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Ladies and gentlemen, good day, and welcome to Astral Limited 3Q FY '23 Results Conference Call hosted by Equirus Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Mehta from Equirus Securities. Thank you, and over to you, sir.
Yes. Thanks, Aman. Good morning, everyone. On behalf of Equirus Securities, I welcome you to the call for 3Q '23 results discussion with the management of Astral Limited. Management is being represented by Mr. Kairav Engineer, VP, Business Development; and Mr. Hiranand Savlani, the CFO. I would straightaway like to hand over the call to Mr. Kairav for his opening remarks. Over to you, sir.
Good morning, everyone, and thank you, Pranav, for hosting this call, and thanks to everyone for joining so early in the morning. Welcome to the Astral Q3 con call.
We know that we have called you a little early in the morning because as per the company policy, we only do our con call or publish any data during non-market hours. Since Mr. Sandeep Engineer is in U.S., he's doing a course at Harvard, we were able to complete our Board meeting a little late yesterday. And because of that, it was not possible for us to have a con call yesterday evening. And today evening, we have some planned guests from overseas. So it was only possible to do this call in such hour.
To strengthen our Board with professional people, the Board of Directors have appointed 2 new members, Mr. Chetas Desai, chartered accountant having very rich experience of 30 years working with reputed organizations like PwC and in investment banking business with Ambit as the CEO; Mr. Dhinal Shah, again, a chartered accountant, having 30 years of experience in advising clients on taxation, exchange control, insolvency and corporate loss. He was Central Council member at Institute of Chartered Accountants of India and Chairman of Direct Tax Committee of GCCI, and a visiting faculty in IIM on various professional topics. We welcome both to our Board, and I'm sure that we will learn from their rich experience, and they will really be an asset and a good addition to our Board and our company.
I'm very delighted to inform you that current year, that is 2023, Astral is celebrating its 25th anniversary. And as a part of the celebration, the Board of Directors have decided to reward its shareholders by issuing a bonus share in the ratio of 1 share for every 3 shares held with the investors. Also very happy to share that our organization got renewed as A Great Place to Work in 2023. We held that certification in 2022, and we were recertified this year as well.
Our consolidated Q3 ended with a good note on all fronts; volume, value and margins as compared to the second quarter. Let's start with 1 of -- the verticals of our business, our key vertical, that is pipes. We all know that the industry was passing through a tough time of PVC volatility, and now that the trend is reversed, it has reflected in good volumes in the Pipe segment. The Pipe segment overall, the demand situation was very good in Q3, and we are confident of a good growth in Q4 as well. Historically, Q4 has been the best quarter for the company and for the industry. And we hope that the same demand will continue, and this growth will continue in Q4 as well. Further, PVC prices are stable since January, and that will give more confidence to the dealers to keep adequate inventory in the peak season.
The losses that we were incurring due to high cost inventory on PVC has gone away from the system, and we may see some gains in inventory in Q4. Our Bhuvneshwar facility is gearing up and we have rolled out PVC products and water tanks from the Bhuvneshwar facility. The CPVC products are under BIS certification, and shortly, we will start CPVC products from that facility as well. From Q1 FY '23, '24, we will have all the products being rolled out from the Bhuvneshwar plant. The water tank business is going as per plan, and we will be closing the year with INR 100 crore revenue guidance as communicated to our shareholders.
Our new project of valves has started giving revenue with a few SKUs being rolled out, and we will be able to launch 120 SKUs by March '23 and are expecting good revenue in the same segment in the next year. Our Infra division is going at a good pace. And with a lot of infrastructure projects from the government and a lot of infrastructure spend as guided in the recent budget, we are expecting a good growth in the coming quarters from this division as well.
The Adhesives division, similar to PVC. The prices of chemicals were falling and we were having high cost inventory with us. Due to that, we were facing some pressure on margins. But now the pressure started coming down as improvement in margins started from Q3, and we are expecting improvement in the margins from Q4 onwards as the prices of the chemicals have leveled.
Our Paint business is on a normal growth trajectory. On a 9-month basis, it has grown by 15%. As communicated earlier, we are waiting for NCLT approval for demerger. And once that will happen, we will start working on it in full swing with the support of Astral brand and we will be doing some rebranding and redesigning of the product line as well.
You will see improvement in the numbers from next year onwards, and our PAT implementation work in the paint company is on, and we are targeting to close that by Q1 FY '23, '24.
Bathware, which is a new category for us. We are working very hard, and we are seeing very encouraging results to start with. Our focus right now is on creation of network, and we are happy to share that we have completed 231 display centers across various states of the country and more than 80 display centers are under construction. We are aiming to complete 500-plus showrooms and display centers in the next 3 months. I'm very happy to share that we are able to supply to more than 3,800 plus bathrooms projects. and more than 25,000 bathroom bidding is on, and we are confident that we'll get the same.
The project pipeline has started building for the Bathware category, and the project pipeline looks quite healthy in the coming year, and we are very confident of our sales team and our product. We are expecting good sales number from FY '24 onwards. And once our display centers are up and running, it will give a big boost to the overall numbers in the division.
Last but not the least, as indicated in our press release, our company is doing good CSR activity and is doing a great job in uplifting part of our society. And I'm really happy to share that our team has done an excellent job, and we were awarded 2 gold awards for our Ranthambore project and our Ice Stupas project in Ladakh and a bronze award for our Hiwali pipeline project in Maharashtra by Afaqs Digies 2023. Basically, the entire awards were swept by Astral with the judges eliminating the silver category and awarding 2 golds and a bronze to us, and we beat out some of the bigger foundations and some of the bigger companies in India by taking all the 3 awards in this category.
