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Edited Transcript of SUPREMEIND.NSE earnings conference call or presentation 25-Oct-19 10:30am GMT

Q2 2020 Supreme Industries Ltd Earnings Call

Mumbai Oct 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Supreme Industries Ltd earnings conference call or presentation Friday, October 25, 2019 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Mahaveer Prasad Surajmal Taparia

The Supreme Industries Limited - MD & Director

* P. C. Somani

The Supreme Industries Limited - CFO

* Rajendra J. Saboo

The Supreme Industries Limited - VP of Corporate Affairs, Compliance Officer & Company Secretary

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Conference Call Participants

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* Aasim Bharde

IDFC Securities Limited, Research Division - Research Analyst

* Akhil Parekh

Elara Securities (India) Private Limited, Research Division - Analyst

* Alroy Lobo

Kotak Mahindra Asset Management Company Limited - Chief Strategist and Global Head of Equities Asset Management

* Avi Mehta

IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary

* Kunal Lakhan

Axis Capital Limited, Research Division - VP of Realty and Aviation

* Madhav Marda

Fidelity Investments - Equity Research Associate

* Ritesh Shah

Investec Bank plc, Research Division - Analyst

* Ronil Dalal

AMBIT Capital Private Limited, Research Division - Research Analyst

* Sneha Talreja

Edelweiss Securities Ltd., Research Division - Research Analyst

* Sonali Salgaonkar

Jefferies LLC, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to The Supreme Industries Q2 FY '20 Earning Conference Call hosted by Axis Capital Limited. (Operator Instructions) Please note this conference is being recorded.

I would now like to hand the conference over to Mr. Kunal Lakhan from Axis Capital Limited. Thank you, and over to you, sir.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [2]

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Good evening, everyone. Thanks for taking time out this evening to attend this conference call. From the management, we have today Mr. M. P. Taparia, Managing Director; Mr. P. C. Somani, Chief Financial Officer; and Mr. R. J. Saboo, Vice President, Corporate Affairs and Company Secretary. Over to you, gentlemen.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [3]

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Thank you very much. I'm M. P. Taparia, Managing Director with The Supreme Industries Limited. I along with my colleague, Shri P. C. Somani, CFO; and Shri R. J. Saboo, Vice President, Corporate Affairs and Company Secretary, welcome all the participants who are participating in the discussion of the unaudited stand-alone and consolidated financial result for the quarter and half year ended 30th September 2019. The stand-alone results and the consolidated results are already with you. I'll give a brief on company's product operating performance and other highlights.

The company sold 93,500 ton of plastic goods and achieved net product turnover of INR 1,255 crores during the second quarter of the current year against sales of 83,175 ton of plastic goods and achieved net product turnover of INR 1,228 crores in the corresponding quarter of previous year achieving volume and product value growth of about 12% and 2%, respectively. The company sold 206,928 ton of plastic goods and achieved net product turnover of INR 2,673 crores during the first half of the current year against sale of 183,080 ton and net product turnover of INR 2,544 crore in the corresponding half year of previous year achieving volume and product value growth of around 13% and 5%, respectively.

Total consolidated income and operating profit plastic and construction business for the second quarter of the current year amounted to INR 1,271 crore and INR 184 crore as compared to INR 1,241 crore and INR 167 crore for the corresponding quarter of previous year recording increase of about 2% and 10%, respectively. Total consolidated income and operating profit, excluding construction business, for the half year of the current year amounted to INR 2,708 crore and INR 364 crore as compared to INR 2,587 crore and INR 360 crore for the corresponding period of the previous year recording increase of about 5% and 1%, respectively.

The consolidated profit before tax and profit after tax, excluding exceptional item in the construction business, for the second quarter of current year amounted to INR 126 crore and INR 138 crore as compared to INR 110 crore and INR 73 crore for the corresponding quarter of the previous year recording increase of 15% and 89%, respectively. The consolidated profit before tax and profit after tax, excluding exceptional item and construction business, for the half year of the current year amounted to INR 253 crore and INR 225 crore as compared to INR 255 crore and INR 170 crore for the corresponding period of previous year recording decrease of about 1% and increase of about 32%, respectively.

The business scenario of all the product segment of the company for the second quarter of current year ended 30th September 2019 as compared to the corresponding quarter in the previous year has been as under: Plastic Piping System business grew 20% by volume and 90% in value term; Packaging Product segment business grew 6% in volume and degrew by 5% in value term; Industrial Product segment business degrew by 13% in volume and 34% in value term; Consumer product segment business grew 1% in volume and degrew by 9% in value term.

During the second quarter, the company provided for and forming -- which are forming part of Industrial Products segment INR 9.7 crore toward quality settlement plan pertaining to supply of composite LPG cylinders to Bangladesh and built INR 4.04 crore towards provision for doubtful debts and a receivable of INR 8.08 crore from one of Industrial Component division customer as the company had moved to NCLT for recovery of dues. The overall turnover of value-added product increased to INR 491 crore during the current quarter as compared to INR 430 crore in the corresponding quarter previous year achieving growth of 14%.

The Board of Directors has considered the payment of interim dividend for the financial year 2019-'20 at a rate of 200% to INR 4 per share of INR 2 each, and we paid to the shareholders on the shares held as on the record date of the 5th (sic) [6th] November 2019. Average borrowing of the company for the half year ended 30th September 2019 was INR 204.54 crore as against INR 223.15 crore for the corresponding period of previous year. Average cost of borrowing as on 30th September 2019 is at 5.89% per annum as compared to 8.23% per annum as on 31st March 2019.

