to the cost.

Okay, over a period of time, once our product portfolio keeps increasing and our footprint across India is getting established, probably we might have a warehouse in maybe Bangalore or maybe Ahmedabad, maybe in Punjab and so on, so forth. We are not very sure, but we will certainly like to. What we’re trying to do is, in terms of supply chain management, our delivery date is very fast. We offer delivery within less than 24 hours, number one and they’re all given its full truckload. We don’t sell in part load, except on the Flipkart, Amazon, etc. And then, now we’re — what we’re doing is we’re also getting to small parts and load through DP World, or Home Logistics, etc., where any consumer — or it’s not a consumer sorry, any wholesaler, dealer across India that it could be from [Indecipherable] to any place or anybody coming from Kerala and any part of the country can actually asked for small consignment of 10,000, 20,000, 30,000, 50,000 pieces also, which we had not been doing for 20 years, but now we are starting with that. That is one green shoot that I see in our company that will happen over a period of time, which we actually — we have not spoken.

We are not — I have not said anything about that particular area of activity, whereby we are likely to see a witness growth in the sales just because we will also be able to reach out to those dealers we are buying a small quantity and fully logistics from five to seven days that transit time it will take and in terms of the freight cost also, we are bearing the cost also because we are able to give them at a certain reasonable price. So we believe over a period of time, we don’t have to have warehouse. Things are gone at the days where people used to have, except for FMCG, where they need to have, because of faster delivery, but in our case, we can actually maintain directly from the company itself and if it all necessary, we’ll certainly have it.

Sandeep Mane — SM Research — Analyst

Yeah. Perfect. Sir, my second question, what is your marketing strength?

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Marketing strength, we currently have about — yeah, we have — currently have about 12 boys working for us in various states right from West Bengal we have, we have in Madhya Pradesh, we have in Gujarat, we have in Rajasthan, we have in Northern India and so on, so forth. And we also have in Karnataka, we have in Tamil Nadu, all these marketing people deployed, about 12 people. These are primary people. And then, all these distributors, salesmen, etc., we have trained them so well, they practically [Indecipherable] in a way, and we ensure that we give them some kind of incentives benefit over a period of time, so that they keep marketing and selling our products. We also train them on the product. We call them to the factory and tell them how — what is the product quality strength, etc., so that they’re able to market and sell better.

So we try to do everything of this kind. And over a period of time, since we have been only with the distribution model, where right for example in Maharashtra, we might have those 12, 15 people over a period of time. So to service 12, 15 people, we don’t need 12 people. We need only one person, a senior person who can go talk to them and comrade and take care of the markets. We are already to retail selling, but over a period of time, since the penetrating across India, we might probably over a period of time, take another step where we might deploy people who will actually do a small amount of secondary — go to this wholesale retailer that I just mentioned.

Sandeep Mane — SM Research — Analyst

Sir, my next — last question is about the recycling. Sir, if everything are you consume internally or sold outside, recycling plastic. If you sold outside, where we are buyers of recycling plastic.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Right. Perfect. Sandeep, incidentally first and foremost at this point of time, our production capacity of recycling plastic has been very, very low because we just started sometime back. So we believe almost about 7,500 to 8,000 tonnes, they can self-consume. That’s our consumption at this point of time and progressively into, we will expand our footprint and our top line will grow. We believe that this will go to 10,000 to 12,000 tonnes. So to that extent, even if I go 1,000 tonnes a month, to that extent, my product gets self-consumed in my factory. I don’t have to sell, number one.

Number two, even otherwise, I was just mentioning sometime back that I’m a National President of Furniture Manufacturer Association across country and hundred and odd manufacturers that I know them, they are on my WhatsApp group, I interact and discuss with them because I’m a little [Indecipherable]. I have been in the industry for almost two decades, which is like post Nilkamal, Supreme seller in the country, ours earliest one who establishes this factory.

So I’m in close conversion contact with these gentlemen, these people. They all know me very well, and I also know them very well. 1 million tonne of plastic gets consumed into these 100-odd manufacturers across country. So today, I’m talking of just 300 tonnes per month, which is too small. Even if I take it 1,000 tonnes, it’ll get self-consumed. If I raise this to 1,000 to 4,000, 5,000 tonnes, selling additional 2,000, 3,000 or 4,000 tonnes is like an easy cakewalk, it’s like selling gold. You talk to them today, all that market prices, let’s say, INR70, you tell them, okay, I offer you for INR5, INR7 less, and they’ll certainly be able to buy it because that’s the cheapest they’re able to get. So selling is not a problem at all. And once we get into that game, probably, the infrastructure that we are actually now trying to set up over a period of time, depending upon the financials of the internal accrual as well as the debt that we would like to access, or certain amount of equity that we can adopt. So we believe that we should be able to not only take care of this advantage that it’s been like kind of gift or God’s gift to us for that matter that we got into this industry, which we have never envisaged and thought. So over a period of your time, once we start selling to these people also, as I said, there are many takers, no issue at all, we will be good or certainly comfortably able to match.

Sandeep Mane — SM Research — Analyst

Yes. Thank you, sir.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, Sandeep.

Sandeep Mane — SM Research — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to Ms. Supriya Madye for closing comments. Over to you, Ma’am.

Supriya Madye — Kirin Advisors Private Limited — Analyst

Thank you.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you, ma’am. I just wanted to just conclude and say thank you, Mr. Raj, Devesh, Miraj, Himani, Sandeep and all other participants who have been listening to me. For me, these are emotional moments when I talk to you people, because I believe that I’m talking with those who are thought leaders, who are the economic drivers, who are the people who will become brand ambassadors and support us to Avro Limited.

At this point of time, we are a small company, but we have gained immense experience in the industry, and we are in the cusp of that explosive growth, which continues likely to witness. And over a period of time, I believe by 2030, world third largest economy and in 2050, we’re going to be second largest economy in the world. It’s a huge population that we have. I think it’s the right product commodity because this is a sunrise industry. It will continue to grow and we grow on the basis of strength, the aspiration of the consumer as well as the delivering mechanism that we have and the experience and learning that we’ve gone through.

So we will need — certainly need a lot of support from all of you in terms of enhancing our value or letting us know all the issues and challenges. In fact, I’ll be more than happy to share my mobile number with all of you and you are free to communicate, talk to me, ask me questions, come on to the factory, have a visit, look at the infrastructure and understand how we are progressing. And over a period of time, please feel free to — advisors will guide us, what is it that is [Indecipherable], how was the consumer feeling, what is your perception about the company and those things. And in case, if you have valuable suggestion to offer to us, we will more than happy to implement and we would like to thank you from the bottom of our hearts. Thank you very much.

Supriya Madye — Kirin Advisors Private Limited — Analyst

Yeah. Thank you, Sushil ji and I thank every region and everyone participating in the call on behalf of Kirin Advisors. We conclude this call. Thank you. Good day.

Sushil Kumar Aggarwal — Chairman and Whole Time Director

Thank you very much. Have a nice day. God bless you. Bye-bye.

Operator

[Operator Closing Remarks]