UFLEX Limited  (NSE:UFLEX) Q2 FY22 earnings concall dated Nov. 05, 2021

Corporate Participants:

Yusuf Nasrulla — Investor Relations

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Analysts:

Yash Dhantavadiya — Maruti Securities — Analyst

Prashant Sharma — Quantum Securities — Analyst

Saurabh Sharma — Individual Investor — Analyst

Kaushik Poddar — KB Capital Markets — Analyst

Kamaljeet — Individual Investor — Analyst

Chirag Singhal — First Water Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the UFlex Limited Q2 FY ’21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Prashant Sharma from Quantum Securities. Thank you, and over to you, sir.

Prashant Sharma — Quantum Securities — Analyst

Thank you, Faizan.

On behalf of Quantum Securities, we welcome you all to quarter 2 FY ’22 Results Conference Call of UFlex Limited. We thank the management for giving us the opportunity to host this call. The management is represented by Mr. Rajesh Bhatia, the Group CFO; and Mr. Yusuf Nasrulla, Investor Relations.

I now hand over the call to Mr. Yusuf Nasrulla. Over to you, Yusuf.

Yusuf Nasrulla — Investor Relations

Thank you, Mr. Prashant Sharma. Good afternoon, everyone, and festive season greetings.

I would like to welcome you all to the second quarter FY ’20 earnings call of UFlex Limited. On the call today, we have our group CFO, Mr. Rajesh Bhatia. Our discussions may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that can cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflects our opinion only as on the date of this presentation. Please keep in mind that we are not obligating ourselves to revise the publicly released result of any revision to these forward-looking statements in light of the new information of future events.

I would like to emphasize that while this call is open to all invitees, it may not be broadcasted or reproduced in any form or manner.

Let me highlight a few achievements in this quarter. UFlex posted 36% year-on-year growth in net revenue at INR3,036.2 crores Q2 FY ’22. EBITDA at INR424.5 crores and PAT at INR170.7 crores. We have also commissioned a greenfield of 45,000 MTA production capacity of our BOPET Film manufacturing plant in Nigeria.

Let me now hand over the call to Mr. Bhatia to throw some information on the quarter that under review. Over to you, sir.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Thank you. Thank you, gentlemen.

Thank you for taking your time out today in this festive season and first of all, very warm wishes to all of you on the call for the Diwali, Govardhan Puja, Bhai Dooj, so for all the facilities. I know it’s a bit tough for everybody to be taking time out of their schedules now and get on to this call. But we — because we didn’t want to delay it any further after the results are there. So we just thought that we will still go ahead with this con call and present our views on the highlights of the quarterly summary.

Yes, as my colleague said that we achieved 36% almost top line increase, which is followed by 31.5% volume increase as well. So as we’ve been saying that the capacity being available from the newly commissioned capacity is now helping us in this bind market from a demand perspective. And happy to say that except Nigeria, all our newly historic capacities are now working at the full level of capacity. They worked at the full level of capacity in this quarter. And post this quarter also, they continue to work at a much higher capacity utilization levels.

There’ll be — as we come out of their more warranty periods, yes, the speeds for the machines will be increased, and there will be more through-put available for us to take. But as of now, what we have achieved is the rated capacity given to us by the suppliers in respect of all the plants, except Nigeria. Nigeria is also operating at a high — quite high capacity utilization levels about 70% or so. But I think for Nigeria to come to 100% level may take a quarter or maximum 1.5 quarters to 2 because there are some logistics challenges over there, which are resulting in some of the bottlenecks in terms of the logistics management.

So we’ll be sorting that out. And so it’s not a machine or a demand problem, it’s more of a logistics issues in Nigeria, which has kept the utilization levels at a slightly lower level. But I’m hopeful that next 1 or 2 quarters at the best, we’ll overcome those hurdles and will start utilizing the full capacity. Because the demand side, both on BOPP as well as on the BOPET continues to be very strong. You would have seen otherwise, a 36% year-on-year volume growth and even on — even if we see on a Q-on-Q growth also, we are at about 10%.

This is the first time ever that we crossed INR3,000 crores revenue mark in a quarter. And we expect that we should be doing it consistently throughout the rest of the quarters in this year and subsequently. Another highlight for this quarter is a constant increase in the raw material prices, constant increase in the shipping costs and some impact on the energy costs. So as a result of that, the margins have been affected a bit.

In any case, as I’ve been saying earlier that at a higher crude prices the margins would even otherwise get impacted because the top line additions does not necessarily, mean that you are adding on to, you are maintaining the same margins. So your margins are more or less fit at dollar per tonne or dollar per kg, whatever way you take it. And obviously, when the input prices are higher and your margins are fixed largely in the dollars per tonne or per kg number, so they will look a bit subdued in the context of when you say the EBITDA margins to the sales. So if we mediate that impact and all that, still the EBITDA margins are lower, but they are low basically because of only one thing that a constant increase in the raw material prices, both for the PET, the BOPET as well as for the BOPP homopolymer.

Just to give you an idea, in India, when we — for the PET resin, we had almost close to about 70% increase in the cost of the raw material as compared to what we — on a year-on-year basis. And there has been a quarter-on-quarter increases also. Homopolymer cost has gone up by about 30% on a year-on-year basis. And similarly, across all our offshore facilities also, the PET resin prices, which are used in the BOPET films, has gone up on the average by about 40%. And homopolymer is used only in Egypt now in Hungary. So again, that’s the — there is a firmness of the prices all throughout.

