GRP Limited — Q3 FY26

GRP Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Zqw83McNjPg Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the GRP limited Q3 and 9 months FY26 earnings conference call. 0:09 9 seconds This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company 0:17 17 seconds as on date of this call. These statements are not the guarantees of future performance and involve risk and 0:25 25 seconds uncertaintities that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you 0:33 33 seconds to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0:42 42 seconds zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Gandhi, managing director. 0:52 52 seconds Thank you and over to you sir. 0:55 55 seconds A very good afternoon ladies and gentlemen. Thank you for joining GRP Limited's uh quarter 3 and 9 month uh 1:03 1 minute, 3 seconds for FI26 earnings conference call. Uh I'm joined today by our chief financial officer Michelle Pamea as well as our investor relations advisors from SGA. 1:13 1 minute, 13 seconds The investor presentation has been uploaded to the stock exchanges and is also available on our company's website. 1:19 1 minute, 19 seconds We trust you had the opportunity to go through the same. Uh while quarter 3 and the year-to- date FI26 were marked by 1:27 1 minute, 27 seconds muted demand and persistent challenges, the last 15 days uh have been particularly encouraging for us as a company and of course the country as 1:36 1 minute, 36 seconds well. Uh the reduction of US tariffs on Indian imports from a potential high of 50% to about what 18% is a significant 1:44 1 minute, 44 seconds development that provides meaningful relief. the pressure that we have faced earlier during the year. This change is 1:52 1 minute, 52 seconds expected to improve our export volumes and realizations with benefits likely to begin reflecting from the current quarter itself. 1:59 1 minute, 59 seconds In addition, the India EU free trade agreement while not immediately impactful for our business is expected to enhance competitiveness of Indian 2:07 2 minutes, 7 seconds tire manufacturers duty access to the European Union. 2:12 2 minutes, 12 seconds Over the medium term, this could support increased demand for reclaimed rubber both for sales in Europe as well as through our customers in India who will 2:21 2 minutes, 21 seconds have a a platform for exports to the EU. This reinforces the sustainabilitydriven growth opportunity. 2:30 2 minutes, 30 seconds Together, these trade developments mark a turning point providing us greater confidence as we look ahead. 2:39 2 minutes, 39 seconds While recent developments are encouraging, it is important to note that Q3 of FI26 and the year-to- date period were still shaped by macroeconomic and industry challenges. 2:50 2 minutes, 50 seconds Despite these headwinds, we maintained a topline stability with total income of these 352 million reflecting a marginal 2:58 2 minutes, 58 seconds 2% year-on-year growth. Overall volumes remained stable. Incremental gains from new business from anti paralysis oil 3:07 3 minutes, 7 seconds helped balance the drop in certain export linked business. 3:11 3 minutes, 11 seconds This stability reflects the benefits of our diversified portfolio and the gradual traction of our newer initiative. 3:19 3 minutes, 19 seconds As part of our long-term strategy to build a fully integrated tire recycling ecosystem, we continue to make calibrated progress in our newer 3:27 3 minutes, 27 seconds businesses of tire paralysis carbon black and crumb tire paralysis. We are encouraged by the 3:34 3 minutes, 34 seconds yield profile and the product mix that we have achieved so far. Most of this in terms of operation starting in Q3 of 3:41 3 minutes, 41 seconds FI26, which gives us confidence in the long-term viability of the technology. 3:47 3 minutes, 47 seconds However, stabilization of the technology has taken longer than anticipated and near-term capacity utilization remains below our internal expectations. 3:58 3 minutes, 58 seconds Technical teams are working closely to optimize process stability and consistency along with the technology providers. And 4:05 4 minutes, 5 seconds in light of this we have prudently deferred the next stage of expansion including scaling up of the tire paralysis capacity and consisting of 4:13 4 minutes, 13 seconds covered carbon black facility are now expected to be commissioned by August 2026 4:20 4 minutes, 20 seconds commercial production available from the second half of we believe this disciplined approach 4:28 4 minutes, 28 seconds protects capital while ensuring that future scaleup is based on stable operating parameters. 4:36 4 minutes, 36 seconds the crumb rubber modified bitamin business. We have made strides and been able to penetrate certain markets and 4:43 4 minutes, 43 seconds while we remain strategically committed but we are realistic about our current input economics. Build a structurally 4:51 4 minutes, 51 seconds margin accredititive model we are actively developing import channels for waste tire and reliance solely on domestic sourcing does not presently 4:59 4 minutes, 59 seconds support attractive returns for the CRM sector. Once secured, these sourcing strategy will allow us to participate in 5:07 5 minutes, 7 seconds a much larger way in the CRM value chain. However, sales in this sector have begun and approvals of several 5:15 5 minutes, 15 seconds large road contractors as well as manufacturers has already been 5:23 5 minutes, 23 seconds established. Overall, these businesses represent important pillars in GRP's long-term circular materials roadmap. 