Mitsu Chem Plast Ltd (MITSU) Q1 FY23 Earnings Concall Transcript

Mitsu Chem Plast Ltd (BSE: MITSU) Q1 FY23 Earnings Concall dated Aug. 11, 2022

Corporate Participants:

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Kashmira Dedhia — Vice President, Finance & Accounts

Analysts:

Sumit Maru — Kiran Advisors Private Limited — Analyst

Manan Poladia — MKP Securities — Analyst

Narit — TSG Capital — Analyst

Rohit Suresh — Samatva Investments — Analyst

Nilesh Karani — Magnum Equity Broking Limited — Analyst

Yashwanti Khedkar — Individual Investor — Analyst

Rohan Kamat — Finterest Capital — Analyst

Riju Dalvi — Individual Investor — Analyst

Sandeep Mane — Individual Investor — Analyst

Aditya Jain — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Q1 FY’23 Results Conference Call of Mitsu Chem Plast Limited, hosted by Kirin Advisors Private Limited. [Operator Instructions]

I now hand the conference over to Mr. Sumit Maru from Kirin Advisors Private Limited. Thank you and over to you, sir.

Sumit Maru — Kiran Advisors Private Limited — Analyst

Yeah. Thank you. Good afternoon everyone. I would like to welcome Mr. Manish Dedhia, Joint Managing Director and CFO of Mitsu Chem Plast Limited; and Ms. Kashmira Dedhia, Vice President, Finance and Accounts.

Manish sir, over to you.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you. Thank you, Mr. Maru. Good afternoon, everyone. I welcome all of you to — all of you for the conference of Mitsu Chem Plast for the first quarter of FY’23.

FY’23 started on a very positive note. We have witnessed a 42% top line and 40% bottom line growth. This indicates that the opening of economics has pulled demand back to pre-pandemic levels and the packaging industry is gaining momentum.

Raw material prices are still high and that has kept our operating margin slightly under pressure but as mentioned in our Q4 FY’22 con call, our strategies are in place and we are keenly focusing on our operational efficiencies. This resulted in 23% rise in EBITDA for the reported quarter.

Our key raw material polyethylene and polypropylene is a crude base product as we are seeing correction in crude prices. We feel the negative impact to be bottomed out in coming quarters. We are quite hopeful for of the same.

Talking from a future perspective, we see good traction in demand with geopolitical issues. Product innovation and value engineering continues to be our focus to enhance product portfolio and product quality. Strategies for the year are increased the product basket addition of new clients, increase regional reach and offer more customized product. The demand is growing and with our strategies in place, we are poised to grow at a comparatively higher rate.

Your company, a leading manufacturer with more than 500 plus SKUs is serving over 30 plus Fortune Indian 500 clients in India. Mitsu Chem Plast stood strong against the pandemic threat and continued its right march towards growth.

I thank you all for your support and the faith in the company which would drive us towards new milestone achievement.

Now, I hand over the floor to Ms. Kashmira Dedhia to discuss the financial performance during quarter one FY’23.

Kashmira Dedhia — Vice President, Finance & Accounts

Good afternoon to you all. Now, I will take you through the financial performance of the company, quarter one FY’23. Your company witnessed strong demand growth in reported quarter. Financial performance for first quarter FY’23. Mitsu Chem Plast total income for first quarter FY’23 registered robust 42% growth to INR84.69 crore.

Molded industrial packaging contributed approx 81% to the total revenue while furniture products like hospital furniture part contributed approx 9.5%. Infrastructure furniture and other products contributed approx 9.5% to total revenue.

EBITDA improved by 23% to INR9.4 crore while net profit grew by 40% to INR5.16 crore. EBITDA margin was at 11.12% and net profit margin was at 6.09%. EPS at 4.27% against INR3.06 up by 39.54%.

Thank you. Now, I open the floor for question-and-answer.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen we will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Manan Poladia from MKP Securities. Please go ahead.

Manan Poladia — MKP Securities — Analyst

So, I’ve noticed in the investor presentation this time you manage the auto parts that you’re talking about manufacturing, I would like to know whether the new FPO that you’ve launched and outside of the funds that you’re going to use to repay your debt as well as the working capital requirements, will any of that money go towards the CapEx for this?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Sorry sir, CapEx for this means?

Manan Poladia — MKP Securities — Analyst

CapEx for the auto parts or do you already have those capacities in built?

Sumit Maru — Kiran Advisors Private Limited — Analyst

No. So, I think, we are open to that for automotive industry as well. Right now from last few years, the Company is not doing much in Automotive. But yes, we are — we have some negotiations on with some companies, and we might come up with that automotive products. So if something comes up, yes, we are ready for that.

Manan Poladia — MKP Securities — Analyst

Okay, sir. Thank you. Also in your RSP somewhere I noticed that you mentioned that you want to put in an FMCG plant from the additional proceeds of the FPO. Would you be able to give us some color on that? What segment would you be venturing into?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

FMCG means? I don’t think so.

