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Edited Transcript of SUPREMEIND.NSE earnings conference call or presentation 24-Jan-20 10:30am GMT

Q3 2020 Supreme Industries Ltd Earnings Call

Mumbai Jan 30, 2020 (Thomson StreetEvents) -- Edited Transcript of Supreme Industries Ltd earnings conference call or presentation Friday, January 24, 2020 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

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Conference Call Participants

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* Abhilasha Satale

Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Research Analyst

* Abhishek Ghosh

DSP Investment Managers Pvt. Ltd. - Assistant VP of Small & Mid Caps and Transportation

* Achal Lohade

JM Financial Institutional Securities Limited, Research Division - VP

* Aditya Bagul

Axis Capital Limited, Research Division - Assistant VP of Midcaps

* Ashish Poddar

Anand Rathi Financial Services Limited, Research Division - Research Analyst

* Avi Mehta

IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary

* Bhargav Buddhadev

Kotak Mahindra Asset Management Company Limited - Research Analyst

* Devansh Nigotia

Securities Investment Management Pvt Ltd - Research Analyst

* Maulik Patel

Equirus Securities Private Limited, Research Division - Research Analyst

* Nehal Shah

ICICI Securities Limited, Research Division - VP of Research of Midcaps

* Ritesh Shah

Investec Bank plc, Research Division - Analyst

* Rohan Gupta

Edelweiss Securities Ltd., Research Division - Research Analyst

* Shrenik Bachhawat;JM Financial;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 Limited Q3 FY '20 Earnings Conference call hosted by Axis Capital Limited. (Operator Instructions) I now hand the conference over to Mr. Aditya Bagul from Axis Capital Limited. Thank you, and over to you, sir.

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Aditya Bagul, Axis Capital Limited, Research Division - Assistant VP of Midcaps [2]

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Thank you. Good evening, everyone, and a warm welcome to the Q3 FY '20 Earnings Conference Call of Supreme Industries Limited.

We have the management of Supreme represented by Mr. M. P. Taparia, Managing Director; Mr. P. C. Somani, Chief Financial Officer; and Mr. R. J. Saboo, VP Corporate Affairs and Company Secretary.

Before we get on to the call, I just wanted to congratulate the management on a good performance amidst challenging times. And now without further ado, I shall hand over the floor to the management to brief us on the results, post which, we shall open the floor for Q&A. Thank you, and over to you, sir.

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

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Thank you very much, Mr. Aditya. I'm M. P. Taparia, Managing Director of The Supreme Industries Limited. I, along with my colleagues, Mr. P. C. Somani, CFO; and Mr. R. J. Saboo, Vice President Corporate Affair 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 9 months ended 31st December 2019.

The stand-alone results and the consolidated results are already with you. I'll be brief on company's product operating performance and other highlights.

The company sold 1,01,393 ton of plastic goods and achieved net product turnover of INR 1,356 crores during the third quarter of the current year against sale of 1,00,982 ton of plastic goods and achieved net product turnover of INR 1,406 crore in the corresponding quarter of previous year, achieving volume growth and product value degrowth of about 1% and 4%, respectively.

The company sold 3,08,321 ton of plastic goods and achieved net product turnover of INR 4,028 crore during the 9 month of the current year against sale of 2,84,062 ton and net product turnover of INR 3,950 crore in the corresponding 9 month of previous year, achieving volume and product value growth of around 9% and 2%, respectively.

Total consolidated income and operating profit, excluding construction business for the third quarter of the current year, amounted to INR 1,375 crore and INR 222 crore as compared to INR 1,412 crore and INR 177 crore of the corresponding quarter of the previous year, recording decrease about 3% and increase of about 25%, respectively.

The total consolidated income and operating profit, excluding construction business for the 9 months of the current year amounted to INR 4,106 crore and INR 586 crore as compared to INR 4,007 crore and INR 536 crore for the corresponding period of the previous year, recording an increase of about 2% and 9%, respectively.

The consolidated profit before tax and profit after tax, excluding exceptional item and construction business for the third quarter of the current year amounted to INR 165 crore and INR 125 crore as compared to INR 127 crore and INR 81 crore for the corresponding quarter of the previous year, recording increase of 30% and 54%, respectively. The consolidated profit before tax and profit after tax, excluding exceptional item and construction business for the 9 months of the current year amounted to INR 418 crore and INR 350 crore as compared to INR 382 crore and INR 251 crore for the corresponding period of the previous year, recording increase of about 9% and 39%, respectively.

The business scenario of all the product segment of the company for the third quarter of the current year ended 31st December 2019, as compared to corresponding quarter in the previous year has been as under: Plastic Piping System business grew about 1% in volume and value term; Packaging Product segment business grew 50 -- 5% in volume and about 1% in value term; Industrial Product segment business degrew by 11% in volume and 21% in value term. Consumer product segment business grew by 7% in volume and degrew by 3% in value term. The overall turnover of value added product increased to INR 568 crore during the current quarter as compared to INR 528 crore in the corresponding period of previous year, achieving growth of 7%.

The average borrowing of the company for the 9 month ended December 2019 was INR 223 crore as against INR 259 crore for the corresponding period of previous year. Average borrowing cost as on 31st December 2019 is at 7.1% per annum as compared to 8.23% per annum as on 31st March 2019.

The bearish trend in raw material prices have come to halt. From the lowest level, there is an increase in price of all types of polymers. The lower prices have increased the polymer consumption in the country by around 7% in 9 months of this year. The increased price, now announced by the makers, continue to remain affordable.

The demand growth for Plastic Pipe System is encouraging. In October-December quarter, growth was low due to both major festivals were in October and the rainfall extended up to first week of November. The demand growth came back by second half of November. With the prospect to increased demand, the company stepped up its investment commitment and plans to commit a sum of around INR 500 crore in the current year. It is expected that all the investments will go in production one after another by March 2021. Principal investment will be to put up PVC Pipe plant and PEX Pipe plant and high-density polyethylene fittings at Jadcherla, PVC Fitting plant at Kharagpur and to put a plastic pipe complex at a new site in Orissa.

