Stylam Industries Ltd (STYLAMIND) Q1 2023 Earnings Call Transcript

Stylam Industries Ltd  ( NSE : STYLAMIND) Q1 2023 Earnings Call dated Jul. 20, 2022.

Corporate Participants:

Ashish Poddar — Investor Relations

Jagdish Rai Gupta — Managing Director, Chairman

Analysts:

Pritesh Chheda — Lucky Investment Managers — Analyst

Pranav Mehta — Equirus Secutities — Analyst

Manav Gupta — Wholetime Director

Nikhil Gada — Abakkus Asset Management — Analyst

Manit Gupta — Wholetime Director

Nikhil Agarwal — VT Capital — Analyst

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

Kunal Bhatia — Dalal and Broacha — Analyst

Ankur Kumar — Alpha Capital — Analyst

Rajesh Kumar Ravi — HDFC Securities — Analyst

Rishab Bothra — Anand Rathi — Analyst

Mihir Dhami — Lucky Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Stylam Limited Q1 FY’23 Earnings Conference Call hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference is being recorded.

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

Ashish Poddar — Investor Relations

Thanks, Melissa. Good afternoon everyone. It gives us immemse pleasure to host the senior management of Stylam Industries, post the Q1 FY’22 earnings. So from the management we have Mr. Jagdish Gupta, Managing Director; Mr. Manit Gupta and Mr. Manav Gupta, Whole Time Director; and Mr. Kishan Nagpal, Chief Financial Officer.

I request Mr. Jagdish Gupta to give an opening remark, post which we’ll start the Q&A session. Over to you, sir.

Jagdish Rai Gupta — Managing Director, Chairman

Hello. Good afternoon to everyone. Thank you everyone for taking out your valuable time for trending the Q1’23 Stylam Industries Investor Conference Call.

Operator

Excuse me, sir. I’m sorry to interrupt. The audio is low from your line, sir. If you could speak into the phone.

Jagdish Rai Gupta — Managing Director, Chairman

I’m speaking from the phone only longer. Maybe we had two phone. Hello.

Operator

Yes, this is much better, Sir. Thank you.

Jagdish Rai Gupta — Managing Director, Chairman

I’m Jagdish Gupta, Magining Director of Stylam Industries, along with me Manit Gupta and Manav, both Directors; Mr. Kishan Nagpal, CFO.

I presume that every one of you would have gone through our numbers in detail. First off, I would like to give the customary disclaimer that this call is to discuss company’s historical numbers and future perspectives. Let me still brief you all the key highlights in Q1. After delivering good record sale in the Q1 ’23, it gives me immense pleasure to share that we have achieved a new record sale of INR235 crores revenue in a single quarter, which is the highest till date.

As the price of raw materisl still getting little soft which helped the company to improve the margin impact. Our EBITDA margin has improved 15.03 as compared to 11.02 in the last quarter ’22. Our net profit increased to INR27.6 crore as compared to INR19.03 in ’22. Company has reached about 80% capacity utilization in laminates division only. We have started modular expansion into other existing facilities to increase our capacity by up to 30% to 40%. This will — entirely a total investment of approximately INR40 crores. Still ocean freight and other prices are still on little higher side but we are hopeful that it will be maintained good margin in coming year ’23 eespite this.

As far as ’23 is concerned, we believe that shift from unorganized to organized will continue in our industry and we stand to benefit with that shift. We think that we will end up gaining more market share by increasing our footprints in domestic as well as export markets. Now, the question. Moderator to take investors call. Thank you very much. Melisssa, you can open the floor for Q&A.

Questions and Answers:

Operator

Sure. Thank you. [Operator Instructions] We have the first question from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah, sir. Thank you for the opportunity. Sir. My question was in this INR235 crore sale, have we booked anything on a solid surface side of the business?

Jagdish Rai Gupta — Managing Director, Chairman

Yes, yes. Not much, maximum INR3 crores to INR4 crores.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Can you help us at 80% utilization, what would be the laminate volume in the quarter? How much sheets you must have sold?

Jagdish Rai Gupta — Managing Director, Chairman

Actually, I told you maybe many times we discussed about this thing. Sheets, we can give you the number sheets, 27 lakh sheets. But it again depends on the thickness of the sheet also. If thickness is less, sheets can be more. 27 lakhs approximate.