Manan Poladia — MKP Securities — Analyst

I think you mentioned FMCG or paints?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Yeah. Yeah. Yeah. Paint, paint. Yeah. Yeah. So, we are coming up with the various injection molded products also. So, the paint is one of the product and that we will — soon we will come up with that. So, I think we’ll announce very soon on that.

Manan Poladia — MKP Securities — Analyst

And what would be the sort of margins that you would be targeting in the paint ales?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Right now, almost similar margins we are — little better than what we are having right now. So initially the margin will be little lesser because there will be many trials and all these things. But yes, in the future, we are expecting good margins in paints also.

Manan Poladia — MKP Securities — Analyst

Right. Sir. Thank you. Also, one last question. Would you be able to give us some color on when the FPO is supposed to open to the public?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Be like, as soon as we get SEBI approval, we will come up with the FPO soon. So, it’s already.

Manan Poladia — MKP Securities — Analyst

There’s no time line on that as of yet?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Sorry.

Manan Poladia — MKP Securities — Analyst

There is no like specified timeline on that as of yet?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

It’s in the SEBI’s hand.

Manan Poladia — MKP Securities — Analyst

Okay. Okay, perfect. Thank you, sir.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Yeah. Okay, thank you.

Operator

Thank you. The next question 1s from the line of Nairit from TSG Capital. Please go ahead.

Narit — TSG Capital — Analyst

Good afternoon, sir. And congratulations on a wonderful set of numbers, and I love that you especially — we have spoken in the last quarter as well about the margins being maintained and you went through with that. So, great to see that.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you very much. Thank you very much for this.

Narit — TSG Capital — Analyst

So my first question was, can you give me some idea on the number of clients we have added this quarter or like the number of clients in the last quarter versus this quarter?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So approximately, new clients added is around 25 plus clients we have added this quarter.

Narit — TSG Capital — Analyst

And from which industry are they? Can you give me any number?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, mostly from — these are from mostly — from chemical and pharmaceutical industry only. So packaging business only, we have added some new clients.

Narit — TSG Capital — Analyst

All right. All right. And can you give me some idea on what is the volume growth versus the price growth for this quarter, because I think the prices are going down. So, there must be a good amount of volume growth?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes. No. No. So I think there is a little change. I mean the prices has increased drastically in last two quarters. So the volume growth is around 20 percentage and — against this 42 percentage of rupees growth.

Narit — TSG Capital — Analyst

So the price appreciation accounts for 20% to 22%, roughly?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Right, right.

Narit — TSG Capital — Analyst

Okay. Just one more last question. The FMCG plan that we have mentioned in the draft red herring. So, what geographies are we targeting because you’ve mentioned that we have opened depots in the North and South?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, right now, yeah, there is a depot only in North and South. But right now the expansion, everything will come out in this Khalapur plant only, Maharashtra only right now. So whatever we will cater, a new customer base will be in — right now in the Maharashtra, Gujarat. And further going, maybe we’ll think over the expansion in further states.

Narit — TSG Capital — Analyst

Right. So roughly, by the next two quarters or four quarters, can you give me a timeline on that please?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So actually — yeah, you have a right question. So, actually, next two, three quarters are really challenging for us to do many things like FPO, then expansions and many things. So, I think we’ll come back an exact data’s and details where we are coming up with the expansion plans and everything.

Narit — TSG Capital — Analyst

All right, perfect. Sir, thank you so much. Happy to talk with you.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you. Thank you very much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Rohit Suresh from Samatva Investments. Please go ahead.

Rohit Suresh — Samatva Investments — Analyst

Good afternoon, sir. Thank you for the opportunity and congratulations on a good set of numbers. So my first question was on the Hospital Furniture segment. Could you just briefly, you know, highlight, you know, the size of the market and what are the major competitors, and how do you see this segment contributing in the next year or so?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Okay. Basically I’ll ask your — unless one of the question was, what is your hospital growth, right?

Rohit Suresh — Samatva Investments — Analyst

The market size, basically, and who are our major competitors? And considering COVID has, you know, settled down, how do you see this segment contributing to your revenues in the next one to two years?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. I mean, like, we see — exact numbers we are also not very clear in this things because we are — the market size about — I’m not ready very, very clearly the figures right now. So I will not be able to comment on that right now.

About, as you said like growth, I think you said about the — second question was the growth, right?

Rohit Suresh — Samatva Investments — Analyst

Yes sir, growth.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. So I think, constantly we are doing growth in this, except this quarter, because of, I think, we had a good contribution from the containers as well. So we have done this around 9.5% in the furniture part. But rest, I think, this will continue for 10% to 13% approximately in the Furniture part, the same growth.

Rohit Suresh — Samatva Investments — Analyst

Got it. And sir, is this any major competitors for us or is this market majorly unorganized sector?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, both the things. Answer is like, right now, what we know till date is, we are competing with the market from China, Germany and other countries who supplying in — yeah, so, we have a mostly our all imported — this all products are imported earlier.

