The Supreme Industries Limited (SUPREMEIND) Q3 FY23 Earnings Concall Transcript

The Supreme Industries Limited (NSE:SUPREMEIND) Q3 FY23 Earnings Concall dated Jan.24, 2023.

Corporate Participants:

M.P. Taparia — Managing Director

Prakash Somani — Executive Vice President

Analysts:

Aasim Bharde — DAM Capital — Analyst

Rajesh Ravi — HDFC Securities — Analyst

Udit Gajiwala — YES Securities — Analyst

Ritesh Shah — Investec — Analyst

Abhishek Ghosh — DSP Capital — Analyst

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Pranav Mehta — Equirus — Analyst

Sailesh Raja — B&K Securities — Analyst

Unidentified Participant — — Analyst

Rahul Agarwal — InCred Capital — Analyst

Sonali Salgaonkar — Jefferies — Analyst

Keshav Lahoti — HDFC Securities — Analyst

Sujit Jain — ASK Investments — Analyst

Venkatesh Balasubramaniam — Axis Capital — Analyst

Utkarsh Nopany — Haitong Securities — Analyst

Niraj Shah — Arihant Capital — Analyst

Presentation:

Operator

Good afternoon, ladies and gentlemen. I’m Toshiya, moderator of Supreme Industries Q3 FY ’23 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note this conference is recorded.

I would now like to hand over the floor to Mr. Aasim Bharde from DAM Capital. Thank you, and over to you, sir.

Aasim Bharde — DAM Capital — Analyst

Thank you, and good evening, everyone. On behalf of DAM Capital, I would like to welcome all to Supreme Industries Q3 Results Conference Call. From the Supreme team, we have Mr. M.P. Taparia, Managing Director; Mr. P.C. Somani, CFO; and Mr. R.J. Saboo, VP, Corporate Affairs and Company Secretary. Over to you, Mr. Taparia, for your opening comments.

M.P. Taparia — Managing Director

Thank you very much, Mr. Aasim. I’m M.P. Taparia, Managing Director of The Supreme Industries Limited. I, along with my colleagues, Shri P.C. Somani, Chief Finance Officer; and Shri R.J. Saboo, Vice President, Corporate Affair and Company Secretary, welcome all the participants who are participating in the discussion of the unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2022.

The standalone results and the consolidated results are already with you. I will give briefly on company’s product operating performance and other highlights. The company sold 138,362 tons of plastic goods and achieved net product turnover of INR2,284 crores during the third quarter of the current year against sales of 91,364 tons of plastic goods and achieved net product turnover of INR1,895 crores in the corresponding quarter of previous year, achieving volume and product value growth of about 51% and 21%, respectively.

The company sold 359,087 tons of plastic goods and achieved net product turnover of INR6,500 crores during the nine months of the current year against sales of 265,301 tons and net product turnover of INR5,106 crores [Phonetic] in the corresponding nine months of previous year, achieving volume and product value growth of about 35% and 27%, respectively.

Total consolidated income and operating profit for the third quarter of the current year amounted to INR2,319 crores and INR331 crores as compared to INR1,948 crores and INR359 crores of the corresponding quarter of the previous year, resulting in consolidated income increase of about 19% and operating profit decrease of about 10%. Total consolidated income and operating profit for the nine months of the current year amounted to INR6,622 crores and INR824 crores as compared to INR5,227 crores and INR985 crores for the corresponding period of the previous year, resulting in consolidated income increase of about 26% and operating profit decrease of about 15%, respectively.

The consolidated profit before tax and profit after tax for the third quarter of the current year amounted to INR273 crores and INR210 crores as compared to INR314 crores and INR246 crores for the corresponding quarter of the previous year, resulting in decrease of around 13% and 15%, respectively. The consolidated profit before tax and profit after tax for the nine months of the current year amounted to INR647 crores and INR506 crores as compared to INR823 crores and INR645 crores for the corresponding period of the previous year, resulting in decrease of around 21% and 22%, respectively. The business scenario of all the product segments of the company for the third quarter of the current year ended December 31, 2022, as compared to the corresponding quarter in the previous year has been hedged under.

Plastic piping system business grew by 82% in volume and 31% in value terms. Packaging Products segment business degrew by 12% in volume and 7% in value terms. Industrial Products segment business grew by 20% in volume and 24% in value terms. Consumer Products segment business degrew by 5% in volume and 9% in value terms.

The overall turnover of value-added products increased to INR826 crores during the third quarter of current year as compared to INR665 crores in the corresponding quarter of previous year, achieving growth of 24%. The company has total cash surplus of INR687 crores as on December 31, 2022, as regard cash surplus of INR518 crores as on March 31, 2022.

Business outlook; Plastic Pipe system business profitability continued to be impacted due to foreign PVC prices until November 2022. December onward, PVC prices have started upward March. The low prices of PVC, along with the destocking by the retail chain, improved business substantially in December. Pipe system prices, in spite of increase in PVC prices, remain affordable.

Demand from housing, agriculture and infrastructure is quite improving. The company achieved 51% volume growth in third quarter on a lower base of corresponding quarter in the previous year, as huge destocking took place in third quarter. For nine month period ended December 2022, piping business has witnessed volume growth of 48%, which is quite encouraging. PVC prices, which had dropped by INR66 per kilo, that means 45% up in this year till November, has recurred again by INR15 per kilo since then. It looks that price of PVC will remain end bound, which augurs well for the business. The company expects to maintain a growth momentum with increased end of system, which are commissioned in this year along with affordable raw material prices.

New greenfield project for plastic piping system at Erode in Tamil Nadu has commenced commercial production from December and there will be some delay. Upcoming facility at Cuttack in Odisha [Technical Issues] start production in this month. Our brownfield expansion of capacity and range of products are working smoothly. The company newly introduced olefin fitting and pressure piping system are getting encouraging response from market and poised for good growth in time to come. The company’s launched cable sealed conduit system in this month.

With all the above projects and expansion in place, company expects to achieve volume growth in excess of 35% in this segment for this year compared to previous year. The cross laminated film division has introduced many new better products and was successful in acquiring customers by entering in four additional countries. This division expects volume to be around the same level of previous year with improved profitability.

Industry component division is doing reasonably well. The division continues to expand its customer base to optimally use its production capacity. Business of home appliance and white goods, which constitute the largest share of the division, is seasonal in nature to some extent, and is likely to improve further with diversified customer base and acquisition of new businesses.

