TCPL Packaging Ltd (TCPLPACK) Q4 FY23 Earnings Concall Transcript

TCPL Packaging Ltd (NSE:TCPLPACK) Q4 FY23 Earnings Concall dated May. 29, 2023

Corporate participants:

Anoop Poojari — Client Manager

Saket Kanoria — Managing Director

Analysts:

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Gunjan Kabra — Niveshaay — Analyst

Jeetu Panjabi — EM Capital Advisors — Analyst

Jayesh Shroff — Cask Capital — Analyst

Unidentified Participant — — Analyst

Nirav Savai — Abakkus AMC — Analyst

Pulkit Singhal — Dalmus Capital Management — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to TCPL Packaging Limited Earnings Conference Call. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.

Anoop Poojari — Client Manager

Thank you. Good afternoon, everyone, and thank you for joining us on TCPL Packaging’s Q4 and FY ’23 earnings conference call. We have with us today, Mr. Saket Kanoria, [Technical Issues] Director; Mr. Akshay Kanoria, Executive Director; Mr. Vidur Kanoria, Executive Director; and Mr. Vivek Dave, the GM Finance of the Company.

We would like to begin the call with opening remarks from the management, following which we’ll have the forum open for an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today’s call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier.

I would now like to invite Mr. Saket Kanoria to make his opening remarks.

Saket Kanoria — Managing Director

Good afternoon, everyone, and thank you all for joining us on this quarter four and FY ’23 earnings call. I will begin the call today by taking you through the key financial and operational highlights for the period ended March 31, 2023, after which we will open the forum to have a Q&A session.

We are delighted to announce the successful conclusion of yet another remarkable year. In FY ’23, our consolidated revenues reached INR1,475 crore, reflecting an impressive 36% increase over the previous year. This performance was driven by notable contributions from both our Folding Carton and Flexible Packaging divisions. Despite facing subdued demand, we strategically capitalize on opportunities, enabling us to achieve a healthy growth.

On the profitability front, we have achieved a record EBITDA at INR236 crore, translating into strong margins of around 16%. We delivered robust margin performance by successfully mitigating the effects of increased raw material costs witnessed during the year and leveraging operational efficiencies. In FY ’23, PBT significantly improved by 98% to INR132 crores. Profit after tax expanded by 136% to INR110 crore and cash profit stood strong at INR216 crores, up 74% on a year-on-year basis. The profit figures include an exceptional one-off income of INR17.3 crores reported in Q2 of FY ’23.

Here, I’m pleased to announce that the Board of Directors has recommended a dividend of INR20 per share, making it the 23rd consecutive year of continuous dividend payout in line with our dividend policy. In line with our expansion plan, we have successfully commissioned a state-of-the-art advanced offset printing line and associated equipment at our Silvassa facility. Moreover, we successfully acquired and seamlessly integrated neighboring properties to accommodate the increased capacity space demands.

Additionally, plans are underway to install a new line at our Haridwar facility and establish a third line in our flexible packaging plant, both scheduled for the latter half of the financial year ’23, ’24. These initiatives align with our focus on sustainable business growth while generating healthy return ratios. I’m pleased to highlight that, in FY ’23, our consolidated return on capital employed and return on equity stood impressively at 20% and 28%, respectively.

To enhance operational efficiency, the Board has decided to merge TCPL Innofilms, our wholly owned subsidiary, with the parent company. This integration will result in cost savings by eliminating redundant paperwork and streamlining operations, optimizing resources, and improving productivity. We are also excited to announce the addition of Dr. Andreas Blaschke to our esteemed Board of Directors as an Independent Director, which is subject to approval of the shareholders at the upcoming Annual General Meeting. He will serve as an Independent Director for a span of five years.

With over three decades of global experience, Dr. Blaschke will bring a wealth of knowledge and expertise to TCPL Board. In addition, we are also pleased to appoint Vidur Kanoria as Executive Director, reinforcing business development and administration. Vidur’s consistent dedication and expertise have been pivotal in driving the Company’s sales and revenue growth and contributing to its overall success.