Rohit Suresh — Samatva Investments — Analyst

Got it. So on the FMCG part, like the other participants asked, what kind of products will be focusing? So in paints, will it be small containers, which are, I guess more value-added or any particular segment within paints or lubricants that you’re focusing on?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So we will start with all lubricant and FMCG initially. And, yes, definitely, so our bottom line will be, you know, where we can get the good margins definitely, as we are entering into this new market, but then obviously we look for a better margin only.

Rohit Suresh — Samatva Investments — Analyst

Got it. Sir, and on your working capital in the RSP you mentioned that for financial year ’23, our working capital requirement is around INR150 crores and you will be using INR80 crores or something from the RSP to meet that demand — to cater to that working capital. So, wanted to know in future, considering we are expanding, going into FY’24, FY’25 and with working capital being a major issue in the industry, how are you going to solve that problem once we put in more capacity and we grow at a much faster pace?

Kashmira Dedhia — Vice President, Finance & Accounts

So, sir. currently we are going for the FPO. Majorly we are looking for the high rate of growth in turnover this year. So, for the next year, for FY’24 and ’25 also, we are expecting the same line of growth. So, we may go for the bank loan and internal accruals for the same.

Rohit Suresh — Samatva Investments — Analyst

Okay. Okay. So we are confident that we’ll be able to meet the working capital requirement as some internal accruals right?

Kashmira Dedhia — Vice President, Finance & Accounts

As and when the company is growing, we will need definitely working capital.

Rohit Suresh — Samatva Investments — Analyst

Okay, fine. And last question on the capacity utilization, any number that you can indicate for FY ’23?

Kashmira Dedhia — Vice President, Finance & Accounts

So for this quarter, we have 68% of capacity utilization.

Rohit Suresh — Samatva Investments — Analyst

And this should be the similar range for the entire year, right?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Will try to achieve at least 75% or plus.

Rohit Suresh — Samatva Investments — Analyst

Got it. Thank you so much, sir. And wishing you all the very best.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you. Thank you very much.

Operator

Thank you. The next question is from the line of Nilesh Karani from Magnum Equity Broking Limited. Please go ahead.

Nilesh Karani — Magnum Equity Broking Limited — Analyst

Hi, sir. Hello, hi, sir. Audible?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes, yes, audible, audible.

Nilesh Karani — Magnum Equity Broking Limited — Analyst

Yeah, Just to understand the overall scenario, if we see probably — we spoke about like probably this one or two quarter might be little bit dampening or sort of because, there are a lot of events happening over. So, now, if I want to understand FY’24 would be in line or FY’23 would be in line with ’22?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

As a profit or as a…

Nilesh Karani — Magnum Equity Broking Limited — Analyst

As a overall — overall performance of the company?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

We feel, it will be better than this and similarly ’24 will be much, much better than this ’23, because see, we will have a lot of — I mean, like, when the FPO money will come and the lot of expense will be down, I mean, like, the interest cost will be reduced, and many things will be reduced. So, here we’ll have a good numbers for sure.

Nilesh Karani — Magnum Equity Broking Limited — Analyst

So basically, just to understand. Now the crude is settling down. No doubt it is still on higher listing, but then overall if you see, so your volume growth and your crude raw material prices and all will be beneficial for you, correct, going forward?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

I have [Technical Issues]

Operator

Sorry to interrupt, Mr. Karani, may we request that you mute your line when you’re not speaking. It’s causing a lot of disturbance and we are not able to hear the speaker. Thanks.

Nilesh Karani — Magnum Equity Broking Limited — Analyst

One second.

Operator

Thank you, sir.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Okay. So, what I’ve understood basically, the crude price, the raw material price, is going to volatile with the world market. So, whatever happens in the world, I mean, like, it is going to be volatile. But yes, we are focusing on majorly in Indian market and definitely we can see big growth in the near future. Near Future means next two to three years. Yeah.

Nilesh Karani — Magnum Equity Broking Limited — Analyst

Okay, thank you so much.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Yashwanti Khedkar, an Individual Investor. Please go ahead.

Yashwanti Khedkar — Individual Investor — Analyst

Hello sir, and good afternoon.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Mam you have to speak little loud.

Operator

Ma’am your audio sounding very very soft.

Yashwanti Khedkar — Individual Investor — Analyst

Am I audible now?

Operator

No. Ma’am, it’s still the same.

Yashwanti Khedkar — Individual Investor — Analyst

Am I audible now?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah.

Operator

Yes. Thank you.

Yashwanti Khedkar — Individual Investor — Analyst

Congratulations on very good set of numbers, sir. I just wanted to understand few things from your side. Like in last quarter we were having no headwinds coming from the domestic issue and raw material. Raw material prices are settled — I mean the crude prices have started softening up. So, we expect some good saving coming out from those areas.

