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Ladies and gentlemen, good day, and welcome to Q1 CY '24 Huhtamaki India Limited conference call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashvik Jain from ICICI Securities. Thank you, and over to you, sir.
Good afternoon, everyone. Thank you for joining on Huhtamaki India Limited Q1 CY '24 Results Conference Call. We have Huhtamaki India management on Call, represented by Mr. Dhananjay Salunkhe, Managing Director; Mr. Jagdish Agarwal, Executive Director and Chief Financial Officer. I would like to invite Mr. Dhananjay Salunkhe to be initiated with opening remarks, post which we will have a Q&A session. Over to you, sir.
Good afternoon, everyone. First of all, thank you for joining this call. This is our fourth or fifth call in succession, and we intend to continue the interactions with the community. Let me start with our safe harbor statement that what we discuss in this call, we deem contain some forward-looking statements, but these are -- basically, do not represent any future performance of Huhtamaki India. So with this, let me give some update in terms of performance of our quarter for '24. As you would have seen, we have improved our volumes successfully from quarter-to-quarter. At the same time, as compared to the previous year, the volumes were down, and that is basically impacted because of the softer market conditions and certain supply chain constrains emanating from geopolitical situation. While we are addressing how do we go forward and improve our volume pipeline, there is a clear strategy in place to address the competitiveness and focus on creating long-term profitable growth initiatives.
A couple of highlights from quarter 1. One, we commissioned our blueloop investment equipment and they're operational from the end of the quarter 1. And secondly, we have started enterprise-wide programs to support the efficiency improvement or operational efficiency improvements to support the profitability measures. And then we continue to invest in our operations and technology to drive the sustainable packaging solutions forward. And that's clearly indicated from some of the awards, which Huhtamaki India won in the packaging space from SIES and WorldStar, and both of the awards, we present clearly that what we are striving to achieve is clearly acknowledged by the industry. With this, I would like to hand over to our CFO and Executive Director Jagadish, to take us through the financial -- detailed financials.
Good afternoon, everyone. I'm pleased to welcome you all to the quarterly [ visit ] call and to take you through the financial performance of the company for the quarter ended March 2024. As I highlighted with Dhananjay, the major highlight of the quarter has been the successful commissioning of the blueloop plant at Silvassa. I believe this is a stepping stone in our progress towards the sustainability goals and the strategy that we have defined for Huhtamaki in the long term. Regarding the key financial indicators, our volumes have slightly improved quarter-on-quarter basis so slightly lagged behind on a year-on-year basis. The same trend is reflected in the top line with revenue for the quarter standing at INR 594,00,00,000, versus INR 555,00,00,000 we had in December 2023 quarter, and INR 646,00,00,000 we had in March 2023 quarter. This represents a 1.4% increase over Q4 2023 through a decline of 8% over March 2023 quarter.
The volume or revenue decline in the [indiscernible] quarter versus corresponding quarter of the last year is primarily attributable for a couple of [indiscernible] things, like higher food incretion in the first quarter, a challenging business environment and supply chain disturbances like Red Sea and all. EBITDA, if you talk about EBITDA for the quarter, it's $494 million compared to $576 million in Q1 2023. Comparing with the December, it was $618 million. And again, the decline in EBITDA is majorly on account of additional credit impairment we had in March 2024 quarter. EBIT for the quarter again stands at $399 million, down around 5% year-over-year. So in March 2023, we had around total $1 million EBIT. And in December, we had a INR 50,60,000,000 of EBIT in the December quarter.
Profit before tax for the quarter before exceptional items is $51 million. Is flat when we are comparing with the corresponding quarter of March 23. Net profit before excessive -- after exceptional items and after tax for the quarter stands at $260 million and EPS for the quarter to [indiscernible]. Now moving on to the data on the liquidity positions of the company. The liquidity position is stable after retirement of entire date during the last quarter, except external commerce borrowing that again having a statutory covenant and mature to close. Debt equity ratio is a healthy 0.2% in line with like quarter -- December quarter. When you look at the debt-to-EBITDA ratio end of March quarter is 4.2%, slightly higher if you compare to December 2023. In December 2023 come at 3.2%. And it is because we have a lower EBITDA in this year due to operating payment. But overall liquidity remains very strong, and we do have a sizable credit lines, which are not utilized at this point of time.
