Pokarna Limited (532486) Earnings Call Transcript
August 11, 2021
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to Pokarna Limited Q1 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.
Thank you, Janice. Good day, everyone, and a warm welcome to Pokarna Limited's Q1 FY '22 Earnings Conference Call. We have with us today Mr. Gautam Chand Jain, Chairman and Managing Director; and Mr. Paras Kumar Jain, Chief Executive Officer, Pokarna Engineered Stone Limited. I trust most of you have gone through the communication and the results presentation that has been sent to you earlier. In the interest of time, we'd like to commence with Q&As immediately. So I'd like to request the moderator to open the floor for question and answers. Janice, could you take it forward, please.
[Operator Instructions] The first question is from the line of Karthi Keyan from Suyash Advisors.
Can you talk about the value increase that is likely to result from the new facilities? You've talked about how the product will be of larger sizes and so on. So can we assume a higher realization versus in the past for the products that you'd be selling from the new facility?
Do you have any more questions or can I answer your question, Karthi?
I have a second question, which is related to the fixed costs in the new facility also sir. Can you talk about what would those be on an annualized basis just for reference so that we have a sense of what incremental cost there will be?
So answering your first question on the capacity and the likely realization from the Unit 2. So typically, this answer is also for the other participants who are listening to this. So the capacity ramp up at the new unit was partially impacted by the lockdown restrictions on account of COVID-19. And also, the revenues got impacted predominantly due to the shipping challenges, which we currently are facing like all other industries, which are dependent on container shipping. So on a peak capacity utilization basis, when the product mix is right, like as we mentioned in the past also that currently, we are going with basic designs. Now we are slowly moving to the mid-range designs. And then going forward, we'll also start taking up some higher realization designs, but that is still to happen. Because of the shipping reasons, we have to typically manage our capacity utilizations and also look at the working capital. So when all these factors are normalized, you can expect a revenue of INR 400 crores to INR 500 crores depending upon the product mix coming from this unit. And that is also when the capacity utilization comes to the peak level.
If you don't mind the supplementary question, would FY '23 be a realistic assumption for full utilization of this facility, given the current demand visibility?
I think keeping the demand and the COVID uncertainty scenarios under constant assumption, I think FY '23 or maybe mid of FY '23, '24 -- early '24 can typically be the point where the peak numbers would come in.
Fantastic. Fantastic. And in terms of fixed cost because it's a bit confusing. The other expenditure has run up sharply from, say, INR 33 crores to INR 44 crores on a sequential basis. So it is -- and INR 5 crores out of that is being described as the one-off ForEx-related costs. So if you had to normalize the incremental cost from the new facilities, that will give us a sense of the economics of this unit?
So basically, if you look at the numbers on a typical basis, the capitalization happened in March '21. And -- for the first quarter when we actually depreciated the assets on a quarterly basis completely. So typically, around INR 4.47 crores increment is due to the Unit 2 capitalization, which is coming in. And similarly the finance expenses also have increased around INR 4.15 crores. And again, it is attributable to the new Quartz unit. And we've mentioned in the other expense includes a foreign currency loss of INR 5.3 crores. which is typically coming on account of the payment, which we made to one of our larger suppliers for this new unit when we settled their LC payment. So this typically, I think more or less, the items which are of nonrecurring nature seems to have been taken care completely now. So we don't believe that large items like what you had in this quarter, that there's a quarter under review, should occur in the other forthcoming quarters.
That's right. Right. One last thing...
Sorry. Yes, sorry, go ahead, please.
No. Go ahead. You continue.
And since you see that majority of the sales, unlike when we ship out of our Unit 1, which is in Visakhapatnam, is the cycle of sale is typically longer in when you ship out of Hyderabad because the containers move out of Mumbai Port and the transit from Hyderabad to Mumbai is -- we are rail and also dependent upon the situation at Mumbai port. Unlike Visakhapatnam where the revenue realization happens relatively quicker because we are just about 50 kilometers away. And the situation in Vizag is, as of now, not as worse as is in Mumbai. So that's also one of the reasons that while materials are being shipped out also, the sales cycle -- because the revenue recognition policy does not allow us to recognize the revenue until the required risk reward and control requirements are met.