Business outlook. The company could overcome the quality issue of composite cylinders. The product is now well accepted in international market. The company supplies the cylinder to several international markets. The demand for pipe system remained robust. The demand in current month in agriculture segment was tripled due to extended rainy season in several states. We expect that going forward the demand will broaden for all system in the country.

Encouraged by the growth outlook in pipe division, the company increased its investment plan in the current year. It's now going to be in excess of INR 280 crore, which should include putting up a new plant in Odisha and to start polyethylene pipe fittings and pit pipe system at Jadcherla. Expanded capacity Performance Packaging Film has smoothly gone into production. The company made a breakthrough in several international market for this product with newer structures for various application. The capacity to manufacture furniture product at Jadcherla is now well established. The demand is slow, but with launch of new variety of product, we expect that demand will absorb the increased capacity by next year.

The demand for Industrial Component and Protective Packaging Product remains subdued. The raw material prices remain on bearish path. It is forecasted that prices are at least going to bottom. The low polymer prices were partially responsible for lower value growth compared to volume growth. For the full year, company expects volume growth to be between 10% to 12%. The value growth will be lower than volume growth in this year. The company expect [to cut] investment plan to around INR 400 crore in the current year. All the industrial plants are going smoothly. The corporate cash reduction has enabled the company to boost the investment ambition without carrying any additional debt.

This is a brief and overall summary for the quarter and first half of the year under reference. Thank you for your patience. Now I and my colleague, Shri P. C. Somani and Shri R. J. Saboo, are available to reply to various queries raised by all of you. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We take the first question from the line of Kunal Shah from IIFL.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [2]

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This is Avi here from IIFL. Sir, with the first half volume growth rate at 13% and your commentary about agri pipe demand likely to kind of come in the subsequent quarters given that monsoon has kind of delayed the demand, why are you not upgrading our FY '20 volume growth guidance of 10% to 12%?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [3]

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Sorry?

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [4]

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Sir, 10% to 12% is still our guidance while first half is 13% volume growth rate. Do you see it's more likely to kind of go higher than our guidance? Why not upgrade it or we should...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [5]

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(inaudible) rainy season. I hope the rain will be over by end of this month. We are aware that the rabi crop is going to be very good, but we are also aware the kharif crop is damaged to some extent in Maharashtra and Madhya Pradesh. So with the damage in the crop, the demand which we expected in month of November, December, we can't forecast today.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [6]

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Okay. Okay. So that is the reason why you're saying that we want to be -- remain at this volume growth rate.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [7]

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Of course. November, December are a good demand month for agriculture segment in Maharashtra and Madhya Pradesh both. And both the places are experiencing rain today.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [8]

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Okay. Fair enough. I got you.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [9]

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Damage to the crop.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [10]

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Sorry?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [11]

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Rains have done some damage to the crop.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [12]

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Okay, sir. Okay. I got it. Sir, the second bit is, sir, you said raw materials are -- they have close to the bottom now is what we are hoping. Then in that sense just to kind of understand how much is the deflation that is being caused, would -- what is the good -- could you give us some guidance here? Because right now, difference between volume and value is very high in this quarter, 10%, almost. How much is more -- what is the kind of explanation you can give?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [13]

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Our prices of polyethylene and polypropylene have gone down by around 12%.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [14]

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12%.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [15]

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Around 12%.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [16]

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Okay. Okay. And that is where it's currently right now -- hope it's right now?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [17]

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That we expected it may go down to some extent. The expectation is there. But in a current volatile world very difficult to forecast precisely.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [18]

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And sir, when does it come into -- I mean this deflation started, if I'm correct, last 2 quarters, right? First quarter, even fourth quarter, you had seen some deflation or no? It was only in the first quarter that this deflation started to come?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [19]

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It started coming down from second quarter big way when the new plant started extracting, and the world economy is growing slow. Several new plants have come up in production in USA.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [20]

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Okay. Fair enough, sir. And lastly, sir, what would be the guidance that you would want to share on the operating margin or EBITDA margin for the year?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [21]

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It should be between 13% to 14%.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [22]

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13% to 14%. Okay, sir. And lastly, sir, I just have small bookkeeping question. These one-off items that you highlighted, where are they reflected in our reported financials because you have not made any key or extraordinary items in your reported financials? So where should I adjust these costs or these one-off items?

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P. C. Somani, The Supreme Industries Limited - CFO [23]

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Hello?

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [24]

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Yes, sir.

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P. C. Somani, The Supreme Industries Limited - CFO [25]

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The composite cylinder claim has been adjusted in the revenue, cess. And the provision for debt has been adjusted in the other expenses.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [26]

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Okay. So the INR 4 crores is in the other expenses and INR 9.7 crores in the revenue?

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P. C. Somani, The Supreme Industries Limited - CFO [27]

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Yes, yes. Correct.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [28]

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Okay, sir. That's all from my side. Sir, one more thing, the tax guidance for the year, sir, if you could kind of also tell us.

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P. C. Somani, The Supreme Industries Limited - CFO [29]

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No, we have opted for this lower rate of tax. So it will be 25.17% of normal profits.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [30]

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So it should be 25.17% for FY '20, sir?

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P. C. Somani, The Supreme Industries Limited - CFO [31]

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Yes.