The division has also received letter of intent of about INR45 crores for supplying electronic working unit component and VVPAT in addition to the earlier order of INR76 crores. Material Handling division continued to expand its customer base and product portfolio. Business of injection and roto molded pallets is doing well. There’s good demand forecast from soft drink bottlers, which would further help the division to optimally use its production capacity.

The furniture division has done well during the first nine months of the year, where its turnover has grown by 13% value and 8% volume of corresponding period of previous year. This division has also witnessed steep fall in polymer prices leading to improved operating margin. Company is focused to add further several varieties of premium products in this business.

In Composite LPG Cylinder division, the existing production line is running at full capacity and primarily catering to the orders issued from Indian Oil Corporation. Commissioning of the new land, doubling the capacity is completed and expect to start full production from beginning February. Protective Packaging division is putting its continuous effort to remain in the business growth path, all products across categories in the division, asset quality and value for money.

The division is closely working with customers and with us and developing new applications for variety industry, keeping their needs in mind. The division is focused to grow in volume, do value engineering and adopting new technology and manufacturing to drive improved profitability. Continuous growth is witnessed in defense, export and insulation business.

Performance Packaging Film division is working extensively on developing specialized structure film to meet newer application and customer requirements. Efforts continue to enter new category in export market and increase the customer base, which is providing fruitful with better realization and profitability.

The division is also exploring expansion opportunities. The complete capex plan for the year 2022, 2023 of about INR700 crores, including carryforward commitment of INR280 crores is progressing with a little delay from the initial schedule. New greenfield plants at Guwahati in Assam, Erode in Tamil Nadu have gone into commercial production, and plant at Cuttack is likely to commence production in February 2023.

Entire capex is being funded from internal resources. The prices of various polymers being used by the company, particularly polypropylene, low-density polyethylene and polyvinyl chloride have witnessed upward trend in the recent past after reaching the bottom during the current year. Prices have gone down earlier between INR41 per kilo to INR66 per kilo since the beginning of the year until November, that is a reduction between 28% to 46% before rising a bit during December and January till now. Most of the fall was in PVC resin, which also resulted in substantial inventory losses, part of which is recovered during December and expected further recovery in the last quarter of the current year. The company is hopeful of achieving good business growth, both in volume and value for the year.

This is a brief and overall summary for the quarter ended in reference. Thank you for your patience. Now I and my colleagues, Shri P.C. Somani and Shri R.J. Saboo, are available to reply to various queries asked by all of you. Thank you very much.

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will now begin the question-and-answer session.

The first question comes from Rajesh Ravi from HDFC Securities. Please go ahead.

Rajesh Ravi — HDFC Securities — Analyst

Yes. Hello, sir. Good evening, everyone. And congrats on strong volumes in the Pipe segment since demand is quite good in this segment. Sir, am I audible?

M.P. Taparia — Managing Director

Yes, you are audible, sir.

Rajesh Ravi — HDFC Securities — Analyst

Great. Sir, could you quantify how much is the inventory loss booked in the third quarter? You said there is a partial recovery. But on a net basis, what is the impact?

M.P. Taparia — Managing Director

In the first half, it was INR230 crores. Then I think again since there was no proper margin, so some money we might have recovered. Maybe we can’t quantify today. But some profit definitely, we recovered it in the month of December.

Rajesh Ravi — HDFC Securities — Analyst

No, no. What I’m asking is in Q3 numbers, are there any inventory losses beyond 1H?

M.P. Taparia — Managing Director

Q3 number only I’m talking. In Q3, in first two months, we again lost money. Only in the last month, we recovered money, which we can see that our operating margin should remain below. What was the operating margin in this quarter — last quarter, of plastic piping?

Prakash Somani — Executive Vice President

Last quarter plastic piping was 12%.

M.P. Taparia — Managing Director

In quarter three, our plastic piping margin was 13.49%. We believe it was definitely 2% lower.

Rajesh Ravi — HDFC Securities — Analyst

Okay. So the inventory would have — okay, has this inventory loss not been there, it would be close to 15.5%, right?

M.P. Taparia — Managing Director

You are right. Yes, correct.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Great. Great. And given that now prices have jumped from the November level, at least inventory losses are behind for the industry?

M.P. Taparia — Managing Director

Not totally behind. We believe that we will get some inventory gains. And losing money, we have imported raw material where we lost quite heavily. In this quarter, we will gain something from our import consignment, which is going to come.

Rajesh Ravi — HDFC Securities — Analyst

Okay, okay. And on the company level, what is the effective tax rate, sir?

Prakash Somani — Executive Vice President

Normal tax rate is 25.17%.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Okay. And sir, any guidance outlook for the volumes and margins, say, Q4, how is the demand looking up? What could be the drivers, Q4 and FY ’24? And similarly, on margins, what sort of — on margin, any outlook?

M.P. Taparia — Managing Director

FY ’24, we will talk in April. For this year, full year, we anticipate our operating margin will be 12.5% plus and our volume growth will be around 25% for the…

Rajesh Ravi — HDFC Securities — Analyst

Full year, 25%.

M.P. Taparia — Managing Director

For the full company.

Rajesh Ravi — HDFC Securities — Analyst

Okay. 25% volume growth?

M.P. Taparia — Managing Director

Last year, we sold 393,908 tons. This year, we anticipate 25% volume growth for the full year.

Rajesh Ravi — HDFC Securities — Analyst

Okay, 25%. So last quarter, you’re building in slightly muted volumes is what I can understand. Okay. That would mean that Q4 volume should be flat — similar to Q3 numbers, if I work backwards. Hello, am I audible?

M.P. Taparia — Managing Director

Yes, you are audible.

Rajesh Ravi — HDFC Securities — Analyst

Yes. So what I’m saying that when I look at 25% volume growth for full year, Q4 volumes appear to be flattish quarter-on-quarter and some 6%, 7% higher year-on-year.

Prakash Somani — Executive Vice President

Q3 numbers are very good.

Rajesh Ravi — HDFC Securities — Analyst

Correct. Correct.

M.P. Taparia — Managing Director

Q3 numbers are best along with the Q3 of last year. Last year, Q3 was unexceptionally very poor.