Now I hand over the call to Mr. Hiranand Savlani, our CFO, for his financial updates for the quarter and the way forward.
Good morning, everyone. Thanks, Pranav from Equirus for hosting this con call in early hours. This is the first call in which Sandeep bhai is not attending because he was traveling overseas as said Kairav, and I'm happy to inform you that he has gone for Harvard University for his OPM course. He will be there for 3 weeks for this course. Last time he attended 3 week course in the month of May. I am sure we at Astral will learn something new once he will come back post this study. Also, it is a matter of proud for all of at Astral that now new generation is also taking charge of the business, and today, Kairav is leading this call in absence of Sandeep bhai.
On a personal note, I want to thank all my investors and all my well-wisher, because of their confidence and trust in our company and me personally, I have been awarded by the Institute of Chartered Accountants of India, a CA-CFO Award, which is the most reputed award in the country and the award jury was chaired by prominent industry personality like Shri. Dilip Shanghvi, Managing Director of Sun Pharmaceutical Limited, along with other prominent personalities of the industry. As a chartered accountant, it is always a dream to get this award from our own institute. I'm lucky that I got this award and dream comes true for me, which was not possible without the support of all of you and blessing from my elders and the family members. And this will increase my responsibility more.
Now back to the business, as Kairav indicated, the Q3 was excellent. And as we always communicated, Astral is believing in consistency of growth and this quarter is in continuation of that consistency. And that is why I have specifically given the few graphs in our press release, which can clearly indicate the 5-year CAGR growth on a 9-month basis so that everyone can understand that how consistent Astral is there in terms of top line, in terms of bottom line or in terms of volumes in all respects.
The numbers are in front of you. I will not take much time, but we'll prefer to give more time on Q&A. Just key number, which I think I should highlight by indicating here. The consolidated top line growth in Q3 was 15% on Y-o-Y basis and 21.6% on a 9-month basis. EBITDA has grown up by 9.5% in Q3 -- sorry, degrown by 9.5% in Q3 on a Y-o-Y basis, and minus 6.4% on a 9-month basis, mainly because of high cost PVC and the chemical we incurred inventory losses. But now we are done away with these losses and high cost inventory, and we are quite confident that Q4 will not be having that effect. On the contrary, as indicated Kairav that we may be having some inventory gain also in Q4.
Adhesive and Paint segment has delivered a top line growth of 28.6% on a consolidated basis in Q3 and on a Y-o-Y basis, 39.70%. But these numbers are not clearly comparable because last year we were missing the Paint business in number. And EBITDA growth of 11.4% in Q3 Y-o-Y basis and 18.2% on a 9-month basis. EBITDA margin of Pipe division was 13.5% in Q2 has increased to 15.4% in Q3, which indicates 190 bps higher compared to previous quarter. EBITDA in Adhesive and Paint was 12.2% compared to 12.6% in Q2, mainly because of high cost inventory chemical and 1 of the loss in our U.K. business due to currency, which was stood at INR 5.5 crore. If we adjust this INR 5.5 crore inventory loss, our adjusted EBITDA for the quarter for Adhesive and Paint business is 13.8%. So it is -- reported numbers are lower mainly because of this one-off item of foreign currency loss.
Bathware division has registered a sale of INR 9.68 crores in gross in Q3, and EBITDA loss of INR 13.8 crores. And from this quarter onwards, we are expecting that we will start generating a gross margin. So this loss number will start reducing on quarter-on-quarter basis, and we may come up in a good number, positive number from the next year onwards. There was a loss of -- I already discussed, there was a loss of INR 5.5 crores in the ForEx in U.K. So if you see, we have published INR 41 crore of EBITDA, this INR 5.5 crores, it works out to be INR 46.5 crores EBITDA, which is precisely 13.85% EBITDA of that respective division.
If I adjust Sanitaryware losses of INR 4 crores in this quarter and adjust the EBITDA of Pipe, then Pipe EBITDA will also increase to 15.83%. So in both the segment, because of one-off items, EBITDA adjustment will be there. As far as the working capital is concerned, I think that is very well under control. Our receivable days are 23 days. Inventory is 66 days. Net working capital days are 34. Today, we are sitting with a cash of INR 476 crores. With this quarter, all inventory losses related to PVC and chemical get over, and we are seeing a very healthy EBITDA in Q4. Also, you are aware that Q4 is always a big quarter for our industry, which always support us in economy of scale, which will further support to our margin in Q4.
To summarize all what Kairav said and I communicated in my initial remarks, we at Astral will be ready with all new set of plants and products by March '23. Like each plant in ready with all products, PVC has already rolled out, and CPVC will be ready by March. Jamnagar Faucet plant is up and running, and we may look into the initial response of the market if we may require to increase the capacity next year in Jamnagar plant also. Valve plant, all products will be rolled out by March. We already rolled out few and revenue has started. So all 120 will be rolled out. Adhesive plant at Dahej will be ready by March. So that will also start generating revenue from next year onwards. Aurangabad plant, originally, which we acquired for a water tank business. But looking to the demand scenario on the ground, we are seeing that we may be requiring some support of that plant. So we have already started PVC pipe manufacturing over there. And I'm very happy to inform you that last month alone we have done a reasonably good sales from Aurangabad plant also.
Similar thing, Sangli plant we acquired for DWC pipe. But looking to the demand of PVC products in that region also, we have started manufacturing PVC pipe in Sangli plant also. So now we are adding our spare capacity of these locations into the pipe manufacturing also. Hence, we are expecting that FY '24 should be an excellent year for growth for us, and capacity utilization will improve substantially. At present, we are just 57% utilization. So whatever investment we have put for CapEx in last 3 years will start generating cash flow for us, which will improve our all financial ratios in a positive direction in the coming time.
