Thank you very much. We will now begin the question and answer session. The first question is from the line of Shravan Shah from Dolat Capital. Please go ahead.

Sir, a couple of questions. So first, I just wanted to understand, can you provide the Wavin volume in Q2?

In Wavin volume, we sold 3,000 tons. We acquired in August 1st . We got 2 months, August and September..

Okay. And yes. So for full year, we were previously looking at around 30,000-odd tons. So will that number remain same?

Number remains same. But now as we have just started properly only from October, we believe this year, the sale may be around 20,000 tons in the 8 months.

Okay. So now, sir, considering the overall particularly the piping volume, so for 11-odd percent that we have done in the 1H. So to achieve 15%, 17% for full year, we need to have around 20% kind of a growth in the second half. So have we started seeing that kind of a momentum in the October itself?

You have seen in the second quarter, we have grown by 17%. In first quarter, we have grown less due to segment got beating. But second quarter, we have grown already by 17%. So we are very confident. Now that rains have subsided and reservoirs are full with water, the agriculture market is going to come in a big way from November onwards.

Yes. So actually, my question is on that part only. So this quarter, so if you look at the Q -o-Q piping realization, which has gone up by close to 11-odd percent. And given that, let's say, ADD maybe, let's say, come from the 1st November itself, where we are looking at INR4, INR5 per kg PVC price hike. So in that scenario, sir, two things. One is, is there any product specific changes? And that's why in the second quarter, piping realization has gone up by significantly 11-odd percent. And no w if the ADD comes and, let's say, INR5 hike is there from 1st November, so how one can look at the realization for the third quarter?

I can't talk about ADD immediately, I can't talk anything about ADD. Volume, we will grow between 15% to 17%. In second quarter, volume-wise, we have grown by 17%. So we are fully aware of our responsibility. When we say 15% to 17% volume growth, which means second half, the volume should be higher than 17%. Then only we can attain 15%.

Got it. And lastly, sir, on the margin front, EBITDA margin front. So in 1H, we have done 12.3- odd percent. So last time, we were saying that around 14.5% to 15.5% kind of EBITDA margin for this year. So is there any change? And if not, then we need to hav e a 17% to 19% kind of EBITDA margin in the second half to achieve this number?

Generally in our business second half is better because first half, the three months of rainy season, the demand goes down, the margins are under pressure. And the raw material price is higher, already so much, there's not much scope now raw material price to fall unless the crude price goes down drastically.

Got it, sir. No. No. I understand. Even if, let's say, the prices remain stable, then also , Still we believe that we can see a 3%, 4% kind of EBITDA margin improvement from currently 12.3% to 17%, 16%.

. We told them because our EBITDA margin for the full year will be between 14.5% to 15%.

Okay. Okay. Got it. Got it. And lastly, sir, now that we have a debt also versus the cash, which has significantly now has reduced with the Wavin acquisition and the capex that we have -- are planning. So on the full year basis, how one can look at in terms of the debt level and also similarly for the finance cost?

We have no debt level. We will not have any debt.

True, true, sir. On the gross front, we have INR240 odd crores debt. But given the capex is there, do we believe that the debt level will again will come down at a gross level.

At a gross level, whatever debt we have taken is very temporary in nature, it’s short -term. By end of December, this will also go away.

Okay.

March '26, we'll be having a reasonable cash surplus in hand,

Okay. Okay.

There won't be much pressure on the capex payment now.

Okay, sir. I have further questions. Will come back in queue. All the best.

The next question comes from the line of Sneha Talreja from Nuvama.

Good evening, sir, and thank you a lot for the opportunity. I just wanted to understand on the margins front, while we have seen quarter-on-quarter improvement in realizations, and even our gross margins have improved, we've seen a fall in EBITDA margins. What would be the impact of Wavin losses that we would have seen this particular quarter?

At the operating level, Wavin does not give any negative margins. They are plus only.

And what about inventory loss? Have we seen any inventory loss this particular quarter?

Inventory loss for the first half, overall in the company, there is an inventory loss. The raw material price has fallen. That is not only PVC, CPVC, polyethylene, all the prices are dropping. So maybe inventory loss in the first half may be around INR50 crores to INR60 crores.