Rajesh Ravi — HDFC Securities — Analyst

Yes. No issue, sir, I think that still is good. So on the capex front, this INR700 crores capex, how much is spending for Q4, to be spent out? And what is the outlook for next year in terms of what sort of capex company would be looking forward to?

M.P. Taparia — Managing Director

We’ll tell in the month of April.

Rajesh Ravi — HDFC Securities — Analyst

Okay. And how much…

M.P. Taparia — Managing Director

This year, our commitment continues. End of the year, we will inform you total commitment made by the company. But to commit, INR700 crores is commitment by the company, including INR280 crore carryforward. When we say commitment, it doesn’t mean that everything will arrive by March 2023, some may come into next year.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Because first half, your capex outgo as per cash flow statement was INR240 crores, which is every half year, the run rate continues between INR200 crores to INR250 crores. So that run rate would continue in the second half.

M.P. Taparia — Managing Director

It would continue in a similar way.

Rajesh Ravi — HDFC Securities — Analyst

Okay. And sir, one last question. The working capital days that you report in the presentation. What is the calculation behind that? Because when we do our working capital numbers, debtors, inventory and payables, they don’t match with your numbers. So where would we be missing in terms of calculation?

M.P. Taparia — Managing Director

See, mostly the other items and excluding the cash in bank.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Thanks. I’ll come back-in queue.

M.P. Taparia — Managing Director

Thank you.

Operator

Your next question comes from Udit Gajiwala from YES Securities. Please go ahead.

Udit Gajiwala — YES Securities — Analyst

Thank you sir for taking my question. Sir, given the robust growth that we have seen, and you mentioned that the PVC prices started to move up in December, so sir, could you quantify that when did the dealer restocking commence? And what are the inventory days with the dealers now versus in the previous quarter?

M.P. Taparia — Managing Director

That, we don’t keep a track of the inventory in general, but definitely, dealers started restocking. And even coming forward after beginning February, the full season starts and the demand remains middle of June, very strong. So we believe that this may only increase the inventory so that they can service the customer.

Udit Gajiwala — YES Securities — Analyst

Understood. And sir, could you quantify the demand driver, primarily where is it coming from? Is it rural economy that you are seeing? Or is it the plumbing end?

M.P. Taparia — Managing Director

Demand was coming quite strongly from the agriculture segment also. So rural economy, we keep a track only each of the segment, while the demand was quite robust in the month of December.

Udit Gajiwala — YES Securities — Analyst

Understood. And sir, like you had mentioned that your FY ’24 on your TV interview today, you said that you are targeting for INR9,000 crores top line. So is that figure right, so the balance would come in Q4?

M.P. Taparia — Managing Director

We are talking FY ’23.

Udit Gajiwala — YES Securities — Analyst

Yes, sir, FY ’23.

M.P. Taparia — Managing Director

’23, we anticipated our turnover will be INR9,000 crores plus.

Operator

Sir we request you to please come back-in the queue.

Udit Gajiwala — YES Securities — Analyst

Sure. Thank you.

Operator

Thank you, sir. I request the participants to restrict with two questions in the initial round and join back the queue for more questions.

Next question comes from Ritesh Shah from Investec. Please go ahead.

Ritesh Shah — Investec — Analyst

Hi sir, thanks for the opportunity. Sir, my first question is, can you please give us some indication on agri versus non-agri mix? And how it has moved on a year-on-year basis? That’s the first question, sir.

M.P. Taparia — Managing Director

With regard to your first question, there is no way to quantify because in India, agri pipe, our so-called agri pipes are used in housing also. So this is the same reply I give in every quarterly meet and this is the reality of business.

Ritesh Shah — Investec — Analyst

Sure, sir. Sir, would it be possible for you to share some trends on the CPVC volume growth?

M.P. Taparia — Managing Director

We had a growth of 32% in nine months.

Ritesh Shah — Investec — Analyst

Okay. That’s encouraging. And sir, just one clarification. When we give volume growth when it comes to pipes and fittings, this does not include any residences, right?

M.P. Taparia — Managing Director

No, no. We are talking plastic product.

Ritesh Shah — Investec — Analyst

Okay, perfect. This is very helpful, thank you so much.

Operator

Next question comes from Abhishek Ghosh from DSP Capital. Please go ahead.

Abhishek Ghosh — DSP Capital — Analyst

Thanks sir. Thanks for the opportunity. Sir, can you just help us understand what is your current capacity and post the commencement of the three units that you have spoken about in Tamil Nadu, Odisha? What would be your capacity looking like?

Prakash Somani — Executive Vice President

You see, our capacity at the beginning of the year was close to 725,000 metric tons. I’m talking of the company as a whole. At end of the year, it should be somewhere it’s like 15,000, so about close to 90,000. Some capacity will be increased with three new greenfield plant and other brownfield expansions. Obviously, the volume capacity increased in Plastic Piping division only.

Abhishek Ghosh — DSP Capital — Analyst

Correct. Okay. So all of these 90,000 tons, part of it has come up in December, the residual will come up over the next — in the current and the next month, right?

Prakash Somani — Executive Vice President

Yes, you are right.

Abhishek Ghosh — DSP Capital — Analyst

Okay. And sir, how should one, given the demand scenario in the East and South — Southern Belt, how should one expect the ramp-up of this capacity which is coming up over the next 12 to 18 months?

M.P. Taparia — Managing Director

We are spread throughout the country.

Abhishek Ghosh — DSP Capital — Analyst

Sir, just referring to this new capacities which are coming up, depending on your past experience, over the next 12 to 18 months, can it reach to a 40%, 50% utilization? Is that a fair estimate?

M.P. Taparia — Managing Director

Not 40%, 50%. Overall, we will achieve — this is new capacity. New capacity coming only in the middle of the year. Some capacity may come in this quarter also.

Prakash Somani — Executive Vice President

This 12 to 18 months, what he’s asking for, yes, you are right, it has been far better what you call, 40%, 50%, if it goes 60% plus utilization.

M.P. Taparia — Managing Director

65% normally we achieve.

Abhishek Ghosh — DSP Capital — Analyst

Okay. Got that. Sir, you have also mentioned about this in the cross-laminated films. You have come out with new products and you’re also looking at additional countries. So how are the prospects in this segment?