The demand for Performance Packaging Film, Protective Packaging Product and Furniture remain normal. The demand for Industrial Component and cross laminated film remain subdued. Company continues to execute small order for composite cylinders in international market.

This is a brief and overall summary for the quarter and 9 months of the year under reference. Thank you for your patience. Now I and my colleagues, Mr. P.C. Somani and Mr. 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) The first question is from the line of Avi Mehta from IIFL.

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

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Sir, congratulations on a good performance this quarter. Sir, I had 2 questions, one was essentially on a very healthy performance that we've seen in the Packaging segment. I mean, in terms of EBITDA per kg, we are now close to about INR 30, INR 33. Is this a more sustainable level, suggesting that the discounting pressures are behind us? Because in the commentary you've also highlighted that cross laminated remains subdued. So where you have taken the price that was supposed to be the price leader for us? So if you could give us some idea about what is happening in that part of the segment, please?

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

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No, we have no plan to reduce the price of cross laminated film product, but reduction has taken place, we are now having reasonable demand for the product. There was a degrowth by 1% by value in the third quarter. That's why we said demand is subdued. There was no growth in cross laminated film.

And in our Performance Packaging Film, we have developed various structure which are laminate and we are an excellent value to our business. Similarly, on Protective Packaging Product also, we have developed several structure, so that's why we are confident now that going forward the demand and the margin will remain okay in this division.

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

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Okay. So it should mean this is essentially close to the bottom. And sir, the pressure on -- that -- there was a 10%, 15% discount, has that narrowed from competition versus not for us?

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

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I think the quality is not comparable, so their price may remain. Out of the many players, we feel that most of the players are hardly making proper quality. There are 1 or 2 players only who are making some product reasonably close to us, not exactly like us. So we don't see much pressure now from any of them, except the price which has taken place has taken place.

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

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Okay, sir. Perfect. Perfect. That would be good to hear. Sir, the second bit was on your commentary on the pipe side, which you said that there is a recovery in the second half November. Just wanted to understand, sir, what kind of growth are we looking at from the second half onwards? Basically, because full year -- full quarter number is not able to give us a picture, correct picture...

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

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Overall, in 9 months, we had a volume growth of 14% in Plastic Pipe System.

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

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That is the metric that we should look at? So we would remain...

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

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Overall 14%. So we anticipate the growth should be between 13% to 15% for the full year.

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

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And overall -- sir, on volume, right, sir?

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

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Yes, yes, because the prices have come down, so we will track down volume growth for this year.

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

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Okay. So you were saying that for the year, what we had said 10% to 12%, we are now saying it should be more like 13% to 14%?

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

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10% to 12% for the company. For Plastic Pipe, we are saying 13% to 15%.

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

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Okay, 13% to -- and for the company, we still maintain that 10% to 12%, right, sir?

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

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Yes, actually maintain 10% to 12%. Yes, you are right.

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

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And marginal -- sir, margin, we would be -- we would up our guidance now because clearly, we are looking like we'll exceed 14%. 13% to 14% margin you had indicated, but...

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

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We are saying, for the full year, the margin may be between 14% to 14.5%.

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

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Okay, sir. Okay, sir. And that is -- sir, lastly, any update on the real estate business? How is that behaving? Is the market still weak or...

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

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Market, real estate, we were to say everything is sold on real estate.

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

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Okay. So that is done. There were some 10,000-odd square feet left, sir, I thought? Okay, then maybe I'm mistaken.

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Unidentified Company Representative, [21]

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Yes, yes, you're right, we have sold, but that transaction will get completed this month, so will come in this quarter.

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Operator [22]

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The next question is from the line of Devansh Nigotia from Securities Investment Managers Private Limited (sic) [Securities Investment Management.]

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Devansh Nigotia, Securities Investment Management Pvt Ltd - Research Analyst [23]

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Congratulations on a very good set of numbers. Sir, my question is specifically related to plastic pipes. I mean, given that the demand in agrochems have been really strong and, like, if you can just share your outlook and dissect our plastic piping growth between agri and nonagri, what would that be like for the current quarter?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [24]

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No, it's difficult to segregate between agri and nonagri because the pipe, which we say agri pipe, we know in several states they are being used in housing. So it is not possible for us to give a precise number or percentage. We only say that we are active in both the segment. We have quite a large SKU available to supply to housing. We are also active player in agriculture market. We handle all the -- both the segment.

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Devansh Nigotia, Securities Investment Management Pvt Ltd - Research Analyst [25]

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Okay. Sir, because -- I mean, specifically, if you can just even give us some trend in agri pipes because agrochems have shown some really strong numbers. And on the supply side, we are seeing players like Kisan and even Jain are consolidating. So I mean, the momentum, I mean, for the agri pipes, if you can just share your outlook? How are you really seeing things?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [26]

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Yes. We are seeing that as the prices are at lower level, the demand from every segment is going quite okay. The farmers are spending money for development of their field. And as the water level has improved, there are now more sources of water available, so the demand is quite okay for farming sector also.

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Devansh Nigotia, Securities Investment Management Pvt Ltd - Research Analyst [27]

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Okay. And are we looking to bid for these players in case if they show up, if they're looking to sell their agri pipe business?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [28]

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Which are the business?

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Unidentified Company Representative, [29]

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Jain and Kisan.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [30]

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No, no, no, we are not here for any inorganic acquisition. We can't talk. Nothing. We are talking organic growth.

