Century Enka Limited (CENTENKA) Q1 FY23 Earnings Concall Transcript

Century Enka Limited (NSE:CENTENKA) Q1 FY23 Earnings Concall dated Aug. 11, 2022

Corporate Participants:

Anuj Sonpal — Investor Relations

Suresh Sodani — Managing Director

Krishnagopal Ladsaria — Chief Financial Officer

Analysts:

AM Lodha — Sanmati Consultants — Analyst

Subham Agarwal — Aequitas Investment — Analyst

Pranav Jain — HDFC Securities — Analyst

Vikas Gupta — AV Fincorp — Analyst

Anant Mundra — Mytemple Capital Advisors — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q1 FY ’23 Conference Call of Century Enka Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you, sir.

Anuj Sonpal — Investor Relations

Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the investor relations of Century Enka Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the first quarter of financial year 2023.

Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s concall maybe forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.

Now let me introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Suresh Sodani, Managing Director; and Mr. Krishna Ladsaria, Chief Financial Officer.

Without any further delay, I request Mr. Sodani to start with his opening remarks. Thank you and over to you, sir.

Suresh Sodani — Managing Director

Thank you, and good afternoon, everyone. I would like to welcome you all to our Q1 FY ’23 earnings conference call. I hope you and your loved ones are all keeping safe. Let me brief you on the operational highlights for the first quarter of financial year 2023.

We had a healthy growth in revenues and volumes in Q1 FY ’23 compared to the same period in previous year which was obviously impacted by second wave of COVID. Our overall sales volume of Q1 FY ’23 increased by around 18% year-on-year to 17,598 metric tons.

In case of Nylon Tyre Cord Fabric, overall demand has moderated slightly as tyre companies are yet to achieve optimal capacity utilization. There was a steep correction in Chinese NTCF prices, however imports were muted. Medium to long-term prospects remain positive supported by robust exports pick up in OEM demand for tyres, restriction on tyre imports and anti-dumping duty on Chinese radial tyre imports as well as pickup in overall economic activity.

In case of Nylon Filament Yarn, we witnessed better volumes in a traditionally weak quarter, although the pass through of cost increases is becoming difficult incrementally due to high absolute prices of yarn and slowdown in China leading to dumping of cheaper NFY in domestic markets. Caprolactam prices remained elevated during the quarter although prices in China have corrected significantly in Q2 FY ’23 and is having an impact on NFY prices.

On capex front as you are aware the company has undertaken capital expenditure plan of over INR300 crores to strengthen its competitive position in tyre reinforcement markets through modernization of plants, augmenting capacity as also increasing capacity of draw texturized yarn and mother yarn. All capex sanctioned by the Board are running as per schedule with orders for all long delivery items being placed on reputed equipment manufacture.

The cash outflow for capex in Q1 FY ’23 was around INR72 crores and the projected cash outflow in FY ’23 is expected to be about INR200 crores on the ongoing capex plan. We target commissioning of NTCF projects in Q4 FY ’23 while target commissioning of full capacity of Polyester Tyre Cord Fabric is expected by Q4 FY ’24. Value addition and expansion in NFY capacity is expected to be completed by Q4 FY ’23 and Q4 FY ’24, respectively.

Now I request our CFO to brief you on financial performance.

Krishnagopal Ladsaria — Chief Financial Officer

Thank you, sir. Good afternoon, everyone. The operating revenue for Q1 FY ’23 stood at INR568 crores which represent an increase of 34% year-on-year. EBITDA for the quarter stood at INR61 crores which was a decline of 0.5% year-on-year and this represented an EBITDA margin of 10.76%. Profit after tax, we reported at INR40 crores, which was a decline of 5.2% year-on-year and PAT margin was at 7.1%. To give product wise numbers, so product wise sales increased for NTCF by 15% year-on-year at INR285 crores while for NFY, increase was 60% as mentioned by Sodani ji, last year it was impacted by COVID second wave. So sales stood for NFY at INR245 crores.