5:30 5 minutes, 30 seconds While the near-term is focused on operational stabilization and capital prudence, the strategic direction sectors remains unchanged. Place this in 5:39 5 minutes, 39 seconds perspective, let me now turn to the broader industry environment that shaped the quarter till date. 5:46 5 minutes, 46 seconds Global tire demand remained under pressure. Passenger car and light truck OEM markets saw modest growth largely driven by China while Europe continued 5:54 5 minutes, 54 seconds to experience weakness. Truck and bus OEM demand was subdued with North America at historic low levels. Reasons 6:02 6 minutes, 2 seconds we all know. However, while replacement markets offered some stability helping balance the overall demand environment 6:09 6 minutes, 9 seconds in North America, reclaim rubber industry exports were broadly unchanged on a year-to-year basis. But with the US share of exports from India declining from 12% to 7%. 6:21 6 minutes, 21 seconds Tariffs have had a significant impact on India's competitiveness for the market. 6:28 6 minutes, 28 seconds Domestic trends till quarter to FI26 have however been more supportive. 6:33 6 minutes, 33 seconds Consumption rose on a year-on-year basis and GRP's market share improved by two basis by 200 basis points. Our 6:42 6 minutes, 42 seconds deliberate focus on non-tire applications have yielded tangible results with consumption in these segments rising sharply and our share expanding in the non-tire applications. 6:54 6 minutes, 54 seconds This focus contributed to a 17% year-on-year growth in the domestic revenues on a YTD basis in reclaimed rubber. 7:03 7 minutes, 3 seconds During the quarter, the figure stood at 27% helping reduce the impact of uh external demand pressures, however, at 7:11 7 minutes, 11 seconds much lower margins. Within this industry backdrop, our reclaim rubber business delivered steady progress. Revenues grew 7:18 7 minutes, 18 seconds during the quarter, driven by strong domestic performance come from the paralysis and crumb rubber businesses started to build during the quarter and 7:27 7 minutes, 27 seconds supported by sales to cement players as well as to steel in. This contributed to overall stability in volumes for the 7:35 7 minutes, 35 seconds entire tire recycling vertical. The volume level, the most significant impact was seen in exports to the North American markets where volumes to key 7:43 7 minutes, 43 seconds customers fell nearly 40% on a year-to-year basis. Margins were affected by continued inflation in 7:51 7 minutes, 51 seconds select raw materials. One key grade saw a 45% increase in input costs year on year against which a 35% pass through of 8:00 8 minutes prices were already large part of the price increases will get effective from this quarter onwards 8:07 8 minutes, 7 seconds and hopefully as a result the extent of the price increase will be completely posed. 8:14 8 minutes, 14 seconds This along with sourcing diversification helped mitigate the pressure but did not fully offset the escalation of the property 8:23 8 minutes, 23 seconds product mix improvements and selective pricing. Cost margins were however kept properly at the IBIDA level. Margins in the 8:32 8 minutes, 32 seconds reclaimed rubber business improved supported by a structural cost reduction method. These included leaner manpower 8:39 8 minutes, 39 seconds deployment, energy optimization, and a gradual shift towards the new technologies which together contributed 8:46 8 minutes, 46 seconds to a 256 basis point reduction in other expenses. Progress is gradual as transitions align with customer approval 8:54 8 minutes, 54 seconds timeline, but improvements remain steady and sustainable after quarter. 9:01 9 minutes, 1 second Revenues within the non- reclaimed portfolio were broadly maintained despite softer oftakes particularly in the recycled polyropylene segment. This 9:10 9 minutes, 10 seconds segment continues to face near-term headwinds driven by a sharp decline in virgin polyropylene prices inflows of lowcost imports particularly 9:18 9 minutes, 18 seconds from China which has emerged as a net exporter. Industry prices declined four to 5% sequentially during Q3 remain 30 9:28 9 minutes, 28 seconds to 35% lower year on year. This affected our ability to increase volumes and build scale in the recycled polyolifin 9:37 9 minutes, 37 seconds market. But we believe that there is a lot to catch up to. 9:43 9 minutes, 43 seconds Price distortion that has temporarily compressed the economic spread between virgin and recycled materials uh has 9:50 9 minutes, 50 seconds reduced the immediate commercial incentive for converters the recycle content beyond compliance required. As a result, the demand 9:59 9 minutes, 59 seconds momentum linked to EPR benefits has been slower than initially anticipated. 10:04 10 minutes, 4 seconds However, we view this largely as cyclical rather than structural. Yeah. 10:10 10 minutes, 10 seconds Remains structurally underpenetrated in the recycle content usage relative to global benchmarks. 10:17 10 minutes, 17 seconds Addition implementation of the auto EPR norms mandating minimum recycle content by FI28 along with broader regulatory 10:26 10 minutes, 26 seconds trail tailwinds in the packaging and consumer goods sectors are expected to create sustained demand visibility over the medium term. 10:34 10 minutes, 34 seconds There have been several encouraging product and customer approvals which will contribute to the long-term growth of these business. However, given our 10:42 10 minutes, 42 seconds earlier plans and the current context, we are reassessing the subsidiaries operating model to ensure the capital deployment aligns with return 10:50 10 minutes, 50 seconds thresholds. Our focus is on optimizing sourcing efficiency, improving product positioning in higher spec applications 10:58 10 minutes, 58 seconds and end markets like automotive, electrical and appliances. 