As a leading provider of eco-friendly packaging solutions in India, we have established ourselves as a trusted name in the industry with quality being the cornerstone of our packaging solution. Our commitment to excellence in quality has been recognized through prestigious accolades, including our recent achievement at Marico’s Supplier Quality Excellence Meet and the SIES School of Packaging’s annual SOP Star Awards ’22, where we were honored for outstanding print excellence.

To conclude, TCPL is well positioned to meet the growing demand for environmentally-friendly packaging solutions. Our focused strategy to grow through diversification has enabled us to consistently outperform our underlying industries. We remain committed to sustainably growing the Company in the future for which we believe should help create sustainable value for all our stakeholders.

On that note, I would like to end my opening remarks and would now like the moderator to open up the forum for any questions or suggestions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Pavan Kumar – Shree RatnaTraya Capital Partners. Please go ahead.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Sir, can you — first of all, congratulations on a good set of numbers and stable operating performance. I wanted to understand our subsidiaries performance, in FY ’23, I understand Creative did revenues of INR32 crores. But how much money did we actually lose in FY ’23 on Creative side? And going forward, in FY ’24, when do we expect to breakeven and at what scale do we expect to breakeven?

Saket Kanoria — Managing Director

Thank you. So Creative’s — we acquired the company in December 2021. And this year gone by is the first full financial year that it has been as a subsidiary. I agree that it has taken a little long time to stabilize the company and its performance. But also, we have unfortunately coincided with a kind of a slump in the demand for mobile phones. The overall demand, this past six, seven months, has been quite slow. However, we are making good progress and we feel that we are quite poised to achieve a much better performance in the current year, ’23, ’24, and going forward because a lot of hard work has been done to upgrade the plant, the efficiency, the quality and we have broad-based customer profile also. And therefore, we are quite confident now that, in the current year, we should make money and not lose money. And last year, on an EBITDA, we were almost breakeven, but on a net level, we have lost money, but the Company’s revenue has grown 31% last year.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And what [indecipherable] the revenue potential for this unit?

Saket Kanoria — Managing Director

Revenue potential is about INR100 crores, but we are still far away from that.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. But is it a fair expectation that by, let’s say, in FY ’24 and FY ’25 together, we can scale this unit up to around INR100 crores and it’ll make similar EBITDA margins as the rest of the business?

Saket Kanoria — Managing Director

Yeah, we are trying to scale it as soon as we can. I don’t know whether we can grow three times in two years, but certainly, we expect to grow quite strongly.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And on the Innofilms side, sir, do we — how much money did we lose? Any indication that you can give, please?

Saket Kanoria — Managing Director

So Innofilms, again, is a futuristic technology, but we’ve had some challenges with the technology itself that the machine has some snags during the year, and some parts had to be replaced with the machine supplier has done and then one more part is on order. So till for another two, three months, it is going to struggle, and then things should start turning around. So here also on an EBITDA level, we have lost money of about INR1.5 crore. But we hope that this year, once the new parts come and the machine stabilize, we should be able to make it up. And however, we have — Board of Directors have recommended to merge the Company into TCPL because we don’t see any reason to keep it stand-alone. So it will get integrated.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And can you throw some light on the background of Mr. Andreas?

Saket Kanoria — Managing Director

Of the sorry, what?

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Andreas.

Saket Kanoria — Managing Director

Dr. Andreas Blaschke has worked in the packaging industry in Europe in Europe’s largest folding carton manufacturer, and he has recently retired from his job there and we know him for a long time. So we requested him to join the Board. He is from Vienna, Austria and his very prestigious entry into our Board, and we are very honored that he has accepted the role.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay, fine, sir. I’ll get back in the queue. Thank you.

Saket Kanoria — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Gunjan Kabra from Niveshaay. Please go ahead.