Now we open the floor for questions and answers. Thank you.

Questions and Answers:

Operator

Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of AM Lodha from Sanmati Consultants. Please go ahead.

AM Lodha — Sanmati Consultants — Analyst

Hello? Am I audible, sir?

Suresh Sodani — Managing Director

Yes.

AM Lodha — Sanmati Consultants — Analyst

Sir, I have got two questions. I require clarification, regarded power and fuel cost in the quarter has gone up considerably. So do you — we have the power plant — coal-based power plant, sir?

Suresh Sodani — Managing Director

No. We don’t have any captive power plants. We are connected to grid power in Pune as well as Bharuch plant. We do utilize the open access to draw power at cheaper rate, but we don’t have any captive power plant.

AM Lodha — Sanmati Consultants — Analyst

Sir, what is the average cost of the power used by the company during the quarter?

Krishnagopal Ladsaria — Chief Financial Officer

For our Bharuch plant, it was somewhere around INR8.40. For Pune plant it was around INR5.30.

AM Lodha — Sanmati Consultants — Analyst

Why don’t the company is considering the — when the company is the case surplus, and even in Godavari, steel plants are putting up solar power plant, why don’t the company has considered to put up the solar plant — green power that is the solar power plant to contain the cost of the power in the future year, sir?

Suresh Sodani — Managing Director

Yes, we are doing it for our Bharuch plant. We have gone into group captive which is a hybrid of solar and wind and this will be commissioned somewhere in the month of March. So, with that commissioning nearly 30% of our Bharuch requirement will be met from this captive source — group captive source which will be cheaper compared to the normal…

AM Lodha — Sanmati Consultants — Analyst

Still INR8.40 is too high compared to the solar power — cost of the solar power generation including interest on the investment which we consider. So, you should plan the bigger power plant in the Bharuch because INR8.40 will become INR10 in coming two years’ time?

Krishnagopal Ladsaria — Chief Financial Officer

We have taken the maximum available capacity as per the group captive scheme. There are restrictions on which we can do and this is the capacity — maximum capacity has been taken which will meet our about 30% of the requirement at Bharuch.

AM Lodha — Sanmati Consultants — Analyst

My second question is relative to demand status of the INR229.27 crore in the Excise department. One thing is pending appeal — Tribunal appeal and another matter is pending at Supreme Court. Can you put some light on this either any recent development or what is the status of the above things?

Krishnagopal Ladsaria — Chief Financial Officer

So, the demand which was at around INR230 crores has been reduced to INR7.3 crores now.

AM Lodha — Sanmati Consultants — Analyst

Okay.

Krishnagopal Ladsaria — Chief Financial Officer

And the company is in appeal to Supreme Court and as per the legal advise which company has received even that INR1.3 crores, there is a good chance that that demand may not materialize. Our appeal is there in Supreme Court and we are pursuing it, but there is no development in last three months in this regard.

AM Lodha — Sanmati Consultants — Analyst

Okay, sir. But what is the matter pending with Appellate Tribunal, has there — department has filed their appeal with the Tribunal against the order of the commissioner?

Krishnagopal Ladsaria — Chief Financial Officer

Yes. So, the reduction which the commissioner appeal has done from INR230 crores to INR7.3 crores, department is in appeal, but it is more of an administrative appeal which they have done. Because in our view, whatever correction has been done in demand has been as per the earlier order of CSAT. So, it is in line with that order only. So, as and when matter will come up for hearing we will know more on the matter.

AM Lodha — Sanmati Consultants — Analyst

Sir. My last question is, we have got…

Operator

Excuse me, this is the operator. Mr. Lodha, may we please request you to come back in the queue.

AM Lodha — Sanmati Consultants — Analyst

Okay. Okay.

Operator

The next question is from the line of Subham Agarwal from Aequitas Investment. Please go ahead.

