Apcotex Industries Limited — Q3 FY26

Apcotex Industries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=RhtBCPwMnLE Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to the Q3 and 9M FI6 earnings conference call of Epcotex Industries 0:09 9 seconds Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation 0:18 18 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0:25 25 seconds zero on your touchtone phone. Please note that this conference is being recorded at this time. I would like to 0:32 32 seconds harm the conference to Miss Purwangi Jane from Welcome Advisers. Thank you and u ma'am. 0:40 40 seconds Thank you. Good afternoon everyone and a warm welcome to you all. My name is Purvangi Jan from Ballerim Advisors. We represent the investor relations of 0:49 49 seconds Abcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and 9 months of the financial year 2026. 1:01 1 minute, 1 second Before we begin, a quick cautionary statement. Some of the statements made in today's concord may be forward-looking in nature. Such forward-looking statements are subject 1:10 1 minute, 10 seconds to risk and uncertainties which could cause actual results to differ from those anticipated. 1:16 1 minute, 16 seconds Such statements are based on management's belief as well as assumptions made by and information currently available to the management. 1:23 1 minute, 23 seconds Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's 1:32 1 minute, 32 seconds earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. 1:40 1 minute, 40 seconds Now I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We 1:48 1 minute, 48 seconds have with us Mr. Abira Choki, vice chairman and managing director and Mr. Vive Takur, Chief Financial Officer. 1:56 1 minute, 56 seconds Without any delay, I now would like to hand it the call over to Mr. Vive Takur for his opening remarks. Thank you and over to you sir. 2:05 2 minutes, 5 seconds Thank you Purwangi. Good afternoon everyone. It is a pleasure to welcome you all to the earnings conference call 2:12 2 minutes, 12 seconds for the third quarter and 9 months of the financial year 2026. 2:17 2 minutes, 17 seconds I hope you all had a opportunity to review the financial statements and earning presentation which have been circulated and uploaded on our website and the stock exchange. 2:28 2 minutes, 28 seconds Let me provide you with a brief overview of the financial and operational highlights for the third quarter and 9 months. Beginning with the quarter, our 2:38 2 minutes, 38 seconds total volumes have grown 10% year on year. However, the operating revenue stood at INR 332 crores which is a decline of 7% yearon year. 2:51 2 minutes, 51 seconds Despite the volumes growing 10%, the decline in revenue is because of the overall fall in raw material and consequently finished goods prices. 3:01 3 minutes, 1 second Operating IITA for the quarter increased significantly to INR 44 crores. 3:07 3 minutes, 7 seconds This compared to 27 crores in quarter 3 of FI25 represents a very strong year-on-year growth of 61%. 3:15 3 minutes, 15 seconds This growth is driven by higher volumes, improved margins and operational efficiency. 3:21 3 minutes, 21 seconds The EIA margin expanded to 13.12%. 3:26 3 minutes, 26 seconds Profit after tax for the quarter was 22 crores which was up 91% yearonear. Uh the packed margin at 6.7% per 6.7%. 3:39 3 minutes, 39 seconds This reflects very strong profitability and operational efficiency. 3:44 3 minutes, 44 seconds This quarter we also had a exceptional item uh which relates to onetime provision of 4.8 crores in accordance with the new wage code notification. 3:56 3 minutes, 56 seconds We are also pleased to inform that the company continues to remain net cash positive as of 31st December 2025. 4:03 4 minutes, 3 seconds This demonstrates sustained financial discipline and a good cash generation. 4:08 4 minutes, 8 seconds The board has also approved an interim dividend of INR to 2 rupees 50% of per equity share underscoring our commitment to shareholder returns. 4:20 4 minutes, 20 seconds Update on anti-dumping duty. If you recall during September quarter the director general of trade remes 4:27 4 minutes, 27 seconds had issued final findings on anti-dumping duty case. The duty notification from finance ministry was 4:34 4 minutes, 34 seconds expected in December 25. This however is not yet notified. 4:43 4 minutes, 43 seconds We've started implementation on all previously sanctioned projects for rupees 210 crores. 4:50 4 minutes, 50 seconds Now coming to the 9 months number, the company achieved its highest ever sales 4:56 4 minutes, 56 seconds volumes up 15% yearon year and highest ever export volumes up 21% yearonear 5:04 5 minutes, 4 seconds which reflects robust success in both domestic and international markets. 5:10 5 minutes, 10 seconds The operating revenue stood at,044 crores broadly stable yearon year while 5:17 5 minutes, 17 seconds operating IITA has grown 42% yearonear to 123 crores. The ITA margin for this 9month period is 11.75%. 5:27 5 minutes, 27 seconds This was supported by volume growth, better margins and higher capacity utilization. 5:34 5 minutes, 34 seconds Profit after tax for the 9 months increased by 79% yearonear to 67 crores. 5:40 5 minutes, 40 seconds Profit after tax margin is 6.39%. 5:46 5 minutes, 46 seconds During this period company reduced debt by around 94 crores which highlights very strong cash generation and good financial discipline. 5:56 5 minutes, 56 seconds The performance demonstrate the effectiveness of our strategy which is focused on volume growth, margin expansion and operational efficiency. 6:05 6 minutes, 5 seconds We are also pr proud to share that the company has received CI award for top 100 most innovative companies. 6:13 6 minutes, 13 seconds This reaffirms our commitment to innovation, technology development and self-reliance. 6:19 6 minutes, 19 seconds With this now I open the floor for question and answer session. Thank you. 6:28 6 minutes, 28 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 6:36 6 minutes, 36 seconds star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 6:45 6 minutes, 45 seconds requested to use handsets while asking a question in order to ensure that the management will be able to address questions from all the participant in 6:54 6 minutes, 54 seconds the conference. Kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. 7:02 7 minutes, 2 seconds Ladies and gentlemen, we will wait for a moment while the question Q assemble. 7:15 7 minutes, 15 seconds The first question is from the line of Adita Ketan from Smith Institutional Equities. Please go ahead. 7:23 7 minutes, 23 seconds Yeah, thank you sir for the opportunity. 