I just wanted to understand like, how the logistic costs and logistic issues Q1 has been seen and whether they are sorted out or take more [Technical Issues]

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Okay. Thanks, ma’am. Thank you for your patience. So, yeah, I think, what you’re saying is that the logistic issue which we have faced in the quarter two and quarter three, so I think, see people have understood somewhere — I will not say the rate has come softener or something like that, people have understood this will be going to be a same rate and they are continuing this business, this is what I can say right now.

So logistic issue what had was a price rise that time and abnormal prices, but availability of containers, yes, it is very smooth now.

Yashwanti Khedkar — Individual Investor — Analyst

Yeah, the main concern was only availability of the logistic and the containers. That is why we are not in a position to supply to our customers who are in terms of exports outside.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Yeah.

Yashwanti Khedkar — Individual Investor — Analyst

So I believe that is sorted out.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

No. So, the problem was, our customer was not able to get the containers and not able to export there. So, we were — I mean, like, we are in the local, so maybe we are able to get those material to them. But they were not getting the containers on time or maybe the price rise was so high that they were not able to export.

Yashwanti Khedkar — Individual Investor — Analyst

Yeah, because till last quarter, we were looking from you that because they were not able to export, we have orders in hand but we are not able to supply them.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes. In some of the countries, yes.

Yashwanti Khedkar — Individual Investor — Analyst

That is the concerns. And sir like the prices are moving down as far as the crude is concern, do we see any benefit coming out of there?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Ma’am, I’m sorry. You need to speak a little louder, because some of the voice is not, I’m not able to hear that.

Yashwanti Khedkar — Individual Investor — Analyst

So, I was just checking with you now, as the softening of the oil price, crude price is happening. Now it is somewhere around 90 level, would you — would we be seeing some good impact on the operating margin because though we have expanded our EBITDA by around 28%, we just wanted to know that margin was not that great. The margin was little subdued, so just wanted to check on that.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. So, see whenever the price goes up, our price goes down. So, there is somewhere it always affect — when it goes down like very sharpen or goes down very sharpened up, so, there — somewhere, some profit margins are going to affect some of the companies. Now it might happen like either we have a stock or we have zero stock.

So, it’s going to happen because our 40% product, 40% or 50% product is imported, raw material we are importing. So we have to keep some inventory, so that sometimes it hurts, when the prices go sharply fall down.

Yashwanti Khedkar — Individual Investor — Analyst

Okay, sir. And now we are coming out with FPO INR125 crores and the major object of the issue is to raise the working requirement and meet the working capital requirement. So, what is our working capital cycles and debtors and inventory in some sort of the days?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah, Kashmira?

Kashmira Dedhia — Vice President, Finance & Accounts

So, you want to understand the number of days of inventories and receivables, ma’am?

Yashwanti Khedkar — Individual Investor — Analyst

Yes, basically how the working capital cycle is?

Kashmira Dedhia — Vice President, Finance & Accounts

Working capital cycle, yeah, I’ll give you that. Just a minute. So ma’am, currently, our gross operating cycle is around 77 days and net operating cycle is approximately 43 days.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. And that will continue to remain same because as we are seeing that is likely increasing the working capital requirement?

Kashmira Dedhia — Vice President, Finance & Accounts

This is to be increase. Our working capital cycle has increased because we are expecting requirement of working capital with high growth in sales volume.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Yeah. Okay. And there is a also certain change in terms of the management, so how would you like to address this issue?

Kashmira Dedhia — Vice President, Finance & Accounts

Ma’am, can you be a little louder,

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Sorry ma’am, we are not able to hear.

Kashmira Dedhia — Vice President, Finance & Accounts

Your voice is very soft.

Yashwanti Khedkar — Individual Investor — Analyst

There is a change in the management, the management personnel continuously. So, how would you like to address that?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

No, sorry, I didn’t get you that.

Yashwanti Khedkar — Individual Investor — Analyst

There is a continuous change in the management personnel.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

I don’t know where your referenced, you are referring to which one?

Yashwanti Khedkar — Individual Investor — Analyst

There is a notice with regarding the new appointment.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, new recruitment is on. So, maybe many new recruitments are coming up. And yes, we are making a good team and so we are adding the people, that’s what I can say.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Okay. Would you — and how — among these two, I mean, between the two packaging and hospital business segments, which one you look more decorative for the current year, seeing the Corona issue is almost over?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

No. So, the ratios will be remain the same — almost same, the percentage of vertical. So — we see — but major growth will come from containers only, which is 80% to 87% in that container segment, because we have already expanded in that line and we are all — our operation efficiencies also goes there mainly because how we can produce more numbers.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Okay, sir. And with regard to capacity utilization as economies is back in the operations, the demand has been seen a good spurt, do we think that we can see some increase in the capacity utilization going forward?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Definitely capacity utilization will be increased. Yeah, we are — you can see from last year — last quarter-to-quarter, we are trying to increase that our through operational efficiencies. We are trying to increase that the maximum number is what we can achieve.