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Operator [32]

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Next question is from the line of Sneha Talreja from Edelweiss.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [33]

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My question is related to inventory losses. Can you quantify what must be the inventory losses in particular quarter for us?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [34]

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Not possible.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [35]

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Not possible. But have we incurred inventory losses in the quarter, sir?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [36]

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To incur -- we have inventory in our godown. We always keep our godown. So when the prices fall, we have to give reduction to our customers.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [37]

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Okay. So there is some amount of inventory loss because, as you said, P&P price has gone down by 12% Y-o-Y.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [38]

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There is some amount of inventory loss in the division where we are heating polyethylene and polypropylene, and there is some amount of inventory gain in Plastic Pipe division.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [39]

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Okay. So the next would be related to packaging films business. Can you give us a picture that where the maximum pressure is coming from? And what is the current scenario that you're seeing in the division?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [40]

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We will see segment in there and maximum pressure is coming in particularly Packaging division where quite a large demand is going to Industrial Component suppliers by our industrial appliance producer. And the industrial appliance producer demand is slow and where the demand is driven -- tripled by us. Otherwise, Performance Packaging Film is another division doing quite well. We are able to increase our volume also and value also and we are getting more and more markets, not only in India but the world market. In cross-laminated film, we had -- now we have some demand reduction in the first half, but now the demand has broadened up, and we are having adequate order to cover up the loss in production and also in the profit. Profit with the product measurement is subdued unless the industry demand rise.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [41]

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Okay. But any specific reason for margins in the packaging film business to go down that significantly?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [42]

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Packaging business -- because in the cross-laminated film in July-September quarter we made a special provision by giving some special incentive to all our distributors for the purchases made by them between September '18 to March '19 and then further increased the additional discount we gave them as a surprise to them in April '19 to June '19. And we also invited them to go on a foreign tour at our cost. And we took a pack, plus we did this before we start our off-season scheme reduce this price by 12%. But going forward, we are seeing the fall in polymer prices, and we did not want that our customers should buy the product and then lose money due to our reduction in price. So I would say that combined reduced the margin dramatically in cross-laminated film in July-September quarter. So for the full year, it is not going to escalate overall in the working of the company or business.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [43]

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Do we expect the margins to bounce back from the current quarter itself?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [44]

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Right. We expect for the full year the margin will be quite okay.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [45]

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Okay. How much could be the one-off kind of an impact? Have we done any calculations on this particular quarter?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [46]

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It will be around INR 19 crore.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [47]

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INR 19 crores, which will be a one-off?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [48]

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Yes, you're right.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [49]

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Okay. In the packaging division wherein we have incurred all these one-off expenses?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [50]

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One-off expenses in particular we did -- we had an inventory loss due to the fire in thermal prices and also demand reduction.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [51]

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Right, sir. Got that. Sir, one second. There is 1 more question.

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Unidentified Analyst, [52]

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Sir, on this piping division, we have seen significant improvement in margins to 13.5% from 8.7%. Though in Q1 you mentioned that when margins were lower, you were saying that because of the lower -- because of the mix of -- mix change towards agri pipe the margin were lower. I get that even this quarter also the scenario remains same, but we have seen significant improvement in margin. So this is all related to inventory gain, which is reflected in the pipe business and...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [53]

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There were better demand from housing segment in July-September. July-September is not a demand period for agricultural market. Rainy season, not agricultural market. That is a very small market where it is demand due to rainy season, but we are seeing good growth -- good demand coming up from affordable houses.

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Unidentified Analyst, [54]

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Okay. So 20% growth in pipe business in this quarter is not primarily driven by agri pipe. So it's mainly -- which is not at all.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [55]

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Not directly. It's mainly -- (inaudible) last year was quite low. The affordable house picked up only now this year.

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Unidentified Analyst, [56]

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Okay. And...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [57]

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Pradhan Mantri Awas Yojana.

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Unidentified Analyst, [58]

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Right. And in this segment, our margins are in this category only. I mean 13% to 14% in housing?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [59]

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No, we talk overall. You see I can't talk of segment-wise because there is cost underwritten. Demand was good in housing segment, and overall demand being better than we were able to run the plant in a bigger way, which will reduce operation cost also.

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Unidentified Analyst, [60]

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Okay. Because -- I was asking because you also mentioned that some gain is also in plastic pipe division while other segment -- the existing has been inventory losses.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [61]

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Inventory gain. Inventory gain will occur in affordable house also. They also require PVC pipe. In our plastic pipe division, we use 2 materials significantly, the PVC and polyethylene. Polyethylene price went down and PVC price went up.

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Unidentified Analyst, [62]

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Okay. So sir, this 20% growth, do you see that during second half pipe division because of this strong housing demand can report 18% to 20% volume growth?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [63]

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We expect that as on today. We expect the demand growth to be 18% to 20% of volume even now also for the second half.

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Unidentified Analyst, [64]

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In pipes?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [65]

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In pipe division.

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Unidentified Analyst, [66]

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Okay. Okay. It's only that pressure which we are seeing in industrials and also to some extent in packaging where we are seeing the volume decline. Otherwise...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [67]

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We believe the industrial and packaging may remain subdued for the remaining part of the year.

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Unidentified Analyst, [68]

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Okay. Sir, industrial, it's primarily facing issues from the poor demand from autos or any other segments?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [69]

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We are a small player in auto, but consumer appliance demand also is quite slow.