7:25 7 minutes, 25 seconds So just a couple of questions. Uh so during this quarter like we have seen overall commodity chemical companies 7:33 7 minutes, 33 seconds quite struggling because of falling prices of raw materials like stylo nitrine. Most companies are factoring 7:40 7 minutes, 40 seconds inventory losses. On the contrary s our numbers look better like prices although have declined but there is a more steep 7:47 7 minutes, 47 seconds decline in prices of raw materials contributing to epida. 7:52 7 minutes, 52 seconds Just want to know how these numbers are shaping up and what are the benefits you have taken in raw material which has improved your eida on sequential and on y. 8:03 8 minutes, 3 seconds Yeah thank you. Thanks Aria. Um this is a choki. Thank you everyone for joining. 8:09 8 minutes, 9 seconds So to answer your question Arita, it is been a challenging quarter and we have also taken a hit on on raw material 8:17 8 minutes, 17 seconds pricing uh because of the drop you know and of course things are changing now I would say December Jan onwards uh because of the oil uh price increases 8:26 8 minutes, 26 seconds and the rupee depreciation again prices have sort of started moving up quite sharply but I would say that started towards the end of last quarter uh 8:34 8 minutes, 34 seconds meaning this Q3 um I think we've managed it well in spite of some loss loses due to uh due to the sharp fall in prices at 8:43 8 minutes, 43 seconds the beginning or first half of the quarter. 8:46 8 minutes, 46 seconds Our team has managed quite well and we have managed to hold our prices and taken some advantage of the drop in raw 8:53 8 minutes, 53 seconds materials. So that's helped us and as you can see that uh in spite of all of that our operating epida uh has been 9:01 9 minutes, 1 second better this quarter than I would say the last you know six seven eight quarters probably. 9:09 9 minutes, 9 seconds Just a follow up onto this. So uh so the main contributor of your AIDA in this quarter would be the nitroic because 9:16 9 minutes, 16 seconds earlier that segment was not able to contribute on AIDA and now prices uh how are how is the moment in prices and what 9:24 9 minutes, 24 seconds contribution in AIDA or is there any any other segment like which is contributing like your synthetic latex any other segment NBR which is contributing to 9:33 9 minutes, 33 seconds AIDA? Yeah, look as the volumes go up you know as I've said before in our kind of business uh as the volumes go up 9:40 9 minutes, 40 seconds obviously contribution goes up you know in terms of total contribution not percentage I'm saying of course in this case in this quarter even the percentage 9:47 9 minutes, 47 seconds has gone up uh and so that automatically automatically increases uh eida as well but besides nitral latex which definitely has seen a turn turnaround in 9:56 9 minutes, 56 seconds the last 6 months um not to the extent uh that you know we would have hoped or it's not precoid levels yet but 10:03 10 minutes, 3 seconds certainly better than the last couple of years. Uh in addition to that I think you know we also had u a lot of excess 10:11 10 minutes, 11 seconds capacity created by us and some of our competitors or one specific competitor in India. So the paper um the paper 10:19 10 minutes, 19 seconds segment also the margins were very muted for the previous couple of years I would say and and you know I would say almost an unhealthy levels they've gone back to 10:27 10 minutes, 27 seconds sort of reasonably okay levels. So paper has also helped um to some extent uh one 10:35 10 minutes, 35 seconds or two other segments like construction also has helped. So I I would say uh no not construct I think more about rubber the rubber segment also we've seen a 10:43 10 minutes, 43 seconds better improvement in margins because we're running at full capacity there. So I think as capacity utilization has gone up we have tried to extract maximum 10:50 10 minutes, 50 seconds margins customer mix has improved product mix has improved you know all these levers come into play when capacity utilization is at a high higher 10:59 10 minutes, 59 seconds sort of right high level so I would say it's a bunch of things it's not just one thing sorry it's a long-winded answer I know but it's been a bunch of things 11:07 11 minutes, 7 seconds along with some of the costsaving measures that we taken so everything is sort of coming together and you know it's looking reasonably good this this 11:14 11 minutes, 14 seconds quarter where we have had a bit margins of or 13%. 11:20 11 minutes, 20 seconds Got it. Got it. So just one uh second question s I remember one two years back you mentioned like the sustainable aida 11:28 11 minutes, 28 seconds margins would be around 12 13%. Now in this quarter we have achieved this to 13%. And you are saying paper segment construction are still struggling. So 11:37 11 minutes, 37 seconds suppose if that segment comes back in terms of demand so meaningful come back in demand you see further improvement in margins from here on or or we are 11:45 11 minutes, 45 seconds standing at the peak. No. So I think um no I didn't say they were struggling. 11:49 11 minutes, 49 seconds Sorry it make I think I said that they were struggling. They've done better now this quarter. Uh especially paper is one I'd want to call out. Uh I think that uh 11:58 11 minutes, 58 seconds as volumes go further up we still have in the next one year we uh we have capacity utilization automatically you know more volume gets added more 12:06 12 minutes, 6 seconds contribution gets added automatically AIDA goes up and Eida margins will also go up. Um so I think there is still some 12:13 12 minutes, 13 seconds leeway. Of course you know there is a lot of uncertainty in the world as as you can see and I think we've managed it 12:20 12 minutes, 20 seconds so quite well so far but of course you look in the short term there can be issues of suddenly runaway prices of you know raw materials and certain things 12:28 12 minutes, 28 seconds could happen in the short term but in the as I said before that you know anywhere between 13 to 16% 12 to 16% is 12:35 12 minutes, 35 seconds you know we could margins for us um and I think we'll try and endeavor to do a little bit better than this quarter as person. 12:45 12 minutes, 45 seconds So just one last question. Sorry. Please for more question. 