Finolex Cables Limited — Q3 FY26

Finolex Industries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=HBrHhB1UvOk Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to the Finlex Industries Limited Q3 FY26 earnings conference call hosted 0:08 8 seconds by ICIC Securities Limited. As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions 0:15 15 seconds after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that 0:24 24 seconds this conference is been recorded. I now hand the conference over to Mr. Arun B from ICA securities. Thank you and over to you sir. 0:32 32 seconds Thank you Sher. Good afternoon ladies and gentlemen. On behalf of I securities I welcome you all to the Q3 FI26 poster 0:40 40 seconds phone call of Industries. From the management side we have Mr. Udep Agarwal maning director and Mr. Chandan Marma 0:47 47 seconds CFO. Now I have Mr. Agarwal for his own post with the floor will be open for Q&A. Over to you Mr. 0:57 57 seconds Thank you Arun. Uh ladies and gentlemen, good afternoon. Welcome to our investors 1:03 1 minute, 3 seconds conference call for quarter 3 of FY26 and also for the 9 months ending financial year 26 earnings release. We 1:12 1 minute, 12 seconds thank you for your continued support and interest in the finex industries. Uh we give coming over to some of the the 1:21 1 minute, 21 seconds numbers for the quarter. we see a little dip in our uh in our volume numbers for the quarter and also correspondingly for 1:29 1 minute, 29 seconds the 9 months ended for the current financial year mainly on account of the of the monsoon season. However, our 1:37 1 minute, 37 seconds operating performance uh has seen a notable improvement during the same period largely supported by softening of 1:44 1 minute, 44 seconds the raw material prices and also the operational efficiencies which have we have been pushing through the organization over the last for the 1:53 1 minute, 53 seconds period of time. Let me also take you through some of the performance indicators for the quarter quarter 3 2:00 2 minutes FY26. So the numbers are like for this quarter the volume decreased by about 2:06 2 minutes, 6 seconds 14% to 73,500 metric tons against 85,767 metric tons in quarter 3 of last year. 2:16 2 minutes, 16 seconds Our income from operations uh was at uh 898 crores for this quarter which is a 2:24 2 minutes, 24 seconds 10% decreased against uh 1,1 cr of quarter 3 FY25. 2:32 2 minutes, 32 seconds However, happy to note that AB AITA improved to 123 crores against AITA of 83 cr in quarter 3 of previous year. 2:42 2 minutes, 42 seconds Correspondingly, PAT also has improved to 110 crores against PAT of 71 crores in quarter 3 of previous year. 2:52 2 minutes, 52 seconds For the 9 months ended December 25, uh overall uh our volume is lower by about 2:58 2 minutes, 58 seconds 6% to 230,965 metric tons against 245729 3:05 3 minutes, 5 seconds metric tons for the 9 months ending of the previous financial year that is financial year 25. Our income from operations was at 2,800 crores down 3:14 3 minutes, 14 seconds about 6% which is in line with the volume against 2,970 crores for the 9 months ending FY25. 3:24 3 minutes, 24 seconds Abita improved to 347 crores against uh uh and this is an increase of about 15% 3:32 3 minutes, 32 seconds against 302 crores for the 9 months ending FY25. 3:38 3 minutes, 38 seconds profit after tax also improved to 926 compared to uh I mean from the 3:45 3 minutes, 45 seconds operations I'm talking about but all in all uh profit stood at 9 326 compared to 3:53 3 minutes, 53 seconds 628 cr which included last year exceptionally gain of 47 crores for the 9 months ending by 25. So operationally 4:02 4 minutes, 2 seconds we have improved significantly in our profitability. 4:06 4 minutes, 6 seconds We continue to have a very strong balance sheet with a net cash surplus of around 2,430 crores as on 31st December 4:15 4 minutes, 15 seconds 25. Okay. I think with this uh we leave the floor uh to question and answers and 4:23 4 minutes, 23 seconds together with me is Mr. Chandan WMA our CFO to answer the questions. 4:28 4 minutes, 28 seconds Good afternoon all participants. A very warm welcome from Penolic Industries. 4:33 4 minutes, 33 seconds [clears throat] 4:35 4 minutes, 35 seconds Thank you very much. We will now begin with the question and answer session. 4:39 4 minutes, 39 seconds Anyone who wishes to ask a question may press star N1 on the touchstone telephone. If you wish to remove yourself from the question Q, you may press star and two. Participants are 4:48 4 minutes, 48 seconds requested to use the answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question Q assembled. 4:57 4 minutes, 57 seconds The first question comes from the line of Dian Takur from Finestrust Capital. Please go ahead. 