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Unidentified Analyst, [70]

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But sir, well, channels just suggest that consumer appliance industry -- it still remains on a solid growth. So...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [71]

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It remains, but the customer to whom we are supplying -- suppose I'm supplying to A customer, and the A has got 4 models. The models for which I'm supplying component if the demand is poor then for further companies the demand is poor. They're pretty very well made. I can tell you Supreme took care. We are at 12% volume growth in appliance segment. Am I clear to you?

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Unidentified Analyst, [72]

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Yes, right.

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Operator [73]

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(Operator Instructions) Next question is from the line of Sonali Salgaonkar from Jefferies.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [74]

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Sir, my first question is again in packaging. Now we have highlighted the 3 reasons that why the margins are lower. But on the Silpaulin and cross-laminated film, are we still taking price cuts to counter the competition, especially from the unorganized players that we did about in the last 3 or 4 quarter?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [75]

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We are reducing our operating margin this year by 2%.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [76]

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Because of the price cuts?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [77]

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Because of pressure from competition.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [78]

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All right, all right. So -- okay. So for full year, you still expect the margins to be somewhat in the double digits, say, about 12%, 13% or lower than that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [79]

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I can't say margin and margin will be in double digit, for sure.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [80]

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Got it, sir. Sir, my second question is in the industrial segment, is it possible to approximately give the breakup of how much is contributed by autos and by consumer durables?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [81]

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Auto is very insignificant. Of the auto that which are making -- only for auto we have sold already to another company. So we are a very small player in auto segment. It may be less than 20%.

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Rajendra J. Saboo, The Supreme Industries Limited - VP of Corporate Affairs, Compliance Officer & Company Secretary [82]

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20%.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [83]

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Okay. So majority of the dip that we are seeing in volumes and value terms in the Industrial Products, sir, largely attributed to the consumer appliances?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [84]

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You're right.

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Rajendra J. Saboo, The Supreme Industries Limited - VP of Corporate Affairs, Compliance Officer & Company Secretary [85]

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But the industrial segment also includes material. There are a lot of players on the material are going to auto supplier, auto component metrics, or auto manufacturers. Even they could also affect it.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [86]

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Got it, sir. Sir -- and thirdly, on the packaging front, you mentioned that some of the end user industries are -- the orders were not coming in the first half in the sense that we had demand reduction. So which sectors are we talking of specifically over here?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [87]

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Consumer appliance segment. In Protective Packaging Product division, the demand is down from consumer appliance segment.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [88]

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Got it, sir. All right. Sir, and my last question is on the capacity. Sir, could you give a breakup of the present capacities? And in terms of CapEx, last time you have guided for increasing by about 50,000 metric tons per annum. Are we sticking to that? Or are we increasing that because of the new product lines of PEX, et cetera, that we are adding on to?

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P. C. Somani, The Supreme Industries Limited - CFO [89]

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Yes. The CapEx program has been upgraded from earlier of INR 350 crore to INR 400 crore now. So the capacity addition we expect now about 70,000 metric ton, largely in the piping segment, because the majority of FX is going into Piping segment. So about 63,000 metric ton capacity could be in the piping segment. The remaining industrial and the consumer. Industrial could be around 5,000 and consumer around 3,000.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [90]

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Okay. Okay. And sir, breakup of our present capacities?

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P. C. Somani, The Supreme Industries Limited - CFO [91]

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Yes. We had opening capacity of 605,000 metric ton, piping system about 418,000 metric ton, Industrial Product, about 73,000 metric ton, Consumer product, 33,000 metric ton, and packaging is close to 80,000 metric ton.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [92]

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Okay. Okay. Sir, what are the applications of PEX pipes? I mean as we understand...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [93]

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(inaudible) ordered forward.

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Operator [94]

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(Operator Instructions) We take the next question from the line of Ritesh Shah from Investec Capital.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [95]

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Sir, my first question is what is the thought process behind entering into PEX and polyethylene pipes? What I want to understand is the size of the market and how actually the numbers can play out? Are we looking to set up own capacities or this will be traded goods and that eventually it will be manufacturing? That's my first question, sir.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [96]

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Regarding what, on polyethylene fittings you are asking?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [97]

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Sir PEX and polyethylenes.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [98]

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No. We are already making polyethylene pipe, but we're not making bolted fitting. Now we are putting a plant to make varieties of fitting by compression molding, electric cylinder fitting and also [expansion] fitting made from polypropylene and high-density polyethylene. This is to give complete system from our company. We are making as on today only pipe, not fitting. And now the government has announced the Nal se Jal scheme, and there is a demand for fitting. So we are supplying them pipe. Now we intend to supply them fitting also. And government has also decided to -- the whole country big way who just tried for LPG gas, they also require special type of fitting, and we want to participate in that business. We -- the team opened up in a big way in our country. On PEX pipe system, presently for whole quarter, we are supplying CPVC system and PPR system. The advance -- let's say, people now want PEX composite pipe, and we intend to supply to that market also industry being important.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [99]

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Sir, what will be the size of the market? And what is the kind of CapEx, so that the specifically PEX extruders would entail? Is it significant as compared to the normal extruders that we have? And is that...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [100]

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It's quite extensive.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [101]

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Okay. And sir, so what are time lines over here for this?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [102]

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Sorry?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [103]

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Sir, what are the time lines to set up this PEX plant? By when can we expect the product in the market?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [104]

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It will take time. We are discussing with our supplier to supply machine earlier, but it will take time. It may come not before next year.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [105]