Working capital also improved significantly when we look at it year-over-year, given the slightly behind when you compare with the trailing quarter. While I said the overview of financial performance of the quarter, I also would like to emphasize that the company continues to target all the levers at it's disposal for supporting the profitability and build efficiencies in the [indiscernible] process. We have seen lots of actions on this trend in the last year with our focus consistently on operational excellence and customer delight. The company has a strategy place to address competitiveness and focus on long-term profitable growth initiatives. The company has always been committed to its stakeholders, focused on technology-enabled innovation and operational performance and realization of value for its products by engaging constantly with our customers.
Huhtamaki India are investing for future and sustainable solutions to become the first trial in sustainable packaging solutions. We believe that this will help our company remain competitive in long run to responsible and profitable growth while upholding highest meters of corporate governance. We appreciate your continued support. Thank you. So I hand it over to Dhananjay.
Thank you, Jagdish. You have covered most of the points. And as you indicated that the quarter 1 highlight remained like we commissioned our blueloop assets and then organization-wide productivity and efficiency improvement programs, which will focus on all cost levers, reducing input cost, improving our wastages, overheads reduction or optimization by restructuring and overall improving the productivity will be the key for creating competitive and sustainable business model. While we continue to improve that, I'd say we are in the business of sustainable packaging solutions, and how do we make it sustainable? So we also made a progress on sustainability, wherein we are taking actions in terms of climate impact reduction, the solvent consumption reduction, water consumption reduction, improving the biodiversity wherever our - the plants are. So with all these efforts, we are also making sure that we have not only having a net promoter scores with our customers, net positive surveys with our employees, but also net positive impact on the Mother Earth. So that's all from my side.
[Indiscernible], we are open for Q&A.
[Operator Instructions] The first question is from the line of Aditya Khetan from SMIFS Institutional Equities.
So, my first question is on trade-in other expenses. You said we are replacing the [indiscernible] in other expenses. You had mentioned that there is some credit impairment. Is this the reason, and what is the quantum of this? Like this has led to this higher other expense?
I can take this question. You are right. Other expenses include a bigger impact of a trade-in payment and majority of the divisions, what we see compared to December quarter is on account of credit impairment.
So, what is the quantum of that impairment?
It's a substantial number, like if you talk about a delta and the two major items, which is making impact between December to this. One of them is a higher freight because we had supply chain disturbances and the second is that we had a credit impairment.
Sir, if you can share that number of credit impairment like INR 10,00,00,000 or INR 8,00,00,000?
In that [indiscernible].
Okay. So this is a one-off only, right? So this might not. . .
No.
Okay. Sir, on to the volume growth, like you have mentioned that this quarter, there is only slightly improvement in the volume. So considering a 2-year perspective, like in CY '24 and in CY '25, what is the volume growth you are targeting?
I mean we have said that we're not giving any forward-looking kind of statement. But definitely, you're working towards that. Having them be -- talk about sustainable packaging solutions, we are working with our customers. And we have definitely a plan to grow our top line, and we had a focus on the bottom line. So the actions are in place. There are a lot of work is happening to address that question as well.
I'll add to it. So maybe a little more sharper on that. Look, if you go through Huhtamaki India's financials from 2019 to 2023. So you will see up and down in terms of volume or in terms of net sales, which is definitely a product of volume and the commodity prices. So our objective is basically to look at -- based off the [indiscernible]. And how do we go back to the volume scenarios of 2019 or 2020 while keeping the overall margins in mind. So that's the goal for next 2 to 3 years for [indiscernible].
Okay. So [indiscernible] because of crude prices going down and the majority of the raw materials like market, so they were also going down. So still, sir, we are not witnessing a good margin performance. So like what makes you confident like for the next 2 years with the rise in raw material prices, if suppose demand also goes for a [ bounce ] so we can maintain our margins.
So one of the important -- and you would have heard us saying multiple times, the blueloop, which is the mono-material recyclable solutions, which offers that opportunity to drive the innovative solutions in our ecosystem and which shall help us to maintain that position in terms of margin profile in terms of growth profile.
Mr. Khetan may we request that you return to the question queue for the follow-up questions as there are several participants waiting for that. The next question is from the line of Bharat Sheth from Quest Investment Advisor.