Subham Agarwal — Aequitas Investment — Analyst

Yeah. Thank you for the opportunity. Good afternoon, everyone. Sir, my first question is likely near term, so Y-o-Y, we have seen both revenue and volume growth obviously on a low base, but it seems like Q-on-Q, our margins are on a declining trends. So, firstly, I wanted to know how grave is the China situation because they would be competitive in terms of raw material pricing? And how do you guide the margin going forward? Thank you.

Suresh Sodani — Managing Director

First of all, I think rightly said that comparison is more with the last year quarter one because we have seasonality particularly on the NFY side. And even in that scenario, traditionally weak Q1 we have good numbers both in volume as well as in turnover.

China has been unstable mainly because of the lockdowns that have happened in various cities and areas which has impacted their value chains and supply chain. So, certain products right from lactam to even the fabrics, having either being higher or lower and which has led to demand imbalance and surplus stocks availability in various parts of the value chain. And that is what has disturbed the market even in India and which we are seeing it also in some of the products.

We expect that now since China has opened up even with some restrictions that in Q2 and most likely in Q3, things would stabilize and that would reflect — revert back to normal practices that are there in China. I mean, we have been operating in the same environment of China competition in past as well. So, we expect that Q3 onwards, it should become more normalize unless COVID situation again becomes critical and China takes a very hard view on lockdowns and other administrative matters.

Subham Agarwal — Aequitas Investment — Analyst

Fair enough. But if I compare the realization of what Chinese are dumping at what price in India compared to our ask, what’s the difference currently?

Suresh Sodani — Managing Director

See, we cannot give a generic answer because China sense material from lactam to just to yarns to even fabrics. So, it’s varying from product to product and then there are multiple yarns. But as I said, it becomes a challenge with the holder of the stocks to sell rather than hold it for a price in China. And that is what we have seen particularly in later half of quarter one and in quarter two. However, the volumes are not significantly higher. They are higher, but it’s just not a case of, I mean, gigantic increase in import term. Yes, the pricings have been, as I said, this happens when the value chain is disturbed and some players want to reduce their stock levels, they would sell at any price. So, this would not reflect normal pricing level with respect to the industries.

Subham Agarwal — Aequitas Investment — Analyst

Okay, got it. And sir, secondly, my question was with regards to the land. So you in the last quarter mentioned that if there is any update, would you like to share with regards to usage of the land?

Suresh Sodani — Managing Director

Yes. No, there has been no update. As I said, these are not short-term things which can happen. I mean, as and when it happens, it will definitely be announced as part of our presentation. But there are no updates. We keep looking for opportunities. And as and when something materializes, we will inform.

Subham Agarwal — Aequitas Investment — Analyst

Okay. And lastly, sir, what would be our Caprolactam current buying price?

Suresh Sodani — Managing Director

Yes, sorry.

Krishnagopal Ladsaria — Chief Financial Officer

Caprolactam, currently trading at around $2,000 per metric tons.

Subham Agarwal — Aequitas Investment — Analyst

So, almost $300 correction in last few months?

Krishnagopal Ladsaria — Chief Financial Officer

On an average, last quarter was at around $2,200. So from $2,200, it is now at around $2,000.

Subham Agarwal — Aequitas Investment — Analyst

Thank you, sir. I’ll come back in the queue.

Operator

Thank you. The next question is from the line of Pranav Jain from HDFC Securities. Please go ahead.

Pranav Jain — HDFC Securities — Analyst

Good afternoon, everyone. Thanks for the opportunity. So, sir, we have made an investment of around 26% in Abrel Century Energy Limited. So what is the rationale behind it and the amount invested? And what returns we expect from the same?