Gunjan Kabra — Niveshaay — Analyst

Congratulations for reporting good set of numbers. I wanted to understand just one question. I wanted to understand that, right now, this year, the paper prices, such as our raw material, was very high this year and some part of last year also. So paper prices are on an increasing trend, so our — maybe our raw material cost as a percentage of sales was around, say, 60%, 61%. So if we consider the previous years when paper prices were not that high, we also had a material cost of, say 52%, 58%. So I just wanted to understand that, going forward, and the prices are down now, so can we expect some gross margins to improve going forward and hence resulting in increase in EBITDA margin?

Saket Kanoria — Managing Director

So the paper prices have started correcting since January, I would say, and it is continuing to correct. But once the paper price correct, we also have to pass that through to customers. So I don’t see that the margin will expand from here. The margin is already quite healthy. And we’re also in a competitive world and the overall demand is fairly soft. So to expand margin doesn’t seem likely to us.

Gunjan Kabra — Niveshaay — Analyst

Okay, okay.

Saket Kanoria — Managing Director

Thank you.

Gunjan Kabra — Niveshaay — Analyst

Okay, thank you.

Operator

Thank you. The next question is from the line of Jeetu Panjabi from EM Capital Advisors. Please go ahead.

Jeetu Panjabi — EM Capital Advisors — Analyst

Yeah, hi, Kanoria ji. How are you? Congratulations. Great numbers. So I just wanted to get a sense on what are you seeing from a demand side? Are you seeing that the pipeline is still very strong and things will continue to grow or do you expect some sort of a slowdown?

Saket Kanoria — Managing Director

I think it’s been very surprising that the demand side is not very strong at all. Last couple of months has been quite slow. As you look at the results of our customers, you can see that the volume growth is low-single-digit. However, the value growth is 10% to 15% typically because last year was a year of high inflation. So the consumer budget has got stretched. And now that inflationary pressures are easing off, so hopefully, volume growth should come back in a better way. There is no reason really for it not to come back. But the last two, three months, I would say that the demand has not been strong at all. And also, a lot of our customers export their products and in general also export because the western world is also under tremendous stress, inflation-led. So therefore, overall, I would say, the world as a whole, the demand is under stress right now.

Jeetu Panjabi — EM Capital Advisors — Analyst

Right. And that your near future would obviously mirror that as well is what you’re saying?

Saket Kanoria — Managing Director

I am saying that, yes, overall, there is a stress in the demand. The economy is not as buoyant as we would like it to be.

Jeetu Panjabi — EM Capital Advisors — Analyst

Okay. And two, is there any new initiatives or new product categories or anything else that would provide another leg of growth, not necessarily next quarter, but over the next year or two? Is there new things happening that you’re focusing on?

Saket Kanoria — Managing Director

Yes, we are studying a couple of synergetic areas, which are not — where we are not there today, but it’s too early to talk about it, but we are studying what the potential is because we believe that we should exploit our — whatever synergy potential there is in the packaging space.

Jeetu Panjabi — EM Capital Advisors — Analyst

Yeah, yeah. Okay. And if I heard you right, if I heard you in your previous question, you essentially said that margins would remain stable despite paper prices coming off because you pass that on. Is that a fair understanding that I got on this?

Saket Kanoria — Managing Director

I mean that is — no, it was response to the lady’s question, whether it will increase. So I said that I don’t see in this demand scenario, margin to increase, but obviously, we hope that we can maintain what we have been doing for quite some time now. We had a growth in margin last year.

Jeetu Panjabi — EM Capital Advisors — Analyst

Correct.

Saket Kanoria — Managing Director

And that is our endeavor.

Jeetu Panjabi — EM Capital Advisors — Analyst

Okay, okay. Thank you, sir. Thank you.

Saket Kanoria — Managing Director

Thank you.

Jeetu Panjabi — EM Capital Advisors — Analyst

And good wishes.

Operator

Thank you. [Operator Instructions] The next question is from the line of Pavan Kumar from RatnaTraya Capital. Please go ahead.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Sir, can you — please comment on the domestic demand side, in the sense that it doesn’t seem to have been like very strong for this particular quarter. But I mean, do we see the demand coming back going forward or at least do we expect ourselves to maintain the current demand rate going forward in FY ’24 or even that would be difficult to sustain?