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Operator [31]

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The next question is from the line of Sonali Salgaonkar from Jefferies Group.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [32]

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Sir, congratulations on a great set of numbers. Sir, my first question is regarding our broader strategy. So up till the first half we had seen very high volume growth. And right now, we are seeing probably moderate volume growth, but very high margins. Sir, should we consider this as a one-off because of extended rainfalls? Or should we look at it from the point that we are more focusing on value versus volume from here on?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [33]

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No, value growth, we never lost sight. Value growth always remain on our radar. In the third quarter, we are very pleased to share that we had around 42% value-added product share. It was extremely good. Normally, we achieve 36%, 37% value-added item. So value added, they are always going to remain on our radar. Having said that, we have to remain in volume also because we are selling a plastic pipe system and major sale comes from pipe. And as we are very active now in infrastructure as we are supplying polyethylene pipe, double wall corrugated pipe, so volumes are bound to come also. So we are going to remain active on volume and value. Our principal focus remains, as it was told earlier, that we must get return on average capital employed higher than 25%. Our focus remains on our ROAC.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [34]

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Understand, sir. Sir, and again, coming back to the point of value-added mix being 41% in this quarter, should we expect this as a sustainable level? Or do we expect it to be ranged -- ranging between 35% to 36% for the coming quarters?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [35]

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No, in the 9 months, we issued [37.64%.] I can only say that in value terms, it will go on growing. Our -- for the 9 month, our value-added product turnover has gone up from INR 1,389 crore to INR 1,516 crore, so around INR 127 crore was more than last year. So...

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [36]

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Understand, sir. Sir, my second question is, this Nal Se Jal Yojna or pipe drinking water to all by 2024. Sir, could you just give us an update as to what is the opportunity size and where all it is rolled out? And by when do you expect it to be rolled out in the other states?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [37]

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No. Presently, we are very active in Bihar and some part of U.P. They are the places, to our knowledge, where the scheme has been rolled out. We are not aware that the scheme is rolled out in other state, but government is very clearly working on it. And as they said the date of 2024, the intentions are very firm and clear. So we expect that year-after-year the demand is going to grow more and more. And for that, apart from polyethylene pipe, we'll be able to supply the fitting also, which today we don't supply, we will be able to supply fittings also very shortly, commit the requirement with that system.

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Sonali Salgaonkar, Jefferies LLC, Research Division - Equity Analyst [38]

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Understand, sir. Sir, and my last question is regarding the industrial segment where we have seen the weakest performance. Sir, which are the end-user segments or consumers of the industrial who have done quite badly? Is it the autos or the appliances this quarter?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [39]

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We are not very much in auto. But now, this quarter, January-March, we have issued a reasonably good forecast. I believe that when we end the year, this quarter, we'll be having a reasonable performance in the quarter. I can say that the consumer appliance side, the demand is now revived here. Because our other company, Supreme Petrochem, which is active supplier of raw material to the consumer durable segment and consumer appliance segment are -- have placed quite a good requisition to us that their requirement will be quite good in January-March quarter. So we believe that demand of consumer appliance side has now come back.

Auto sector, we are a very small player. Suppose our turnover is going to be around INR 5,900 crore. We -- our supply is around 3% in auto segment. So we are insignificant player in auto segment.

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Operator [40]

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(Operator Instructions) The next question is from the line of Nehal Shah from ICICI Securities.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [41]

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Congratulations, sir, for good set of numbers. Sir, my question is on pipe margins. We have seen pipe margins going up by almost 200 basis points, from 12% to 16%. So can you quantify the expansion of -- expansion to that extent?

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

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It is more due to the more share of value-added item. More share of value-added item in that segment.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [43]

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Okay. And do we have some extent of margins coming in or higher margins coming in from CPVC pipes as well? Probably, we would be gaining some market share because of the anti-dumping duty which is there?

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

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We definitely have served more CPVC pipe in quantum compared to country growth. Out of which the country has grown, our growth is more in volume term. So definitely our sale is increasing.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [45]

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And sir, even margins would be better than what it was earlier in CPVC pipes?

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

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As we are adding more and more value-added item in CPVC system and -- in system and we are adding more and more product in such system, the margin are definitely destined to improve.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [47]

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Okay. And sir, have our CPVC recent contract, which was likely to increase, has it already increased from the supplier side?

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

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They have already increased the price.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [49]

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They've already increased. And we have -- have you also passed on to the same extent in the market?

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

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Yes, we have to pass it on.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [51]

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Okay. So we are fully covered to that extent?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [52]

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I believe that has (inaudible) only the -- that cost push is due to the rupee depreciation also.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [53]

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Okay. Because sir, what we have been hearing during our checks is that in the second half of December, we have seen some promotional schemes or discounts being offered by companies in CPVC pipes in particular.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [54]

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They are due to all the people who are making from the Chinese material, but we are offering -- we are not aware of such thing, after all we supply quality product.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [55]

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Right. And sir, what is the quantum of price hike we have taken in CPVC pipes?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [56]

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I don't recall correctly, but we have taken -- we have factored the increase in cost due to raw material price increase and also due to the rupee depreciation.

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Nehal Shah, ICICI Securities Limited, Research Division - VP of Research of Midcaps [57]

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Okay. So we are fully covered to that extent?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [58]

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Reasonably covered.

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Operator [59]

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The next question is from the line of Ritesh Shah from Investec.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [60]

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Sir, congratulations for a good set of numbers. Sir, just to continue on the prior question. Sir, when was this price increase taken for CPVC specifically, given the vendor procurement cost for us would have increased?

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

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No, when this anti-dumping duty had been imposed on China and Hanwha, then the -- our suppliers who were -- who kept under pressure and then they were required to drop the price. So when this duty had been imposed, but duty also is still not final, it's a provisional anti-dumping duty. So when the duty is finalized, maybe in the month of February only, it looks like they may be finalize the duty. So sometime during the previous 2 months, they increased the duty -- increased the price, which I -- that I don't remember.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [62]

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Okay. And sir, given we are a very large player, do we have specific long-term contracts wherein we get better pricing terms as compared to the smaller players?