Suresh Sodani — Managing Director

So, this investment is it — is for group captive which we are doing for our Bharuch plant. So, at Bharuch, we are putting up 10.5 megawatt group captive project which is solar plus wind. And for that project, there is a requirement that we invest 26% in the SPV which has been formed for this purpose. And total investment expected in the SPV will be around INR8.8 crores. And this is not for the return on investment, it is on saving of power. So, power cost saving will be there over the period and it is quite attractive.

Pranav Jain — HDFC Securities — Analyst

So, sir, how much savings do you expect from this investment?

Suresh Sodani — Managing Director

So, our expectation is that if the power supply is as per the expectation, it will be around INR15 crore saving per annum.

Pranav Jain — HDFC Securities — Analyst

Okay. And, sir, second question regarding the realization per ton trend, so our realization per ton is increasing on Q-on-Q basis. So is it due to increase in the NFY or NTCF volumes? Or it is mainly because of the prices or mainly because of the volume mix?

Suresh Sodani — Managing Director

So, it’s mainly reflection of the price increases that were there compared to Q4 in the underlying raw material. Some mix changes do happen between the products, but prime reason is increase in the base pricing — raw material pricing.

Pranav Jain — HDFC Securities — Analyst

Okay, sir. And sir, lastly our operating margins are at the lower end. If you see in this quarter, it is somewhere around 10.5%. So like when will we expect this to rise like, what is your guidance regarding this?

Krishnagopal Ladsaria — Chief Financial Officer

I think our normal expectation of margins is in the range of 10% to 13%. And it will keep varying based on the raw material pricing because that impacts the margin calculation as well. So, as I said, Q1 pricing of raw materials were higher. It also had an impact on the margin percentage.

Pranav Jain — HDFC Securities — Analyst

Sir, but if you — you said that the Caprolactam prices have corrected like around $200 per tons, so like apart from this, so the major was the power and fuel cost — major contributing factor was power and fuel cost?

Krishnagopal Ladsaria — Chief Financial Officer

Yes, in the EBITDA margins, yes, one of them is also power and fuel which have increased significantly compared to Q1 last year. And some improvement increase even compared to Q4, definitely and that’s a industry wise, economy wise phenomena because of the underlying pricing of coal and other fuel costs.

Pranav Jain — HDFC Securities — Analyst

Okay, sir. Thank you so much. I’ll come back in the queue.

Operator

Thank you. The next question is from the line of Vikas Gupta from AV Fincorp [Phonetic]. Please go ahead.

Vikas Gupta — AV Fincorp — Analyst

Thank you for the opportunity, sir. Sir, we are planning for a capex of around INR300 crore. Is it right?

Suresh Sodani — Managing Director

Yes.

Vikas Gupta — AV Fincorp — Analyst

So, how much might be the cash left after doing this capex?

Suresh Sodani — Managing Director

How much would be, sorry?

Krishnagopal Ladsaria — Chief Financial Officer

Cash.

Vikas Gupta — AV Fincorp — Analyst

How much will be the capital or cash that will left over after completing this capex?

Suresh Sodani — Managing Director

We will be sufficiently funded on liquidity even after spending INR300 crores based on the current quarter and the likelihood of similar performance in future quarters. So, we expect that the entire spending that we are doing in the current financial year would be out of the generations between the current. So, we can expect similar levels of cash flow at the end of the financial year.

Vikas Gupta — AV Fincorp — Analyst

And what might be the idea to utilize the cash after this capex cycle get spent?

Suresh Sodani — Managing Director

We keep evaluating opportunities for further growth and these are tested and, I mean, [Indecipherable] process of rigorous — proper strategy part of it. And also that it is to be presented before the board. So during the year, we come up with something interesting and looks good long-term back to on our — keeping our strategic fit, we will utilize that — this surplus fund. Idea is not to keep this fund idle, but utilize it for more productive use.

Vikas Gupta — AV Fincorp — Analyst

Okay. My second question is related to the receivable. So is there any receivable from Birla Tyres Limited?

