Time Technoplast Limited (NSE: TIMETECHNO) Q2 2025 Earnings Call dated Nov. 12, 2024
Corporate Participants:
Bharat Kumar Vageria — Managing Director
Raghupathy Thyagarajan — Whole-Time Director
Analysts:
Abhijit Mukesh Purohit — Analyst
Jatin Damania — Analyst
Anushka Rai — Analyst
Kush Bafna — Analyst
Priyank Parekh — Analyst
Dolly Choudhary — Analyst
Heet Vora — Analyst
Unidentified Participant
Ankur Savariya — Analyst
Presentation:
Operator
Good Evening to one and all present here with us. We welcome you to the Time Technoplast Q2 and H1 FY25 Earnings Conference Call hosted by Kaviraj Private Limited. This conference may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantee of future performances and involve risks and uncertainties that are difficult to predict.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask question after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijit Mukesh Purohit from Kaviraj Securities Private Limited. Thank you, and over to you, sir.
Abhijit Mukesh Purohit — Analyst
Thank you. Good evening, ladies and gentlemen. Kaviraj Securities Private Limited welcomes you all for Q2 H1 FY25 earnings conference Call of Time Technoplast Limited. Today, on the call, we have with us the management team, which is represented by Mr. Bharat Kumar Vageria, Managing Director; Mr. Raghupathy Thyagarajan, Whole-Time Director; Mr. Sandip Modi, Senior VP, Accounts and Corporate Planning; and Mr. Hemant Soni, VP, Legal and Corporate Affairs. Now, without any further delays, I hand over the call to Mr. Bharat Kumar Vageria for his opening remarks, post which we will open the floor for Q&A session. Thank you, and over to you, sir.
Bharat Kumar Vageria — Managing Director
Yeah, good afternoon to all the participants and my colleagues, and thank you, Mr. Abhijit, for the introduction to management. It’s our pleasure to convene today to present and discuss the results of Q2 and H1 FY 2025 as well as to provide our outlook for the remainder of the fiscal year FY ’25. We are pleased to report continued strength over Q2 FY ’25 with a year-on-year growth of 17% in volume and corresponding 15% in the revenue. There is a difference of 2% because of the prices seen in the downward trend and as the company policy to pass on the prices to the customer.
This performance has been underpinned by robust demand in our Industrial Packaging segment, alongside an exceptional 36% surge in our CNG Composite Cascades business. Additionally, our profit after tax for the Q2 has demonstrated an impressive year-on-year increase of 40%. And I remember a similar-looking one in the Q1 also, reflecting the benefit of optimized capacity utilizations as well as the reduction in the finance and the depreciation costs. The demand for Type IV composite cylinders for CNG Cascades remained particularly strong with our current order book standing at approximately INR185 crores.
This momentum is complemented by substantial growth in the sale of our value-added products, including composite cylinder for both LPG and CNG while our core Industrial Packaging business continued to perform with stability. Given these favorable trends and the solid foundations we have established across our key business segments, we remain confident in our prospect for the remainder of the year. As in the beginning itself we have shared, we’ll grow around the 15%. And that’s what we will continue. In spite of this, we all are aware that there was a challenge this quarter this year especially because rainy seasons were increased substantially. And last in the month of October also, rain was there.
But looking to that, I think remaining five months looks very good as far as India part is concerned. With that, I would like to turn over the attention to the detailed financial and operational highlights, which have been communicated before in our results. Let us take a moment to review the key takeaways together. During Q2 FY ’25, I will provide you the Q2 FY ’24 figure also on a consolidation basis. Net sales achieved INR1,372 crores as against the previous year’s same period was INR1,195 crores. So there is a revenue growth of 15%. And EBITDA is increased INR197 crores from INR167 crores.
Sales after tax has increased to INR98 crores as against INR70 crores. We are just two runs away from the century. So we hope we should get it in the next quarter. Compared with the corresponding quarter previous year, the net sales increased 15% and almost in India, 14%, overseas, a little more achievement, is 16%. Volume increased 16% in India, overseas, 18%. EBITDA increased overall 18% and PAT increased by 40%. So first half of the — on consolidation basis, normally, I have clarified in the past, this conference call also, normally, in the first half, we achieve 45% of our revenue, in the first quarter, 22%, and second quarter, 24%. And balance, 55%, we achieve in the second and third quarter, which is 26% and around 28%.
So during the H1 of FY ’25, net sales stood INR2,600 crores — INR2,602 crores exactly as against INR2,275 crores; EBITDA, INR372 crores as against INR315 crores last year; profit after tax, INR178 million as against INR127 crores. So in terms of the percentage, sales increased by 14%, almost India and overseas are the same. Volume is also India and overseas, same, 16%. EBITDA increased by 18%. PAT increased by 40%. H1 ’25 EBITDA margin is — there is an increase in the EBITDA margins also by 14 basis points and achieved 14.3% as against 13.9% the previous year’s first half.
Our share of the business, when we have seen the EBITDA margin, improvement is there, percentage of the established versus value-added products has increased. Value-added products grew by 21% in H1 FY ’25 as compared to H1 FY ’24 while established products grew by 13%. The share of the value-added product is now 27% of the total sales in FY ’25 as against 25% in FY ’24. And again, when talking about the value-added products, the company is also taking target of achieving 35% value-added product sale in the next two to three years’ time. So we are on that direction only. Our share of the India and overseas business remained constant in H1, continue at 65% India, 35% overseas. And EBITDA margin at the both India and overseas surpassed the 14% range.