12:51 12 minutes, 51 seconds Let him finish one last question then we can move on to the next caller. Sorry Adita but you know we want to give everyone a chance. So yes sir thank Yes sir. So my question 12:59 12 minutes, 59 seconds was on to the anti-dumping duty. You had mentioned that December 25 government was to notify for the duty. Sir, we have 13:06 13 minutes, 6 seconds seen like in other chemicals also whether it is rubber chemical, soda, the finance ministry has not imposed the anti-dumping duty but the digit has in 13:14 13 minutes, 14 seconds our case also like there is a delay. Uh so what is your opinion whether this would be not imposed now and and if it 13:22 13 minutes, 22 seconds is not imposed what happens to our expansion plans of NBR? 13:27 13 minutes, 27 seconds Look, I mentioned this last time that this anti-dumping duty was always uh you know we had asked the government for this anti-dumping duty because we felt 13:34 13 minutes, 34 seconds that the Indian industry needed to be supported. We are the only manufacturers of NBR. We have not filed any anti-dumping petition for any other 13:42 13 minutes, 42 seconds products of ours where we have local competition. In this case, we are the only manufacturers of NBR. If we cannot sustain this plant, India will have no 13:51 13 minutes, 51 seconds manufacturing of NBR which I think is a very important synthetic rubber for uh for all uh several segments including 13:58 13 minutes, 58 seconds auto agri um you know gas horses several segments industrial products. So, you know, we wanted some help from the 14:06 14 minutes, 6 seconds government to and of course the DGTR did agree with us on most fronts and uh on several countries the anti-dumping duty 14:13 14 minutes, 13 seconds was imposed uh or was recommended rather but it has not been notified by the finance ministry. Our expansion plans continue nonetheless. uh we have found 14:23 14 minutes, 23 seconds an innovative way to expand our product our our our uh volumes by almost 80 90% 14:31 14 minutes, 31 seconds in in a much lower capex cycle because of a capex um amount than what we had initially envisaged 2 years ago. The 14:40 14 minutes, 40 seconds reason why we didn't do it 2 years ago is because at that time you know we were thinking it'll be 200 250 crores now we're able to do it for maybe 130 140 crores. So we are going to do it for 14:48 14 minutes, 48 seconds much lower and we think the ROC's and the um you know and the margins even 14:56 14 minutes, 56 seconds currently without anti-dumping will support that um we would have hoped that the government would have supported us further but um but it's the expansion 15:05 15 minutes, 5 seconds plans continue nonetheless and and to answer your question I don't know what's going to happen honestly we are still you know along with the rest of the industry as you said it's not just been 15:13 15 minutes, 13 seconds us but I would say a majority about 80 to 90% of the cases in the last 3 months have not been notified yet. We don't know whether that means an outright rejection. We don't know if it's a 15:21 15 minutes, 21 seconds delay. Um we do not have communication yet from the finance ministry and we're trying to work through it. Got it. Thank you, sir. 15:30 15 minutes, 30 seconds Thank you. 15:33 15 minutes, 33 seconds Thank you. The next question is from the line of KK Panda from BHL. Please go ahead. 15:40 15 minutes, 40 seconds Uh thank you. 15:46 15 minutes, 46 seconds Sorry to interrupt. Uh Mr. Panda, we are unable to hear you. Are you able to hear now? No. 15:54 15 minutes, 54 seconds Okay. I'm just getting uh now are you able to hear me? Yeah. Yeah. Please go ahead. 16:01 16 minutes, 1 second No. First thing I wanted to know about the wind energy. You had invested about couple of years back in wind energy. How 16:10 16 minutes, 10 seconds is your finance? Is it uh paying off that investment or you are able to check 16:18 16 minutes, 18 seconds out how what is the benefit? How much have your financial benefit out of this uh wind energy project? 16:26 16 minutes, 26 seconds Uh you had invested in the wind some wind energy. Uh so what is the status financially? 16:37 16 minutes, 37 seconds So I'm not sure what you're referring to but we have one windmill which uh which is a small percentage of our total 16:44 16 minutes, 44 seconds consumption which is a captive windmill um where we get credit in our Maharashtra factory we uh and that's in 16:51 16 minutes, 51 seconds Maharashtra the windmill of course that was more than a decade ago if you're referring to that I think maybe I'm not referring to that I'm referring 16:58 16 minutes, 58 seconds to about 3 four years ago you had some there was some uh company wind energy company in which you had invested about three cr or so. 17:09 17 minutes, 9 seconds No, no. So that not 3 four years ago. 17:11 17 minutes, 11 seconds This was announced only a couple of quarters ago where we had taken board approval to invest that investment will be completed by the end of this 17:19 17 minutes, 19 seconds financial year and we should start receiving um you know the the the credits that is in Gujarat. Yes, you're 17:27 17 minutes, 27 seconds right. That's about 3 and a half cr investment and we should receive the credits starting from uh sometime early next year. The exact date is not out yet. So that's not yet started. 17:39 17 minutes, 39 seconds Okay. A second thing I wanted to know your expansion plan. You had to said in the last quarter of 26 27 you'll be 17:47 17 minutes, 47 seconds completing your expansion plan and with that the turnover would increase around 200 kores. Uh what is the status of 17:56 17 minutes, 56 seconds progress? Is it on time online or delayed? 18:02 18 minutes, 2 seconds So we have started the project. Uh yes our endeavor is to complete it by the end of the next financial year which is 18:09 18 minutes, 9 seconds FI27. We expect sometime between March April of the year 27. Um around that 18:16 18 minutes, 16 seconds time we have three or four three different projects three four different projects ongoing. So they will start commissioning slowly from the end of 18:24 18 minutes, 24 seconds this year to maybe you know April of next year. Um that's on track. We are uh we have already started the investment 18:33 18 minutes, 33 seconds cycle uh and the planning the some of the long lead item POS uh have all been done and just to correct you it's not 18:41 18 minutes, 41 seconds going to be about 200 crores it's it's likely to be uh around 550 to 600 crores that'll be added to the top line. Oh, 18:50 18 minutes, 50 seconds good. Anyway, best of luck. Hopefully you thanks. I My questions are my 18:57 18 minutes, 57 seconds questions are over and I hope by in 2627 the turnover would be round will touch 19:04 19 minutes, 4 seconds 2,000 kores. Are you expecting that in 2627? 19:11 19 minutes, 11 seconds Unlikely. Honestly speaking, unlikely because we don't have the like capacity and the prices remain where they are currently. I I don't think we'll reach 2,000 crores, but we'll definitely do 19:19 19 minutes, 19 seconds better than this this year. So, uh we'll continue to grow. Thank you. Thank you. 19:27 19 minutes, 27 seconds Before we take the next question, a reminder to all if you wish to ask a question, please press star and one. The 19:35 19 minutes, 35 seconds next question is from the line of Karan Sharma from Credent. Please go ahead. 