M.P. Taparia — Managing Director

This year, the business will show hardly any growth. But next year, we are quite optimistic with our business in molded item and in export market will show good growth. We’ve got quite a good capacity lying idle. We’ll be able to put better utilization of capacity next year.

Abhishek Ghosh — DSP Capital — Analyst

Okay. Okay. And sir, just one more thing. In terms of the Performance Packaging division also, you’ve kind of looked at those special structure films for newer applications and you’re also evaluating expansion opportunities. So how should one look at this segment’s prospects?

M.P. Taparia — Managing Director

This segment, our capacity is very small. We can produce only 12,000 tons per year. We are evaluating this capacity and where we put up the — up till now, we have not taken any decision. Once we take a decision, we will convey to all our investors.

Abhishek Ghosh — DSP Capital — Analyst

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

Operator

Next question comes from Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Yeah, good afternoon team and thank you for the opportunity. Sir, my first question is on how is the competitive scenario in the domestic market for cross-laminated films? We believe there were a few competitors who had come up with lower-priced products. How is the scenario now?

M.P. Taparia — Managing Director

Scenario of what?

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

In terms of competition.

M.P. Taparia — Managing Director

Now they are selling in kilograms because in the market, the quality was found quite inferior. They only offered blue pallet product, which didn’t perform compared to our product quality.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Okay. So are we seeing any improvement in terms of pricing over here, given that those competitors are exposed on their product?

M.P. Taparia — Managing Director

Yes, we are pricing product correctly.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Because our margins are in this segment continue to remain in single digits. So are we confident that we will see recovery?

M.P. Taparia — Managing Director

Margin single digit? No, I think margins are in two digits.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

No, no, overall packaging business, I’m saying EBIT margin.

M.P. Taparia — Managing Director

Overall packaging, there are too many — three segments. So when you see, cross-laminated film, it is in double digit.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

No, sir. For the overall packaging business, are we looking at margin recovery possibly in FY ’24?

Prakash Somani — Executive Vice President

Yes, sure. You see our Protective Packaging division, which also constitutes a good part of the business in this, is working on various product developments, new applications. So in the division, yes, we should shoot double digit definitely in ’23-’24.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

Okay. Secondly, sir, if you look at the working, it’s right about 36 days versus 30 days in FY ’22. Possibly, this — on account of higher inventory is due to volatile RM prices. But as RM prices stabilize, are we looking at working capital coming back to normal?

Prakash Somani — Executive Vice President

Yes, yes. It should. To some extent, the growth in business, we’ll require more working capital, obviously. But yes, the level it is at, it should definitely come down.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

And lastly, sir, on the value-added side, you mentioned CPVC had 32% revenue growth. Are there any other things, which you want to call out, which have done well?

M.P. Taparia — Managing Director

There are many product of value addition, not only in plastic, piping and other division also. So overall, as we stated, our value-added business has gone up to INR826 crores in third quarter compared to INR665 crores in the previous year same quarter. So there was 27% value growth in the value-added item. It came not only from plastic piping, it came from other divisions also.

Bhargav Buddhadev — Kotak Mutual Fund — Analyst

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

Operator

[Operator Instructions] Next question comes from Pranav from Equirus Securities Private Limited. Please go ahead.

Pranav Mehta — Equirus — Analyst

Thank you sir for taking my question. Sir, I wanted to understand and know about your thoughts on how the PVC prices are expected to move going forward because as we understand globally, still the demand continues to remain challenging, and India remains in a bright spot. So is there a possibility that imports might see dumping coming from a lot of other countries, which are big exporters of PVC because of which going forward, there is a possibility that prices may correct?

M.P. Taparia — Managing Director

No. We believe PVC prices have gone down too much so that can be corrected. It went down up to $650 from $2,100 internationally. And now it has come up to close to $950, $960. So that overshoot when there’s a big cycle change. But now after all, considering the cost position, we believe the prices are in range bound, considering those are up and minus we cannot say. But we don’t see much upside also with the world economy not in great shape, but downside also due to cost push.

Pranav Mehta — Equirus — Analyst

Thank you very much.

Operator

Next question comes from Sailesh Raja from B&K Securities. Please go ahead.

Sailesh Raja — B&K Securities — Analyst

Thanks for the opportunity. My questions are pertaining to Supreme Petro. Sir, so much of styrene monomer capacity has been created in China and a lot more capacities to get added. But still, the prices of styrene are very volatile. If you see last six months from $1,250 per ton went down to $950. Again, now it bounced back to $1,250 per ton. So by when do you expect the styrene prices will stabilize, sir?

M.P. Taparia — Managing Director

Styrene prices will always go and remain always volatile. But the bulk created from China to India is still at an elevated level. Earlier it was $110 per ton, but now also it is $80 per ton, whereas solid material can come at $30. So bulk shipping, yes, for liquids are still quite high. But fortunately, quite a good capacity coming at China, that will give a good support to our company for procuring our requirement of styrene monomer.

Sailesh Raja — B&K Securities — Analyst

Okay. Okay. Sir, can we expect this EBITDA per KG to sustain above INR20 for this year and the next year? Because nine months, we have done INR22 per KG.

M.P. Taparia — Managing Director

For which INR20?

Sailesh Raja — B&K Securities — Analyst

Overall EBITDA — overall, sir, for the company, EBITDA per KG, we have done INR20.

M.P. Taparia — Managing Director

Supreme Petrochem, that they will reply you the effect.

Sailesh Raja — B&K Securities — Analyst

Sorry, sir?

M.P. Taparia — Managing Director

Supreme Petro will tell you correctly.

Sailesh Raja — B&K Securities — Analyst

Okay. Okay. Sir, how is the demand — current demand scenario, sir, now?

M.P. Taparia — Managing Director

Demand, there is quite a good demand.

Sailesh Raja — B&K Securities — Analyst

Okay. Sir, by when do you think the new expanded capacity will be fully utilized? Sir, the last two, 2.5 years, we didn’t focus on exports. And also, can you please guide us how much we are targeting in exports in this year and the next year, sir?

M.P. Taparia — Managing Director

Our capacity of polystyrene has gone up to 300,000 tons now. And we believe that we may export some 30,000 tons, 40,000 tons polystyrene next year. And if we are running at maybe 80% capacity, 200,000 tons, we’ll be able to sell in India.

Sailesh Raja — B&K Securities — Analyst

Okay. Thank you.

M.P. Taparia — Managing Director

Thank you.