Net cash from operating activities is continuously increasing, in H1 FY ’25 is INR238 crores. Company’s focus on debt reduction is continued in the first half, reduced by INR52 crores. Total capex incurred during H1 FY ’25 was INR94 crores, which has included INR39 crores to the regular maintenance capex, capacity expansion, engineering and automation, et cetera, and INR55 crores towards the value-added products, mainly composite products and the other, IBC. Now certain major events which has occurred during this quarter, I can say first half also would like to get your attention, even though I have given in the earnings presentation clarification. Because some of the people in between have also asked, I thought it is better to give clarifications on the conference call.
So most of the people who are present personally can come to know about that. And these are all the things already informed with NSE, BSE stock exchange as per the required guidelines. So especially, as part of the QIP concern, as the company Board has approved QIP, Qualified Institutional Placement, of up to INR1,000 crores, and this is enabling resolution, object is already mentioned, and as this resolution is valid for one year time. Because I have received certain questions from my investor why it is required. I’m again clarifying all of you, it is enabling resolution for the next one year time. In spite of company’s own plan to become a debt-free by March ’26, but it’s thought if it is better tied to that, then we can become the faster debt-free company.
And company has no — the objective is also mentioned in this QIP. Major object, the debt repayment, expansion plan for brownfield and new products, value-added products mainly, CNG, LPG and hydrogen. I have also clarified in the last — my conference call further that certain Indian government gas distribution company need same size of the cylinder that is 14.5 kg cylinders, which company is under development. That it is going to take time. And further in the present scenario, all the distributor mix of the government companies are ongoing so that company can also understand the market size and took the necessary actions to put the capacity in place. So this is the advance we ourselves are keeping ready for that.
Now another company is also focusing, as we are all aware, that day-by-day or month-on-month, the manpower cost, especially labor cost, is increasing. Because government is also focusing on the increasing labor cost, so company is very focusing on the automation, engineering modifications of the existing equipment molds, to maintain the productivity and increase the productivity and reduce the cost in terms of the kg for the manpower. And further, even though it is mentioned that funding the organic is okay, inorganic growth in the areas of operations, yes, I used to tell you, I don’t have any acquisition plan of the company. Because the company has own plan, organic growth, and the company has own plan as mentioned recently.
The working capital requirement, because company is growing 15%, as we have decided, the company should be debt-free. So additional working capital requirement, even though company is focusing reducing the working capital cycle days, which at one point of time was 120 days, which is now reduced to 100 days, so focus is on. And first, the company with a key target to achieve a working capital cycle days of 85 to 90 days in the next two years’ time. Then another thing, which I have mentioned, regarding the consolidation of the subsidiaries companies, Power Build Batteries and the NED.
I’ll just give you, recollect this company, company has gone in these energy storage devices manufacturing long back in 2007. Presently, two companies, same line of the products and manufacturing and two manufacturing places are there. But company thought it is better to use the resources available, manpower resources, marketing resources and to the common better efficiency and effective utilization of the resources, company management has approved so that overall profitability can be improved. And the overall ROCE from this company, where company has made the investment of approximately INR69 crores invested by Time Technoplast as a listed company in both the companies together.
So that is the objective for the increased margins. And another, you have seen one of my subsidiaries, TPL Plastech, with 75% subsidiary of Time Techno, which is engaged in manufacturing of packaging products only, IBC, drums, jerry cans, conical pails. But mainly, that also includes the value-added product IBC, which Time Techno is also manufacturing. But as — this company is also their own expansion plan. Time Technoplast has no IBC manufacturing in the Maharashtra region and the good demand is coming, which is already mentioned a reason for demand in that Konkan region.
So this — and it’s a government long-term lease. There have already been allotments that was received. So in the next three, four months’ time, the company will plant the project cost, identify it. And then we’ll do this project is estimated to complete next year. And just when I’m talking on this subject, last year, the TPL Plastech subsidiary company has completed expansion project in Dahej, overwhelming response is there. Capacity utilization has already reached to the 70% in the next six months’ time. Already, it is achieved in the last six months’ time. So looking to that overwhelming response, company cost, which is to logistic cost basis and other cost basis to put up the plant in the Konkan region.
So this can be the first-mover advantage. And on other things, everybody would like to hear because you know that last eight to 10 months, somebody was asked — all the people mostly asking me, What about the overseas sales? But as I mentioned very clearly, company had agreed initially by way of an offer letter was received. But that offer letter was received based on the ’22 and ’23 EBITDA margin. But now as company has achieved a growth of more than 15% in Middle East, further, in the last three, four months, company has — management has decided to put their own plant in Sharjah, which will be around 100% by subsidiary of Time Technoplast Limited.
So it is better now in uncertainty situation to call up that sale business because it is very clear when companies earning more than INR350 crores to INR400 crores in a year and the company was estimating this realization of INR150 crores net of the taxes for sale proceeds of this 50% stake. So I’ve been advised by my Board member not to sell this business and grow company for overseas businesses, which is already evident. And growth is there in the Middle East, good growth, considering the — especially in Middle East, I can say that Saudi is a good upcoming chemical zone areas. And then Saudi government is welcoming to expatriate and they are giving good kind of benefits to the industry people, so we thought it is better to put our own unit there in Saudi.
Currently, we are servicing from our nearby countries Bahrain and small units available in Saudi also. And this will be the 100% ownership. Another thing also, I have clarified my notes, sale of the non-core assets, which is upwards, is continuing. You remember that I have told in the last October, November, there’s a targeted realizable value estimated was INR125 crores. So we have fulfilled our promise. And almost 50% already realized around INR65 crores. And for the balance, INR50 crores, efforts are on and estimating in the next 12 months’ time.