19:43 19 minutes, 43 seconds Hi, am I audible? 19:46 19 minutes, 46 seconds Uh, yes, you're audible. Can you please speak a little louder? Yeah. Uh, my question. 19:55 19 minutes, 55 seconds Sorry, Karan. Can you please speak a little louder? We are unable to hear you properly. Sorry. 20:02 20 minutes, 2 seconds Can you use a handset note? Yeah. Yeah, please go ahead. Thank you. 20:07 20 minutes, 7 seconds So there uh in the last year call there was a duty that US had imposed on Chinese gloves for 100% it was supposed 20:15 20 minutes, 15 seconds to happen two times. So it was 50% last year and 50% was supposed to happen in January this year. So has that gone through? 20:23 20 minutes, 23 seconds Uh yes I believe that's now now in place. Yes, it's been imposed from January 26. 20:30 20 minutes, 30 seconds Okay. So uh what's the utilization in a Nigraics plant right now? 20:36 20 minutes, 36 seconds I would say for the YTD uh we are at about 70 75%. So around that much uh and 20:43 20 minutes, 43 seconds and the impression of Chinese duty has definitely helped some of our customers in Southeast Asia and South Asia and therefore we can see that our 20:52 20 minutes, 52 seconds utilization rates have also gone up. We you know we've continued to do that and I think by um next year we'll be at sort 21:00 21 minutes of full utilization or I mean we'll have we'll be at full utilization run rate at some point next year. Yeah. 21:07 21 minutes, 7 seconds Okay. So our clients are primarily the Malaysians or have we added uh any other new client as well from any other? 21:14 21 minutes, 14 seconds No all over Southeast Asia. I would say Malaysia, Thailand, Indonesia, Vietnam, uh Sri Lanka, India. India also has now 21:21 21 minutes, 21 seconds quite a few glove manufacturers that have that have increased their capacities and are doing reasonably well. So all over Southeast Asia and 21:29 21 minutes, 29 seconds South Asia, Bangladesh as well as one or two players. So uh that's great. 21:34 21 minutes, 34 seconds We're also exporting to Turkey. Um so I would say six or seven countries mainly. 21:41 21 minutes, 41 seconds Okay, great. Great to hear. Uh so my next question was that post this new expansion at WA would we be left with spare land for further expansion or if 21:49 21 minutes, 49 seconds in future we might have to then go for a new green field with land. 21:54 21 minutes, 54 seconds Um I think we will have some more land depending on what we want to expand in. Uh we will have some spare land. 22:02 22 minutes, 2 seconds Okay. I have uh one other question. Can I ask one? Sure. Go ahead. 22:07 22 minutes, 7 seconds Yeah. Uh so I was reading on a product called super absorbent polymers which is found in powder form used in basically 22:14 22 minutes, 14 seconds female hygiene products in our immersion polymer chemistry. Uh does that product fit in or this is something totally different from what we 22:23 22 minutes, 23 seconds do it I think it's completely different from what we do. I know it's uh it's been a product that's been of interest 22:30 22 minutes, 30 seconds to many people but yeah it's it's a different from what we do. 22:34 22 minutes, 34 seconds Okay. And uh means in future do we probably can we go into this product if the 22:43 22 minutes, 43 seconds um we we have not evaluated in detail but uh technology wise it's it's quite 22:50 22 minutes, 50 seconds far from what we do so uh but now that you mentioned it I'll look into it again. Okay. So not in our right. Yeah. 23:00 23 minutes Oh thank you. Thank you very much. 23:06 23 minutes, 6 seconds Thank you ladies and gentlemen. A reminder to all if you wish to ask a question please press star and one. The 23:14 23 minutes, 14 seconds next question is from the line of Chanpal Singh an individual investor. Please go ahead. 23:21 23 minutes, 21 seconds Hello am I audible? Are you ahead Mr. Singh you're audible. 23:27 23 minutes, 27 seconds Avid uh any views on the raw material security that you might be uh taking in 23:33 23 minutes, 33 seconds the future? Uh if you can expand on that what do you mean if I'm sorry I didn't uh actually the business is quite 23:42 23 minutes, 42 seconds volatile because of the raw materials prices are going up and down so any views or any efforts by the company to 23:51 23 minutes, 51 seconds get the raw material raw material security or backward or forward integration. 23:57 23 minutes, 57 seconds Ah okay. So see backward integration um we are not able to do with our major raw materials because there are you know petrochemicals uh which are part of sort 24:05 24 minutes, 5 seconds of you know big petrochemical plants or refining plants. Um as far as security is concerned in 24:13 24 minutes, 13 seconds general there there is for all our raw materials even though styine and acronitan are not available in India currently uh there is enough imports 24:22 24 minutes, 22 seconds coming in from countries close by and uh while there can be some short-term hitches you know like currently we're 24:30 24 minutes, 30 seconds facing that in styrene where uh you know a couple of plants large plants that supply into India have gone down together one was a plant shutdown one 24:38 24 minutes, 38 seconds the unplanned shutdown. So there are some shortages but short-term shortages are there but otherwise you know most of these raw materials that we have have 24:46 24 minutes, 46 seconds enough um capacity for our requirements and uh in general long-term there's been 24:53 24 minutes, 53 seconds we don't expect any issue there can be short-term issues as far as security is concerned security of raw materials the other question you asked is on raw 25:01 25 minutes, 1 second material price volatility now that's here to stay you know that's been going on for now 15 20 years uh you know I joined the business more than 20 years 25:09 25 minutes, 9 seconds ago and I've seen many cycles where you know prices have been you know from plus 25:15 25 minutes, 15 seconds minus you know 100%. Uh so that we have continued to manage and we manage it quite well. We able to pass along the 25:23 25 minutes, 23 seconds prices if the raw material prices go up and we are also forced to sometimes reduce our prices when prices come down drastically. So that's part of the game 25:32 25 minutes, 32 seconds and you know quarteron quarter those kinds of u you know pluses and minuses do happen in margin. 25:39 25 minutes, 39 seconds Okay. Any views of epco build? 