And this time, the firmness in the prices have also been more consistent. Like if you have a price now and then the next month, it will be different, but the trend in the quarter has been that there have been frequent changes, which actually means that the stronger the order book position that you are sitting on and I have said that demand momentum was very high.

So to service the same order, you are then buying the raw material at a higher cost. So while from the sales team, it looks good that you’re sitting on such a huge order book. But in a constantly, continuously rising raw material prices probably that is bit counterproductive because you still continue to serve those orders at the higher input prices. But we — this is, I would say, an edition. And I don’t think so this would be there beyond 1 or 2 quarters, including the 1 previous one.

So once the stability returns on the pricing, obviously, the margin profile will definitely improve. Heartening is the revenue profile, which is both volumes of about 31.5% and value of about 36%, and that’s what is the highlight for the quarter. And not only that, in some of the other businesses also, which are ancillary to our packaging business like Chemicals Business, which comprises of inks, adhesives, and other stuff. So there also, the impact of the raw material prices over the previous year has been pretty hard and so much so that the prices have gone up from — for the various items from 25% to about almost about 100%.

So such a volatility in the prices is actually where a strong order book position has only worked on the wrong side for us in this quarter. And when I look at some of the competitor results which are out or whether we call it FRX. We have also reported huge fall in EBITDA margins, roughly about 36% to about 20% on a stand-alone basis and about 35% to 21% open on a standalone — for the quarter. So some of the other competitors who are there in BOPP films, there the price — their performance has been better because the PET films, resin price as I explained. And there the BOPP also the demand side continues to be extremely, extremely strong at this point in time.

So yes, the advantage is that you have found a customer much earlier than what you had expected for your expansion projects. But yes, the margin profile in the last quarter was good. This quarter has been frequent changes in raw material with a strong order book position, which didn’t help the cause. But hopefully, October is much better as compared to the whole of the last call of the last quarter. And hopefully, that will help us translate into better numbers.

Then there are positive news that ICRA, who has been rating — sorry, India Ratings, who has been rating the company now for many years. They have given us a 2-notch upgrade and our credit rating last stands at AA- level. Same as some of our competitors who were always 2 notches higher than us because of their smaller balance sheet profile. But I think we’ve been able to break that barrier now with them by showing such an exemplary performance that whatever was predated in the last 1 year almost stand fully sold out. So that’s where they’ve seen a strong business growth and have upgraded us by 2 notches with AA-. That’s another feature for the quarter.

Nothing much to say on any of the other stuff. Because there are new — no new expansion. There is nothing much else happening as and when we have anything on that. Obviously, we do come back to you announce that to whatever is required statutorily, but both India expansion of our aseptic packaging is on schedule or expansion in par for BOPET sales as well as CPP sales is on the target.

And our extension in Dubai for CPP film is again on the target. And we continue to make strides there. Packaging business, per se, again, has been — we would say has been a kind of a bit not so good performance that the kind of volumes we wanted to have there. We are not able to show that kind of a performance in that segment. And that’s why you see that there is no expansion of the business over there.

So I saw for the second successive quarter loss reported by one of the major competitor in the flexible packaging business, which clearly demonstrates that this is a particular business segment, which is clearly struggling because of the demand and supply mismatch. But why we can take more tonnage. We don’t want to be doing the things at the prices which are just to undercut somebody or just to get higher capacity utilization levels and all that. So we’ve taken that call and we said that look, we are not going to be getting into the mad race of cutting down the prices and getting the orders somehow.

We want to do more of a value-added stuff and some of the higher-margin business, which others do not have because of their infrastructure limitations. So are we happy doing that till the time we have this demand supply in sort of sorting out. And hopefully, that business will also start to generate higher margins in the quarters to come. After the completion of the Dharwad project, total BOPET capacity should be close to about 400,000. BOPP capacity is now about 150,000 and after the expansion of CPP, we should be close to about 50,000 tonnes CPP both India, Egypt and Dubai at 3 locations. There has been some reduction of debt in this quarter. The term loans have been paid. So whatever is structured repayment profile of those facilities, we are paid according to that monetization schedule, that’s in a nutshell, what explains about the quarter.

And happy to have any questions, field any questions that you guys may have.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Yash Dhantavadiya from Maruti Securities.

Yash Dhantavadiya — Maruti Securities — Analyst

I just have a couple of questions. I would also like to understand the revenue and the operating loss in Nigeria facility. Also, since you’re doubling your aseptic packaging production capabilities, I want to understand what was this quarter’s revenue from the aseptic packaging and the EBITDA from aseptic packaging? And also, why haven’t we been able to pass on our rising input costs on to our clients? And will we be able to do so in the coming quarters if the input costs stay wherever they are from this quarter onwards. Also, the order book and the debt level, when can we expect it to stabilize and start coming down. Yes, these are my questions.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Okay. So quite a few of them. So on Nigeria, I said I can only give you the capacity utilization levels and the information that it’s an EBITDA positive for Nigeria in this quarter.

Yash Dhantavadiya — Maruti Securities — Analyst

EBITDA negative last quarter, right? If I’m not wrong.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes, it’s an EBITDA positive this quarter. And the capacity utilization level has been around 70% this quarter for the Nigeria business. On the —

Yash Dhantavadiya — Maruti Securities — Analyst

Can I know what percentage of revenue comes from the Nigeria facility? Because you’ve invested $100 million there, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes. So I don’t think so that number is available with me right now. So in any case, we don’t disclose in the quarterly that much of a number. But as I said in 1 quarter or maximum 2 quarters, there also we will be operating at a full capacity utilization levels. So I think you can very well know that what kind of a top line we’re talking about over there. On the aseptic packaging because this is not peak quarters, the peak quarter for them is normally January, February, March and April, May, June. So this is probably a bit lower quarter then. But this time, the second quarter for them was — just one second.

