Mold-Tek Packaging Limited (MOLDTKPAC) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Mobile Tech Packaging Limited Q2FY27 on its conference call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal our operator by pressing star, then zero on your touch-tone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Rajesh Kumar from MK Global Financial Services Committee. Thank you and over to you, sir.

Good evening, everyone. I would like to welcome Mr. J. Lakshman Rao, Chairman and Managing Director of Multic Packaging. We thank him for this opportunity. I shall now hand over the call to him for his opening remarks. Over to you, sir.

Good evening, everybody. Thank you very much for showing interest in our quarterly call. I'm very glad to inform you that the sales volumes of the company in the Q2 have gone up by 10.1 percent compared to last Q2, and profits have zoomed by 36 percent, resulting in a very healthy EBITDA per kg of 46.5. So when you compare to the EBITDA per kg of last Q2, which was somewhere around 39 rupees, there's a jump of almost 18 percent in EBITDA margin, which is a healthy sign considering the geopolitical situation around us. All the segments are doing very good in this quarter, and one of the most important quarter segments for us is pharma. It's grown by 26.3 percent in volume. Food and FMCG is up by 23.7 percent. Paints are also up by almost 9%, while the lubricant pack continues to be a drag with a 12.3% decline. So the quarter turned out to be a very good performer in view of better segments, better contributing segments are grown at a faster rate compared to the other segments like lubricants and paint, And thereby improving the profitability of the company. And I mentioned in my previous calls our consolidation of the units at Hyderabad, resulting in single unit producing entire IML labels under one roof, has resulted in considerable savings in the cost and improved efficiencies. And also, the removal of a couple of production units and clubbing them in the Sultarpal unit has resulted in overall improvement in the performance and cost controls. Going forward, the company is very positive about the food and FMCG because the Ponipat plant started picking up clients and the numbers are slowly getting added. And by next season, starting from Jan, Feb, I think we'll be seeing good numbers witnessing, I mean, coming from the northern region to Panipat. And another good news is that IODX project, which has been on hold for more than three years, has been cleared with some changes, and the chain molds are also getting ready by December, November, and probably in December or Jan, we'll be starting commercial production of IODX This is a bomb tax. They run into millions of pieces a month. And again, coming to another, three new products have been under development for three MNCs of sizable quantities, and they all will be launched somewhere in the end of December or January, contributing towards the growth of food and FMCG further in the next coming years also. So, this is briefly the highlights of the quarter. I think we can share more details on question and answer session. Go over to the operator.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shirish Pradesh from Mothilalakwar.

Good evening, Mr. Rav and team. Thank you for the opportunity and congratulations. Sir, starting with the volume growth in the paint, I think paint industry is expected to deliver a good number, and there is a price increases also has been happening. But when we look at the volume growth in this quarter, which is lower, so two questions here. What is worth, and is there any backlog which is getting shipped in quarter three?

No, the paint volumes have grown up by 8.6%. Value-wise, they're up by 26%. So, 8 to 10% is the general growth of the paint industry. So, I feel comfortable growth has been already achieved in paint. And going forward, things may improve further, because we are now at Chayar, started taking orders from nearby clients in the south, which are adding numbers gradually. And hopefully, this may come close to double digits in the second half.

Second question, you know, food and FMCG, I think the volume growth is picking up. But then, you mentioned that there are some more clients which are getting added. So, is this volume growth momentum will continue in second half?

Yes, I am very confident that the volume growth will continue to grow at a healthy level, because not only the current orders are being executed and the new molds are being added, and three or four new products are on the pipeline, which are getting into production in November and December, which will certainly add value to the food and FNCG sector in the coming quarters.

That's helpful. And last on the beta per kg, now we are reaching towards about 40 plus. Rather, this quarter we have done 40 specs. So when this mix is tilted over FNCG and which is a high value, high margin product, Is it safer that the full year we will be able to maintain more than 45 in the range of 45-50 these parties?