Understood. Any other insight that you would want to give because of which EBITDA margins are lower on a quarter -on-quarter basis, leaving apart the depreciation impact because you've added substantial capacity in this particular quarter?

Because of the lower volume than anticipated, that's why the fixed cost, which is otherwise segregated on the larger volume, remained a portion on the lower volume. There is no specific reason for lower margin. And that's how we are anticipating good marg ins in the second half and overall margin for the year should remain between 14.5% to 15% at operating level.

Okay, sir. And sir, could you speak about the demand on the ground? you have mentioned on the agri part and the infrastructure side that we could read in the press release. But how is the demand in general

We deal mostly in agriculture and housing. The demand is going to look quite robust. In infrastructure, as on today, whatever demand is coming, they are not related to our pipe demand. We hope that now the rates have subsided, infrastructure demand may come. We have to watch. We are not a big player in the infrastructure market.

Understood. But on the plumbing side, you continue to see demand being robust?

Plumbing side and agri side, both sides, we expect robust demand in second half.

Understood. And lastly, in case we can get some capex breakup, you have done substantial capex in the current quarter, leaving apart Wavin, which are the product segments where we have added capacity substantially?

One is a window profile, which is around INR200 crores. Then a silent pipe system, we invested around INR80 crores.

The next question comes from the line of Keshav Lahoti from HDFC Securities.

Sir, I want to understand on Wavin. So as you said, Wavin hasn't been profitable this quarter. So when we think the Wavin margin will be in line with company's margin? And what steps are you taking? Because earlier Wavin was loss -making. So what steps you are taking to possibly ramp up its operation and whether Wavin...

Wavin price list has been changed to our price list. Wavin will be a regular margin just like us from November.

Got it.

We have cut their various costs, staff costs and their ground costs. We have cutmany of their costs.

Volume improvement, ultimately.

Got it, sir.

Volume improvement, better utilization of the plant.

Understood. Got it. As the Wavin sale is ramping up, will it imply -- impact Supreme sale? And secondly, you plan to rebrand Wavin under Supreme, some of its sales. How are you planning going forward?

Along with the Wavin asset, we've got 120 sales team member in our company. We've got 266 new distributor and dealers. So somewhere where our reach was poor, we got distributor and dealer, and our sales force has been strengthened by addition of 120 numbers...

Okay. Got it. As you -- one last question from my side. As you highlighted, INR50 crores, INR60 crores is the inventory loss in H1. So this was the same number in Q1. So possibly Q2 won't be having any inventory loss element. Is this understanding right? A nd secondly, still Q2 margin looks very subpar, 12.4%.

Very difficult to say. As some product, we might have gained something. But I think, we believe that whatever inventory loss was there, it is already behind us.

Got it. So what I'm trying to understand, still this quarter, your EBITDA margin is 12.4%, while year-on-year, the margin in Q2 FY '25 was 14% inspite of inventory loss. So you -- if we adjust for inventory...

Maybe our raw material cost is lower rate or we maybe sell more value-added item. Value-added item withs higher margins. So very difficult to just quantify like that.

Understood. Got it.

Thank you. The next question comes from the line of Vipulkumar Shah from Sumangal Investments. Please go ahead.

Hi. Thanks for the opportunity. Why consolidated margin consolidated net profit is lower than the stand-alone profit? Any particular reason?

Okay.

Whereas consolidated, that goes away and the share of profit comes from the consolidated results.

Okay. Okay. Thank you. So, none of the subsidiaries are making losses, right?

Yes, none.

Okay. Thank you, sir.

Thank you. The next question comes from the line of Shravan Shah from Dolat Capital. Please go ahead.

Hi, sir. Sir, can you tell us with now 71,000 Wavin, our piping capacity is how much? And by end of this year, it will grow to how much?

Our capacity by end of March '26 would be 1 million plus. In piping system, I'm talking. For the company as a whole, it will be 1.2 million plus.

