Thank you. Good afternoon, everyone, and a warm welcome to you all.

My name is Purvangi Jain from Valorem Advisors. We represent the investor relations of Apcotex Industries Limited.

On behalf of the company, I would like to thank you all for participating in the company's earnings call for the fourth quarter and financial year ended 2026. Before we begin, a quick cautionary statement.

Some of the statements made in today's concall may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated.

Such statements are based on management's belief, as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions.

The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now, I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks.

We have with us Mr. Abhiraj Choksey, Vice Chairman and Managing Director, and Mr.

Vivek Thakur, Chief Financial Officer. Without any delay, I would now like to hand over the call to Mr.

Vivek Thakur for his opening remarks. Thank you, and over to you, sir.

Good afternoon, everyone. It is a pleasure to welcome you all to the earnings conference call for the fourth quarter and financial year ended 2026.

I hope you had an opportunity to review the financial results and earnings presentation, which have been circulated and uploaded on our website and the stock exchange. Let me provide you with a brief overview of the financial and operational highlights for the fourth quarter and financial year ended 2026.

For Q4 FY '26, the revenue operating revenue stood at INR 398 crores, registering a growth of 14% year-on-year. This was supported by higher volumes and continued pricing discipline.

While total volumes for the quarter grew by 10% year-on-year, this reflects steady demand across key segments. Operating EBITDA stood at INR 55 crores, up 42% year-on-year, with EBITDA margins which have improved to 13.76%, which is driven by higher volumes, better realizations, and an enhanced operational efficiency.

Profit after tax for the quarter stood at INR 35 crores, which reflects a strong growth of 107% growth year-on-year. PAT margins improved to 8.73%.

This performance was supported by a financial disciplined execution across key operational parameters, along with a continued focus on cost optimization and efficiency improvements. We also continued to execute our ongoing capex projects with rigor and discipline, aimed at supporting strategic growth and capacity expansion.

During the quarter, the ongoing West Asia crisis led to heightened volatility in raw material prices and some moderation in export demand across select markets. In response, we proactively secured key raw materials to ensure uninterrupted customer supplies.

This strategy helped has helped us maintain operational stability during the period. While we witnessed some modest impact on export sales, the company continues to remain resilient with limited direct exposure.

Demand is stable across key core markets, and the proactive risk mitigation measures help us along with a strong balance sheet position help us navigate this volatility. For FY '26, the company delivered a strong performance, achieving record high sales volumes, up 14% year-on-year, and highest-ever export volumes also grew growing at 14% year-on-year.

This reflects a robust demand across both domestic as well as international markets. While operating revenue stood at 1,442 crores, which which is a growth of 4% year-on-year, operating EBITDA reached a new peak at INR 177 crores, up 42% year-on-year.

EBITDA margins expanded to 12.31% for the year, supported by strong volume growth, improved margins, and higher capacity utilization. Profit after tax for the year stood at 101 crores, reflecting a growth of 88% year-on-year.

PAT margins are at 7.03%. Company has maintained a strong liquidity position during the year and remained net cash positive, with cash and investments exceeding borrowings by approximately 70 crores.

Our net debt to equity also improved to 0.08. Lastly, the board has announced a final dividend of 5.5 rupees per equity share, which is subject to shareholders' approval.

This takes the total dividend for FY '26 to 8 rupees per equity share, including the interim dividend which was declared earlier. Before I conclude, I would like to briefly highlight certain provisions and accounting adjustments recognized during the quarter.

Employee benefit expenses include certain provisions of approximately 14 crores, which relate to long-term incentive plan, pending litigations based on external legal advice, and higher gratuity and leave encashment obligations arising from policy changes. Additionally, an impairment assessment of turbine and related accessories at our Valia facility, it resulted in recognition of impairment loss of about 4 crores, which has been charged under other expenses.

Further, following an internal technical assessment, we revised the useful life of certain plant and machinery, resulting into additional depreciation of about 2 crore during the quarter. These accounting adjustments better reflects the economic life of these assets.

Some of these items are one-off and may not recur. With this, now I open the floor for questions and question-and-answer session.

Thank you.

Thank you, sir, for the opportunity. Just a couple of questions and congrats on a good set of quarters.

Sir, during the quarter, I didn't understood this employee benefit expense. You had also mentioned in your footnotes that this some 13 crore of additional cost has been taken towards some pending litigations on legal advice, towards gratuity leave.

We have not seen this sort of increase when we look at the history over the last five, six years. This additional numbers, if you can quantify what is this based on?

Sure. Yeah.

What's your second question? You said you had two questions.

Sir, second question, I would like to know, this quarter again this policy changes in depreciation, suddenly why we are changing some policies on depreciation in a quarter where we are able to get good benefits? Still this sort of some provision, some one-offs in other expenses also of some 4 crores.

If you can also quantify what is that turbine-related losses exactly and also why there is a policy change in depreciation only in this quarter?

Sure. I'll answer both questions.