Yash Dhantavadiya — Maruti Securities — Analyst

Yes, I would just like to understand the revenue and EBITDA from accepted packaging, since you’re doubling the capacity or I can come to an assumption of what kind of growth do you see when the capacity —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

We said that we are looking at about 20% margins over there. So as compared to the Q1, where we had capacity utilization of 93% from that business. This quarter, we had about 86% — 87%.

Yash Dhantavadiya — Maruti Securities — Analyst

So we are doubling our capacity, right? So I just wanted to understand what percentage of our revenue comes from the aseptic packaging, if you can give me a number?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, I can — I will not be able to share that right now, but offline, we can probably do that. Aseptic packaging business also, you have to take it that whenever we talk of numbers where we to take into account the peaking capacity. And as I said, peaking happens from January to June, which is the summer period. And as the rains and other things —

Yash Dhantavadiya — Maruti Securities — Analyst

I’m just trying to understand the size of the aseptic packaging unit in terms of your company size, what percentage of your revenue comes from aseptic packaging? And since you’re doubling the capacity, what kind of revenues can we see coming?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So I think at the current capacity of 3.5 billion PAT. We can look at about INR600 crores of top line from that business.

Yash Dhantavadiya — Maruti Securities — Analyst

Yearly, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes.

Yash Dhantavadiya — Maruti Securities — Analyst

Yes. So what about the rising input costs. If the rising input cost stabilize here. Will we be able to pass it on to our clients from the next quarter onward.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

As we are passing on the rising cost to the clients. But what happens is you pass on today, and by the time you have to deliver the same order. If you take an order today and you to service that in 30 days time, and 30 days’ time, there are 4 price rises. So obviously, you will always lag behind in terms of passing on to that. Yes, because of the strong demand side, there have been — it’s not very challenging to pass on those costs to the customers. But because of the frequent changes, the lag is — the lag effect has increased a bit in this quarter. So what we are doing is now, we be restricting the order book to a much lesser period than we earlier used to do so that we know that if we were earlier taking the 30 to 60 days kind of orders also. So now we would love to do only about a week, 10 days kind of an ordering so that we know that as to what are we — what are we committing ourselves to.

Yash Dhantavadiya — Maruti Securities — Analyst

Do we not have any way of hedging our input costs?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, we don’t have.

Yash Dhantavadiya — Maruti Securities — Analyst

Okay. I would just like to know the current cash and the current debt levels.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So as on 30th September, the term debt is about INR3,165 crores. The working capital has gone up a bit. Because as I said that there has been increase in the raw material prices, which means more working capital is — but still on a net. Our current assets basis, we’ve managed it well by having incremental liabilities also. So overall, the net impact of the working capital is within 100 CR only. But obviously, the working capital, whatever are the cash earnings from the business we’ve deployed in the working capital. And we have tried to bring the working capital levels down as possible. So today, if — on an overall basis, we talk about I think not more than 40% of our working capital facilities are used on a company-wide basis. So there is enough liquidity both in terms of your higher utilization of the working capital possible. And also wherever there are opportunities to sort of not — there are no opportunities to lower your working capital. So we keep on investing money in the very short-term maturity, government securities and —

Yash Dhantavadiya — Maruti Securities — Analyst

Yes. That’s why I would like to know your net cash level on your books, cash and cash equivalents?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Cash and cash equivalents.

Yash Dhantavadiya — Maruti Securities — Analyst

You’ve invested — the money that you’ve invested other than the working capital that you’ve invested into short-term and long-term PET instruments.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

We have to give you that offline.

Yash Dhantavadiya — Maruti Securities — Analyst

Okay. Also, what is our interest cost right now? If you can give me a figure in terms of percentage interest.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Now what we borrowed in India are sub-7%. And in foreign, it depends on the jurisdiction to jurisdiction, but again, very competitive at not more than LIBOR plus 2%.

Yash Dhantavadiya — Maruti Securities — Analyst

So after we got a ratings upgrade, are we expecting the cost to come down, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Obviously, yes. Definitely.

Yash Dhantavadiya — Maruti Securities — Analyst

Yes. And also my last question, I’m sorry for taking your time, but I didn’t get an opportunity on the last con call. So going ahead, what kind of margins are you projecting from this quarter onwards? If you can give me a figure.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, we are not — very difficult to predict at this point in time.

Yash Dhantavadiya — Maruti Securities — Analyst

Are you seeing any involvement — at least if you can —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I can say that October is — I can say, October is much better than the previous quarter.

Operator

The next question is from the line of Prashant Sharma from Quantum Securities.

Prashant Sharma — Quantum Securities — Analyst

Sir, in your press release, you have said that the higher raw material prices, shipping and energy costs led to the decline in margin. Sir, this is regarding the shipping cost. Are you — I mean to say, facing any difficulties acquiring the raw material? And how much of your raw material is imported right now?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So in India, we import the homopolymer, which is used in the BOPP. That’s what we do. But across other locations also there is some shipping involved, both from a raw material as well as for your material being sold in the different jurisdictions. Like if Egypt is exporting to Europe or some of the other countries are exporting into America. I think the shipping cost, everywhere is affected both for and the prices increase on a Y-o-Y basis, at least 5 to 6 times there also. And this quarter also, there has been no respite from increasing shipping costs. So everything is sort of adding on to the cost.