This fund also will be utilized for the capex plan. So overall capex, if I tell you that we have a range of — maximum range of INR200 crores. And if out of that, we are realizing INR125 crores, so net capex will be very, very minimum. Now I’ve covered most of the things. But if any other things I have left, I am keeping open the floor for the questions, if any, which I’ve not covered. Thank you to all.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Jatin Damania from Swan Investments. Please go-ahead.
Jatin Damania
So good evening, sir, and thank you for the opportunity. Is my voice audible?
Bharat Kumar Vageria
Yeah.
Jatin Damania
So just want to understand regarding our business, now when we indicated that we are not going ahead with the sale of the UAE or the Middle East plant, how shall one look at the overall growth in the Middle East when we have decided in the past that we wanted to sell it? So when you compare with the past six numbers, how shall one look at the fortune of the Middle East operation?
Bharat Kumar Vageria
Jatin, this is the only question you have or any other questions?
Jatin Damania
No sir. I have a couple of more.
Bharat Kumar Vageria
So I think you ask — give me your question first. I will answer at a time of all the questions. One is regarding the UAE, right?
Jatin Damania
Yes. And secondly, on the non-core assets, since last quarter, you have decided to dispose around INR90 crores. Now you have increased it to INR125 crores. And as per our practice, you have indicated that INR65 crores you have already achieved or we have received it. But as far as cash flow, it indicates only INR30 crores, which are — which have come to the business. So is it safe to assume that INR90 crores, INR95 crores will probably come in the second half?
Bharat Kumar Vageria
I will clarify.
Jatin Damania
Yes. And third, on the capacity utilization across the product mix, you can help us to understand the future growth driver? So these are the three questions.
Bharat Kumar Vageria
Yes, we have four questions. First, you told me about the UAE business. You know that overseas, we do manufacturing of the packaging product only. That is called jerry cans, IBC and drums. Now I have clarified in the past also, overseas business, if I consider the 100% revenue, we normally get 30% revenue in the MENA region, which is inclusive of the four countries that is Sharjah, Bahrain, Saudi, and Egypt. Egypt is around 75% of revenue, if I’m not wrong. I told Middle East revenue in terms of the rupee is around INR350 crores. And the INR350 crores revenue, if I will sell out, there was, out of the revenue figure, was around INR175 crores.
So we have agreed to sell by getting 50% or 100% valuation was $50 million and 50% valuation was to $25 million, which if I will take my EBITDA of ’22 and ’23 average, we were selling at the time of the multiplier of between 7.5 per round. But as this current year is concerned, ’24, we are already one month away from closing of this year. So we have told very clearly, we should get the EBITDA multiplier not ’22, it’s a ’23 and ’24 average. And this was agreed in between us. And further, looking to the present growth, we’ve asked very simple questions. Because it took eight months’ time in concluding this deal.
But again, delay is — we are holding our decision about the expansion plan of the Saudi and other expansion plant on the Middle East. So we thought that the company is growing, we should not agree because INR150 crores, which company is getting, it is equivalent to, I can say, the four or five months profit of the company as a whole organization. That is the point we considered. And I’ve been clearly advised by my Board member not to sell this business, you grow yourself. When the international business, we have reviews for the next two, three years’ time and be sustainable. And if the good growth is coming around 15%, so there is no need for sale. That is the guidance given by my Board.
Accordingly, we have conveyed this message to the — and one thing, again, I’m clarifying you, as a company side, we have not incurred any because it’s a succession-based, the transaction was there. So as a company, we have not incurred any kind of expenses for sale of this investment. This was whoever agencies were there also was very clear. If transaction goes, then only you will get the fee. Otherwise, everything gets back to the home.
Now second, you’ve asked non-core assets. I think you have heard about the March only. But in the month of last Q3 of ’24 in — around November or December, I’ve said my non-core assets was INR125 crores. By March, INR30 crores was already realized. The balance, INR90 crores, shown in the balance sheet for the realizable value for the ’24/’25. So out of that INR90 crores, again we have realized around INR30 crores, so it’s around INR60 crores is pending. And that’s also, we are — I mentioned to you, we are focusing that realized in next 12 months’ time.
Third, you have asked about the capacity. The capacity utilization, as the 15%, company is growing and company management decided to do the only brownfield expansion wherever required, looking to each of the product capacity. For example, you have seen we have a shortage on the capacity of CNG expansion. So definitely, the expansion is going on. In some kind of IBC, need-based expansion is doing in India and overseas put together. But I’m glad to tell you the overall capacity utilization you asked me, India and overseas put together, is around 82%. And overseas utilization is more, 87%, and the India utilization is around 80%. So contribution basis, it is 82%. And that is as the company utilization is increasing and the value-added product sales is increasing, therefore, you have seen the EBITDA is increasing on quarter-on-quarter by 20 to 30 basis points, which is evident on the margins. So I think I’ve answered your four.
Jatin Damania
Yes, sir. Thank you for the detailed answer. Just follow-up questions on your first answer. When we indicated that we are not going to the Middle East, so it is fair to assume that the growth — the target growth for the entire overseas is 15%? Or it is only the Middle East?
Bharat Kumar Vageria
No. I’m again — because you are right. If I’m getting 100% revenue from overseas, we have a three continent, I can say. One is the Middle East, where we get 30% of revenue. Around 50% revenue we get from the Southeast Asia, which covers Thailand, Malaysia, Indonesia, Vietnam and Taiwan. And another 20% revenue we get from that U.S.A. part, where we have a presence in three cities. But as company management decided to expand further in U.S.A., U.S. country is growing now. The last two years, situation is improving. And further, it will be strengthened as Trump has recently taken as President of the U.S.A. So I think very aggressive.