Saket Kanoria — Managing Director

I think I just answered this question to Mr. Panjabi that demand is a little weak right now. Whether we expected how we — it will — I said that, with the inflation easing off, there’s no reason why the demand should not get stronger, but I mean, there’s nothing beyond that I can say.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. And can you, please, comment on the utilization levels on the flexible line and the paperboard separately?

Saket Kanoria — Managing Director

So in the last quarter, if we were to see the Q4, I would say that the capacity utilization is roughly 75%, both in paperboard and in flexible, roughly.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

So without any further capex, is it a fair understanding that we can hit maybe INR1,800 crores or INR2,000 crores of revenues from the existing facilities?

Saket Kanoria — Managing Director

No, it’s not practical to do that much in the current — without further capex.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

What would be our peak revenues from the current capacity, sir? If you had to [Speech Overlap]

Saket Kanoria — Managing Director

I think we can do up another 10%, 12% from what we achieved in Q4.

Pavan Kumar — Shree RatnaTraya Capital Partners — Analyst

Okay. Okay, sir. Thank you.

Saket Kanoria — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Jayesh Shroff from Cask Capital. Please go ahead.

Jayesh Shroff — Cask Capital — Analyst

Yeah, good afternoon, Mr. Kanoria, and congratulations on a good set of numbers. I just wanted to know what is the status on our Innofilms line, and both in terms of our utilization and customer acceptance for the product.

Saket Kanoria — Managing Director

So as I mentioned earlier in the call, I don’t know if you were hearing the Innofilms [Speech Overlap].

Jayesh Shroff — Cask Capital — Analyst

I’m sorry, I was not — I joined in a bit late. So I’m sorry.

Saket Kanoria — Managing Director

I’ve already answered this question. So [Speech Overlap]

Jayesh Shroff — Cask Capital — Analyst

Okay.

Saket Kanoria — Managing Director

Essentially, the line has some technical issues, which is still fully not sorted out. We hope it would be sorted in next three, four months. So in the meantime, it is only operating for our own internal use. And yeah, I think that in the second half of the year, it should be proper operational level.

Jayesh Shroff — Cask Capital — Analyst

Okay, all right. But in terms of customer acceptance of the product, is it independent of our line or with one [Speech Overlap]

Saket Kanoria — Managing Director

See, customer acceptance is an ongoing effort, it’s happening slowly because with sustainable packaging, a lot of shelf-life study and adjustments to their billing line, etc., is required. So yeah, I would say that, overall, there’s great interest in this product, there’s also a great export opportunity. So it’s still very — we are still very positive about it.

Jayesh Shroff — Cask Capital — Analyst

Okay, all right. That’s it. Thank you so much.

Saket Kanoria — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Amit Kumar from Determine[Phonetic] Investments. Please go ahead.

Unidentified Participant — — Analyst

Yeah, thank you so much for the opportunity, and good afternoon to you, sir. Just one question. I mean, could you just breakdown — could you just first tell us what is your capex plan for fiscal ’24, just sort of break it down across the different lines you mentioned earlier in the call, please.

Saket Kanoria — Managing Director

So our — broadly, our capex plan is just above INR100 crore for this FY ’24, and essentially, we’re adding three production lines, one is at Silvassa, which has just started, and there is another line starting in — being installed in Haridwar and then we are putting a third flexible packaging line in Silvassa, and along with these, there are post-printing equipment as well, and also some our old machines are being removed. So overall, it’s kind of an expansion and a modernization. So it’s a very large increase in new capacity.

Unidentified Participant — — Analyst

Understood, sir. Sir, just a little bit curious on the offset side. Sir, this line that you have already put out, the capex for this would have been largely already done in fiscal ’23, right? [Speech Overlap]

Saket Kanoria — Managing Director

It has been booked in April only, April-May, because the machine has gone into commercial production only now, so [Speech Overlap]

Unidentified Participant — — Analyst

Yeah, but it would already present as CWIP in our fiscal ’23 balance sheet.

