RAJSHREE POLYPACK LTD — Q3 FY26

Rajshree Polypack Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=EOI5rQ0QlAg Published: 2 months ago

0:01 1 second Ladies and gentlemen, good evening. I welcome you all to the quarter 3 financial year 26 conference call to discuss the operational and financial 0:09 9 seconds performance for the Rashri Polyc Limited. As a reminder, all participant lines within the listen mode only and 0:16 16 seconds there will be an opportunity for you to ask questions. Please note that this conference is being recorded. 1:03 1 minute, 3 seconds I will now hand over the call to the management further opening remarks after which we will be open the floor for questions. Thank you and over to you Ramsup. 1:20 1 minute, 20 seconds Thank you Diva. Good evening everyone and thank you for joining us today. 1:28 1 minute, 28 seconds I am pleased to welcome all our shareholders, analyst and participants to the Rashri Polyac Limited earnings call for the third quarter of FI26. 1:37 1 minute, 37 seconds With me is today our CFO Mr. Sunil Sharma. I hope you have all had the chance to go through our investor presentation. 1:47 1 minute, 47 seconds Let me begin with a quick overview of our performance for quarter 3 FY26. 1:54 1 minute, 54 seconds Revenue from the operations stood at rupees 71.62 crores compared to rups 72.70 cr in quarter 3 last year 2:03 2 minutes, 3 seconds reflecting a yearon-year decline of 1.49%. 2:08 2 minutes, 8 seconds Abita was at rupees 10.3 crores compared to rups 9.05 cr in quarter 3 fi25 2:15 2 minutes, 15 seconds representing a 13.82% year-on-year growth. AITA margins improved to 14.4% 4% compared to 12.5% 2:24 2 minutes, 24 seconds in quarter 3 last year. Profit after tax was at 2.13 cr compared to 1.7 cr last 2:31 2 minutes, 31 seconds year reflecting a 25% year-on-year increase. 2:36 2 minutes, 36 seconds While revenue declined marginally yearon-year margins improved meaningfully due to better product mix and operational efficiencies. However, 2:44 2 minutes, 44 seconds sequentially quarter 3 tends to be seasonally softer particularly on the domestic front. 2:50 2 minutes, 50 seconds Let me now touch upon our domestic and export markets. Despite US tariff headwinds, exports continue to remain a strong growth driver for us in quarter 2:58 2 minutes, 58 seconds 3. In quarter 3 FI26, exports revenue stood at rupees 20.54 crores compared to 14.58 3:06 3 minutes, 6 seconds crores in quarter 3 FI25, reflecting a 40.8% growth yearon year. This growth was 3:14 3 minutes, 14 seconds largely driven by strong strong traction in injection molding products from existing customers. 3:20 3 minutes, 20 seconds However, the US markets continue to remain challenging due to prevailing tariff structure. Now with the ease in the tariff, we have actively started 3:28 3 minutes, 28 seconds engaging with existing customers for further growth as well as new potential customers to start the new business. 3:36 3 minutes, 36 seconds At the same time, we are actively diversifying geographically and currently exports are there to 13 countries helping reduce concentration risk. 3:46 3 minutes, 46 seconds On the domestic front, revenues in quarter 3 FI26 stood at rupees 51 cr as compared to 58 cr in quarter through 3:54 3 minutes, 54 seconds FI25, reflecting a 12% yearon decline. Key factors impacting the domestic revenue were lower raw metal prices impacting 4:03 4 minutes, 3 seconds realization especially in sheet sales and moderation in institution uptake due during the quarter due to seasonal impact. 4:13 4 minutes, 13 seconds We have seen an improved traction towards the end of the quarter and expect domestic volume to strengthen in cube 4. 4:20 4 minutes, 20 seconds Product-wise performance in quarter 3 FI26 injection molding products grew very strongly up by 38% from rupees 12.8 4:29 4 minutes, 29 seconds crores to 17.6 cr. This continues to be our strongest performing segment driven primarily by export demand. Thermopform 4:37 4 minutes, 37 seconds packaging products remain stabled at rupees 38.3 crores. Sheet sale were lower at 15.22 cr as compared to 18.66 4:46 4 minutes, 46 seconds cr last year reflecting 18.4% 4% year-on-year decline. 4:53 4 minutes, 53 seconds During the quarter, we increased the extrusion capacity to 25,600 metric t peranom from 24,000 metric t 5:00 5 minutes peranom, strengthening backward integration and positioning ourself for higher volume across packaging products. 5:07 5 minutes, 7 seconds On the expenses front, COGS improved from 60.6% to 56.4%. 