I think these are everything to do with certain provisions that were made, and I realized that they are higher and other people may have questions on the same. Maybe I'll spend a little bit of time on this and hoping that whoever has similar questions those are also answered.

First to answer your question on the employee benefits expense, there are three or four provisions that were taken by, of course, the management, auditor, audit committee, board. It's gone through the whole process.

It was the end of the year, there were all provisions that were taken where we thought were prudent to take them. One was a new policy on long-term incentives for certain senior management employees that we've just introduced in the last quarter.

It is to be paid out over a period of five years. That provision has been made.

That will be paid out in the fifth year, in 2030. That provision has been made this year, and that will be made every quarter from now on.

Obviously, this year, since it's happened at the end of the year, the entire year's provision have come into this quarter. Going forward, every quarter will be less.

That's on long-term sort of incentive. That's one reason.

The second reason is there are some pending litigations that were against the company. Again, this was discussed with the auditor, audit committee.

It was transparently discussed with the board as well. We thought it was prudent to make a provision at this stage.

Unfortunately, I can't talk a lot about it since the matter is in the courts, and I think in the next two, three years or whenever it is, some clarity will emerge. At that point, we will see, but at this point, we thought it was a conservative call, but a prudent call to take that provision.

The third thing was some changes in gratuity policy that happened this year. It's neutral to the company.

It's just that actuarial valuation changed due to certain gratuity policies that we've undertaken. Obviously, the new wage code that has come about sort of triggered this discussion, we made some changes in our gratuity policy as well.

As a result of which, we've had to make a provision of that as well. Again, the numbers are in the notes for all those three.

All those three together have had that impact on employee benefits, that line item. The second question on the depreciation, actually, this is the co-gen power plant that we had invested in a few years ago.

Now in the last few quarters, we've not been using the turbine because the power available from the grid is significantly cheaper than generating our own power. When we had made the investment at that time, coal prices were lower, it made sense and the grid power prices were higher.

As a result of which, again, and we found it prudent to kind of impair this turbine, at some point, we may even sell it. Right now, we've just kept it as a backup, but we may choose to sort of liquidate that as well.

As a result of that, all the co-gen power plant assets, which were sort of, the depreciation was taken over 40 years, has been reduced to 15 years. That's resulted in the change in depreciation.

It's linked to the two. We felt that it was the end of the year sort of, and we wanted to sort of clean up whatever pending issues there were.

These mostly are one-off nature, and we don't expect them to be recurring. Sir,

one more question, if I can, please?

Let him ask one more follow-up, please Sagar, and then we can move on.

Go ahead.

Sir, wanted to know is it possible to quantify the inventory gains during the quarter? On Nitrile Latex, sir, any update where are we standing today in terms of utilizations, and what is the oversupply situation today, and what are we expecting to ramp up or to get some operating leverage for '27 and '28?

Sir. Thank you.

That's it. Thank you.

Inventory gains, yes, there has been some inventory gains. I don't think there's been significant.

Perhaps there has been, because Jan, Feb in March, there was some run-up, I guess. Honestly, March 1st is when the whole war situation started.

I would say there was not a significant inventory gain, but some inventory gains. I think largely, there has been margin expansion in Nitrile Latex.

That is definitely been one of the reasons for a good quarter. The war situation, we were actually better placed than some of our competitors in March, in the month of March.

That helped for sure in Nitrile Latex gain. As far as Nitrile Latex margins, but as far as long term is concerned, it still remains an oversupply.

We are running at almost full 100% capacity utilization now for Nitrile Latex. At least going forward, we expect to run at full 100% capacity utilization.

From a capacity utilization standpoint, no issue. From a margin standpoint, short-term margins have certainly improved right now because of the war situation, and some of our competitors have not been able to consistently supply material to our customers.

That's helped. Long-term, as I've been mentioning, it's improving slowly, and we expect it to continue to improve.

There might be some short-term gains due to this war situation in terms of margins for Apcotex.

Got it. Thank you, sir.

Thank you, Aditya.

Hi. Good afternoon.

Can you hear me?

Yes. Go ahead, Ankit.

Hi. Congratulations on the good set of numbers.

Just looking at your I think EBITDA for Q4, I believe it's amongst the highest numbers in the last few quarters. Would it be safe to assume this as the new base for say the upcoming four quarters ahead for Q1 to Q4, or do you seek some kind of margin compression in case of the crude ahead?

As we generally don't give any guidance of future quarters. Our business is fairly volatile quarter-on-quarter.

There are some quarters, and we've had seven, eight difficult quarters in terms of margins also. This quarter, obviously EBITDA margins have been much better.

Difficult to say given the current war situation. Look, I would say strategically as we are at a higher capacity utilization levels, we expect margins to be better than the average of last year, at least for this coming year.

Quarter-on-quarter is really difficult to say because there are so many uncertainties in the business. First, and if you see the last one year, there's just been so many things from tariffs to this war, to lots of raw material issues in general.

Difficult to say quarter-on-quarter.

Sure, thanks. That's helpful.

