The Supreme Industries Limited (SUPREMEIND) Q4 FY23 Earnings Concall Transcript

The Supreme Industries Limited (NSE:SUPREMEIND) Q4 FY23 Earnings Concall dated Apr. 28, 2023.

Corporate Participants:

M. P. Taparia — Managing Director

P. C. Somani — Chief Financial Officer

Unidentified Speaker —

Analysts:

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Dhananjai Bagrodia — ASK Asset & Wealth Management — Analyst

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Keshav Lahoti — HDFC Securities Limited — Analyst

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Sneha Talreja — Edelweiss Group — Analyst

Achal Lohade — JM Financial Services — Analyst

Ritesh Shah — Investec — Analyst

Rishab Bothra — Anand Rathi Investment Services — Analyst

Mohit Agrawal — IIFL Securities Ltd. — Analyst

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

Navid Virani — Bastion Capital Management — Analyst

Devansh Nigotia — SIMPL — Analyst

Presentation:

Operator

Ladies and gentlemen, good day. Q4 FY ’23 Earnings Conference Call of Supreme Industries Limited hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Aasim Bharde from DAM Capital Advisors. Thank you, and over to you.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Thank you, Yashashree, and good evening, everyone. On behalf of DAM Capital, I would like to welcome all to Supreme Industries Q4 Results Conference Call, Q4 and FY ’23. From the management side, we have Mr. M.P. Taparia, Managing Director; Mr. P. C. Somani, CFO; and Mr. R. J. Saboo, Company Secretary and VP, Corporate Affairs.

Over to you, Mr. Taparia.

M. P. Taparia — Managing Director

Thank you very much. I am M.P. Taparia, Managing Director of The Supreme Industry Limited. I along with my colleagues Shri P. C. Somani, CFO; and Shri R. J. Saboo, Vice President, Corporate Affairs and Company Secretary. Welcome all the participant who are participating in the discussion of the standalone and consolidated financial results. For the quarter and year ended 31 March 2023, as ten year results and the consolidated results are already with you. I give brief on the company product operating performance and other highlights. The company sold well 1,47,414 ton of plastic goods and achieved net product turnover for INR2,566 crore during the first quarter of the current year, against share of 128,670 ton of plastic goods and achieved net product turnover of roughly INR2,519 crore in the corresponding quarter of previous year achieving volume and product value growth of about 15% and 2% respectively. The company sold 5,06,501 ton of plastic goods and achieved net product turnover of INR9,066 crore given the year under review against share of 3,93,900 ton and net product turnover of INR7,625 crore in the previous year, achieving volume and product value growth of about 29% and 19% respectively.

That total consolidated income and operating profit for the fourth quarter of the current year amounted to INR2,610 crore and INR559 crore as compared to INR2,566 crore and INR461 crore of the corresponding quarter of the previous year recording increase in consolidated income and operating profit of over 2% and 15% respectively.

The consolidated income and operating profit during the year under review amounted to INR9,231 crore and INR1,353 crore and compared to INR7,793 crore and INR1,446 crore for the previous year recording increase of about 18% in the consolidated income and decrease of 6% in operating profit. The consolidated profit before tax and profit after tax for the fourth quarter in the current year amounted to INR451 crore and INR359 crore compared to INR409 crore and INR34 crore over the corresponding quarter of the previous year, recording increase in profit before tax and profit after tax 14% and 11% respectively.

The consolidated profit before tax and profit after tax during the under review amounted to INR1,111 crore and INR865 crore as compared to INR1,432 crore and INR968 crore for the previous year. We’re seeing decrease in profit before tax and profit after tax about 10% and 11% respectively. The business scenario of other product segment of company for the year ended 31 March 2023 and compared to the previous year end.

Lastly, piping system business grew by 37% in volume and 20% and in value ton. Packaging products segment given a same level at volume and grew by 8% in value term. Industrial product segment finish grew 23% in volume and 31% in value term. Renewal product segment business grew by 5% in volume and 10% in value term. The overall turnover of renewal product increased to INR3,329 crore as compared to INR2,911 crore in the biggest year, achieving growth of 48%. The company had total cash surplus of INR738 crore as of 31 March 2023 and with a cash surplus of INR518 crore as of 31 March 2022.

The company plans to commit capex of around INR8,750 crore during the year, including carry forward commitment of INR153 crore at the beginning of the year. The plant will expand capacities and introduce a range of new products into our segment. The capex plant also include checking a plant at Malanpur near Gwalior. Entire capex share will be funded from internal.

Business outlook. The country whose contain inflation equation, we see the growth there, large investment infrastructure by central estate government, forecast over monsoon at group, we hope to put agriculture production in the year. Mewarpur housing was very robust. Due to weak work economic forecast, the commodity pricing were on downward path which target well for boosting growth in our country economy, commodity accept of all the business enabled the company to achieve 29% volume growth in the year mostly coming quite heavy of loss witnessed in last two years.

During the year under review, the company achieved volume growth of about 37% and plastic pipe system made from different plastic materials. Overall, the company showed a 7,546 tons of pipe system compared to 2,74,295 tons versus the preceding year. However, with increase in prices, revenue growth was around 20% of our previous year. We received a predominant [Indecipherable] in the the company plastic pipe business. During the year ’22, ’23, the prices were again literally in roller coaster mode for second year in succession. The prices of [Indecipherable] were in downward trend for 1 April 2022 to the third week of November 2022. Overall prices of pipe share went down by INR67 per kilo during this period. This has resulted in large payment loss. Thereafter, after 4 December 2022, pipe share started increasing scale up to generate 2023 as a right spot to INR15 per kilo from [Indecipherable] that we changed it previously but now registered. Prices at lowest level — at lower leading to boost in conjunction. The country experienced growth of around 32% in pipe rate in conjunction and the previous two, growth was negative. The government and the central have taken several initiatives, like focus on new admission, Swachh Bharat Abhiyan, Seher Qaisar, affordable housing, the smart cities and many more which are urging industry demand for plastic piping products. The initiatives are much more pronounced in the past year. The share can continue from beginning of this year also. The company incurred a tax of INR398 crore in the year under review with a dividend, FX reduced plant to build the highest initiatives, rent, and commissioning of three project at Guwahati, Assam, Erode in Tamil Nadu and Cuttack in Odhisa. All three greenfield plants has gone into production during the year, one after the another.