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

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I don't know. But definitely, we are a large -- we are a reasonable sized customer, so they give proper cognizance of our volume and accordingly they charge the price to us.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [64]

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Okay. Sir, my second question was on the margins in the packaging segment. I was looking at the dollar pricing for both HDPE and LDPE. For last 3 quarters, it has actually come down quarter-on-quarter basis. Sir, despite that, if one looks at our numbers on a per kg basis EBITDA, it actually went down and it has again bounced back to around INR 32, INR 33. So sir, just wanted to understand how should we reconcile this number? Is it like we have reduced the discounts because the headline numbers have definitely come down? Or if you can explain our inventory stocking policy, sir, it would be very useful.

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

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Inventory tracking when the prices are coming down only 1 tracking that there will be loss. Inventory tracking can be a loss only, no?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [66]

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Correct. But sir, then our EBITDA per kg in packaging, it has come -- it has -- from INR 24, it went down to INR 13 and then it increased to INR 33.

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

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You are saying packaging or pipe?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [68]

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Sir, packaging. Packaging.

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

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Packaging, okay. That is for the previous quarter, no?

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Unidentified Company Representative, [70]

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Yes, previous quarter, there was some [annual] losses in packaging division, which is onetime -- one-off, one-off.

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

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No, that quarter in [October-December], okay?

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Unidentified Company Representative, [72]

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September. November, I've got a scheme, yes.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [73]

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September. Yes, we’d given a special scheme on our cross laminate film. We explained last time that we have given a big foreign tour scheme of around INR 3 crore and then we had given it and discount for the previous purchases all were factored in July-September quarter. I -- we remember we had explained to our partners. But that was there in July-September, now there is no such issue.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [74]

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Okay. And -- but sir, if one looks at, say, from June '19 to December '19, again, the EBITDA per kg, say, from INR 24, it has moved to INR 33. Now if I look at the realization or, say, pure HDPE or LDPE prices, even adjusted for ForEx, it has actually come down. So sir, how should one understand this? Is this purely a function of discounts?

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

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On Packaging or piping?

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [76]

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Yes, sir, packaging. Because our reported realization per kg has come down from -- only from INR 192 to INR 188.

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

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In packaging, we have got so many segments. We have so many new structures we are developing. So it depends on what structure has been going into that quarter. Very difficult to share, but it's not 1 single product. Too many varieties of product.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [78]

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Okay. Okay, fair enough. And sir, any new products that we are intending to launch over next 6 months? And specifically, what is the status on Silpaulin Star wherein we were awaiting BIS approvals?

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

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Silpaulin Star is growing very well. It is very well accepted and Silpaulin Star is going to come from BIS. It takes always some time, as regulatory norms take some time. And we are developing some new film -- cross-laminated film activity. It's a new technology being perfected by our collaborators and we hope that, that product we may launch in the financial year 2021.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [80]

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Okay. And sir, any other products across the product lines with packaging, industrial, plastic, anything new that we are -- that we intend to launch?

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

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We have got 3 segments -- in the product segment, we have got 3 categories: Protective Packaging, Performance Packaging Film and Cross Laminate Film. In all the 3 segments, we are going on adding some new varieties, new structure, new laminates. So if we continue activity a month -- every month it is going on. How to add more value? How to improve the per capita -- per kilo income? And so continuous effort is going on.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [82]

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Okay. Okay. And sir, last question, by when do we see the launch of PEX in the market? Or is it already there?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [83]

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Long term?

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P. C. Somani, The Supreme Industries Limited - CFO [84]

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PEX. PEX.

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Ritesh Shah, Investec Bank plc, Research Division - Analyst [85]

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PEX. PEX Pipes.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [86]

--------------------------------------------------------------------------------

PEX Pipes, we've placed the order. It is going to come in 2021. Next year, it's going to come.

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Operator [87]

--------------------------------------------------------------------------------

The next question is from the line of Sneha Talreja from Edelweiss.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [88]

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Sir, the question is more pertaining to the margins this quarter. We've seen a robust performance in margins across the segment. Is there any one-off item in the margins? Or I mean, these margins are sustainable, especially for the packaging as well as pipes business?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [89]

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We share the margin in our sector for 2 reasons: One was due to the raw material price coming down. So our operating margin, we are not -- necessary to reduce the price to full extent and also due to addition of value-added item. I guess the value-addition item business has grown very nicely in the third quarter. Our aim is to how to achieve and maintain 16% margin. But for the full year, we are saying already that we may end up between 14% to 14.5%.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [90]

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Okay. And sir, you also said that, I mean, your margins were better in the pipes business also because your CPVC business has done well and you have increased the proportion of share in this segment. Could you give a breakup of what would be CPVC in this particular quarter versus your PVC and other segments?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [91]

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Very classified information.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [92]

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It's a classified. Okay. And sir, since you're saying that your margin -- agenda of achieving the margins of about 16-odd percent, so your guidance for this year, of course, remains between 14% to 14.5%, but are you looking at increasing this guidance for the next year? I mean, the next complete year, which is FY '21?

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

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Let us say, if we want to earn 14.5% in the whole year; in 9 months, our margin is 13.76%. So in the fourth quarter, definitely, we will do more than 14.5%, then only our margin can improve. Then only we can attain 14.5% for the full year. In 9 months, our operating margin is 13.76%. And we have given a guideline that we may earn between 14% to 14.5%, which means the margin in the fourth quarter is bound to be better than what happened in the first half of the year, maybe just like the third quarter or maybe slightly lower than third quarter. But for the full year, given quarter-to-quarter, quite difficult to target. Our aim is to improve the margin.

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Sneha Talreja, Edelweiss Securities Ltd., Research Division - Research Analyst [94]

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Right, sir. Got it. Sir, anything on the composites cylinder space? Is there some movement happening in the domestic market? And what are the countries that you are aiming at in the international market? How much are we doing right now? I mean, some kind of a scenario status, if you could give in the composite cylinder space.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [95]

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Composite cylinder couldn't still make any breakthrough in domestic market. The one government oil marketing company has also purchased some quantity, but they've have still not last very rigorously. Some private players have taken from us, but they are not able to compete with OMC or the government. International markets, we are exporting, but they are small, small volume to many countries, not in any significant quantity, especially the division is struggling. That division is still not contributing to the performance of the company.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [96]

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Sir, just one question on CPVC. Rohan here. Sir, you mentioned that you have definitely gained market share. Can you give some more sense...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [97]

--------------------------------------------------------------------------------

In which?