Saket Kanoria — Managing Director

It was like a capital work in progress.

Unidentified Participant — — Analyst

Understood. So sir, the INR100 crore number that you’re talking about, this is a cash number and I’m interested in the cash number for fiscal ’24 really. What will be the cash spend? Is it about 100-odd-crores?

Saket Kanoria — Managing Director

Yeah, it’s 100-odd-crores because we’ll again have some capital work in progress at the end of the year. And plus, we are buying balancing equipment as well in all the plants. We’re also adding to the solar capacity, solar power. So you can say that it will be about INR100 crore, yeah.

Unidentified Participant — — Analyst

Okay, understood. Understood. Just on the offset side, sir, what prompted you to add another line? Because I was just going through your third quarter call, you had talked about this offset line, which you have just launched it, but there was no plan to actually have another offset line as well. And as you sort of mentioned earlier in the call that the market sort of looks a little bit on the softer side, so about 75% caps utilization is not very high, and given the fact that you just added a new line, you have sort of plenty of capacity. So any sort of reason for launch — for having another sort of — planning another offset capacity so early in the [indecipherable] in the year?

Saket Kanoria — Managing Director

Yeah, I think the reason why we decide to add a line is essentially to be far more flexible and agile because customers are now just launching many, many brands, the average run length is reducing. And hence, if you are at a very high level of capacity utilization, your lead-time to service such customers increases and for which they are not willing to give you that time. By having some slack and some additional capacity, then you can — your service level improve quite considerately. So one of the factors is that. And of course, we also say — also the old machines are getting old. And secondly, the — obviously, we want to be ready when the growth numbers pick up because then once we order machine at that point, we may get too late in the day because it takes six, seven, eight months before you can actually commercialize it.

Unidentified Participant — — Analyst

Understood, sir. That’s it from my end. Thank you so much for this.

Saket Kanoria — Managing Director

Thank you. Thank you. The next question is from the line of Nirav Savai from Abakkus AMC. Please go ahead.

Nirav Savai — Abakkus AMC — Analyst

Thanks for the opportunity, sir. My question is maybe on the export side. So what’s the outlook on the export business for FY ’24 and what was the contribution of exports for FY ’23?

Saket Kanoria — Managing Director

So export has been one very big silver lining as far as we are concerned over the years. It’s about 25% of our revenue. And the outlook for the current year, it’s too early to say, but generally, the western world is under a little stress because of demand softening there, US and Europe. However, we have a lot of markets to explore. So we do feel that the growth in exports should continue and the outlook looks positive and also countries are looking at India in a bigger way to outsource from. So that also is helping us. And the currency is also helping us as of now. So overall, I would say that the export potential and what we have realized has been quite a good thing.

Nirav Savai — Abakkus AMC — Analyst

So what was the growth in exports if I were to see for FY ’23 to ’22? Was it more than the Company’s actual growth?

Saket Kanoria — Managing Director

Yes. The export growth was higher than the Company’s growth.

Nirav Savai — Abakkus AMC — Analyst

Do we expect this to continue for the next year as well?

Saket Kanoria — Managing Director

Yeah, this level of growth was also fueled a little bit by inflation, but I don’t think this such high levels of growth is practical to continue.

Nirav Savai — Abakkus AMC — Analyst

I’m saying in terms of volume, basically if I look at the volume growth.

Saket Kanoria — Managing Director

We expect the volume growth, I mean, that is our endeavor to keep it up.

Nirav Savai — Abakkus AMC — Analyst

So a double-digit kind of a volume growth and export is something which you see is [indecipherable]

Saket Kanoria — Managing Director

Yeah.

Nirav Savai — Abakkus AMC — Analyst

And sir, any ballpark number where we see this company in the next three, four years, now we have been steadily expanding every year one line in each of the plants as and when we feel that we need just certain level of utilization. But for the next three, four years or five years, any kind of a size of the Company which we aspire, which we would like to reach in next three, four years at a Group level. What will be the Flexible Packaging as well as the Folding Carton business?