Secondly, just want to understand your latest read on the ADD that was kind of sitting, any read if it's coming in or not or if you already built that benefit into your lack of benefit into your FY '27 planning?

We never built it into the planning anyway. It was something that we wanted some support from the government.

Unfortunately, as I mentioned in the last concall as well, the Finance Ministry did not notify the anti-dumping duties that were recommended by the DGTR, which is part of the Commerce Ministry. There are some other legal cases on the same issue, not Apcotex, but they are ongoing.

We're waiting and watching on what happens there. In one or two cases, a high court has actually given an order to provisionally levy anti-dumping duty.

It hasn't happened yet, I'm not sure how it's going to play out. If it makes sense, we will see if you want to go legal.

However, we have not built that into our plans. We continue to expand and we continue the expansion project for NBR, which will almost double our NBR capacity by next year.

We feel fairly confident that, as far as the returns on investments with all the work that we have done over the last few years with or without anti-dumping, it should be good. Obviously, yes, we wanted some support from the government for a period of five years since we were coming up with a significantly large NBR plant.

Right. Thanks, and wish you guys all the best.

Thanks.

Thank you.

Hi. Thanks for the opportunity.

Just two questions. Can the existing assets support further growth, or has utilization already entered the constraint zone because the new capex is further away?

Going into fiscal '27, how do you see at an overall aggregate basis the capacity that is still available?

No, you're right. For us, capacities, we have five different plants in our two locations.

I would say in one or two plants, we still have some capacity available. For NBR, for example, we were at 100% capacity utilization for a few quarters and will continue to be so for the next four quarters until new capacity comes up in Q1 of the following year, following financial year.

For synthetic latex, we're building new capacity, again, which will come up in the following financial year. There, we have some leeway, and we can grow.

In Nitrile Latex, for Q4, we were at almost full capacity utilization, so that will continue to be at full capacity utilization. There, we hope margin expansion will be there over the next four quarters.

It's a, every business has we are running at fairly high capacity utilizations. Yes, that's true.

There is some leeway for growth. Fortunately for us, some of the, we were anticipating, when I look back, of course, in 2020 hindsight, we were anticipating to reach full capacity utilization in some of our products by Q2 or Q3 of this financial year, '26, '27.

Fortunately, Q4 was very strong for us. That's where we are today.

Sure.

Sure, that's helpful. What part of the current margin expansion you think is structural, operational improvement versus temporary raw material spread kind of a tailwind?

Because there's a lot of chaos and disorder happening globally as you have acknowledged over previous earnings calls as well. Given that the world is still very fragile and random, how much of this improvement we should take as structural, and how much is just pure luck or cyclical?

I think, look, if you see Jan and Feb were fairly stable months, right? The tariffs were gone.

There were no major wars. I think Jan and Feb for us were very good months.

Sure, in the month of March, we did have we were better placed than some of our competitors. We took some really good decisions in the past that paid off.

There might be some amount of, as you would say, cyclicality or temporary benefits that would have come. Hard to quantify, but in this quarter, I think not a very large amount in Q4.

That's helpful. That's all from my side.

Thank you. Sure.

Thank you.

Hello, sir. Congratulations on a great set of numbers, and thank you for the opportunity.

Thank you,

sir. What are the current utilization levels across Nitrile Latex and rubber capacity?

I would say for Q4, I'm talking about Q4, yeah, not for the whole financial year, but for Q4, we were between 90% and 100% across all our plants, all our factories.

Sir, are we planning any capex, which is going to bring up some more capacity in FY '27?

FY '27, no. Most of this capacity will come on stream in FY '28.

In FY '27, we will have growth for the whole year, and, yes, there are some debottlenecking projects which will help a little bit. Yes, you're right.

There is no major capacity expansion plan or project that will come on stream in FY '27. Sir,

which quarter of FY '28 we'll see more additional capacity?

I think by Q1 of FY '28.

Okay. Sir, with the kind of current geopolitical scenario, now that most of it is out of it, but still there is some kind of conflict going on.

I believe that we had inventory of raw materials earlier on. How are we placed for the upcoming two quarters?

A great question. Look, I think as there are the way we look at it, there are two kinds of raw materials, one, three kinds, rather.

The ones that are available in India, those, obviously, we are better placed. Even for those raw materials that are available in India, their upstream supply chain sometimes is an issue when they're importing, especially from the Middle East.

Then second set of raw materials that we were importing directly from the Middle East, from Saudi, Kuwait, that were affected immediately, right, as soon as the war started within the first week, as as soon as the Strait of Hormuz

So

that remains an issue, and it remains a challenge. Fortunately, we were, we've been able to run our plant without one even one day of shutdown because we were able to take some bold calls in early March.

We covered material, as Vivek mentioned in his opening in his opening remarks, that we took a risk, covered a lot of the material so that we could keep the plants running in March and April as soon as the material stopped from the Middle East. The third set of materials is that comes from other parts of the world, which continues, right?