And I see cost by industry this quarter that the cost inflation has affected everybody in this. As I said, that — again, in our industry, as I said, that the demand momentum was strong, and we were able to pass on the cost. So it’s not that we are not able to pass on the cost. But I do it today. And by the time I go to the market again, it will be a rise again. Then the orders which have already taken, I can’t renegotiate prices on that, no. Those still have to be served. So that’s the only thing. So hopefully, that’s a passing thing in the last quarter only and there the price rises are not so frequent. If we have a monthly sort of a price rise, it’s easier, much easier to handle rather than a weekly price rise.

Prashant Sharma — Quantum Securities — Analyst

Right, sir. And we have ample inventory, sir, to — so we do not lose any sales due to the shipping issues that the world is facing right now.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, we not losing any tonnes to that, so far. But the raw material availability continues to be tight. And as we said, on earlier calls, our global footprint gives us that flexibility that we can move material from any part of the world to wherever there is a deficiency. Yes, today, that will come at a slightly higher cost. That flexibility will cost you slightly higher. But we’ll ensure that your fire is burning.

Prashant Sharma — Quantum Securities — Analyst

Okay. Our sales volume went up by 31.5%, whereas the net EBIT revenue was up by 36%. So there is an increase in realization. So what do you attribute to this increase in realization, sir?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Cost increases.

Prashant Sharma — Quantum Securities — Analyst

Okay, cost increases. And there’s no favorable revenue mix that we have?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So the margins were healthy only in the previous quarters also. So I think that the raw material prices started going up, the prices — the selling prices had still a lot of catching to do. So typically, what happens in an industry is when the prices — raw material prices start to rise, people just don’t start passing on those prices to the market immediately. They bid for a while for a fortnight or so before those prices are passed on. But in our industry, given the strong demand momentum, we were able to do that almost instantaneously. But again, to repeat what I said, what hurt us as a constant increase in the raw material prices and not the increase in the raw material prices.

Operator

The next question is from the line of Saurabh Sharma, Individual Investor.

Saurabh Sharma — Individual Investor — Analyst

You can hear me, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes. I can hear you, Saurabh.

Saurabh Sharma — Individual Investor — Analyst

So my first little request would be to, sir, for your Investor Relations team to check better the earnings con call notification is posted correctly on the website of exchanges because this particular conference call notification was not posted on the exchanges. It was only on the website. So that is one small request. And now coming to the first question of mine. Congratulations, by the way, on the volume increase. It is quite commendable how the capacities have been ramped up. But raw material increase was expected, I believe, in the result, but what really set off the decline in stock price yesterday on other trading day more or less, first of all, was, I believe the other expenses, and they have been a point of contention for quite some time now, sir. No?

Even in the last September ’20 quarter, there was a write-off, I believe, of about INR100 crores, there was receivable write-off and there was some recoverables write-off combined of INR100 crores. Despite of that write-off in the Y-o-Y quarter, the other expenses have gone up quite substantially, now around more than — around 15% of the other expenses have gone up 10% around expenses gone up. And if you take out the effect of that write-off in the September 2020 quarter, the other expenses have gone up by 50%. And that I believe is the core of the matter. Could you please explain why the other expenses have gone up so much? Shipping should not be a major problem for a company like UFlex, primarily because of 1 of our USP, sir, is that you’re close — you have been closer to customers. So compared to competitors, your shipping costs should not be affecting the UFlex particularly as much it’s —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Other expenses increased, if I see correctly, last quarter versus this quarter, they are in line with our — the revenue and the volume —

Saurabh Sharma — Individual Investor — Analyst

Last quarter, there were exceptional expenses for Nigeria.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Exceptional expenses for Nigeria means?

Saurabh Sharma — Individual Investor — Analyst

In the Nigeria plant, there were some EBITDA losses and they were included in other expenses, as you had explained in the conference call.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No. EBITDA losses are never included in other expenses. No.

Saurabh Sharma — Individual Investor — Analyst

They are there in other expenses chart. EBITDA losses are also in the other expenses.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

But the other expenses of — INR341 crores in the last quarter and INR392 crores in the current quarter. We are in line with the increased volume and the increased revenues of the company. There are no such factors which are to be looked at.

Saurabh Sharma — Individual Investor — Analyst

If you look at the other expenses of the March quarter in which the production was over 125,000 tonnes. If you look at other expenses in March quarter, they were at INR288 crores, and they are INR392 crores right now. I mean I have the results right in front of me, sir. I mean I mean I can —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I don’t have to — so the message that I’m giving you is that there is no cause for concern for us on any of the expenses side other than the raw material cost and the shipping cost. All other expenses are well within control, and there is nothing that raises their eyebrows from a management perspective for any of these.

Saurabh Sharma — Individual Investor — Analyst

So you’re — in a nutshell, you’re saying that there are no onetime expenses for this quarter and the same —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No.

Saurabh Sharma — Individual Investor — Analyst

The same loan of expense is expected to carry forward from here on?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes.

Saurabh Sharma — Individual Investor — Analyst

Right. So I mean, okay —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, there are no one-offs.

Saurabh Sharma — Individual Investor — Analyst

So does that — so sir, does that mean that your EBITDA expectation, your PAT expectation which you had outlined at the beginning of this financial year, you had outlined around INR10,000 crores revenue, which probably is going to be accomplished. But you also said INR1,000 crores PAT number, that is going to be difficult to achieve.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So very difficult to say at this point in time. I think that the INR1,000 crores PAT, one, we’ve never guided anybody to that. I think we’ve always talked about EBITDA, PAT that is for you today, but even if I look at the first 2 quarters, if we are looking at about INR435 crores. I think there’s still ways to catch up to INR1,000 crores. I don’t think there’s anything will be far off on that number.