Saket Kanoria — Managing Director

Our past performance indicates a 17%, 18% average growth annualized. I think we’ll be quite happy if we can achieve that.

Nirav Savai — Abakkus AMC — Analyst

Right, sir, roughly about 2,000-odd-crores of top line, let’s say, in next five more years.

Saket Kanoria — Managing Director

Yeah, not five years, much quicker than that.

Nirav Savai — Abakkus AMC — Analyst

Much quicker than that, about four years. Right, sir. That’s it from my side. Thank you very much.

Saket Kanoria — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead.

Pulkit Singhal — Dalmus Capital Management — Analyst

Thank you for the opportunity, and congrats on a good set of numbers and getting an expert on the Board. First question is, all the growth vectors, obviously, I mean, export has been touched upon, but you also had two other growth vectors which was market share gains in the domestic carton industry and second is the flexible packaging line. So if you can touch upon the growth prospects from flexible packaging? And also, do you expect the market share gains to continue at a similar rate? Have you invested in marketing to such an extent that you can continue that pace or do you think that will also slow down with a little bit of demand stuff?

Saket Kanoria — Managing Director

I’m not sure if I understood your — firstly, thank you, Pulkit, it’s nice to hear from you again. And secondly, I’m not clear about what your question really is, but I understood that you’re asking whether our marketing team of budget is expanding, so the answer is yes. We are constantly adding new frontline marketing people, and that is greatly helping us to reach out to more customers across India. People are also traveling a lot more these days. So yes, that is a very key component of the domestic marketing effort and the same holds for export as well. I’m not sure about the other part of your question.

Pulkit Singhal — Dalmus Capital Management — Analyst

Flexible. I was talking about the flexible growth in flexible line. I mean, can that growth vector continue at a similar pace that we’ve seen before? I mean, is it continuing at a fast pace?

Saket Kanoria — Managing Director

Yeah, sorry. Yes, flexible line is also — if you recollect, we expanded the capacity in the flexibles last year, it started in March, April of ’22, and the performance has been extremely pleasing. We have been able to get also new customers onboard and grown the business. And therefore, we are now putting a third line, which should start in the second half of this year. And so then effectively, we would have traveled the capacity. And we are very confident that we should be able to [Technical Issues] that up fairly quickly.

Pulkit Singhal — Dalmus Capital Management — Analyst

Fair point. Actually, where I was coming from is that the domestic FMCG industry has — had slower growth for the last two quarters itself. But you have managed a very healthy reported growth driven by these aspects like exports, flexible, and market share gains in the domestic line. Now, I’m just wondering whether going ahead, even if the domestic industry were to continue to be lackluster. Can we offset that by these vectors? And now this year, we’ll also add the rigid packaging also contributed. Do you think we can still, on a net basis, do a healthy — I mean, a good double-digit growth or do you think it will be a bit of a stretch given the industry?

Saket Kanoria — Managing Director

I mean, if the domestic demand does not grow or if it stays at a very low growth, then obviously, to maintain a high growth is not possible at all. However, we believe that we can afford to invest in lines and be ready, and we are making a lot of effort to expand our overall footfall both domestic and export. So we don’t have any issue with the slight capacity — lower capacity utilization for a quarter or two. But we see that India is poised for its economy to grow quite well. And last year, because of inflation, the household budget was very constrained. But if the inflation is now under check, then volume growth is bound to come back. In any case, it is always 3%, 4%, 5%. It’s not that it is in any negative territory. And hence, I think for us to expect a double-digit volume growth is quite possible to continue because we did that even last year. So we don’t see any reason why we can’t do it this year.

Pulkit Singhal — Dalmus Capital Management — Analyst

Understood. Fair point. Secondly, just on the capacity versus March end and what you’re planning post this capex of INR100 crores. How much would the domestic carton capacity go up by? And I’m including what you added in April. So on a volume basis, how much tonnage increase would be there for carton and how much for flexible?