Operator

We have a follow-up question from Ritesh Shah from Investec. Please go ahead.

Ritesh Shah — Investec — Analyst

Yeah sir, thanks for the opportunity. Sir, just one question. There have been murmurs on the street about new management been indicated. What we see is there is a new HR head, which has come in. Just wanted to sir understand the thought process of induction of senior management. Is this something ongoing? How should we look at it? That will be very helpful, sir.

M.P. Taparia — Managing Director

We have appointed one HR head.

Ritesh Shah — Investec — Analyst

Yes, sir.

M.P. Taparia — Managing Director

He is now functioning very well starting from 1st of August.

Ritesh Shah — Investec — Analyst

Right. Sir, are we looking at further induction at the top level basically, given the company is growing and manufacturing facilities are also expanding. Are we looking to strengthen the…

M.P. Taparia — Managing Director

We are having leadership development among our organization.

Ritesh Shah — Investec — Analyst

Okay. Sure. And sir, would you be able to provide some color on our recent launches on cables, electrical side and specifically on the cylinder side, how things have been actually progressing and industrial valves as well, sir?

M.P. Taparia — Managing Director

They have been launched only in this month only. So I have nothing to tell you today. Industrial valve and cables have been launched this month only. So it’s too early to give any color about that, but we anticipate good demand growth coming from both the products.

Ritesh Shah — Investec — Analyst

Sir, would it be possible for you to quantify the size of the market that we are looking at over here? And what sort of competition will be over there?

M.P. Taparia — Managing Director

We will be conveying you on this in the month of April.

Ritesh Shah — Investec — Analyst

Sure, that’s great. Thank you so much and good luck [Indecipherable].

Operator

Next question comes from Ahmed Mansoor, an individual investor.

Unidentified Participant — — Analyst

[Technical Issues]. Sir, there is — as per your management presentation, there is a capacity of extruded polystyrene, which we’re expecting to come up by March ’24. So sir, is that on track? Or has the capacity building started?

M.P. Taparia — Managing Director

Extruded polystyrene?

Unidentified Participant — — Analyst

Extruded polystyrene boards.

M.P. Taparia — Managing Director

No, that has not come up still in production.

Unidentified Participant — — Analyst

Okay. So are you expecting it to expand by 1 lakh cubic meters by FY ’24?

M.P. Taparia — Managing Director

Yes, I think they will be able to reply you properly.

Unidentified Participant — — Analyst

Thank you.

Operator

Next question comes from Rahul Agarwal from InCred Capital. Please go ahead.

Rahul Agarwal — InCred Capital — Analyst

Yeah hi sir, good evening. Thanks for the opportunity. Sir, first question was, what could be the top two, three reasons for PVC resin prices to go up?

M.P. Taparia — Managing Director

Very good question. Some plant went through difficulty. And so there was tremendous shortage created because no new capacity came up. Some existing plant went through difficulty, some existing plant in USA. which were big suppliers. They went on expansion, so they also closed their operations. Particularly the demand for PVC, we have never seen such a swing that prices went up from $700 to $2,100 and then came down again back to $650. Upwards, when it started from April, May 2020 and continued up to October 2021. November onwards, the prices started falling.

Rahul Agarwal — InCred Capital — Analyst

Sir, I was asking because of this December up move. The reason for that also was some plant shut down globally, is it?

M.P. Taparia — Managing Director

Plant shutdown and somewhere we had cost pressure, then they felt not worth of producing PVC.

Rahul Agarwal — InCred Capital — Analyst

Okay. So that plant.

M.P. Taparia — Managing Director

Prices dropped so severely that many suppliers found that it is not worth running and making PVC full capacity. It’s a normal particular cycle.

Rahul Agarwal — InCred Capital — Analyst

Got it, sir. So that plant is now already functional?

M.P. Taparia — Managing Director

Perhaps, by and large running. In the world, there are very good huge plants. They have 45 million ton capacity to produce. So some plants will always be maintenance or some plant may have some break down. But overall, supply is adequate nowadays.

Rahul Agarwal — InCred Capital — Analyst

Got it, sir. And sir, the last question on packaging. The volumes actually degrew in third quarter by 12% Y-o-Y to 145,000 tons. Any specific reason for this?

M.P. Taparia — Managing Director

Partly due to fall in demand for cross-laminated film product.

Rahul Agarwal — InCred Capital — Analyst

But I thought, sir, our products are better, then why the demand is going down?

M.P. Taparia — Managing Director

Okay. But there are so many good lookalike products there in the market, selling at 30%, 40% lower than our price. No quality. That will come back now.

Rahul Agarwal — InCred Capital — Analyst

Okay. Okay. Got it. So next quarter, we should see some improvement. That’s what you’re indicating, right?

M.P. Taparia — Managing Director

Yes, for sure.

Rahul Agarwal — InCred Capital — Analyst

Got it, thank you so much. I’ll come back-in queue. Best wishes.

Operator

[Operator Instructions] The next question comes from Sonali Salgaonkar from Jefferies. Please go ahead.

Sonali Salgaonkar — Jefferies — Analyst

Thank you for the opportunity. Sir, my first question is, with PVC prices firming up, do you foresee the risk of affordability getting impacted? Because we are seeing very strong volume growth throughout this year, that’s FY ’23, the first nine months, especially because PVC prices have corrected, which has led to increase affordability. Do you foresee that to reverse?

Prakash Somani — Executive Vice President

Do you foresee the reversal of prices?

M.P. Taparia — Managing Director

It may not go back to the same level of 72 — within country, we are getting at INR72 a kilo. We don’t see that’s going back to INR72 a kilo. Our procurement cost has gone up from INR72 today to INR90 a kilo. It came down from INR160 a kilo to INR72. Now currently it is INR90. We do not see any reason for prices to come down from INR90 to INR72.

Sonali Salgaonkar — Jefferies — Analyst

So that’s what I’m asking. If the prices stay firm for PVC, do you foresee the affordability to get impacted?

M.P. Taparia — Managing Director

No, small changes in pricing and volume is going on taking place. So that is a part of business. And for two years, it was significant price rise and significant price drop. That’s where PVC came in limelight.

Sonali Salgaonkar — Jefferies — Analyst

Okay. Got it, sir. On the demand side, are you seeing any weakness in the real estate or construction demand in Q3? You did mention that agri was very strong. But do you — have you seen any weakness in construction demand?