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Okay. That's helpful. Sir, secondly, following on the earlier question, you indicated that our operating margins will go down by 2% because of price cuts. Sir, can you indicate what is the differential in pricing between the Tier 1 player like us and Tier 2, Tier 3 players? And have we recouped the lost market share? Or what is our strategy to get the market share back?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [106]

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We are not short selling the market share. The only thing, we are not able to hear anything more to our market. We are maintaining our market share. And they are selling at 10% to 12% lower than us. Some people are selling at 15% lower than us. We believe that their quality we discovered because then they are selling at lower than 10% to 15%. They're to play with 3 things possible. That means they play with a round figure. So clearly they played -- play next to us, and clearly they play with their size, even beyond winter. And because -- like it they give (inaudible) [hedging by 12 feet], and it may give lower than hedging by 12 feet . In the year, though, they can just -- they mark or declare or you may use (inaudible) material in plastic are possible. So we believe that many of the player we found out in the market in next, 1, 2, 3 years. People get the sense. So any -- if something dropped down in [our] price, they cannot sustain the business. (inaudible).

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [107]

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Correct. And sir, you had earlier spoken about the exports being opportunity over here. Sir, are we looking at that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [108]

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We surely are looking very much. Particularly this year, [107] (inaudible) in the world. We have targeted first engine new markets also because (inaudible) it always takes time. (inaudible) market and it's opening up more application and more market to the company. And we are going to go and invest in more markets in the future.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [109]

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Right. Sir, last question, what is the quantum of inventory that we have for HDPE and PVC in number of days?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [110]

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Sorry?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [111]

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Sir, what is the quantum of inventory that we keep in number of days for HDPE and PVCs?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [112]

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We don't -- I couldn't catch it. There are 2 [waste] material that we really developed here as we brought down our inventory. I can give you next time [the divide]. I've submitted an inventory [voucher under INR 70 crore] last year at same time, but gone down by INR 70 crore.

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Operator [113]

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(Operator Instructions) Next question is from the line of Kunal Lakhan from Axis Capital.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [114]

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Just a quick one from my side. So in our Industrial segment, a significant portion of our demand comes from the auto sector. And considering the sector is going through a drastic slowdown, how do you see the overall volume scenarios there?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [115]

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No. We are very small player in the auto segment. As I told earlier, out of our overall business Industrial component, our supply to auto company is less than 20%. So we are not concerned much what auto segment going slow for our industrial component, but it helps our demand in the field their segment (inaudible). But overall, the auto supply, the industry to industry, what we are doing that way demand has come down into newly operating segment for our company.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [116]

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Sure. Sure. And the second one being with the antidumping duty, now we are seeing the hardening of -- and (inaudible) pipes -- pricing rather. How do you see that impacting our overall realization going there, considering the mix...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [117]

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Antidumping duty is still not final. They have still not been announced. What they (inaudible) they announced, they say is it going well? And when the final antidumping will be announced, then they will get (inaudible) much lower than then they may (inaudible) for [duty water] that break. So until -- the only thing that we don't play (inaudible), which has helped that player who are not playing -- not really in that material, the demand has definitely gone up. But -- and actually, the antidumping duty on the imports on China and Korea are not finalized completely. They will finalize sometime by December then. As we reach in January, we can tell very clearly what is going to impact of that -- antidumping duty. But definitely, the -- unless (inaudible).

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Operator [118]

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Next question is from the line of [Nishant Shagma] from IDFC Securities.

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Unidentified Analyst, [119]

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Sir, two questions from my side. First one is whether we have read or did any revenue for the Construction segment this quarter or the same quarter last year?

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P. C. Somani, The Supreme Industries Limited - CFO [120]

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No. This quarter, there is no revenue; but last year, yes. It was a sale of INR 81 crore.

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Unidentified Analyst, [121]

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INR 81 crore. Okay.

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P. C. Somani, The Supreme Industries Limited - CFO [122]

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Profit of INR 53 crore.

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Unidentified Analyst, [123]

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INR 53 crore.

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P. C. Somani, The Supreme Industries Limited - CFO [124]

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Before tax, yes.

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Unidentified Analyst, [125]

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PBT, okay. Okay. Second question, sir, this might be repetitive. In your guidance, you mentioned that the volume growth would be somewhere close to 10% to 12% while the value growth could be lower than that. In the current quarter, we have seen that the price or the blended realization have got corrected by around 13%. So what is our sense -- what quantum we are expecting that the blended realization can fall further? Or in terms of value growth, what could be our guidance on that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [126]

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Today, we are saying that our volume growth will be between 10% to 12% and revenue will be slightly lower than volume growth. Beyond that, I don't know what to say. Because definitely, this year, the volume growth will be lower because the polymer pressure are going to remain soft earlier to March. In likelihood, the polymer price could go up unless some major event happens.

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Unidentified Analyst, [127]

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Okay. So we have already seen something. I mean this quarter, we have seen the realization correcting by 14% while the volume growth for last 2 quarters, if we see, it's over 12%, which are -- so can we expect that the -- we can beat on the volume growth and, thereby, some correction could happen on the pricing side and guidance. We can make it in terms of the value growth. We can be close to 10% or something like that.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [128]

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Yes. I mean we can't say volume growth will be 10%. But normally, we were following only value growth. In polymer prices, we are not still very sharp here.