The company has successfully launched olefin fittings regions and fittings which a portfolio of 179 number. The company plans to increase the rents substantially and add 140 new product during the current year. The company reported three aluminium three pipe per house and surcharge. These kind of pipes are now part of house collection designed for [Indecipherable] The compression chat which is opposite pipe are also building up so called complete system of polyethylene aluminum, polyethylene pipe application. The company started manufacturing piping product at one more prominent South door in June-July district Erode in Tamil Nadu since December 2022, in addition to the existing plant at Jadcherla, Telgana making this project stronger in Southern India.

Erode plant is changing the location, we service Tamil Nadu, Kerala and part of Karnataka corporation. Company is settling to double the capacity of pipe at Erode and also start manufacturing [Indecipherable] pipe and this quarter came at same site within this year. The business of course [Indecipherable] and product and the growth of 5% in volume terms during the year. Company introduced many new major product from actual [Indecipherable] and successfully acquiring customers by entering an additional world market. Explore grew by 12% on the previous year with project 32 countries across the globe. The company witnessed 11% by new products against estimated growth of 3% from plastic furniture industry during 20% to 23% of previous year. The company could grow more in the industry due to intensive marketing effort, consistent business policies, launching of several new range of furniture and increase in coverage of uncovered market and a strong position as a premium brand producer.

They company is focused on creating large retail display showroom for plastic furniture was successful. An interesting component dividend is reasonably well. That dividend continued to expand this customer trends. We optimally use it’s products in various cities. Business is long and wide goods which get you to larger share of the division we see them in nature to some extent and is likely improve further with diversified customer page and acquisition of new businesses. The company acquired orders from EC IL for manufacturing EVM machine and we created plant have subassembly [Indecipherable] revenue growth by nearly 30% year-over-year the preceding year.

The automobile, engineering FMCG company again giving metallurgical demand over the previous two years yet material handling division to grow 16% by volume and 28% by variable for the year. Company regulatory to this new meter of additional mortgage credit aggregating again about the features and benefits of the share, providing revenue-enhancing solution that will shape the economic material storage and granted at given the positive and growth result. While the good end of this growth momentum for the coming year also, it is continuing to strengthen and introduce suitable new products in this segment of business.

The year under review was very successful for company shared the dividend which start running at 98% of it stated and short-term supply commitment, of which supply 4.72 in cylinder and aggregate til March 2023 to Indian Oil Corporation against the annualized for supply of 731,000 cylinder. Company expects further order from Indian Oil Company during the year and continue to expand to get a reach to other countries. Expansion of the existing capacity has been successfully completed and now increased capacity of 1 million cylinder per annum is in place and performing dividend. On the positive front, any product mix and focus on valued share to branch and derivative product. These are clearly close to obtain the volume at 21%. Dividend is now registered under EPR, making extreme provision responsibility and it’s supporting all my initiatives or sustainability for risk management. The company expects to achieve a very normal rate of growth it just witnessed in the current year due to increase customer base in India and abroad.

Product packaging division, it’s continuous effort remain on growth mode. The growth in 5% volume at 11% in per share terms. Our product across category in the division, asset quality and variable money. Dividend is closely working with customers and we bringing new applications in our industry keeping their needs in mind, usually focus to grow in volume, do various things, adjusting no capital management to drive improved comparability.

Thank you to all the witness and different export that we witness where we gave brief and overall summary for the quarter at year under reference. Thank you for your patience. Now I and my colleagues, Shri P. C. Somani and Shri R. J. Saboo are available for reply your various questions by you. Thank you very much.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] We have our first question from the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Yeah. Thank you for this opportunity. You had communicated that in the inventory loss in the first half of the year was between INR200 crores to INR250 crores. Can you tell us if there was any inventory loss or inventory gain in the second half of the year and especially the fourth quarter?

M. P. Taparia — Managing Director

First quarter will eventually gain. Of around INR50 crore, INR70 crore besides the number that we gave you.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay.

M. P. Taparia — Managing Director

First haf, we lost INR2 crore, INR3 crore in inventory loss.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Yeah.

M. P. Taparia — Managing Director

Which we count — I had a side of INR70 crore again. Net-net we lost INR180 crore inventory loss for the year.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay. The INR70 crores, was is the second half or was it in the fourth quarter?

M. P. Taparia — Managing Director

Fourth quarte, fourth quarter.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay, okay. Thank you for that. Now what is your volume revenue and margin expectation for the next year? Volume growth, revenue growth and margin.

M. P. Taparia — Managing Director

We anticipate 15% volume growth.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay.

M. P. Taparia — Managing Director

And margin will be between 13.5% to 14%.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay. Now, why are you — why is your…

M. P. Taparia — Managing Director

Third quarter will be excess of INR11,000 crores.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay, okay. Now because your 13% to 14% margin expectation seems very, very low because in the fourth quarter, you have done almost like 18% plus kind of margins and it is, — yeah, it is almost 18.5% kind of margin. Even if we adjust for that INR70 crore kind of number, you will still get to almost. 17.5% margins. So why are you guiding for such a low number for the next year 13% to 14% margin?

P. C. Somani — Chief Financial Officer

There INR70 crore comes with 16% for the quarter.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay. Still that is like 15.5%, right?

P. C. Somani — Chief Financial Officer

Yeah, yeah. Ultimately, the products are seasonal, agri pipes does not command such margin in rest of the year. So we have to filter the overall revenue of what we are getting.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay, okay.

P. C. Somani — Chief Financial Officer

Over the last quarter.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay, understood. Can just add one last thing. What was your capacity at the end of FY ’22 and what would be your capacity at the end of next year?

P. C. Somani — Chief Financial Officer

Our capacity 20, 23 ton and on 31 March 2024, 9.5 ton.

Venkatesh Balasubramaniam — Axis Capital Limited — Analyst

Okay. Thank you very much. All the very best.