With this, I want to open the floor for Q&A session. Thank you very much. Over to moderator.
[Operator Instructions] First question is from the line of Rahul Agarwal from InCred Capital.
Congratulations for a recovery in third quarter. Sir, 2 questions and then a bookkeeping question. Firstly, on Pipes. Obviously, the recovery is much better than Adhesive. And Adhesive my sense is like-to-like removing paint last 3 quarters, the revenue has largely been the same. Some bit of color, if you can provide on the demand margins -- you've already said that they'll start improving fourth quarter. But just on the demand and volume growth, if you would comment, sir, please.
So I think Adhesive margin has already started improving it. As I said you that, if I adjust this ForEx effect, my consolidated margin is 13.9% precisely. So margin improvement has already started because the pressure on the chemicals are coming down. But as far as demand is concerned, you are right, some pressure is there on the demand because the rural demand was low in the previous quarter. And now we are seeing some improvement into that.
Secondly, the U.K. economy is also under pressure. So our overseas business is also not able to give us the required run rate of growth. So because of that also some pressure is there. But now I think inflation has started coming down there also. And here also we are seeing post this rabi crop and all the demand in the rural side also will start picking up and we'll be coming back to the top line growth also. And now because of the price pressure will come in, the product will also become more affordable. So that is going to support us in the coming time.
Got it, sir. And second question was on Dahej. How much capacity does you add from 1Q? What is the asset turn there and the time to reach 100% utilization?
I think it's too early to say when we will be able to utilize 100%. Let first we complete the plant. And then we will, one by one, we will roll out the things. Because we are of the view that -- which is -- Dahej is a very substantial plant, so it will take some time. But we are working on a few products. And there, we are seeing a reasonably very high growth in the coming time because our team started the groundwork on that. And we already appointed the senior people into that division. I will not disclose individual category or all this thing because of competitive scenario. But we are of the view that -- with that, we will be able to ramp up our growth in the coming time. And we will be utilizing the capacity as early as possible. But we can say that with this Dahej plant, the Adhesive as a whole company as a whole, I think we can generate a revenue of close to about INR 1,800 crores, which is last year INR 1,000 crores.
So I think substantial capacity addition is taking place, and we are confident that with this addition of capacity and with this introduction of new products in an aggressive way in the market, we will be delivering good number in the coming times.
Go it, sir. And lastly, just bookkeeping. If you could just give me Gem revenue and EBITDA for the quarter and Bathware revenue, please?
For January?
No. For the Paint business, if you could give me the revenue and EBITDA number and for the Bathware the revenue number?
So I think Bathware, I already said INR 9.68 crore. And Paint was roughly about INR 52 crores last quarter. And EBITDA was 12.6% in Paint. And if I adjust this one-off effect of U.K., then Adhesive EBITDA was close to about 14.5% or something. So now I think we are back to 14%, 15% EBITDA into the Adhesive business.
Got it, sir. Sir, Bathware, INR 9.68 crore is for 9 months or 3Q?
No, it's 3 months because we started from last quarter. Prior to that, there was no sale. So initially, 1 or 2 quarters, one-off expenditure will be there because we are recruiting a lot of manpower also into that division. So initially, costs will be higher. But once the run rate will start picking up from the next year onward, I think this all losses will go away.
The next question is from the line of Sujit Jain from ASK.
Complements for a good set of numbers and welcome Kairav. Sir, if you can just quickly spell out the capacities that will be there now in Pipes division and as well as in Adhesives.
So I think Pipe, we are -- on a 9-month basis, we are utilizing 57% capacity. So we are still low. And that is what I said in my initial remark also that last 3 years, whatever CapEx we have done, I think they will start generating revenue from now. So that's why I said that all financial numbers and ratios will improve. And that commentary, I'm continuously repeating every time that Astral is spending too much of money into the CapEx side because we were decentralizing our company from 1, 2 location to a country level, multiple location. So now we are adding 5, as I indicated, Sangli, Aurangabad, now East plant, all this start contributing to us in the coming quarter. And we are quite confident -- looking to the current scenario of the demand, we are quite confident that the numbers will be really a good number in FY '24. And this is not I'm telling you now, even last year also I communicated that FY '24 will be the really good year for Astral because we are completing all our projects in FY '24. . And Adhesive, I think Adhesive capacity utilization is around 55% to 60%, but we have to give 1 old plant of this Unnao of Kanpur to the previous promoter as per our original understanding in 2014. So our understanding was that till 2020, he has to give us the plant to use free. But because of this COVID, he was so generous that he supported us for extended to 2 years. And now from April onwards, we will be shifting all this facility, whatever the vessels are there, we will be shifting to Dahej and will start manufacturing. So capacity addition will be substantial, but at the same time, some capacity cut will be there because of shutting down this Unnao plant also. So exact number of how much we are reducing from Kanpur and how much we are adding from this Dahej, I think we will be able to give you in the next presentation of our full year number.
So safe to say that Pipe's capacity is now 310,000.
Yes, I think we have already put it in our numbers also.
Sure. And -- if you look at your...
Pipe is 286,000 not 3 -- 286,000. 286,000 -- precisely, INR 286,095.
Sure. And inventory days have gone up. Working capital has also gone up. If I look at Q-on-Q, it has gone up from about 20 days to 55 days from March also, it has gone up. What would be our cash flow from operations for 9 months?
So I think inventory, we are going into the peak season. But if you see Q2 number, I don't think it has gone up substantially. It is like that only 1 or 2 days here and there will be there even on Q2 basis.
And cash flow from operations for 9 months.
Nine months. I don't have a handy number. Please call me post con call, I will give it to you.