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Unidentified Analyst, [129]

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Okay. And that -- but then, sir, in your volume guidance also you have mentioned that it will be for the full year 10% to 12% volume for the quarter itself?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [130]

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Value growth (inaudible) to announce today because...

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Unidentified Analyst, [131]

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No. No. In terms of volume growth, sir. You have mentioned that the volume growth would be 10% to 12% while in the first half itself here, it was close to over 12% volume growth. So are you expecting some moderation in the volume growth as well? Or...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [132]

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I think because this is really an issue that's a real scare. Initially, it continue longer time. Then definitely, the demand for pipe will go down also.

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Unidentified Analyst, [133]

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Okay.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [134]

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So give me all the causes. We are the reason

(inaudible). And again, no reason the volume which will be lower what they referenced in the first half.

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Unidentified Analyst, [135]

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So far, if suppose -- I'm just very -- vaguely, I'm asking or optimistically I'm saying that the rainy season or the rains just stopped in the month of October...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [136]

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And our volume growth will be lower than 13%.

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Operator [137]

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Next question is from the line of Ritesh Shah from Investec Capital.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [138]

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Sir, what have been the pricing trends on PVC and CPVC from September onwards?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [139]

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Pricing had dropped previous 2x.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [140]

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For CVs?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [141]

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PVC price have dropped when CP price have gone up.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [142]

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Sir, how much is the drop on PVC price?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [143]

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PVC pricing, they dropped price by INR 3. And then they gave a scheme of INR 1 or INR 1.5 based on performance of the customer. So for our total, you can account, the price had dropped by INR 4.5.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [144]

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And sir, on CPVC side, the price increase will be how much?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [145]

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The key detail on the brand is the price, so I don't know what -- how much increase has been taken -- has been announced by that 2 companies. Otherwise, we can (inaudible) for information. I can only say it will increase.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [146]

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Correct. Sir, how should we look at the CPVs in market, given the uncertainty around the antidumping duties, which you explained that the final call could be taken around December, January. So is it companies are not importing material from China and Korea, and they are resorting to other countries? Or is it that the material is not available for imports. Is there a scarcity in the market? Sir, how should I...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [147]

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Evidently, when the antidumping duty will import on China and Korea, they should definitely never decrease supply. You will join [CPC] and [Kerala] to more larger volume -- to move larger volume to Indian market. So it did benefited the 3 suppliers in the world market.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [148]

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Okay. And sir, how should you look at the pricing going forward given you indicated that there could be rebates? So as the strategy, would you stock up CPVC inventory? Or will we go light over here?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [149]

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Where should I stood? I don't like China material. I don't like Korea material. I am buying only from [Kerala].

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [150]

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Okay.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [151]

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So I never did restock. And sure, I do (inaudible) inventory. But

normally, we'll (inaudible), meeting the requirement of my customer.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [152]

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Correct, correct, correct. That's helpful. And sir, in the earlier question, you indicated that for (inaudible), there is specific demand for fittings. So you indicated these fittings are towards HDPE and polyolefin side. That's what you said?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [153]

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Actually, normally, the completion fittings are made from polypropylene and (inaudible) fitting. So I didn't say HDPE. I said polyolefin tight fitting. Polyolefin include polypropylene and polyethylene.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [154]

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Okay. Both PP and PE. Okay.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [155]

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Yes. You are right.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [156]

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Okay. And sir, we will be manufacturing both going forward?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [157]

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Yes. We're going to make both. They are going to made by various processes, and we are going to create rapidly and largely. We need to supply an excess of fittings and from polyolefin material.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [158]

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Correct. Sir, what is the competition in this market like? Is it currently felt by imports or? The players like Ashirvad who can cater to the segment? And we are -- at this particular fittings market, sir, which you indicate that it could be big going forward?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [159]

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Yes. There are 2 prominent companies, Georg Fischer.

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Unidentified Company Representative, [160]

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Georg Fischer, okay.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [161]

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Georg Fischer. They are making. And one other company, a European company, which has purchased the plant of Kimplas Limited, K-I-M-P-L-A-S, Kimplas Limited. That they are the 2 supplier fittings in India. And then there are some smaller suppliers who are making compression molded fittings. We are going to supply compression molded fitting, and we are going to supply electric fitting switching, both.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [162]

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Okay, okay. And sir, by when can we expect this plant to be ready, so that it benefits us on numbers?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [163]

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It will take around 1 year.

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Operator [164]

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Your next question is from the line of Akhil Parekh from Elara Capital.

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Akhil Parekh, Elara Securities (India) Private Limited, Research Division - Analyst [165]

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Sir, my question is on the packaging front. A couple of quarters back, we had mentioned that we have introduced Silpaulin Star, which is a cross-branded film. Any update on it, like in terms of pricing versus our existing Silpaulin product and the distribution lead that we have achieved for Silpaulin Star?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [166]

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Silpaulin Star is very well accepted. They (inaudible) it is a better property. We are keeping the same price of Silpaulin Star like Silpaulin. And we hear that price between the BIS and Silpaulin Star. Once you get BIS on Silpaulin Star, we will increase the price of Silpaulin Star.

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Akhil Parekh, Elara Securities (India) Private Limited, Research Division - Analyst [167]

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Got it. And in terms...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [168]

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(inaudible) these are market -- we are able to hold the market. And no, even now in our market share.

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Akhil Parekh, Elara Securities (India) Private Limited, Research Division - Analyst [169]

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Got it. And sir, will Silpaulin Star replace Silpaulin product going forward once we get the BIS approval?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [170]

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They supplement.