Okay. Okay. Got it. Got it. And in terms of this quarter, whatever growth that we have achieved on the volume front in the piping, will you help us in terms of the CPVC and the PVC ? Specifically CPVC growth was how much? And with Wavin -- and going forward, is there a broad -- any idea how the CPVC volume growth looks like?

CPVC growth in the first half has gone up by 26% in volume.

For us?

For our company we are talking. We can talk about our company only.

Yes. No. I mean for industry would be a much lower number then?

Industry I have no idea.

Okay.

I am seeing, Supreme Industries and growth is at 26% in the first half.

Yes. Got it. Got it, sir. I got the point. I was just trying to understand whether we have gained the market share or not on the CPVC front.

I have no idea, but I believe this is my conjecture our market share must have gone up.

Got it. Because that may be the reason why the Q -o-Q plumbing realization has significantly increased. Maybe this quarter, we could have a higher share of the CPVC in the overall piping volume and that may be the reason the Q-o-Q realization, which is 11%-odd increase. So, that's what I was trying to understand.

Same is for our assessment. Yes, please.

Yes. And another, sir, in terms of last time, we have said that the JJM, so currently, how much broader our receivables are there? Is there any improvement on the JJM in terms of the government releasing funds?

Total outstanding 17 days of the sale.

Sorry, sir?

17 days of the sale remain outstanding. 17 days of sale.

Okay. But we are not seeing any improvement there?

17 days, we are quite happy.

Okay. Okay.

We are happy, 17 days comparatively company standard is quite low.

Okay. And sir, whatever the slightly lower reduction in the volume guidance, so leaving the plumbing, the three segments, so this is particularly from the industrial, that's why we are seeing a lower volume guidance?

We have given 15% to 17% volume guidance. Now we are repeating same thing. P. C. Somani For the company,12% to 15%, I think it was the...

This is what we told in April. This is what we are saying today in October. There is no change.

No, sir, I think last time we were looking at 14%, 15% overall. And now we are looking at 12% to 14%. So, is the industrial segment is the reason and that's why we are seeing or giving a 1% or 2% lower?

Because the company’s business volume is very low . The company’s business volume is very low.

Okay. Got it sir.

And the main segment is now volume in Plastic Piping System; we remember that we had guided for 15-17% and we are maintaining the same percentage today.

Okay.And sir, any broader idea that this quarter in terms of overall the entire plastic pipe and plumbing volume growth would be how much for the industry?

We could say we already stated for the year. For the quarter, we don’t know...

And for the industry for full year would be of 8%, 9%, that's the fair number?

Maybe. You can better talk to the Reliance Industries . They will be a better person, better position to reply to you.

Okay. Thank you, sir, and all the best.

Thank you. The next question comes from the line of Kumar Soumya from Ambit Capital. Please go ahead.

Hi, sir. Good afternoon. Sir, just one question. If you could just give a little more clarity on the margin as to what should be the annual number -- annual margin we should be looking at? And what is the number that you think should be deliverable at least in the FY '26?

Annual turnover should be between INR11,000 crores to INR11,500 crores and our operating margin should be between 14.5% to 15%.

Got it. Got it. And sir, what is the capex that we are looking at from the second half perspective?

We believe overall capex should be around INR1,300 crores. But depending on how we are able to order book the order as we are negotiating. In first half, we paid INR869 crores as capex outflow. And as my colleague has told you, we will be having a reasonable good cash surplus on 1st of April 2026.

Yes, sir.. Thank you, sir. That will be all. I'll come back in the queue. Thank you.

Thank you.

Thank you. The next question comes from the line of Raman KV from Sequent Investments. Please go ahead.

Sir, I joined the call a little late. I just want to understand there has been a big increase in the inventory levels. So can you give the reason why there is an increase in the inventory levels? And going ahead, if we are converting this inventory to our revenue in the coming quarters, will there be an impact on the margins? Because my understanding is we will sell this inventory at a lower level?