Yes, we are confident we will be maintaining now anything around 45-46 range for sure, because even this third quarter started on a strong note, and we feel that the momentum going forward only can help it. But I'll be very happy even if we do 46, which is a big jump from 40.7 for the full year last year. So, it's almost something like around 16, 17, 15% growth in EBITDA margin. Considering the, apart from that, a double-digit growth is still possible in the volume, we'll be witnessing a healthy bottom-line growth.

Thank you. The next question is from the line of Kushan Shalma from Equinox Capital Ventures. Please proceed.

Yeah, nice, sir. Very good evening and hearty's congratulations on a good set of numbers. Just want to get an update, like in the last call, you have told me about something development you are seeking in your upcoming product in the farmer like DozyBase and all, and you are finding some partner for that that will reduce your time from three years to one year. So, any development in this area, and you are also working in semiconductor trays, and also any development in all the value-added products that we are proposing to launch or proposing to enter?

Yes, in case of Aftalmi Kydropper packs, we have already ordered the molds, and some molds are being made in-house, and I think by January, we will be having the molds ready, and then trial runs would take at least two months. So by March, our product will be ready for testing and commercial production, and hopefully in the next financial year, we'll see the numbers coming in from an atomic range of packs. I think they're coming in three sizes. And then apart from that, we have some good headway in semiconductor tray packaging. We are now in touch with all three or four top semiconductor companies that are coming up in the country. We have met them, started talking about the specifications and sharing information, their volumes and their timelines, and accordingly we are getting prepared to be there when the semiconductor products start in India, which is expected to be in a bigger way in 28, 29 onwards. And we are in touch with a couple of partners who can be a probable JV or at least technology providers, and in that direction, we are traveling in next month to China and Korea, and hopefully some clarification, I mean, some clarity will come by end of this quarter. These two are developing simultaneously. As I said, semiconductors is a business for next 28 onwards, but we are getting ready right now to find good partners and start a product range that will be more suitable because different semiconductors will have different applications and different types of trace, direct trace they use. So we need to deeply understand the needs of the client Before we go for the molds and machinery. So that process has already begun, and at least three semiconductor companies have invited us for discussions, and we are meeting them and taking it forward.

Currently, the major manufacturing country semiconductor is mostly China, Taiwan, and all, right, sir?

Yes, Taiwan, Korea, and China also are active in the direct race, which are basic packaging carriers for semiconductors, and we are in touch with at least two, three of the players who are active.

And that would be cost competitive as well in case, as compared to another country, if we manufacture here and apply those.

Compared to Europe and the USA, there is a huge manufacturer, but their costs are very high. Definitely, Asian players will provide most costs to the company to advantage. And here, not only the costing, what we understood from the study, what we did in the last three months, is that there is a variety of dieter trays that are required. It's not that you can have five or six varieties and that range is enough. You will need to make several molds and several changes. So that excites us because Moltec having the very good tool room and mold knowledge will be able to make a differentiator. That can be a differentiator between us and any other competitors who may enter this field. So having molds and having more variety of products is always exciting to Moltec because that is where our strength lies. Yes.

And as you said in the pharma, do you think that revenue would come in the next year?

In pharma, you are saying?

In pharma, pharma.

Pharma, yes. Next year, we should be seeing some revenues coming from ophthalmic range of products. On the dosage pens, we are still in talks and some samples evolution is going on. I don't see much happening in the next six months at least in that direction. But ophthalmic, yes, it will start contributing from at least Q1, Q2 onwards for the next year. And semiconductor is a long shot. It may go into 28. But we have one more line of closures, speciality closures through VIBE, which is now under testing, going for commercial molds by April, May. So hopefully VIBE will be starting contributing revenues in the next financial year.

Got it, sir. Thank you very much for listening.

Thank you. The next question is from the line of Girard from Keynote. Please proceed.