Obviously, their prices have gone up, but availability so far has not a problem. The problem is is is, even though there is a cease-fire today, the Strait of Hormuz is still closed.

With the Strait of Hormuz being closed, there are a lot not only oil, but a lot of petrochemicals that the world is dependent on, on on the Middle East region for those petrochemicals. Those, we don't know what the long-term impact of that is.

As of now, it seems that we have managed managed it quite well. Honestly, it's kind of day-to-day, I wouldn't say day-to-day, but week-to-week, situation.

Far, we feel fairly confident that we are covered up to the end of June.

Right. Sir, appreciate your transparent response on this one.

Thank you so much.

Thank you.

Yeah. Thank you for taking my question.

This FY '26, we have generated 200-plus crores of cash flow from operating activity. Now, and I see around 50 crores of that is because of working capital adjustments.

How do we see it directionally from here? How much of this should be structural and how much of this can be one-time?

Or if you can just throw more color, that would be very helpful, sir.

Nothing is one-time or very little is one-time because the whole year, in fact, was a challenging year in some sense. Only in March, you can argue there were some perhaps short-term benefits.

The remaining 11 months were sort of regular 11 months with challenges. We expect it to only improve.

Okay.

Cash generation,

on an

annual basis you mentioned? Cash generation.

On an annual basis,

yeah. Okay.

Basically, when I look at the working capital situation over here, it is a positive number in this compared to the general sense of always working capital being negative. That was my main question.

Okay. You're right.

That way, because raw material prices were fairly muted for about 9 or 10 months of the year, that definitely helped with sort of cash generation, to speak. Now, obviously, in the current context, it's exactly the opposite, where the prices are the highest in many, many years.

Some of it now will be sucked back into working capital. From that point of view, yes.

I meant from a profitability point of view, will only expect it to improve. Overall, working capital requirements may go up and down based on sort of raw material pricing and volatility.

Overall, I think structurally from a profit point of view, we expect things to only improve from last year.

Sure, sir. My second question was related to Appcobil, we had a good run on Appcobil for three, four years, and I think this year probably we have not grown that much.

If you can throw more color as to how do we see that and what are your views over the next two, three years? Directionally, in general, I'm not asking for any guidance.

How is the competition shaping up in this space? That's it.

Actually, even Appcobil, we finished the year quite strong, we've had double-digit growth. There were some internal issues for us in terms of manpower at the beginning of the year.

That's been now corrected. We've relooked at our distribution channel.

I think we have a fairly good team in place. We have a new leader who's taken over last year.

We feel fairly confident that we will continue to grow at double digits given, as I said, we're in a niche space in a few geographies, a few products. We are trying to improve and grow in that.

As and when there is any additional information that is material in nature, we'll let you know.

Okay. Thank you so much, and all the best, sir.

Thank you.

Yes. Hi.

Good afternoon and congratulations to the team on a great set of numbers. Abhiraj, first question on Nitrile Latex is how is sort of profitability shaped up in that quarter?

Now, is that contributing to overall profitability?

The short answer is yes, of course. Just to recap the history that when we commissioned the plant in April '23, or March '23, obviously, it was at the down cycle.

It was the lowest and in all of '23, towards the '23, '24 and '24, '25, the margins were the lowest they've ever been, even pre-COVID. Then things started improving in '25, '26.

Every quarter, we've seen a gradual improvement in margins. In Q4, there was a significant improvement.

As I mentioned to one of the callers earlier, especially the month of March could have been a little bit of a blip because we were better placed than some of our competitors, we got excellent margins. Some of it may again come down in the coming few quarters.

As of now, Nitrile Latex structurally remains still a challenging business, but temporarily, it's been very good for us in terms of margins.

That's great to hear. Secondly, on the new capex that we are doing, which is obviously 12 months away.

Maybe slightly medium-term question on that, that given the geopolitical challenges, etc., the world that we are living in, maybe we assume that this is status quo or that things are not going to be normal, let's say, for a while. Any sort of medium-term plan on how we are placed?

Do we need to do something to de-risk ourselves? Are there suppliers we can sort of engage with?

Just want to understand big picture on the two, three main raw materials that we use, how the team is thinking about that at least.

No, you're right. Look, it's, as I've mentioned to one of the previous callers, it's very difficult because I'll just give you an example of one raw material called styrene that we were importing largely from the Middle East, Kuwait and Saudi Arabia.

Obviously, those, with the Strait of Hormuz being closed, those avenues are closed right now. A large chunk is coming from China now.

Far, good. We've been able to get it.

I think we're covered till the end of June. It's so hard to predict what will happen in the future.

I wish I could. We feel fairly confident the way things have been.

Initially, in the month of March, obviously, there was a lot of panic. I think supply chains in the world are quite resilient, and thanks to the Chinese overcapacity in most manufacturing, we've been able to ride through that.

Some other raw materials like butadiene are available in India, so as long as they don't have an issue with their upstream supplies, we don't expect any issue there. Most of the others also, as of now, the issue in getting material doesn't seem to be an issue.