No, we will price the inventory realization value. And we believe that the polymer price have come close to bottom only unless the crude price goes down dramatically. The crude price can go down a very low level , but today, prices are hovering between $62 to $65 Brent Oil. If will go to $55, then we may have inventory loss, b ut we cannot predict about the crude oil price going forward. But this is quite a low price of crude oil, which is prevalent today in our country, in the world actually a very low pri ce. So people don't anticipate otherwise i f it goes very low, then exploration will come down. And there may be a shortage of crude oil later on going forward.

No, I just want to understand what's the primary reason for increase in the inventory levels?

We have a good business in second half.

Okay. The business was good in the second half?

We gave good capacity and good prospect for second half. And this is our business experience of many years and second half all business will be better than first half.

Okay. Thank you, sir.

Thank you.

Thank you. The next question comes from the line of Utkarsh Nopany from company BOB Capital Markets. Please go ahead.

Yes. Good evening, sir. Sir my first question regarding the pipe segment margin. So if we see our pipe segment EBIT margin was down by roughly 250 bps on a Y-o-Y basis. Despite we have seen a pretty good volume growth of 17% in this quarter. Our share of value-added product has also gone up quite sharply say which was earlier 40%, now it has gone up to 45%. And what we understand that last year, we booked an inventory loss of INR 40 crores a nd whereas this year we have not seen any inventory loss in September quarter. So can you please, sir, help us understand what is the reason for the margin contraction in the pipe segment?

In first half, we lost around INR60 crores in inventory.

Sir, we have booked INR50 crores to INR60 crores inventory loss in June quarter only. And so if we are saying that we have booked INR50 crores, INR60 crores inventory in the first half, that means that there was no inventory loss in the September quarter?

Second quarter, there was too much rain. So the prices have to drop down. This was a slack season. Second quarter is a slack season period due to pipe demand – pipe demand get affected due to rainy season. The second quarter ma rgin will be always low, but we try to give the off- season discount to the customer.

And there was an extended rainfall also.

No, sir. Like my reason was that like we have not seen any negative operating leverage. We have seen positive operating leverage benefit only because our volume was up 17% and our realization on the quarter-on-quarter was up pretty sharply. But fine, sir, I will just take it offline, sir, from you. Sir, my second question was...

If you are looking at EBIT margin, EBIT Wavin coming into hold from August onwards, the depreciation has increased definitely.

So that's why the EBIT margin would be impacted.

Okay. Got it, sir. Sir , my second question is on the i ndustrial and packaging segment volume. So what we have seen that the Industrial segment volume was down even on a weak base of last year. And even packaging segment volume also came under pressure in September quarter. So what could be the reason for the same?

In my opening remarks, I said all ou r division worked well, except i ndustrial component division. The demand from our customers who are making the primary product in the market, the demand was low in the second quarter and p ackaging segment due to rainy season demand was low. Packaging demand is going to have a good grow th this year. We informed that p ackaging division business will grow by double digit this year and may reach INR1,000 crores this year, which is a significant achievement for the company. After plastic piping division, the division which is going to reach INR1,000 crores is protective packaging division in the company.

Okay.

Thank you. The next question com es from the line of Navid Virani from Bastion Research. Please go ahead.

Thank you for the opportunity. Sir I have a couple of questions regarding Wavin. So we see that when we have acquired Wavin, we have also acquired some technology with it. So the first question, which I want to ask is when do we expect these acquired technologies to start benefiting our piping segment?

We have told that we have entered into technology license agreement that they have got several technologies in the portfolio. We have to decide whic h technology we want to take. Option is given to us, we are studying, we are developing on the market first of that product and then only we will enter into an agreement to acquire any technology. Once we acquire any technology license, we will inform all our partner immediately. As on today, we have still not started negotiation for acquiring any technology. We have got a license from them that we have full authority on exclusive basis to acquire any of the technology which is in the portfolio, which will decide when we meet in January, we may be able to dwell on some technology and then we will inform to everybody.

Sure. Thank you for that clarification, very clear. Next I wanted to understand the overall outlook of the business, let's say, in 3 years to 5 years in terms of exports. So from what I'm able to understand right now, the export as a percentage of our total business today is very small. So how are we planning to build those -- the exports business and what can be the contribution of exports, let's say, 3 years, 5 years down the line? Is there any target which we are working with?