5:13 5 minutes, 13 seconds Employee cost increased to around 18% on year-un basis primarily on account of annual increment done in April as well 5:21 5 minutes, 21 seconds as unit 3 which commence production commercial operation during the year. 5:27 5 minutes, 27 seconds The same was partly offset by saving in the job work charges for sheet extrusion and thermopforming business. 5:33 5 minutes, 33 seconds One of the important highlight is signing the term sheet with a renewable power producer to purchase renewable power at a lower price under captive 5:41 5 minutes, 41 seconds arrangement. As per the term sheet, we shall be investing rupees 2.25 cr approximately in the renewable energy SPB while remaining investment will be 5:50 5 minutes, 50 seconds done by the power company. We expect to save around 1.5 cr approximate peranom in power cost once the project starts 5:57 5 minutes, 57 seconds generating power which we expect to happen in around 5 to 6 months from now. 6:03 6 minutes, 3 seconds Further on the interest front, we have finalized arrangements with the bank to convert the sum of rupees 20 cr loan into foreign currency loan at the lower 6:10 6 minutes, 10 seconds interest rate which will help us to save approximately 1 cr rupees peranom. 6:17 6 minutes, 17 seconds At the same time, we are constantly working on finding ways to reduce the overall debt exposure to the company by bringing in more efficiency. We shall 6:24 6 minutes, 24 seconds keep you updated on the same on the olive ecoact joint venture. Our 6:31 6 minutes, 31 seconds JV company olive EcoAC continues to make encouraging progress. We have installed capacity of 7 million pieces per day 6:38 6 minutes, 38 seconds making OI one of the largest in integrated producers in the country in this category. 6:45 6 minutes, 45 seconds In quarter 3 our paper coating was,085 metric t and finished goods we did,35 metric t with utilization of around 28%. 6:56 6 minutes, 56 seconds So we are steadily increasing our utilization. Financially, Olive recorded a turnover of 15.69 cr of revenue in 7:04 7 minutes, 4 seconds quarter 3 uh significantly higher than 12.05 cr in Q2. Abita improved to 1.15 7:12 7 minutes, 12 seconds cr with a margin of 7.33% reflecting meaningful operation improvement from 0.05 cr in Q2. We are 7:20 7 minutes, 20 seconds also seeing good traction from large domestic customers and we are gaining interest from Europe and Middle East. We remain confident of achieving sales of 7:29 7 minutes, 29 seconds 19 to 20 cr revenue in quarter 4 and continuing the journey towards profitability. 7:35 7 minutes, 35 seconds Further with the ease in the tariff in US, we expect to restart discussion with US customers and posit will start exporting to US from quarter 1 of FI27. 7:46 7 minutes, 46 seconds During the year, both olive and RPPL participated in global exhibitions for packaging. The event helped strengthen 7:54 7 minutes, 54 seconds our visibility in international markets, particularly in North America and enabled meaningful engagement with existing and prospective customers. 8:04 8 minutes, 4 seconds Looking ahead, we expect recovery in domestic volume in Q4. Export momentum, particularly in injection molding, remains encouraging. Olive continues 8:13 8 minutes, 13 seconds progressing towards operating scale and improving margins. Renewable energy integration will support long-term margin stability and reduction in the 8:22 8 minutes, 22 seconds interest rates will also help in improving the margins. While overall quarter 3 has been retutatively softer 8:30 8 minutes, 30 seconds sequentially the structural growth drivers of the business remain intact. 8:35 8 minutes, 35 seconds With this I conclude the business update for the quarter. We will be now happy to take your questions. 8:43 8 minutes, 43 seconds Participant who want to ask question kindly raise your hand using this using raise hand icon. 9:01 9 minutes, 1 second Participant who wants to ask question kindly raise your hand using raise hand icon. 9:20 9 minutes, 20 seconds Participant who want to ask question kindly raise your hand using raise hand icon. 11:04 11 minutes, 4 seconds Hello. You can raise hand by selecting the react icon and thereby you will get an option to raise hand. 11:30 11 minutes, 30 seconds Hello investor. You can raise your hand by using the react icon. There will you get an option to raise the hand. 12:19 12 minutes, 19 seconds Hello investor, you can raise your hand by using the react icon. There you will get an option to raise hand. 12:45 12 minutes, 45 seconds Thank you. 13:12 13 minutes, 12 seconds Yes, I am. 13:38 13 minutes, 38 seconds Listen. 14:04 14 minutes, 4 seconds Yeah, Mr. Augustine, you are audible. 