Krishnagopal Ladsaria — Chief Financial Officer

Yes, there was receivable of around INR7 crores from Birla Tyres, which were fully provided a year back. And so there no exposure to Birla Tyres which is unprovided or which is open for us.

Vikas Gupta — AV Fincorp — Analyst

Do we expect this to get back to us? Any update on this?

Suresh Sodani — Managing Director

So this Birla Tyres is in NCLT. A receiver has been appointed for Birla Tyres. And it will all depend on what is the realizability of their assets. So, we are hoping that some part will be recovered of this. But as of now, company has fully provided for those receivables.

Vikas Gupta — AV Fincorp — Analyst

That’s it from my side. Thank you so much once again, sir.

Operator

Thank you. The next question is from the line of Anant Mundra from Mytemple Capital Advisors. Please go ahead.

Anant Mundra — Mytemple Capital Advisors — Analyst

Hi, thank you for the opportunity. Sir, I wanted to understand that after the capital expansion that we are planning that you said, so will our margin profile change? Currently, you mentioned it is around 10% to 13%. So do we expect that to change after the capex is gone?

Suresh Sodani — Managing Director

Difficult to comment because once — these are markets which are volatile as well as — but we expect, our internal estimate is that it should remain in that range on a higher base, higher turnover because markets are determined by — I mean, margins are also determined by how our end user segment what tyre and textiles are doing. And their help will also determine the margins that we are in the company. So, we expect that this should remain in this range, but there could be upside and some volatility depending on how other factors play out.

Anant Mundra — Mytemple Capital Advisors — Analyst

But in NFY, sir, we are going into some more value added products. Am I correct? I think, after the capex, the capex, so — I mean we can expect some kind of at least margin increase in the NFY segment. Is that understanding correct?

Suresh Sodani — Managing Director

Yeah, obviously the purpose of doing value — I mean value addition to certain product is to improve margins, but these are not significant in terms of the overall capacity. It is more of portfolio adjustments and making products which are better margins and which are more acceptable to the markets. As we mentioned in the last call, we expect that by FY ’25 the topline should grow by 20% to 25% and that should — and margins in that range should remain 10% to 13%.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. So, my next question, sir, is what is the — so we are getting into polyester as well now, the plan to get into polyester, so what would be the raw material for PTCF?

Suresh Sodani — Managing Director

These are polyester chips which are available both domestically and internationally. And thereafter, it go through a process and finally make to a Polyester Tyre Cord Fabric.

Anant Mundra — Mytemple Capital Advisors — Analyst

So, is there adequate domestic availability for these polyester chips or again like Caprolactam we will have to be dependent on imports?

Suresh Sodani — Managing Director

No, the polyester domestic availability is better than nylon — caprolactam or nylon chips — I mean, caprolactam or nylon chips. So, polyester is — there are two domestic producer as well as more international producers even outside China.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. Okay. And in this also will we have the capacity to make chips ourselves in polyester like how we have in nylon?

Suresh Sodani — Managing Director

No. We will be starting with purchase of chips because that’s a large volume business and we don’t intend to get into chips manufacturing, polyester chips manufacturing.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. Okay. And sir, one more question. So we — I mean I read in the annual report that we are exporting some green polymer chips currently. So is that the only export that we are doing? Or are there other products also that we are exporting?

Suresh Sodani — Managing Director

We do export some quantities of yarn and that is more to develop certain markets. And these are normally from specialized yarns, some special effects are required by the customer, but that volume is small. The larger volume of exports is green polymer chips.

Anant Mundra — Mytemple Capital Advisors — Analyst

And is this scalable or — the green polymer chip opportunity in exports, is this scalable or this is where it will plateau or what is the plan here?