And 1 last question on Seal IT, while you have mentioned the currency loss, even if I add that back, the margins still have not stabilized to what they were before. This is for at least last 2, 3 quarters, at least Q2 and Q3. When do you see situation there improving?
So I think last con call also we communicated that the Seal IT is a big player as far as the silicon business is concerned in the U.K. And silicon prices went up from $2.5 to as high as $8. From there, it has started coming down. And again, it has come back to almost $2.2, $2.3. So because of that consistently there the inventory losses were there. So now I think they are coming out from that. Maybe by Q4, they will be done away with all this old inventory. And from Q1 onwards, you will see there will be an improvement into the number. So this quarter, I think they delivered 8.6% EBITDA. And we are of the view that Q1 onwards, I think they will be coming back to the normal EBITDA.
But even their sales have come off from about INR 90 crores, INR 95 crores to INR 75 crores odd, that is my calculation for quarter.
Naturally [ when there ] -- key product, which has come down from such a peak level of $8 to $2.3, $2.4, they have to pass on that price drop also to the market. So top line will be loaded. Just like PVC in India, every PVC manufacturer has started eroding the top line. Everyone has moved to the volume. Similarly, there also the similar situation is there...
Because of the volumes lot of debt? Have the volumes gone up there, 9-month basis?
Yes. Yes. Volumes are picking. Volumes are picking up. On the contrary, we are doing expansion over there.
The next question is from the line of Nitin Jain from Fairview Investments.
So my question was related to the piping business. So with the price appreciation that we're seeing in PVC, what kind of volume growth and given that you have mentioned Q4 is our peak season, what kind of volume growth can be penciling for, say, Q4 and Q1. And my next question is, any update on the income tax matter that was -- that have occurred last year.
As far as the PVC prices go, they did increase by INR 13 in the end of last quarter. But now PVC is no longer going up. PVC has been stable since January, and we expect this to be stable for the coming few months. But it's, again, too soon to say because we don't know about the global situation, and there can be anything happening. So too early to comment on where the PVC will go. As far as volumes go, I think we are comfortable in sticking to our guidance of 12% to 15% volume growth. So we don't want to give a very high guidance and then just not achieve it -- or we speak to a very conservative guidance. But looking at the overall scenario and looking at how January has gone and how the first week of February has gone, I'm very confident that Q3 -- Q4, we will give a decent volume number.
So I can add what Kairav said that 12% to 15% is our long-term guidance. But if you consider this year, I think this year will be much, much higher then. You can see the 9 months number also. 9-month wages, we are already up by almost 20%. So this year will be ending with a very, very high double-digit number, I can say. And next year onward, Kairav has said long term 12% to 15% will be the minimum guidance. But looking to the current situation of the market, we may exceed that number also. But keep finger crossed because we should not jump in on a 1-quarter higher number wages. So we have to see how the consistency is maintained into the PVC prices and how the market is going to respond. But overall, the demand in the plumbing side is very, very robust. So it looks like that the numbers could be very, very encouraging. But I think as Kairav rightly said that it's too early to say on the PVC price and all this front. So because of that, we will not be able to tell you on quarterly what will be the run rate. But yes, as of today, when we are talking, 8 February, this quarter is going excellent. I can say like that.
Great. And my second question on the income tax thing that happened last year. Any update on that?
I don't think we have not received any notice or any demand as far as Income Tax Department is concerned. So if anything will be there, we will definitely update. Being a listed company, which is our responsibility, it is our duty to increment to the shareholders. But as of today, we don't see any problem in the system.
The next question is from the line of Venkatesh Balasubramaniam from Axis Capital.
I had a few data questions. First of all, in the third quarter, did you have any inventory loss or gain in the pipe segment? And if it was there, can you please share it.
Yes, yes, there was a loss of PVC side because October and November, there was a sizable loss. So some of loss we cover up in December. Sizable, we will be covering up in the Q4. That's why in the initial remark we said that we will be having a healthy EBITDA margin, and there will be some element of inventory gain also in Q4, because whatever the price rise in PVC, we have seen that was in the month of December. So because of that, the benefit will come in January and February. So we are seeing a good number in Q4. But yes, in October and November, there was a loss. It is very difficult to quantify how much will be that, but it should be close to about INR 25 crores kind of level was there. But it is not approximate base number, it is not a perfect number. It is my guess work I'm telling you. So don't rely on exact number.
Mr. Venkatesh, does this answer your question?
No, it doesn't. What I was asking is does the -- this INR 25 crores is the third quarter inventory loss approximate number? Or is it like you gained back part of this INR 25 crores in the month of December.
Gained back.
Okay. Now the second question is, I don't know if you shared it, but it was not very clear. Can you share the Paint's revenue and EBITDA in the third quarter?
INR 52 crore revenue and 12.6% EBITDA.
16% EBITDA. Okay. Now you -- in your press release also have given that for the 9 months, Sanitaryware and Faucets has done INR 13 crores loss. And did you also mention that in the third quarter the loss was INR 4.5 crores. Did you share this number? Just checking.
INR 4 crores to INR 4.5 crores, yes.
What exactly was the number in the second quarter? Is it possible to share?
Second quarter was around INR 3 crores or something like that. Because in this quarter, we have added a lot of new teams with us and plus Jamnagar plant-related initial setup cost was also there because we opened up the Jamnagar plant also. So that cost was also there. And revenue was not there. But from this quarter onwards, revenue will start flowing. So we are expecting that this loss number will wipe out in the next couple of quarters.
Okay. Okay. Now in the first 9 months, Sanitaryware and Faucet, you didn't have any revenues, is it?
No, because we didn't started in the market. We started from Q3 only.
Okay. Now because you shared some number, INR 9.68 crores for third quarter, was that a revenue?
That is for the Q3 number, that is the Q3 number.