So considering I’m very clear from my international Director, international President, to look after this business, he is targeting to grow 15% overseas across the countries everywhere, where he can give me consolidation growth. India is also — we are quite confident for the two to three years’ time. Because another thing, I think everybody is evident there, the oil prices have gone down in the range of $70 to $75, which at one point of time, it was $85 to $90. So it’s good. When the polymer prices are down, company takes the strength and the benefit will pass on to the customers. And good conversion from metal to the polymer and composite product take place faster. That is the metal advantage, better advantage of conversion and this thing.
And another thing, it is seen that in the last one year or next one year also, one or two years, good new capacities of polymers are also coming. I’m glad to tell you, anybody in the process industry, next three years is good for the polymer processing and component product company because the capacity and there is a demand gap between the demand and the supply. So it is a biased market. You can ask your discounts, whatever things you want, and the faster conversion will be there, right?
Jatin Damania
Yes, sir.
Bharat Kumar Vageria
Yeah.
Jatin Damania
Thank you, sir. Thank you for the detailed answer. That’s all from my side.
Bharat Kumar Vageria
Thank you. Always pleasure.
Jatin Damania
Thank you.
Operator
Thank you. The next question is from the line of Anushka Rai from Trade Brains. Please go-ahead.
Anushka Rai
Hello. Thank you for this opportunity. Sir, I wanted to ask you about the value-added products. In the presentation, I read that the company is focusing on increasing the share from its value-added products in terms of revenue and margin. So I just wanted to understand what are the plans for expansion in the pipeline? And also, I also read that in the QIP that it is mentioned that the company is going to allocate some amount for this. So what percentage of the QIP can be expected to be put in this segment?
Bharat Kumar Vageria
In fact, if you go to the objective of the QIP, I will tell you the company is going to incur INR100 on the expansion. I think you can consider almost 50% for value-added product because then only that percentage can be higher and reach to the 35% of the total revenue. And as I mentioned previously also, company in the existing product will do the brownfield expansion. But the major expansion in India and overseas put together is the value-added product. And value-added product, which covers, you have seen in my earnings presentation slide, what are the products cover under the value-added product is clearly mentioned value-added products are the composite LPG, oxygen, CNG and the MOX film and the IBC.
One other product, we are not ready yet but very huge potential, that is hydrogen cylinders. And that is the future will be in the hydrogen cylinders after the CNG. So company is focusing on MOX business also. Company has already got the approval for hydrogen cylinders. And further, I’m glad to tell you another application is also coming up, which government is also focusing, on the application of cylinder in the drone. The government is focusing and is using more drone by the agriculture use also and for surveillance. So currently, what I understand, most of the drone company, I think 20, 25 companies in India is engaged in manufacturing of the drone.
And as I understand, drone value ranging from INR5 lakhs to INR30 lakhs. And many agriculturists now started using it for the fertilizer, seed growing, the drone they are using. And currently, they use the batteries. So when they will use this cylinder, then they can go to fly on the high. And further, they can fly for more hours, four times capacity more than the present batteries than they use it. So this new application is coming. And very soon, you will hear application for the drone application of our products. I will update as we get the final approval for this very huge opportunity in that line of the business.
Because internationally, I understand it’s a $40 billion business as far as drones are concerned globally. But India has a good opportunity. We’ll see how we’ll grab that opportunity available. So company, you are right, if I will incur INR100, 50% will go for value-added product and 50% on the brownfield expansion of the existing. Because value-added product, we are estimating growth of 13% year-on-year for at least next three years’ time. And the existing products, the packaging, we are considering growth of 10% to 12%. So combined of both is averaging around 15% growth we are projecting.
Anushka Rai
All right, sir. And sir I also wanted to ask you one more thing which is about your capex. So, what is the capex plan for the H2 and FY26 and also what kind of growth are you expecting in terms of volume and value in this period?
Bharat Kumar Vageria
In fact, I can tell you the volume growth because value you have seen recently as I mentioned the 16% volume growth and revenue growth is 14% because of the price differences, revenue. But when we estimate our business, when I’m telling you the 15% growth, that is the volume growth. Revenue, maybe 20%, maybe 10% but the volume growth is depending on the pricing of each of the product, composite products, and the polymer prices, which is linked with the demand supply.
Now, you are asking me, capex. You have seen in the last track record of the five or seven years, the company was doing expenditure in the range of around INR180 crores to INR200 crores. This year, including the value-added product sales, we had projected around INR180 crores to INR200 crores. And in the first half, around INR95 crores incurred. And in the balance of overall estimation in the beginning of the year we had given, it will be around INR175 crores to INR180 crores. And if you ask me the net capex after the reduction of the non-core assets, it will be in the range of around INR125 crores to INR130 crores. That already in the beginning of the year, I have given my projections. So, I think looking to the first half, INR95 crores, maximum capex in whole of the year will be in the range of INR180 crores to INR200 crores. And out of that, whatever proceeds will come from the sale of the non-core assets will be netted off from this.
Anushka Rai
All right. Thank you, sir.
Bharat Kumar Vageria
Yeah.
Operator
Thank you. [Operator Instructions] The next question is from the line of Dolly Choudhary from Niveshaay. Please go-ahead. The next question is from the line of Kush Bafna from Bafna Brothers Finance and Property Agent. Please go-ahead.