Sir, the last thing, what would be the debt outstanding? And what would be the peak repayment this year?
Yes. I think about this year on consolidated INR 260 crores. About INR 260 crores is our peak debt.
Okay. Including the new CapEx you are saying, just INR 260 crores?
Yes. Hopefully. So this is typically when we say debt, this is typically when we talk about bank -- financial institutions. We also have a little investment from the promoters already, but that is anyways back to the bank borrowing.
So all told, what would the number be for modeling purposes?
Around INR 360 crores.
Around INR 360 crores. And what would you repay this year?
INR 12 crores.
For '22?
For whole financial year.
Yes, whole financial year...
Because the old plant has already been repaid. So now old plant more or less is debt-free already. This now debt relates to the new plant where we have a payment schedule of 8 years still left over.
I hope you report incrementally much better numbers.
The next question is from the line of Dixit Doshi from Whitestone Financial.
Sir, my first question is regarding in the annual report, it was mentioned that CVD and AD rates by USDOC subject to adjustment and the first review will happen in July. So how can this impact us? Or what is the current status, if you can elaborate on that?
Yes. Thank you for going through the annual report. And coming to your question on the CVD and AD review. As per the U.S. Department of Commerce set regulations, CVD and AD are subject to annual reviews and the annual review process is typically run by the department and they typically take an anniversary period. So already the CVD-related and AD-related initiation has started. And the department has just released the initiation notice and also has released another relevant data. And it's about 90 days during which you get a clarity and as to whether the proceedings are going forward or not going forward because Cambria has not requested for the CVD review this time. They have only requested for the AD review. And we had requested for the CVD review like others -- many others also did the same. And since Cambria has not requested for the CVD review, our counsels have withdrawn our CVD review as well. So it appears that we would not be part of the CVD proceedings currently. So it means that the status quo position continues as on the date today for the CVD. Now coming to the AD, the initiation notice has just been published, and the process is still not out. So it will take another month or so to get full clarity. And -- but we are fully prepared to answer all the questions, which USDOC has.
Okay. Second question was regarding the peak that you mentioned around INR 360 crores. So does this include the working capital loan as well?
No, this is purely the term loan and the promoter loan.
Okay. So -- and this term loan, INR 360 crores also includes the conversion of LC, which was going to happen.
Exactly.
Okay, okay. And just one question. I know it is too early to ask. But let's say, whenever in 2 years, 2.5 years, we reached the peak capacity utilization. Do we have the extra land at current facility to do the next round of CapEx?
Yes. So basically, when we plan any infrastructure, we always keep our future plans in mind. So we have enough of civil infrastructure and also related land in place, should we decide to expand in the future.
Okay. Okay. And so -- and how is the demand scenario, if you can just elaborate on that? Because one of your competitors who have also put up the Bretonstone Technology. So there were 2 new plants have come and one of the company have took over the other company. So can we assume that demand scenario is very strong from U.S. And once this container issue is sorted out, we can ramp up very fast?
So in terms of the demand scenario, definitely, like with any other building material today, the countertop industry in the U.S. continues to be strong. And there are supply chain disruptions, but otherwise the consumer sentiment is relatively strong. Demand doesn't seem to be a concern at the moment.
Okay. And one last question from my side. This quarter, the performance of the Granite segment is also decent. So can we expect a similar performance even going forward to continue?
Yes, more or less, it should be same. Again, subject to situation improving at the ports because most of the turnover in granite comes from block sales to China. But the situation of shipping is still very bad even for the bulk cargo exports. And the rates to China have more than not only tripled, but nonavailability of shipping is again another issue. But subject to things improving at the logistics, we hope to get the better turnover this year.
The next question is from the line of Utkarsh Somani from Money Bee.
Sir, my question is pertaining to the new product launches in the sink segment, sir, I wanted to know whether we are going to export these -- this for a domestic market? And can you also throw some light on the margin profile of these products?