Okay. Now the last 1 small query, which I had, if you see our consolidated financials, you have -- at the other income level, you have a loss of around INR 2 crores. Why is that?
So like INR 5.5 crores loss was there in U.K., which I said in my initial remarks also, and there was a gain of INR 3 crore something in my other operations like Astral and all wherever we are parking our liquid funds and all, so that was a gain. So net of was INR 2 crores minus.
Okay. No, but shouldn't that come under ForEx gains, which you anyway give separately?
No. Because as per the accounting policies are such that 9 months, whatever the other income is there, you have to reduce 6 months and the balance figure you have to show as a 3 month. So because of that, the small question was raised by me also to my team, that why you are showing here? So they said, no, it is like that only. Because gain will be like that -- upstairs and loss will be on down. We have to net off on a 9 months versus 6 months, whatever the difference is that they have to show like that way. But it was a confusion to me personally also to be very honest.
Okay. Okay. I just had 1 request to you that if on a consistent basis, on a quarterly basis, you share in -- at least in the call, you share the plumbing revenues and rather the Sanitaryware Faucet revenue and EBITDA because that helps us understand how the underlying pipe business is doing. Otherwise, you end up thinking that actually the pipe business is not doing very well, which is actually not positive for the...
That's why in this quarter I was specifically given that number.
The next question is from the line of Praveen Sahay from PL India.
Firstly, congratulations on the CSR award and to the Hiranand sir for your CFO award. And now the question from my side is related to the volume growth of 30%, which you have delivered. Can you give some more color on -- how is the further like PVC, CPVC or a corrugated pipe tank has performed. If not in numbers in the quantitative terms, if you can give some view on that.
Praveen, sorry, we don't give any segment-wise data, be it value or volume because as you know, the competitive intensity in the business is too high. So we would like to maintain the secrecy on our vertical-wise data. I can give you some color that in all segments we have grown, I can say like that way. All segments. Whether it is a PVC, whether it is a CPVC, whether it is a tank, whether it's a DWC, all segments, there was a growth. Otherwise, this 13% growth is not possible. We are not agri company, you know. So most of the growth has come from the plumbing side of the business. So because of that, all segment, we had a growth. And that's why you are seeing this number.
Second question, sir, related to the Sanitaryware, in the opening commentary, Kairav sir has mentioned there's a 25,000 bidding on the way for a path building, what is that exactly?
We are currently quoting in projects, which the total pipeline is around 25,000 bathrooms. So we are working on a few projects, and we are confident that we will close them. So that is why I had mentioned that we are actively working on certain large-scale projects across a few metro cities in India where the quantum is about 25,000 bathrooms. We have already supplied to more than 3,800 bathrooms in our project business in the Sanitaryware and Faucet division.
Okay. And the next question is related to the Paint. You also mentioned about the rebranding of that. So is it like a Astral brand you are going to do with the Paint or...
So we have not yet decided on exactly what path to take. Right now, the paints business, the brand name is Gem Paints. Now Gem Paints is a very strong brand in a couple of south states where it operates. So we have not yet decided whether to change the brand name from Gem Paints to Astral Paints or to keep it Gem Paints. So based on the market scenario and the feedback that we will get from our sales team and from our channel partners, we will take a call in the coming few months. Right now, we are working on the packaging of the product. So we are redesigning all the packaging and then we are slowly and steadily working on a new website and new creatives. And so a lot of stuff is happening, but the rebranding from either keeping Gem or Astral is not yet finalized. We will communicate that to the market once we take a decision on that.
Okay. And then the last question is related to the incremental -- the capacity at Aurangabad plant and Sangli plant you have created for the PVC pipe. How much is the CapEx you had incurred for that?
It is a very less CapEx actually. Basically, the plants we already had and the buildings were already constructed. So it was basically just buying the extruder for the PVC pipes and placing them there. So it was not a very significant -- couple of crores hardly it was there.
[Operator Instructions] The next question is from the line of Mitul Shah from Reliance Securities.
Congratulations on a very strong performance. Sir, I have first a clarification on -- we said pipe utilization of 57%. So that is including this new Sangli and Aurangabad plant? Or that would be incremental coming at the quarter.
No, no, no, including that only, Sangli, Aurangabad, this Bhuvneshwar, all put together.
Okay. And second question on this pricing of PVC as well as adhesive also where we are saying that price increased towards the end of December and then onwards it is more or less stable in Jan and Feb. So on a blended average Q3 average price versus Jan-Feb is how much it would be higher, roughly?
So I think it is very difficult to arrive that price rise. Because we have not given any price rise to the market. What we communicated that whatever the high cost inventory was there, that has gone away from the system. So we are not increasing any price. On the contrary, if the demand comes more, then we may have to reduce also the price. We have to see how ultimately we are settling down our margin. So based on that, pricing will be decided by the way. As of today, January, there was no change in the price in Adhesive or Paint or 5 divisions. We have maintained the same pricing what was there in December. Because December there was a high fluctuation in the price.
I'm asking for Q3 averages. October, November were relatively low price, December we are saying it has increased and the December higher level is maintained in January. So compared to Q3 average, it should be slightly higher, right?
Definitely, it will be high, much higher because INR 13, INR 14 price hike was there in December. So naturally, it will be high.
Okay. And lastly, on the tank business side, sir, that we are on try to achieve our targeted revenue in the first year itself. So going forward, how much in terms of expansion network, et cetera, and -- can give more details? And once we reach to a stable volume size, what would be the stable margins in next 2, 3 years for this segment?