Congratulation on commissioning Blueloop's plant. Coming to on this blueloop plant since we are so -- how do we see the ramp-up of this plant? Because what we understand or how much we -- our customer approval is already done? And how long -- otherwise, it's not done long, it will take to really ramp-up this plant sending material. And if you can give some color, again, whether this plant will be able to cater to whole Southeast Asia and for even export market? So if you can give a little more color from 2-3 years perspective, will appreciate.
So you asked a couple of questions. So let me start with the ramp-up of the investment. So as you clearly see that this is one of a kind, first to the market, monomaterial, recyclable solution. So customers also are taking this very cautiously, while we are in a very advanced stages of product qualification with our live customers. And in fact, some of the product lines already have started commercial production. At the same time, this is definitely a period where we have to really preemptively work with our customers to make sure that they understand the value proposition. One is, of course, recyclability. And second, we need to ensure that customers also are in line with what quality expectations they have. This is first time -- like this is called MDO, which is machine direction oriented [indiscernible], which is a new to market, getting established. So that's one important aspect which we are managing. And we are in a very advanced stages of commercialization. I think we can see a gradual ramp-up in coming quarters and years.
That's one. Second, about the supplies to Southeast Asia or to the exports, yes, the plan is clearly not only depending on our India region, but wherever we are right now supplying to our export customers as well. At the same time, we have invested this kind of technology in another four locations globally, worldwide, within Huhtamaki. So we will be also looking at overall manufacturing and supply chain basis that we might be taking the cost in terms of where that supplies comes from and goes to. So at the same time, yes, there is a plan to continue exports as well from these lines.
Can we expect this from, I mean, full -- I mean, it may take 2 years to reach kind of breaking even or it is less than 2 years? And second question on this is particularly for food packaging or this mono-material [indiscernible] application, if you can also give a little more detail?
Sure, sure. So if I have to look at how much time breakeven or turn around, look, I mean I can only say we are so excited about this. If some of the customer products click it, it can actually completely fill in within a few quarters. So that's the aggressive -- the product proposition is. The second question you asked is about this is a food application also. And I think maybe next time, we will add in our investor presentation, the -- what was the past structural barrier properties of the current structures versus what we are offering, I think we will definitely would like to give it to the market where -- what are we trying to do? Essentially, we are -- we are able to replace even aluminum foil with these kind of solutions. So it is not only about the food application, but the aggressive applications of any item, like hair products or the food products, which are also aggressive like asset-based products and so on. So applications are a wide range, and we -- I cannot claim -- but we will add this to the next time that we are offering the barrier properties of as good as a replacement of aluminum foil.
Okay. And last question, sir, with your permission. Recently, your company has discontinued operation in Malaysia. So how do we see that India is supplying to that market? And do we have any possibility of we can get a large chunk of Malaysian market also?
Yes. So if you would have read that news article basically that factory or better product was basically the food service, and not the flexible packaging. So in fact, Huhtamaki has -- globally, has taken, as I said, enterprise-wide program, which is basically we are relooking at our manufacturing footprint, our distribution footprint, warehouses footprint. And that's a part of that. So even in that region, we have also other -- essentially, we -- as Huhtamaki, we are into 3 segments. One is flexible packaging. Second is fiber food and services. And third is in North America, which is on the Gofood. So this plant, which was closed is part of a global segment, which is called fiber and foodservice. So that is basically a different segment. So not having any per se product connection with flexible packaging. But however, as a Huhtamaki whole, it reflects our initiatives to kind of consolidate operations and improve the overall long-term growth as well as profitability.
The next question is from the line of Vipulkumar Shah from Sumangal Investments.
So would you again elaborate on this credit impairment for the ranks still not able to understand means -- it is a write-off or -- and what is the quantum? So what exactly this credit impairment is?
Mr. Vipul, I think the similar questions asked earlier also, and we said that this is definitely when we are paid impairment is in the nature of [indiscernible] only, which is going to happen. So right there is the problem [indiscernible]
And you didn't quantify the figure. So would you please do it, sir?
I think numbers, we said that the major decisions what we are talking about between the December and March quarter is because of trade impairment only.
No, but what is the exact number that I'm asking, sir?
I mean we definitely even can talk about a very specific number now, but when you complicate it in terms of is it specific. I talked about ECL provisions and also it got many more things. But one especially item to isolate is difficult, but majority of that GAAP which we are talking about is be per the trade impairment.
Okay. And sir, what is the absolute debt, absolute net debt, on books on first April? And what is the [indiscernible] component in that?