Kush Bafna
Am I audible? Hello?
Abhijit Mukesh Purohit
Yes please.
Operator
Yes.
Kush Bafna
Yes. Hi, sir. Many congratulations on your excellent performance and also continuous debt reduction. I just had a small question, sir, from my side about the trade receivables which are being shown in the book. Any estimate as to when that comes little down or this is how the company maintains in general business conditions?
Bharat Kumar Vageria
No, it’s okay. I think it is going to be down as you know that especially normally I talk about when working capital days I am talking which is 100 days. So, what happened always working capital cycle time as we know the working is the inventory days, then receivable days and the minus the creditors. So, if I’m getting more credit, I’ll give more credit to the debtors. But always one principle is very clear over company. If anybody would like to have more credit more than 30 days’ time, I’ll have to simply add 1% cost of the credit to them. And that is the advantage to the company, because if I’m paying cost of the funding around 9%. So, if I’m taking 12%, so it is benefit to the company.
But at the same time, normally average receivables you have seen 73 days. It’s the combination of the various products. With some products, we give the credit of 60 days. Some products, we give the 90 days. But maximum credit, we give 90 days. For some of the products, which the industry itself is giving, I have also to follow the industrial norms. But certain products, we give 45 days’ credit. So, it’s the average working out around 73 days. But if maximum, whatever efforts we’ll do, we can go down to 70 days, not less than that, in the combination of that. Because in our nature of the product, we sell that we supply the products, then our customer consider the credit period after receiving the material at their site for acceptance by their site. Because if you take this especially, for example, PE pipe product, we supply the material, customer received after 10 days, then it will be received from their site. Then further from their site, they receive, their inform to their head office.
And then their head office will consider the days. If I am giving the credit of 40 days the actual credit period will be 60 days. So, I’m considering 15 days is acceptance and the transit period in receipt of the consignments. So, if we do best efforts, it cannot go less than 70 days. I have to consider. But yes, what we can do, as we are keeping our target of 90 days periods, what we can balance out, we can reduce the inventory level by five to seven days further. And that efforts are continued because in the current scenario, our certain products, which we are depending on the imports, but yes, we are developing.
We have certain understanding with the local manufacturers to develop this product in the next two years’ time. I don’t want to mention the name of the polymer manufacturer because they are the large company and the confidentiality agreement signed between us to develop that product based on the government also like Make in India. But I’m sure in the two years’ time, this working capital cycle time 90 days based on the inventory level go down from 70 to 60, debtor from 73 to 70, and the creditors to increase to 50 days. That’s where we will be able to maintain 90 days’ time. There is still availability of 10 days to improve working business cycle time.
Kush Bafna
Right, sir. Thank you so much for your detailed answer and wishing you all the best for the forthcoming QIP and also entering into draw. Thank you so much.
Bharat Kumar Vageria
Yeah. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Priyank Parekh from Abakkus Asset Managers, LLP. Please go-ahead.
Priyank Parekh
Yeah, thanks for the opportunity, sir. Sir, my question is more of a clarificatory in the nature, so, I think we have the CNG cascades capacity of 480 cascades per annum. Is it right sir?
Bharat Kumar Vageria
Yes, you are right. [Technical Issue] cylinder.
Priyank Parekh
Yeah. Currently, in this quarter, if I say we have manufactured 135 cascades in terms of volume and if I just do 135 x 4, it will give me a number around 540. So, I just wanted to understand when we have capacity of 480 cascades per annum, why this excess production? So, what is my gap in understanding?
Bharat Kumar Vageria
No, no, no. You see that in the first-half, how much sale was there? In the first-half it was the 95 cascades.
Priyank Parekh
Correct, sir.
Bharat Kumar Vageria
Second quarter 135. You put both put together is how much? 230
Priyank Parekh
Yes. Correct.
Bharat Kumar Vageria
So, number of the cascades I tell you the cascades is the two types of the cascades because number of the cascades have been mentioned it is not relating to 60 cylinder cascades because certain cascades size where we use the 40 cylinder, certain cascades where we use the 60 cylinder depending the capacity of the each cylinder. So, number of the cascades does not multiply directly. The number of the cascades if I will sell the mini cascade and that 60-passenger bus and mini bus and the big bus is the difference.
Priyank Parekh
Yes. Okay. Understood.
Bharat Kumar Vageria
You just don’t see the number of the cascades you see the revenue part.
Priyank Parekh
Okay. Understood.
Bharat Kumar Vageria
So, in terms of the revenue, you can work out very well the maximum revenue from 480 cascades, if 90% utilization considering the holidays, the revenue can be of around INR350 crores revenue can be generated from CNG business whether I sell mini cascades or I sell the large, big cascades. But yes, as the expansion, if you attended my last call and Sunil Bhai and your Aman know very well that the capacity of 600 cylinder around FY26 is coming in the Q4, it is complete. So, next year definitely the projections will be the higher.
Priyank Parekh
Okay. And that capacity is coming on — which time period you see it?
Bharat Kumar Vageria
I think Q4 it is coming already. My trial and test is going. It is delayed by six months. I mention in my last call also, it is delayed because of the elections, because of the Russia-Ukraine war, because of the Red Sea problems, European problems, multiple problems were there. It is otherwise by this time [Speech Overlap] the project would be on the stream line by this time, but it is delayed by almost four to five months.
Priyank Parekh
Okay. Yeah. Yeah. Thank you. That’s it from my side.
Bharat Kumar Vageria
Yeah, yeah. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from theline of Dolly Choudhary from Niveshaay. Please go-ahead.