We're hoping that in the next few weeks, if the war ends and the Strait of Hormuz opens and things normalize, then, of course, everything is back to normal soon, hopefully.

Understood. Congratulations and a great show on the cash flow in these tough times.

It's an outstanding work by the team to pay down the amount of debt that we've paid down, and the balance sheet is as strong as ever. That's a great job done.

That was the idea. We want to keep a strong balance sheet even in the most difficult times.

As you rightly said, the team deserves all the credit. We worked day and night in the month of March and April to ensure that our customers don't suffer, our plants keep running, and our customers' plants keep running.

That's been the endeavor, and I'm glad it's worked out. Another thing I'll mention, though, is that, and some of this doesn't get reported, but managing risks.

I'll give you a small example is both our plants run on multiple energy streams. For example, our Valia plant, we can use gas, we can use coal.

In this context, when in the month of March and April, as there was a shortage of gas, and we were able to manage without even a single day of production loss, whereas I know many other companies, especially in Gujarat, had to cut down production by 50% and more. Our team has worked really hard to manage this.

That is indeed heartening to hear. Thank you very much, and all the best for the next few years.

Thank you.

Hello?

Yes, Farokh. Good afternoon.

Good afternoon. Hi, Abhiraj.

Congratulations on the excellent numbers. Some of my questions have been answered.

My first question was on Nitrile Latex. When we had initially commissioned the project, we had spoken of a sort of step-up increase in capacity at a very low cost.

Is that still applicable, and could it be possible that in the next 6, 9 months, we could get some capacity there, all going well with growth and margins and etc.? Is that a possibility, or will that too, if it has to happen, get pushed into the following year?

Absolutely. The plan is ready.

We are ready to sort of go ahead and do that. We were waiting just to see how margin improvement happens.

Honestly, the margin improvement, as I mentioned to a previous caller, have been better than expected in Jan and Feb were good. March was excellent.

April is excellent. That may be partly because of this war situation.

We're waiting to see how things land once things normalize. Otherwise, we're ready to go ahead with it, and it's a question of bringing in equipment, and just the equipment lead time, ordering and delivery of the equipment.

That we expect will be 8 to 9 months in the current context. I think we will probably take a call on that in the next 3 to 6 months.

Again, if that capacity comes on stream, it'll be in the next financial year, not this financial year.

Got it. Then I just had a question on some of these numbers that you mentioned in your sort of initial comments.

Firstly, where are we with regards to net cash? We have all our investments and cash, etc., and then we've got some debt.

Where are we on a net cash basis? Relating to the earlier comments, apart from the litigation-based provision which you have taken, what else from all the numerous provisions that you've mentioned are nonrecurring?

The litigation is also nonrecurring.

Right. Apart from that, what else is nonrecurring?

The long-term incentive will be recurring, but the difference will be that I think it's for the long-term incentive, Vivek, are you on the call? That 2.7 crores is for the whole year, and going forward, it'll be done every quarter, right?

Yes, correct.

That will be recurring. The other thing was on gratuity policy changes, that was also a one-time thing, that will be nonrecurring.

Right.

The impairment of the asset, that one asset, turbine, is nonrecurring, of course, it's a one-time thing.

Correct.

The depreciation we have taken for the year, I guess that will be kind of recurring because we've reduced the useful life from 40 years to 15 for a few assets that were linked to the turbine.

Then

I would say majority is nonrecurring, there'll be some amount that'll be 3, 4 crores that may be recurring.

Correct. The 260 lakhs, which was the incentive, that will still be Obviously, it won't be 260 it'll be 260 lakhs per annum.

That's the rate at which the expensing will happen.

There's an accounting thing about sort of time value, so that may differ every year. Yes, per annum, correct.

It's per annum. From now onwards, you'll be providing for it every quarter.

Sure. Providing for it every quarter, but the amount will be relating to this amount up or down on a per annum basis, the total amount.

Got it.

Yes, exactly. Yeah.

Every quarter. Yeah.

The cash position or the net debt position?

Vivek, do you have that number for as on March 31st? It's only improved since then, but as on March 31st?

As of March 31st, we have a total debt of about 90 crores, and our investments and cash bank balances are 160-odd crores.

It includes working capital loans as well, right?

It includes all the loans. Entire debt is 92 crores.

Term loan and working capital. Yeah.

We are positive by about 70 or 80 crores.

That's correct.

Great. All the best and, once again, congratulations.

Thanks a lot.

Thank you.

Thank you.

Sorry, I didn't hear the name. Can you repeat Sagar?

Sure.

Yeah. Thanks for the opportunity, sir.

Congratulations on a great

Yeah. Is this better?

I wanted to ask, on a basket basis, how much percentage increase have we seen on the raw material side?

Sorry. Can you repeat the question?

I didn't

Yeah. How much increase have we witnessed on the raw material side prices?

Are you talking about Q4 or

Yes. Q4, yes.

Vivek, do you have that

Just a broad number on an average how much increase?