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [98]

--------------------------------------------------------------------------------

Sir, in CPVC. Yes, hello? Sir, can you hear me?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [99]

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I can hear now, yes.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [100]

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Sir, you have gained market share in CPVC in the current quarter given the other players are facing raw material availability issue. Can you give some more sense that if the raw material prices for other players who are importing raw material from China or Korea, they will face a bigger issue given that there is increase in prices? Do you see that the CPVC market for players like you will be further lucrative and you will gain more market from those players?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [101]

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The players who are operating with Chinese material, we believe their business is going to shrink. Because personally, we don't believe that Chinese quality is top of quality. Hello? Can you hear me?

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [102]

--------------------------------------------------------------------------------

Okay. Yes, sir. Yes, sir.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [103]

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Yes. So the market is there. So that market is going to be supplied, it is going to be studied by the people who are making CPVC pipe system with quality raw material. We never consider Chinese material as quality material. We have nothing to ask. There's Korean material, but Chinese material is not of proper quality.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [104]

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Okay. So given that raw material issue now for those players, you see that...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [105]

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It is shared by all the 4,5 players. There are many players apart from my company.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [106]

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Yes. There are 2 to 3 more players in that.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [107]

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Ashirvad, Astral, Finolex, Supreme, there are several players now.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [108]

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So all these players will be gaining market?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [109]

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I hope so.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [110]

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Okay. And sir, raw material prices for you increased in CPVC resin has been in line with the Chinese prices going up, I mean, after the import duty? Or it has been less than that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [111]

--------------------------------------------------------------------------------

Say it again, please.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [112]

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Sir, I'm saying that Chinese raw material prices have gone up after the import duty levied there. So your supplier has increased the resin prices for you in line with that? Or it has been less than that?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [113]

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We believe all the suppliers must have increased the price to their customer. We are buying only from one company, Kaneka.

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Rohan Gupta, Edelweiss Securities Ltd., Research Division - Research Analyst [114]

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Yes. I just want to know, sir, what is the quantum in terms of price increase, raw material price increase for you.

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

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That is a classified information. What increase they've done, I'm not going to inform anybody. I can only share our view. You have asked the increase in the price. Other customer of other American company or European company, they will also require to pay some extra price.

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Operator [116]

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The next question is from the line of Achal Lohade from JM Financial.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [117]

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Just wanted to get a sense on the margin. Sir, you just said, for the quarter, for Plastic Pipe segment, the margin improvement was to do with the value-added mix being higher. Would you be able to quantify how much would be the value-added mix in the pipe segment itself?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [118]

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How much is the increase in value-added item for quantum?

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [119]

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And what would be the mix for the Plastic Pipe segment from value-added product?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [120]

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Mix, we'll take the -- still quantum increase or value-added, that's the only thing we can say. But there's an increase in CPVC business also in the quarter compared to last year. And definitely, by increasing value-added, I can share also. There are some...

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [121]

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Or if you could help with the mix. What is the mix for 3Q?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [122]

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PVC pricings came down. We had some inventory loss also in the quarter. I'll comment and need to -- and we have taken many measures to reduce our production cost also. We have taken many measures to reduce our component cost also. So we are buying lots of components required in a plastic pipe. I guess, the raw material prices have fallen for our plastic as well as all-in prices of the raw material of the component also. So we have taken very serious view on the component pricing. So it's a combined structure now. Reduction in our component cost -- component procurement cost, due to reduction in our production cost, due to slight increased business of CPVC system, due to increase in business of value-added item and negatived by some fall in the PVC price, which caused some inventory loss. All put in together, we ultimately were able to get a better margin in the third quarter.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [123]

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Got it. But -- so what it means is, basically, there are some one-off factors and there are some structural changes. So what...

--------------------------------------------------------------------------------

Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [124]

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One of the factors when we're able to buy components at lower cost, this is not a one-off factor. Cost reduction is not a one-off factor.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [125]

--------------------------------------------------------------------------------

Right. No, I meant, basically, when the raw material price falls, it does hurt our margin size.

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

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Raw material price for the inventory loss comes down.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [127]

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Yes, inventory loss. That's what I meant actually. So is it fair to say that this is more sustainable number one should work with, 16% kind of margin to the plastic pipe business?

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

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We don't say 16%. We say within 14% to 14.5%.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [129]

--------------------------------------------------------------------------------

That's for the overall company, right, sir?

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

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Overall company, plastic pipe is a big portion. 60% turnover comes from plastic pipe.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [131]

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Correct. Correct. Okay. So you mean 14%, 14.5% margins for the plastic pipe business also one should work with from a more medium term for...

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

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We have not sustained it. We are trying to sustain it.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [133]

--------------------------------------------------------------------------------

Got it. Sir, second question I had...

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Operator [134]

--------------------------------------------------------------------------------

(Operator Instructions)

The next question is from the line of Abhishek Ghosh from DSP Mutual Fund.

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Abhishek Ghosh, DSP Investment Managers Pvt. Ltd. - Assistant VP of Small & Mid Caps and Transportation [135]

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Sir, could you throw some light on Supreme petchem where you briefly mentioned that you expect now better this thing. So whatever profitability drop that we have seen, do you expect that to come back in Supreme petchem?

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

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That will definitely come back because we had a big loss of -- in the falling standard price. It came down from $10.40 to $8.50. But fortunately, we finally not ended in red. And now the prices reverted to $9.20, $9.30. And the demand is also looking better, due to consumer appliance demand has come back. So we are going to have a growth of around 8% in volume and pull strategy, our major raw -- major product what we are selling. 9 months ago, it was 8% and we believe the growth may still be -- there will be some growth there in our business. We knew that this quarter, we may -- last quarter being better quarter than the third quarter.