M.P. Taparia — Managing Director

We are seeing good demand coming from agriculture, housing and infrastructure, all the three segments.

Sonali Salgaonkar — Jefferies — Analyst

That’s it from my side. Thank you.

Operator

Next question comes from Keshav Lahoti from HDFC Securities. Please go ahead.

Keshav Lahoti — HDFC Securities — Analyst

Thank you for the opportunity. I just wanted to check one thing. Last time, you mentioned that your capacity will increase by net 60,000. Overall, it will be 80,000, but a plant from Maharashtra to Erode will transfer by 20,000. But this call, you have guided your capacity will increase by 90,000. So what is the reason for the same? And what will be your capacity segmental-wise in FY ’23 end?

Prakash Somani — Executive Vice President

Yes. Capacity realignment with the Erode, etc, we have put up the new lines also. We have funded the capacity for the plastic water tank. That’s why overall for the current year, the capacity increase is better and now visible. Everything will be in production by end of February, mostly. For segmented capacity for the end of March ’23, which is close to like 815,000 metric tons, the measured will be in the Plastic Piping system 610,000 tons; industrial product, 83,000 tons; packaging product, 90,000 tons; and consumer product, 30,000 tons.

Keshav Lahoti — HDFC Securities — Analyst

Okay. Understood. Sir, why PVC resin prices have pulled off from INR160, INR170-odd levels to INR90 level? Do you think now there would be some demand impacted of CPVC?

M.P. Taparia — Managing Director

For CPVC, as we told, we have seen a growth of 92 — 32% in nine months. And CPVC demand is going in the plumbing segment. Also, it continuously — requirement continues. So we don’t see any demand downside also. We don’t see a downside.

Keshav Lahoti — HDFC Securities — Analyst

Okay. One last question from my side. Again, I’d like to ask you on resin prices. Is it fair to assume that resin prices will settle at INR90 level? Or do you think the volatility will continue in this?

M.P. Taparia — Managing Director

In all the polymer prices, not only PVC, all the polymer prices, volatility remain. In all commodity products, prices will always remain volatile. But if the volatile is only INR3, INR4 a kilo, minus or plus, doesn’t make much difference. It was severe, so PVC came in limelight. It went up from INR70 to INR160, and then came down to against INR72. Otherwise, there is nothing great now. It normally happens in our business. Now it is a normal business cycle.

Keshav Lahoti — HDFC Securities — Analyst

Okay, thank you. That’s it from me.

Operator

We have a follow-up question from Rajesh Ravi from HDFC Securities. Please go ahead.

Rajesh Ravi — HDFC Securities — Analyst

Yeah, hi sir. You mentioned in the earlier question, the pipes plastic capacity is now increasing to 610,000 tons by year-end. And even if I do 25% volume growth, you would be closing the year with close to 5 lakh tons of volume for FY ’23. And that would mean you will have a good amount of capacity surplus for the next two to three years. So just wanting to understand, how would that impact or will it lead to a slower capex program for you for the next two to three years, and you will focus more on asset searching?

Prakash Somani — Executive Vice President

So dear, you see the capacity what we are talking is installed capacity per annum. If you have observed in the past, our utilization remained around 65% or so. For example, if we have 800,000 tons capacity, then if you go at 65%, then you require further capacity because the number of SKUs, the items, the change of product lines, it requires a lot of…

M.P. Taparia — Managing Director

And not throughout the year.

Prakash Somani — Executive Vice President

And demand is not even throughout the year. So we have a very tight working capital measurement in the company. So we don’t create inventory beyond in all the parts. So all put together, capacity utilization cannot be or will not be more than 65% to 70% for the rest. So apart from that, we also need to expand geographically to make our product more reachable to the various parts of the country.

Rajesh Ravi — HDFC Securities — Analyst

Okay. And which of these geographies reach up — which markets do you believe that your reach is still not to the optimum level that you expect to proceed?

M.P. Taparia — Managing Director

We believe we have to explore throughout the country. There is opportunity for us throughout the country. There are 6,000 talukas in our country. Every state, there are many talukas where our product is not found.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Understood. Sir, in terms of macro numbers, do you have any view on how would have demand been shaping up in FY ’23 for plastic pipes, more so in terms of PVC and CPVC growth for the industry this financial year?

M.P. Taparia — Managing Director

Overall for the country, this year, we are told by the raw material makers, the country may see a growth of 21% by volume. And we are saying, it will grow by 35%. Currently, ours also will grow by 21% by volume. The country has a degrowth continuously for last ’20-’21 and ’21-’22. This year the country has entered into a growth path.

Rajesh Ravi — HDFC Securities — Analyst

Sorry, you mentioned that Supreme will deliver 35% volume or 25% volume growth?

M.P. Taparia — Managing Director

We anticipate that we will grow 35% plus — we will grow 35% plus in the plastic piping system…

Prakash Somani — Executive Vice President

In the plastic piping, right?

M.P. Taparia — Managing Director

Whereas the country is expected to grow by 21%.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Okay. Understood. And anything on the CPVC, similar numbers. What sort of volume growth the industry is looking at?

M.P. Taparia — Managing Director

CPVC, we can tell you about our company. We have grown nine months at 32%. And the country growth may be around 240,000 tons.

Rajesh Ravi — HDFC Securities — Analyst

Okay. And this 32% growth is volume or revenue for you, sir?

M.P. Taparia — Managing Director

In volume.

Rajesh Ravi — HDFC Securities — Analyst

In volume terms, okay. And going forward, are you expecting that with prices softening compared to the volatile numbers earlier, the agri market should open up big way and that is where the volumes can remain buoyant for next financial quarters?

M.P. Taparia — Managing Director

The price change will — demand will remain buoyant coming in the peak agri season, that is in April and May. If nothing happens — agri pumps because the prices today are down by 20% compared to last year January. Vinyl product sharing price is 20% lower than last year January. So it has become very affordable to the farmers.

Rajesh Ravi — HDFC Securities — Analyst

Correct. But what we understand is that the sales, rural or agri sales have relatively much lower margins compared to the plumbing sales. So would that mean that while volume numbers for the industry may look up, margin profile for the industry and major players may taper down?

M.P. Taparia — Managing Director

Margin will remain normal. In the pipe — for farmers, pipe prices are always kept low.