Operator

Thank you. We have our next question from the line of Rahul Agarwal from InCred Capital. Please go ahead.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Hi, sir. Good evening, and congratulations for a strong recovery in business. The first question is how has been the start to the first quarter? April of this month, PVC prices have now stabilized, so any views on PVC prices and the start to the volume for this season, please.

M. P. Taparia — Managing Director

Now the first quarter is going to be volume like higher procured in last year’s first quarter. Last year first quarter was quite big, so this year, demand for sector is quite good because PVC prices in Guangdong substantially were driving up last year. But this year price, pipes are — they sell mostly in shipments and their demand is quite Robert due to low price and certainly demand for infrastructure for plastic pipe was quite good because JK laid that pipe before the rainy season. So if the demand from infrastructure and leakage are shifted. Both are better than last year.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

But sir, any outlook on PVC pricing?

M. P. Taparia — Managing Director

PVC pricing outlook, but today they are doing pricing rate ranged on $50 plus-minus will continue [Indecipherable] and foreign one. Now the pressure grew to so such a low level, if we are dropped by 400, it will go up by INR4. It is pretty difficult due to the whole economy is not in good shape.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Got sir. And my second question was on — for sir Somani. Income at P&L of the company on effective basis have been pretty low, like 19% to 22% for the last three years. Any specific reason, sir, why is that and what is the guidance for fiscal ’24?

P. C. Somani — Chief Financial Officer

Can you repeat again?

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Sir the income tax in the P&L, the rate is about 19% to 22% average for even fiscal ’23 and last two years. Any reason why the income tax rate is lower than the marginal rate? And what is — what should we built in for fiscal ’24?

P. C. Somani — Chief Financial Officer

No, no. You see the previous result, we have a good income from dividend from several petrochem. If we are distributing the dividend more than they so those income of dividend become tax free, Section 80M.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

I looking at consol numbers, sir. I’m looking at consolidated numbers.

P. C. Somani — Chief Financial Officer

In consol numbers, because of the profit — share of profit from petrochem we are taking income tax only. They don’t take further on that.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Okay, okay. That explains. Thank you so much, sir. All the best. I’ll come back in the queue.

P. C. Somani — Chief Financial Officer

Thank you.

Operator

Thank you. We have our next question from the line of Sonali Salgaonkar from Jefferies India. Please go ahead.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Sir, thank you for the opportunity and congratulations on a great set of margins in Q4. sir, my first question is broadly towards this pipe drinking water in Alwasail. You did mention some part of it in your opening comments, but it would be useful to have sort of an update as to what is the development of this project. And if at all you could share what kind of sales have we accrued so far out of this.

M. P. Taparia — Managing Director

Okay. New order. Just nothing. Don’t say that. No, she is asking what is the outlook and what is the necessary — necessary term scheme — necessary scheme. Now that that work have started now more effectively, they are trying to see that by 2024, the company [Indecipherable] throughout their country. But is t possible? Because some estates are not cooperating or some estates are bringing the chain. But quite a large portion of the country is going to be covered by lot of us by furnished begin 20 months from today, we’ll be covering most of the country, not just one but you referred 600,000 villages very gently tuck the central and state government government both are working very effectively and strongly now a days. Just today there were new, they are giving 40,000 connection in only UP per day. So from machining the way government is going there, we have seen them moving election as a drive. Then we achieved the complete — covering the entire country by December 2024.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Sir, you did mention that some of the states are not cooperating. So approximately how much of the countries is already covered?

M. P. Taparia — Managing Director

What is your paper item, I can tell you. I don’t know the state which is not cooperative. Personally, I believe they are but not too cooperative.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Okay.

M. P. Taparia — Managing Director

We’ll mostly don’t like to provide district.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Right. So sir, for Supreme, is there anything, any kind of sales or margins you could share that you have accrued from Nalseral [Phonetic] so far?

M. P. Taparia — Managing Director

No, we don’t generally give separate numbers. I think we can give that we have partnership continue to separate in pipe and we separated.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Okay, sir. All right. Sir my second question is regarding — to Mr. Somani. If you could help us with the segment-wise capacities as of March ’23.

P. C. Somani — Chief Financial Officer

Yes. So piping is 800,000 metric ton. Industrial product, 84,000 metric ton. Packaging product, 90,000 metric ton and consumer product, 29,000 metric ton.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

And what’s our average utilization?

P. C. Somani — Chief Financial Officer

We see this 800,000 capacity, part of it — beginning capacity of 725,000.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Right.

P. C. Somani — Chief Financial Officer

If you look from the opening capacity, then we have showed closed to 510,000, 506,000. So it will be around 65% to 70%, 66%, 67%.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Got it. Sir and just one last question. The value-added sales in Q4, correct me if I’m wrong, but are they showing a minor decline in absolute terms compared to last year?

P. C. Somani — Chief Financial Officer

Because of the silpaulin film which was — it’s import time was 100T elevated due to the poor margins, the margins below 17%.

M. P. Taparia — Managing Director

We out of the product. We got on from INR972 crore to INR943 crore.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Understand, sir. Sir, silpaulin has now gone out of value added, because the margin has slightly come below 17%, is that right?

M. P. Taparia — Managing Director

That’s what we got.

Sonali Salgaonkar — Jefferies Group LLC — Analyst

Understood, sir. That’s all from my side. Thank you.

Operator

Thank you. We have a next question from the line of Dhananjai Bagrodia from ASK. Please go ahead.

Dhananjai Bagrodia — ASK Asset & Wealth Management — Analyst

Sir, congratulations on a fantastic set of numbers. Would this volume growth be predominantly — our company — have we gained share or would this be an industry-wide phenomena in piping?

M. P. Taparia — Managing Director

Industry-wise, the growth was 32% of that PVC regime and we grown 37%.

Dhananjai Bagrodia — ASK Asset & Wealth Management — Analyst

Okay. Sir industry wide would be 32%. Okay. And sir, for your other businesses, the other verticals, do we have any like revenue guidance or what we’re seeing in those?

M. P. Taparia — Managing Director

The other verticals are in range of 10% to 15% growth.

Dhananjai Bagrodia — ASK Asset & Wealth Management — Analyst

Okay, sir. Sure. Yeah. Thank you so much.