See, basically, we are one of the first companies to bring up this product into the category. So right now, we are doing typically pilot testing and all in local markets. But as we are a SEZ and EOU unit, our focus is definitely exports. But currently, before going for the exports market, we are doing a lot of pilot runs in India with our dealers and others. So as the market catches up and the test results and the pilot results are encouraging, we'll take the product to the other markets. Already in terms of marketing and advertising, they're already talking about this product in the U.S. market as well. In terms of sampling and all that activity has all started. So that's the first part of your question. Second part of the question, again, the margin profile more or less will be similar to what we have.
Okay. And sir, what is the capacity in this segment? And whether -- like this is over and above the existing capacity or it is fungible?
See, basically, this is a number which I will not be able to share for competitive reasons, but we have enough capacity to meet the demand.
The next question is from the line of Sonaal Kohli from Bowhead Financial.
I have a few questions. Firstly, in the past, when the currency run rate was lower than today and perhaps the raw material inflation would have been also less, you would bring almost like INR 95 crores, INR 100 crores revenue run rate from the old plant at the peak. In light of the new current currency rate and increase in raw materials, what is this capacity capable of generating on a quarterly run rate basis in a normal quarter? This is my first question. The second question is, we have made an EBITDA margin of 29%, 30% in cohorts suggesting for ForEx. When this -- your new plant is fully operational and at full capacity and maybe the shipping rates are normalized, is 40% EBITDA margin a possibility for us? I'm not talking about now, I'm talking just in terms of possibilities, 4, 6, 8 quarters down the line. And then I have a few very -- more questions, but I'll ask them after this.
Okay. So coming to the revenue generation capacity, typically, it's predominantly dependent on the product mix and also within the product mix, also whether the thicknesses and also whether we are doing cut-to-size more or we are doing slab more. So given that the hospitality segment globally has still not recovered, so the -- getting the peak run rate what you saw in the past still looks to be a little tight. If the shipping situation is normalized, in terms of getting the containers available on time at the right price, so that the customer is able to ship the containers. The Unit 1 typically has an ability to produce anything between INR 75 crores to INR 85 crores on a quarterly basis. And anything upward that would typically warrant that we get the hospitality demand back into the channel, which, as you know, that in the tourism industry is still not picked up completely, a lot of renovation plan, a lot of commercial establishment plans are on the hold. So that is one part of your question. What was the other question, sorry?
The new plant also will typically give the same value.
So once the new plant reaches the peak level and has the right product mix, the numbers would be resonating the levels of Unit 1.
Sir, in the previous call 2, 3 years back, you had mentioned that your new capacity is 130% of existing capacities. So what am I missing here? Would the revenue be 130% of the existing? Or would it be similar to the existing?
See, basically, the numbers in terms of the nameplate capacities are higher, but then reaching on those numbers and getting the right product mix is first priority. So that when you are saying about 6 quarters, I don't see that we get that right product mix immediately in 6 quarters right now. It will take typically at least 6 quarters to get the right product. Post that, you can probably look at the coming numbers what you are asking.
I see. Sir, second question was that if we adjust for your ForEx losses and take it as a one-off, you reported a 29% EBITDA margin in your Quartz business. Once you are fully operational, whether it's 6 quarters away or 8 quarters away, whenever you get what you aim for when you set up this capacity, is it a reasonable assumption to assume a 40% EBITDA margin with the user robotics and assuming, obviously, the demand remains where it is? Or what do you say would be a reasonable case for it?
Typically, one of the important factors of EBITDA getting little contracted is definitely the polyester resin prices. The polyester resin prices are at the peak, I have seen at least in my career. So -- and the chemical prices, as you see, every other chemical is just about anything between 50% to 100% or 200% up from it's normal level. So unless the resin prices come back to a relatively normal level, getting to the EBITDA margins what you had seen, I think there are the days when you typically even saw 40%, 45% EBITDA margin. So I think our short-term target is to reach 35%. That's where we are focusing. And once the resin prices come to normal levels, probably there can be some increments from there.
Okay. But there would be some benefit of operating leverage, right?
And then you also have to see how much of that can be offset by the other factors, which are not in our real control.