So whatever debt we have, that is on account of PCB only. And you can the physical in the December balance sheet that were -- the numbers were crore that you mean as is in [indiscernible]
So that we cannot repay due to contractual obligation, right?
No. I mean, there are rules. There are FEMA guidelines that -- there are rules that there has to be a dysmaturity period for our loans so that we have to follow.
And sir, my last question, what percentage of our turnover do you expect to come from this new blue line Blueloop products over the next 2-3 years. So can you share any ballpark figure?
No. I mean at this point of time, it is very difficult, like when we say that we are working with our customers. We are looking at quite a scope of applications -- and I think there are immense opportunity for that, but I think we have to wait a little bit to have that comfort with delivering that.
Yes. So to add to Jagdish point, look, we are a in a derived demand industry, right? So our products are sold to our customers, which are basically large consumer packaging goods companies. And if you see two aspects coming in. One is a regulatory push on the recyclable packaging products and the customers, various customers, which are our large conglomerates, they are also doing certain pharmacies. So by -- if we combine these two together, that's where you can look at. Today, currently, we have somewhere our recyclable products stands at around 20% -- 30%, 25% to 30% range. And if we look at our customers' aspirations and regulatory requirement, possibly we could see that it's definitely moving at a faster rate in next 2 to 3 years, and we should go more than maybe 60%-70%. And that's where the -- that's where we also want to be part of.
Will it be margin accretive, sir? These products will come at higher margins?
So again, it depends upon the products, the mix as well as the categories which we work with, right? So let's say, there is a pharma, there is food, then there is a personal care and home care and health care and so on. So it depends. So really putting whether they will be margin accretive or not, that can't be predicted, but only one thing which we can predict is basically, they will be accretive to the Mother Earth.
The next question is from the line of Saurabh Patwa from Quest Investment Advisor Private Limited.
So I just wanted to understand, you have -- I think in the last few quarters, we took several actions both in terms to improve profitability. I think there are two full actions which you have called out and implemented. We came off of certain businesses which were financially margin dilutive. And against that, we also cut down cost in terms of employees, in terms of reducing your manufacturing footprint. So I just wanted to understand, sir, where are we in the journey? So we think the pace of falling sales seems to have been controlled, in control now. Have the costs also been controlled now? So incrementally lost revenue and costs should increase? That's the first question, sir.
Okay. So let me answer that, start with that. So if you look at our margins, look at last 4 quarters kind of a margin we have. And if you go back and look at our margin of 2022 for engaging quarters, we find that there is a significant increment on our operating margins. And this improvement is happening because a lot of actions are happening on the ground, which as we talk about bringing the office efficiencies and in which talk about footprint optimization in which we talk about process improvements, whether we talk a [indiscernible] team and all. So those are helping us and we are very close. If you look at our EBITDA margins and not very close to 8%-9% kind of the range we have in the last 3 or 4 quarters. Having said that, if you're able to maintain that, and that is what we are looking. Apart from that, we are seeing that we are moving into a program, which we have already started with, again, how we're going to have operational efficiencies. And when we talk about operating efficiency, it's about definitely reducing the input cost. We are talking about [indiscernible] reductions. We are talking about optimization, we are improving productivity. But when you talk about bigger actions, which already happened in 2023. Now we are going to have an incremental impact of those, and we are going to continue to drive. And it's lighter process actually in a continuous journey. So we'll continue to drive to be as efficient as possible to [indiscernible] efficiency that's obviously an improvement. And that definitely is going to help to maintain our EBITDA or EBIT or operating margins in the range that we are looking at this current pace.
So is it fair to understand, sir, that you -- in terms of products where you believe you're historically believe the market provide was weaker and you monitor to exit those businesses, that is behind, right? So incrementally, by [indiscernible]. But in terms of your product category where you want to be [indiscernible] that is already done?
I mean in a way, yes.
Okay. And on the new roof, I believe some of the presentation, what I can understand is that towards the end of the quarter, this is where the new facility goes on. So for the of cost associated with the new facility in terms of new employees and any other additional costs which you do have that. So have you already been taking care of that and if not, how much will be the impact from -- in the coming years, while revenue will take time, is one I can understand from the combination so far?
Yes. So ramp-up have its own pace. And the ramp-up is still going on forward. We have already started building on these blocks in the last couple of months. And I'm not expecting any significant cost is going to go in the first month and the quarter.