Saurabh Sharma — Individual Investor — Analyst

And my second question is about the balance sheet. So on the balance sheet for this quarter, there is an increase in other — there’s an increase in current assets and a substantial increase in receivables and inventories is understood because of the new plant being — new plant and new capacities coming online. But there’s an increase of INR200 crores in other current assets. And going back in the past of UFlex, there have been these property investments to tech developers transaction that was made. And I wanted to ensure that this other financial asset increase of INR200-odd crores. It’s been into the cash flow also. There is, I believe, if I can check, yes, there’s INR258 crores negative cash flow for other current financial assets. So what is this comparison. This number has actually increased quite substantially over the past 18 months now. It started at around INR300 crores —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So 70% — as I said on a Y-o-Y basis, there is a 70% cost increase in your input cost. There is a 30% cost increase in the BOPP. So obviously, the working capital deployment has increased. But then I’ve seen on the net current asset deployment as a whole, I think we are on that basis within INR100 crore number when I see the net working capital deployment. There are no other investments into any of the nonrelated business or any loans and advances to anybody. There may be some investments in some of the businesses for any short-term instruments that they may have made. In Egypt, like — there are about $20 million invested in some treasury bills of the government — issued by the government of Egypt. But that is more as a liquidity management thing and not as any long-term strategic investments. So they will — as and when they will require liquidity, they will offload — they’ll sell off those bonds and realize their working capital.

Saurabh Sharma — Individual Investor — Analyst

Okay. Okay. And sir, on the debt servicing front, I realize your rating has been upgraded to AA-. That would only affect the interest cost for India. The interest cost abroad, of course, going to the remain the same, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No. Not going to impact the interest cost abroad.

Saurabh Sharma — Individual Investor — Analyst

And most of the debt is outside.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes. No, India, we have about — term debt of about — close to about INR900 crores. So — but — and then the — then there is a debt of — there’s a working capital of about INR400 crores. So I think those will get better priced.

Saurabh Sharma — Individual Investor — Analyst

So the 7% that you mentioned, that is after the AA- rerating.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, that was before that. That was before that. AA- is only last 1 week kind of development.

Saurabh Sharma — Individual Investor — Analyst

Right. So — but on the debt servicing front, do you see UFlex being comfortable going for power because your EBITDA has reduced now. And I mean being CFO, you would, of course, want to plan for contingencies and going further. Anything can happen really with the raw material prices, other costs also. So do you — are there any contingency plans for debt servicing because in terms of comfort for the company.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, there’s enough comfort, there is enough comfort. UFlex undrawn lines as well as the liquidity would today sit on more than INR1,000 crores cash. There are absolutely no issue.

Saurabh Sharma — Individual Investor — Analyst

Right. And sir, my last question, really sorry for extending the questions. But so what — UFlex has increased its capacity by around 40,000 metric ton per quarter, so that amounts to around 4 lines in a year. It amounts to 4 lines and all of them have come up under operation in the past 1 year. We’ve seen in BOPP, things have not been affected by as much as in the BOPET. Do you believe that all of the additional capacity that UFlex has put up, that has been weighing on the margins and that is the reason, that is actually the reason why PET film margins have been low. And if, let’s say, you were to go slow on capacity utilization, if you were not to fled the market with product at the present moment. But if you were to stagger your production increases over a few quarters, this impact on PET film prices is going to be lessened?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

[Foreign Speech] I mean that didn’t cross my imagination.

Saurabh Sharma — Individual Investor — Analyst

It hasn’t happened with BOPP, sir, one of the only – BOPP-only producer —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

We have — whatever expansion we’ve done on the BOPP side, the same number we had done on the PET side also. It’s not that the PET is more and other one is less. It’s the same. Rather for us — PET — we’re more known for PET rather than for BOPP internationally. Because before this expansion, we had just 1 line in Egypt for our BOPP business. And — but with the new line in Hungary and Egypt expansion. So it’s the BOPP capacity, which got added. And obviously, because these were known more for our PET play rather than a BOPP play.

What has been admirable is that you’ve sold out those additional BOPP capacities so fast. Yes, the market has also supported us, but still in terms of making new customers and everything. Things take time, but fortunately, a bind transit has helped us, and both the plants today are operating at their full capacity levels. On the PET side, we just added 2 lines, 1 in Nigeria and another in Poland. And I don’t think so we’ve flooded the market more than — so I really don’t think that there is any — anything —

Saurabh Sharma — Individual Investor — Analyst

How much capacity additions do you see coming up in this year? Of course, in FY ’23, there are quite a few capacity additions, including your own. But in this year, how many capacity additions really the next 12 months?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

This year does not look to be — does not look that there’ll be any challenges. But yes, next year, you will have some of the new capacities coming in. But fortunately or unfortunately, the raw material side is also getting tight. So for some of these new capacities as we stand today, signed up the raw material, it’s not going to be very easy.

Saurabh Sharma — Individual Investor — Analyst

Okay. And are you seeing any old capacity —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I think we’ll have to wait and watch and see as to what happens, but raw material even availability is the kind of new dimension mentioned that we are seeing.

Saurabh Sharma — Individual Investor — Analyst

So with regard to the difference in prices between BOPP and BOPET films, we’ve seen that BOPET films are actually now more comparable in price to BOPP, while traditionally, BOPP is cheaper. So is there a possibility of replacement of BOPP users being met with BOPET users because of pricing.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

[Foreign Speech] That a longer time frame. Because some of the large companies just do not for changing their structure of them, it’s a bit longed on process and not so easy —

Saurabh Sharma — Individual Investor — Analyst

Right. But it is possible if there is a long-term structural change?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes. People do switch over. People do switch over.