11:04 11 minutes, 4 seconds We are also evaluating strategic partnerships that enhance traceability and help us build scale. We remain 11:11 11 minutes, 11 seconds committed to the opportunity but are laying a more disciplined approach for pacing the investments until pricing 11:19 11 minutes, 19 seconds spreads normalize and return on capital employment uh capital employment is justified. 11:26 11 minutes, 26 seconds Further to our earlier update we have entered into a PPA agreement with BECIS solar private limited involving an investment of approximately 3 crores. 11:37 11 minutes, 37 seconds This project is expected to deliver annual cost savings of approximately 3.2 crores while also helping us reduce our 11:44 11 minutes, 44 seconds carbon footprint advancing our sustainability and decarbonization. 11:50 11 minutes, 50 seconds On that note, I'll hand over the call to Miss Shilpa Meta, our CFO to walk you through the consolidated financial highlights for Q3 and 9 months of FY26. 12:02 12 minutes, 2 seconds Good afternoon everyone. 12:13 12 minutes, 13 seconds Shba ma'am uh sorry to interrupt but we can't hear you properly. 12:22 12 minutes, 22 seconds Hello now. Much clear ma'am please continue. Yeah. 12:26 12 minutes, 26 seconds Okay. So we start with Q3 of FY26. Total income is at rupes 1,352 million 12:34 12 minutes, 34 seconds compared to rups 1,327 million in Q3 of FY25 which is reflecting a 2% increase. Gross 12:44 12 minutes, 44 seconds profit was rupees 666 million versus rupees 74 million in Q3 of FY25 which is a decline of 5%. 12:55 12 minutes, 55 seconds Gross margins were 49% for the quarter. 12:59 12 minutes, 59 seconds AIDA came in at rupees 112 million compared to rupees 130 million in Q3 of 13:05 13 minutes, 5 seconds FI25 which is lower by 14% on year-on-year basis. 13:12 13 minutes, 12 seconds Aida and margins during the quarter were impacted by 11% higher RM cost in the 13:19 13 minutes, 19 seconds claim volume drop in plastics and high base of polymer composite and EPR of 13:25 13 minutes, 25 seconds previous year and a 45% export margin decline due to US tariff. Another major 13:32 13 minutes, 32 seconds factor is fixed cost from a new plant operating at suboptimal levels which is expected to improve gradually in future. 13:43 13 minutes, 43 seconds EPR acrewed for the quarter was rupees 4.54 crores and income from subsidiaries 13:50 13 minutes, 50 seconds GCSL and GSPL stood at rupees 44 million with a loss of rupees 11 million. 13:58 13 minutes, 58 seconds Adjusted profit after tax stood at rupees 23 million compared to rupees 44 million in Q3 of FY25 with a decline of 49% on year. 14:12 14 minutes, 12 seconds This figure however excludes the impact of an exceptional item which is uh uh graduity provision as per new labor code 14:21 14 minutes, 21 seconds which is coming to this 14 million. 14:26 14 minutes, 26 seconds Now we turn to 9 months financials 9 months of FI26 where income is rupes 3,930 million 14:36 14 minutes, 36 seconds compared to rups 3,912 million in 9 months of FI26 which is maintaining broadly the same 14:43 14 minutes, 43 seconds levels year-on-year basis despite prevailing headwinds. 14:48 14 minutes, 48 seconds Gross profit is at rupees 1 1970 million versus rups44 million in the previous period previous 14:58 14 minutes, 58 seconds of FI20 which is lower by 4% on year 15:04 15 minutes, 4 seconds AIDA is rupees 335 million compared to rupees 363 million in 9 months of 15:13 15 minutes, 13 seconds while margin remains steady at 9% is consistent Rick price 15:21 15 minutes, 21 seconds margin reduction was driven by flat volumes 5% increase in rum material cost 15:28 15 minutes, 28 seconds forex loss of rupes 3 cr on account of revaluation of working capital loans and nearly rupes 1 cr of additional debt 15:36 15 minutes, 36 seconds servicing for new projects contributing incremental volumes but operating at sub optimum level 15:45 15 minutes, 45 seconds for the period accured at rupees 13.56 adjusted PAT stood at rupees 60 million 15:53 15 minutes, 53 seconds compared to rupees 113 million in 9 months of FY25 including the impact of an exceptional 16:00 16 minutes item related to new labor code of rups 14 million gross debt including long-term and short-term borrowings 16:09 16 minutes, 9 seconds stood at rupees 1,82 million in 9 months of FI26 16:16 16 minutes, 16 seconds debt to equity ratio rats was 92 as as on 31st December 2025. 16:23 16 minutes, 23 seconds With this I now open the floor for Q&A. 16:29 16 minutes, 29 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 16:37 16 minutes, 37 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 16:44 16 minutes, 44 seconds requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question cue assembles. 16:53 16 minutes, 53 seconds The first question is from the line of Raji Sha from Bright Securities. Please go ahead. 17:00 17 minutes Hi uh thank you for the opportunity. So sir on the US tariff normalization now that the tariffs have been reduced to 17:08 17 minutes, 8 seconds around 18% I had few questions regarding the same. So the first one is uh have a commercial negotiation with your US customers resumed. 17:21 17 minutes, 21 seconds U Raji may I request you ask all the questions so I can respond to all of them together? It's just easier from my perspective. Thank you. 17:27 17 minutes, 27 seconds Okay. Sure. So I'll uh so my second question is that are you seeing any early indications or green shoots in terms of order inflows or volume recovery? 