Okay. And sir, in terms of depreciation that we have already, I think our depreciation as we change in the policy on the acquisition numbers have come down sharply, to continue to come down this quarter as well. Is this a fair number from going forward? Or is there still some scope there that you would be continue to reevaluate your definition policy?
I think these numbers are going to stay and there will be impact to the extent of new CapEx addition. So what more is going to say.
Okay. And sir, with this current rise in oil prices, have you seen increase any raw material and have been able to pass on some of it?
I think it started when we talk about crude prices, in prices and all these are moving in the range of 85-87 and all. So we have to really wait and watch and see the real impact of this starting into other competitive prices. Maybe probably in a few weeks' time, we'll have better clarity on that.
So may we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn. The next question is from the line of Saket Kapoor from Kapoor & Company.
Sir, as you mentioned about the -- this impairment part as the differentiation in the other expenses between December and the March quarter. So this -- if we remove this one-off item, then our comparison with last year March quarter as the margins in the similar ballpark only? This one-off item if we knocked out -- is it a fair comparison then?
Yes -- we are very close to that. Yes. If you move that impact, we are very close to that.
Because this was not a line item, which was relevant for the March quarter '23.
Yes. Yes, absolutely.
Right Sir, you have spoken in length about the blueloop and that getting accreted and acknowledged by your customers. So I think one of our large customers, this came up with their numbers yesterday, I'm talking about Unilever. And there the numbers looked at depressed in the margins also contracted. So on account of their demand and the pricing part, how -- what is the filler from them? And also said you have earlier spoken about this segment nature of the industry. So how do you think the pricing power -- we would be having the pricing power to get Blueloop into the foray, I think so that will be -- that will have a difference in terms of pricing and will not be a commoditized product. So if you could just explain the business environment currently in terms of your buyers potential to accept the product can say a higher price?
You're right, Mr. Kapoor. I mean, if you look at last couple of quarters were very challenging, and you have seen some competitive [indiscernible]. They will definitely the pressure on the bottom line. But our focus is whatever we can do within arena of influence. Spin of insurance, we are going to improve all offices excellence and efficiencies. And that's one of the reasons we are able to maintain our operating margins. Top line detrital is under pressure. And we are also really careful about to ensure that how we want to maintain what we are trying to -- what we had in the last couple of quarters. So we do want to dilute that. But definitely, our focus is to have both and bottom line meters of improvement on that.
So maybe I'll add to Jagdish point. So if you see last couple of quarters, we had added one slide or one comments on our blueoop offerings. And if you go back to that, I would say, we are offering power of 3. What is that power of 3. One, we are offering recyclable solutions. That's one, recyclability is first power. Second, those will be -- those products or solutions will be running on the customers' machines without much change. So customers are not expected to change their lines or add some CapEx or there will be no impact on their productivity. And third, is affordable because it's very easy to say this is not commodity exactly, it's not commodity. But at the same time, in order to have a push our innovations to the customers' lines. We need to also make sure that it does not come at a very differentiation. Otherwise, adaptation might get delayed. So we need to have a very fine balance in terms of -- in terms of how do we maintain our pole position, which is a differentiation. At the same time, it is also acceptable to our customers because it also -- as you said very rightly, and not only the customers you mentioned, but also, in general, PMCC results, except for some of the companies, they are really muted. And in fact, one of the CEOs said open, there is no price in the market. And that reflects overall. So -- and we are their ecosystem, right? So that's where we are really playing a very -- what is it? Golden mean, so that our products are acceptable to them. At the same time, we keep the differentiated.
So just to conclude, the acceptance part, can you comment how is the sense you are now commercializing the Blueloop facility. So definitely, you must have got the acceptance part of the feedback from your key customers? So if you could share what is the key takeaways in terms of the acceptance? And then on the employee cost part also, sir, I think so a lot of westernization has gone through in closure of some of the unit and now commercializing a new facility at Silvassa. So what kind of further rationalization can we expect, especially in terms of the employee benefit expenses as a percentage of sales -- and if time permit, I will chip in with one small point.
So acceptance-wise, that's what I said, we are replacing certain parameters and like the structures which we are offering to the customers are really attractive and they're getting really run well on there, which -- so from that acceptability point of view, we are really making very good progress, and that's where now almost -- we are in very early stages of, I would say -- not early, very forward stages of starting the commercial supplies. On the second part, if you can add on employee cost, Jami, you can.
