Mold tek packaging
Concall ( feb 2025)
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1…FUTURE GROWTH TRIGGERS
A…Pharma
B…ABG paint
C…Q pack and fmcg
D…Iml in asian paints will lead to stabilization of business loss(probabaly)
E…Addition of 40% printing capacity
F…Improvement of margin due to pharma
G…Decreased depreciation cost in future
RISK FACTORS
1…10% loss of asian paint market share
2…Lubricant@only 2-3% growth
1…Growth
=I’m really excited that pharma is going to be the game changer for next – at least for a decade for Mold-Tek. That’s my individual expectation.
=We thought we will be in the region of 10% to 15% this yr , but probably it looks like we might
end up close to 8% to 9% growth overall in this year concluding in March, but coming to next
year we are confident we’ll be in double digits (10-15%)
2…Reasons of degrowth in last few yrs
A…Low printing capacity
B…10 % share loss to asian paints-
A…added 40% printing capacity
B…Asian paint
=All depends upon how we fare with Asian Paints next year. If our numbers at least stay where they are this year, we can aim at definitely a
double digit and a decent better numbers, which we’ll see only next year
=we anticipate at least, if not a growth in the other paint companies, we may not lose our share in the next financial year is our strong
belief
= But going forward, I don’t think it would happen further because as I said IML adoption is improving in
Asian Paints.
3…Pharma
A…Moat
So when they see the speed at which Mold-Tek is able to develop molds, develop corrections
and give them a product which they have to go for stability tests, send it for trial, supply trials,
transit trials, where they have a lot of time wasted. So if we save the development time by couple
of months that is what makes pharma to look at Mold-Tek with interest and we are using worldclass facilities, nowhere we are compromising on quality or cleanliness.
= That’s the kind of facility we have created. So world-class facilities, world-class tool room and fast
development and innovation is what we are bringing to the table in pharma packaging.
B…Growth
=If things go well, pharma can be a star contributor in the next couple of quarters. But
that’s not the end. In fact, it is the beginning because, as you know, pharma packaging is a very
huge market of more than INR3,000 crores, INR4,000 crores per annum. So what we are looking at is INR30 crores, INR40 crores next year is not even 1%
. We are in a position not only to add several new products and several new clients, but commercial supplies to some of them started as late in December and it’s picking up
pace in this quarter, that is Q4.
For example, our sales were hardly INR1.5 crores in pharma compared to INR2.27 crores in
pharma against INR1 crore in Q2. But in the month of January itself, we have crossed INR2.1
crores due to the commercialization of the samples that were approved during the last several
months
=Coming to the pharma, the molds which have been developed for pharma are all approved. And
I’m glad to inform you that we are not even 1 year old in pharma because the plant was inaugurated only in February last year. And within 1 year, I’m glad to say that we have developed 12 new bottle SKUs and 2 more chilled-assistant featured products for pharma industry in India.
And I’m also glad to inform you that recently in the month of December, we have taken up a
challenging project for one of our Hyderabad-based MN company exporting to US, a product
which has been applied for patent. And that product supplies also started at the trial batches of
about 2 lakh pieces worth around INR25 lakhs, INR30 lakhs per month, but with a potential that
can more than triple in the next financial year
=So these molds are now ready and supplies also have started. And we are gearing up additional
capacities in pharma within the premises, what it can accommodate in the next 3 to 4 months.
And for the new premises, construction also has been initiated, which will be probably starting
from next calendar year
=We have been identified
even by a U.S. company to procure canisters from us. I have been talking about our products
which are unique compared to our competitors in India, especially in the canister segment. We
have single-piece canister with laser marking on it, whereas others are still using paper label and
double piece canisters.
So these are what canister models which are used in USA. And in fact, right, as we are talking
today, one consignment of 1 million pieces of canisters are being exported to U.S. directly. So
that opportunity also opening up our ability to aim at U.S. market directly instead of going
through Indian pharma companies. So we are even exploring those opportunitie
4…Paint
A…ABG
The Paint-Packs volume has grown up by almost 14% this year, thanks to Aditya Birla Group starting commercial production at Cheyyar and Panipat and recently at Mahad
B…Asian paint
=Major reduction is from Asian Paints because they are one of our largest customers even today.
So there, we lost almost 10% volume.
=One of the reasons is I think they also have tepid growth, one. I don’t have the exact numbers,
but there is a tepid growth in their volumes.
=And there is also redistribution of volumes between
the vendors based on pricing. We are a little sticky on our pricing. Probably that is one of the
reasons why we are losing some part of the business.
=we are neither related to Asian Paints or ABG, we are just a professional company and
doing our best services and our quality is what is giving us the opportunity to serve this kind of
giant companies. Having said that, ABG, all the suppliers other than Hi-Tech, rest of the all the
paint manufacturers you name in country are associated with ABG one way or another.
So that is not the reason, like our association with ABG won’t make Asian Paints to reduce our
volumes. Definitely, I don’t think so. It is maybe redistribution or pricing that could be the reason
is what I guess.
C…Iml in Paint Industry
=There is always a price pressure on paint industry, sales to paint industry.
=Shifting to IML is improving in the paint industry That
makes Mold-Tek as a better choice for players like Asian Paints or even KNP and Berger because of the robotic capacities what we have, our in-house IML capacities and our ability to develop new designs and challenging artworks
=So that makes Mold-Tek is obviously a better option. So we anticipate at least, if not a growth
in the other paint companies, we may not lose our share in the next financial year is our strong belief
5…Lubes
=competition is not so severe in lubes. Hence, price pressure on lube
packs is not so much
=However, it is very low growth industry
6…Fmcg
=Newly added
Surf excel
Horlick
= So going forward, even food and FMCG, we anticipate double-digit
growth from 7.3% this year. It should be in the range of around 10% to 12%.
=There is an increased competition,
7…Printing machine
=One of the challenges we have been
facing for the last several months is the printing capacity of IML and procuring the IML in time,
which is impacting our supplies in food and FMCG sector and also to some extent in the paint
and lubes. So these printing machines have just arrived, a couple of them, one from Italy and
one from Delhi. Both the machines are in transit.
=So, certainly by end of February, we are ready to have almost 35% to 40% increase in the capacity of IML print labels
8…Depreciation
Depreciation is now
getting impacted in the P&L. So that way the underutilization of these new capacities is causing
a challenge in increasing the EBITDA. But going forward, with the ABG numbers improving
and pharma numbers also improving from probably next quarter onwards, we would be able to
see the EBITDA per kg improving.
9…Margin improvement
As we grow in pharma,
per kg realization could be more than INR300 to INR350, whereas our current average is
INR206. So even if pharma becomes a 5% of our sale price – sale volume, it would be taking
up our sale average price from INR205, INR206 today to INR215 level. So that can substantially
improve the pricing, hence, margins also