Suresh Sodani — Managing Director

No, currently we use our own internal waste and convert it into back to polymers and then convert to chips. The scalability will come if we have to buy this waste from outside and which is a very difficult thing because waste come in all kind of mixes, whereas when we are using our own waste we assure of the quality and what is going into that. And this is subject to certain international certification. So, we have to be very sure of the quality of products that we are exporting. So, in the interim, we don’t have any plans to expand this capacity. But if opportunity arises and there are possibility of getting raw materials — assured raw materials in terms of quality, we could look at this possibility as well.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. And sir, what is the opportunity that we have in terms of exports to develop the export market because our export presence is so limited. Are we — I mean, is that the focus or we are currently only focusing on expanding domestically more?

Suresh Sodani — Managing Director

No, the focus currently is on domestic markets which is growing. And obviously the realizations are also better compared to export market. Exports would be mainly niche products, where we get better realizations compared to domestic markets or there is a demand for certain products which domestic markets still not developed for.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. All right. I have a few more questions, I’ll get back in the queue. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of AM Lodha from Sanmati Consultants. Please go ahead.

AM Lodha — Sanmati Consultants — Analyst

Thank you, sir, for follow-up. There are two follow-up questions there. And there is total expansion of INR300 crore. Can you give sir a split of NTFC [Phonetic] and the polyester tyre cord?

Suresh Sodani — Managing Director

We — as mentioned we are in single segment. So both on turnover and volumes, everything is on similar basis, but majority portion of this expansion is on the reinforcement business.

AM Lodha — Sanmati Consultants — Analyst

Sorry, sir. Can you repeat it?

Suresh Sodani — Managing Director

The reinforcement business, this is the tyre cord segments. Majority of that is on tyre cord segments.

AM Lodha — Sanmati Consultants — Analyst

It has been mentioned in the presentation, NTFC quarter four FY ’23 and polyester tyre cord FY ’24?

Suresh Sodani — Managing Director

Yes.

AM Lodha — Sanmati Consultants — Analyst

So, just I wanted the breakup of the investment in these two — total breakup of these two lines, nylon tyre cord and polyester tyre cord?

Suresh Sodani — Managing Director

As mentioned, these are products that are mainly — I mean, we are into synthetic yarns business and then manufacturing products out of that, both in terms of — so we are giving only the sales breakup and for competitive reasons mentioned earlier also [Speech Overlap].

AM Lodha — Sanmati Consultants — Analyst

Okay. Can you just tell us in this how much turnover we can expect on full capacity utilization of all your debottlenecking and the fresh capex?

Krishnagopal Ladsaria — Chief Financial Officer

Yes. So once these are commissioned in FY ’25, we expect a topline growth of 20% to 22% on the baseline price of 2022, FY ’22, which will keep varying if prices go up and down, the numbers could change and it’s underlying raw materials change. So, we expect about 20% to 25% topline growth.

AM Lodha — Sanmati Consultants — Analyst

Fine, sir. My second question is how much cash and cash equivalent we have as on 30th June ’22, please?

Krishnagopal Ladsaria — Chief Financial Officer

See, if we had to mentioned that, we would have given that. This would be given along with the balance sheet in the September. But as I mentioned earlier in an earlier question, we have sufficient liquidity and by the year end we expect that the current capex spend would be done out of the operating profits of the current year.

AM Lodha — Sanmati Consultants — Analyst

Sir, why I am asking, sir, I am asking from the point of view that because I have observed that the management holding is very low in the Century Enka. When you have the surplus cash, why don’t the Board management consider the buyback of its shares which will not only increase the holding of the management, if management does not participate and that it will be beneficial to all our minority shareholders. So, this is purely a suggestion, sir. Suggestion, the company can do the buyback on that [Phonetic] to increase the holding because the low holding always in our investors mind a very low holding of 25%, 27%, 28%, 30% is not good for any management.

Suresh Sodani — Managing Director

We’ll convey your suggestion to the Board. That is something that only the Board and promoters can decide. We will convey your suggestion.

AM Lodha — Sanmati Consultants — Analyst

Thank you, sir. Thank you. Thanks a lot for opportunity, sir. Thank you.