Okay. Sir, further, what will be your recurring depreciation run rate? What this quarter reflect the normal depreciation Q1 or because the plant was not fully utilized, this was not a normal depreciation rate? Secondly, whenever you reach your full capacity and you take your working capital, what kind of interest cost would one assume, let's say, a few quarters down the line when you're taking your working capital rate?
Basically, the Q1 numbers are completely reflective of what you will see quarter-on-quarter because Q1 was completely -- the plant was capitalized in March '21. So what you see in terms of depreciation, about INR 4.5 crores is typically because of the new unit and another INR 4.15 crores of finance cost is because of the new unit. So I think you will see the similar numbers -- incremental number coming there.
So sir, is the plant running on 24 hours shift because depreciation is also a function of the number of shifts you may be running?
Yes. What you see is exactly reflecting what you're asking.
This is great. My last question, sir, in terms of including the working capital debt and promoter debt and all forms of debt. When you run your peak capacity, what is the peak that you have in mind? Would it be materially different than current or the cash flows would take care of working capital requirement -- incremental working capital requirements?
Typically, the promoter debt is around INR 100 crores, and the debt from the bank for the term loan is about INR 260 crores. So about INR 360 crores is typically the term loan what we are seeing. And working capital at the peak would be around INR 120 crores.
Okay. And when would you -- and safe to assume, I mean, if you do what you are saying, it gives us very significant free cash flow. What will you do with that? What you do with that total working capital debt? Or would you have some other plans as well?
Yes. I think all those are typically a function of when we will see that because today, I think the biggest challenge is to get over the shipping issues. So unless the shipping issues are addressed, all the other plans typically cannot take any shape. So I think our first focus is now to make sure that what we produce is what we are able to sell and ship out to the customers. And future plans, if there are any, definitely will come back and give an announcement about it.
And sir, shipping prices are totally pass-through or no? You also have to bear a brunt currently because of high shipping cost?
It depends. There are some contracts where we are obligated and in some contracts, it's a pass-through.
The next question is from the line of Hrishikesh Bhagat from Kotak AMC.
First, dwelling into this margin side on the -- I think there's some one-off related to, I think, ForEx-related. -- Is that largely pertaining to your Quartz segment only, INR 7.5 crores is only from ForEx-related?
Actually, you are not clear. Can you please come back?
The ForEx-related is -- ForEx loss of INR 7.5 crores, if I'm not wrong. Is it largely pertaining to your Quartz segment only?
No. That's -- what you see is both Granite and Quartz. So typically, what you see there is a consolidated number, out of which, the large number came from the Unit 2 of Quartz.
Okay, okay. So if I just look at it, broadly, then the margins adjusted for this should be upwards of 25%, probably 27% to 30%, between that range, adjusted for this foreign currency. Is my understanding right?
Yes, yes. If you look at -- if you adjust that item of foreign currency loss, what you see from Unit 2, then typically, there is an incremental addition of the number what you're talking.
The next question is from the line of Ayush from [indiscernible].
So my question is that the manufacturing plant, which you have come up with, how you are planning to utilize it? If you can throw some light on it, for example, that -- what you may be planning for production of the new product Bioquartz and Kreos?
See, basically, the first unit is in special economic zone in Visakhapatnam, and the second unit is an export-oriented unit. So our focus definitely -- the first focus is definitely to export as much as we can. And as you would be following us on social media, you will see that we are doing a lot more and more within India as well by bringing in our 360-degree model where we do complete management of 2 installation facility also. We are exclusive partner for the Quartz worked with IKEA in India. So the focus definitely is exports, but then we will also cater to the domestic demand as we are able to establish the category and create a niche for the product. And product creation from the Unit 2, it's -- as I mentioned to the previous question as well, it takes time because currently there's a lot of training, which has to be imparted to the -- all our team members and then we gradually move to the other levels of the product before we start really working on the more intricate design. I think we are, at least, 4 to 6 quarters away in coming to the peak levels with the right product mix.
Okay. Okay. So -- and my second question is that how you are planning to leverage your relationship with IKEA in the U.S.A.?
See, we always work on leveraging our every relationship. I don't want to be specific to any particular relationship. But given an opportunity, we'll keep exploring wherever the revenues are available.