25:43 25 minutes, 43 seconds Um no I mean continues to do okay. This year has been more challenging for us because we had a few years of good growth. It's still a small part of our business as I continue to say every 25:51 25 minutes, 51 seconds time. Um this year has been a little bit more challenging for us. uh I think a lot of competition has also come into the construction chemical segment in 26:00 26 minutes recently uh we are in a few geographies so the growth hasn't been as great as uh previously uh but uh we continue to sort 26:08 26 minutes, 8 seconds of push through it and focus on the margins there and you know there we're backward integrated into the polymers so that's where you know it's the it's the additional margin that we get by 26:16 26 minutes, 16 seconds supplying directly to uh to a few regions in western and central India so that's what we're focusing on 26:23 26 minutes, 23 seconds okay thanks thanks a Thank you. The next question is from the 26:31 26 minutes, 31 seconds line of Redra from Ithod Financial Consulting. Please go ahead. 26:39 26 minutes, 39 seconds Yeah. Hi, thanks for the opportunity sir and congratulations. 26:43 26 minutes, 43 seconds Great sir. Uh I wanted to get a qualitative outlook on different industries that we 26:50 26 minutes, 50 seconds are supplying our products. like you mentioned paper is coming back and uh so what's your outlook outlook on other 26:58 26 minutes, 58 seconds industries uh maybe nic latex glove suppliers or whatever else where we 27:05 27 minutes, 5 seconds supply our products I think see paper indust the industry the paper industry is still going through a tough time because the Indian 27:13 27 minutes, 13 seconds paper industry is facing a lot of dumping from what I understand uh so their margins are under pressure compared to the last couple of years is 27:20 27 minutes, 20 seconds what I understand from our customers What I meant was that our latex uh uh margins which were very low uh have 27:28 27 minutes, 28 seconds improved a bit because our capacity utilization has gone up and the extra capacities that were created at the same time are now you know at a higher 27:36 27 minutes, 36 seconds capacity utilization level. So that's what I meant rest construction continues to boom in India for us carpet uh carpet and textiles has been one industry that's actually been a degrowth for us. 27:45 27 minutes, 45 seconds I should have mentioned that earlier it's a good question. carpet, textiles and tire all three uh industries we have 27:52 27 minutes, 52 seconds seen a slight degrowth in volumes uh in this last quarter and I think even for the 9 month period flat mainly because of these tariffs from the US so a lot of 28:01 28 minutes, 1 second the carpet manufacturers not only in India but in the Middle East um have also been affected by these US tariffs 28:08 28 minutes, 8 seconds and the uncertainty around them. Uh same similarly with textiles and tires we see the same thing. Um but the but and 28:16 28 minutes, 16 seconds gloves continues to do well for us. The Chinese the US imposing Chinese anti the the the duty on Chinese gloves has 28:24 28 minutes, 24 seconds helped some of our customers in Southeast Asia and South Asia. So that's been a a good for us. Overall the glove industry continues to grow. Obviously 28:32 28 minutes, 32 seconds it's a essential medical um you know uh product. So I think that will continue 28:39 28 minutes, 39 seconds to grow at 7 8% uh year on year for especially for nitral gloves at least 7 8% if not 10 12%. 28:48 28 minutes, 48 seconds I hope that gives you a flavor of the different industries definitely and uh do you see uh the 28:56 28 minutes, 56 seconds demand supply situation uh getting better in nitratics? 29:03 29 minutes, 3 seconds I think look there's still globally an over capacity. Uh China especially has created a lot of over capacity. So we 29:10 29 minutes, 10 seconds could see some Chinese latex now come out and you know come into East Asia which was not Southeast Asia which was not happening earlier. Even so far we 29:18 29 minutes, 18 seconds have not seen that much but it could happen. So I think that will still take you know couple of years for for it to 29:25 29 minutes, 25 seconds go back to sort of precoid levels in terms of you know 80 90% capacity utilization levels. Maybe there'll be some consolidation. Some capacities may 29:34 29 minutes, 34 seconds even shut down which are not viable. The old ones uh recently in the last one year one capacity in Malaysia for example was shut down from what we 29:43 29 minutes, 43 seconds heard. Old plant not commercially viable. Um you know 25 year old plant plant I think it was now and so that 29:51 29 minutes, 51 seconds could happen and you know then margins could improve even further quickly but I think it's it's still over capacity and it may take another couple of years but at least right now the margins have 30:00 30 minutes improved for sure. uh for nitr latex and and the gloves from what I understand from what they were in 203 and 24 and 25. 30:12 30 minutes, 12 seconds Understood. Sir you also said uh sorry to interrupt Mr. Raha. Sorry to interrupt. Please rejoin the key for more questions. 30:20 30 minutes, 20 seconds Okay Mr. Ra you can finish your last question since you started I think we all know. 30:25 30 minutes, 25 seconds Yeah thanks. Uh you mentioned that we have done better on the rubber side as well if I'm not wrong. Could you provide more details on that? 30:34 30 minutes, 34 seconds I think look after uh sort of the pandemic we had a couple of good 30:41 30 minutes, 41 seconds years uh and then the margins were again uh depressed. Now I think margins are a little bit better. That's what I meant 30:49 30 minutes, 49 seconds compared to the last couple of years. Uh slightly better. But overall, as I said, we are still hoping for um you know, an 30:58 30 minutes, 58 seconds anti-dumping duty to be notified because it's been recommended and uh you know, there was a detailed investigation for a period of one year. Uh the the DGTR did 31:07 31 minutes, 7 seconds agree with us on most countries except one. They did recommend a reasonably good anti-dumping duty to support us for 5 years. We're not asking for it for 31:16 31 minutes, 16 seconds full you know forever but uh at least some support for 5 years to support an industry which is essential for India but uh but things are better for sure in the last 3 4 months. 31:29 31 minutes, 29 seconds Thank you. 31:31 31 minutes, 31 seconds The next question is from the line of sabra from QRC Investment Advisor LLP. Please go ahead. 31:39 31 minutes, 39 seconds Yes. Hi, thank you for uh giving me the opportunity. Congratulations on a very strong performance. Uh Aida, just one uh 31:46 31 minutes, 46 seconds request and a suggestion. Um if you could maybe more regularly disclose 31:52 31 minutes, 52 seconds utilization across lines or geography u it will sort of volume numbers because 32:00 32 minutes it will really help us appreciate if the business is moving in the right direction and what I mean is that sorry to interrupt sor we are unable to 32:07 32 minutes, 7 seconds hear you your voice is muffling. you I think I'm getting the gist of the question but it definitely is not clear very clear. Yeah sorry is this better? 