Yeah, thank you for the opportunity, and congratulations to the entire team for the great set of numbers. So, my first question is related to the lubricant segment. If I am not wrong, after losing one client, our expectation was that in Luz, we would be doing about 600 tons volume on a monthly basis. However, it is slipping down further. So, as per you, if you could guide us, what can be the normalized situation for the Luz?

See, if you notice, this is a trend that is going on from Q1 onwards. There used to be one or two plus or minus percentage points, But this time it has gone up to almost 15% in the H1. That's mainly because of the couple of our major private companies, private Lube companies, having input issues. And public sector, we have never been with public sector. So that is why our pain is visible in the Lube industry, having lost a couple of clients in their volumes. That is why loop continues to be in the decline. And what you are seeing now is the decline of last year to this year. So last year, there was no such war or any disruption. So whereas this year, I think every quarter, you will notice some decline rather than a positive number coming in, growth number coming in loops.

Got it. So, what will be the fair to assume, like, if we look at the mix in terms of revenue or volume related to paint, food, and pharma? So, how are you looking at the mix down the line two years, three years?

See, today, paint is continuing to grow at 9%. Probably, it will catch up to 10-11% in the full year, if possible, because the indications are good. The paint industry is picking up at least for the last couple of months, and their indications are positive for the next coming season. Of course, the season is we are in the middle of the season. So in paint, we may still see a possibility of a double-digit growth. Food and both QPAC will certainly see very good numbers, because several new products are being added with backup orders, and IODX also is starting. So Food and FMCG will witness Yes, similar or better performance in the next couple of quarters or even beyond that because Poniput plant is all set now, and some clients are regularly being added. Additional clients are coming in, and we hope next year real growth in food and FMCG can come through Poniput plant. And QPAC is also picking up very well. And QPAC business is now growing into other segments in a big way, especially the residents. And there we have another major player given as an order. I can't do the details today, but the supplies have to start from the end of November. Already the artworks have been shared and labels are under development. So this is another new development in the QPAC segment, which can add considerable numbers in the coming quarters. So it's very encouraging to see food and QPAC doing pretty good. And pharma, as I said, we are aiming at somewhere close to 50 crores turnover. We are on track. I think we reached a turnover of 24 crores for the first half, And we hope we may continue to grow at a good pace and reach the 50-plus crore turnover in pharma as projected. So my confidence grows more because of the food and QPAC. Demand is growing rapidly. And new products in the food and FMCC domain, which are having big volumes. I can't share the names now, but you all know the brands in the country. There have been very famous brands we are introducing in November and December, and these products range will contribute to better numbers in the coming quarters.

Very helpful, sir. So, next thing, generally, if my understanding is correct, in this business, we keep about four months of inventory of us. And if I look at the way the raw material prices have moved, is it fair to assume that the kind of gross profit per KT that we are making is expected to be slightly higher than what it should be?

No, no, nobody keeps four months inventory in this industry. Even if you consider the SFG, FG, and raw material put together, it will be maximum of one month because they are very voluminous and, you know, carrying time is 52 days. Now, currently it is 52 days because the raw material may be half of it. Let's say 25 days is raw material. SFG and FG will be remaining 25 or 27 days. So, there is no need to have four-month inventory, neither we can have space, because they are occupying, they occupy a lot of space, especially the finished goods and semi-finished goods. So, we always have limited stock of about a month material, and the rest is SFJ and FJ.

Got it, got it, got it. Sir, if you could help me understand the kind of product that we are making for Vibe, and how much that it can translate into numbers for the next year?

Yeah, Vibe, we are making specialty closures, spouts for Vibe. Already a set of seven products are developed and approved by Vibe, and in this month of November, they are going for commercial and client trials, and if the trials are successful, which I am sure they will be, because we have already tested them thoroughly, there will be orders, and then we have to make the commercial molds, which may take another four months. So, sometime in March, April, we may start commercial production. The volumes may start gradually picking up to become a considerable size in one or two years' time, but I can assure you the EBITDA margins will be far better than even Pharma.