The next question is from the line of Anand Jain, individual investor.
My first question is what kind of capacity utilization right now we are running at in a Quartz plant in Visakhapatnam and in Hyderabad?
We are running almost at the peak level in Visakhapatnam. In Hyderabad, because of shipping-related challenges, so we had to pay down our capacity. So it will take at least another couple of more quarters before we come to a 60%-plus number.
Okay. So it is immediately impacted by shipping, but I thought Hyderabad must be used so we can ship for the JNPT. And is that not sustainable?
Basically, today, I don't think any particular location can be the easy way of shipping unless you are actually at that location. So whether it is Visakhapatnam, Gujarat, Chennai or any other port on east also, the situation is same. It's a complete chaos in the shipping line business as of now.
Okay. So the other question is if you can speak something on how are you looking at the India growth and the prospects in India because yours is like one of the best brands in Quartz -- I mean, even a lot of developers who I've spoken to are aware of Pokarna and are really interested in what we do, what we make. So can you just speak something on how we are looking at the India growth plan?
See, basically, Pokarna as a brand is about 3-decade-old in the building industry. So builders know us from our granite business and now they also know that about -- for a decade, now we bring also Quartz surfaces. And millions of square foot of our project is already installed in various projects in India, especially with the prestigious different ventures in south of India. And now with the 360-degree model, we are trying to bring experience, which the consumer has in the developed nations like Europe and U.S. where we typically go to the home of the consumer and just twice -- And the first time, it is 1 hour and the next time, it is around 4 to 5 hours. So typically, in 6 hours, you have all your kitchen countertops installed completely and without any mess at the site and because we bring the completely finished product, packed in the world class way is delivered to the consumer in the right way. And then we don't create any mess. And of course, overall, we also provide a 10-year warranty and we use non-VOC glues and all that. So -- but then all this has a cost. And we do compete in the local market with the manufacturers who have deployed Chinese machineries and have a different product profile. So that's a place where we compete with them. But the people who understand the difference between a good and the best product typically look for always the best and they come to us. So we don't want to commoditize our product in this market because we believe that there's a lot of value proposition decision, which we bring on to the table. So India is a growing market and it will definitely take some time before it becomes a major part of our revenues.
So my question is this, that we have a lot of these shipping issues and container issues. Can we divert and Hyderabad not being an SEZ location, how much of your Hyderabad capacities can we divert to the local market?
Typically, if the local market is able to take the entire capacity, we can divert it, but that's more hypothetical in nature.
No. Probably from a demand side I'm trying to understand. Demand side for our product, how much of that...
I don't see that demand for about close to 10 million square foot is available locally is what my understanding is.
Okay. And how much are we supplying locally if you have any numbers on that?
I think I would refrain from giving those specific numbers. Thank you.
But we -- but are we seeing an uptick on the domestic market from our company? Is that right?
Yes, that's what is our insight.
The next question is from the line of Riken Gopani from Capri Global.
Sir, I just wanted to understand, in the U.S. market currently, what kind of competitive scenario are you seeing in the Quartz business? And who are the key competitors? And in terms of realization, what are the key trends that you are seeing in the U.S. market, if you could elaborate on that?
See, typically, we compete with the large players in the industry. And our customers typically are big boys of the industry. And we also distribute through certain specific channels around Quantra brand as well. So be it the [indiscernible] of the world to LG, and the others we compete with them in the U.S. market. And in terms of competitive trend and realizations, it all depends upon which market you are concentrating because there are some pockets where typically the focus of a particular product design is higher. And there we -- because of our specialization in the manufacturing process, we are able to get a little more realization. And then there are certain products where the product profiling does not completely differentiate you from others. And there, the realizations are on par with the competitor. So it depends upon which pocket you are and what type of product you are presenting. But we typically try to refrain from the basic range of the products because that is something where there is too much of competition. And there's little value, which we can add to that type of a product.
Right. Right. So -- but in the current scenario, are you -- given the kind of demand environment for building materials we are seeing in U.S., has that helped in terms of the competitive intensity being moderate or pricing being more firm? Any specific trend or it's sort of business as usual. I mean, if you could share some things there.