Operator

The next question is from the line of Kaushik Poddar from KB Capital Markets.

Kaushik Poddar — KB Capital Markets — Analyst

So far, your investment has mostly been in big capacity and all these things. Now every quarter, you come out with another press release saying that these are the new innovations you have carried out in various kind of packaging type of things. In the current quarter, in the last quarter, for example, along with the press release, there is one more press release about aseptic packaging. So can we take it that from now onwards, your focus will more be on such kind of innovative packaging products, which can hopefully give you higher margin rather than on putting up capacity.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I think both the things go simultaneously by we have to be innovative in our business. There’s no time about that. We had to be ahead of the competition, and that is where your customer also respects you. And he does not think that you would the kind of the company who will only — so they know that they can turn up to you in case of any contingencies in the availability of a particular material, particular structure and all that. I think both are 2 separate things. As you would have seen now the capacity. If this capacity expansion was not there, we would have been looking at a INR3,000 crore top line number. And how much higher absolute amount of profitability, both on EBITDA and tax side.

I had earlier also said that at some point in time, then the capacity catch-up will happen with — in this business. The margins will come down, but our new capacity expansions and the revenues will actually compensate us to ensure that our absolute numbers on the profitability remains intact. And I think over the next couple of years, we will see more instances of those things happening as the market stabilize as the higher margins in the PET or the BOPP industry are normalized with the new expansions with the new capacities coming in. So that has been the whole objective. Our innovation is not a substitute for the capacity expansion and also the vice versa. Innovation is a constant thing that we keep on doing.

Kaushik Poddar — KB Capital Markets — Analyst

And see, in case of BOPP, for example, other than Tetra Pak, are you the only people other than Tetra Pak in the Indian market?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

BOPP?

Kaushik Poddar — KB Capital Markets — Analyst

Not BOPP. Aseptic packaging, yes, sorry.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes, we are the only 2 manufacturers Tetra PAk and ourselves in the India market. There are other people who imports it from China also.

Kaushik Poddar — KB Capital Markets — Analyst

So as there are 2 manufacturers, is the margin higher in aseptic packaging than in other packaging?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes. Currently, the margins in aseptic packaging are much better as compared to the flexible packaging.

Kaushik Poddar — KB Capital Markets — Analyst

Okay. And capacity is being double, for example, INR3.5 billion to INR7 billion, which is INR700 crores. When do you hope to attain, say, 80%, 90% capacity of the expanded, I mean, it is coming on stream probably end of this fiscal, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I think about 12 to 24 months’ time.

Kaushik Poddar — KB Capital Markets — Analyst

From now, which is next September or —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

After they come into — after it comes into place.

Kaushik Poddar — KB Capital Markets — Analyst

Oh, after it comes into production. It’s coming in production —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Obviously. In — should be in the next fiscal.

Kaushik Poddar — KB Capital Markets — Analyst

Early or later. I mean June — June —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Early.

Kaushik Poddar — KB Capital Markets — Analyst

June quarter.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes.

Kaushik Poddar — KB Capital Markets — Analyst

Okay. And my last question is on your debt profile. So your debt is right around INR3,165 crores as you said, term debt. I mean, how do you see it at the year-end? And how do you see at the end of next year?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I think we would generally have, if I’m not — correct, we would generally have about INR500 crores of repayment each year, INR400 crores to INR500 crores — INR400 crores, INR450 crores kind of repayment each year.

Kaushik Poddar — KB Capital Markets — Analyst

INR400 crores to INR500 crores, which is roughly given into your depreciation, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes.

Operator

The next question is from the line of Kamaljeet, Individual Investor.

Kamaljeet — Individual Investor — Analyst

Sir, my question is related to what is the plant utilization right now on year to year half-year basis in a sense of last year to as of date?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Come again.

Kamaljeet — Individual Investor — Analyst

So what is the plant utilization in the India-based plants as well as overseas plants?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So as I said, all are at 100% except Nigeria, which was at about 70% last quarter.

Kamaljeet — Individual Investor — Analyst

Okay. And in last year also in the same period, what was the plant utilizing capacity there?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I don’t have that number before me.

Kamaljeet — Individual Investor — Analyst

Okay. And sir, so your inventory versus your sales. At what level, management will be comfortable in the sense of as inventory has been increased and you are taking proactive steps?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Inventory increases because of the increase in the price levels, okay? It’s not because of increase in tonnage at all.

Kamaljeet — Individual Investor — Analyst

Okay. And so like even though plant is 100% in use, and we are increasing the inventory level.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No. See, when the plant is utilized more, obviously, your inventory level for the WIP as well as for the for the raw material for the WIP and also for the finished goods and also receivables, everything will get inflated. Because then you are utilizing the plant to the maximum, so you need more raw material, you need more finished stock and you need more customer receivables. So everything sort of is expected to go up when you are operating the plant at the higher levels. But as I said that the incremental working capital deployment in this quarter has been mainly on account of the raw material price increase which affects that and which affects everything, even your receivables will go up because the price rise will impact your receivables also. But as I said that net impact of that increase has been less than INR100 crores for us.

Kamaljeet — Individual Investor — Analyst

Sir, my next question too is regarding how much we are spending on the R&D expenditure.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Again, that question to be taken offline.

Kamaljeet — Individual Investor — Analyst

Okay. And any like patent in queue right now? Or it is always different —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Nothing. We’ll announce to the market as and when it happens, very difficult to give any premature information or even if we are looking on some of those things, it will stay very difficult to share at this time.