Okay. Okay. Great. Great. And if you could just highlight a ballpark understanding, like, how big it can be, like, two years down the line, how much are we expecting?

Yeah, two years down the line, we should be able to see at least five to six million dollars, let's say 50 to 60 crores top line, with a very strong EBITDA, somewhere around 30%.

Got it, got it. Thank you so much, sir. I'll join back the queue.

Thank you. The next question is from the line of Richa Agarwal from Equity Master. Peace with me.

Hello.

Hello.

You may proceed with your question.

Due to no response from the current participant, we move on to the next. The next participant, Pravitra from Prime Investor. You may proceed.

Hi, thank you for the opportunity. I just wanted to follow up on the 10 injector plans that you have. Could you throw some more light on, you know, when we could eat these, translate into actual business, your estimate of that? And also, like, what, you know, what kind of customers are you targeting for these products, domestic, export? Are we planning to play into the TLB1 opportunity, or is there something else? You are talking about Vibe products? No, sir, I am talking about the pen, the auto-injector pen.

Auto-injector pen, I just answered that the development is still on, samples are being assessed by the clients, and we are working with a couple of patent owners in China, and it might take some more time to talk about numbers. So, more progress is happening on Vibe, which is a caps and closures line of business, which we entered in a JV with them. While Vibe takes care of marketing, we are developing the malls and production. So, that is mainly meant for US and Europe markets.

So, depends, I mean, will we get more clarity on it than like FY28? Is that something realistically

Yeah, in Europe, in March 28, we may have to come into agreement with a couple of JV players we are trying to approach and make a deal. And as I said, in December, there is a travel to Cheda, and hopefully some talks may happen. But nothing in the next two to three months, it won't happen. Even if it happens, it will start as a trading. I'm representing them and selling their products here in India for the next six months or so. And then we'll be looking at manufacturing them here back in India.

Okay. And these are targeted at domestic pharma companies in India?

These are targeted for the domestic pharma companies, which will be manufacturing either diabetes or the semaglutide kind of products.

Okay. Thank you.

Thank you. The next question is a follow-up question from the line of Chilap from T.O.

Thank you for the opportunity again. Sir, if you could just highlight the mix of IML and non-IML in volume for the quarter.

Yeah, IML volumes, I think, are close to, one second, 77% now, and non-IML, that's labeled products, and non-labeled products are 22.68%. There is a small improvement further. Last year, last Q2, it was 77% and it has become 77% now. So, IMLs will continue to grow. One of the heartening points is in Asian paints, the IML adoption is increasing, which is also one of the reasons why we see the growth in paint industry.

And value-wise, would it be 79, 21?

Yeah, value is 78, up from 76, 78.25.

Got it, got it. So, nextly, if I look at the current capacity and the kind of volumes we are doing, we are soon to reach the 70% utilization again. So, will it be fair to assume that another 10% of the size graphics is expected to be there for FY28?

Another what you said?

Another 10%? Yes, today we are at around 57,000. We would be adding another 6 to 7,000.

Not much. We have already added in this year capacity, and some more missions are on the way, which might take it up close to 68,000, 69,000. And hopefully the next year we'll be Starting with less than or around 70,000 capacity.

Got it.

And as I said, always 70% utilization of the capacity is always very good, and anything beyond 75 is generally not workable in an injection modeling unit, given the complexes of molds and underutilization of the machine capacity. Anything around 75 is a great number.

That's the only reason I was asking, that we might be requiring an additional capacity expansion for the next year.