5:04 5 minutes, 4 seconds Uh sir congratulations on a great set of numbers. So uh what we have been seeing for the past few months have been that 5:11 5 minutes, 11 seconds the everyone is saying that PBC prices should uh bottom out. So can you provide us some guidance on uh how the market 5:18 5 minutes, 18 seconds has been behaving and when is it going to stabilize? Thank you sir. 5:24 5 minutes, 24 seconds Yeah I mean uh all the commodities market have been affected by what is going on with respect to the 5:31 5 minutes, 31 seconds geopolitical developments. Yeah. And uh also so that has an impact on not only 5:38 5 minutes, 38 seconds on the polymer prices but also on other commodities as well. So from that standpoint uh we had our own share of 5:46 5 minutes, 46 seconds volatility in the raw material prices and also on the prices of PVC. Uh during the quarter we saw that the prices going 5:55 5 minutes, 55 seconds very very low. I think we had never seen these kind of prices in the recent recent past. Yeah. 6:03 6 minutes, 3 seconds the PVC price had gone down to as low as in the range of $600 depending on the region where it is coming from. Uh 6:11 6 minutes, 11 seconds however this uh the situation has improved a little bit. Yeah. And we look into this uh this quarter a little more positively. 6:25 6 minutes, 25 seconds Hope that sir can you uh Yes sir that that answers my question. Sir can you also provide us with a visibility on how what prices can 6:33 6 minutes, 33 seconds we see going ahead or something like that? 6:37 6 minutes, 37 seconds Nobody knows what is going to happen but prices in the month of December has started improving or towards end of 6:45 6 minutes, 45 seconds December as I said uh last quarter we saw prices going as low as 650 and we 6:52 6 minutes, 52 seconds saw we see some 8 9% improvement in that. So they are more likely more like $650 $660 range currently. 7:01 7 minutes, 1 second Yeah. 7:04 7 minutes, 4 seconds Okay. Thank you so much sir and all the best. Thank you. Thank you. Thank you. 7:11 7 minutes, 11 seconds The next question comes from the line of Utkash Nupani from Ajandrati. Please go ahead. 7:17 7 minutes, 17 seconds Yeah. Hi. Good good evening sir. So my uh first question is again on the PVC resin side. So just wanted to know you 7:24 7 minutes, 24 seconds like uh given large PBC surplus capacity is there in China. So do you see uh any possibility of uh the 7:33 7 minutes, 33 seconds thin prices going back to the historical range of around uh $850 to $900 for done over the next say 12 to 18 month period. 7:44 7 minutes, 44 seconds Yes. Uh there is a not only in China but globally there is a capacity portion and we also see in the recent 7:53 7 minutes, 53 seconds past uh capacity adjustment. Some of the western companies announcing uh shutdowns of their plants. We see thus 8:02 8 minutes, 2 seconds this kind of a trend in China also. But the I think China also there are two different technologies which operate. 8:09 8 minutes, 9 seconds Okay. and uh not everywhere everything could be used. We also heard the news uh 8:17 8 minutes, 17 seconds that there's going to be a different uh tax structure or the incentive for exports in China. So that is also going 8:26 8 minutes, 26 seconds to have an impact of uh impact on the PVC raisin prices from from exports for 8:32 8 minutes, 32 seconds exports from China. Okay. So we will see how does it play out but uh outlook is that uh family PVC has bottomed out. 8:43 8 minutes, 43 seconds Okay. And sir yesterday in uh uh in the budget uh uh when we looked at the document we saw that the government has 8:50 8 minutes, 50 seconds reduced the import duty from 10% to 7 and a half% for chapter number 3904 and 8:57 8 minutes, 57 seconds the PVC resin falls under chapter number 3904. So just wanted to confirm whether the import duty on PVC resin has gone down from 10% to 7 and a half%. 9:08 9 minutes, 8 seconds Uh Uskash we have also seen this announcement but we are waiting for the fine print to come out still at a speculative stage. Let the fine print 9:16 9 minutes, 16 seconds come out then we'll have to able to conclude whether actually we are getting impacted by the reduction in the PBC prices or not. We are waiting for the further data in this regard. 9:27 9 minutes, 27 seconds [clears throat] 9:28 9 minutes, 28 seconds And now see the PDC recent prices on a buy basis in rupee terms it has corrected by 9:36 9 minutes, 36 seconds double digit rate. Uh but our pipe realization has improved quite a lot on a bioy basis for the past two 9:43 9 minutes, 43 seconds consecutive quarter which is not the year. So this only because of the change in the product mix or is it because of some other factor? 