14:08 14 minutes, 8 seconds Yeah. Yeah. I was trying to find the button. Yeah. Get the button. Okay. Thank you, sir. 14:13 14 minutes, 13 seconds Thank you for taking my question. Uh sir, uh I wanted to have a little bit color on this JV operations actually. 14:20 14 minutes, 20 seconds So, uh the loss has come down. That is a good thing to know. But uh in your books, you have completely made the 14:28 14 minutes, 28 seconds investment zero because the loss has made so far as your investment. Yeah. Is that correct? 14:36 14 minutes, 36 seconds Yeah. So can you tell me accumulated what is the loss position for this company so far? 14:43 14 minutes, 43 seconds uh for only vic pack uh I'll just a minute 14:49 14 minutes, 49 seconds it's around uh uh 12 12 cr 14:56 14 minutes, 56 seconds that's that's our share or is it for the our share our share okay so 24 crores uh for the total company JV 15:05 15 minutes, 5 seconds okay so uh going forward once Yeah, go ahead. 15:22 15 minutes, 22 seconds Yes. Yes. Of course. Of course. 15:26 15 minutes, 26 seconds So it means that take at least one to two years and then numbers. 15:33 15 minutes, 33 seconds Yes. Yes. For us to get the profitability number at least one and a half year. we'll need to first recover that loss. 15:41 15 minutes, 41 seconds Okay. So, uh since the company is making losses, how is the cash flow position? 15:46 15 minutes, 46 seconds Is it all running on bank debt or like how is it like the company might be generating may not be generating free cash, right? So, it's all funded by uh 15:54 15 minutes, 54 seconds bank lines or like how is the negative working capital or uh cash position of JV? 16:01 16 minutes, 1 second I would say like with uh 20 uh crores of revenue uh uh rough we will be able to 16:08 16 minutes, 8 seconds uh manage the cash flow with respect to depreciation and the bank interest and the other operations. 16:17 16 minutes, 17 seconds uh we we uh we we are not taking our interest what we have invested we are of 16:24 16 minutes, 24 seconds course acrewing it in the books uh and so uh so that much cash flow is not going which is roughly 1.5 1.6 6 cr both 16:33 16 minutes, 33 seconds the JVS put together per per quarter but at 24 25 crores we'll be probably roughly at PBT level we'll be uh doing 16:42 16 minutes, 42 seconds the break even so uh so there then uh so it's it's matter of another I will say we are expecting 19 to 20 cr in this 16:51 16 minutes, 51 seconds quarter and maybe 23 to 24 cr in next quarter so with that uh uh roughly we'll 16:58 16 minutes, 58 seconds be break even at PBT Sir, just like curious to understand like this particular product you are 17:06 17 minutes, 6 seconds targeting mostly in the US or is it like Europe is also a big market? 17:10 17 minutes, 10 seconds No, it is domestic. Currently, majority of the sale is coming from the domestic market. 17:18 17 minutes, 18 seconds Hello. 17:20 17 minutes, 20 seconds Okay. Yeah, I'm majority of the sales is coming from the domestic market. we have uh around 15% 17:28 17 minutes, 28 seconds of revenue coming from exports which is in from UK and uh partly from Middle East uh but US remains of course one of 17:37 17 minutes, 37 seconds the uh strong market and there's a big demand for this category of the product in US and Europe so that uh uh 17:45 17 minutes, 45 seconds definitely with this uh reduction in the tariff we expect that uh business to uh get started uh in those markets. 17:55 17 minutes, 55 seconds So with the the tariff issue almost settled and uh with the new FDA so like for next year okay Q4 is anyway 20 cr 18:03 18 minutes, 3 seconds but for the next year or so hold yeah from from Q1 we could we could start seeing the movement already the discussions have started with the 18:12 18 minutes, 12 seconds customers uh who were sitting on the fence so they they already the discussions have been initiated again 18:19 18 minutes, 19 seconds and uh we uh we expect definit definitely to uh see the revenue coming from uh those geographies. 18:30 18 minutes, 30 seconds Uh sir just one suggestion actually this uh since you're going through by this route of accounting it's very difficult to actually identify like what is 18:37 18 minutes, 37 seconds exactly happening with the JV like had it been a subsidiary like consolidated statement would have given 18:44 18 minutes, 44 seconds like this much cash burn is there or financials but this like I mean you've written you have disclosed everything I'm not denying the fact but it's unless 18:53 18 minutes, 53 seconds you go very minute and deep inside you'll not be able to understand exactly what is the position for this company. 