Yashwanti Khedkar — Individual Investor — Analyst

What we can expect by the end of the year, sir?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Sorry.

Yashwanti Khedkar — Individual Investor — Analyst

What we can expect by the end of the year, sir? FY’23, how much we can see the capacity utilization will be increased?

Kashmira Dedhia — Vice President, Finance & Accounts

Ma’am, we are expecting It is — it will be between 70% to 80%. That is what our expectation is.

Yashwanti Khedkar — Individual Investor — Analyst

That is a good jump, [Technical Issues]

Kashmira Dedhia — Vice President, Finance & Accounts

Yes.

Yashwanti Khedkar — Individual Investor — Analyst

Okay, sir. I think that’s all from my side. In case of any question, I’ll come back in the queue. Thank you.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you very much.

Operator

Thank you. The next question is from the line of Rohit, I’m sorry Rohan Kamat from Finterest Capital. Please go ahead. Rohan, your line is talk mode. Please go ahead.

Rohan Kamat — Finterest Capital — Analyst

Hello, are you audible?

Operator

Yes, sir. You are audible. Please go ahead.

Rohan Kamat — Finterest Capital — Analyst

Congratulations for the good set up of number. Sir. I want to know about molded packaging. Sir, in the molded packaging segment, what is the pricing for we enjoy with our customer, sir?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you very much for the question, but I really did not understand exact question.

Rohan Kamat — Finterest Capital — Analyst

In the molded packaging segment what is the pricing power we enjoy with our customer?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

You are talking about the percentage or….

Rohan Kamat — Finterest Capital — Analyst

Yeah sir, percentage, sir?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

It depends, like, we sometimes it’s a 15% to 20% EBITDA level, depending on the customer, depending on the size, depending on the volume and depending on the other things like printing and all these things. So, all rates are dependent on item wise.

Rohan Kamat — Finterest Capital — Analyst

Okay. Sir, is there any plan for buybacks for the company share?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Right now, sir, not, because we are just coming up with the FPO, so there are no plans right now as of today.

Rohan Kamat — Finterest Capital — Analyst

Okay. Okay, thank you. Thank you, sir.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Rohit Suresh from Samatva Investments. Please go ahead.

Rohit Suresh — Samatva Investments — Analyst

Yeah, hi, sir. Just one follow up question. If you could just focus on operational efficiencies, if you could just highlight what steps the company has taken to improve efficiency over the past one or two years and how — like, any steps, any areas that you are particularly focusing on, so if you could just highlight very briefly?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

No, so we — basically we are implementing many systems on the production side, and wherever we can change over, mold changing, the color changing and many other things. Small, small things also makes you know, like you know, that makes a lot of difference to in operational efficiencies. So, we are focusing more on that thing right now.

Rohit Suresh — Samatva Investments — Analyst

Got it. Thank you so much. Thank you, sir.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Thank you.

Operator

Thank You. The next question is from the line of Riju Dalvi [Phonetic], an Investor. Please go ahead.

Riju Dalvi — Individual Investor — Analyst

Hello. Thanks for the opportunity, sir. My question was that like, you said in this quarter we have achieved 68% kind of capacity utilization. Is that right?

Kashmira Dedhia — Vice President, Finance & Accounts

Yes. Yes, sir.

Riju Dalvi — Individual Investor — Analyst

So, in Q4 FY’22, how much was the capacity utilization?

Kashmira Dedhia — Vice President, Finance & Accounts

Last quarter was 64%, sir.

Riju Dalvi — Individual Investor — Analyst

64% for FY’22, as a whole?

Kashmira Dedhia — Vice President, Finance & Accounts

Fourth quarter of FY;22 was 64%, vis-a-vis this quarter we have achieved 68%.

Riju Dalvi — Individual Investor — Analyst

Yes, ma’am. But I am asking for the full year.

Kashmira Dedhia — Vice President, Finance & Accounts

Full year is also approx 64% — 63.97%, approx you can say.

Riju Dalvi — Individual Investor — Analyst

Okay. Got it. And one more thing, we have seen that some of the raw material price that are cooling off from their life time high, so how this can impact your margin going forward? I mean, like, are we holding some kind of high-cost inventory right now or not?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

I did not understand the question, sir. If you can just repeat the question, it will be better for me, sir. Thank you.

Riju Dalvi — Individual Investor — Analyst

Yeah, yeah. So, my question was that, like, our main raw material prices are coming down from their lifetime highs, so are you holding any kind of high cost inventory?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

No, it’s not, it’s coming down. See there are — I don’t know you are referring to which prices, but HDPE prices is just coming down in this quarter. It has just started from the June month. So, it has not come down so much drastically down, but till I say the prices are still up, although crude prices are a little bit softer, a little bit softer. So, the major corrections are yet to be happened.

Riju Dalvi — Individual Investor — Analyst

Okay. And if you could tell me the raw material inventory that we are holding in — as as on June ’22, so that will be helpful.