Dolly Choudhary
Hello, sir. Thank you for the opportunity. I had two questions. So, first of all, in our presentation, we have mentioned that in CNG cylinders our per year opportunity size is approximately INR2,200 crores. And I believe in our, this year we can go around INR350 crores to INR400 crores, so I wanted to understand as we are the only player, how’s the remaining demand is being fulfilled?
Bharat Kumar Vageria
No, no, I’m telling you, every customer gives us some delivery schedule timing, in fact. You know that, if you go through my presentations, large business potential is there as far as CNG cylinder is concerned. If you have gone through the policy of 2020, that as far as composite product, CNG business, potential is INR28,000 crores for the different application with CNG cascades, mobile refilling units, compressed biogas plants. You must have seen today, Economic Times, which is reliance has declared INR65,000 crore investment in compressed biogas plant in Andhra Pradesh. So, that is also where the cylinder can be used.
CNG for Intra-City Bus. But what we are projecting, it’s eight years and[Phonetic] four-year policy. So, we are projecting the composite business, cylinder business, can be of INR2,200 crores yearly business it is possible in the next three years’ time, looking at the policy of this government. So, in that direction, only we are working. So, we are also targeting, in the next five years’ time, this composite product, which is currently INR350 crores can be reached to over INR2,000 crores in the five years’ time and around INR1,500 crores in the next three years time, we are also projecting in this business.
In this business, we have not used the existing cascades, which is metal cascades, because CNG cylinders are available for more than 30 years in India. This policy is for the new stations. You know that Indian government has allocated in 29 district, 8,000 new stations are under construction and allotment have been given to various gas distribution companies, which include government and private gas distribution companies. Very good potential, CNG, and later on future also, it will go on the hydrogen also.
Dolly Choudhary
Okay, sir, that was helpful. And next question I had regarding the value added products and the development that we have presented. So, I wanted to understand what can be the, like where are we on this composite fire extinguisher and the hydrogen cylinder? Like what is the update on that and what can be the opportunity size for it going forward?
Bharat Kumar Vageria
In fact, in value terms, opportunity is very huge. We have not yet summarized that all. You know that first thing is the composite fire extinguisher. Current fire extinguishers, you know that metal, everybody has a compulsory. Even now, I have seen many societies are keeping, many government authorities have to keep, every industry has to keep it. But it is just formalities, because everywhere you will see the fire extinguishers made from the metal, which is very heavy and it is not very usable friendly. Light fire extinguisher, I tell you, the fire extinguisher which we are developing the weight will be 20% of the existing weight of the cylinder.
Yes, the price will be higher. But you know that in India, people are willing to price, subject to the item can be used. You must have seen today nowadays, the buyers of the Apple phone are more than the other Samsung phone. Similarly, you see the prices are higher, but people are more buyer. So, these items which we are developing is a very high-value items, but yes, it’s usable. And it has an advantage. There is my colleague Director, Mr. Raghupathy, who will explain more about the fire extinguisher.
Raghupathy Thyagarajan
See, as Bharat was also explaining, typically the fire extinguishers are made of metal, and they are normally installed at a place and very rarely in use. Though the cylinder is, extinguishers are not used, they undergo a lot of corrosion and deterioration on the cylinder. And when the need comes in, you have to ensure that these cylinders are actually in working condition. On many, many places, they may observe that the cylinders are non-functional and they don’t even work because of the fact they continue to corrode. The advantage of the composite cylinders would be that they will not rust or corrode, and that’s a big advantage that we’ll have.
In some of the new trains that have been rolled out by the Government of India, such as the Vande Bharat, etcetera, if you go through the documents there, in the tender documents, they have mandated the use of composite fire extinguishers in those new age trains. So, it’s a clear acknowledgement as well of the technology that is available and we are moving in that direction. The demand is enormous, there is no doubt about it. Likewise, hydrogen, I would put it, the story is very well validated and most of the geographies, most of the countries, any geography, they are all proceeding on this.
We are also in a position to see there are enough initiatives being taken both by the government as well as by the private sectors to venture into hydrogen, multiple hydrogen generating plants have already put in place. So, there is a lot of interest that is being generated in the high pressure cylinders that are being manufactured by us. So, we are very hopeful that you know all these new initiatives in this new technology items are going to be a good opportunity for the company to grow.
Dolly Choudhary
Just a follow up question, I want to know if there are other players also in India who are working on this composite fire extinguisher. If it’s compulsory in Vande Bharat, maybe there must be other players also who are working on this?
Raghupathy Thyagarajan
Yes, there would be some initiative that will be taken. I mean, since we have taken the lead, we are there much ahead of the others. So, in any industry, you will have some people or the other who will follow us. There is no doubt about it.
Bharat Kumar Vageria
But one thing why we are going under this development, because we are already working on the composite products since last four years. So, one experience what we have. You know that in composite product, initially we started from the LPG cylinder. Then we expanded to the CNG cylinder. Then we have expanded to the oxygen. Now we expanded to hydrogen. So, at least somebody has to pass on the basics, whichever there is, took time in the five years. So, always you know the first-mover advantage and the experience and R&D which we have [Indecipherable] is not very easy for everybody.
Dolly Choudhary
Right sir, [Indecipherable], thank you and all the best.
Bharat Kumar Vageria
Yeah.
Operator
Thank you. The next question is from the line of Heet Vora from Guardian Capital Partners. Please go-ahead.