Pritesh Chheda — Lucky Investment Managers — Analyst

27 lakh sheets. Okay. There is a substantial jump from INR160 crore, INR170 crore run rate that we’re doing in the business to 230. If you go could throw some light on where this jump has come from, Sir.

Jagdish Rai Gupta — Managing Director, Chairman

No this, jump is form both domestic as well as export is concerned, both. Export will be almost 180, 169, 170 and balance is 65 from domestic.

Pritesh Chheda — Lucky Investment Managers — Analyst

65 from domestic, okay. And sir, lastly the — If you could give some color on the melamine and the phenol prices as a raw material for us, where they were in the quarter 4 and how are they are panning out for us on the pricing side?

Jagdish Rai Gupta — Managing Director, Chairman

Every raw material is going softly day by day, looks [Foreign Speech] it will more effect on this coming month, maybe in this quarter or next quarter [Foreign Speech] which we buy from import. You have to plan for 2 to 3 quarters [Foreign Speech] it is coming on older prices which we booked last month. Iit will come next month or next to next month. It will have more effect on the profit in coming months. I think you understand what I mean.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah, so this [Foreign Speech] we are doing about 50% value addition, we are doing less than 50 today, or let’s say we are doing slightly less than 50% earlier 48% [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

Positively, yes, looks. And, sir, last on the export side, how much of we do the entire business on CIF basis or FOB, how we do it. It is now actually, we are doing on CIF basis, but when the ocean freight increase, we are charging some different ocean freight. Difference of freight. That is also going to reduce the [Foreign Speech] So we charging INR6,000 from the customer.

Pritesh Chheda — Lucky Investment Managers — Analyst

So you do it on FOB or CIF?

Jagdish Rai Gupta — Managing Director, Chairman

No, it is mostly CIF, but we are charging additional freight from them.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay, okay. Thank you, sir. I will come back if I have more questions, sir. Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Pranav Mehta from Equirus Securities. Please go ahead.

Pranav Mehta — Equirus Secutities — Analyst

Yeah, thank you for taking my question and congratulation on very good set of numbers. Sir, I wanted to understand on the export business. So, are we seeing higher sheet premium sheets going into the export market because your realization has improved quite well [Speech Overlap]

Jagdish Rai Gupta — Managing Director, Chairman

It is already started going more premium and we are looking after more premium market, and in the coming month, coming quarter you will see that more different changes.

Pranav Mehta — Equirus Secutities — Analyst

Okay, okay, so sir, premium markets I understand would be U.S. and Europe, right?

Jagdish Rai Gupta — Managing Director, Chairman

No, no, no, it can be Far East also. Every market has premium. Even if you can get for a Middle East, even Gulf country, there are few customer for premium also, not in — other — many people percentage wise more for premium, but in a small country also some are premium. We are getting that customer.

Pranav Mehta — Equirus Secutities — Analyst

Okay. And sir, how is as of now the demand holding up in the export market for you? Are you getting the same queries from the export market, let’s say…

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Pranav Mehta — Equirus Secutities — Analyst

But sir, export market [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] From India, every product is increasing worldwide [Foreign Speech]

Pranav Mehta — Equirus Secutities — Analyst

Okay. [Foreign Speech] have we added any dealers distributors in 1Q or [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

Manav Gupta will, he is loking after domestic.

Manav Gupta — Wholetime Director

Am I audible?

Pranav Mehta — Equirus Secutities — Analyst

Yes, sir, you are audible, but, yeah.

Manav Gupta — Wholetime Director

So our distributor…

Operator

I’m sorry, sir, but we cannot hear you clearly sir.

Manav Gupta — Wholetime Director

Hello.

Operator

Yes, it’s better. Thank you.

Manav Gupta — Wholetime Director

So as we were working for the last few years to penetrate the market. Hello. Yeah, so last year we were working to penetrate in the market and we have built up our distributor and dealer network almost all over India, and our infrastructure all set. So now the work is going for the influencer division. Our teams are working with influencers and we’re getting good penetration in the market. This quarteroverall because of unstability in the overall world, the market was a little jittery but we as a company, Stylam has done both in the domestic market also with good penetration and the team is working hard, it should go better and our products are doing well.

Pranav Mehta — Equirus Secutities — Analyst

Okay, sir.