Yes. So Mr. Saket in cost, we are not expecting is going to change significantly because we started doing the [indiscernible] from last few months. So we are not expecting any number is going to go significantly higher side in Q2 or Q3. So we are -- we can all mince on that.
Mr. Saket, may we request that you return to the question queue for follow-up questions. The next question is from Rohit Suresh from Samatva Investments.
So, my first question is to Mr. Jagdish, it's been 1.5 years since you are joining the company. So where -- what are the major changes that you have seen both in terms of the positives? And if there are any areas where you want to see some more improvement. So very broadly, I want to understand your picture what has happened over the last 1, 1.5 years.
First of all, thank you to remind me that I'm already 18 months old in this company, such a nice feeling, yes. So look, I think one very clear positive aspect of after joining in here. And I can be very proud to say this, and my colleagues here are listening to me that I'm incredibly proud of working with this team of Huhtamaki India, such as talent is available and very driven and passionate. So I -- that's what I really surprised when you said you are 18 months old will come I never felt that way. And in that 18 months, if I look back, what we really drove, I think one of the critical pieces we drive our strategy execution very clearly. So one large takeaway that this strategy was there in the making for last few years. And what we did was the active and accelerated that strategy execution. So be it was the footprint optimization or so on and so forth. The second one is, again, in our conversation, you would have or we took a full position in terms of our product portfolio. So we took it a very hard look at what products which we are making and selling. And in last year's first and maybe first 4-5 months, we took that call. And I think you can see this clearly reflecting in our margin improvements. That's the second one.
The third one, apart from the network optimization or so on. Another good thing what we did is we also consolidated our offices. Now, you know, we are now in Thane in Iran and eastern [indiscernible], where we have a consolidated office space. And then it is becoming a hot hub for all the employees coming in together having a very good collaboration and discussions together and creating something of a nature of blueloop. So that's the 3-4 things I would really articulate happening very well. What can go well or could have gone well in spite of taking a call on the volumes and dilute portfolio optimization, I would have still love to have a bit of a better volume growth. That's definitely one. And second, we are in a transformation, right? So we are -- last year, we kind of optimized our network and so on. So how much we communicate internally, externally. It's still a lot to do on that. So some customers might not be very happy with our -- some plant closure or some -- essentially, the stakeholder management, more communication, even though we did really, really well. Still, I would say these two aspects would have been still -- can be better volume development and various better -- and better and better communication could have been still better. So that's the two aspect, I would say, would have been better.
Great, and thank you so much for the elaborate answer. So my second last question would be on the demand recovery side. So are you seeing any particular segments where demand is recovering much faster? Or are there any segments in particular where you see it might take much longer than what you had expected?
So as you would have seen coming from mostly FMCG company last 10 days or so, I think everyone is expecting demand, food and beverage demand to come back -- or food, I would say, rather on account of better than [indiscernible]. Second, I think heat wave or summer -- even though they are delayed by maybe a month or so, that is coming in. And I think food and beverage demand probably shall be going up. Then a good monsoon will also means the pulses and all the stuff, pharmaceutics will be better. And other than that, we are also closely working with pharma companies and so on. So that is where we see that it might be improving. The reason for that is a lot of regulatory interventions are now happening in that space, and that will be really looking at certain changes in our customer profiles. And I think that's where we are expecting that it may come back to the place like automate where we are known for our quality compliance and ethical standards.
The next question is from the line of Mohanlal Jain, who is an Investor
[Foreign Language]
Yes. Yes.
[Foreign Language]
Again, I'll first talk about the performance what we in the last 3 or 4 quarters. In last 2 or 4 quarters, if you had seen the results, I'm sure we appreciate that our operating margins are coming into a sustainable level and at least consistent level. We are talking about 8% to 9% of operating margins. Again, we'll go back because when we have a base and you want to improve on that base. So the base of October 2021 or we'll talk about 2002 is better than 2021. And if we talk of 2023 is better than 2022. And definitely, we are working towards how we are going to improve it further on. So there is a consistent approach is there at sustainability, what we are doing, we would like to sustain it. So sequentially, if you look at, there's a good progress on that. Now having said that, there are a lot of things which is also happening where we spoke about that at an enterprise level at a company when we are driving a lot of initiatives, which are going to help us to improve overall as competitiveness in terms of how we are focusing on our opportune efficiencies, how we are focusing on our input cost, what we are gaining on optimizing overhead costs and all. All in all, if you look at makes a good progress in the good revenues there to ensure that whatever is there, how we able to maximize the value and how it can improve the total shareholder value in the entire game.