Operator

Thank you. We have our next question from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Yeah. Good afternoon, team, and congratulations for the good set of numbers. My first question is, sir, we’ve started this is Erode plant in South India. Sir, can you quantify what could be the savings in freight cost towards supplying material to say, Tamil Nadu, Kerala, South Karnataka? And also, what could be the improvement in terms of delivery time because I believe earlier, the material used to come from the Jadcherla plant in Telangana.

M. P. Taparia — Managing Director

This is sharing of the freight is our go to buy customer or to go to buy users. The freight from Karegaon to Kerala and Erode to Kerala in 3%, 3.5%.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Sorry, sir, how much? I could not hear it.

M. P. Taparia — Managing Director

Karegaon to Kerala and Erode to Kerala in 3.5%.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

3.5%. Okay. Okay. This will help you make you competitive in South India.

M. P. Taparia — Managing Director

Make my goods more affordable to the customers of Kerala.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Okay.

M. P. Taparia — Managing Director

And Tamil Nadu also. It makes more affordable and goods can reach in the same day.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Same day. And earlier it used to take what two, three days?

M. P. Taparia — Managing Director

Three days out shed the same day. They can work with low inventory also.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Okay, okay.

M. P. Taparia — Managing Director

Low stable field boosts.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Okay, okay. Ans secondly sir, we’ve started this plant in Cuttack as well. So how about the economics in East India, there also we’ll have savings in freight cost and delivery times.

M. P. Taparia — Managing Director

Certainly. We will be delivering in same location. Just we got plenty of project, the project freight will go down dramatically.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Dramatically.

M. P. Taparia — Managing Director

We shall do commercial area.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Yes.

M. P. Taparia — Managing Director

Slightly very good to Cuttack.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Okay, okay, okay. Sir, earlier the delivery used to happen from which plant in the eastern part of the country?

M. P. Taparia — Managing Director

Sir, Kharagpur.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Kharagpur. Okay, sir. Okay. And lastly, sir, just wanted to know what has been the growth on the CPVC portfolio for us in FY ’23?

M. P. Taparia — Managing Director

Somaniji, you get that question.

P. C. Somani — Chief Financial Officer

Yeah. Volume growth was 24%.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

34%?

P. C. Somani — Chief Financial Officer

24%.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

24%. Okay. And value growth?

P. C. Somani — Chief Financial Officer

More than 40%.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

40%. Good. Okay, sir. Thank you very much and all the very best.

Operator

Thank you. We have our next question from the line of Keshav from HDFC Securities. Please go ahead.

Keshav Lahoti — HDFC Securities Limited — Analyst

Hi. Congrats on a great set of numbers. Just a follow-up on the last question. So what will be the mix of the PPVC right now broadly?

M. P. Taparia — Managing Director

Sorry?

Keshav Lahoti — HDFC Securities Limited — Analyst

What is the mix of PPVC portfolio in terms of revenue?

Operator

Mr. Lahoti, can you use your handset, please? Your voice is not very clear.

Keshav Lahoti — HDFC Securities Limited — Analyst

Just a minute.

M. P. Taparia — Managing Director

I’ll share the details later. That is classified information.

Keshav Lahoti — HDFC Securities Limited — Analyst

Okay, okay. Got it. And what is the sense on the agri demand as of now?

M. P. Taparia — Managing Director

Demand of security, the demand is quite good.

Keshav Lahoti — HDFC Securities Limited — Analyst

Sorry, I missed it.

M. P. Taparia — Managing Director

Agri demand is quite good and it starting and it should continue in the middle of June. So too early to say what growth you can get. The growth is looking quite good compared to last year.

Keshav Lahoti — HDFC Securities Limited — Analyst

Okay. One last question, as you highlighted the capacity by year-end would be INR9,50,000, can you give some bifurcation among the four segments?

M. P. Taparia — Managing Director

You want the bifurcation for the current capacity. The maximum expansion is taking place in plastic piping. So 90% of capacity increase is in the plastic piping still.

Keshav Lahoti — HDFC Securities Limited — Analyst

Okay. Got it. Thank you. That’s it from my side.

M. P. Taparia — Managing Director

Thank you.

Operator

Thank you. We have a next question from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Yeah. Thank you for taking my question. Sir, can you give some indication on the industry growth for the piping pipe and fittings segment for ’24?

M. P. Taparia — Managing Director

’24, we shared it between 13% to 15%.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

That is what your or for industry as well?

M. P. Taparia — Managing Director

No, the piping is 30% to 50%, other segment growth 20% to 30%.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

It’s a volume term?

M. P. Taparia — Managing Director

We have volume implied to you.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Yeah, yeah. And second question, sir, on the geographical mix for the pipe segment. Can you able to give the geographical mix of your pipe segment, like how much is from North? How much is from South?

M. P. Taparia — Managing Director

We share throughout the country.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

So equally throughout the country?

M. P. Taparia — Managing Director

No, not like that it depends but this year throughout the country.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Okay. And lastly on the capacity, sir. The three plants you initiated that’s in Guwahati, Erode and Cuttack, is it possible to say the capacity of these three plants?

M. P. Taparia — Managing Director

Yeah. 80,000. RTI, 80,000 ton.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Okay. Thank you, sir. All the best.

Operator

Thank you. We have our next question from the line of Sneha Talreja from Edelweiss. Please go ahead.

Sneha Talreja — Edelweiss Group — Analyst

Thanks a lot. Hello. Congratulations on great set of numbers. Sir, just two questions from my end. We would like to know the contribution this particular quarter from every pipe. I mean, the growth rate in every pipe should have been higher or is it planning which is driving the growth or was it infra?

M. P. Taparia — Managing Director

Which one? For the quarter?

Sneha Talreja — Edelweiss Group — Analyst

For the quarter as well as, let’s say, here in case you can just give some highlight. Like you mentioned because PPVC, it was 24%, what would have been the case contribution from infra and from agri?

M. P. Taparia — Managing Director

We don’t — personally this will be just about to tell you how much growth came from infra, how much from plumbing, how much from — cannot say.

Sneha Talreja — Edelweiss Group — Analyst

Okay. It was in the press release before?