Manav Gupta — Wholetime Director

In the domestic market in the home building material space very soon.

Pranav Mehta — Equirus Secutities — Analyst

Okay, sir. And sir, as you highlighted in your opening remarks that you are seeing the shift from unorganized to organized in the domestic market. So do you think that this will continue once, let’s say, the raw material cost start going down or other unorganized people expect it to be aggressive in the market once the RM pressures start subsiding?

Jagdish Rai Gupta — Managing Director, Chairman

Sorry, sorry, again please. Little bit noisy. I could not understand your real question.

Pranav Mehta — Equirus Secutities — Analyst

Sir [Foreign Speech] will this continue going forward as well [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

That is not a matter [Foreign Speech] little bit slightly of course we have to pass on. But when there is a gap between previous and now, so there will be no much percentage problem. Domestically, our organized sector is increasing day by day.

Pranav Mehta — Equirus Secutities — Analyst

Okay, sir. Okay, thank you, sir. That’s it from my side.

Operator

Thank you. We have the next question from the line of Nikhil Gada from Abacus Asset Management. Please go ahead.

Nikhil Gada — Abakkus Asset Management — Analyst

Yeah, hi, sir. Thanks for the opportunity and congrats on very good set of numbers. [Foreign Speech] we have done really well in exports, but how would the other players in the industry from India itself would have done. Have actually been able to capture more market in this particular quarter?

Jagdish Rai Gupta — Managing Director, Chairman

Your getting the market, you can see the figures. I could not understand your actual question?

Nikhil Gada — Abakkus Asset Management — Analyst

[Foreign Speech] We have grown to 70, 80% [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] I don’t know their figures, but of course we increased [Indecipherable] quality, price difference. I cannot answer, they can answer very well.

Nikhil Gada — Abakkus Asset Management — Analyst

[Foreign Speech] in this particular quarter [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] rather we are weak in some country where getting [Foreign Speech] US side, we are a little weak [Foreign Speech] Far East, very increasing proportionately. Not any particular market.

Nikhil Gada — Abakkus Asset Management — Analyst

Understood, sir. [Foreign Speech] in terms of revenue for exports.

Jagdish Rai Gupta — Managing Director, Chairman

No, no, no why.

Nikhil Gada — Abakkus Asset Management — Analyst

Just asking.

Jagdish Rai Gupta — Managing Director, Chairman

No, no, not at all.

Nikhil Gada — Abakkus Asset Management — Analyst

Okay, sir. Understood.

Jagdish Rai Gupta — Managing Director, Chairman

The same things are going on also.

Nikhil Gada — Abakkus Asset Management — Analyst

Understood. So basically then this sort of [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

Yes, atleast yes surely.

Nikhil Gada — Abakkus Asset Management — Analyst

Understood, sir.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Nikhil Gada — Abakkus Asset Management — Analyst

Sir, then secondly on the domestic market we have now achieved a base of INR65 crores, INR70 crores [Foreign Speech] So, sirI think [Foreign Speech] atleast in the next two years [Foreign Speech] Do you think this is possible?

Jagdish Rai Gupta — Managing Director, Chairman

It is still undervalued, it will be possible. It will be rather more [Foreign Speech] We are more focusing on export. Now we have, after this new plant and CORONA [Foreign Speech] definitely it will achieve, maybe this or next quarter surely.

Nikhil Gada — Abakkus Asset Management — Analyst

And sir Just two questions on the financials itself. [Foreign Speech] first sir, other expenses [Foreign Speech]

Manit Gupta — Wholetime Director

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

That is due to only due to ocean freight.

Manit Gupta — Wholetime Director

So basically this number [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

No, no, [Foreign Speech]

Manit Gupta — Wholetime Director

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] expenses will go down [Foreign Speech] Expenses will not go up proportionately same, it be reduced rather.

Nikhil Gada — Abakkus Asset Management — Analyst

Sir lastly [Foreign Speech] because we do so much export?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we are importing also almost 50%, 55%. Yes, of course, it will be beneficial.

Nikhil Gada — Abakkus Asset Management — Analyst

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

Operator

Thank you. We have the next question from the line of Nikhil Agarwal from VT Capital. Please go ahead.

Nikhil Agarwal — VT Capital — Analyst

Good evening, sir. Thank you for the opportunity. Sir, could you highlight on the price hike you’ve taken during the quarter in both the domestic market and export markets? Hello.