9:56 9 minutes, 56 seconds I think uh it is a combination of different factors. One thing is that during this quarter we had a higher 10:03 10 minutes, 3 seconds share of non-aggree segment. Okay. So that also helped us to keep the prices little bit on the higher side. So 10:10 10 minutes, 10 seconds realization is also better. Second thing is we have been also careful on uh on our pricing side. Yeah. 10:20 10 minutes, 20 seconds And I think uh as you know that we have always been saying that we are looking at a at also profitable growth and this is what is the impact what we see. 10:33 10 minutes, 33 seconds Okay. And so on the margin side like the margin for the PVC resin producer or the plastic pipe company has been coming 10:40 10 minutes, 40 seconds under pressure. uh but for us it has actually improved over the past okay the 10:47 10 minutes, 47 seconds good possible reason for that sir in a in in a falling resin place environment so [clears throat] of course if you know 10:54 10 minutes, 54 seconds that we are the company we are which is having advantage of backward integr integrated plant for the PVC resin now of a total consumption of say 100 in a 11:03 11 minutes, 3 seconds year in a given period of time roughly we get a share of uh 65 to 70% from the in-house manufacturing of the resin 11:12 11 minutes, 12 seconds Now if the in-house manufacturing region we have a cost advantages in ter in comparison to the other producer who are who are purchasing the PVC price 11:20 11 minutes, 20 seconds directly from the market. So this having a backward integration plant and inhouse manufacturing with resin we are having a certain cost advantages that is getting 11:29 11 minutes, 29 seconds reflected in our margin. Uh no sir what I was uh what I meant to say is that as per your presentation only if we see the 11:38 11 minutes, 38 seconds PVC ADC delta or the PVC VCM delta has gone down sharply in this December 11:45 11 minutes, 45 seconds quarter on both Q on Q and Y basis okay uh so how come our margin has improved 11:52 11 minutes, 52 seconds sir that's my question sir yes so see if you see the PBC delta that is that is alo more or less indicative 11:59 11 minutes, 59 seconds number which gives a direct direction in which the market moves on. Number one. 12:03 12 minutes, 3 seconds Number two, if you see the margin as our just explained the margin consist of two part one is the improved in the realization second in the cost 12:11 12 minutes, 11 seconds efficiency. So if you add both together both has added in as a in a favorable direction for us that has resulted in 12:19 12 minutes, 19 seconds the in the overall increase in the margin performance. So there is a two two-way benefit. One is a improved in 12:26 12 minutes, 26 seconds the net realization that we are having and number two though there is a a decline in the EDC PBC ADC delta but 12:33 12 minutes, 33 seconds that's actually not got converted while we actually negotiate in the market that that that advantage we also having. So 12:41 12 minutes, 41 seconds in a way both the way we having the advantage from the sales realizing side as well and as well as cost side both these two has resulted in the overall 12:50 12 minutes, 50 seconds improvement in the IITA for the quarter and YTD as well. 12:54 12 minutes, 54 seconds Uh okay sir lastly sir what would be the sales volume guidance for for the current March quarter and what would be the I beta margin guidance over the 13:02 13 minutes, 2 seconds medium-term period sir for us that would be my my last question 13:09 13 minutes, 9 seconds you know historically the quarter 4 has been the the quarter where the demand 13:16 13 minutes, 16 seconds picks up and this is true not only for us but also for the industry. So we hope that the trend also continues 13:25 13 minutes, 25 seconds in this year and we see a better volume number in quarter 4. Okay. 13:31 13 minutes, 31 seconds And is there any growth we are looking at any range as compared to as compared to the 13:41 13 minutes, 41 seconds previous year for the full year we will see uh more of a flattish to slight increase in the volume for the full year. 13:50 13 minutes, 50 seconds Okay, this is what our our expectation is. 13:53 13 minutes, 53 seconds We'll see how the demand uh picks up and how the market behaves in the in the next two months. 14:03 14 minutes, 3 seconds Okay, what would be the beta margin guidance on a sustainable basis for us? 14:08 14 minutes, 8 seconds You would like to continue with the same margin. Let's see how things gets unfold over the period time. We would like to maintain our margin level. 14:15 14 minutes, 15 seconds Okay. Thanks a lot, sir. 14:19 14 minutes, 19 seconds Thank you. The next question comes from the line of Shania from Dalat Capital. Please go ahead. 14:27 14 minutes, 27 seconds Uh hi. Uh thank you. Uh sir, I have couple of questions. Uh before that just a couple of data points to get it right. 