I think because of the shipping situation, while the demand is there, that -- it's not completely translating into the numbers for many of us because consumer continues to ask the material, but the material is typically not available because they're not able to ship more material. So it's not completely translating into the gains for anyone in the channel.
Understood. Understood. And second, sir, with the new capacity coming on stream, are we also making any changes to our distribution framework in the U.S.? Or how -- what kind of network do we have? And what kind of scale-up do we expect to make over there? Or it is going to be the current like foot steps?
So as I mentioned that we have a good OEM model where we work with the big boys of the industry and do the white label manufacturing for them. And then we also focus on building our own network of Quantra. So I think in line with that class, we'll continue to have a balanced network of OEM and brands. There'll not be a significant change than what you currently see.
The next question is from the line of Sachin Kasera from Svan Investment.
I had 2, 3 questions, mainly for the domestic market. Sir, is it that we have exclusive tie-up with IKEA in the sense we can only sell through IKEA? Or they are just one of the relationships that we have as far as the domestic market is concerned?
Yes. So you want to ask other 2 questions or should you want me to answer this one first?
No, first, if you can answer this one.
So IKEA is one of our relationships. The exclusive tie-up is for the Quartz surface, which they have to buy from us. So there's no obligation for us to not supply to the other. The 360-degree model, what we have brought in into India, we are servicing beyond IKEA as well. So we are doing a lot of -- like if you go to our new website, quantra.in, you can look at where to buy. And you'll see that you can buy in several places today in India. Very shortly, we'll be having many more in Mumbai as well. You can see that you can buy a product in Cochin, Hyderabad, Ludhiana, Mumbai, Goa, Ahmedabad, Khanpur. So like this, we are building up a network today of kitchen studios where the product is available for experience. So you can typically walk in, see the product, feel the product and then buy that through the channel. So we are doing both the sales through channel and also where we are not directly present or through a channel, we typically would sell out of Hyderabad. But today, like even if you're in Kanyakumari or Srinagar, you can order a countertop and the 16th today, you'll have the countertop installed at your place.
Sure. That's great. Secondly, in terms of pricing and realizations, sir, is the Indian market now competitive with the export realizations or India being a little low-cost economy, you have to price it at a lower price?
So it depends upon the product also again, Sachin, in this case that -- but again, since we are doing a lot of investment in creating the marketing channel, so realization may not appear to be same if you really factor in those all marketing and promotions because we are doing a lot of display at the store where you can see a large piece of stone. It's not just a small piece of stone. We are investing in bringing the experience at the center, so that requires a little of marketing expenses as well. So if you compare for those, you'll not see -- you'll see that the realizations will typically be a little lower than what you see in the domestic market where the efforts to sell is relatively lower.
Sure. And from a 4- to 5-year perspective once the market matures and stabilizes, do you think the domestic market can be a significant part of the revenue as far as the Quartz business is concerned?
Yes. So that's what our strategy is also that to develop a good portion of our revenues to come from the domestic market. But of course, domestic market will never be of the size of the export market. But I can't crystal-clear today what will happen at 5 years. This is what I understand from the current trend.
But you are seeing that the Indian market is maturing, and you see there's going to be a good traction in the overall Quartz market in India in the next 4, 5 -- the way the market is...
We see a good indicator of traction. And that's the reason we are looking at creating that niche product segment in the category.
Sure. And just lastly, in terms of the 4, 5 years from now, the mix between institution versus your own brand or retail. Is it that the focus is more going to be retail or is going to be like a balanced mix? How -- what is our internal strategy from a 4- to 5-year perspective?
Typically, I think the mix would continue to be what you see today.
The next question is from the line of Sonaal Kohli from Bowhead Financial.
Sir, I wanted to understand, do we have any data on the size of the Quartz market in India? Would you be the biggest player in that? Or would it be some trader importing from outside or some other Indian player? And do we have any data on the growth rates of the market or any potential study where any consultant, how big the market could be 5 years down the line?