Jagdish Rai Gupta — Managing Director, Chairman

Hello. Sorry.

Nikhil Agarwal — VT Capital — Analyst

Could you highlight on the price side you’ve taken in the domestic market and export markets?

Jagdish Rai Gupta — Managing Director, Chairman

Nno, no, export — we have hike in fourth quarter, not in this quarter much. Prices are already stabilized worldwide [Foreign Speech] unorganized sector is. They start reducing in domestic market due to — our prices are same like third quarter.

Nikhil Agarwal — VT Capital — Analyst

Okay. And, sir, so basically it’s the volume, it’s the product mix that has led to the increase in realizations during the quarter.

Jagdish Rai Gupta — Managing Director, Chairman

Correct, correct. Okay. And sir, any revenue expectations from the acrylic business in FY ’23. No, no, no, acrylic vusiness we already — already we did everything, nothing it is small INR1 crore, INR2 crore. Second machine is under operational and acrylic sale definitely in this quarter will be increased lot — will be increased a lot. We already made distributors [Technical Issues] quality is well established in international as well as in domestic market. So there will be no any expenditure.

Nikhil Agarwal — VT Capital — Analyst

No, sir I was asking the expected revenue from the acrylic business division in FY ’23.

Jagdish Rai Gupta — Managing Director, Chairman

Year or quarter?

Nikhil Agarwal — VT Capital — Analyst

Sorry.

Jagdish Rai Gupta — Managing Director, Chairman

Do you want in quarter or — this quarter will be definitely more than INR10 crore.

Nikhil Agarwal — VT Capital — Analyst

So INR10 crore in Q2 and in FY ’23.

Jagdish Rai Gupta — Managing Director, Chairman

’23I it can be 100 also.

Nikhil Agarwal — VT Capital — Analyst

Okay, sir. And sir, any revenue and margin guidance overall.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we cannot say anything [Foreign Speech] even then we are observing [Foreign Speech] there wil be cut in the production cost also as well as procurement of raw materila also.

Nikhil Agarwal — VT Capital — Analyst

[Foreign Speech] not only acrylic, laminates and acrlyic.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Nikhil Agarwal — VT Capital — Analyst

Any specific number?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] definitely it looks better.

Nikhil Agarwal — VT Capital — Analyst

Sir, in the last quarter you had said revenue — you are expecting value growth of around 30% in FY ’23. So do you still maintain that?

Jagdish Rai Gupta — Managing Director, Chairman

13%, sorry.

Nikhil Agarwal — VT Capital — Analyst

30% top line growth bullet in FY’23. So do you maintain that?

Jagdish Rai Gupta — Managing Director, Chairman

Why not, definitely.

Nikhil Agarwal — VT Capital — Analyst

Okay, okay great. And sir just one last question if it’s not an issue The recessionary trend that we are expecting in Europe and US [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Nikhil Agarwal — VT Capital — Analyst

Okay, Okay, thank you so much.

Operator

Thank you. We have the next question from the line of Hrishikesh Bhagat from Kotak Mutual Fund. Please go ahead.

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

Hi, thank you for the opportunity, sir. Sir, [Foreign Speech] firt question domestic market related. So, I think clearly we have done bood job in terms of increasing presence. On the domestic market have you [Foreign Speech] price correction or anything because of the input cost correction?

Manav Gupta — Wholetime Director

We have not decreased the prices as of now and we are not because organized companies have not decreased prices, only unorganized companies [Technical Issues] companies have decresed price. So definitely now as our brand is getting stronger we have no plans to decrease prices.

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

Okay, Just on the input cost side [Foreign Speech] say something like melamine or prenol for us compared to Q4, Q1, sorry.

Manav Gupta — Wholetime Director

As I told earlie, tThe thing is that because we are importing and effect is seen after 2 months or 3 months because the inventories in pipeline. So definitely it should reflect next quarter hopefully.

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

Okay. And sir, just on the domestic side, the portfolio side, is there any specific size where we are fairly dominant, something like 0.8mm, 1mm or we are present across the segment?

Manav Gupta — Wholetime Director

We are very good and strong in specialized products like exterior laminates and speciality acrlyic solid surface for its plant in India to be manufactured by your technology. So we are good in the good products, architect products we are quite strong and we hope that it will get better.