So like Paint, you can see the market, Astral is selling always at a premium. We don't -- we are not a commodity company, which we have repeatedly said, we are a brand. So we will not sell any product at a loss. That is a very, very clear thought process among all the senior people working in Astral. So even today also tank also, you see our margin will be somewhere around 12% to 13% minimum. And that is the beginning of the journey, and that is with a low capacity utilization. So with this increase in the utilization, I think we will be settling down somewhere around 14%, 15% margin and that we communicated long back in our previous calls also, if you can go back to our transcripts also. So we are very clear that we will be working on a 14%, 15%. That is a healthy margin for any brand to work. So we will be maintaining that kind of margin.
Today, yes, definitely, we are still low because we are gearing above our market share. And still, we have not grown up our market. Even 2% -- even if I do INR 100 crores this year, we will be hardly 2% of the market share. So it is not a substantial market share we have gained. These are just the beginning of the journey. So we have to see, we have to evaluate, because right now, our tank is rolled out from almost 5 locations. So in future also, we will see how many more locations will be added into the tank side. Because tank is basically a logistic play. If you are near to the market, you will be able to sell to the market in a better way because storage is the biggest challenge for any distributor or a dealer. So if you are near to the market, you can gain a fast market share. Otherwise, it's a challenge.
So we have to see how fast we have to utilize our current capacity, and then we will see how best way we can add the more capacity into the existing plant or we may add to the new plant that we have to work out. But right now, we are operating from 5 locations. And in future, we may add more.
Yes, sir. Sir, if I can squeeze 1 more question on dealer level inventory for pipe business compared to traditional Q4 how it has been and restocking related [ retail if ] you can give.
I think dealer level inventory is still not at the optimum level because the dealer level inventory was very dry in Q3. So with the PC upward movement, the demand came from the end consumer, the farmer level demand and the builder level demand, developer level demand. So a lot of the product that was sold in Q3 was consumed in the market rather than building up the inventory. So from January onwards, we are experiencing that the dealer level inventories have started building up. But it is still not at the -- I would say it is still not at the optimal level as it used to be before PVC started falling.
And all this is 25,000 bathrooms, we are talking about, what could be the ticket size per bathroom here, roughly?
I think it is difficult to say it. It depends on the project and what product they use. So we have faucets starting from under INR 2,000 and then we have faucets that are selling at INR 12,000, INR 13,000. Similarly, with our Sanitaryware product and ceramic product also. So it depends on what range this developer decides going for. If it is a low-cost housing, then the ticket size is different, if it is a little bit of a medium to an upper scale sort of a housing complex, then the ticket size is different. So basically, we have 4 category into Sanitaryware and faucet, start range, mid-range, upper mid-range and the high end. So we are quoting to all categories of the developer. So we don't know which category the order will flow.
[Operator Instructions] The next question is from the line of Achal Lohade from JM Financial Institutional Securities.
What I wanted to check is that you mentioned that in your comments that the demand has been robust in the plumbing business. If I were to look at the Q-o-Q jump in the volume is about 13% for us, while it is 30% to 50% for some of our peers. So just thought of getting your perspective on the same.
I think we communicated earlier also, we are not an agri pipe company. So major chunk if you see the volume is coming from the agri side of the business. That's why if you can compare the per kg realization of Astral versus other brands, you will clearly find the demarcation over there. And we are much, much ahead of any players in the market. Similarly, if you see the margin, we are much, much ahead of any players in the market. So that is a very clear indication that we are a plumbing company more focused on the CPVC side of the business. That's why you can't compare the 2 companies or all other peers. We have to compare apple versus apple. We can't compare apple versus banana. So that's a big gap. Because right now, the biggest demand is coming from the agri side of the business because last 2 years, the demand was very, very low into that segment.
And secondly, the base effect you have to also consider. Base effect was very low for the other company, particularly the agri-dominated company. So we have to consider that also. That's why we have given the press release, the 5-year CAGR numbers also in all front, top line, EBITDA, volumes, all respect, we have given the number. And that -- again, I'm telling you that number will not be comparable because the nature of business of every company is different. So all companies are respectable company in the market.
We don't want to say that other companies are not good. All are doing great in their respective field. But comparing volume number, it will be very, very difficult. Because if somebody is CPVC dominated, their volume will be low. If you compare only plumbing number, yes, definitely. If some companies are giving you the number of plumbing, volume of plumbing, then yes, definitely, you can compare and then you can say that which company is doing good. And I will be very happy to understand from you if you get this kind of number, I would be definitely learned from you. And wherever we feel that we are not doing good, we have to improve ourselves also.
Got it. So basically, I just wanted to clarify. This is largely driven by agri for the others, which is not our key focus area, and that is the [indiscernible].
That is our hunch. I cannot 100% without seeing anyone -- I cannot 100% comment that, all that growth is coming from agri. But from the market sentiment that developed in the end of Q3 with PVC prices going up, large chunk of demand was coming from PVC. And with the farmers not having bought new agri product for last time, it was -- PVC prices had bottomed out. So the demand was very robust from the rural India and the farmers. And also line businesses of agri pipes are also doing very good. So overall, this is what our market and channel checks has.
Got it. Got it. And just a small clarification. You said the inventory loss for the second -- for the third quarter is INR 25 crores, right -- INR 25 crores, right?
I say approximately. It is not a correct number because it is very difficult to arrive the number of inventory loss. This is the approximate number.
And this would be realized loss, so to say, right? I mean given it's solely in October, November, this will be realized loss.
Yes, yes. So that's why we say that December the PVC price shot up. So that benefit we will get in the month of January and to some extent in February. If the PVC price maintained at same level, whatever the closing level of December was there. Now suppose hypothetically in February, if the PVC price goes up from here, then there will be a further gain in February and March. And if it goes other way around, down, then the gain will be low. But I think now it is at least good that in our six region, the prices are stable. PVC price had not changed from 1st of January. So that is a very, very good thing for the industry. Because that gives the confidence to the dealer to put up the inventory because normally, dealers are afraid to have a more inventory when there is a fluctuation in the raw material side. But here, at least 1 thing is good, so last 40 days the prices are stable.