Yeah, yeah. 66.9 thousand will definitely become 70 thousand by beginning of the next financial year. In that, again, we'll be aiming at at least somewhere close to 50 thousand tons from somewhere around 42 thousand last year, and probably this year we may end up around 46, 47 thousand. From 46, 47, we'll be again looking at 50, 51 thousand for next financial So, that volume growth is possible, and one thing you need to understand is, tannage is not the only criteria nowadays, because pails are becoming more or less stagnant, only paint industry is growing, lube industry is falling. So overall paint contribution in the tonnage is more or less stagnant, while the entire growth is coming from food and FMCC and pharma, where the weight of the component is less. Per tonn, we get much more value add. So even if the volume growth looks 10%, in my opinion, it's equivalent to 14-15% growth of the last three years. Because those days, peels used to be a major contributor to our top line and bottom line. But nowadays, slowly food and pharma and tomorrow vibe will start contributing to the growth. And they are lighter in weight, but add more value to both revenues and EBITDA.

Great. Right, right. So just one last thing from my side. When I look at the finance cost as an expense line item, is it fair to assume that due to this higher, the incremental rise in crude prices impacting the requirement of short-term warrants for managing the working capital for now, and as soon as there will be a normalization, requirements of short-term debts would go back to the earlier level.

Yes, you are correctly guessing that. One of the reasons for increased interest rate is higher utilization of working capital for higher raw material prices. But if you look at as it has a percentage, it has moved up earlier from 4.1 percent to almost 5 percent now, and probably it will come down back to 4, 4.2 percent in the future of the total revenue, maybe once the raw material prices come down. But as it looks, unless there is a sudden complete peace in the West Asia, the parameter prices are not expected to drop in a hurry. So for the year, we are factoring almost 4.5-4.7% of the finance cost and building up our model.

Got it. Got it. And just one last, if I can Sir, based on my understanding, since last 20 to 24 months, we have been focusing a lot at the export markets, too, if I'm not wrong. So, any updates on that? Are we getting any clients onboarding for the export markets?

See, exports are becoming, again, difficult in this scenario of increasing freight costs. But in spite of that, there is a rise in our exports gradually. It's not jumping in huge numbers. But there are exports still happening, and we see some steady growth, but now multiple growth due to this conflict and increasing freight costs. We are now, in fact, in December, expecting a client for our pharma products from Egypt, and that is a big opportunity, and they have already tested our samples and approved them. So they are coming in for the CPHA show happening at the end of November, and then they have scheduled a meeting with us towards the end of this month or beginning of December, and hopefully something might rectify. Okay. But for that, other side, exports are stagnated, no decline, because there are products like resident packs and batter packs, which we export to U.S. They continue to buy. There was a lull in the middle during the war. But again, they also have to sell their products, so they can't get rid of packaging altogether. So again, they restarted, and the numbers are slowly inching up.

Got it. Thank you so much, sir, and all the best to the entire team.

Thank you.

Thank you. The next question is from the line of Akhil Parekh from 361 Capital Market Private Limited.

Hi, thanks for the opportunity, and many congratulations, sir. I have a strong set of numbers. Sir, my first question is in one of the comments you mentioned that the start to the third quarter has been very strong. Would you be able to share some color, like how the first month, that is month of October, has been in terms of overall demand, basically?

Yeah, the demand is pretty good in October, and the numbers, compared to the last October, I'm saying, is very satisfying. Maybe it is too early to talk about it, but definitely it's much better than what in a month-on-month growth-wise October stands out as the best month so far. It need not be the highest among the months, but because we know April, June, July are our seasonal demand months, followed by again in March, we'll see the demand picking up in the fourth quarter. But this month started, October ended up on a very strong note, I can say that.

So is it fair to assume we should be crossing double-digit volume growth for full year, F.27?

Yeah, that is the target still today. Now today we are at 8% for the 6 months period. Up from 7% in the Q1, now we are at 10.1%, so we are somewhere around 8%. And hopefully, we are still positive it may take us to double-digit, the second half.

So, the second question on the chat.