Kamaljeet — Individual Investor — Analyst

Okay. Sir, what management settles its view from like a market valuation of the company, like there are good products of the company. And — but a market still not in the valuation of what is required to be. So what management doing at a strategic level, like what is marketing or anything or any discussion that like the investor community, what are the steps management is taking care of?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So we are busy in and ensuring that we are the most efficient player in the market to run the business. We feel that it’s for the market forces to take note of bill that how is our performance and as in comparison to the other peers, take note of that and then find opportunities — either find opportunities in us or some other competitors. I think we let it to the market forces largely to take care of that. Yes, as we told you on the governance side, now we have for the last 3 years, EY as our internal auditor, now BDO is our statutory auditor — joint be auditor also. So from our side, whatever we can do in terms of better governance, we’re doing that, coupled with our performance on the business side. The rest is for the market to take a note of that.

And I think in the last 1 year, as such, 1, 1.5 years, we’ve done reasonably well in terms of the stock price performance. Still not happy with the level that this the stock is and the multiples are still much lower. But I think it’s up to you guys to have faith in that and stay invested and even look at allocating more to an industry leader, which is not an — which is the global industry — we are a global industry leader, not only a local or a regional industry leader. So I think once you’re doing the things the right way, I think the world will find you and give value at some point in time, which it has — which has happened partially in the last year, 1.5 years, but we happen much better in the next in the next — in the few years to come.

Kamaljeet — Individual Investor — Analyst

Okay, sir. Sir, unlike power and fuel has been — the cost has been increased 20% to 30%. So it is only India-related like increase in cost or it is globally?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No, it is globally also. The costs are increasing everywhere. So we’re doing whatever we could do, we are doing to take care of that. In Mexico, we’ve now recently started our own capital plant. In Russia also, now we’ve started our own capital power generation. So obviously, these things will come handy in terms of the cost — But in some of the other jurisdictions, it may not be possible to sort of do that. So we’ll have to then take that into our stride. But yes, the impact of the shipping and energy cost has been not only in India, globally also.

Kamaljeet — Individual Investor — Analyst

Okay. Sir, in last 2 years, last year as well as this year, whatever the annual report you have released, some accounting parameter, the format has been changed in the sense of might be some — it seems that some consultancy has been taken, some mechanisms on basis organization is working. So may I get some input on it, in your annual reports.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I don’t understood you question.

Kamaljeet — Individual Investor — Analyst

Okay. The format of the accounting statements in your annual reports since plus 2 years, it has been changed from the previous one in the sense of.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So I’m not too sure of that. Why is that unless that is statutorily required.

Operator

The next question is from the line of Chirag Singhal from First Water Capital.

Chirag Singhal — First Water Capital — Analyst

First of all, congratulations, sir, on the faster ramp-up of all the expansions, recommendable to see the production numbers. Now the first question is on the status of the ongoing expansion, which is the Asepto and —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I’d just like to make one correction here. The Nigeria capacity level was not 70%, but it is 56%. Sorry for this.

Chirag Singhal — First Water Capital — Analyst

56%, you mean currently or for Q2?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

For Q2.

Chirag Singhal — First Water Capital — Analyst

Okay. And current capacity utilization?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I think should be around 77% — 75%, 77%.

Chirag Singhal — First Water Capital — Analyst

Okay. So on the Asepto and Dubai and Dharwad, so what are the tentative start dates for all the 3 expansions?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I don’t remember as of now, but I think next — around the same time next year, we should have Dharwad up and running, I think. Aseptic will be of commencement of the next fiscal. That’s it.

Chirag Singhal — First Water Capital — Analyst

And Dubai line?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes, that is still on at almost at the same time as India. So it takes the same amount of time.

Chirag Singhal — First Water Capital — Analyst

Okay. Now so coming to the production numbers, we recorded a production of 125,000 tonnes approximately, and we sold close to 122,000 tonnes of packaging funds during the quarter. Now I was just trying to reconcile this with the production across all the plants given that we are running at full capacity, including the expansions. So just wanted to understand that this 122,000 odd tonnes of sales volume, does this include the entire film sales of India? Or this excludes the capital consumption and only include the external sales.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Whatever sales number we are reporting, they’re only external sales.

Chirag Singhal — First Water Capital — Analyst

Okay. So then I’m getting a difference. So if I take like 100% capacity utilization for all the plants for all the rated capacity, and slightly higher for US, Mexico and Poland because we are running at more than 100% in those 3 plants. So totally comes a little lower than the sales volume. So did we have some sort of an inventory sales in the quarter, like the production that we would have done in the previous quarter and sold in the current quarter?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

[Foreign Speech] Our team can help you with that answering whatever the sales numbers are reported, revenue is reported INR3,000 crores, that is net off, that is not profited sales.

Chirag Singhal — First Water Capital — Analyst

Correct. I was just talking on the volume front. No worries, I’ll take it off line. Now coming to the increase in raw material prices. So you gave a detailed explanation on how things pan out and the time lag that happens for the pass-through. So in the current quarter. How are you seeing spreads? Are you seeing that the spreads are better than the previous quarter? Are we able to gives this quarter —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Last quarter — much better [Foreign Speech]

Chirag Singhal — First Water Capital — Analyst

Okay. So we are able to sort of pass through the increase in raw material prices by taking price hikes in the BOPET films?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

[Foreign Speech]

Chirag Singhal — First Water Capital — Analyst

So far.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So far, it is a better environmentally. Across all the businesses, not only India but across all the businesses.