Saket Kanoria — Managing Director

So let’s say, one line, typically, we say 9,000 tons a year, so two lines would be 18,000 tons. But I would say that because the volumes per brand are reducing, and hence, the total output goes down to some extent. I would say, instead of 18,000 tons, we could push for like 14,000, 15,000 tons effective capacity.

Pulkit Singhal — Dalmus Capital Management — Analyst

Okay. On a base of like?

Saket Kanoria — Managing Director

We have now 100,000 tons roughly.

Pulkit Singhal — Dalmus Capital Management — Analyst

Okay. And for flexible, that will be almost 33% increase at the third line?

Saket Kanoria — Managing Director

That will — would be about 6,000 ton increase roughly.

Pulkit Singhal — Dalmus Capital Management — Analyst

On a base of 12,000 tons?

Saket Kanoria — Managing Director

On a base of — about 10,000 tons.

Pulkit Singhal — Dalmus Capital Management — Analyst

10,000 tons. Got it. Great. Thank you, and all the best.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vivek Agarwal, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Sir, on the FY ’23 numbers, if I remove the effect of Creative Offset, then roughly we are growing at 30% on a top line basis. So how much would be your volume growth in this roughly? Because when we have cited slow growth and still we have grown the top line by 30%. What would be the effect of value growth and how much would be the volume growth?

Saket Kanoria — Managing Director

Firstly, I didn’t get your name. Could you please tell me your name?

Unidentified Participant — — Analyst

Vivek Agarwal.

Saket Kanoria — Managing Director

We don’t really flesh out these numbers towards very fine detail. But I would say that the volume growth overall out of that 30% would be — yeah, about 10% to 12%, I would say.

Unidentified Participant — — Analyst

These are volume?

Saket Kanoria — Managing Director

Yes.

Unidentified Participant — — Analyst

Okay, sir. And sir, you told that Q4 top line can grow by 10% at the initial capex level. So if I analyze that, it is around INR1,650 of top line. Is that what we think we can achieve without the capex? And the 15,000 tons of carton and 6,000 tons of flexible packaging that is going to come on stream in FY ’24 is over and above that?

Saket Kanoria — Managing Director

No, we have given guidance of a double-digit growth in the current year.

Unidentified Participant — — Analyst

No, sir, I’m not talking about current year, I’m talking about going forward.

Saket Kanoria — Managing Director

CapEx is an ongoing part. So our endeavor is to grow in that range yearly.

Unidentified Participant — — Analyst

Understood, sir. That’s [Indecipherable]. Thank you.

Operator

Thank you. [Operator Instructions] As there are no further — sir, we have a question in the queue from the line of Vivek Agarwal, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Sorry, sir. My apologies to come back. On the debt front, sir, now that we are showing healthy cash accruals, directionally, the debt would be constant and with a negative balance or going forward, two, three, five years with INR100 crore capex.

Saket Kanoria — Managing Director

Our debt — if you look at our total debt, in terms of ratio, it has improved considerably.

Unidentified Participant — — Analyst

Yes, sir, it has.

Saket Kanoria — Managing Director

I mean, so overall, it’s fairly healthy situation, which we hope to continue.

Unidentified Participant — — Analyst

Ideally on the [indecipherable] grow from here because the cash accruals are now INR250 crores [indecipherable] INR250 crores.

Saket Kanoria — Managing Director

Yeah, but then we’ll grow faster if we can do that.

Unidentified Participant — — Analyst

We really hope for that, that’s why [indecipherable].

Saket Kanoria — Managing Director

Thank you.

Unidentified Participant — — Analyst

Okay, sir.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Saket Kanoria — Managing Director

So thank you, everyone. I hope I’ve been able to justify and answer all your questions. Should you need any further clarifications or if you would like to know more about us, please free to contact our Investor Relations team or the CDR India. We hope to have your valuable support on a continued basis as we move ahead. On behalf of all of us here at TCPL, I thank you for taking the time to join us on this call, and I look forward to interacting with you all again soon. Thank you.

Operator

[Operator Closing Remarks]