17:37 17 minutes, 37 seconds And uh nextly, how should we think about the timeline for regaining the volume loss that occurred earlier due to the higher tariff return? 17:48 17 minutes, 48 seconds These are my questions. 17:49 17 minutes, 49 seconds Thank you so much, Raj. Uh so as far as the US tariffs are concerned, as we said, the volumes dipped in Q3 on a 17:56 17 minutes, 56 seconds year-on-year basis by close to 40%. Uh I think commercial conversations have already begun uh with with with the 18:03 18 minutes, 3 seconds customer. Uh notwithstanding the fact that one particular business which is a rubber composite we announced earlier uh 18:11 18 minutes, 11 seconds that we had decided to sort of uh uh shut that business that we would not be restarting but the rest of the businesses around the custom Dforms as 18:19 18 minutes, 19 seconds well as the reclaim rubber uh we should be able to revert to those volumes uh potentially over the course of the next 18:27 18 minutes, 27 seconds few uh quarters. I mean exact timing is still uncertain. We are having the conversations but we do believe that the 18:34 18 minutes, 34 seconds recovery in volume will take place only to the extent of the substitution that was done for our product on a like to 18:41 18 minutes, 41 seconds like basis. However, customers uh are experiencing or have experienced during the year a lower demand and lower 18:49 18 minutes, 49 seconds production of their uh produce especially tires. As I mentioned the the OE tires were far lower in terms of overall production in North America. So 18:58 18 minutes, 58 seconds I think a large part of our demand recovery will be also linked to how quickly does the OE the replacement tire 19:06 19 minutes, 6 seconds manufacturing in North America kind of come back to far as the timelines are concerned we are in conversations with the customers. 19:15 19 minutes, 15 seconds I would say it would probably be another 3 to four weeks before clarity of this emerges. So see uh some impact visible 19:25 19 minutes, 25 seconds from this quarter definitely it back that entire volume I still don't have a timeline to 19:34 19 minutes, 34 seconds conf yeah that was really helpful thank you 19:44 19 minutes, 44 seconds thank you a reminder to all participants anyone who wishes to ask a question may press star N1 Everyone 19:52 19 minutes, 52 seconds the next question is from the line of Sha from Elevate Research. Please go ahead. 19:59 19 minutes, 59 seconds Yes sir. Uh good evening. Uh sir I need some clarity on the 150 crore capeex plan that was targeted by December. So that you had mentioned that around 76 20:07 20 minutes, 7 seconds crores remains to be deployed across pyrolysis recovered from carbon black and crumb rubber. So could you break down how much capeex has already been 20:15 20 minutes, 15 seconds incurred in each of these three segments individually and how much incremental capex is yet to be deployed in each business. 20:24 20 minutes, 24 seconds Sure. So I I mean I think uh the questions are mostly around the uh the green energy or the pyrolysis and the carbon black business. I think so far uh 20:33 20 minutes, 33 seconds total of about uh 76 odd crores has been deployed until FI26 uh until uh you know 20:39 20 minutes, 39 seconds Q4 of this uh financial year uh starting FI24 last quarter that we had begun 20:47 20 minutes, 47 seconds and the rest of the capeex as far as FI27 is concerned and approximate about 80 crores of capeex are to be deployed 20:56 20 minutes, 56 seconds in in in this year however we've recalibrated our plans and you know from our earlier uh trajectory or earlier 21:04 21 minutes, 4 seconds volumes that we were planning almost uh 25% additional volume is planned for the entire project given the cost economy 21:13 21 minutes, 13 seconds and therefore there's going to be an overrun on the overall spend but for the higher capacity that will get deployed 21:19 21 minutes, 19 seconds we expect that by first half of FI27 the entire project in shapur will be 21:27 21 minutes, 27 seconds executed and commissioned as I mentioned by September October we expecting commercial volumes to kick in for both the additional pyrolysis uh as well as 21:36 21 minutes, 36 seconds the recovered carbon black. Um and the next site where we are planning to deploy will also have additional 21:45 21 minutes, 45 seconds capacity and that work will start towards the second half of this year potentially complete by Q1 of FI 208. 21:53 21 minutes, 53 seconds So that's broadly how I can uh Got it. Got it. Provide the breaker purpose. 22:01 22 minutes, 1 second Yes. Got it. 22:03 22 minutes, 3 seconds As far as the other businesses, sorry your your question was also in terms of capex in other businesses. I Yes. You already initiated uh capeex in line two 22:11 22 minutes, 11 seconds of the new technology in EKM rubber that we or in the debulcanization technology as we explained earlier that as customer approvals improve we will look at 22:20 22 minutes, 20 seconds deploying the second line. uh wanted to share that we have already initiated the investment in and potentially by May or 22:28 22 minutes, 28 seconds June of this year that uh Capeex is likely to get uh commissioned as well. 22:34 22 minutes, 34 seconds So that will additional capacity as far as reclaiming rubber through the new technology is concerned. Uh that investment is likely to be in the region 22:43 22 minutes, 43 seconds of uh between 12 to 15 crores and will be deployed uh entirely by May of this year. That's the other deployment that 22:52 22 minutes, 52 seconds is being planned and this will be in the new plant in Shapur where this technology will get commissioned and capacity utilization hopefully will 23:01 23 minutes, 1 second start uh showing up from for for the uh 9 months of next year. 23:08 23 minutes, 8 seconds Got it. Got it sir. And sir at peak utilization what kind of revenue potential do you see from each of these projects? And additionally what what 23:15 23 minutes, 15 seconds asset turns are you targeting at steady state? 