Got it. And just 1 more question, if I may, with respect to -- like you mentioned 13% to 15% volume growth for the pipes business, similar guidance for the Adhesives, please.
Adhesive also we have said, it is very difficult to give you 1 -- category-wise guidance. We have given already in FY '20 presentation, first time, we have given the guidance of 5 years, okay -- that we will be doubling our revenue in the next 5 years. And if you pick up the number of '22 or maybe '23, I think we are going much, much ahead of what we have guided. So we are continuously giving the guidance that we will be maintaining that run rate that doubling our revenue in next 5 years. That is what guidance we go.
Quarterly, very, very difficult to give the guidance for individual segment-wise giving guidance is really challenged. And within the segment also, if I start giving numbers, you will ask the category-wise guidance. So I think it is very, very difficult for anyone to give you that kind of number. But yes, on a broader basis, we have committed that we will be delivering the 15%-plus revenue guidance. That is about the 5-year doubling. And today, we are much, much ahead of what we have guided. And our new product contribution will start coming now, which I already said in my initial remarks. That is very important to see how that new divisions are going to perform, whether it is a valve, whether it's a faucet, whether it is a sanitaryware, whether it's the East plant performance, we have to see how this all new things are going to support us.
Based on that, the guidance may change on upward direction also, but it is too early. So we don't want to unnecessarily give you too much of hope that we can do this, we can do that. It is very difficult because launching is easy, but then to grow up in the market, it is always challenging. Like tank, we were never expecting that very second year of performance, we will be doing INR 100 crores. But in the very first year itself, we got a confident that's why we said that we will be able to do INR 100 crores. Similarly, Sanitaryware and faucet, I'm not giving any guidance for FY '24, because we know it's not an easy business. We have to work hard. First, we have to create this 500 display center. That is very important and success for us. If we are able to do 500, I'm sure we will be able to deliver the numbers also. But till we are not able to do that part and start talking about the number, I think it will be too early. So I don't want to give any guidance on the sanitaryware and faucet for next year because we have to do still a lot of work. Same thing will be in the paint.
Paint also we are working since last -- almost 6 months, we are just understanding. And now we are going to complete our SAP implementation. Once you implement SAP, then you start getting the authenticated number. Now based on the tele number, you can't rely and take a final call. Our all seniors are working on a certain system based approach. So now on a daily, we can't work on that way. So first of all, our utmost challenge is to implement SAP. And SAP implementation for a smaller company is another set of challenge. So we are working on all fronts. But I think number maybe 1% or 2% here and there.
Look at the 5-year growth of Astral, look at 10-year growth of Astral. Don't look at 1 quarter, 1 year number. Please join with us for next 10-year journey of the growth, rather than 1 quarter, 2 quarters. That's why every call we are communicated that we are a company which will give you a consistent [ fee] of the number. We don't want abnormal kind of growth also at the same time we don't want to degrow also. So we want to maintain the consistency.
Mr. Lohade, request you to join the queue for any follow-ups as we have several participants waiting for their turn. We take the next question that is from the line of Rajesh Ravi from HDFC Securities.
Congrats on good set of numbers. Coming to this plumbing business, the inventory losses, though you are talking approximately INR 25 crores. I see Q1 and Q2, the losses were close to INR 25 crores and INR 45 crores. And Q3, the price -- raising price fall was quite low INR 12, INR 13 from September exit. So just wanted to understand how this accounting works because the number seems to be quite high given what we booked in the first half.
So what happened that once you book -- once you sell, then the real number of loss comes [indiscernible] will not come because it is at the cost value, okay? So in this Q3, we have sold the highest volume. If you see the last 9 months number, the highest sales took place in the Q3. So majority of the high-cost inventory was sold out in the Q3.
So is it like...
That's why I say, let me complete. That's why I said that Q4 will be a gain, because whatever the low-cost inventory we have purchased in the month of October, November, December and continuous basis, that is not sold out. That will be sold in the Q4. That's why we said there will be some element of inventory gain also in Q4. So basically, accounting is that based on the selling, not on the basis of purchase or anything else.
Okay. So it's not basis the outstanding at September and whatever inventory you had, you had marked to -- marked it down. So this basic sales on actual basis...
It will never be marked down because it is not sold -- it is entire cost.
Okay. So the 9-month number would give a fair understanding of your total losses because this consummates the whole cycle.
Yes. Perfectly.
And sir, secondly, on the Adhesives and Paints revenue, if I look at the prior numbers have been restated. Any specific reason for the same? Because I don't think there is a change in the business. The paint numbers have already been affected since March '22.
So I think we have started from Q1 onwards, not last year. From Q1 onward paint business be awaited.
So why the prior numbers have been restated, sir?
Because we don't have authenticated number with us. There is no audited numbers. So our auditor will not consult that number. They said we did a quarterly audited number.
Okay. Okay. So, just, if you may have handy...
Small-sized company, normally, nobody make the quarterly audited number.
Agree. Agree on that. Sir, just September quarter, can you give the Paint's EBITDA margin again, please? December, you gave 12.6% for September, how much was the number?
September, I don't have a handy number with me. Can you call me post con call, I can -- I have to check my sheet and let you know.
The next question is from the line of Sujit Jain from ASK.
I think it was 13.9% in Q2 -- Paint business.
Sujit Jain from ASK.
Sir, just 1 question on the [indiscernible] from the time you've acquired the company, what would have been the volume CAGR, and is the business finally back in terms of growth in terms of volume.