[Foreign Language]
No, Mohanlal, it's not about -- I mean, you're asking questions what you feel are right. But if you look at the progress, I mean, we have to look at the progress also we cannot discount the progress what we had in the last 3 years. And if you look at the progress also, there is a positive progress there's a consistency in the retail zones. So this is sustainability in what we are promising. So we have to take everything into account and definitely to relate all your support and all, we are going to drive, and we are able to consider how we are going to maximize the value of [indiscernible].
The next question is from the line of Vipul Shah from RippleWave Equity.
Just wanted to understand a couple of things. We've rationalized the manufacturing factories over the last year or so. And also going ahead, we going with that, we've also rationalized a lot of headcount. So just wanted to understand the employee cost numbers which we have reported in this quarter, which is around INR 61,00,00,000. Does that also include the annual hikes which the company would have given post the closure of the financial year for calendar '24? And is this a sustainable number to go ahead for this calendar?
Yes. So I mean normally, increment cycle most of the company starts in the April, same with us. So if we compare March 23 versus March 24, definitely, there is an element of increment and increment in the cost. Is that your question, Mr. Shah?
Yes. I mean, March 23, our employee benefits was around INR 60,00,00,000. Right now, it is around INR 62,00,00,000. So what my question was, sir, essentially whether the increment cycle has been factored in and is the number which is appearing in this quarter, is the annual number, which a number which we should annualize or the increment cycle will come in the next quarter, which is the coming quarter?
It is going to come in the next quarter.
Okay. So that was the first question, sir. Second question, sir, there is a little confusion. And I really don't understand the hesitancy in at least sharing the actual number for the credit impairment, which is, as we all understand, it is a one-off. I believe the Indian investor community has evolved so and they understand that these items are not to be considered in a normal course when you evaluate a company basis, which you make an investment or you continue to hold an investment. So the conclusion was, so that the delta between other expenses between March '23 and March '24, which is INR 12,00,00,000 or whether you should look at a quarter-on-quarter delta, which is INR 15,00,00,000. Is that the number for credit impairment? Or is it something in between both of them?
I think it's mostly -- it's very close to what we are talking about in March '23 to March '24
Got it, that is really helpful. Sir, last question, which -- if you allow, sir. And again, it's on a very -- I mean, something to take back to the global management is a lot of companies MNCs in India, sir, they believe in a single consolidated entity with all businesses in one listed entity. We -- clearly, flexible packaging is a huge business for Huhtamaki in India. But has there been any thought process of bringing also the foodservice business in India under the listed entity fold so that you have one Huhtamaki?
So that food service business is very small. And as I said earlier, we have 3 segments, and each segment has its own expertise. So fiber food service needs certain expertise on the paper side of it. The flexibles where we are is basically expertise remains on the PE or one plastics. So -- and considering the huge difference in the size of operation, the target market and the focus area. Huhtamaki do not see that as a, I would say, a large synergy. Otherwise, they would have operated it as a globally consolidated way, right. So that's one very critical aspect. And in India, particularly, that -- if that is what we call, is very, very small business. And so essentially, Huhtamaki would like to continue to look at it as a separate entity.
May we request that you return to the question queue for follow-up questions. The next question is from the line of Khaten Acarle from RoboCapital.
I wanted to know what was be the full -- I mean, what the revenue potential of this blueloop plant on full capacity? And what is the total addressable market sales, which we aim to serve with this plant?
Again, we are a dynamic kind of situation and it's kind of evolving. It's very difficult to comment even if you look at Mr. Khetan today, when you talk about this alive product sales, we are in the revenue 20% to 30%. So this will be a different kind of -- it's like a one-off [indiscernible], which is also going to add our overall lease ability or subtle product portfolio. So it's very difficult to comment exactly how it is going to add to the portfolio and what's the addressable market. When you look at our market, market is a big market. To use markets, flexible use market. And from our perspective, I think a lot can be addressed to this. But again, we are very, very dynamic, and we also -- we are moving to have [indiscernible] to sell more and more clarity on this.
The next question is from the line of Aditya Khetan from SMIFS Institutional Equity.