32:15 32 minutes, 15 seconds Yes I think so. Go ahead. 32:17 32 minutes, 17 seconds Yeah so I was saying this is just one request if you could perhaps give us some more uh details on volume and 32:24 32 minutes, 24 seconds utilizations. Uh I think it will help us appreciate which direction the business is going in because we've sort of 32:31 32 minutes, 31 seconds obviously a long-term stated objective has been 13 to 15% marching something that you've said multiple times. we've reached it a few times and given the 32:39 32 minutes, 39 seconds volatility of I guess the end commodity and the raw material uh it's far more important for us to look at the spread than the percentage uh but we can't do 32:48 32 minutes, 48 seconds that if we don't have the volume numbers so if you could maybe consider in whichever way given the competitive let's say whatever you are comfortable 32:57 32 minutes, 57 seconds disclosing I think it then gives us a far better idea that you really should be margin aggregative uh I 33:06 33 minutes, 6 seconds mean nal latex let's say is a misfortunate event that otherwise should have been very profitable but is not. Um and you did allude to that outside of 33:15 33 minutes, 15 seconds night trial lex last quarter we were already at mid- teen kind of margins if I remember correctly. So you know this will just help us understand where the 33:23 33 minutes, 23 seconds business is going when the leverage sort of kicks in and what we should expect. 33:28 33 minutes, 28 seconds So otherwise uh I mean I guess all other questions have been answered. I do hope you would consider doing this. 33:34 33 minutes, 34 seconds Sure. So sort of a fair question and honestly you know as a company we try to be as transparent as possible but as I've said again before that we try and 33:42 33 minutes, 42 seconds balance out you know um revealing all numbers because there's also something you know that we also have to worry 33:49 33 minutes, 49 seconds about competitive uh what we information we're providing to competitors through these uh you know through these very transparent dealings with investors and 33:57 33 minutes, 57 seconds analysts and that is actually counterproductive uh in the long run. So the reason why we 34:04 34 minutes, 4 seconds don't give volume numbers because specific volume tonnage numbers is because we are in so many different industrial segments and it could happen 34:12 34 minutes, 12 seconds then you know once you go down that rabbit hole of revealing volumes then you know it's easily decodable for some of our um uh for for some of our 34:22 34 minutes, 22 seconds competitors. I'm being very honest here and but you know we do provide volume growth overall uh because we do want to 34:29 34 minutes, 29 seconds give the investors and analysts a flavor of you know like in for example this quarter the revenue growth if you were just to see the revenue growth from the 34:36 34 minutes, 36 seconds numbers it's flat but if but we've actually grown in volumes for the first 9 months we've grown at 15% but the revenue has been flat so that's the kind 34:45 34 minutes, 45 seconds of flavor that we do provide as far as capacity utilization is concerned I think we've been quite transparent but noted and what we'll do is in the um 34:52 34 minutes, 52 seconds perhaps Vive in your you know opening remarks or in the investor presentations we can maybe we can give a flavor of the 34:59 34 minutes, 59 seconds capacity utilization of the various product lines. 35:03 35 minutes, 3 seconds Yes that will be helpful at least it gives us a handle like I said that the business is actually because it exactly like you said it feels like the business 35:11 35 minutes, 11 seconds is in much better shape it was than let's say two quarters ago. Uh but it you something that uh doesn't come out in the presentation or in the speech. So this will be highly appreciated. 35:22 35 minutes, 22 seconds No take. Thank you. Just to answer your question, we for for NDR we at 100% capacity utilization. We have been now for the 35:30 35 minutes, 30 seconds whole year. Um for nitrial latex we're at about 75 70 75% capacity utilization. 35:38 35 minutes, 38 seconds Uh 75 perhaps closer to that for the for YTD I would say the numbers. Uh for the other products which is construction, carpet, paper, textiles, you know, we 35:47 35 minutes, 47 seconds it's all one plant. uh and overall there also we are at about 85 87% capac capacity utilization. So for nitral 35:54 35 minutes, 54 seconds latex and for um you know other synthetic latex products we have one at least one year of growth uh left and 36:01 36 minutes, 1 second then obviously new you know the new capacity will come on stream NBR we already out of capacity but that capacity won't come on stream for another year. Um 36:11 36 minutes, 11 seconds yeah I think I I think those are the three main product lines. Uh we also have a separate tire cord which is almost at again 85 90% capacity 36:20 36 minutes, 20 seconds utilization but that's a little bit of a swing plan we can use it. So just broadly we're at very high capacity utilization levels currently uh we have 36:28 36 minutes, 28 seconds one year of growth left in uh the latex side uh and then we'll have new capacity come on. 36:35 36 minutes, 35 seconds Great. And so just then uh sort of addition to that so this does mean that you can further optimize on clients on slightly higher margins or better terms 36:43 36 minutes, 43 seconds of business just given that now we are running at pretty close to uh full up right and that's something that will be the endeavor for the next next 15 months 36:51 36 minutes, 51 seconds we have the option to do that yeah we would have next year all thank you yes thank you yeah 37:00 37 minutes thank you the next question is on the line of sani vish from Access Securities. Please go ahead. 37:08 37 minutes, 8 seconds Yeah. Uh hi. Thank you for the opportunity. I just have a couple of booking question. One is on the uh 37:15 37 minutes, 15 seconds interest part. Uh I can see the interest has dropped significantly this quarter. 37:20 37 minutes, 20 seconds So what is our expectation and what is the reason behind this and secondly on what are what is our expected tax for the year? 37:30 37 minutes, 30 seconds Okay. May I request Vive to take these questions? Vik on interest and tax please. 