Earlier we were exporting only through our Dubai office. Now we have put more resources. We're opening another market. So we are very optimistic that our export busi ness will go on growing quarter-after-quarter. Percentage, I can't say. We wanted to reach 5%. As on today, we are less than 3% of our turnover. Our aim is to increase the target of export as much as possible. In India, generally, there is too many constraint on boosting export of plastic product, but they are now being handled by the government, central government, state government also very effectively. So we hope that export will start growing quarter-after-quarter from now.

Noted. And the packaging segment, is it right to assume that the packaging segment will lead the charge as far as export business is concerned?

Plastic piping and packaging both.

The next question comes from the line of Mehul from NMV Securities.

Yes. So Wavin's turnover for FY '24 was INR1,000 crores. So if I assume the similar turnover in FY '25 and the capacity is around INR71,000 crores -- 71,000 metric tons. So realization per metric ton is around 1.35 lakhs, so which is broadly similar for Supreme Industry as well. But if I see this, the Supreme Industry is currently trading around INR 50,000 crores. And if I divide it by the capacity which currently Supreme Industry have, which is 8.70 lakh metric tons. So Supreme Industry is trading around 5.74 lakh per metric tons, whereas the company, the Wavin you bought, it's around 41,000 per metric ton.

Mehul, I think your understanding is wrong of the subject. Wavin turnover, what you're looking for FY '24 was inclusive of their tank business, which they have divested in '24, '25. So piping turnover, what we have acquired was less than INR600 crores.

Earlier, Wavin turnover was along with the Vectus turnover. Wavin Vectus is marketing Vectus tanks.

The next question comes from the line of Vandit Shah from Abakkus Asset Management LLP.

Sir, I just had one question. How is the inventory levels currently with the dealers? Is it normal or still we are waiting for a restocking of inventory?

As per us, it may be lower than normal.

And do you believe that with the restocking might happen in the October & in the November month before the ADD comes in or in November, December months?

So without ADD also, they have to start buying as when the peak season time. From November to May, the demand remains robust of plastic piping division. So they have to maintain and service their customers.

Sir, in the first quarter, we mentioned that we executed our PE piping order for gas applications. So you want to throw any light with respect to the FY '26, '27 visibility on revenue?

Now we have DVGW approval for our fitting also. So now we are the only company who is able to supply pipe and fitting both from the same company. So we are very optimistic now that going forward, we will be able to meet the requirement of several gas comp any, pipe and fitting together. The schedule was issued in last week only. So we can talk better when we reach in the month of January, but we expect growing business. Business is not going to be very large, but it's a prestigious business, and this can help us to serve the community better.

What can be the market for this piping...

Comparing to our business of INR8,000 crores, INR 9,000 crores of plastic piping, this can not be a large business. This might be below INR50 crores.

Right. And sir, any update on the greenfield facilities for the plastic piping over the next 2 years?

Plastic piping, next 2 years, I'm not aware today. But we hope that we growing better than the industry . We told earlier also the industry grow 2% more than GDP. We must grow 2%, 3% more than the industry.

Last time we were awaiting land approvals at Bihar and Jammu.

Jammu, we have still not started. Land is in our possesion. Land in Bihar also in our possession. But there we still not started any manufacturing activity. First, we will take up to put the plant at Bihar and Jammu will come later. We hope that all the capacity should be up and running in 2027 first half.

The next question comes from the line of Vipulkumar Shah from Sumangal Investments.

Are we required to pay any royalty to the Wavin for using their technology?

Whenever we acquire technology, we have to pay them royalty.

Sorry, sir?

Whenever we acquire a new technology from them, then on all the technology turnover, we have to pay them royalty.

But on this 71,000 tons of capacity, we will not be paying any royalty, right?

We already paid them INR260 crores.

Okay. And sir, since we have very little cash left, what is your capex guidance for next year, sir?

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

We thank you very much for a very intelligent questions, and we hope that we have satisfied all the questions raised by our partners. Thank you very much.

Thank you, everyone.

Thank you, everyone.

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