P. C. Somani — Chief Financial Officer

Pardon?

Sneha Talreja — Edelweiss Group — Analyst

Sir was every brand present in Q4 or will we see the major growth only in Q1?

M. P. Taparia — Managing Director

The demand starts from Q4 March but the growth come all in the first quarter, I mean, the April-June quarter. When demand starts growing after Pongal, the January demand starts.

Sneha Talreja — Edelweiss Group — Analyst

Okay. But was this year better in terms of demand compared to last year?

M. P. Taparia — Managing Director

Better than last year, for sure, the demand came in at 39%.

Sneha Talreja — Edelweiss Group — Analyst

Okay. Sir, second I wanted to take them an update on the Maharashtra project that we have received from HDPE pipe which was some INR40 odd crores to be executed for the 13 month. Any numbers there how much have we achieved or any other government trajectory, added some details will be really helpful.

M. P. Taparia — Managing Director

Yeah. INR15 crore, INR20 crore we are supplying in 12 month. Initially it was planned to go — run for 24 months.

Sneha Talreja — Edelweiss Group — Analyst

Any other government regime that we are working apart from Maharashtra?

M. P. Taparia — Managing Director

In Maharashtra, we are supplying them INR15 crore to INR20 crore every month. The Maharashtra government.

Sneha Talreja — Edelweiss Group — Analyst

I’m just curious, any government regime apart from Maharashtra? Because it is only Mahrahastra at this point in time.

M. P. Taparia — Managing Director

Other areas also we are supplying but credit issue conjuncture. We are supplying them all credible plant, we are supplying through our mother plant, we are supplying to various state government requirement from our plant at different location. But in Maharashtra, we are supply direct to Maharashtra government.

Sneha Talreja — Edelweiss Group — Analyst

Understood, understood. Thanks, thanks a lot, sir, and all the very best.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Achal Lohade from JM Financial. Please go ahead. Achal Lohade, I have unmuted your line. Can you please ask your question?

Achal Lohade — JM Financial Services — Analyst

Yeah. Good afternoon, sir. Thank you for the opportunity. What I wanted to check, sir, if you look at the past the — in the plastic pipe business, the blended realization, the realization to average PVC resin prices to be about 1.3 to 1.4. For last three quarters, we have seen this number going up to 1.7. So is there a — any structural change in the mix, which is driving this markup or gross margins from the plastic pipe segment?

M. P. Taparia — Managing Director

In our piping system, we are not calling PVC pipe. They increased the percentage of policy rate — the policy is much more expensive than previously. We increased our share of GPVC which again is much higher than PVC. We increased the share of polypropylene that’s also much higher than PVC.

Achal Lohade — JM Financial Services — Analyst

And would that also have a higher margin as well? Is that a fair understanding compared to…

M. P. Taparia — Managing Director

Margin, I cannot say, margin differs product-to-product.

Achal Lohade — JM Financial Services — Analyst

Okay.

M. P. Taparia — Managing Director

But overall, it will definitely indicate the value.

Achal Lohade — JM Financial Services — Analyst

Understood. And with respect to HDPE PP, is that also driven by the project business?

M. P. Taparia — Managing Director

No, PP is mostly private only.

Achal Lohade — JM Financial Services — Analyst

Okay.

M. P. Taparia — Managing Director

But plumbing — and PP was plumbing. And originally, we have got both the setup digits, trade market and project was in this.

Achal Lohade — JM Financial Services — Analyst

Right. And just one clarification. In terms of the sales project versus retail. Would you be able to share some sense of what is the mix of the — from your sales company to project or company to area distributors?

M. P. Taparia — Managing Director

It’s not really available with me.

Achal Lohade — JM Financial Services — Analyst

But is there a substantial change compared to what it was, say, two years back or three years back, or it would be similar?

M. P. Taparia — Managing Director

We were sharing — we share to trade and we share to government.

Achal Lohade — JM Financial Services — Analyst

Right. Would there be a change in the mix? That’s the question.

M. P. Taparia — Managing Director

Because government, there are many — next we separated both like this. I don’t get positive information, I carried out two of them differently. We separate trade also, we separate government also.

Achal Lohade — JM Financial Services — Analyst

Understood, sir.

M. P. Taparia — Managing Director

Situation supply only go with them.

Achal Lohade — JM Financial Services — Analyst

Got it. And just a clarification. With respect to the ratio, what I was asking in terms of the realization PPVC resin price, this is more sustainable one, is that a fair understanding here in terms of the explanation what you gave, what has driven that is more structural change or ongoing ratio, would that be a fair assumption?

M. P. Taparia — Managing Director

I can’t share the detail because we will never — only in PVC pipe company. Now, we are encouraging capacity to policy also, we are engaging capacity of GPC also, so PVC also we are engaging capacity. So we are engaging capacity now, the same one where we are operating.

Operator

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

Ritesh Shah — Investec — Analyst

Thank you. We have our next question from the line of Ritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, couple of questions. First is, sir, on sampling, you indicated that the margins are below 17% right now. Sir, what is the strategy that we are adopting over here? Are you looking to push volumes or increase prices? How should we understand that, sir?

M. P. Taparia — Managing Director

Firstly, we increased the price there.

Ritesh Shah — Investec — Analyst

Okay. Sir, anything beyond increasing prices? Any new product variation?

M. P. Taparia — Managing Director

Just allow me to complete the answer.

Ritesh Shah — Investec — Analyst

Sorry, sir.

M. P. Taparia — Managing Director

There are look-alike freight came in to-market and they were selling at a most lower price than us, 20% 25% lower. So we were forced to drop the price. But finally in the last three, four years, we have found out that their quality was actually useless. So they were forced to sell it kilo basis, their quality cannot meet their sustainable of our ship volume. Now we are taking our sample rate product at the right price which was there and we were required to grow and now we are directly in the fresh trusting level ever. We can justify the investments.

Sure, sir. This is helpful. Sir, my second question is over time the company continues to launch new products. Sir, just if you can help us with the list for what all categories the company will be clocking, say more than INR150 crore sales, few variables, which come to my mind would be probably like tanks, tiles, walls. Can you list down price and the new categories, which over the last three years that we have come in and which will be fracing more than INR150 crores of top line?