23:19 23 minutes, 19 seconds uh okay I don't have those numbers immediately I mean I think we've indicated as far as the uh entire 23:26 23 minutes, 26 seconds pyrolysis and the recovered carbon black is concerned there the expected uh asset turns out how to depending on the stage 23:35 23 minutes, 35 seconds of uh execution that we go as far as the uh reclaimed rubber itself is concerned the asset terms would be in line with 23:42 23 minutes, 42 seconds the current number uh and therefore this 12 to 15 crores will yield the appropriate uh revenue Mhm. 23:49 23 minutes, 49 seconds Okay. Got it sir. And lastly sir, uh given some of these plants are currently operating at suboptimal limits. So what kind of margin track should we factor in over next few quarters? 23:58 23 minutes, 58 seconds So reclaim rubber in the last 6 months we've seen the utilizations being lower mainly on account of tariffs as I said 24:05 24 minutes, 5 seconds and US alone was down 40% from uh the previous year's uh uh Q3. We're hoping 24:12 24 minutes, 12 seconds to obviously get back some of those uh levels as far as utilization is concerned. Uh I would say that with this 24:19 24 minutes, 19 seconds new technology starting to pick up steam uh and we starting to see the orders filling in. I think the the new tech we 24:27 24 minutes, 27 seconds will start seeing the utilization inch up above 60 65% uh starting this quarter or sorry starting next quarter and as 24:35 24 minutes, 35 seconds the next line comes in that utilization will also take some time to but as far as Q3 reclaim is concerned 24:42 24 minutes, 42 seconds overall we were at about 87% utilization there is still some room for growth uh the EP business or the engineering plastics business continued to 24:51 24 minutes, 51 seconds operate at just about 50% levels uh and the custom dform and the rubber composites again which were both uh US 24:59 24 minutes, 59 seconds dependent were operating at 50% utilization as I mentioned the the the the composite business we have taken a 25:05 25 minutes, 5 seconds call to uh discontinue that will obviously not sure but the CDF business is expected to get back up to the 75 80% 25:14 25 minutes, 14 seconds utilization that it was operating pre the tariffs so that's in a nutshell how I would uh describe the utilizations 25:21 25 minutes, 21 seconds over the next couple Got it. Got it. Sir, this helps. Thank you. Thank you so much. 25:27 25 minutes, 27 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1 on the touchstone telephone. 25:36 25 minutes, 36 seconds The next question is from the line of Karan Sharma from Sham Securities. Please go ahead. 25:43 25 minutes, 43 seconds Hello. Thank you for giving me the opportunity. Am I audible sir? Yes. Yes. Go ahead. 25:49 25 minutes, 49 seconds So sir as you mentioned about reassessing the subsidiaries operating model. So does this include any potential capital reduction or any 25:58 25 minutes, 58 seconds strategic invest investor on boarding? Um I think all options are on the table. 26:05 26 minutes, 5 seconds I think the subsidiary has uh predominantly the polyolophin recycling 26:13 26 minutes, 13 seconds as part of its portfolio. We've got some good strong approvals from brand owners. 26:18 26 minutes, 18 seconds We've also started recently working with uh global compounder for the same some of the 26:26 26 minutes, 26 seconds areas that we are reassessing the same is the kind of product mix and customer mix that we are targeting and also the end segment is shifting or rather I 26:33 26 minutes, 33 seconds wouldn't say shifting but focusing far more on automotive electrical and appliances sectors and that's something that we are hoping will provide 26:41 26 minutes, 41 seconds long-term stability as well as uh improved margin. Uh as far as your question on whether we're looking at either of a fund raise or a strategic partnership and or reduction in capital. 26:50 26 minutes, 50 seconds I think uh we haven't gotten far. I mean there is all on the joint board and several options under consideration. We will certainly announce something once 26:59 26 minutes, 59 seconds we have uh made progress on either of these uh opportunities but yes there some of these are within the possibilities. 27:08 27 minutes, 8 seconds Okay sir. Okay. uh what is the current capacity utilization in nonrela or 27:15 27 minutes, 15 seconds rubber segment of this last year as I mentioned I think each of these businesses are operating at different 27:23 27 minutes, 23 seconds utilizations uh the engineering plastics business is operating at just about 50 odd% 50 plus a little bit plus minus the 27:31 27 minutes, 31 seconds CDF business uh operating also at closer to 50% while the subsidiary is operating at sub 50% at the moment 27:41 27 minutes, 41 seconds Okay. Okay. And lastly, so on with auto EPR norms kicking in by FY28, what revenue contribution are we expecting from EPR link demand by FY28? 