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Akhil Parekh, Elara Securities (India) Private Limited, Research Division - Analyst [171]

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It's a supplement. Okay. Okay. And in terms of...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [172]

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Silpaulin is a very good material. Silpaulin Star is also a very good material.

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Akhil Parekh, Elara Securities (India) Private Limited, Research Division - Analyst [173]

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Got it, sir. And in terms of the reach, how far we are we, the distribution reach for Silpaulin Star?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [174]

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We are reaching 12 new country now. We will be (inaudible) with Silpaulin Star.

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Akhil Parekh, Elara Securities (India) Private Limited, Research Division - Analyst [175]

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Okay. Okay. Got it. Sir, I think you mentioned that we will be -- no, there will be a decline of 2% of margin for the Silpaulin business for this entire year because of the excessive competition. But our channel checks suggested that especially in Kerala market, which is our one of the biggest market, our -- one of the big competitors has already moved away from Kerala because of the quality issue. Would you be able to share some light on it, if possible?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [176]

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I can't tell you about the competition. I can only say 2 players, second again only -- again to produce in China and in Kerala. We're there to fight producers on (inaudible) high count. And they started now producing what they claimed as a newer material. We have still not tested the product, so I can't talk about their product. But our market share remain intact.

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Operator [177]

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(Operator Instructions) Next question is from the line of Sonali Salgaonkar from Jefferies.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [178]

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So my question is pertaining to the industry per se. Now we have seen that pipe players are reporting good volume growth. So especially in the piping system, which segment is doing better in the sense? Is it plumbing? Is it infrastructure pipes? Or which application is accounting majority to this volume growth?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [179]

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We are supplying these in 3 segment: housing, agriculture, infrastructures. And we are seeing good growth coming from all these 3 sector.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [180]

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Sir, even in housing, I mean is it more from affordable housing or new constructions?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [181]

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We are not -- these big numbers, we don't care. Where affordable housing, we [can] seasonally. But we are supplying to housing. All right? I don't see that the housing demand has completely gone down beyond INR 4,500,000. Affordable housing is only approved for INR 4,500,000 once you get the affordable house. Demand is there. What is there in our type of housing? It may be affordable house, below INR 4,500,000. And in the house of 5 crore, 10 crore, also demand is there.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [182]

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Got it, sir. Sir, and my second question is regarding this Jal se -- Nal se Jal Yojana, where -- what's the kind of opportunity do you see in this? And will this opportunity also be shared by Metal Pipes?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [183]

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The government announced that there will be I think the whole country on Nal se Jal by 2024. Presently, we are seeing that they have become part up there in Bihar and some of part of [UP]. Going forward, the -- from the deal is going to move toward the whole country as the government not only -- I think the country opened because of [this entry]. Similarly, they are going to work on Nal se Jal. We are already going in a very good way in Gujarat and Telangana. There are 29 states and 27 states still to go. So demand has come. In some way, there will -- we'll buy metal pipe also. But plastic pipe is far better and more durable and more receptive. In metal pipe, they target [intra-station] over a period. In plastic pipes, the intra-station move very slowly. In case there's a (inaudible), then lower bottle becomes lower and lower. And the guidance have becomes shorter and shorter with the mineral in the water over a period. That's where plastic [power] is considered the ideal material for moving the drinking water.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [184]

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All right, sir. Sir, within plastic pipes, any particular segment which could be of significance, for example, HDPE?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [185]

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Now there are [UJ, DP, MDP and CPUC]. That's only began in the [HE] housing. So it began on the piping sector for (inaudible), a very (inaudible) type of material, LTP, MDP and CPUC.

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Operator [186]

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Next question is from the line of Ronil Dalal from AMBIT Advisors.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [187]

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Can you hear me? Hello?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [188]

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Yes.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [189]

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Yes. Sir, so a question I was able to ask that, sir in double-wall corrugated pipes, what is the kind of progression over there? Earlier you had said that it was not going as per expectation. Competitors are not following BIS standards. What is the progression? And how is the market...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [190]

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No. We started selling. We are definitely at very low price, in double-wall corrugated pipe. And we maintained more demand, this is what I quantify for time being because it's a rainy season. But I think now from next month onwards, demand returns [for our corrugated] result. We are seeing a more and more straight line instead of -- being RCC pipe are more into the (inaudible) are the truth for Asian pipe, up to 200-millimeter demand which still quite robust. (inaudible) then only they can buy the pipe and install it. Installing this type of pipe will give us (inaudible) with the hours it took underground. And when there are water all around, how can we do the right (inaudible)? This starts from May until November. And we'll be supplying. There's no issue about it. We are going to remain -- that initially, we are going to remain a true leader in the business.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [191]

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Okay. And sir, what about -- in the packaging film and protective films, you had mentioned at some point, I think, I mean the last quarter that these are higher than 25% ROC businesses. So does that still hold?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [192]

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Yes. That -- can you post -- what you said on the -- this, much more than 25%.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [193]

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Okay. Yes, that's what I meant, greater than 25%. Okay. Okay. And so sir, and what about the tarpaulin sector? You are seeing some new competitors coming in. There was intense competition. Anything on that? Any updated on -- any update on that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [194]

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We are able to share tarpaulin margin by 2%, which is earning even now 25% less. And we are going to -- we are not talking about getting demand for our product.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [195]