14:34 14 minutes, 34 seconds Uh so agree non-aggree sir. Uh CPVC sir and fitting sir for uh third quarter. 14:42 14 minutes, 42 seconds Oh agree non-aggree. Currently we are at the 60 to 38 new current quarter. 14:48 14 minutes, 48 seconds 6 60 62 62 versus 38. Okay. 14:54 14 minutes, 54 seconds Okay. CPBC share is 8% in terms of volume. Okay. Fitting share 12% in terms of volume. 15:04 15 minutes, 4 seconds Okay. Got it. And uh uh PBC uh PBC VCM spread for third quarter. 15:12 15 minutes, 12 seconds PBC VCM spray for the third quarter on an average 156. 156. 15:19 15 minutes, 19 seconds No sir. Yes. 15:21 15 minutes, 21 seconds Okay. 156. Yeah. Got it. Uh so now sir uh coming to uh the the uh main 15:28 15 minutes, 28 seconds questions. So uh sir as you just now said that we are looking at a margin flatest to marginal growth for fourth 15:36 15 minutes, 36 seconds fourth quarter. That means in the last year Q4 F4 25 we did close to one lakh 15:42 15 minutes, 42 seconds 2,000 uh plus kind of a volume. uh so if we want to have even flattis also we 15:49 15 minutes, 49 seconds need a 39% kind of a QQ growth uh which is a significant kind of a 30,000 extra 15:56 15 minutes, 56 seconds uh uh that we need to sell in the fourth quarter so uh in the January uh did we 16:03 16 minutes, 3 seconds have have seen that kind of ah growth just to trying to understand 16:11 16 minutes, 11 seconds shan good to good to meet you although virtually uh I would like to say I would not we would refrain from making any forward-looking 16:20 16 minutes, 20 seconds statements here but uh there's a good traction in the market as far as January is concerned. 16:28 16 minutes, 28 seconds Uh so does that mean good traction that on on a not the number but uh uh was that a growth on Y basis for us in January? 16:41 16 minutes, 41 seconds So Shan just we are about to wrap up the number but things are looking positive in January month as well. So let us uh 16:48 16 minutes, 48 seconds wrap up our let us let let us allow us to wrap up our number then we'll be able to comment on that because January has just closed yesterday only. So we are 16:58 16 minutes, 58 seconds about to look at the number but yeah over overall on a direction basis as our India just communicated we are looking 17:07 17 minutes, 7 seconds somewhere around sgest to slightest growth in the on a year or full year basis. 17:12 17 minutes, 12 seconds Got it. So then from FI27 onwards broadly if you can help us how one can look at the industry level growth and 17:21 17 minutes, 21 seconds for us how can we expect kind of a 5 7% kind of a growth or are we looking at kind of a 8 10% kind of a growth from 17:30 17 minutes, 30 seconds F27 onwards shan uh we have uh just kicking starting 17:39 17 minutes, 39 seconds our budget planning for the next year that overall if we look at the industry and how the markets are behaving I think 17:48 17 minutes, 48 seconds any having anything growth which is double digit I don't know if that would be something 17:56 17 minutes, 56 seconds which I can comment on this moment yeah but is it fair to say can we see a 5% at 18:05 18 minutes, 5 seconds least plus kind of a growth for us and for industry that's the broader process yeah I think Our endeavor would be that we keep our market share. 18:17 18 minutes, 17 seconds Okay. And then sir just on the margin front so last quarter also and this quarter so if you can help us in terms of accounting entry particularly this 18:25 18 minutes, 25 seconds change in inventory particularly. So last quarter it was 172 K and this time 168 K and that's why there is a 18:32 18 minutes, 32 seconds significant improvement in the margin is there. So uh uh try to uh understand me 18:40 18 minutes, 40 seconds uh so whatever the cruising higher inventory which was there in the Q2 uh similar was was there in this quarter 18:48 18 minutes, 48 seconds and let's say if this gets sold in the fourth quarter so then can one can expect kind of a 8 9% kind of a margin. 18:59 18 minutes, 59 seconds So if you see seven quarter three we have ended with a a margin AITA margin 19:06 19 minutes, 6 seconds of uh roughly around 14%. Right? So now we are and on a yearly basis is 12%. So 19:13 19 minutes, 13 seconds as we have just I have replied to previous question we would like to maintain our 12% ITA 12% around in that 19:21 19 minutes, 21 seconds trajectory our full year IITA margin as well. This is number one. 19:28 19 minutes, 28 seconds Yeah. Uh but but still still still not able to understand uh how come we have the similar kind of a higher closing 19:37 19 minutes, 37 seconds inventory at the end of second quarter and the similar number 170 odd in the third quarter itself. So because that's 19:45 19 minutes, 45 seconds the one which is actually have a significant