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

Okay. And lastly on the capacity expansion where we are talking about, say small, we’re doing the investments of say INR40 crore. Hello — where we arse looking at INR40 crore investments and probably looking at capacity expansion of also 40% [Foreign Speech] fair to assume that we will be moving from 14 million sheets current capacity to probably 18-19 million sheets. Is it a fair assumption?

Jagdish Rai Gupta — Managing Director, Chairman

Listen, I will tell you. This cannot be — everything is not [Foreign Speech] only quantity [Foreign Speech] we are going for more value addition items. This see the main purpose. [Foreign Speech] then from this even you can achieve 20% or more.

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

True, true. Got it. [Foreign Speech] which is based on assumption on some size so compared to that [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Hrishikesh Bhagat — Kotak Mutual Fund — Analyst

Got it, got it. Thank you.

Operator

Thank you. We have the next question from the line of Kunal Bhatia from Dalal and Broacha. Please go ahead.

Kunal Bhatia — Dalal and Broacha — Analyst

Yeah, sir. Thank you for the opportunity. Sirin regards to same question, sir [Foreign Speech] [Foreign Speech] so want to go for more value addition things. Okay, okay. Sir, one business question. Sir, given a choice [Foreign Speech] it should come from overseas [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] there cannot be all egg in one basket.

Kunal Bhatia — Dalal and Broacha — Analyst

[Foreign Speech] because of COVID or other reasons of freight [Foreign Speech] domestic business compared to the overseas business increase [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] even then everybody started paying ocean freight [Foreign Speech] not only laminates other things also [Foreign Speech]

Kunal Bhatia — Dalal and Broacha — Analyst

[Foreign Speech] compared to the local player there. In general, how much competitive we would be in pricing?

Jagdish Rai Gupta — Managing Director, Chairman

We are competetive verywhere.

Kunal Bhatia — Dalal and Broacha — Analyst

[Foreign Speech] we would be say 50%, 15%, 20%, 30% cheaper. How would that be?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we are very strong in export in Europe market [Foreign Speech] then you can understand that we will be competitive everywhere.

Kunal Bhatia — Dalal and Broacha — Analyst

Okay. Sir, price differential [Foreign Speech] on an average?

Jagdish Rai Gupta — Managing Director, Chairman

Whose versus?

Kunal Bhatia — Dalal and Broacha — Analyst

Stylam versus other companies in Europe.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Kunal Bhatia — Dalal and Broacha — Analyst

Okay, okay [Foreign Speech] so can we move up till 100 or because of the different kind of sheets which we manufacture, some are high quality. This would be sort of a full utilization level.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we should run it to 20, 30 days a month, then capacity and capability how we can reduction in cycle times, that we will see later. We are quite hopeful that it will increase percentage wise more. [Foreign Speech] After three onths we will discuss on these things.

Kunal Bhatia — Dalal and Broacha — Analyst

Okay, okay. Thank you, sir, and all the best. Thank you so much.

Operator

Thank you. We have the next question from the line of Ankur Kumar from Alpha Capital. Please go ahead. Ankur Kumar, your line has been unmuted. Please go ahead with your question. This is the operator, if you have muted the line from your end, please unmute and speak. Mr. Ankur Kumar.

Ankur Kumar — Alpha Capital — Analyst

Hello.

Operator

Yes, pleas go ahead.

Ankur Kumar — Alpha Capital — Analyst

Yeah, thank you for taking my question and congrats for a good set of numbers. Sir, I just wanted to probe a little bit on the export side. [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we are maintaining that right now also [Foreign Speech] You can see, our slogan is quality, European quality on Indian price [Foreign Speech] it will increase definitely more.

Ankur Kumar — Alpha Capital — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Ankur Kumar — Alpha Capital — Analyst

Okay, sir. All the best.

Jagdish Rai Gupta — Managing Director, Chairman

Thank you very much.

Operator

Thank you. We have the next question from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech] should we multiply by 4 to believe that you will achieve that kind of revenues for the…

Jagdish Rai Gupta — Managing Director, Chairman

Whu it cannot be more than this.

Pritesh Chheda — Lucky Investment Managers — Analyst

Why it cannot be because the way you’ve performed over years, quarter one can safely be annualized [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] First quarter is always lesser than 4 quarters.