Operator

Thank you. The next question is from the line of Anant Mundra from Mytemple Capital Advisors. Please go ahead.

Anant Mundra — Mytemple Capital Advisors — Analyst

Sir, wanted to understand what are the different products that we manufacture at Pune and Bharuch? How are they different? Or they are the same products?

Suresh Sodani — Managing Director

Both the plants manufacture both nylon tyre cord fabric as well as nylon filament yarn. Only difference is nylon filament yarn has multiple products and large number of SKUs, so which are divided between both the plants at — depending on past and equipments that are there. In case of NTCF, both plants have the facility. We are now putting up a dipping facility at Pune which was not there. And that will also get commissioned in Q4 of this financial year. So, NTCF will be very similar at both the plants.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. And sir, what is the current value of the Mahad land that you are planning to sell on our books?

Suresh Sodani — Managing Director

No, we are — we are not trying to sell that land. As we have mentioned earlier, we are looking at opportunities either to utilize it gainfully for some of our products or different expansions. And as and when — we have not got anything — any valuation done since we are not actively using — looking to sell that land. As and when any transaction or anything is due for announcement, we will do as a part of our earnings presentation.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. And sir, just one clarification to one of the questions that the earlier participant had asked. So we are planning to invest around INR8.8 crores in the solar and wind captive — group captive scheme and the savings that we expect out of that is INR15 crores annually. Is that figure correct?

Krishnagopal Ladsaria — Chief Financial Officer

Yes.

Suresh Sodani — Managing Director

Yes, yes.

Anant Mundra — Mytemple Capital Advisors — Analyst

So, on an INR8.8 crore investments, we are envisaging a saving of approximately INR15 crores?

Suresh Sodani — Managing Director

Yes, because this pricing of power is a fixed pricing and cheaper to the grid pricing. So, when we enter into an agreement, the pricing is fixed and that gives us the confidence that — and this is — saving is based on the differential between with a current grid rates where we are drawing the power from.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. Okay. And sir, my final question. So just wanted to understand how big is the unorganized sector in the NFY segment and how big are the second or third competitors in this industry? We are the biggest. How big is the second and third largest competitor that we have and how large is the unorganized sector in this?

Suresh Sodani — Managing Director

Actually, unorganized segment is the largest, I mean, on a combined basis, because this is a very modular business at low investment from anybody many people get into small capacities. The next competitors are in the range of 10% to 15% and lower next to two and three, but the majority on a combined basis are on an unorganized basis.

Anant Mundra — Mytemple Capital Advisors — Analyst

And, I mean, has there been a decline of the presence on unorganized sector in this segment or there they are maintaining that market share?

Suresh Sodani — Managing Director

No, there is some decline especially after the COVID many small scale and — but there are also new entrants. And so, I mean it’s difficult to keep a track on who is entering and who is leaving to a large extent. But based on the market information on not a very confirm basis, these entries and exits keep happening.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. And I am assuming NTCF the unorganized sector presence would be far lower than the NFY segment?

Suresh Sodani — Managing Director

There is no — in fact nobody in the unorganized sector in the NTCF because that’s a very technical product and to work through a rigorous approval process with the tyre company. So — and obviously also the investments are large. So, there is no unorganized player in the NTCF market.

Anant Mundra — Mytemple Capital Advisors — Analyst

Okay. Okay. All right. That’s it from my side. Thank you.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for their closing comments. Over to you, sir.

Suresh Sodani — Managing Director

Here just a clarification, in one of the question, I mentioned the power cost for Pune at INR5.3 in fact it is INR6.6 per unit because earlier it was there then there is an increase in charges. So, that is one clarification. And we want to thank all the participants for their active participation. And if there are any follow-up question, you can always reach us. There is an Investor Relation link on our website. So, your question can be put up there. Thank you.

Krishnagopal Ladsaria — Chief Financial Officer

Thank you.

Operator

[Operator Closing Remarks]