There are several new opportunities in food and FMCC. I just explained to one of the inquiries. So, I see a strong performance coming up in the rest of the year, And hopefully we may pull up the volume growth to 10%. And I also said, Akhil, that in future, more than looking at the volume growth, I would encourage you to look at the EBITDA growth. EBITDA growth is at 35% quarter-on-quarter and 23% H1 on H1 if you compare last year to this year, Q2 to Q2. The H1 and the EBITDA, sorry, PBT has gone up by 35%, and EBITDA, the absolute number, has gone up by almost 30%. So this is where we should be focusing in future, because volume numbers depend more on pails, which are heavy. Like a 20-liter pail is about 1 kg weight, whereas you come to tinwall ice cream cups, they may be 18 grams, 20 grams, 25 grams. So, as the growth is coming more and more in the light wall, light tin wall section products, we will be noticing the volume growth may not look 14-15%, but the bottom line growth will be higher because of the better margins. So, I would encourage you all to look at the EBITDA growth, which will be a correct reflective of the company's performance.

Sure, this is very clear. Because we have seen a sharp improvement. Should we expect similar kind of improvement in cash flows to sustain? That is one part to my question. Second, given that our CAPEX requirement will not be more than 70, 80 crore, so is it fair to assume we will generate a reasonably good free cash flow for full year at 5.27?

Okay. See, the cash flow will – we are aiming at doubling the cash flow from 107 to 215, as I mentioned in the beginning of the year. So I'm still standing on that. I hope to – we hope to see a bit of 250 crores compared to 173 crores last year. That's a handsome growth of more than 20 percent, 23, 24 percent. And coming to the investment, as I said, investments have been under, I would say, lower levels compared to the last three, four years, and they should be ending up somewhere around 75 crores for the full year. Already, 60 crores have been spent in the first seven months, and the rest of the machinery and one more printing machine and some other balancing equipment and molds will be adding up to somewhere around 75 to 80 crores for the full year. So there will be adequate cash in the system after removing the interest and income tax. So we still have somewhere around 46 plus 80, say almost 160 crores inflows on the depreciation dividend outflows if you remove. Somewhere around 125 crores, whereas the outflow will be somewhere around 80-85 crores. So this time will be cash surplus, and you may see the long-term debt or debt overall start coming down, at least in this year, end of this year.

Thank you. The next question is from the line of Sandeep Moody, an investor. Please proceed.

Yes, good evening. Congratulations on good set of numbers. Yes, sir. I wanted to ask some few questions. The new land which we have purchased, when it will be operational?

Just a week ago, we got it registered. I think last two, three days ago, the land has been registered. There was a long delay from the industrial department in registering the land, which got registered just a few days ago. So, we have just taken the position of the land, and now the work has to start. Meanwhile, the Sultanpur B Block itself, we are setting up our ophthalmic product range. So, because we can't wait for months together, we waited almost a year. So, now the construction activity started in the B Block, and that production, as said, will start by March, And commercial production by April, May next year. So, this new area is fully available for our future growth into either auto-injected tents or semiconductor trees or both of them. So, we have not yet taken a call on that as of now.

Okay, okay, okay. Sir, one more question. Total, how many robots we have and how many we are planning to add more?

I last count, I think the robots more than 120, 125 robots we must be having because most of our products are now shifting towards IML and our machines have become more than 200 recently. So we must be having at least 130 to 140 robots.

Okay, okay. Sir, one more thing, how many molds in Vibes and Parma are in process?

Sorry, in what?

How many molds in VIBE generation and in pharma are in process?

In VIBE, there are seven more molds are under process. Seven are already approved by client, and we are awaiting that signal for commercial molds development, which might take another four months, as I said, in the last quarter. It is progressing well. Another seven molds, two or three are already ready, and another four components will be ready by end of December. So by end of this year, we'll have 14 components ready, and we may get the approval for commercial molds for seven of them, which may be ready by April next year. That's why I'm saying why numbers will start trickling from next financial year. If all 14 products catch up into commercial production, there can be a sizable contribution that we can expect in the second half of next year.