Sir, on to the Blueloop brand, sir, is it possible to quantify what is the CapEx we had done for the last 2 years. And as was said by [indiscernible] participant, if you can share at peak utilization, what sort of a top line can this -- so blueloop can [indiscernible]?
I think CapEx is -- again, we don't generally talk any specifics about specific item. But if you look at -- we had a substantial CapEx in the last 2 years, we can go through our annual report for '22 total, we'll say that there is a central CapEx we had on entire portfolio, not really blueloop we did -- I mean, they are always -- you are adding something or you're doing something on that. Now coming back to -- again, I said that [indiscernible] are dynamic, and we do have testable product solutions as a small part of a 25% to 30% sales we are doing in that. Blueloop is going to add and complement on top of that. It's going to mono next year. And I mean they definitely are going to have more and lower pattern visibility and we'll be able to share more concrete things in times to come.
And what was the CapEx figure, the one you mentioned?
CapEx... So CapEx, if you look at our annual report of last 2 years, you'll see that we had a substantial CapEx, but to accelerate the CapEx for a specific project is difficult.
Okay. And sir, okay. So on the CapEx or it possible you can share how much capacity addition is done by this blue loop on the base capacity?
So again, capacity will be determined with a lot many multiple factors are there. There are laminating capacity the printing capacity, the seating capacity, the making capacity. So there are different targets we talk about the capacity. So again, I mean adding some [indiscernible] and something, it's very difficult to say that we have incremental of this capacity and all.
So sir, like, sir, if you're not saying anything on to that front, operational side, sir, what incremental top line we can get if you can like share a base number that would have helpfully served for analyzing this?
Again, not specific going to incremental number. It can be replacement like we are talking about these products have a capability to replace all kind of applications. So it's not that it's going to be incremental. It can be replacement with sustainably. Our focus is that how we are not over sustainable product and how to have more impact on the planet. At the same time, definitely growing our top line and bottom line.
Got it. Sir, just one last question, sir, what is the -- so when we sell a plastic film and we sell blueloop plastic. So what is the difference in terms of margins? I suppose if a normal plastic bag, so that sells for like 8% to 9%. How much does this blueloop sort of a product, what type of margin does this product [indiscernible]?
They're not specific to margin, but I say the 3 key properties, which we are talking about Blueloop, one, it's sustainable. Second, it's adoptable, it's very easy to adopt. And that it's affordable if we talk about overall product portfolio point of view. And definitely, it's on a capability or reduction of the plastic also. So there are many solutions were they have 3 they are flights that can be converted into life. So overall diabetes of plastic going to have in terms of affordability.
And sir, in terms of margins, so like it is a 20%/30% premium product as compared to your base portfolio, would that be okay?
Again, I mean, you might find it a little bit not so specific, but it depends on application to application, product to product, customer to customer. I mean, we can't put a specific margin on that, but what we are saying is that overall solutions are for are optimal and sustainable.
The next question is from the line of Nirav Seksaria from Living Root Analytics.
I just had one question. So sir, what is the crude price level at which we are sustainably able to operate?
I believe that the ongoing prices, which are in the range of $85-$86 per barrel, is that what is allowing prices. And again, when that commodity prices take a high inflation in all, we definitely have to see that how we are going to engage with the market factors and how we and how we're able to maintain. But definitely, they are going to insist have an impact on the bottom line for.
So sir, let me rephrase my question. At what level of crude prices, will we be able to maintain our current margins well?
So crude prices will have an impact. That impact comes through raising prices and then how the raise in prices are going to come -- if we said that 85 is the number, any number, it won't be right on my part. It depends on the what kind of contract we have a customer when you're going to have that lag impact marching on to the customers. So there are multiple factors.
Our range would also move out?
Sorry? I mean when we started making this year 2024 thinking that we are going to have this quarter and on, I think that range was -- it was like $81-$82 going on. And we had that in mind. But again, I'm saying that many have inflation in place, definitely able to work in market factors are your customers and on to see how the impact is pass it on to the customers.
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Dhananjay Salunkhe for closing comments. Okay.
Thank you. So first of all, thank you, my internal team, Jagdish, Anil and Sumit, for preparing for this and keeping the tradition of having this call every quarter, and we continue to do that. A big thank you to all the questions. They are very, I would say, very thoughtful. And it also gives us also opportunity to reflect on what is that investor community is also looking at and make us also prepare around that. And also a big thank you to ICICI for organizing this call. So I appreciate all your support and continue to be connected.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.