delta on on the margin. So no sorry 19:54 19 minutes, 54 seconds shan you have to keep in mind though number more or less looks in terms of parity uh from our previous however in 20:03 20 minutes, 3 seconds terms of volume if you because price is always changing. So if you compare the inventory changes which is getting 20:10 20 minutes, 10 seconds reflected in our quarterly result in terms of volume this is not always always in par. So though coincidentally 20:17 20 minutes, 17 seconds numbers is looking quite similar in terms of the previous quarter but actually if you do a quantitative basis the numbers is not similar. So Q2 always 20:25 20 minutes, 25 seconds remain where we keep the higher inventory and Q3 keep Q3 is the where the inventory starts getting liquidated. 20:33 20 minutes, 33 seconds That's how the industry works but that doesn't get reflected in the number. So uh correct me if I'm wrong 20:42 20 minutes, 42 seconds simple basic math I'm not able to understand this minus 168 cr how this number comes uh if we have the 160 does 20:52 20 minutes, 52 seconds that mean that the closing inventory as on December is higher by 168 cr versus a Q2 and that's why it is resulting or something I'm missing. 21:01 21 minutes, 1 second Yeah. Yeah. So it's a basically difference between the opening stock at the beginning of the quarter and the closing stock at the end of the quarter. 21:08 21 minutes, 8 seconds So that is what this number gets reflected changes in the inventory something requirement. 21:13 21 minutes, 13 seconds No. So then the the question the arises the similar then why the closing inventory of 2Q did not got sold in the 21:21 21 minutes, 21 seconds third quarter and why we kept the again the similar kind of inventory not is not like that Q2 inventory 21:29 21 minutes, 29 seconds because our we have every company has a continuous production process. So inventory gets liquidated over the period of time. Then again inventory 21:37 21 minutes, 37 seconds gets built up and it's there are a lot of factor that we keep in play like what is the raw materiality what kind of future forecast we are having what kind of inventory level we have to maintain. 21:47 21 minutes, 47 seconds So there are multiple factor which keeps playing around when we see a particular in inventory number at a particular point in time. So say you are see saying 21:56 21 minutes, 56 seconds that inventory has been remain whatever was remain the Q2 end is continue at the Q2 end that is not exactly a correct exit statement because whatever 22:04 22 minutes, 4 seconds inventory was there in the Q3 Q2 end that gets liquidated then again there is a built up inventory because of the production that has been taken place during the quarter. 22:14 22 minutes, 14 seconds Okay. And lastly sir, what we heard just to uh uh correct me if I'm wrong that from the 1st January till now what we 22:22 22 minutes, 22 seconds have seen is there is a 7 rupees hike in the PVC prices. So first if it is uh yes or no and then if yes uh have we also 22:31 22 minutes, 31 seconds seen the similar kind of pass on to the consumer levels. 22:37 22 minutes, 37 seconds Yeah you are right. We have seen a price increase in the PVC prices here in India and you know 8 hours ours is primarily a 22:45 22 minutes, 45 seconds pass through business. So quite a bit of is it is passed. 22:50 22 minutes, 50 seconds So so at the at the channel level have we started seeing the a significant improvement at the inventory level. So which was kind of a below average. So 22:58 22 minutes, 58 seconds have the channel has kind of a seen a normal level of inventory or still it is 23:05 23 minutes, 5 seconds below the uh normal I think channel has started building up the inventory slowly slowly in the month 23:14 23 minutes, 14 seconds of January after the the prices have started increasing because sentiment has changed right but I don't think so it is 23:22 23 minutes, 22 seconds at a at a level where it should be there is still room for for improvement Okay. Okay. I have more questions will 23:31 23 minutes, 31 seconds come up in queue. Thank you and all the best. Thank you Shan. 23:36 23 minutes, 36 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star and one. The next question comes from the line of 23:44 23 minutes, 44 seconds Vipulkumar Sha from Sumangal Investments. Please go ahead. 