27:53 27 minutes, 53 seconds Uh that's a interesting question. I don't have the quantification yet, but I can tell you two things. One is the auto 28:00 28 minutes EPR in Europe has been uh in place for a while. And what I'm given to understand with the India EU FDA is that a lot of 28:08 28 minutes, 8 seconds these vehicles that will be produced in India or exports to Europe will start having to comply with those auto APR 28:16 28 minutes, 16 seconds norms and that will provide some demand impacts to us wherever our approvals with the automotive uh brand owners is 28:23 28 minutes, 23 seconds in place especially in the plastic compounding side that traction should potentially start by FI27 28:31 28 minutes, 31 seconds etc. uh as far as the India norms are concerned I believe we are in the draft stage so it' be a little uh early to 28:38 28 minutes, 38 seconds comment on what would be the impact of that on our business but I think these are directionally the areas that we've been investing in and the norms are you 28:46 28 minutes, 46 seconds know anywhere close to what the European norms are it could mean a significant uh uh growth in capacity could mean for us 28:53 28 minutes, 53 seconds at least in EP and polyropene doubling down of capacity from where where we are at the moment uh but again as I said 29:00 29 minutes since the norms are in half state very difficult to uh be able to provide a number to you at this. 29:08 29 minutes, 8 seconds Okay. Okay sir. Thank you. Thank you so much. Sure. 29:11 29 minutes, 11 seconds And all the best for the future. Thank you. 29:13 29 minutes, 13 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1. 29:22 29 minutes, 22 seconds The next question is from the line of Jane from JJ Capitals. Please go ahead. 29:28 29 minutes, 28 seconds Hi sir, I I hope I am audible. Uh yes sir on the EPR EPR side could you provide some color on the current 29:36 29 minutes, 36 seconds environment uh like are we facing any challenges in generating or monetizing APR credits whether in terms of 29:44 29 minutes, 44 seconds regulatory approvals verification timelines or realizations? 29:50 29 minutes, 50 seconds Uh no answer is no. There is no challenges in either of monetizing generating or regulatory challenges. We 29:57 29 minutes, 57 seconds continue to generate EPR credits uh in line with our domestic sourcing and in line with the production of the different grades of materials that are eligible for generating the credit. 30:09 30 minutes, 9 seconds There is only one particular issue which is our pyrolysis plant that registration is still pending and likely to be received in this quarter. So the impact 30:17 30 minutes, 17 seconds of EPR credits on account of uh both purchases and sales in the uh policies and uh RCB business those are not 30:26 30 minutes, 26 seconds factored in our current approvals because the approval from the CPCB is not in place but that's generally there is a lag it takes a couple of months and 30:34 30 minutes, 34 seconds we're hoping that in this quarter we will have the registration and then start generating the credits uh and and and acrewing the income to that effect. 30:43 30 minutes, 43 seconds As far as sales of VPR is concerned, I mean we currently don't have uh challenges in selling. We have long-term contracts in place with several of our 30:51 30 minutes, 51 seconds customers with whom on a quarterly basis we are selling the EPR credits uh more or less in line with the generation that 30:58 30 minutes, 58 seconds we are acrewing. Yes, there is some lag in terms of credits but I don't think the lag is significant. uh we pretty 31:05 31 minutes, 5 seconds much able to convert most of the credits that are acred in terms of cash uh with a lag of maybe a couple of months. 31:13 31 minutes, 13 seconds Uh okay. So the reason I'm asking that we have seen some peers reporting higher than expected EPR approvals. So just want to understand is there any 31:22 31 minutes, 22 seconds industry-wide shift in pricing or credit issuance uh that we should be aware of? 31:28 31 minutes, 28 seconds uh I mean a as I said we are generating credits based on only the domestic sourcing of raw materials that we are uh doing which is in line with the norms. 31:38 31 minutes, 38 seconds Uh we are generating those credits on the portal and are able to sell those. 31:43 31 minutes, 43 seconds Uh EPR uh what do you call it credits are not allowed on imports and therefore we are not generating any credits as far as 31:51 31 minutes, 51 seconds imports are concerned. As far as pricing is concerned, currently all of our approval is at the floor price of 2.52 rupees. We are not uh either uh bullish 32:00 32 minutes and or ambitious in terms of the price at which we are approving the credit. So I I can't comment on what other peers as 32:07 32 minutes, 7 seconds you mentioned uh have been considering but uh we are very much in line in fact the guidance that has been provided in the past and I think the information 32:16 32 minutes, 16 seconds that is there on the website in terms of the generation possibility based on our domestic sourcing and the production of 32:23 32 minutes, 23 seconds uh reclaim that we have I think is more or less in line with uh uh what we are generating. I can't comment on peers and how they are reporting. 32:32 32 minutes, 32 seconds Got it sir. Just one last question from my end. Uh how much incremental EPR benefit do we expect from the pyrolysis 32:40 32 minutes, 40 seconds and crumb rubber business as capacity stabilize? 32:45 32 minutes, 45 seconds Uh I don't have the numbers immediately off the top of my head but I mean we know that as far as pyrolysis is 32:51 32 minutes, 51 seconds concerned the oil generates credits at a conversion rate of I think 0.8 8 uh uh and so does the chart. 