So I think now this year is doing great. So this year will be a reasonably very high growth into that business. This year, I think on a 9-month basis, we are up by -- I don't know exact number, but close to about 25% volume growth. So doing very well for us this year. And looks that the way now government has done a lot of announcement into the budget for the infrastructure-related things, that looks that we will be getting a reasonably high growth into that business also, plus railway side also government has done a lot of announcements. So we are supplying certain products related to that also, plus road-related announcement is there. We are supplying to that related products also. I think, hopefully, it will do good for us.
Secondly, to utilize that plant, we were having the space. So we thought that by the time these products start picking up, why not do utilize the space over there. So we have put up our PVC machines over there in Sangli location. And that has started giving us a good volume from that location. So ultimately, we are able to utilize that plant because all other facilities were there, utilities and all were there, because ultimately it is a plant. So now all our agri products, SWR products all have started rolling out from that location also.
Yes, that is good to know. But you'll have to look at 3-year CAGR because the 9-month base was muted, so hence 25% growth. So what would have been the 3-year stage we are in volumes.
I don't have a handy number for the 3 year. And secondly, we don't share also individual product wise. That is the policy of the management that we don't want to share all this individual product category-wise growth.
Next question is from Girish Choudhary from Spark Capital.
Firstly, if you can talk a little bit about the CPVC market in terms of how the competitive intensity, your market share the pricing trends. And the other thing is that we have also seen PVC prices coming down sharply. So do you see any impact to the CPVC volumes? So that's the first question.
CPVC prices will not go down beyond a certain extent is because we already -- India already has an antidumping duty in place, and that antidumping duty caps the CPVC price at $2. So even if PVC falls from here also and when PVC was at an all-time low in December -- November and December, CPVC prices have remained very stable. So because of this antidumping duty in place, the CPVC price will continue to hover around a certain level and will not fall beyond $2. So I don't think there is any problem on that side.
[Operator Instructions] The next question is from the line of Sandesh Barmecha from Haitong Securities.
Just 1 question. So what was a 9-month FY '23 CapEx? And what is our guidance for FY '24 and '23 as well?
I think next year, we will not still finalized the budget, so it will be difficult for me to give you that number but 9 months base, it was around INR 190 crores. This INR 190 crores include this acquisition of our Jamnagar faucet plant also.
Okay. So in FY '23 full year guidance, sir?
Full year guidance will be, I think, another INR 40 crores -- INR 35 crores, INR 40 crores will be there.
Next question is from the line of Jenish Karia from Antique Stock Broking Limited. The next question is from the line of Nikhil Agrawal from VT Capital.
I just wanted to know what would be the expected volume growth for the industry for the next few years?
Next?
Few years, 2, 3 years.
I think very...
The volume for the industry.
I think, last 2-year industry was not growing. FY '20, I think, was the negative growth of 17% or so -- sorry, FY '21 was negative by almost 17%, 18%. FY '21 was roughly about flat or minus 2%. And this year we have to see because it's not published data, so very difficult. This is what I have got the information from the market. I don't know whether it is authenticated or not. Well, nobody is officially publishing this data. So this is what I have got from my reference check and all I'm telling you. But overall, if you look at things that have been announced, the budget that was announced recently, and looking at the real estate market, I think the next couple of years will be very good for piping companies.
A lot of the inventory -- finished inventory of apartments and houses got sold during the COVID time and a lot of new projects have been announced pan-India. So after the announcement of a project, it takes about 1.5 years or so for it to reach the plumbing stage. So a lot of new construction is also happening. So next 2 or 3 years will be very good for the plumbing industry. And based on the infra measures that have been announced, it will also be very good for the company's dealing in infra products.
So operator, you can take the last question.
We'll take the next question from the line of Girish from Morgan Stanley.
I may have missed this. The dealer inventory right now that exists for pipes for your large dealers, how much is that versus usually in fact, you would have seen in the past. And second 1 was just on the Dahej chemical plant. Are we expanding more on the consumer side, if you can give us some rough split around that INR 1,800 crore pipeline of revenue how much would be industrial versus consumer?
Let me answer your second question first. So major chunk, we are going into the consumer side only. And you know that Astral is a brand, so normally we believe in the consumer side more. So more of it will be on the consumer side. Secondly, your question was relating to the dealer inventory. I think Kairav has already replied. But again, I'm repeating that thing. That PVC prices started going upward journey from December onwards. So initially, dealers were not having confidence that this will be maintained or not.
So because of that, they were shy away for taking the inventory. But slowly and gradually they have started picking up the inventory. And now they all are in a peak season. So they have to keep certain inventory. Otherwise, they may lose the business also because in a peak season, you have to always having the inventory. But again, it is not 100%, I can say, dealers are sitting with the full inventory. But maybe 75% or so dealers are sitting on the inventory and 25% still vacant positions are there. So we have to see how the stability is coming in the PVC side. And based on that, they will be fully having the inventory, which normally they keep with them.
Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. Kairav for closing comments. Thank you, and over to you, sir.
Thank you, everyone, for joining on this Q3 earnings call, and thank you, Pranav, for hosting it. Hope everyone is satisfied with the call and our numbers, and we continue -- we will continue to work hard, and we will come back with positive numbers in the fourth quarter. And also we will continue to work hard for the coming years, and we will follow our guidance as given to our investors. So thank you all, and thank you for joining so early in the morning. It was lovely interacting with all of you. Thank you.
Thank you, everyone, for participating in this call. If you have missed out any question or any number which anybody want to understand, please call me directly maybe after 1 hour, and I will be happy to reply all of you. Thank you very much.
Thank you very much. Ladies and gentlemen, on behalf of Equirus Securities, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines. Thank you.