We have not commissioned any research on this typical segment as yet. And so I'm not privy to any research report, which says that the market size is this much of this. So we typically see the building material as a category where we can focus, and that's a huge category. So I don't have an absolute number with me at the moment. And I don't see there are any authentic research reports available. There could be many other who publish it on that. I think marketresearch.com and all those guys, they gave some indicators, but I don't believe those indicators are completely rational. So I don't think I'll be able to give you an accurate answer on your question.
So since you were short-term capacity for last few years for most of the period. And obviously, exports were the priority in a larger margin business for you. Is it safe for them then to say that you may not be the largest player in India and as of now and there could be a few players bigger than you because of lack of capacity, even if your product and reach may be better than that?
As I mentioned in my previous call that export has been our focus. So there could be some players whose focus only in the Indian market. And I'm sure there are some players who are focusing predominantly or at least largely on the Indian market. So there could be some potential players with -- who've got higher concentration of revenues coming from the Indian markets.
Lastly, when you see 3 years down the line, whenever you are fully running, how do you see a breakup in your revenue between Europe, U.S. and India? Would Europe have a significant increase in share or not? How are you looking at your business model from a 3-year perspective?
Typically, we believe that U.S. will always be the largest share of our revenue. And Europe may not necessarily have a largest chunk. So U.S. is where -- I would rather say North America will continue to be the largest player in our entire sales portfolio.
Sir, one more question. Considering if ships are fully available, why would it take you 6 quarters to run full capacity at least for the normalized products, let's say, by December quarter or by March quarter if the ships are fully available, considering the pent-up demand, et cetera, wouldn't it be possible for you to reach, at least for the normalized product, not the high-end customized products, beats your full capacity utilization in that time frame itself, subject to obviously your limited shipment?
I wish I could do what you say, but it takes a lot of time to train people and have a right product mix develop because it is not just like a printing tile, what you see in the ceramic industry that you just put a design and every tiles comes out like a print. It's a manufacturing process. It takes a lot of research and development, and it's a full broad product. And we stand behind what we sell. So we just don't sell whatever we produce. So it has to meet our quality expectations. It has to be certified by various international bodies. So it takes time. I'd be more than happy to get you the numbers what you're asking. But then it's not how it works. Typically, 15 to 18 months is a period by which the stabilization and the right product mix comes in.
And lastly, sir, is there any scope for you to add capacities? And if a situation arises 4, 6 quarters down the line, and how quickly could that be done a 10%, 20% increase in capacity. Is there any scope of that?
I just mentioned, I think, partially about this in some of the previous questions. We have infrastructure in place in terms of civil infrastructure and the land availability to expand, should the opportunity be there. Whether it will take -- whether I can add 20% in short time, whether I can add 40%, it depends upon what type of expansion we are doing. But I think whatever way you want to do, it's not possible to turn around in 3 or 6 months. This is typically a little longer gestation projects. Typically, it takes between -- anything between about a 1 year to 15 months to get the right infrastructure installed and commissioned.
The next question is from the line of Dixit Doshi from Whitestone Financial.
Sir, first question was since this new plant has a different product than the Unit 1 we'll be selling to the same customers, the new product as well? Or it's all together a different customer we have to target?
I think, Dixit, I answered this question. So let me first clear the misconception. The product is not different. The designs can be different from what we have. So it's all cost of this product, but the level of detailing and all that can be a little different based on the robotics output. So it's not that the products are different.
Okay. Okay. And sir, one last question from my side. So how do you -- in the earlier years, 2, 3 years back, we were planning to sell the textile division, but then we didn't get any buyer. So why we are not closing it down rather than selling?
We don't want to do a distressed sell, of course, because we have good quality of machines. And we'll see if we can tie up or use them rather than doing a distress sell. So we are waiting for a right customer or maybe revival is possible.
And you would be saying that typically, the amount of cash burn in that has come down dramatically. So I think we have good fixed assets there to monetize in the right way.
Ladies and gentlemen, that was the last question today. I would now like to hand the conference back to the management for their closing comments.
Thank you, and I hope you guys are keeping safe in this time and look forward to catching up with you guys again in the next quarter. Stay safe.
Thank you. On behalf of Pokarna Limited, we conclude today's conference. Thank you for joining. You may now disconnect your lines.
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