Heet Vora
Thank you for the opportunity. I had one question on the CNG composite cylinder. So, in the AR, we have written that we’ve already gotten an approval from Tata Motors while I know that we are going to look at Automated applications only once the new capacity comes in. But any sort of RFQs that we’ve received from maybe Tata motors for the CNG cylinders?
Bharat Kumar Vageria
Okay. I’ll just clarify you. Today, we have an approval for automobile industry for the size of 60 liters. For the gas industry, 156 liters. Now, as I mentioned, I think if you attended my last call, we have capacity limitations because currently whatever we are producing we are selling as a complete cascades where we use the CNG cylinder and selling then the cascades to the gas distribution company. Now, definitely, because you know the automotive industry, already we have approval. And currently, automotive industry is using the cylinders which is made from the metal only. So, we have started working with them.
We know that it’s an eight to 12 months project when working with the automotive line. So, already my team have started working with them, getting the drawings, do the development because every vehicle’s capacity is different. Then we need to do the development of the tool for each and every model and each and every manufacturer. So, our team has started talking with them. And when expansion will come in the Q4 of this FY25, thereafter, we will take each of the OEM and supply them. Approval we have already. Approval-wise, there is no problem. We have a current limitation and instead of selling the only cylinder to them, better to use the value-added product and sell as a cascades to the gas distribution company. There is a priority on that.
Heet Vora
Sir, actually my question was, have the plant audit been done by these OEMs?
Bharat Kumar Vageria
Of course OEM, we are the Category-1 supplier. We are having a green channel with all OEMs because certain OEM products we have done, for example, Tata. We are already working diesel fuel tanks. We have worked out. And we are supplying from another factory. You know that Tata Magic and that vehicle, they are using that fuel tank of the gas, this diesel fuel tank. We are supplying. For composite product, air-receiver tank, we have worked for 30 liters with them. Now 20 liters under development.
Certain composite products which are not of the commodity nature, especially we have a relationship with Tata, Ashok Leyland. So, we do some of the automatic components, which are not of the commodity, specific customized product, we already deal with them. So, in fact, people have started talking with them. We are in process of getting their design, drawing approvals, then we will do the development, submit them, then the PESO approval will be required. And when you go in automotive industry, then Automotive Research Institute, which is in Pune, their approval will also be required. So, we’ll do the right time so that all get the approvals, and we will introduce that in the automotive industries also. But there are many other things, many composite products. By using the same line, we can work out for the automotive industry.
Heet Vora
Understood. That was it. Thank you.
Bharat Kumar Vageria
Yeah.
Operator
Thank you. The next question is from the line of [Indecipherable]. Please go-ahead.
Unidentified Participant
Yeah. Congratulations, sir, on a decent set of numbers. Wanted to ask a few questions. Sir, firstly, we have seen typically in the past that there is a propensity that we have higher revenues in H2. So, can we expect that based on the way our current business, order books and everything is placed, that H2 should be higher revenue than H1 for us, given the client mix and their programs and everything?
Bharat Kumar Vageria
It always happen. As I mentioned you, in Q1 we get business of 22%, Q2 24%, both put together 45%-46%. So, it’s the first half, you will see 45%; in last 10 years progress, you can see that. And the second half, always we get 55%. Then again in Q3 26%, and Q4 28%. It’s a trend of the industry. Last Q4, always turnover is high. You see the last Q4 turnover, Q3, it is easily comparable.
Unidentified Participant
Sure, sir. A couple of questions on the expansion. One is TPL Plastech, we have announced an expansion. So what kind of total capex and asset terms do we expect over there? And also at the overall — that is at Time Techno overall total capex, how much do we expect for entire FY ’25 and ’26. And in general, what are the guiding rules that you would consider for an expansion in terms of asset turns and margins to consider it in a particular product or technology type?
Bharat Kumar Vageria
Agreed. I think you have right question. As far as you asked me, the overall capex as a consolidation basis, India, overseas put together is in the range of INR160 crores to INR180 crores, so a maximum INR200 crores. Now out of the INR200 crores also, you will see around INR70 crores to INR80 crores on account of the maintenance capex, automation, reengineering to maintain the capacity and — to maintain the capacity and the tool development. Balance INR120 crores expansion where we added the capacity in value-added products or the existing product capacity. Now specifically another you have asked me — and specifically, this year, I mentioned out of INR180 crores to INR190 crores, we have already noncore asset sales business will be there, so net of that, the capex would be hardly INR140 crores to INR150 crores.
Then ’25, ’26, we are the same in the range of INR150 crores to INR180 crores, considering the expansion line in India and overseas. And somebody has asked me just in this call itself how you distribute, I’m very clear. In our business, value-added product, when we invest INR1, we get more than 3x of revenue, but when we do the investment in the other existing product lines, brownfield expansion, normally, we see the 3x of the revenue we should get it in the value-added products and other products, we get in the range of 2 to 2.5x. But we have seen whenever we do the automation, reengineering product, we consider payback period, so payback period should be less than four years to — whether by way of a reduction in the power cost, reducing the labor cost et cetera.
So many other areas also I’m working, I’m not active[Phonetic] in every, but I’m here to tell you, we are working on the power cost reductions also. As you know that government is also focusing the use of the solar power. I’m just ballpark figure, which I remember I am trying to tell you, in a year in India, we use INR15 crores units of the power. So now — you know that certain government policy has come out in Karnataka, Tamil Nadu, Maharashtra, Gujarat to — you can buy up to 75% to 80%, if we are power requirement from the solar manufacturing companies.