No, three year is too short, three year to achieve such a turnover. Normally, we calculate in five-year timeframe. Sir, as of today, I can only share one thing that we are happy to report that whatever project with last five-year, every product in here accepted in the market. We are very appreciated and we are further adding to the range. So presently, I don’t have a figure that what was the quantum of target we achieved by the petrol and plus five-year. We don’t share. So I cannot give you any number, immediately any number. But one thing I can only say that whatever product we launch, all were successful

Ritesh Shah — Investec — Analyst

Sure, sir. Sir, just last question, it is more from a industry standpoint, it is not something with respect to Supreme Industries. Sir, when all the companies report pipes and fittings volumes, sales volumes, should we assume that it is only pipes and fitting? It has not at all resin trade volumes included over here. Sir, if you can speak on behalf of the industrials, there would be great sir.

M. P. Taparia — Managing Director

All right. But can you repeat your question. please.

Ritesh Shah — Investec — Analyst

Sir, my question is many companies report pipes and fittings sales volumes, does it only include pipes and fittings or there is scope that it could also potentially include resin skills over here?

M. P. Taparia — Managing Director

They can’t. We don’t make resin. We don’t make resin. Normally look, resin is only made Finolex.

Ritesh Shah — Investec — Analyst

Fair, sir. Sir, I am referring to the traded volumes on resin, so if we buy at a lower price and if we sell at a higher price, we would not put it in our pipes and fittings volumes, right? But is that a industrial practice as well?

M. P. Taparia — Managing Director

Ritesh, even in the industry other company, we feel, suppose we are excluding white fitting, it will be pipes and fittings on either, it will not be included in that. How resin can be — how it can be included it? It’s not a product that we have traded since no.

Ritesh Shah — Investec — Analyst

Correct, correct, correct. Sure, sir. This was very helpful, sir. Thank you so much.

Operator

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

Rishab Bothra — Anand Rathi Investment Services — Analyst

Hello, sir. Congratulations on good set of number.

Operator

Sir, can’t hear you clearly. Please use your handset.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Congratulations on good set of number. Am I audible?

Operator

No, sir, it is not.

M. P. Taparia — Managing Director

Rishab, not audible.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Hello? Yeah.

M. P. Taparia — Managing Director

Yeah.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Congratulations on good set of numbers.

M. P. Taparia — Managing Director

Thank you.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Can you just tell me the quarterly volume throughput volumes for each of the segments, volumes-wise?

M. P. Taparia — Managing Director

Totally. Okay. For starting I think for quarter four, 1,1,293 metric tons.

Rishab Bothra — Anand Rathi Investment Services — Analyst

1.12 lakhs?

M. P. Taparia — Managing Director

1,1,293 metric tons.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay.

M. P. Taparia — Managing Director

For industrial product, 16,508 metric ton.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay.

M. P. Taparia — Managing Director

For packaging segment, just 13,532 metric ton.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Right.

M. P. Taparia — Managing Director

And for consumer segment it is 5,081.

Rishab Bothra — Anand Rathi Investment Services — Analyst

And sir, secondly, the new three plants which have been commissioned, what is the revenue potential from the plants and by when will it optimally utilize the capacities?

M. P. Taparia — Managing Director

Everything will be operated this year only.

Rishab Bothra — Anand Rathi Investment Services — Analyst

This year only.

M. P. Taparia — Managing Director

Markets is already there. Now we have put up the capacity to meet the local requirement from the plant tickling the state. Earlier it was being separate for other branch.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay.

M. P. Taparia — Managing Director

So market was there and capacity started running so they will be all sold-out this year.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay.

M. P. Taparia — Managing Director

Actually, in our inward plant, we have now taken in hand to double the capacity.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay.

M. P. Taparia — Managing Director

Present capacity is 3,000 ton monthly now we are making additional further 3,000 ton which will start by November this year.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay. And sir my last question is on the associate company that is Supreme Petrochem. Last year, I think there was a substantial profitability in the company and how do one should look at the company profitability going forward? What would be the contribution like?

M. P. Taparia — Managing Director

I think that’s the best reply by Mr. Rakesh Nair the Chief Finance Officer, if you direct to Supreme Petrochem.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Is he on the call?

Hello?

M. P. Taparia — Managing Director

Maybe he will reply to your question.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Yeah, yeah.

M. P. Taparia — Managing Director

We’ll ask Supreme Petrochem.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay. Is he on the call today?

M. P. Taparia — Managing Director

Sorry?

Rishab Bothra — Anand Rathi Investment Services — Analyst

Is he on the call?

M. P. Taparia — Managing Director

We have a different call or different presentations so we can connect to them.

Rishab Bothra — Anand Rathi Investment Services — Analyst

But if you could throw some insight on that?

M. P. Taparia — Managing Director

Just I did.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Okay.

M. P. Taparia — Managing Director

Thank you.

Rishab Bothra — Anand Rathi Investment Services — Analyst

Thank you, sir.

Operator

Thank you. We have our next question from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Yeah. Thank you for taking my question again. So it’s related to industrial product, where we had seen for year ’22, as well as ’23 there is a very good volume growth and also you had mentioned about the growth here from the home appliances, white goods share has increased and growth were there. So can you guide us for the way forward like the similar kind of growth you are expecting the way forward as well in this segment?

M. P. Taparia — Managing Director

Okay. This was a good year for them. This year also there is a…

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

And the same home appliances or white goods that are driving the growth, the way forward also, you are expecting from there only?

M. P. Taparia — Managing Director

I think I pulled it furniture also. And then there is a part which is division. So all three industrial component, material handling product, and composite cylinder. Mostly is then good and they are expecting a good growth continually.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

And cylinder utilization level can you give like you have now 1 million cylinder capacity, how much is the utilization level there?

M. P. Taparia — Managing Director

Yeah. Last year this expansion has gone into production have commenced early in the February. So last year capacity — initial capacity of pilots cylinder. The last year we have retained it 90% plus.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

And now you have visibility to utilize this 1 million as well. Yeah.