37:36 37 minutes, 36 seconds So uh basically on interest uh at the beginning we mentioned that the year has 37:44 37 minutes, 44 seconds been good from a profitability point of view. So good cash generation. So that cash which is generated 37:52 37 minutes, 52 seconds out of profitability plus the working capital release uh that has been used for repayment repayment of some of the 38:01 38 minutes, 1 second borrowings. So the borrowings have come down also the interest rates have fallen and we have been able to negotiate better rates from the banks. So mix of 38:10 38 minutes, 10 seconds these two uh factors have led to a reduction in finance cost. I would say 75% of the reduction in interest cost is 38:20 38 minutes, 20 seconds through the reduction in borrowings. The rest is all interest rate related. On the second question of yours on the tax, 38:27 38 minutes, 27 seconds so we expect a effective tax rate of about 27 28% for the year. 38:36 38 minutes, 36 seconds Okay, that's it. Thank you. 38:38 38 minutes, 38 seconds And also to add that obviously look we will now for the new projects we will be raising more um uh sort of long 38:46 38 minutes, 46 seconds long-term debt for for this project. Partly it will be through internal approvals but we will be uh raising some debt. So now interest 38:55 38 minutes, 55 seconds rate interest cost may go up also in the next uh sort of next year you know. 38:59 38 minutes, 59 seconds Yeah of course but that will move with the debt levels right. So in terms of uh the effect to interest rate also I think 39:07 39 minutes, 7 seconds this should be a comfortable living right and just to add to Vive we are also uh you know net debt free so we 39:15 39 minutes, 15 seconds have in fact we have reasonable amount of excess cash right now in the books which we will be deploying for these new capex projects of course 39:23 39 minutes, 23 seconds okay and the working capital may go uh may increase towards the end of year right or does it uh tend to be similar 39:32 39 minutes, 32 seconds prices going up certainly that I think it will that's another thing that's helped is overall raw material price in the last 6 months have been quite low so 39:40 39 minutes, 40 seconds we've seen years so that's again started to move up so I think our working capital utilization will also go up uh I 39:46 39 minutes, 46 seconds think in the next 3 4 months okay perfect thank you 39:55 39 minutes, 55 seconds thank you the next question is from the line of Karan Sharma from credit please go ahead 40:02 40 minutes, 2 seconds Yeah, hi. Thanks for the follow up. My question was on latex. You mentioned that this year uh sorry 27 we get 100% 40:11 40 minutes, 11 seconds utilization and uh if I go back to precoid this was a this is where we had big plans. So now that the market is 40:20 40 minutes, 20 seconds shifting and uh we are a very small player in the global market considering the global size is huge and we are not even 1% of the capacity. Are there now 40:29 40 minutes, 29 seconds again thinkings on expanding capacity in the nitral side? So just to clarify first of all I mentioned NBR which is 40:37 40 minutes, 37 seconds NVR solid rubber we had 100% capacity utilization for nitral latex we still have some capacity left um and I expect 40:46 40 minutes, 46 seconds that at some point next year we will hit a run rate of full capacity utilization um but but for the year we we'll have to 40:54 40 minutes, 54 seconds see how that goes as far as additional additional capacity is concerned as I mentioned to one of the previous callers look globally there's a lot of over 41:02 41 minutes, 2 seconds capacity so it doesn't makes sense to add capacity right now maybe in a couple of years and we have left some space for 41:08 41 minutes, 8 seconds that. Um unfortunately the margins don't warrant currently don't justify um additional capacity at this stage. 41:20 41 minutes, 20 seconds Yeah. My question was that only if the pricing comes back, how soon can that new capacity kick in? I guess if since you had 41:27 41 minutes, 27 seconds so once comes back and once the decision is taken I think it'll take up take us about 9 to 10 months and really the long lead time will be just certain equipment 41:34 41 minutes, 34 seconds specifically reactors which take that long you know 8 times otherwise civil structure everything is ready so we don't uh you know we don't need uh that 41:43 41 minutes, 43 seconds much so it would depend on how long some of these uh long lead time equipments take I suspect 9 10 months 41:52 41 minutes, 52 seconds and our current capacity is 50,000 Yeah about 48 to depending on yeah 48 to 50,000 correct and how much can that expand by? 42:02 42 minutes, 2 seconds Sorry to interrupt please rejind for more questions. 42:06 42 minutes, 6 seconds So just to answer the last question how much can we expand that by? We can probably expand it by about 50% 50 to 60%. Okay. Thanks. Thank you. 42:15 42 minutes, 15 seconds But we'll have to rework the cost at the time we take the decision and see if it justifies doing it. So you know we will see at that time as I mentioned earlier 42:23 42 minutes, 23 seconds that you know we have taken certain assets you know from the nitral latex um 42:30 42 minutes, 30 seconds plant because uh you know towards this new you know styrene the synthetic latex that we are developing in so it's going 42:39 42 minutes, 39 seconds to get a little complicated going forward which I don't want to get into now as and when the decision we take the decision to expand I'll let you know I I seriously doubt will happen in the next 42:47 42 minutes, 47 seconds year or two Okay, thank you. 42:53 42 minutes, 53 seconds Thank you. The next question is from the line of Rdra Shraija from I thought Financial Consulting. Please go ahead. 43:03 43 minutes, 3 seconds Yeah, thank you for the opportunity again sir. Uh uh I want a sense on the 43:09 43 minutes, 9 seconds Aida margin front like this is a high that we have done in last 11 12 years. 43:17 43 minutes, 17 seconds How do you see that sustaining or what kind of risk that you still foresee in the market that we could fall behind again? 43:26 43 minutes, 26 seconds No, honestly I'm so sorry but I there was a I couldn't hear the question properly. I think I've got the gist but if you can repeat the question please. 43:35 43 minutes, 35 seconds Yeah. Uh I think this is the highest that we have done in lastuh 11 12 quarters this 13%. 43:43 43 minutes, 43 seconds And uh generally we believe 13 to 16 is uh what we should do in the normal course of the business. So you see this 43:52 43 minutes, 52 seconds 13% sustaining going forward if uh and what kind of used forc are there that would make us fall behind that number? 