Pritesh Chheda — Lucky Investment Managers — Analyst

So no major difference [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

Yes.

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] as already mentioned, we are expecting up 200 also.

Pritesh Chheda — Lucky Investment Managers — Analyst

And what will, up 200 sir, for that you have to have something with you in terms of confirmed orders or something.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] for the last one month rather, you can say from the July onward. Four branches already, you can go to Delhi, Calcutta, Bangalore and Bangalore. You can go anywhere. You can find maybe granites is available in the market. [Foreign Speech] that we are quite hopeful.

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

Very nice [Foreign Speech] machine is already displayed, not displayed, placed on the floor, 99% it will be operational within two months.

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we know the market. India is importing more than INR800 crores. Market is growing everyday. Korea is a small country exporting worldwide. There and more than 100 machines like this.

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] why not in domestic market. [Foreign Speech]

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Sir, lastly [Foreign Speech] FY’21 otherwise you are 17% margin.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Pritesh Chheda — Lucky Investment Managers — Analyst

[Foreign Speech] you will have a same expense number 30%, 40% higher topline, any employee cost.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] and I hope so it should be better than this.

Pritesh Chheda — Lucky Investment Managers — Analyst

Thank you very much.

Operator

Thank you. We have the next question from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Yeah, hi, sir, good evening. Am I audible?

Jagdish Rai Gupta — Managing Director, Chairman

Yes, yes.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Yeah, congrats on good set of numbers. Sir, I have a few questions. First, you mentioned that the surface business revenue you’re targeting INR100 crores for this financial year, is this understanding right?

Jagdish Rai Gupta — Managing Director, Chairman

Yes, up to — up to 100 in this financial year, 8 months is still there.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Correct, correct. And so, like what would be your stable quarterly run rate, maybe by third or fourth quarter you’re looking at.

Jagdish Rai Gupta — Managing Director, Chairman

Correct. [Foreign Speech] there arse four distributor already, not distrubitor, CNF. You can check the availability of granites in Stylam brand. [Foreign Speech] we are exporting to USA already starting [Foreign Speech] when there is a market is there, capacity is there, quality is established, price is moderate of our competitor, then why we cannot achieve.

Rajesh Kumar Ravi — HDFC Securities — Analyst

So what is — in subsequent years any top line number you have in mind for this business?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] It will be fulfilled very soon.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Correct, correct, sir. And margin profile [Foreign Speech] for INR100 crore top line for this business and for a INR400 crore topline.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rajesh Kumar Ravi — HDFC Securities — Analyst

Okay, so you’re expecting 15% to 20% EBITDA margin if you crossed INR100 crores top line.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rajesh Kumar Ravi — HDFC Securities — Analyst

And sir, another question is on the laminate margins, I see your contribution margin FY ’20 up 46% contribution margin FY’22 and one 1Q 43% of the contribution margin. We are looking at EBITDA margin improving from 15% to 20%. So do you expect this to be driven by contribution margin reaching 47%048% sort of number [Foreign Speech] EBITDA margin expansion.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] all of our raw material is from the old prices. [Foreign Speech]

Rajesh Kumar Ravi — HDFC Securities — Analyst

So what you’re saying, the benefit of the lower raw materials is still to flow in your contribution margin.

Jagdish Rai Gupta — Managing Director, Chairman

Absolutely correct. [Foreign Speech]

Rajesh Kumar Ravi — HDFC Securities — Analyst

And laminates, what is the revenue guidance you’re looking at for FY ’23? Turnover for FY 23 you’re looking at?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rajesh Kumar Ravi — HDFC Securities — Analyst

So around INR1,000 crores of top line. This is what — and that is where almost INR1,000 crores versus INR660 crore, you are looking at 50% plus topline increase this year.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rajesh Kumar Ravi — HDFC Securities — Analyst

Just on the conservative side you’re targeting given that Q1 is a low base number.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] but you’re right, your calculation in right.

Rajesh Kumar Ravi — HDFC Securities — Analyst

Okay, sir. Great. Sir, thank you. All the best.

Jagdish Rai Gupta — Managing Director, Chairman

Thank you very much.

Operator

Thank you. We have the next question from the line of Rishab Bothra from Anand Rathi. Please go ahead.

Rishab Bothra — Anand Rathi — Analyst

Hello.

Operator

Please go ahead, sir.