Okay, okay. And for Pharma, how many companies we are, strongly we are getting orders, etc. Any good news about Pharma?

Yeah, in Pharma, we are adding clients very rapidly. Even today, as we speak, Mr. Rana and Amol, they are on a trip to Bangalore, beating five clients there. And every quarter, we are adding two or three big hands. And going this rate, we will be able to maintain our, you know, projection of 50 crores plus in the full year this year, and probably 75 crores for the next financial year.

Okay, okay. Any details about the strategic agreement for expanding business in Egypt and Vietnam?

No, there is no strategic alliance or anything we are seeking. We are working with an export importing company in Egypt who are looking at our products and already tested them. They are coming here in the first week of December to inspect our facilities, and probably some export opportunities may start based on their visit.

Okay, okay. Sir, any new sectors we are planning to start?

Yes, we are looking very seriously at auto-inject reference, that is in pharma, and then semiconductor trays, JEDEC trays. And also, we are planning the regular trays for diary and other applications, which will add well to our machinery, especially whenever we find idle time, these trays can be built up as a substitute product. But semiconductor trays and auto-injector pens are very high-value-add products, which require a specialized skill set and mold-making capabilities, and some cases, patents also. In the case of auto-injector pen, we need a patent for which we are looking for a partner. In the case of semiconductor trays, the variety of molds, variety of products are very high, and they are very high-cost products, requiring very high accuracy and dimensional stability. So, this kind of challenging projects will be where mold-tech strength can be used. So, we are very excited about these new opportunities. But let me take one or two years to rectify.

Yeah. Achai, sir, I got this news from the annual report.

May we request you to join the question queue as there are several other participants waiting for their turn.

Okay.

Thank you. The next question is from the line of Rucha Agarwal from Equity Master. Please proceed.

Yeah, hi. Am I audible?

Yeah, Rucha.

Yeah. Hello, good afternoon, sir. Sir, my question is related to, you know, the investment that we are planning in Vibes. You know, if you could just give us a data about what kind of investment involves in machineries to reach that 50 crore kind of mark that you have highlighted.

Yeah. See, the advantage of injection molding is all the machinery is fungible. So we may not invest anything on the machinery until we have some firm commercial orders So, based on that, the investment will be in the tune of around 10 to 15 crores in the phase one, which will be sufficient to give us a turnover close to 40 to 50 crores. So, around 15 crores you can take would be a requirement of Y boat and molds and machine side. And some of the machines which are found idle can also be used for these machines, for the production of these components. Because they don't require any special conditions other than a clean room, which we already have.

Okay. Okay. And so my second question is related to the raw material cost, considering that the food prices are growing up, and if this scenario continues, I mean, could you just comment on the willingness of the customer to accept higher prices? I know that we are helped by the product mix, but purely on the gross profit margin itself, what kind of openness is there for the customer to accept the price rise?

See, Richa, you have asked me a good question. If the clients are not willing to participate in the price rise and they want to stick on to their whole price, you would not see this kind of performance from Moltec. This is the ability of Molitech to get the price rise actually faster than previously agreed terms because they were equally worried about not having the product packed at their end. See, end of the day, packaging, especially rigid packaging, is not fungible. Nobody can go back to a metal tin or a glass bottle while they are telling their products in the plastic containers with IML decoration. So, whatever happens, let the price, I'm not saying that the price should go up further. It's already gone up by 60% in this last six months, raw metal price. But everybody is ready to accept and agree with the reality that the raw metal price has gone up, and they are ready to bear the cost, because no molder can bear that cost for the sake of retaining a business. After all, this business has to go on, and they are aware of the raw material price increase. And whenever the price decreases, they take the price benefit. We don't keep it in our pocket. So this is a long-term agreement going on for the last 30, 40 years. Hence, there is no doubt in your mind about whether our ability to get the raw material price height as and when that happens. If that is not the case, we would not be seeing this kind of performance. While our volumes have grown up by 10%, our bottom line is shorted by 35%. So that kind of volume grows 36%. So that shows very clearly that there is no impact of the material price on our performance. Had the material been a little lower, let's say 120 or 115 level, we might have got some more business, and that would have added further to our numbers. But nobody stops buying packaging because their entire product cannot go into the market without packaging.