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Abhishek Ghosh, DSP Investment Managers Pvt. Ltd. - Assistant VP of Small & Mid Caps and Transportation [137]

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Okay. Okay. That's helpful. And sir, just lastly, on the entire CapEx of INR 500 crores that you're now talking about, that is for FY '20, is that the right way? Or is it FY '21? How should we look at it, that INR 500 crores?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [138]

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INR 500 crores is the commitment we are going to make before 31st March, 2020. We are going to make a commitment of INR 500 crore in FY '20. But the equipment will go on arriving starting from '19, '20, up to March '21. So there are some equipment between delivery period of 8 to 9 months also. So when we are showing commitment, you see commitment being made by the company, the physical outflow of the money may not happen this year, it will happen sometime next year and month after month.

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Abhishek Ghosh, DSP Investment Managers Pvt. Ltd. - Assistant VP of Small & Mid Caps and Transportation [139]

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Okay. Okay. So even though finalization will happen before the March, but the cash outflow and the commissioning will happen over the next 2 to 3 quarters. Is that the way to see it?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [140]

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Most of the equipment we've ordered, by and large, mostly we've ordered.

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Abhishek Ghosh, DSP Investment Managers Pvt. Ltd. - Assistant VP of Small & Mid Caps and Transportation [141]

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Okay. Okay. And the newer capacity that you're adding, should that also inherently increase your value-added products to share? Is that the right way...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [142]

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Naturally. Naturally, yes, our focus remains to go on increasing share of value-added item.

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Operator [143]

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The next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [144]

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Sir, in Cross-Laminated Films, our share is extremely high in Kerala.

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

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Sorry.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [146]

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So if you look at our Cross-Laminated Film, our share is very high in Kerala, so my question is that what are we sort of doing to increase our presence in other states or even in the export market for Cross-Laminated Film?

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

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Our efforts are going on big way in the export market, not only the market, but new structures we are offering in the export market, which are more labor-intensive and which are more laminate also because we are -- we have got so many laminates, so many substrates we produce in our company and we offer many laminate with our cross laminated film to the export market, and many products made out of the -- such laminates. Apart from that, our Biofloc Tank is also under various trial in the whole country, and we see a great potential in this product. Up till now, we have not launched formally in the market. Presently, it's going through a testing procedure. It can hold 5,000-, 10,000-liter water. So we you want to see that the water is maintained properly and it adds value to the customer. It should not get -- when we give the tank to him and the water leaks out, then it will be a loss to him.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [148]

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All right. And sir, I believe this Biofloc Tank market would also be inherently higher the GSM as well?

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

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We are often up to even 450 GSM you can make. We have made various thickness of film and they are all under intensive trial in several parts of the country.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [150]

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Sure. Sure. What could be the market potential, sir, for this Biofloc Tank?

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

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Once we launch commercially, we can share better, but we are -- we can get very intelligent response from homes where we have given it for trial.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [152]

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And Kerala would be a large market for this, right?

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

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I am not going -- we are very thankful to you that you made -- you will get good result for the subject. Thank you very much for that.

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Bhargav Buddhadev, Kotak Mahindra Asset Management Company Limited - Research Analyst [154]

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No, no problem, sir. And sir, for Kerala, given that demand for fresh fish is very high and availability of fresh fish is not that great, would we -- would it be fair to say Kerala would be a large market for this product?

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

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Kerala, Andhra, Tamil Nadu, Orissa, all coastal areas...

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P. C. Somani, The Supreme Industries Limited - CFO [156]

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Coastal belt.

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

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All coastal area, big market.

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Operator [158]

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The next question is from the line of [Chintan Shah].

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Unidentified Analyst, [159]

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Sir, my question was, are we looking at any major M&A in this space? A lot of international companies are interested in the Indian markets. So are we hearing, sir, anything of this sort?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [160]

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We don't want -- we are not planning to acquire any company in the international market.

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Unidentified Analyst, [161]

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Okay. Okay. And sir, can you brief something about industrial composite fittings that you had indicated in the prior call that, that is something which will be your focus area going forward. So sir, any particular update over here? I think you had...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [162]

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Industrial composite means what?

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Unidentified Analyst, [163]

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Composite fittings, sir. That is what you had indicated in the prior call, that, that is...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [164]

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It's compression -- not compression molded fitting, and industrial fusion fitting.

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Unidentified Analyst, [165]

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Okay. So sir, where are we over here?

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

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Composite means what? We have a plant coming up in Jadcherla. We are putting the plant to make polyethylene fitting -- not polyethylene, olefin fitting. We are going to make for different material, but in olefin family, the compression type and electrofusion type, both type of fittings, the plant is now coming up in Jadcherla. Make sure, only olefins.

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Operator [167]

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(Operator Instructions)

The next question is from the line of Shrenik Bachhawat from JM Financial.

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Shrenik Bachhawat;JM Financial;Analyst, [168]

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Sir, can you please help us with your pipe volume growth and total volume growth guidance for FY '21?

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P. C. Somani, The Supreme Industries Limited - CFO [169]

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For FY '21.

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

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About '21? FY '21 volume growth? Hello?

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Shrenik Bachhawat;JM Financial;Analyst, [171]

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Yes, sir, '21. FY '21.

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

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We are now increasing our capacity. Our -- Yes, Mr. Somani, you can tell the capacity guidance.

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P. C. Somani, The Supreme Industries Limited - CFO [173]

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Yes. You see at the beginning of the year, we had a total capacity of about 605,000. And the current year investment which will certify, our capacity addition will be around 72,000 metric ton. By the end of this March '20, it will be around 677,000. The CapEx plan, which we are completing this year and which is certifying over a period of next 10 months, another capacity of about 40,000 metric ton -- between 40,000 to 45,000, you can say, so by end of March '21, we'll be having around more than 710,000 metric ton capacity.