Rajesh Ravi — HDFC Securities — Analyst

Correct. So blended margin, will it be impacted? I’m just trying to understand…

M.P. Taparia — Managing Director

We don’t make only agriculture pipes. We make varieties of products. I am saying that housing is bigger than agriculture.

Rajesh Ravi — HDFC Securities — Analyst

Any ballpark breakup, sir? How much would be your housing sales or plumbing sales as a whole?

M.P. Taparia — Managing Director

Breakup, we do not know because our agriculture pipe is used for housing also.

Rajesh Ravi — HDFC Securities — Analyst

Okay. Great. Lastly, one more question. This Meghmani Finechem CPVC resins, which is now getting available in the market, and next year, DCW resins would also come in supplies. How would they change the CPVC dynamics?

M.P. Taparia — Managing Director

The requirement of import may go down.

Rajesh Ravi — HDFC Securities — Analyst

Okay. But would it also bring in more players, more CPVC pipe manufacturers in the market?

M.P. Taparia — Managing Director

Yes, there are already many are there.

Rajesh Ravi — HDFC Securities — Analyst

No. Why I’m saying this is currently, the resin supply is well concentrated and few have only — this is more of a more moat sort of thing. And hence, the pricing of CPVC also remains celebrated. So can that see a risk?

M.P. Taparia — Managing Director

We don’t see that. After all CPC supply was not a problem starting this year. The problem was that in previous year due to the plant shutdown of Kaneka, there was — now this year, starting from April, there was no problem in supply.

Rajesh Ravi — HDFC Securities — Analyst

No, I’m not talking about Supreme, sir. In general for the industry because we have a…

M.P. Taparia — Managing Director

I am saying the industry as such. There was no problem getting CPC resin, nothing. If the local process may come up, then it will get extended and imports will go down.

Rajesh Ravi — HDFC Securities — Analyst

That’s all from my end. Thank you.

Operator

Next question comes from Sujit Jain from ASK Investments. Please go ahead.

Sujit Jain — ASK Investments — Analyst

Sir, if I look at your volume growth five years here, from FY ’14 to FY ’19, it was 8%. Of course, this was a sluggish real estate period. Over the medium term, five years hence from today, let’s say, FY ’23 end, what kind of industry level volume growth one can expect?

M.P. Taparia — Managing Director

For which segment?

Sujit Jain — ASK Investments — Analyst

For overall piping segment?

M.P. Taparia — Managing Director

15%, our company should grow.

Sujit Jain — ASK Investments — Analyst

15% you are saying?

M.P. Taparia — Managing Director

1% to 5% volume growth should go, next five years, yes.

Sujit Jain — ASK Investments — Analyst

And that is mainly on the back of housing demand, that is plumbing pipes, is it?

M.P. Taparia — Managing Director

Housing, infrastructure, agriculture, all segments.

Sujit Jain — ASK Investments — Analyst

Okay. And what would be your normalized margins at the company level overall now that the inventory gains losses are out broadly?

Prakash Somani — Executive Vice President

That should be around…

M.P. Taparia — Managing Director

15.

Prakash Somani — Executive Vice President

Between 15% to 16% in normalized level.

Sujit Jain — ASK Investments — Analyst

Okay. And in terms of your dealer distribution network, where that number stands today?

M.P. Taparia — Managing Director

We go on increasing our reach. We go on increasing number of distributors and dealers. Overall, we are nearly 4,000…

Prakash Somani — Executive Vice President

4,373.

Sujit Jain — ASK Investments — Analyst

Okay. That is a distributor number. And in terms of dealer?

M.P. Taparia — Managing Director

See dealers, for each segment, we have got different number of dealers. In piping systems, it is more 70,000 dealers. And the business, our distributor as well as dealers, we looked really to more than 200,000 — 150,000 retailers. Overall, we don’t keep — I don’t have numbers to just tell you. But distributors, many of them sell to many retailers.

Sujit Jain — ASK Investments — Analyst

So penetration-led growth will not be there for Supreme because Supreme would have reached to most of the distributors and dealers in India?

Prakash Somani — Executive Vice President

No, it’s not the case.

M.P. Taparia — Managing Director

I don’t want to…

Prakash Somani — Executive Vice President

Reach wise, you see India is a large country. As mentioned in earlier call, the answer is, India has more than 6,000 talukas. There are many talukas where we are not there.

M.P. Taparia — Managing Director

We are very clear that we are not present in all 6,000 talukas. But we are present in many areas, that’s why our sales are the highest in the country.

Sujit Jain — ASK Investments — Analyst

This 4,300 number can potentially go to what, 5,500, 6,000?

M.P. Taparia — Managing Director

No, we don’t keep any limit. Out there, there are 6,000 talukas, and then we have got several products, which are sold through distributor network, not only plastic piping system, our furniture, our tarpaulin, our material handling system, our protective packaging product. So we will have many, many more number of family members going to be aiding.

Sujit Jain — ASK Investments — Analyst

Right. And did we hear it correctly when you spoke about CPVC demand in India at 240,000 tons?

M.P. Taparia — Managing Director

Around that, yes. It is restricted only to plumbing. But it’s a small segment only.

Sujit Jain — ASK Investments — Analyst

Right. All of your competitors are entering into bathware and faucet-ware segments. Supreme has not done that. What is the strategy?

M.P. Taparia — Managing Director

We are already there. Our brand is very strong. AquaKraft brand is very strong.

Sujit Jain — ASK Investments — Analyst

Not metal faucet-ware, you are there in plastic faucet-ware. So would you in future look to…

M.P. Taparia — Managing Director

We have got — as on today, no plan to go to metals. When we will have planned, we’ll inform to all our partners.

Sujit Jain — ASK Investments — Analyst

Right. And one last question. Capacity is coming up in the East. You’ve put up capacities there. You still have to put up capacities. If in one particular region, large capacities come up, would it impact the sales in that particular region?

M.P. Taparia — Managing Director

For any reason, we’ve got still reach only in 12 states, 29 states are there. So we have to reach in many, many more states. Today, we are operating 20th plant. And we’ll be opening new plants in new location, which we will convey in the month of April.

Sujit Jain — ASK Investments — Analyst

What is the potential of fittings revenue per annum eventually?

M.P. Taparia — Managing Director

If you make good quality product, you can go and sell it.