Kashmira Dedhia — Vice President, Finance & Accounts

So, it is not that we are holding the high raw material prices stock because it is on an average we add the stock on a daily and weekly basis. So, it is never that way that the high cost raw material prices we are holding.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

And this is local prices, but when it is coming to import, yes, we have to have at least 75 to 90 days inventory with us. So, our 40% to 60% is import material and the rest is local prices, local materials, domestic.

Riju Dalvi — Individual Investor — Analyst

Got it. And sir, like, we are a B2B player. So what is the time gap to pass on our high raw material cost or high input cost to our customers?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, it depends sometime, so like, sometimes it takes around one month, sometimes it take one quarter. So depends on like — the last third quarter, when the prices has gone up drastically up, it took us to get some two to two and a half months to get the rates from the customer, because there was a many other cost also went up. So, everybody was like to get the prices pass on, was a little difficult sometime.

Riju Dalvi — Individual Investor — Analyst

Understood, sir. And other thing 1s that, if I look at your revenue growth of over the last year, or last two years, so, that is indicating way that our volume growth was not much, but our price growth was high, so the growth in FY’22 will be much of a price growth, is that a right understanding, sir?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Sorry.

Riju Dalvi — Individual Investor — Analyst

So, sir, for FY ’22 revenue growth was largely driven by the prices, not volume. Is that right understanding?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. Somewhere. It is, yeah, because our volume growth was 20% — the volume growth is 42%. Yes. That’s what, I think your question is, right?

Riju Dalvi — Individual Investor — Analyst

Yeah. Yes, yes.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes, yes. [Speech Overlap] prices drastically from Q3 and Q4, it has upward only. And even the Q1 also somewhere, some of the months, the prices was up. And now it started getting down. So, yeah, volume growth is always there. Yeah.

Riju Dalvi — Individual Investor — Analyst

Yeah. But in FY’23 we are expecting volume growth kind of 20% kind of volume growth that we’re expecting. So given that the prices are cooling off, so, can we expect that the revenue growth for the full year basis on FY’23 will be lower than the last year, or is there any strategy that [Speech Overlap]?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

I got your question. So, maybe, yeah, so I — the volume growth will be almost with a similar base or maybe a little more on that, because we are coming up with the many new products as we — you must have seen in the prospectus. And also, yes, our operational efficiencies has increased, the capacity also through operational efficiency. So, I think, we see a good growth in at least ’23.

Hello. I think he is disconnected.

Operator

The line for the current participant has dropped off. [Operator Instructions] The next question is from the line is from Sandeep Mane, an Individual Investor. Please go ahead.

Sandeep Mane — Individual Investor — Analyst

Hi, hello, good afternoon.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes, good afternoon.

Sandeep Mane — Individual Investor — Analyst

Sir. I have some question. Sir, my first question is, sir, out of our product mix, which product category contributes highest to your revenue?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

That is containers, which is the packaging industry.

Sandeep Mane — Individual Investor — Analyst

Okay. And sir, is there any plan on new capital expenditure?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes. Not yet decided. But yes, definitely when once we come up with FPO and all, so we will definitely come up with something good.

Sandeep Mane — Individual Investor — Analyst

Okay. Sir, my next question is, on margin front, can we get product category-wise margin get up or which strategy has highest margin and which has lowest margin?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, yeah, definitely see, furniture industries and others where we have a infrastructural product, so we have a little, little more margin than the containers, for sure, as containers are [Indecipherable] yeah.

Sandeep Mane — Individual Investor — Analyst

Okay. More margin on containers?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes, yes.

Sandeep Mane — Individual Investor — Analyst

Okay, sir. My last question is, what majorly is the margin in FY’22 from 13.4% to 10.3%. Can we expect margin to go north in coming year?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Are you talking about EBITDA level or what exactly you are talking? I am sorry Sorry, sir. repeat your question, if you don’t mind, please.

Sandeep Mane — Individual Investor — Analyst

What majorly. The margin in FY 22 from 13.4 to10.3 can we expect margins to go, not in upcoming year it’s, if you could much any color.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Okay. I think we wanted to maintain. We wanted to, we have a better margin than what we are presenting right now. So our major focus area is like you know how to increase and how to maintain the profitability.

Sandeep Mane — Individual Investor — Analyst

Okay. Thank you, sir.

Operator

Thank you. The next question is from the line of Aditya Jain an Individual Investor. Please go ahead.

Aditya Jain — Individual Investor — Analyst

Hi, sir. Out of the….

Operator

Sorry to interrupt Mr. Jain, sir, your audio sounding very very soft.

Aditya Jain — Individual Investor — Analyst

Am I audible now.

Operator

Little better sir. Please proceed.

Aditya Jain — Individual Investor — Analyst

Hi. Out of the FPO proceeds, how much CapEx are we envisaging?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, there is no — we haven’t described anything there. So, once the major funds are going into capital requirement only, working capital requirement. So, we haven’t decided yet.