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Okay. Okay. And sir, one last thing that -- your value-added product share, any kind of guidance on that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [196]

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Have you seen our (inaudible) one thing had turned off. And that's, again, why last year in second quarter it's gone up from 35% to 39%.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [197]

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Yes. Yes, yes. So I've seen that was -- sir, any...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [198]

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(inaudible) will come from INR 432 crore to INR 491 crore.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [199]

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So any reason? What were the key...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [200]

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Customers are saying that we want to go and increase in the sale of value-added item.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [201]

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So where did the increment come from this quarter? So 39% is usually much higher than, say, even last corresponding quarter last time was 35%.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [202]

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I can give you last quarter, about -- in the first half, that's a 58%, and these are the one-offs that keep adding up from the full half year.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [203]

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Right. Right. So sir...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [204]

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Actually, our one-off from 33%, 35%. And the second part depreciate in terms of 35%, 39%.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [205]

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Sir, what I'm just saying that -- and then can you probably say that where that is coming from? Which are the key...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [206]

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Coming from many segments (inaudible) furniture (inaudible).

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [207]

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Okay. Anything from pipes as well or not so much?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [208]

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[Give us some time].

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [209]

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So can I say a large chunk of it, more than 50%, 60%, is coming from pipes?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [210]

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I don't remember. I can only say the overall value in first half is (inaudible) INR [860] crores, which is the INR 948 crores.

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Ronil Dalal, AMBIT Capital Private Limited, Research Division - Research Analyst [211]

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Right, right...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [212]

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(inaudible)

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Operator [213]

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We take the next question from the line of Alroy Lobo from Kotak Investment.

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Alroy Lobo, Kotak Mahindra Asset Management Company Limited - Chief Strategist and Global Head of Equities Asset Management [214]

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I just wanted to get an update on the DWC segment, the double wall corrugate pipe segment. Because what we're seeing is that your competitor seems to be very bullish. Just wanted know what is your take on that segment and there are view in terms of the potential business opportunity?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [215]

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I'm not bullish either. The only thing is that projecting many competitions are within material. We don't know they're allowed to use and to get BIS certificate. We have decided, as a company, that we will make extra BIS. So it means I'd rather be very low in (inaudible) for some quarter. But over the period, people will see the quality, and then we will be -- started which order to come in the future. We are getting a very small -- today, we cannot produce more than 1,200 ton per month of CPVC pipe. Not that we present confident (inaudible) properly differentiated, then we are going to so many location. We will increase our capacity to manufacture in more location. We'll be (inaudible). And here, we are in actually (inaudible) per 6 location. Same, we will go for DWC pipe [logs] going forward.

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Alroy Lobo, Kotak Mahindra Asset Management Company Limited - Chief Strategist and Global Head of Equities Asset Management [216]

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And what about the approvals from the various agencies? Have they been only on June?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [217]

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Here, we apply, we get the approval. No issue. Here, we're not the (inaudible) not a problem.

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Operator [218]

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We take the next question from the line of Madhav Marda from Fidelity Investment.

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Madhav Marda, Fidelity Investments - Equity Research Associate [219]

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Sir, just continuing on the previous question. Usually on DWC pipes, you have usually been a little bit more -- you sounded much more positive on the DWC pipe business this time. So is the challenge from the poorer quality players following the market? Do you think that's coming off? This was...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [220]

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(inaudible) They will -- no. They're not coming off. They rarely -- these are our margin. Our margin is (inaudible), you can handle -- we are making 35,000, 34,000 -- 36,000 turnover product every month in (inaudible) small business. I want the poor -- and I want to give to the interested, say, buyer a proper quality of pipe, which will last for 100 years. (inaudible) they don't last for 100 years. They cannot last beyond the 10 years.

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Madhav Marda, Fidelity Investments - Equity Research Associate [221]

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Quality, of course. Okay. That's all right.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [222]

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[Unless quality really build up], okay?

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Operator [223]

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Next question is from the line of Aasim from IDFC Securities.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [224]

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Sir, I have two questions. The first one for H2 FY '20, what is the price volume growth that you are expecting?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [225]

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Very good question. In first half, we had sold under 153,000 turn pipes. First half, we sold 153,000 turn pipe. Next season and next second half should be higher than this. Hello?

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [226]

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Yes, sir.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [227]

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(inaudible)

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Operator [228]

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Mr. Aasim, we are unable to hear you well, sir.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [229]

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Is this clear?

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Operator [230]

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Yes. It is.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [231]

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In first half, we sold 153,000 turn pipe. Am I clear? Can you hear?

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [232]

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Yes. I can hear you, sir.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [233]

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Second half, we should sell slightly more than this.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [234]

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Slightly more than. Okay. And sir, for the Industrial segment, what kind of full year margins are we expecting adjusting for the one-offs in Q2?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [235]

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Full year margin. What's your margin?

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P. C. Somani, The Supreme Industries Limited - CFO [236]

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10% to 12%.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [237]

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Did you take -- margins are 10% to 12%.

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Operator [238]

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Ladies and gentlemen, that is the last question for today. I would now like to hand the conference back to the management for their closing comments. Over to you all.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [239]

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Thank you very much. And wish -- we wish all the participant a very happy Diwali and that we are still in Bombay, a very good -- happy New Year also. Wish again very best for the remaining part of the year.

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Operator [240]

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Thank you very much. On behalf of Axis Capital Limited, we conclude this conference. Thank you all for joining us. You may disconnect your lines now.