M. P. Taparia — Managing Director

Ultimately…

P. C. Somani — Chief Financial Officer

We hope so. We hope so here.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Okay. Okay. Great. Because you have given — answering to one of the questions that’s other vertical to grow at a 10% to 15% of growth. So that’s why just asking if industry so growth were higher industry.

M. P. Taparia — Managing Director

Higher industrial injection molding product volume-wise we’ll grow 10% this year.

Praveen Sahay — Prabhudas Lilladher Private Limited — Analyst

Okay. Okay. Thank you.

Operator

Thank you. We have our next question from the line of Rahul Agarwal from InCred Capital. Please go ahead.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Yeah. Thank you for the follow up. Sir, it’s been some time, the new HR had joined the company. Could you elaborate a bit or could you whatever you can share in terms of what changes you’ve made in the organization, what kind of recruitments have happened and what should we expect going into next 12 months?

M. P. Taparia — Managing Director

It’s structured, in two quarters for his — he is there. He is involved in all our ne recruitment and they are very happy the way he has moved forward to increase our capability. He is working overall to improve the capability, the human sector.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Sir, any specific gaps you want to fill where he is helping or is it like very general across the company?

M. P. Taparia — Managing Director

In general, it was done. It’s how — our potential gets emerged. emerging is good — great potential. So the potential which is further given is, that is what he is doing very nicely

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Okay. Gfot it. And secondly, sir, in terms of piping — plastic pipe division, what is the count of distributors now and the thought process for fiscal ’24 in terms of new additions in case we are thinking on those lines?

M. P. Taparia — Managing Director

Plastic continues — the total distributors sales as of 31st March is INR1,443 crores. In fact, it is to add another INR100 crore and send it back to us during the current year.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

And how much did we add in this year?

M. P. Taparia — Managing Director

So it was INR1,250 crore to INR1,443 crore.

Rahul Agarwal — InCred Capital Financial Services Private Limited — Analyst

Okay. Okay. Got it, sir. Best wishes for fiscal ’24. Thank you so much.

Operator

Thank you. We have our next question from the line of Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Yeah, sir. Just one follow up. You mentioned INR70 crores inventory gain in this quarter, is it possible to quantify what was the inventory gain in the same quarter last year?

M. P. Taparia — Managing Director

Last year we had no inventory share. As we’ve shared the total in last year’s fourth quarter. As we shared in document I think in January, March last year. Within the peak October it was a month where it was not proportional in October will be of Q1 and again, we reached our first upgrade it came down to INR148.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

All right.

M. P. Taparia — Managing Director

I don’t see any region of gain in January March 2022 — in 2Q. We don’t see any reason. Don’t regards today but there is no reason for any inventory gain as you are finding out it will generally note it INR144 to INR137 to INR144, so as we’re referring to that we gained.

Bhargav Buddhadev — Kotak Mahindra Asset Management Company Limited — Analyst

Okay, sir. Thank you.

Operator

Thank you. We have a next question from the line of Mohit Agrawal from IIFL. Please go ahead.

Mohit Agrawal — IIFL Securities Ltd. — Analyst

Yeah, sir. Thanks for the opportunity. My question is on the volume growth guidance for FY ’24, 15% Now, the last five years volume CAGR has been around 6.5%, 7%. Just wanted to understand that this 15% number, does it include impact of some pent-up demand that you expect on the agri side or is it more like a sustainable number 15% going forward?

M. P. Taparia — Managing Director

Last five years it went to 10%, if you remember two years of Covid because of drastic economies. We have Covid, please don’t forget. So nothing to compare just for now because we are putting more — we are reaching more areas of the country, we are adding more product portfolio, we are expanding more distributors, we are increasing our capacity, we are reaching our rent. So we believe it should go as well which are 12% to 15% going forward.

Mohit Agrawal — IIFL Securities Ltd. — Analyst

Okay. Understood, sir. And, sir, any comments on the level of channel inventory? Now, you had earlier stated that February onwards the restocking will start. So any comments on that?

M. P. Taparia — Managing Director

Now present is that channel according to our knowledge that mentioned only normal inventory. No, that’s correct because the trend is not breached. Yes, loosely price is — accordingly our prices will go down may remain at this level only. With the commodity prices world wide are remaining soft. There is no apparent reason for them to build extra inventory. Normally limited they are running because they have to run the business.

Mohit Agrawal — IIFL Securities Ltd. — Analyst

Okay, sir. Understood. Thanks a lot.

Operator

Thank you. We have our next question from the line of Chirag Lodaya from Valuequest. Please go ahead.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

Sir, thank you for the opportunity. Sir, just one clarification. This 13.5%, 14% margin is for the overall company or you are talking about plastic product as a division?

M. P. Taparia — Managing Director

Overall company.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

And what could be plastic products division margin, sir, going ahead?

M. P. Taparia — Managing Director

If we will forecast for the full year total income overall to company is 13.5% to 14%. With your computer there you may have seen whole trade. So lend bond also become weight shifted to say.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

Okay. Okay. So earlier you used to guide about 15% to 16% is the normalized margin.

M. P. Taparia — Managing Director

3%.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

Sorry.

M. P. Taparia — Managing Director

Last year the margin went 38.3%.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

All right.

M. P. Taparia — Managing Director

Of the required range.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

EBITDA margin.

M. P. Taparia — Managing Director

Yeah, we are talking EBITDA only there.

Chirag Lodaya — ValueQuest Investment Advisors private limited — Analyst

Got it. Okay. Thank you.

Operator

Thank you. We have our next question from the line of Navid Virani from Bastion Research. Please go ahead.

Navid Virani — Bastion Capital Management — Analyst

Hi, sir. Good evening. Thank you for the opportunity.

Operator

Sir, we cannot hear you clearly. Please use your handset.

Navid Virani — Bastion Capital Management — Analyst

Hello. Am I audible, properly?

Operator

No. Not clear.

M. P. Taparia — Managing Director

Not audible fully.

Navid Virani — Bastion Capital Management — Analyst

Is it better now?

Operator

Yes. Please go ahead.

Navid Virani — Bastion Capital Management — Analyst

Better. Now better. Yeah. So thank you for the opportunity. Just wanted to understand on the — I just wanted to have some understanding on the competitive scenario for the packaging business, sir.