Sujit Jain — ASK Investments — Analyst

And one last question. Your reason wise split of your volumes in piping division, North, West, East, South?

M.P. Taparia — Managing Director

We are present throughout the country.

Sujit Jain — ASK Investments — Analyst

But any percentages you would like to give us?

M.P. Taparia — Managing Director

I don’t have the number before me, so I cannot give you — I don’t want to give you a wrong number.

Sujit Jain — ASK Investments — Analyst

But is it West and South heavy? Is it West-North heavy for the company?

M.P. Taparia — Managing Director

I say we share throughout the country.

Sujit Jain — ASK Investments — Analyst

Thank you so much. All the best.

Operator

[Operator Instructions] Next question comes from Venkatesh B from Axis Capital. Please go ahead.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Yeah, thank you for this opportunity. Most of my questions have been answered. Just a very simple question. I know it is still early days. And after the full year numbers are over, you look at next year FY ’24. But as of today, given that you will do almost 25% kind of volume growth in the current year, can you do double, more than 10% kind of volume growth next year? Is that a possibility?

M.P. Taparia — Managing Director

I think we can. Still, we may grow 15% next year.

Venkatesh Balasubramaniam — Axis Capital — Analyst

15%, okay, okay. And if raw materials do not fluctuate too much and if PVC prices remain where they are, we should be in that 15% to 16% kind of EBITDA margin band?

M.P. Taparia — Managing Director

We hope so.

Venkatesh Balasubramaniam — Axis Capital — Analyst

Thank you. All the very best.

Operator

Next question comes from Utkarsh from Haitong Securities. Please go ahead.

Utkarsh Nopany — Haitong Securities — Analyst

Hi, good evening sir. Further based on the current demand environment, can we expect to clock more than 20% volume growth for the pipe segment in the current March quarter period?

M.P. Taparia — Managing Director

Sorry, say it again?

Utkarsh Nopany — Haitong Securities — Analyst

Based on the current demand environment and the resin prices, can we do more than 10% volume growth on a year-over-year basis for the Pipe segment in this current March quarter period?

M.P. Taparia — Managing Director

For this January-March?

Utkarsh Nopany — Haitong Securities — Analyst

Yes, January to March, sir, versus previous January-March, sir.

M.P. Taparia — Managing Director

We’ll do more than 10%. We’ll do more than 10%. Last time, our capacity was based on 97,000 tons. We’ll do more than 10%.

Utkarsh Nopany — Haitong Securities — Analyst

Okay. And sir, like you have mentioned the volume growth for the CPVC for the nine months. Sir, can you also quantify for December quarter? [Technical Issues]

Operator

Participants kindly stay connected while we connect the management team back on the call.

We welcome back the management team. Please go ahead, sir.

Utkarsh Nopany — Haitong Securities — Analyst

Sir, I was asking for the CPVC volume growth for December quarter period only, not for the nine months.

M.P. Taparia — Managing Director

We don’t give numbers before — for the December quarter alone.

Utkarsh Nopany — Haitong Securities — Analyst

Okay. And, lastly sir, how is the competitive scenario in the pipe segment at the moment? Whether the small and the midsized players have become more aggressive in the market after easing of the PVC resin supplies in the domestic market?

M.P. Taparia — Managing Director

We don’t compete with those players. I have no view on that. We only know that our growth is 30%, 35% and the country growth is 25% — 21%. So our share has mostly gone up. And because we are introducing several new varieties of product, there’s also — basically, it is a better growth for our company.

Utkarsh Nopany — Haitong Securities — Analyst

Okay. Sir, lastly, like our number of pipe distributors or channel partners actually came down from FY ’21 to FY ’22 as per the annual report. Just wanted to know whether in this nine months of FY ’23, have we done any addition of pipe new distributors? And what would be that number?

M.P. Taparia — Managing Director

I don’t think any new numbers. We are mentioning same numbers, 1,320, 1,320, I think because overall 1,320, 13 — now 1,319. And it was 1,250 on March 31, 2022. So we have added 69 distributors.

Operator

Next question comes from Nikunj Khanna from ASK Investments. Please go ahead. There is no response. And the next question comes from Niraj Shah from Arihant Capital. Please go ahead.

Niraj Shah — Arihant Capital — Analyst

Hi sir. Thank you for taking my question. Sorry, if the question is repetitive. Just wanted to understand first thing is the rural demand, how do we see the rural demand right now? And secondly, what would be our view if China opens up and then what would happen to the raw mat pricing scenario over there if China opens up? Because I believe imports would increase from there. Just these two questions.

M.P. Taparia — Managing Director

Two questions on rural segments. We introduced — in rural area, we have two items, that is agriculture pipe and our cross-laminated film for various agriculture applications. In both the segments, we are seeing good demand coming from rural sector. Coming to the second point, we believe that China is now in between strong restriction on COVID movement, and China economy opened up. From 30th of this month, when the China opens, the market expects the polymer prices may harden. And it continues request — China has continued to import raw material, there is no material to run the plants. We are — and PVC, at least, we are too much dependent on imports. Our 60% of our requirement has to come from imports.

Niraj Shah — Arihant Capital — Analyst

Okay. So you’re expecting prices to go up?

M.P. Taparia — Managing Director

May go up, it shall be seen, not much. There is no reason for price to go up too much also and too much down also. Some small change will always take place.

Niraj Shah — Arihant Capital — Analyst

Okay. And that would be towards the end of the current month, right?

M.P. Taparia — Managing Director

Sorry?

Niraj Shah — Arihant Capital — Analyst

As you said, China will be opening up towards the end of the current month?

M.P. Taparia — Managing Director

There the New Year Lunar already there. It will close by 27th. So the China will open fully from 30th, that is Monday. And we expect is that all polymer prices in domestic market in China will harden because the demand will open up very nicely up to the Lunar New Year. This is the market expectation. But nobody can say. I can’t predict particularly what will happen in China. If they supply more material in India, they are welcome. We are short of PVC in end demand in the country, and China is a big supplier.

Niraj Shah — Arihant Capital — Analyst

Understood, understood. That is all from my side, sir. Thank you.

Operator

Thank you. That will be the last question for the day. Now I hand over the floor to management for closing comments.

M.P. Taparia — Managing Director

Thank you very much.

Operator

[Operator Closing Remarks]