Chirag Singhal — First Water Capital — Analyst

Okay, understood. Sir, one last thing. On the specialty side, so like our domestic peers, let’s say, Cosmo. So they kind of give the split between the specialty and the commodity. Similarly, when Polyplex is giving the split between the specialty and commodity. So just wanted to understand, at least for the past 2, 3 quarters, what is the likely trend we are having in terms of the split between specialty and commodity. And what is the target that we have said internally because now we have a broad base —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I think we’ll have to take this also offline in terms of the specialty and commodity split.

Operator

The next question is from the line of Saurabh Sharma, Individual Investor.

Saurabh Sharma — Individual Investor — Analyst

So my question was about the selling price per se of the BOPET films. So the selling prices would have gone up after the end of the September quarter, right?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes, you’re right.

Saurabh Sharma — Individual Investor — Analyst

Yes. So — okay. Right. Okay. So sir, in the sense of the strategy of the company would be to sell out maximum production? Or would it be to sort of produce most efficiently so that the margin is maximized. So will it be volume-led growth that the company is looking at right now? Or would that be EBITDA accretive growth?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

No. But how is one different from the other. Are you saying that —

Saurabh Sharma — Individual Investor — Analyst

Because even though your volumes have increased this quarter, your EBITDA has reduced. So there are ways of balancing the 2 out. There are ways in which you can reduce your — just like you said you have done for your packaging business in India, where you said Huhtamaki, of course, has posted a loss and that probably is because they are doing all kinds of business. And they are not differentiating between EBITDA accretive business or EBITDA destructive business. That is what I’m trying to understand.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

I can only tell you one thing. I may have understood your question only partially. But I can only tell you one thing that we — when we look at our business, whether packaging or packaging films, we don’t want to cater to the market, which is — there are no margins. So we’re happy to leave some of the business, some of the SKUs, which can be done by a much, much smaller company. Because they can obviously do better than us as compared to a large player like us who — where the cost structure is different from that. So even in case of packaging — aseptic packaging, we took more time in terms of achieving full productivity because what we didn’t do was to just to cut price and gain — get the market, penetrate into the customer, and then look at raising the prices [Foreign Speech] we’ll see. Some of the other businesses have that tendency.

So once — but clearly, we are not into that kind of mindset at all that you have to do the plant utilization at the highest level under whatever the situation is. Yes, the market dynamics for our expansion capacity when it came into being were changed and I had earlier also said that probably the kind of operating levels of these plants that we’ve seen probably even the management had thought that it will take a much longer time but the market dynamics are such that it has happened early. So — but as a management philosophy, we are not ready to sell our product cheap. And if there are markets, if there are other players where we see structurally it is not possible to service that particular SKUs just because others are able to do it more cost effectively, you simply get out of that and let others do that. Because otherwise, then it’s a blood bath, and we don’t want to get into that.

Saurabh Sharma — Individual Investor — Analyst

Sir, what would you attribute the fact that BOPP film prices have increased, but BOPET film prices have not?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Okay. So there, the raw material has played a spoilsport there. So the polymer — homopolymer has been in short supply. So because of the raw material scarcity, the price ramp up there has been faster.

Saurabh Sharma — Individual Investor — Analyst

I’m not sure I understand, sir because BOPET prices, PET resin prices have also increased.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Yes. But if you see the PET prices only increased substantially recently. While the BOPP is now about a 6-month old story that the raw material availability becoming a bit of a challenge for the payers.

Saurabh Sharma — Individual Investor — Analyst

Right. Okay. So in terms of BOPP —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So while — because of our raw material better management, so maybe that’s another reason that we were able to populate those plants fairly quickly.

Saurabh Sharma — Individual Investor — Analyst

Okay. I’m not sure what role did raw materials play in populating the plant quickly?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So let’s say, a player who is not able to procure it. And that happens to a lot of smaller companies who were one plant play and they don’t have the global reach to source their raw material. And those are the companies who are then — not even if you very well —

Saurabh Sharma — Individual Investor — Analyst

Okay. All right. So sir, after the quarter end in this — in October month, have BOPP prices have increased also? Or the difference between BOPP increase and BOPET increase? If you can comment on that.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

So in this quarter, the raw mat price of BOPP has rather come down. BOPP price — the BOPET raw material prices have increased on a sequential quarter basis. But BOPP raw material prices have been lower than quarter as compared to —

Saurabh Sharma — Individual Investor — Analyst

And selling prices for BOPP and BOPET?

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Selling prices for BOPP and BOPET —

Saurabh Sharma — Individual Investor — Analyst

Because sir, BOPET —

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

BOPET prices have gone up in Q2 over Q1, while the BOPP prices are marginally down as compared to the sequential quarter.

Saurabh Sharma — Individual Investor — Analyst

Okay. Okay. And sir, just to clarify, I believe to Mr. Singhal’s question. I believe he was not taking into account the packaging sales from India, which are close to around 20,000 tonnes per quarter. So that is why there might be a discrepancy of 120-odd thousands that he is saying and 140-odd that we’re doing in sales. So that might — discrepancy.

Operator

As there are no further questions from the participants, I would now like to hand the conference over to Mr. Yusuf Nasrulla for closing comments. Thank you, and over to you, sir.

Yusuf Nasrulla — Investor Relations

Thank you, everyone, for joining us today, and we look forward to staying in touch in future quarters. Have a nice day, and wish you all a very Diwali.

Rajesh Bhatia — Group President of Finance and Accounts & Chief Financial Officer

Thank you all, sir, and enjoy your festivals. Thank you.

Operator

[Operator Closing Remarks]