44:03 44 minutes, 3 seconds Yeah, look, I think given the the current where we are currently, I you know, I don't see any reason why 44:12 44 minutes, 12 seconds um AIDA overall AIDA should reduce. One thing that could happen is, you know, like what's happening now is suddenly 44:18 44 minutes, 18 seconds the raw material prices you know are going up by 20 30% you know very quickly in which case we focus on Eida per ton. 44:28 44 minutes, 28 seconds So you could see the percentage margin come down but overall AIDA PBT ROC uh being quite healthy. So we look as a 44:37 44 minutes, 37 seconds company oh as a company we um don't only look at Eida percentage margins we look 44:44 44 minutes, 44 seconds at AIDA patal and ROC is very important for us. So as long as ROC is healthy sometimes we we are okay with Aida percentage margins falling. So for 44:53 44 minutes, 53 seconds example oil was at 60 now it's become 70 let's say it goes to 90. So that means uh oil if oil goes to 90 there's an increase of 50% in raw material prices. 45:03 45 minutes, 3 seconds We're not sure if we'll get the 50% increase in finished goods prices to keep the AIDA the same. It may be less. 45:08 45 minutes, 8 seconds So the AIDA percentage may reduce uh but ROC will still remain strong but overall we're quite positive of uh the at least 45:16 45 minutes, 16 seconds in the next year year and a half you know till new capacity comes on stream when we have limited capacity we're able to take the advantage of you know 45:23 45 minutes, 23 seconds picking and choosing the right customers uh with high higher margins with um good payment terms and uh payment 45:31 45 minutes, 31 seconds performance. So, so I think I I don't see any reason of course other risk could be um again certain you know if this anti-dumping doesn't come through 45:40 45 minutes, 40 seconds and suddenly you know there could be some dumping of rubber products for latex it's a little harder but for rubber products that could happen so 45:47 45 minutes, 47 seconds there are of course inherent risks again in the annual report if you see there are certain risks that we look at all those factors are there raw material 45:55 45 minutes, 55 seconds risks in terms of sometimes raw material is not available and our plant is shut for some time you know all these kinds of risks are there of course but there I 46:02 46 minutes, 2 seconds think low probability risks at this point that we see. 46:09 46 minutes, 9 seconds Understood. So thank you for the detailed answer. Sure. Thanks. 46:17 46 minutes, 17 seconds Thank you. Ladies and gentlemen, a final reminder to all. If you wish to ask a question, please press star and one. 46:50 46 minutes, 50 seconds So I think um we're almost done with an hour. So should if there are no further questions. Uh yes sir. 46:59 46 minutes, 59 seconds Is there any anyone in the question queue now? 47:02 47 minutes, 2 seconds Uh yes sir. We got one question from Adite Kan from Smith Institutional Equities. Please go ahead. 47:09 47 minutes, 9 seconds Yeah, thank you sir for the followup. Uh so the question on the per ton per kg like you mentioned to earlier participant so you can give some flavor 47:18 47 minutes, 18 seconds like how has that been fared over the last 3 to four years and u are we nearing that range of of 15 rupees like 47:26 47 minutes, 26 seconds I think we have said some some quite a few years back how are we like standing in terms of per kg today? 47:35 47 minutes, 35 seconds Uh so honestly I I am not able to give you the exact number. I I and I certainly don't have numbers from the 47:43 47 minutes, 43 seconds last 3 four years in front of me. Um but overall as I said it's it's uh gone to reasonably healthy levels um perhaps not 47:52 47 minutes, 52 seconds as high as what we had in FI223 uh but reasonably healthy levels and with the volumes going up I I think we're quite comfortable uh with these 48:01 48 minutes, 1 second margins and of course our endeavor will be to improve these further. 48:07 48 minutes, 7 seconds Perfect sir. Just one question on epco build like uh how serious are we like to build this business because we have seen 48:14 48 minutes, 14 seconds like no material contribution to topline. Uh do you think like to work on such a smaller business which has no 48:21 48 minutes, 21 seconds meaningful scale for us? Should we focus our energies towards this sort of business or like focus on the core businesses like your latexes and all? 48:31 48 minutes, 31 seconds Yeah, as I've told you before, our strategy for for the appco build business has been a little different. 48:36 48 minutes, 36 seconds Um, it is actually quite related to the core business. I would not say that it's very far from the core business. We we 48:43 48 minutes, 43 seconds are, you know, focusing on mostly products that we are manufacturing and is is where we have technical expertise. 48:50 48 minutes, 50 seconds We do have some outsourced products as well in our product range. Um but really the focus has been to capture the 48:58 48 minutes, 58 seconds additional margins that that we that uh you know anyway we're supplying to some of the the customers that have a brand. 49:07 49 minutes, 7 seconds So the endeavor has been to capture that additional margin and while we may not see it on the top line as being significant but it's a reasonably 49:15 49 minutes, 15 seconds healthy bottom line and uh it's still a small percentage of the bottom line as well but we're capturing that additional um you know additional contribution 49:25 49 minutes, 25 seconds at a at a lower cost you know so I think we will continue the business whether we choose to invest large 49:33 49 minutes, 33 seconds amounts and become a large player in that that I agree that is something that's not our focus or chosen not to 49:40 49 minutes, 40 seconds focus on it right now but we'll continue to uh you know manage and grow this business. 49:47 49 minutes, 47 seconds Perfect. So just one last question. So is there any plans to like forward integrate to make uh uh so globes also because we are into latex and directly 49:56 49 minutes, 56 seconds we should manufacture globes and export it to the global markets. Any sort of an understanding on this? 50:02 50 minutes, 2 seconds We had considered it earlier. We said first let's focus on manufacturing latex and get that right. And as I mentioned earlier also given the current entire 50:11 50 minutes, 11 seconds glove industry and the glove supply chain including latex is so much additional capacity at this stage it 50:18 50 minutes, 18 seconds doesn't make sense to add more capacity both inves. 50:32 50 minutes, 32 seconds Thank you ladies and gentlemen. We'll take this as a last question for today. 50:37 50 minutes, 37 seconds I now hand the conference to go to the management for closing remarks. 50:42 50 minutes, 42 seconds Thank you everyone for joining us in this Q3 um conference call. We look forward to seeing you at the end of the financial year. Um happy new year to 50:50 50 minutes, 50 seconds everyone and um thank you again. Thank you once again for joining us. 50:56 50 minutes, 56 seconds Thank you very much. On behalf of Appitics Industries Limited, that concludes this conference. Thank you all for joining us today and you may now disconnect your lines.