Average increase in raw material prices in Q4 compared to Q3, Vivek, would you have that number?

I don't have the blend, but I think it was in line with the increase in crude prices. Generally, we have seen the crude prices have gone up by about 70% in couple of months.

That's round about the increase we are also looking at in raw material prices.

I think what Vivek is saying, if you were to compare the raw material prices as on Jan 1st and March 31st, obviously, it was a huge jump. The blended average of Jan, Feb, and March, and there's so many raw materials that we have, honestly, you can just look at the cost of materials, COGS, and you'll see the blended, right?

That's the increase.

Understood, sir. Understood.

Since, sir, we have been able to maintain or I would say we have improved our margins, we have been able to pass on increase on the finished goods side as well. My question is, do you see more resistance from customer side if we further have to increase prices going forward?

Short answer is yes, absolutely. I think that's a big worry because, in the long run, I don't know what these kinds of high energy prices and high petrochemical prices, or nobody knows, I don't think anyone can predict what the demand destruction will be.

In some industries, they're price inelastic to some extent, there maybe it won't be. In some industries, I know some of our customers who, for example, supply to the automotive companies are really facing the brunt because they're not getting the price increases from automotive companies, and all their raw materials have gone up, not just our products, but all other products is well.

They're being squeezed really hard. I don't know how they'll react.

Some of them have even decided to run the plant at losses for one or two months, but I don't know if that's sustainable. Obviously, that's not sustainable.

It's very difficult to say, but I would say, in the long term, I think with inflation due to this issue, I think it's definitely a big cause of concern, and it should be for all industries, not just ours.

Understood, sir. Sir, one more question from my side.

In what situation, sir, would you expect that margins would deteriorate from here, sharp further increase in crude prices or a sharp fall in crude prices?

I think Look, a fall will definitely hurt us because we are covering for material. The call we have taken is that we are, we're going to cover raw materials and ensure plants are running, and we're not going to take a call on where crude price and petrochemical prices go.

When once we have decided that, obviously, as I mentioned to one of the previous callers that we are covered till June. Now suddenly if prices were to fall and we're stuck with high-cost raw materials, we will be there could be a quarter or a few months, a few months or a quarter where we would have to live with lower margins, and that's fine.

That's the nature of our business, that there are some quarters that could be really good and some quarters that, we'd have to to keep it going and protect our market share, we'd have to take that call. I would say at least, obviously a sharp drop in prices will definitely affect margins in the short term.

Increase in prices, I'm not sure. I think we will be able to pass it along, but if we can't, then it could also impact, you know.

Makes sense, sir. Sir, just last question

Okay. Let Mr.

Raheja ask one last question.

Thank you, sir. Yes, sir, hypothetically, had we operated on a 100% capacity utilization in this quarter across all plants, what would be our revenue levels in that scenario, assuming current prices?

We are at very high capacity utilization anyway. Assuming current prices, you could assume a little bit more.

I don't think we have too much room to grow, but maybe 5, 10% more.

Understood. I

don't know. I don't have the answer.

I'm just guessing. I shouldn't be guessing, but I'm just guessing a little bit more.

Perfect, sir. Thank you.

Yeah.

Hi. Actually, most of my questions have already been asked and answered, I have no questions.

Thank you.

Great. Thank you, Darshan.

Thank you, sir, for the follow-up. Sir, just a couple of questions.

Sir, on Nitrile Latex, is it possible to quantify for this fiscal FY '26 what would be the top-line contribution and similar EBITDA contribution? Secondly, sir, onto this, suppose for this quarter we have done a 15% EBITDA margins.

Base business margins versus the Nitrile Latex margins, how are these two margins today as on date? Also, sir, you had also said to an earlier participant that the margin improvement into the Nitrile Latex that seems to be more of a temporary in nature.

Structurally, though, it has not been improved actually. What are the levers you see whether this business can improve, or it will continue to remain in oversupply mode, and things will continue to go back when the crude prices fall and all things will go back to normal?

Okay. Sorry.

I'll answer your last question first. I think you misunderstood.

Structurally, also, there was an improvement, right? Over the course of the year, every quarter, there has been a structural improvement in margins.

There were a few quarters we were at 0% EBITDA margins. That had improved in Q3, Q4.

Of course, in the month of March, there was some benefit that our company had, especially in Nitrile Latex. That only for that 1 month in the whole of the last year where you could say it's not structural.

At some point, of course, we feel as the capacity utilization in the world increases for nitrile gloves and Nitrile Latex, margins will go back to pre-COVID levels. They were still not at pre-COVID levels in February, but at some point in the next few quarters, they'll continue to improve.

Get to those levels is our contention. It's already taken three years, we've been very patient.

Sure, there are some short-term gains, and sometimes, as I mentioned to the previous caller, short-term losses as well that we may have to sort of live with. I do not have a crystal ball.

You would appreciate, in the current scenario, who can predict what's going to happen the rest of the quarter, let alone the rest of the year. I don't have any number for you in terms of giving guidance for Nitrile Latex margins and all of that in the next one year.