Aditya Jain — Individual Investor — Analyst

Yeah, so this will be for the sale, right, for the new product?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So there we have already — I think if you have read prospectus, that we have already — will start very soon. So that we have — yeah, so one expansion is already there in the phase, yeah.

Aditya Jain — Individual Investor — Analyst

Right. And this INR126 crores of working capital requirement which you’ve envisaged, what would be the working capital days according to you?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Working capital cycle will be approximately for both of things is around more than 75 days.

Aditya Jain — Individual Investor — Analyst

75 days.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

More than 75 days.

Aditya Jain — Individual Investor — Analyst

Okay. More than 75 days. Right. And with the existing capacity, right now we are at 68% and you said, we’ll try to achieve 75% or higher. What could be the peak revenue we can achieve on this capacity? Earlier you said INR345 crores, INR350 crores if I’m not wrong.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Same thing. As of today, same thing, without any addition of the capacity, it will be the same.

Aditya Jain — Individual Investor — Analyst

Right. And once the raw material volatility subsides, we can do 15% margin. Right? The normalized number, let’s say, going forward in next year or so.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Nobody can predict on that volatility, all over the world, there is something or the other thing going on. So, it’s a very — yeah, but definitely we wanted to keep the same margin. Let’s see, or maybe we wanted to sustain the margin and we wanted to have a better things.

Aditya Jain — Individual Investor — Analyst

Yeah, I’m not asking for any guidance, I just want to understand once it normalizes, whenever it happens. I know it’s very uncertain right now, but whenever it happens, can we do 15% margin?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Of EBITDA?

Aditya Jain — Individual Investor — Analyst

Is it possible?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes, obviously. See, our target is like now my last two, three con-calls I am saying this our target is always a 15%, 14% and 15% in between. So, definitely we wanted to increase from — so I think, we have increased from 10% to 11.12%. So, maybe we are going to increase that EBITDA margin, for sure. Target is over maybe 14% plus.

Aditya Jain — Individual Investor — Analyst

Okay. Thank you so much.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you.

Aditya Jain — Individual Investor — Analyst

Thank you. The next question is from the line of Yashwanti Khedkar, an Individual Investor. Please go ahead. Yashwanti Khedkar, your line is in the talk mode. Please go ahead. Yashwanti, your line is in the talk mode. Please go ahead.

As there’s no response from the current participant, we’ll move onto the next. That is from the line of Riju Dalvi, an Individual Investor. Please go ahead.

Riju Dalvi — Individual Investor — Analyst

Sorry for the glitch. My line got disconnected earlier. So, right now sir, we are into B2B business. So, any plan to move into the B2C business in near future? Or how you are seeing in your business. So, sir my question was, right now you are in B2B business. So, any plan to venturing into B2C business, in our sales maybe in next three to five years period?

Operator

Sorry to interrupt, sir, your audio is breaking up. We are not able to hear your question clear.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Breaking up and you just little bit away from your mobile, little bit, not too much, but because, they are too close to the mobile.

Riju Dalvi — Individual Investor — Analyst

Yeah. So now it’s better.

Operator

No, sir. It’s still the same. Sir, we would request you to use your handset mode while speaking, and not the speaker phone or the headset.

Riju Dalvi — Individual Investor — Analyst

I am not using handset mode, so is this better now?

Operator

Sir, a little better. Please proceed.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Little better, yeah, go ahead.

Riju Dalvi — Individual Investor — Analyst

Yeah. My question was like, right now you are in B2B business. So, any plan to venturing into B2C business, in our sales manner, maybe in three to five years period?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, yeah, you are right we are into B2B segment right now. Not any plans right now in B2C. As of today no plans right now.

Riju Dalvi — Individual Investor — Analyst

Okay. And how you are expecting the growth maybe over next five years or maybe in FY’25, how you are expecting the growth to be coming?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, too much, yeah, but we haven’t — I can’t — So, yes, definitely the company is growing, you can see since last many years your company has given a growth of more than 30%, 34%, 35%. So, we wanted to at least remain the same thing because if you do this way, you definitely will have a good number. So, I think, you can expect the same growth story in next some years.

Riju Dalvi — Individual Investor — Analyst

Okay, got it. And sir like given the plan that we — plant that we have, so any possibilities like it can expand our capabilities by doing brownfield CapEx in our existing plants, and how much you can increase our capacities in the existing plant?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yeah. So I think we have a — some of the capacity we will in a Khalapur plant so we might come up with the expansion there.

Riju Dalvi — Individual Investor — Analyst

Okay. No, sir I just wanted to understand like right now we have a capacity of 23,000 metric tons.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Right.

Riju Dalvi — Individual Investor — Analyst

So, given these like we have three plants. So, can we expect that these capabilities, it can increase to maybe 30,000 or 35,000 metric ton by doing the brownfield expansion not the greenfield expansion?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

No, see, any plastic industries has some limitations. So, whatever the capacity is the maximum achievable is 80% or 85%, out of the whatever the capacity we have given it. So, yes and we are trying to reach up to the maximum level within this year by or maybe maximum next year so we achieve that.