18:58 18 minutes, 58 seconds So uh uh like I like I was surprised to see that like another to I mean it'll take at least one two years to 19:05 19 minutes, 5 seconds materially see our financials in moving at least the EPS point of view. 19:09 19 minutes, 9 seconds Uh so so that's because the accounting style was like this I mean wherein you do 50% directly on the P&L. uh so I as 19:17 19 minutes, 17 seconds an investor I would be more happy if had you con considered such a subsidiary and uh otherwise it's there's another option of showing the financial separately for 19:26 19 minutes, 26 seconds this JV so that uh things become very clear that's able 19:33 19 minutes, 33 seconds we are we we are uh cons consolidated subsidiary after subsidiary only we can do what we can do is we can put those 19:42 19 minutes, 42 seconds numbers or maybe in our investor presentation if possible So that they there will be clarity on that. So we can start doing that from next investor presentation. 19:51 19 minutes, 51 seconds Okay. Thank you so much. And one more uh thing sir this uh on this staff uh attration u point. So recently uh the HR head has also resigned. 20:04 20 minutes, 4 seconds Huh. One HR. Yeah. Yeah. He was uh so we have already Yeah. 20:11 20 minutes, 11 seconds So so have you found a replacement for them or still? 20:14 20 minutes, 14 seconds Yeah. No, we we have internally uh uh uh promoted a person who was who was working with us since last 3 four years. 20:24 20 minutes, 24 seconds So he has been promoted internally only. 20:28 20 minutes, 28 seconds Okay. And secretary also got hello 20:36 20 minutes, 36 seconds generally as a as a strategy for a company. 20:41 20 minutes, 41 seconds Your voice is Mr. Augustine in between your voice is breaking the point retaining employees are having 20:51 20 minutes, 51 seconds any special scheme so I'm everyone's like frequently there something like this happening in the 20:59 20 minutes, 59 seconds company it's not a good sign right I mean the company is your voice is little breaking but what I understood is about retaining of the 21:07 21 minutes, 7 seconds people uh we we are giving ESOP also to the to our key people who are there in the company apart from the salaries but 21:16 21 minutes, 16 seconds uh as you understand like uh the the uh uh after five seven years sometimes 21:23 21 minutes, 23 seconds people want to uh switch over. It's not that people are switching just in one or two years. So uh uh and uh uh we have 21:34 21 minutes, 34 seconds found replacement who can actively uh do the same kind of work because he was working under him only. So we are not 21:43 21 minutes, 43 seconds very much concerned about that particular this thing but of course yes we we are trying our best in terms of 21:49 21 minutes, 49 seconds retaining the people provided uh that doesn't affect our budget also and we keep people motivated with this esoph 21:58 21 minutes, 58 seconds which we give almost every year like sir thank you sir I learned it 22:06 22 minutes, 6 seconds yeah Participant who wants to ask question kindly raise your hand using raise hand icon. 22:33 22 minutes, 33 seconds Participant who want to ask question kindly raise your hand using raise hand icon. 22:55 22 minutes, 55 seconds Participant who want to ask question kindly raise your hand using raise hand icon. 24:12 24 minutes, 12 seconds Hello Mr. Sumit. Uh we have sent you unmute request. Please unmute yourself. 24:20 24 minutes, 20 seconds Hi sir. Uh good evening. Uh can you please uh give us some uh outlook for I don't know I joined the call a little late. So you know what's the outlook for 24:29 24 minutes, 29 seconds the next two three years both in terms of revenues and margins? 24:34 24 minutes, 34 seconds For uh plastic uh business we are looking at around 24:40 24 minutes, 40 seconds 360 to 370 odd cr revenue for 27 and uh without any further major capex 24:48 24 minutes, 48 seconds our capacity is around 400 odd cr. So we the idea will be to reach this capacity without any further capex first. 24:58 24 minutes, 58 seconds Okay. Yeah. And on the paper business we are looking at around 120 to 130 crores 25:04 25 minutes, 4 seconds for FI27 and roughly 180 to 190 crores for FI28. 25:12 25 minutes, 12 seconds Okay. 25:15 25 minutes, 15 seconds So business will be uh roughly at the margin of 15 15 and a half% AITA and paper business will be at 16 16 and a half% AIA. 25:29 25 minutes, 29 seconds which is uh kind of right now you're achieving how much? 25:34 25 minutes, 34 seconds We are roughly at 14.5 uh uh%. Got it. Got it. 25:42 25 minutes, 42 seconds And also in terms of working capital, how do you see the working capital playing out? 25:48 25 minutes, 48 seconds Uh working capital uh uh cycle actually also depends upon the RA prices. 