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Shrenik Bachhawat;JM Financial;Analyst, [174]

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Sir, is it possible to give the breakup of this 677,000 and 710,000? And the...

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P. C. Somani, The Supreme Industries Limited - CFO [175]

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Yes. 677,000, I can give, which is the highest capacity of plastic piping division, which is about 482,000 metric ton; and industrial product, about 75,000 metric ton; furniture, about 36,000 metric ton; and packaging segment, about 84,000 metric ton.

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Shrenik Bachhawat;JM Financial;Analyst, [176]

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A broad breakup of 710,000?

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P. C. Somani, The Supreme Industries Limited - CFO [177]

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You see the major capacity will come in piping was -- more than 80% CapEx is being done in plastic piping division only. So the addition of 45,000, you can say, about 80% or 85% capacity will come in plastic piping only. The remaining are the various segments.

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Shrenik Bachhawat;JM Financial;Analyst, [178]

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So broadly, what is the pipe volume growth we expect in FY '21?

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

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We believe the growth will be maintained between 12% to 14%.

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Operator [180]

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The next question is from the line of Ashish Poddar from Anand Rathi.

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Ashish Poddar, Anand Rathi Financial Services Limited, Research Division - Research Analyst [181]

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Yes. So I think most of the segments, we have discussed here. On the Consumer Product segment, I think this segment did very well in FY '19. But from the beginning of this year, we are also seeing some degrowth in that segment. So is it because of the general industry scenario? Or we are lacking somewhere? Your comments would be helpful, sir.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [182]

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I mean degrowth means what? In the value term, there is a price fall in polypropylene. So when raw material prices fall, then in value term, it may fall. At any event, we are now pushing more and more on value-added item in our consumer segment. We are making furniture. And also...

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Ashish Poddar, Anand Rathi Financial Services Limited, Research Division - Research Analyst [183]

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Sir, even on the volume front, we are broadly flattish this year?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [184]

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That's not true. We've got 1% volume growth in 9 months. Because the number is 9 months, we had a volume growth of 1%. But as I said, we are changing our more and more product mix to value-added item, so we are working only how to improve the margin because there are so many players now coming again in informal sector in furniture.

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Ashish Poddar, Anand Rathi Financial Services Limited, Research Division - Research Analyst [185]

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So I was coming to that only, sir. I mean after GST implementation, have you seen any change in the industry structure? Or is it still going like the earlier way.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [186]

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Let me complete it also. In third quarter, you have seen our operating margin 18% plus in furniture.

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Ashish Poddar, Anand Rathi Financial Services Limited, Research Division - Research Analyst [187]

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I'm not talking only about the Q3 number, I'm talking about the last few quarters' performance. So -- like you mentioned the volume growth is about 1% only. So is it the industry, which is facing this? Or it is that unorganized players are still growing and in organized...

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

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No, you are right. The people are coming, who are again selling without bills in furniture, a big wave is coming. Some new players are also coming. So we are moving more and more to the value-added item, which is fusion furniture, where they are not participating and they will not be able to sell because then we sell to institution. They cannot participate in such business. So unfortunately, in our country, that's coming and they are -- there's no stopping. They could -- new players are also coming. So we are not forecasting big increase in value and volume, but definitely, company will go and earn decent margin in the business.

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Ashish Poddar, Anand Rathi Financial Services Limited, Research Division - Research Analyst [189]

--------------------------------------------------------------------------------

Sir, the new players, you are talking about the smaller regional unorganized players?

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

--------------------------------------------------------------------------------

They're organized to sell in number 2. How can I say, unorganized. They are selling without bills. They are informal sector, you can talk. Unfortunately, they are quite active.

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Operator [191]

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The next question is from the line of Maulik Patel from Equirus Securities.

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [192]

--------------------------------------------------------------------------------

Sir, just wanted to -- I mean, this CPVC anti...

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Operator [193]

--------------------------------------------------------------------------------

Mr. Patel, your voice is not audible. Can you please...

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [194]

--------------------------------------------------------------------------------

Is it audible now?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [195]

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I can hear you.

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [196]

--------------------------------------------------------------------------------

Yes. Sir, this CPVC antidumping duty on China and South Korean company was placed for the 6 months. What is the probability that this will extend further?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [197]

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How can I say. That is decided by Government of India.

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [198]

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Sir, did the government put in the presentation or the representation has been met? Because what I understand that, sir, as a country, we produce only 7,000 ton of CPVC. Antidumping duty is generally placed on to protect the domestic industry, where our consumption of the CPVC in the country is around 1.5 lakh ton.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [199]

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Maulik, see your reply can be given by the antidumping department. I can't give it.

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [200]

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Okay. Sir, the next question and the last question is that, sir, within the Industrial segment, what kind of a sectoral performance, particularly for the consumer durable you have seen? We have with us now material handling and the consumer durable, 2 segments are there. So what kind of a growth or decline we have seen in these 2 segments?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [201]

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Industrial component -- there are 2 segments: one is the Industrial Component; second is Material Handling System. So Material Handling System, we are now going to grow much more, much faster into many applications, which are not going for industry usage. We are going to sell to other application also, which is not going to be affected by slowness in industrial economy.

Industrial Component, we have already divested our automobile business and any ongoing unit -- one of the units is there, again, in automobile component, so we have to seriously examine it whether to stay in or out of business. We are not eating at it exactly. Anyway, it is a very small segment. Today, it is more than 4%, 5% of turnover. Auto segment is only 3%. They don't manage strategies. This is not much in our own radar.

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [202]

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Okay. Fine, sir. Sir, just one last question. You mentioned that about market share gain for the organized player and particularly for you also, for the Piping segment, there were a couple of large players which were facing a lot of difficulties and that has also helped us getting in and around good growth in the first 9 months. Have you seen...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [203]

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New players also (foreign language)

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [204]

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Yes, new players. But they are -- so have we just -- is this -- those players which reduce the volume in the market, have they come back? Or they are still on the fringe side?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [205]

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Who have come back now? We are not aware of anybody coming back. The only thing we are aware is, new players are coming.