With simultaneously, yes, we are going to expand some of the product line and some of the machinery also in the near future.

Riju Dalvi — Individual Investor — Analyst

Okay. So, there is no plan to do any kind of greenfield expansion in the near future, maybe one or two years period so there is no plan to prevent like do a greenfield expansion plan?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Really sorry, sir. I did not — did not understand single word what questions you asked last time.

Kashmira Dedhia — Vice President, Finance & Accounts

Basically, not able to hear you.

Riju Dalvi — Individual Investor — Analyst

Yeah, so. I just want to understand that, so there is no plan to do any kind of greenfield expansion for maybe next one or two year period?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Which expansion sir, which expansion?

Riju Dalvi — Individual Investor — Analyst

Greenfield. Greenfield expansion?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Greenfield expansion. Yeah, yeah. But right now, nothing as of today on a paper. So anything is coming up, we will definitely announce soon.

Riju Dalvi — Individual Investor — Analyst

Okay. Got it. Thank you. Thanks a lot.

Operator

Thank you. [Operator Instructions] The next question is from the line of Yashwanti Khedkar, an Individual Investor. Please go ahead.

Yashwanti Khedkar — Individual Investor — Analyst

Yeah, thanks for the once again — for giving me the opportunity. Sir, just wanted to understand what is the contribution coming from our top 10 clients?

Kashmira Dedhia — Vice President, Finance & Accounts

Top 10 clients is approximately giving 25% of the turnover ma’am.

Yashwanti Khedkar — Individual Investor — Analyst

Top 10 contributing over 25%. Okay. And what is our client retention policy, any threat towards the business?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, we have a policies of clients because we have many clients who are there from so many years with us. So, right now I can say our 70% business is coming from 88 customers.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Okay, sir. And how would… yeah.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

88 customers are like almost repetitive customer from last many years.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Okay. So is there the next or the new entry> Do we have any entry barriers as far as the business goes?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Good question and difficult question. You asked a very difficult question. So, I can say, yes, and I can say no, as well. So, yes, because there are many unorganized player also in this segment.

And no because, nowadays many multinational companies require many facilities as to be with a valid feed, well planned with a fire extinguisher and all the systems in place. So, it is very difficult for unorganized player. So, your answers are yes and no, both.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Okay, sir. And how are your future growth driver?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Sorry.

Yashwanti Khedkar — Individual Investor — Analyst

What are our future growth driver?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Future growth driver?

Yashwanti Khedkar — Individual Investor — Analyst

Yes.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So right now future growth driver is like our Packaging business only.

Yashwanti Khedkar — Individual Investor — Analyst

Okay.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Definitely, there is — like other segments are also there, but right now, we are mainly focusing on packaging business and how we can do a lucrative business on that, the same thing, yeah, we are looking at same.

Yashwanti Khedkar — Individual Investor — Analyst

Okay. Sir, I might have missed out, you might have said, but I just wanted to confirm, is the packaging contributing around 60% to 70% of our total turnover renewal or more than that?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

More than 80%.

Yashwanti Khedkar — Individual Investor — Analyst

More than 80%. And how much is coming from the hospital furniture?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

This quarter is coming around 9.5%

Yashwanti Khedkar — Individual Investor — Analyst

9.5%. Okay. Okay. Is it because now the demand has come down because of the Corona, the demand was — has been high during the Corona period because of the loss of requirement for the beds and there was a lot of expansion happening at the hospital end too. So, is it right to expect that a contribution from the hospital business will be around 10% to 12% going forward also?

Manish Dedhia — Joint Managing Director & Chief Financial Officer

So, I will say here not exactly because see, even in the Q4 also we have done very good numbers in the furniture parts. So it is — and — but this time, yes, container business was on a high growth.

The furniture part remained the same with a 10% to 12% which will be a common. See, whatever happens in the COVID time, it was like past stories now. So, yes, definitely we are seeing a good growth in furniture part as well.

Yashwanti Khedkar — Individual Investor — Analyst

Okay, sir. So, now you see the business has been normalized and more tinted towards the packaging.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Yes, yes, yes, yes.

Yashwanti Khedkar — Individual Investor — Analyst

Okay sir. Thank you so much for once gain for giving me opportunity, and wish you the best.

Operator

Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Sumit Maru for his closing comments.

Sumit Maru — Kiran Advisors Private Limited — Analyst

Yeah. Thank you. Thanks, everyone, for joining the conference call of Mitsu Chem Plast Limited. If you have any queries, you can write us on info@kirinadvisors.com. And once more many thank you, everyone, for joining the conference. Thank you.

Manish Dedhia — Joint Managing Director & Chief Financial Officer

Thank you very much. Thank you very much the team.

Kashmira Dedhia — Vice President, Finance & Accounts

Thank you all of you.

Operator

[Operator Closing Remarks]