33:01 33 minutes, 1 second Crumb rubber generates credit at a conversion rate of 1.1 times the uh input less the yield. Uh reclaim 33:10 33 minutes, 10 seconds continues to be the highest at 1.3 times but the others and I believe the conversion factors and the tables are all mentioned on our investor 33:18 33 minutes, 18 seconds presentation. There is there is a slide on that which I encourage you to go through. If you have any questions, post that. We'll be happy to uh address them 33:27 33 minutes, 27 seconds offline uh at your convenience. But yeah, I mean 1.3 is what reclaim is and 33:34 33 minutes, 34 seconds uh crumb rubber is at one and pyrolysis oil and char. So the continuous method is at8 33:41 33 minutes, 41 seconds weightage. So all of that together will definitely add to the EPR revenue in the coming period. As I said, we haven't got 33:49 33 minutes, 49 seconds the approvals from the PCB for the pyrolysis unit. So to that extent we under the port that the income acred but only we can only acrue it once the 33:58 33 minutes, 58 seconds approvals come in place and the credits are in our Got it sir. Thank you for the detailed understanding. All the best. 34:06 34 minutes, 6 seconds Thank you. 34:07 34 minutes, 7 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1. 34:15 34 minutes, 15 seconds The next question is from the line of Nisha Sha from NM Securities. Please go ahead. 34:23 34 minutes, 23 seconds Uh thank you sir for the opportunity. I have a couple of questions. Uh your gross debt stands at 182 million with uh debt equity ratio at uh 0.92. 34:36 34 minutes, 36 seconds So what is your comfort level for leverage and uh what do you expect uh 34:43 34 minutes, 43 seconds debt to increase before prior analysis stabilization? 34:50 34 minutes, 50 seconds So I think the the debt equity was a conscious call when we did raise the capital because uh there is adequate confidence in the future cash flows uh 34:59 34 minutes, 59 seconds that we are generating from the business. Of course this year over the first 6 months uh there has been a little bit of a hiccup on account of the 35:07 35 minutes, 7 seconds tariffs from North America and its resultant impact on the gross margins of the company but uh we remain fairly confident that the margins will now 35:15 35 minutes, 15 seconds start turning given that the tariffs have reversed and uh this leverage will certainly reduce but I think the current uh debt toa as well as the debt equity 35:24 35 minutes, 24 seconds ratios we are fairly comfortable with the current level you'll see in the course of the next few quarters that this will start uh improving movie for 35:31 35 minutes, 31 seconds sure. Um that's yeah broadly how I define this. Yes. 35:37 35 minutes, 37 seconds Okay sir. My second question is uh your solar PPA investment of rupees 3 k 35:45 35 minutes, 45 seconds uh gives you 3 4 cr savings annually. So when do you see this start reflecting in PNL? 35:54 35 minutes, 54 seconds Uh so I just want to clarify that the investment that we have made is in the equity of the SPV. So the total project cost obviously will be significantly 36:02 36 minutes, 2 seconds more because the way the SPVS would be structured we would hold the 26% equity the power producer will hold the remaining 74% of the equity and then 36:11 36 minutes, 11 seconds they would subsequently leverage uh the uh project for debt. So therefore the overall contribution of ours to the 36:19 36 minutes, 19 seconds total project costs would be uh significantly lower at closer to about 11 or 12%. uh that's that said this 36:26 36 minutes, 26 seconds project is uh for our plants in Gujarat uh is expected to be commissioned by July and therefore the benefits of this 36:35 36 minutes, 35 seconds will start acrewing from August for solar power has its own seasonality in terms of generation. So during the monsoon period we often find the 36:43 36 minutes, 43 seconds generation of units from solar plants lower than the rest of the year. So one will need to uh uh factor those uh in in 36:51 36 minutes, 51 seconds in the projections but yeah I mean uh currently the SPV PPA is very clear that from August uh we will start generating the units. 37:01 37 minutes, 1 second Okay sir. And lastly what will be your peak guidance for peak capex guidance for FI26 and FI27? 37:11 37 minutes, 11 seconds As I said, I mean FI26 FI27 I already indicated that the total number is likely to be about 80 crores 37:20 37 minutes, 20 seconds for the paralysis and recovered carbon black business and between 12 to 15 crores for the incremental capacity 37:27 37 minutes, 27 seconds addition for the reclaimed rubber business. This is obviously in addition to whatever is the maintenance capex requirement for the plants uh which 37:35 37 minutes, 35 seconds which will be more or less uh bruised on the historic level. As far as FYI26 37:41 37 minutes, 41 seconds itself is concerned uh roughly 31 crores has been spent on the paralysis in the 37:48 37 minutes, 48 seconds RCB plant and business and another uh 18 odd crores has been spent on the rest of the cape. So together close to uh 50 crores is the total capeex for FY26. 38:02 38 minutes, 2 seconds Okay sir. Thank you. That was very helpful. All the best. 38:06 38 minutes, 6 seconds Thank you. A reminder to all participants. Anyone who wishes to ask a question may press star N1 on the restaurant telephone. 38:15 38 minutes, 15 seconds The next question is from the line of Raj Maha from Wisdom Advisor. Please go ahead. 38:22 38 minutes, 22 seconds Hello. So thanks for the opportunity sir. On outlook front on FI27 outlook as we look beyond the current year and 38:30 38 minutes, 30 seconds factor in tariff normalization along with the ongoing capex ramp up. So how should we think about revenue growth in 38:38 38 minutes, 38 seconds FI27 and can you share any broad guidance on EIDA margins once the new capacities stabilize? 