Okay, that was helpful. So, just one more related point. Like, you know, maybe a few quarters ago, you were witness in heightened competition, but with these higher growth prices, are you also seeing, like, you know, that the other players may be getting saved out or something like that?

No, I don't think nobody will be phasing out at any stage because, as I said, whatever applies to mold tech will, I mean, more or less applies to other molders also. It's basically our ability to expand our product range, consolidate our operations, and bring efficiencies in the costing is what really brought us a better bottom line compared to maybe compared to others. I don't have a comparison, but it's not true to say that because of the raw metal price rise, somebody will be shutting shop. They will also be able to pass on if they are a reliable supplier.

All right. All right. Thank you so much in all the way.

Thank you. The next question is from the line of Tashar from Omega Portfolio Advisor. Please proceed.

Thank you for the opportunity and congratulations on the Jetset entrepreneur. I just wanted to know the management aspiration to increase the EBITDA per per year from 46 degrees for the next three years with Paul. And in terms of the pharma business, the pens which you're talking about, so what are the discussions happening on ground on that regard, and when can that material contribute to our EBITDA?

I think, as I said, EBITDA shot up a clean 15-18% in the last two quarters from 40.6% last H1 to 46.6% in the current H1. So, it's a very big jump looking at the past data, but we are still positive that these numbers can still grow as exports and, sorry, mainly pharma and food and FMCG sales are increasing, and VIB also start contributing.

So, as you said, in two to three years,

it is nothing wrong to hope for a 50 rupees EBITDA margin in the coming two to three years. So, that is what is our internal target is. And that will be a sizable number, because if you notice, the last five years, we have never crossed 40 or 41. So from there to 50 rupees beta is a big call, but I think we are on track, and our product range, if semiconductors and doserpins also are added in the next two, three years, it may not stop at that level also, it can go up further after two, three years. So, let us hope everything is moving good now, and if things fall in place as plans, 50, you can keep it for two, three years as a short-term goal, and it can be better once in case we succeed in semiconductors and injecting things.

Hello, very much, sir. I just wanted to understand that what gives us confidence in terms of semiconductor trays. I understand it is a consumable product. So, what is the right reason in this market?

and the material that are to be used and the variety of molds that are required. So the knowledge is now being imbibed, and we feel confident that such a product is where Moltec can shine because where there is a complexity, accuracy, and several new molds are required, our strengths in tool room and designing and in molding accuracies, we will be able to contribute. So, this is an exciting field, but nothing is going to happen in the next two months or six months. It may take a year or two to really see the numbers coming in and how our semiconductor industry fares in the country. But it's an exciting field, and again, here also fungibility is there. Most of the injection modeling machines, which we have recently bought in the last five years, at least, they're all suitable for manufacturing this kind of precision components. So what is required is molds and then clients. So once that clarity comes in with the material that is already available in the world, compound materials for semiconductors, our processing team can easily master that technique. So we are awaiting for more clarity from the clients and also the industry itself, and we are ready. That's how much I can say. But how it fans out, how quickly, it all depends upon how the industry faces in the country. But as I said, our side, only the molds are required, and even the clients are ready to bear the molds cast. So it's a kind of really an exciting new industry which is coming for us at this juncture. And if that does well and we do well, that EBITDA margin of 50 can easily be crossed.

As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Over to you, sir.

I take this opportunity to thank Rajesh and MK for arranging this conference and also thank all the participants for sparing their time. And I sincerely hope that we all will have a better future, not only in our company, but also in general. And I take this opportunity to wish all of you a very happy Diwali and a great year ahead. Thank you very much.

On behalf of MK Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.