M. P. Taparia — Managing Director

Packaging segment will reach as it is quoted in packaging. Particularly packaging, first had a share in and performed in packaging.

Navid Virani — Bastion Capital Management — Analyst

So can you give us an update on the competitive scenario as to how is it shaping up, because most of these products, if I’m not wrong, you have to qualify as value-added products resource which might not be the case currently due to increased competition. So just wanted to understand there.

M. P. Taparia — Managing Director

So the key component of the packaging, of course, you have to fill if you qualify. Now, this year we — both the margins have gone below 17%. That business let’s say to pull out three years, every year, the margins are shrinking.

Navid Virani — Bastion Capital Management — Analyst

Okay.

M. P. Taparia — Managing Director

Now we believe that the [Indecipherable] If the company product is not failing corporately.

Navid Virani — Bastion Capital Management — Analyst

Got it, sir. Thank you. That’s helpful. Thank you, and all the best.

Operator

Thank you. We have our next question from the line of Devansh Nigotia from SIMPL. Please go ahead.

Devansh Nigotia — SIMPL — Analyst

Yeah, sir. Thanks for the opportunity. Composite cylinder frequently that is on the current capacity and the orders that we mentioned? And also, in order of what is the value for composition?

M. P. Taparia — Managing Director

The letter of intent qhat we received from IOCL for 7,35,000 cylinders, the order value was close to INR170 crore out of which over 472,000 cylinders will supply till March ’23. Our current occupancy issuance 5 lakhs cylinder per annum. They’ve been developed now in February 2023, now we have 1 million cylinder capacity per annum. So apart from balance order from IOCL, we expect further order from ICOL. They are also looking at many inquiries from the other geographies of the world market. So last year, we had — are utilizing 90% plus capacity, this year it is yet to be certain how much inquires get certified but we are quite hopeful of influencing the capacity to the optimal level which is 70% to 80%.

Devansh Nigotia — SIMPL — Analyst

Okay. And 1 million, how much of that is translated to value? The current capacity if utilized fully. And also, over the next three, four years, what kind of trigger, I mean, how big this opportunity can become In terms of revenue contribution from it?

M. P. Taparia — Managing Director

For realization the current capacity translates to INR200 crore per annum.

Devansh Nigotia — SIMPL — Analyst

Okay. And in terms sale over the next three, four years, how big it can become and constraints that we have seen for it scaling up to, let’s say, INR400 crores, INR500 crores?

M. P. Taparia — Managing Director

It all depends how the composite cylinder is accepted in the market or is promoted in the market by inviting companies. They will be required to put up the plant to rapidly. It cannot be catered for the single. That is yet to be seen.

Devansh Nigotia — SIMPL — Analyst

Okay. Thank you. And last, you have seen a lot of capacity in by itself going around, utilization has actually dropped down significantly with some recovery shown this year. So do we see a risk to the margins structurally as needed if distribution?

M. P. Taparia — Managing Director

I think.

Devansh Nigotia — SIMPL — Analyst

Yes sir, total capacity expansion that has happened over three, four years, there are new players and even the existing player, and volume that’s not commensurate…

M. P. Taparia — Managing Director

Already we are expanding, which we give you a number. While we are expanding we have informed you.

P. C. Somani — Chief Financial Officer

There is a good potential to grow. So they are looking — we will grow right.

Devansh Nigotia — SIMPL — Analyst

Okay. Thanks a lot, sir. We’ll wait for it.

Operator

Thank you. We have a last question from the line of Aasim Bharde from DAM Capital. Please go ahead.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Okay. Yeah. Just one question from my side. I heard your comments on the packaging business, especially the cross lam fill one. You will be introducing new products, we already have to an extent and we will be hiking prices gradually. But on margins, will this segment be at 10% to 12% margin business from here on or current go back to old levels, say three to four years? Any outlook on packaging segment margins?

M. P. Taparia — Managing Director

First, we are trying to make it value added item with which we have to bring it to 17% level. First, our effort is to make it bring to 17% level which came down below 13%, okay?

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Sir, gradually I think that 13% will take time to reach 17%, so the segment margins will still be somewhere around 11%, 12% over the next two to three years?

M. P. Taparia — Managing Director

No, why? It should happen this year only.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Okay.

M. P. Taparia — Managing Director

We have been targeting the systems. We are working to make it 17% this year but at some region — first our products and just reduce supply price because of the look-alike product we’re selling to 15%, 25% loans and life rash. But it’s been distorted by the customers. In general last.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Sir, but this commentary is something that you’ve been giving for the past three quarters, then our margins have been sub 10% in packaging, so just wanted to get a set of the outlook on margins. So will that jump this year because you already put in place new product at a high price…

M. P. Taparia — Managing Director

One of our division is high right. These are our other producing business,product packaging, product transfer and losses, there are using LDPE and they have also fallen very drastically in the first nine months. Therefore, this year the packaging margins are just like — because the quantum of business is competitive, strong compared to package divisions.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Yeah, yeah.

M. P. Taparia — Managing Director

They have good process. So going forward both definitely improve to 16%, 17% what we have now. In other segment for packaging, I want to improve. So definitely you will see a backlog change in the margin profile.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Can you give any quantum as to what kind of growth in margin can we expect in FY ’24 for example or in FY ’23?

M. P. Taparia — Managing Director

For packaging if you talk, there is a combined packaging…

Aasim Bharde — DAM Capital Advisors Limited — Analyst

Yes.

M. P. Taparia — Managing Director

Between 13% to 14%.

Aasim Bharde — DAM Capital Advisors Limited — Analyst

13% to 14%. Okay, sir. Thank you.

M. P. Taparia — Managing Director

Thank you, sir.

Operator

Thank you. I would now like to hand the conference over to management for closing comments. Over to you, sir.

M. P. Taparia — Managing Director

We thank all the participant, thank all the investors with very interesting questions. And we very thankful to the support extended to the company towards the year. Thank you very much.

P. C. Somani — Chief Financial Officer

Thank you.

Unidentified Speaker —

Thank you very much.

Operator

[Operator Closing Remarks]