Rishab Bothra — Anand Rathi — Analyst

Am I audible.

Jagdish Rai Gupta — Managing Director, Chairman

Yes.

Rishab Bothra — Anand Rathi — Analyst

Sir, basically wanted to understand, since there is a large opportunity in India, how are we different from the existing players in laminate business? And since global markets also you have penetrated well, but what’s the industry size of global markets in laminates and how soon can we double our category and in revenue base?

Jagdish Rai Gupta — Managing Director, Chairman

Exactly [Foreign Speech] domestic market is bigger market. Yes, I’m right?

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech] we have not been able to do…

Jagdish Rai Gupta — Managing Director, Chairman

Not able to do [Foreign Speech] if you go for other main competitor [Foreign Speech] We are a young company. We are faster digitization enterprenuer [Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

Achievement. There is no doubt about it.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech] or there is some differentiation.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

Correct, becasue what I sense, the other players are not so keen in export market as such [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

INR2,500 crores last year [Foreign Speech] I cannot say right now.

Rishab Bothra — Anand Rathi — Analyst

This is you are saying of global industry sir.

Jagdish Rai Gupta — Managing Director, Chairman

From India or total global?

Rishab Bothra — Anand Rathi — Analyst

Total global.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

Our market share international player.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] vakys wise I know last year 2,400 to 2,500 from India export globally laminates.

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech] what’s the growth strategy for laminates.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] In laminates compact laminates will also come, exterior grade will also come, cubical will also come [Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

Those are basically lamintes but high marging, high value category, correct?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech] So there is unorganized opportunities in organic growth, acquisition, either manufacturing [Foreign Speech] so is there a inorganic growth opportunity either in terms of acquiring manufacturing facilities or from brands.

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] comparatively, not much taxes [Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

Understood [Foreign Speech] Are we also entering into other…

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] so there are many other opportunities better [Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we have more opportunity [Foreign Speech] then we will go for another product.

Rishab Bothra — Anand Rathi — Analyst

[Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech]

Rishab Bothra — Anand Rathi — Analyst

Thank you. Best of luck going ahead.

Operator

Thank you. We have the next question from the line of Nishit Jain from SNJ Investments. Plese go ahead. Sir, the participant has lost the line. We will move to the next question from the line of Mihir Dhami from Lucky Securities. Please go ahead.

Mihir Dhami — Lucky Securities — Analyst

So the 40% capacity increase which you are going to do, how much time it will take to come on stream [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

Within this financial year, end of this financial year.

Mihir Dhami — Lucky Securities — Analyst

Okay. And current plant, how much can we expanded capacity?

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] we can go up to 1,500 up to from this total operation.

Mihir Dhami — Lucky Securities — Analyst

And if we had done greenfield capex [Foreign Speech]

Jagdish Rai Gupta — Managing Director, Chairman

[Foreign Speech] how big size, how many you presses you have, which quality you want. 80% of machines are imported machine [Foreign Speech]

Mihir Dhami — Lucky Securities — Analyst

Just one more question. Where are you dominant in India [Foreign Speech]

Manav Gupta — Wholetime Director

Distribution network, in South we are strong. Basically if you see the Indian domestic market, it is dominated by, first is South as a older market for good industry. First is South, second is West, followed by North and East. So we are following the same trends. We are quite fast. So quite strong in South and second North and then West and East.

Mihir Dhami — Lucky Securities — Analyst

So how do we rank in the Indian market price wise and revenue wise as well?

Manav Gupta — Wholetime Director

Right now it is very hard to say because there is — in Indian market there are only few organized players who doing genuine fulfilling system work. So the thing is that overall I think we are in right now top 10. But looking forward, we will be a major challenger.

Mihir Dhami — Lucky Securities — Analyst

Okay, thanks. That’s all.

Operator

Thank you. Ladies and gentlemen, eue to time constraints that was the last question and we will now close the question queue. I would like to hand the floor back to Mr Ashish Poddar for closing comments. Please go ahead.

Ashish Poddar — Investor Relations

Thank you everyone for joining us today. Thank you the management of Stylam to giving answers to all the questions. I wish all of you a very good day. Thank you so much.

Jagdish Rai Gupta — Managing Director, Chairman

Thank you.

Operator

[Operator Closing Remarks]

Duration: ?? minutes