23:48 23 minutes, 48 seconds Hi, thanks for the opportunity and congratulations for very good set of numbers. So my question uh is uh 23:56 23 minutes, 56 seconds regarding the cash balance. So we have very modest capex every year and we are 24:02 24 minutes, 2 seconds building cash. So we are neither taking any big uh capex 24:10 24 minutes, 10 seconds nor we are uh uh sharing it with sh sh 24:13 24 minutes, 13 seconds sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh sh 24:14 24 minutes, 14 seconds sh sh sh sh sh sh sh sh sh sh sh sh shareholders through dividend or buyback or any other route. So what we are going to do with this cash? 24:25 24 minutes, 25 seconds So uh as you are saying yes we have been seeing there is a quart of increase in the car balances over the year. So last 24:34 24 minutes, 34 seconds year I think we have a the for the financial year 2526 roughly around 100 to 150 cr was the kef plan for the 24:42 24 minutes, 42 seconds current year 2526 basically. So that is all the capex spending already on and if you can recall last year we have 24:48 24 minutes, 48 seconds declared a dividend of uh 3.6 rupees per uh per share. So that that amount still 24:56 24 minutes, 56 seconds will uh that was a huge dividend that we had declared last year. We are waiting for the current number then we'll have to take and call on that number one even 25:03 25 minutes, 3 seconds saying that uh yes there will be there will be still a sufficient balance of cash will remain. So this discussion is 25:11 25 minutes, 11 seconds around we re yet to conclude upon what to do with this cash over the period in time. So once something will be frozen out then we'll be able to conclude upon 25:19 25 minutes, 19 seconds and a company of our size and this I mean we always keep looking at opportunities for the capex and there 25:26 25 minutes, 26 seconds are different discussions which happen at a board level and uh so we all are working under the direction of board and 25:33 25 minutes, 33 seconds as soon as we have some more decisions around it happy to communicate. 25:40 25 minutes, 40 seconds This standard answer is given in every call sir. Anyway, uh so what is the 25:47 25 minutes, 47 seconds current delta PVC VDC delta current as on today? 25:52 25 minutes, 52 seconds As of today it's 465 465. Yeah. 25:59 25 minutes, 59 seconds And sir uh you said your CPVC volume was 12% of the overall volume, right? volume 8%. 26:08 26 minutes, 8 seconds 8% CPV. Yes. 26:12 26 minutes, 12 seconds Okay. Okay. Thank you. And I'll return to the Thank you. 26:19 26 minutes, 19 seconds Thank you. The next question comes from the line of Shraan Sha from Dalat Capital. Please go ahead. 26:27 26 minutes, 27 seconds Uh hi sir. Uh sir uh this uh what last time we said that we are looking at so 26:33 26 minutes, 33 seconds currently pilot 20,000 capacity we are looking at 50 80,000 kind of a uh uh addition so uh uh can is it fair to say 26:43 26 minutes, 43 seconds that in fi by fa 27 we will be able to add this to 80,000 kind of a capacity and if yes the how much capex that we 26:52 26 minutes, 52 seconds need to do Yeah, for us the capacity addition is a 27:01 27 minutes, 1 second continuous process. Yeah. And uh as you know that we recently in the last 27:08 27 minutes, 8 seconds uh one year we have increased our capacity and the discussions are on to to increase the capacity further to 27:16 27 minutes, 16 seconds support the growth. Right? So this is a ongoing exercise but typically we end up 27:23 27 minutes, 23 seconds doing a capex of between 100 to to 200 kores yearon-year basis. 27:29 27 minutes, 29 seconds So we'll continue to see that kind of a direction. 27:34 27 minutes, 34 seconds Okay. So roughly one can say similar kind of a 50,000 to maybe a 70,000 kind of a 27:41 27 minutes, 41 seconds yearly basis one can look at if if if he finds the demand is growing. But there also we are we are we are not kind of a 27:49 27 minutes, 49 seconds confidently saying that we can see a double digit kind of a growth. So that's what I'm I'm trying to wondering how one can look at. 27:57 27 minutes, 57 seconds You don't build Yeah. So you build capacities also with a little outlook of the demand not only for a over a period of short short period but also maybe 28:06 28 minutes, 6 seconds over a horizon of two to three years because capacities also do not come up immediately they also take their own time in coming up. So you always have 28:14 28 minutes, 14 seconds excess capacity and what you can sell and it is a continuous process you keep evaluating keep evaluating year on year. 28:24 28 minutes, 24 seconds Yeah. Got it. and and and and given let's say if we if there is a 7 rupees price hike and PVC and let's assume that 28:31 28 minutes, 31 seconds it remains uh constant till the March 31st uh though it is uh we will be passing on to the customers but uh given 28:39 28 minutes, 39 seconds if we have the similar volume but if we are selling at let's say previously 100 now at 107 28:46 28 minutes, 46 seconds uh so is it fair to assume that we will be having a some operating leverage and then uh our margin would be better but 28:55 28 minutes, 55 seconds at the same time we are saying our margin for for fourth quarter we are looking at a 12%. So yeah if you can clarify. 