38:46 38 minutes, 46 seconds Um I think as far as the volume growth in the recla business itself is concerned. uh we we we have I think for 38:55 38 minutes, 55 seconds this year on the whole we kind of will probably end up at closing to 5% but next year as far as the uh would do you 39:02 39 minutes, 2 seconds call it the uh utilization of capacity or others the growth is likely to be significantly higher on account of two 39:10 39 minutes, 10 seconds three factors. One is the volume returning in the North American markets. 39:14 39 minutes, 14 seconds The other is the approval of the new technology as that is picking up pace. 39:18 39 minutes, 18 seconds We expect that that volume will grow. So expectation is a mid- teen kind of a number in terms of uh volume growth for 39:25 39 minutes, 25 seconds next year over FI26. Uh proportionately as far as revenue growth is concerned should maintain that and this is only as far as the reclaimed rubber business is 39:33 39 minutes, 33 seconds concerned. As far as the uh pyrolysis and the business of recovered carbon 39:40 39 minutes, 40 seconds black etc because it's a fairly low base uh I would say that utilization 39:47 39 minutes, 47 seconds will will improve in there and I mean I say based on the pace etc this would be 39:54 39 minutes, 54 seconds uh a fairly sizable jump in revenues I think at this stage unable to provide a number but this would be um you know 40:03 40 minutes, 3 seconds assuming that the entire u let's say capex for the pyrolysis and RCB will be deployed we will have a 40:12 40 minutes, 12 seconds effective net capacity available of about 45,000 tons for the year additionally for all of pyrolysis steel 40:19 40 minutes, 19 seconds oil crumb char and RCB uh so that 45,000 tons should generate a fairly significant revenue for that particular 40:27 40 minutes, 27 seconds part of the business uh I think the plastics business uh I would be for satisfied if the utilizations levels 40:37 40 minutes, 37 seconds from the current sub 50% would go to closer to 75 80%. So that's the potential that I see again on account of 40:44 40 minutes, 44 seconds combination of factors. One is uh uh the return to normaly of the polyolophin pricing which we are seeing reverses 40:52 40 minutes, 52 seconds starting this month. Uh we're also seeing some demand officer plastics is concerned. uh so all of this 41:00 41 minutes together I mean it will be incremental at best but uh one one can say that there the growth in volumes etc would be 41:08 41 minutes, 8 seconds also more or less in in line with the mid- teens to high team numbers on uh on the current year levels so that's in a 41:17 41 minutes, 17 seconds nutshell I mean as I said effective capacity of GE I mean of the green energy business of the pyrolysis and RTD is what one should look at as providing 41:25 41 minutes, 25 seconds a significant kicker in addition to the mid I mean volume growth that we are expecting from the stable state uh uh 41:34 41 minutes, 34 seconds steady state businesses of reclaim and uh uh plastic businesses. 41:40 41 minutes, 40 seconds Understood sir. That's all right. Uh that was helpful. Thank you sir. 41:45 41 minutes, 45 seconds Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to the management for closing comments. Over to you. 41:55 41 minutes, 55 seconds Uh thank you again for for the uh interesting questions. As always uh it's uh interesting to note that the 42:02 42 minutes, 2 seconds questions uh reflect a strong understanding of the sector uh as well as the opportunities that lay ahead of us. U I mean again want to reiterate 42:11 42 minutes, 11 seconds that we continue to remain committed towards the long-term plans of continuing to build a you know globally relevant size and scale for a tire 42:20 42 minutes, 20 seconds recycling ecosystem. We believe the tailwinds as well as the opportunities on account of uh the the government as well as the brand owners is very much 42:28 42 minutes, 28 seconds with us and therefore being able to implement these plans successfully is what uh we are hoping to achieve uh over 42:37 42 minutes, 37 seconds the course of the next few quarters. Uh yes there have been a few hiccups during this financial year and account of project execution delays as well as the 42:44 42 minutes, 44 seconds tariff situation which is a little out of our control but we do believe very strongly both from a utilization of uh 42:52 42 minutes, 52 seconds capacity in the uh paralysis business we kind of have overcome the initial hiccups. So therefore starting to see some steady uh business growth there and 43:01 43 minutes, 1 second the return to normaly of tariffs will allow us to sort of uh provide or you know unleash the full potential of the 43:08 43 minutes, 8 seconds capacities that we've created for the reclaim rubber business. I just want to highlight again that a lot of the initiatives on cost reduction in the 43:16 43 minutes, 16 seconds reclaim rubber business have started to completely bear fruit and our operating costs continue to trend lower. So as and 43:23 43 minutes, 23 seconds when there is a gross margin expansion, one will start seeing a fairly significant growth in the overall margins for that business. So with that 43:30 43 minutes, 30 seconds we go into 2020 uh 627 extremely bullish and uh continue to uh 43:38 43 minutes, 38 seconds you know deliver sustainable materials to the industry. Thank you so much for participating in the call and look forward to your support and continue the idea. 43:47 43 minutes, 47 seconds Thank you on behalf of GP Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.