25:54 25 minutes, 54 seconds Sometimes if the RM is going up we have to stock the material or sometimes during the start of the season we we have to keep certain inventory for 26:03 26 minutes, 3 seconds certain customer to meet the seasonal demand but the idea is to reduce the working capital by by 10 to 15 crores over next two quarters that is the whole idea. 26:14 26 minutes, 14 seconds Got it. Got it. And in terms of capex do you need any uh capex to achieve these numbers? Say ballpark you're saying about 500 crores for 527. 26:25 26 minutes, 25 seconds No no no major capex no major capex up around 3 4 crores here and there but apart from that no major capex. 26:34 26 minutes, 34 seconds Got it. Got it. So right now you're working at what kind of capacity utilization? 26:40 26 minutes, 40 seconds Uh different processes are at different capacities. 26:44 26 minutes, 44 seconds uh but as I said like we are roughly at in terms of revenue in plastic we are at roughly at 330 40 crores of revenue so we have 26:52 26 minutes, 52 seconds additional 50 60 crores of revenue to be increased and uh we are like in some segment we are at 70% in some we are at 27:01 27 minutes, 1 second 90% so and somewhere we are at 55% uh so different processes are at different uh 27:11 27 minutes, 11 seconds utilization Got it. So strategically what are you looking at say after FI27 would you 27:18 27 minutes, 18 seconds continue to grow in the segments that you are in or you're looking to grow into some new segments? 27:24 27 minutes, 24 seconds uh like of course we see a good potential in a paper as a category also once we uh uh are able to stabilize that 27:31 27 minutes, 31 seconds and reach to 80% of the installed capacity there we see a good potential and also in our uh plastic business and 27:40 27 minutes, 40 seconds injection molding we see a growth good growth coming along with the thermofforming so there both once we stabilize and uh uh for a year or so 27:49 27 minutes, 49 seconds reduce our debt then we will definitely look forward to grow further in these two categories is itself by at least another 40 to 50%, so the next target 27:58 27 minutes, 58 seconds will be to go to 700 750 odd crude in that these two segment itself. At the same time, we'll try to identify certain 28:05 28 minutes, 5 seconds new products which we are in process uh which which can add or complement to the existing uh range of products. 28:13 28 minutes, 13 seconds Got it. And what's the current debt level? 28:16 28 minutes, 16 seconds We are roughly at 9500 crores all put together term loan and cash credit. 28:22 28 minutes, 22 seconds And that's roughly what's the cost of debt? 28:26 28 minutes, 26 seconds 7 and a half% to 8% on an average. Uh out of which now we have uh we have we 28:33 28 minutes, 33 seconds have reduced around 15 18 odd crores uh to 2.25%. 28:41 28 minutes, 41 seconds There more like packing credit. No, it was a JPY uh loan which we took. JPY. 28:48 28 minutes, 48 seconds Okay. So are you hedging that loan or it's a uned loan? No, we have natural exports. So we are not uh hedging it. Huh? 28:58 28 minutes, 58 seconds Uh natural exports to Japan. 29:01 29 minutes, 1 second More it is in USD at the end of the day it is linked with USD only. And if we see the fiveyear trend JPY is more or 29:08 29 minutes, 8 seconds less uh stable like because ours is one year only 10 year. 29:15 29 minutes, 15 seconds It's not a long tenure. Okay. All right. Thank you very much. 29:30 29 minutes, 30 seconds Participant who want to ask question kindly raise your hand using rain hand icon. 30:29 30 minutes, 29 seconds Participant who wants to ask question kindly raise your hand using raise hand icon. 30:57 30 minutes, 57 seconds Participant can put 31:06 31 minutes, 6 seconds participant can put their question in the chat box also. 32:35 32 minutes, 35 seconds Participant who want to ask question can also put their question on the in the chat box also. 33:18 33 minutes, 18 seconds Thank you very much. As there are no further questions, I would now like to hand the conference over to the management for the closing comments. 33:26 33 minutes, 26 seconds Thank you and over to you Ramsupo. 33:30 33 minutes, 30 seconds Thank you very much ladies and gentlemen for taking the time off and joining us uh for the Q3 FI26 uh conference call. 33:40 33 minutes, 40 seconds Wishing you all uh good health. Thank you very much.