29:08 29 minutes, 8 seconds Yes. So as the prices so long as the PBC prices will show the upward trend there will be definitely a advantage in terms 29:14 29 minutes, 14 seconds of our operating margin not only for us but for the industry as well across the industry but if you will see the stress in the PBC prices then the things will 29:23 29 minutes, 23 seconds again go into different direction. So the the so more the more the PBC price level is stable the more the efficiency 29:30 29 minutes, 30 seconds will look will be appearing in the numbers. 29:34 29 minutes, 34 seconds Okay. And and and before this the the China whatever the extra tax they are they they are putting up for the for the 29:40 29 minutes, 40 seconds uh uh uh uh uh export particularly to let's say uh India but this is replicable from I think from the from 29:48 29 minutes, 48 seconds the fall separate onwards. So is there a possibility that before that uh uh there will be a some dumping will be happening 29:55 29 minutes, 55 seconds and that may lead to a some roll back in the prices. Uh is there also a fair probability? 30:03 30 minutes, 3 seconds I think that is one of the reasons that we see a uh price increase here in India 30:10 30 minutes, 10 seconds with the lead time into into consideration that expectation is that the prices would be sustaining on. 30:24 30 minutes, 24 seconds Okay. Okay. So prices will will sustain. 30:26 30 minutes, 26 seconds So uh there will be a less probability that there will be a dumping from China before 1st April. 30:32 30 minutes, 32 seconds uh and so it should not be impacting the the prices. So more or less the prices from here here on should should stay stable if not increase further. 30:43 30 minutes, 43 seconds Yeah. But uh I would like to always have a caveat here that we do not know what would be the 30:51 30 minutes, 51 seconds reaction or how the producers in that country would look at their book account and the underutilization of their capacities. 31:02 31 minutes, 2 seconds So cannot say it with 100% certainty but uh trend looks like that way. 31:09 31 minutes, 9 seconds Okay. Okay. Hold on. 31:12 31 minutes, 12 seconds Yeah. And and for us the CPVC the 8% share. So there also we have continuously seen the double digit growth. 31:22 31 minutes, 22 seconds Yes. Because CPVC we are getting a good uh appreciation in volume. So that is going in higher rate. 31:29 31 minutes, 29 seconds Okay. Okay. Okay. Okay. Got it. And and then broadly what the our our long-term target 50/50 agree non-aggree. 31:38 31 minutes, 38 seconds uh uh so how do we uh so that long-term uh uh so structurally let's say by F27 31:46 31 minutes, 46 seconds on an average basis if one has to see can we see 33 3% 4% kind of a improvement there or how how one can 31:54 31 minutes, 54 seconds look at though our overall ambition is also to increase our nonre because it there are a lot of variety 32:02 32 minutes, 2 seconds figure factors that keeps play while though there is a great impressive going on from our Right opponent. 32:10 32 minutes, 10 seconds So things will come unfold over the period of time but still difficult to comment what is time horizon when we will be able to get but yes our emphasis 32:17 32 minutes, 17 seconds is already on to improve improve our share for the non-eid. 32:24 32 minutes, 24 seconds Okay. uh got it and and broadly for for third quarter the CPVC prices more or 32:31 32 minutes, 31 seconds less has has remained stable or still there was also some some decline uh in 32:37 32 minutes, 37 seconds the CPVC prices also go in tandem with the PBC prices to though there is no exactly uh in the 32:45 32 minutes, 45 seconds same tandem but yes it is it's in sync with the prices of the PBC prices. 32:53 32 minutes, 53 seconds Okay. Okay. Got it sir. Uh thank you. Thank you. 32:59 32 minutes, 59 seconds Thank you. The next question comes from the line of Sonali from Jeff. Please go ahead. So thank you for the opportunity sir. 33:07 33 minutes, 7 seconds Sorry but I have to ask this question on margins yet again. So if I look at our 33:14 33 minutes, 14 seconds gross margin from Q2 FI25 to Q1 FI 26 we were somewhere always at about you know 33:22 33 minutes, 22 seconds uh so our raw material cost to sales was somewhere between 65 to 70%. 33:29 33 minutes, 29 seconds Suddenly over Q2 and Q3 FI26 it has dropped to 57%. 