I hope that answers your question.

For FY '26, just on to the direction-wise if you can say, compared to the base business, margins would be lower?

The difference It has been lower. Yes, that's a question I didn't answer.

Compared to the base business margins, they have been lower, but catching up. Again, I don't exactly know what will happen for the rest of the year.

I expect structurally it'll keep catching up, and eventually, it should reach the base business. I don't know when that will happen, but that's what will happen.

Sir, the top contribution of Nitrile Latex in top line for FY '26 and on EBITDA also, sir?

You mean in terms of revenue?

Yes, sir. Revenue and EBITDA, both.

Don't have the EBITDA number. Overall, percentage revenue of Nitrile Latex will be probably, I'm guessing, 15 to 20%.

Vivek, do you have a number approximately of how much we expect Nitrile Latex revenue to be as a percentage of the top line? I know none of our sort of product lines are more than 20% of our total top line, it will be probably 15 to 20% is what I expect.

Vivek, do you have a number?

Yes, sir. Around those levels.

Yeah.

Got it, sir. Thank you.

Thank you.

Hi. Thanks for the follow-up.

I just wanted to understand your overall R&D approach and thought process around innovation. How can we structurally transform this business over the medium to long term to make it more sort of value-driven rather than volume-driven, and any initiative that you are currently very positive about as far as the R&D innovation approach is concerned?

Thank you.

Absolutely. Great question, Sajal.

Two, three things we're doing. Number one is, see, we are in eight different industry verticals largely, yeah, paper, carpet, construction, textile, rubber, footwear, tyre, and gloves.

These are our largely eight different industry segments. In each of these industry segments, we have multiple grades of products.

Some grades are what people would call commoditized, where sort of me-too products. Then there's some grades within each segment that are fairly specialized, where for two or three customers, we are making this grade that nobody else in the world makes.

For example, I can give you some examples. Technical textiles, there are a couple of grades.

There is a few grades in oil and gas, specific application of oil and gas, which broadly falls under construction segment, but it's actually a specific oil and gas segment. Within paper as well, we have for certain specialty paper.

That's how we look at it. There will be parts of the business which will be what we call commoditized.

Even I feel that you can't call it a commodity product because a commodity is something like cement. None of our products are like cement, right?

None of our products like steel. It's not as commoditized, but sure, there are multiple competitors or two, three competitors, and we don't have that much differentiation as far as product is concerned.

Therefore, those are commoditized. For each of those segments, we look at where can we move up the specialty value chain and do something for our customers wherever there is a demand.

Another new thing is, for batteries, we are developing something for battery binders, which is very specific for a few customers. Those kind of things will happen.

Second thing we're doing is we're building a new R&D center this year, for which we've got approval from the board, and we're going to spend somewhere between 20 to 25 crores building a new R&D center, where not only in our current industry segments, but even in different types of polymers, we'll be doing new research, new molecules. As and when that is commercialized, we will, of course, come back.

Nitrile Latex is a good example of something that came from our R&D. These other examples that I gave you for technical textiles and oil and gas all came from our R&D.

There are many other examples, for example, in the NBR space as well. Sorry, I feel passionate about it, it's a long answer.

We are developing a new R&D center, and we plan to spend let's say 20, 25 crores only on infrastructure, and then also, in our kind of business, it's very hard to get this kind of talent. Also, we have to actually get some raw talent and groom them and retain them to ensure that they add value and they can add value to our customer not only in India, but globally.

That's a few things that we're doing. In addition to that, we're looking at, obviously, brand new areas that have low competitive intensity, that are something that would be required more in the future.

Obviously, where we have that polymer capability and expertise, and where we can develop that. I hope that answers your question.

Those are a few things we're doing in R&D.

Definitely. Such long comprehensive answers are so very helpful.

Thank you so much. Very comforting.

Thank you, Sajal.

Sir, how do we see our export business? Is it sustainable what we have seen in FY '26, or are we trying to grow better than this year?

A great question. It's been a challenge, especially in the Middle East, obviously last 2 months.

That remains a concern while the war is gone. Look, a large chunk of our export business is exports to UAE, Kuwait, Saudi, Egypt, Turkey, those whole areas.

While Egypt and Turkey are not affected by the war, but freight rates have gone up. Our cost of certain raw materials that we were getting from the Middle East are now coming from China, so that's gone up.

That's one of the concerns for us in the coming year is how one is if those customers themselves are kind of running at lower

demand,

lower capacities. That's a concern.

The customers in Egypt and Turkey that are running are getting competitive products now because our costs have gone up significantly, maybe compared to some of our Chinese competitors. For the first time, we're seeing in Turkey and Egypt, for example, Chinese latex coming in there.

That's something we're sort of watching closely. Again, that structurally, we feel, that will completely reverse again.

While there are some structural benefits that we have got from the war, there's also been temporary benefits we've got, there have been temporary disadvantages as well from this war. This is a big one.