Already — we have already signed agreement. We have done the equity investment, and we are going to save almost INR3 units. So if I just remember, around INR4 crore units which we have a requirement in Gujarat, Maharashtra, Tamil Nadu and Karnataka, we have signed, the company will able to save next year at least INR12 crores on account of the power — power cost itself. Because otherwise, my power cost itself is more than INR110 crores or something we are paying annually. Now the similar policy we are expecting in other states also, like in Telangana, in Uttarakhand, in Himachal everywhere we are expecting as — because one our team is completely following with the government, ministry department and other local departments, wherever policy is coming, immediately, we are tying up and try to save these costs, because it’s a major cost as far as power is concerned.
Our — in business, two are the major cost other than the raw material is the power and the manpower. So we work hard on that how we can reduce these costs by increasing the productivity and by increasing — doing the automation. So we will be able to get more productivity and increase the percentage and offer our products competitive pricing to the customer. That is the main objectives of the company.
Unidentified Participant
Sir, I had also asked regarding the TPL Plastech expansion and what kind of.
Bharat Kumar Vageria
TPL Plastech, it’s just expansion in the Konkan region, because Time Technoplast do not manufacture IBC in the Maharashtra, Konkan region. Currently, their customers are servicing from the Union Territory area, Daman or Silvassa, and Dahej area. So too much logistic cost is involved. But especially in this Konkan area, too much chemical bond is coming up, Maharashtra government and many new units are coming up in that region. It’s already mentioned in note, you must have seen the solar/PV chemicals, fruit juice industry, semiconductor many new units are coming and because of the near to the Nhava Sheva port and the reason that chemical joint is coming up. So TPL Plastech exact investment we have worked out, but roughly, I can say, it will be in the value of around INR20 crores to INR25 crores, improving the cost of the land and buildings and equipment, and so that if a company will do INR25 crore investment, then definitely it can generate the revenue of around INR75 crores to INR80 crores.
Unidentified Participant
And this would be falling in the category of value-added products only, right?
Bharat Kumar Vageria
Value-added products, yes.
Unidentified Participant
And sir, a couple of bookkeeping questions. One is your depreciation is lower. What would be the main reason? Would this be related to the non-core asset disposal or why would the depreciation year-on-year be lower from INR46 crores to INR42 crores?
Bharat Kumar Vageria
No. Depreciation is in the range of INR150 crores to INR160 crores and again, it is lower because certain assets which is already depreciated we are 94 company, for almost 30 years have gone, many assets already written off, no need to again write off that depreciation. That may be the difference.
Unidentified Participant
Okay. I mean because there was a sharp year-on-year drop of almost 10%.
Bharat Kumar Vageria
Yes, because you know that 25 years company some essence already, you know we considered the life of the building, 25 years, life of the plant and machinery is 20 years, life of the mold and machine, life of the molds and tools 10 years So, definitely it is going to be reducing the system.
Unidentified Participant
Fair enough and finally sir what will be the current borrowing rates for debt for us and incremental debt, how much would we be borrowing it?
Bharat Kumar Vageria
I can provide you the range because the company is rated and AA rated company. And so the rate of their interest is in the range of we are considering, if you ask me the range, 8.25% to 9% is the range we are keeping ourselves in India. And similarly in overseas it is in the range of 6% to 7%.
Unidentified Participant
Yeah, sure. Thanks, sir. That’s it from my side.
Bharat Kumar Vageria
Yeah. Thank you.
Operator
Thank you. The last question is from the line of Ankur Savariya, an Individual Investor. Please go-ahead.
Ankur Savariya
Good evening, sir, and congratulations on fantastic set of numbers [Foreign Speech] we are not working beyond the market [Foreign Speech]
Bharat Kumar Vageria
[Foreign Speech]
Ankur Savariya
So our revenue target for the next two years for financial year, ’26 will be somewhere about INR6,000 crores in that case?
Bharat Kumar Vageria
[Foreign Speech]
Ankur Savariya
The revenue charges?
Bharat Kumar Vageria
Revenue charges [Foreign Speech]
Ankur Savariya
[Foreign Speech] Any update on the LPG orders, because last time, it was only enhanced for one month, because of the elections. [Foreign Speech] any enhancements news anything?
Bharat Kumar Vageria
[Foreign Speech] we are not depending on the election. [Foreign Speech]
Ankur Savariya
Last time, if I recollect correctly [Foreign Speech]?
Bharat Kumar Vageria
[Foreign Speech]
Ankur Savariya
Any update on orders of oxygen cylinder?
Bharat Kumar Vageria
Oxygen cylinders are, yes, we have orders [Foreign Speech] which is a very, very huge market [Foreign Speech]. And we are going to supply vertical application also. [Foreign Speech] what we are looking, we are in composite product [Foreign Speech] we will use our knowledge of the composite product manufacturing and explore the possibility in the industries where these items can be used.
Ankur Savariya
Absolutely. [Foreign Speech].
Bharat Kumar Vageria
[Foreign Speech]
Ankur Savariya
Absolutely. Congratulations.
Bharat Kumar Vageria
Thank you. Thank you Ankur.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Bharat Kumar Vageria
Yes. Thank you very much my all valued existing and possibly investors to listen peacefully. And I tried my best to provide you clarification. If any person later on comes any query clarification, they ask, we have an investor leadership agency, that is Orient Capital is there. We have provided the number of the company, Investor Relations Manager, Mr. Himanshu, number is also mentioned. In addition to that, you can ask Mr. Purohit at Kaviraj Securities. They are also aware about the updating time to time who are arranging this conference call. So thank you once again to all the participants. Thank you.
Operator
[Operator Closing Remarks]