33:35 33 minutes, 35 seconds So now if I look at the last two quarters, the volume growth has not been as great and the PVC prices are also weakening also suggesting that the 33:43 33 minutes, 43 seconds realizations are getting lower. So could you help us reconcile what exactly are we doing right or what has changed in 33:51 33 minutes, 51 seconds the past two quarters that our gross margin has suddenly improved by you know about 700 to 800 dips year on year. 33:59 33 minutes, 59 seconds Thank you. Okay. 34:03 34 minutes, 3 seconds So if you see consider our structure of business roughly our 75% of total consumed raw material cost comes from 34:11 34 minutes, 11 seconds the in-house and 25% comes from the outright procured when I'm saying 75% on 34:19 34 minutes, 19 seconds an average comes out from the in-house procurement it consist of prices of imported raw material which is though 34:26 34 minutes, 26 seconds move in line with the PBC prices but there is no absolutely uh spread always remain same. So if the 34:33 34 minutes, 33 seconds PVC prices I giving one example if it goes by the 10 basis point goes down by the 10 basis point it is not always necessary that prices of BDC or ETH will 34:42 34 minutes, 42 seconds also go in the same uh in the same period in the same in the same number. 34:47 34 minutes, 47 seconds So it always keeps a lag sometimes and sometimes it remains like if I see a decline in the PBC prices of 10% we have 34:54 34 minutes, 54 seconds seen the decline the EDC prices by 8 rupees 8%. 8 basis point. So in a way so our raw material prices if so long as it 35:02 35 minutes, 2 seconds is uh not getting affected the way the PBC price is getting affected we are finding a cost advantage number one. 35:12 35 minutes, 12 seconds Number two though there is a declining in the overall PVC prices we have improved our realization in terms of our structuring of prices in the market that also gives us increase our realization. 35:23 35 minutes, 23 seconds So on an absolute basis you can see from the outside world yes price of the PBC is declining from the in our sons 35:30 35 minutes, 30 seconds relations but we have improved our restructured our sales price on a net realization basis that has given us a price advantage as well in the market. 35:39 35 minutes, 39 seconds So these two factor both added in our favor which is resulting in the better gross margin. 35:47 35 minutes, 47 seconds So if I may just uh extend this question, we do understand that you know PVC and EDC are not exactly correlated 35:55 35 minutes, 55 seconds to each other as both are global commodities. But uh would you agree that whatever the delta is is captured in 36:02 36 minutes, 2 seconds that one ratio of PVC to EDC spread. If I look even at that ratio, that ratio has come down from $500 per empty in Q3 36:11 36 minutes, 11 seconds last year to $449 which reflects the movement of both PBC and EDC. So I'm just still trying to understand that if 36:18 36 minutes, 18 seconds your real realizations are lower, if your volume growth is not as great, plus we did add this new employee cost as per 36:26 36 minutes, 26 seconds the new labor code, it's certainly a great surprise that you know the gross margins and the AITA margins are growing 36:34 36 minutes, 34 seconds so well yearon year. So just wanted to reconcile these bits. Thank you. 36:38 36 minutes, 38 seconds Just just to add the employee benefit cost is not forming part of the gross margin. It is even forming part of the 36:46 36 minutes, 46 seconds AITA not the gross margin right sir I I yes I was meaning the EITA only but my main question is regarding 36:53 36 minutes, 53 seconds the 840 bits jump in the gross margin yeah so gross margin as a I'm just wanted to reiterate the prices that you 37:01 37 minutes, 1 second see in the uh BBC delta delta that is more or less indicative but when we go actually commercial negotiation the 37:09 37 minutes, 9 seconds prices the prices will definitely uh uh there are a lot of factor that quantity volume discount landed price at which 37:16 37 minutes, 16 seconds and rupee dollar as well. So all these factor considering our landed landed cost of PBC sorry delta EDC has seen a 37:24 37 minutes, 24 seconds significant decline from last year's Q3 versus Q2 Q3 of the current year that has resulted in the uh cost saving to us. 37:34 37 minutes, 34 seconds Sure sir. Thank you. That's all from my side. Thank you. Thank you. 37:42 37 minutes, 42 seconds As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you and over to you sir. 37:52 37 minutes, 52 seconds Thank you. Thank you for everybody for participating in the call and asking the well researched and deeper level 38:00 38 minutes questions. Uh uh hope to meet you next time in the conference call. Thank you. 38:06 38 minutes, 6 seconds Have a good evening. Thank you all participants from the phenolics site and thank you very much for showing your continuous support for the phenor. Thank you so much. 38:16 38 minutes, 16 seconds Thank you. 38:18 38 minutes, 18 seconds Thank you on behalf of ICICA Securities Limited. That concludes this conference. 38:23 38 minutes, 23 seconds Thank you for joining us and you may now disconnect them. Thank you.