We think that'll correct very quickly once the war ends and things normalize in the Strait of Hormuz. There are some positives and some negatives because of this war as well.

Sir. Sorry, one follow-up on this.

How much does Middle East contribute to our top line?

When I say Middle East, I'm looking at Egypt, Turkey, UAE, Saudi, all these countries, all put together. As I said, the business is good, but the margins have been affected.

About probably Vivek, 7, 8% of the total top line? About

12%.

12%, there we go. Okay.

So 12%. It's definitely a significant number.

We are trying to make that up from other geographies and including India. Far in the month of March and April, we've been able to do a good job.

We'll see what happens in the future.

Sir, if the Middle East situation was absolutely normal, then would we increase our exports from this region, all the countries which you mentioned?

Of course.

Okay. Do we have any incentive to do higher margins from this region or

No, no. This is a strategic region that we've developed over a few years, and we'd obviously like to make sure we keep the market share and hope the customers also are healthy and do well.

Some of it is out of our control. Whatever is in our control, we'll try and do our best.

Right. Sir, are we exporting anything to

Okay. He can finish the last question, and then we can

Yeah. Just this is a related one.

How much is that percentage from Europe and US?

No, Europe and US is very less. I would say less than 3, 4%, 2, 3% maybe.

Thank you so much, sir, and wish you very best.

Thank you.

Yeah. Sir, I have one clarification question.

You mentioned we are looking for 5 to 10% growth. That's on volume number or the revenue number?

No, I didn't mention 5 to 10% growth. No, we expect the growth to be more for the whole financial year compared to last year.

Compared to Q4, which was a very strong quarter in terms of volumes, yes, value-wise, very difficult to say because we don't know what the prices are going to be. Yes, volume-wise is what I meant.

Let me rephrase, sir. Almost all our capacities are running at full utilization.

Are we looking for same kind of double-digit, high double-digit volume growth this year?

In Q4, I'm talking about Q4, we were running at 90 to 100%. Q1, Q2, Q3, we were not, right?

We were at lower capacity utilizations.

Yeah. What kind of volume growth we are looking for this year, sir?

For FY '27. I think,

as I said, the whole world is a little very uncertain right now. If the demand is there and we do have capacity to grow by another low double digits in volume terms.

Okay. Realization growth will be over and above that double digit, right?

It will depend. If the raw material prices crash, then it may not be, right?

It just depends. If you see this year, FY '26 compared to FY '25, as Vivek mentioned earlier, we have a 14% growth in volumes, but only a 4% growth in revenue.

Now

it's just April, right? We're just 1 month in the year, it's very hard to predict what will happen to revenue.

I can talk about volumes.

Cool. Understood, sir.

Thank you.

Thank you.

Namaskar Abhiraj ji, kya aap meri aawaz sun pa rahe hain? Haan ji Om Prakash ji, boliye.

Kaise ho? Bas bahut badhiya, sir.

Ek baar phir aapne net profit ki century lagayi, iske liye bahut-bahut badhai. Effort poori team ka hota hai, par captain ki bhoomika mukhya hoti hai, to iske liye Abhiraj ji aapko, Vivek ji ko aur Brijesh ji ko bahut-bahut badhai.

Aur aapne jo dividend diya hai, shareholders ke liye yeh bahut mahatvapoorna hota hai, to 5 rupees 50 paise ka jo dividend diya hai, iske liye bhi bahut-bahut shukriya. Aur aapki team kaise helpful hoti hai, aaj main BSE se file download kar raha tha, to main nahi pahunch paaya tha site pe, to maine Brijesh ji ko phone kiya.

Unhone meri help kari, tabhi main yeh concall attend kar paa raha hoon. To aapki team effort bahut hi achha hota hai, bahut supportive hai, bahut-bahut thanks.

Aise hi aage badhte rahiye, company ko aage badhate rahiye. Thanks.

Thank you, Omprakash ji. Aap bilkul sahi bole ki it's all about the team.

Team ke bagair captain kuch nahi hota, sir. That's the only disagreement that I have with you.

Thank you very much for your kind words. Thank you.

Any other question, Sagar, or should we end the call? Hello?

Sir,

Hi, sir. Thanks for the opportunity.

Just one question on NBR. How is that product performing for us?

Because with freight cost increasing, have the imports come down, and which is helping us?

I think in the short term, yes. I think we are also seeing a pushback because the prices have also been the highest in many years, or probably highest I've ever seen.

I think, overall, yes, imports are down, but then demand is also quite challenging in the current context. Things are margin-wise better for the last couple of months.

Overall also, things are okay. NBR is okay, doing well, steady.

We don't have capacity, we're running at full capacity. Our main endeavor is to ensure that we run at full capacity every month from now on.

Yeah.

Understood, sir. Thanks, sir.

Thank you, Sagar. We thank all the participants and investors for attending the conference and for the continued trust and engagement.

We also look forward to your continued participation in the next quarter's earning call. Thank you, and have a good day.