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Maulik Patel, Equirus Securities Private Limited, Research Division - Research Analyst [206]

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Okay. I am talking specifically about, sir, Jain Irrigation. Have you seen any marked improvement in the volume from their side?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [207]

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Jain usually is running, but running and limping; however, I was told they are running this year. No, we don't have clear idea.

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Operator [208]

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The next question is from the line of Dhiral Shah from Phillip Capital.

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Unidentified Analyst, [209]

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Sir, you said the PVC prices were down on a Y-o-Y basis, so how much it was down?

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

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Down, but never gone up. Down with INR 6, INR 7 a kilo.

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Unidentified Analyst, [211]

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So what would be the current price then?

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

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Now they have gone up by INR 3, INR 4 a kilo.

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Unidentified Analyst, [213]

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So it would be how much, sir, then?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [214]

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Now they are down by -- net-net, they are down by INR 2 to INR 2.5, which also may be increased next month.

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Unidentified Analyst, [215]

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Sir, if you can quantify, what would be the current price of PVC?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [216]

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Can you give the number? It is for pipe, it is INR 78,055 and fittings are INR 8,909. And then, they give some discount based on the object of the particular customer. The list price is INR 78,000.

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Unidentified Analyst, [217]

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Per ton, sir?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [218]

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Per ton, it was -- it came down to INR 75,500 and now it is 78,000. And on INR 78,000, they give a scheme that if you lift a full proper MOU, then they give you INR 1.5 discount. Ideally, they'll give more discount. So this is the list price and then they are giving some scheme -- off-take scheme monthly. So proper price depends on customer to customer.

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Unidentified Analyst, [219]

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Okay. Okay. And sir, secondly, sir, are we seeing any ground implementation of schemes like Har Ghar Jal?

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

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Har Ghar Jal has started already in Bihar, some parts in UP. Telangana already it was implemented earlier and we are confident that it is going to be implemented in more states in next financial year.

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Unidentified Analyst, [221]

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So what will be the opportunity for plastic pipes, sir, particularly?

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

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We are already supplying pipes there in the system in Bihar in big way. There is an opportunity because it requires so many things, but the plastic pipe is also one of the requirement and our company is able to participate.

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Unidentified Analyst, [223]

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So out of the overall scheme of Har Ghar Jal, sir, what would be the quantum for plastic pipe, particularly in terms of...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [224]

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Depends upon which state they will launch? How many houses they are going to cover? There is an opportunity for next 5, 6 years for the Nal Se Jal, the people were making quality piping system. For this system, pipe and fitting both are required.

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Unidentified Analyst, [225]

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Okay. So total scheme is of 6 lakh crores? So you believe 15%, 20% would be?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [226]

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I don't know that quantum, but after all, a lot of money will be spent first to drill the source to get water. Pipe will come only once what is available. Nal Se Jal (foreign language)

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Unidentified Analyst, [227]

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Okay. So you feel the water availability would be the key criteria for this?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [228]

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After a secured source of water, then only the scheme can start in that state.

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Unidentified Analyst, [229]

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Okay. But it has already been started in Bihar, UP, Telangana.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [230]

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Bihar, started. UP, only one part of UP. UP is a big state. UP is just like a country.

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Unidentified Analyst, [231]

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Okay. But you believe that 10%, 15% would be utilized for plastic pipe out of the overall scheme of Har Ghar Jal.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [232]

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I can't say. I don't have the number correctly. But I know that plastic piping will be required. Plastic piping system is required for Nal Se Jal and we are participating also.

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Unidentified Analyst, [233]

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Okay. So these are all government-based contracts, sir?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [234]

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We're supplying to contractors.

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Unidentified Analyst, [235]

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Okay. So margins are same? Just one question. Just wanted to ask regarding the margins.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [236]

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We supply pipes at proper price. We don't supply long-lead product.

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Operator [237]

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(Operator Instructions)

The next question is from the line of Achal Lohade from JM Financial.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [238]

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Just wanted to check in terms of capacity, what's the typical optimal size of a plant? If one wants to setup a greenfield, what is the size, typical? And what would be the CapEx in that case?

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

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Now we put nowadays plastic complex, so it is not single product. Like our Kharagpur plant is in 59 acres, Jadcherla is 50 acres, and we make many products. So I don't...

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [240]

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I think, going forward, somewhere I wanted to check...

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [241]

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Hello?

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [242]

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Yes, I couldn't hear you, sir. What did you say, sir?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [243]

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No, it is not a particular plant. We put a plastic product complex. We make varieties of...

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [244]

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No, I was asking about, sir, plastic pipes' typical size of a plant of 10,000 to 15,000.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [245]

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We make plastic pipes, varieties of plastic pipe. PVC pipe, polyethylene pipe, PPR pipe, PEX pipe, CPVC pipes. Every pipe, as per requirement of market, we'll go and put in capacity. So there is no minimum size, right? Minimum size, I put in a petrochemical or cement plant or steel plant. And there is still no cement nor petrochemical.

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Operator [246]

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The next question is from the line of Abhilasha Satale from Dalal & Broacha Stock Broking Private Limited.

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Abhilasha Satale, Dalal & Broacha Stock Broking Pvt Ltd., Research Division - Research Analyst [247]

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Yes. Most of my questions are answered. I just want to ask that in the pipe division, how much is from fittings -- how much is contribution from fittings?

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [248]

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No idea. Classified information.

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Operator [249]

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Thank you. That was the last question. I would now like to hand the conference over to the management for closing comments.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [250]

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Thank you very much. Thank you, Aditya.

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Aditya Bagul, Axis Capital Limited, Research Division - Assistant VP of Midcaps [251]

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Thank you so much. Thank you so much to the management and all the participants for joining the call.

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Mahaveer Prasad Surajmal Taparia, The Supreme Industries Limited - MD & Director [252]

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Thank you very much, sir.

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Operator [253]

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Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.