Apcotex Industries Limited (NSE: APCOTEXIND) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Abhiraj A. Choksey — Vice Chairman and Managing Director
Analysts:
Unidentified Participant
Nupur Jainkunia — Analyst
Dhaval Shah — Analyst
Aditya Khetan — Analyst
Balasubramanian — Analyst
Farokh Pandole — Analyst
Manav Vijay — Analyst
Rohit — Analyst
Rudraksh Raheja — Analyst
Deepak Ajmera — Analyst
Nirav — Analyst
Presentation:
Abhiraj A. Choksey — Vice Chairman and Managing Director
Ladies and gentlemen, good day and welcome to the Q1 FY ’26 Earnings Conference Call Apcotex Industries Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that your conference is being recorded at this time. I would like to hand the conference over to Ms. Nupur Jainkunia from Velorem Advisors. Thank you. And over to you ma’. Am.
Nupur Jainkunia — Analyst
Thank you. Good afternoon everyone and a warm welcome to you all. My name is Nupur Jain Kunia from Valorum Advisors. We represent the industrial relations of Apcotex Industries Ltd. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the first quarter of financial year 2026. Before we begin, a quick cautionary statement. Some of the statements made in today’s conference call may be forward looking in nature. Such forward looking statements are subject to risk and uncertain opportunities which could cause actual results to differ from those anticipated.
Such statements are based on management’s beliefs as well as assumptions made by and information currently available to 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 trip you 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 Softy, Vice Chairman and Managing Director.
Without any further delay, I request Mr. Abhiraj Softsee to start with his opening remarks. Thank you. And over to you sir.
Abhiraj A. Choksey — Vice Chairman and Managing Director
Thank you Nupur. Good afternoon everyone. There’s an echo. Can I request you to press on mute? So, thank you again. Good afternoon everyone. It’s a pleasure to welcome all of you to the earnings conference call for the first quarter of financial year 26. With me I also have our CFO Mr. Vivek Thakur and our GM Finance Mr. Suraj Badale. I hope you have had an opportunity to review the financial statements and earnings presentation which have been circulated and uploaded on our website and the stock exchanges. Let me provide you with a brief overview of the financial performance for the first quarter ended 30th June 2025.
The operating revenue for Q1 FY26 to that rupees 376 crores. Reflecting a year on year growth of around 12%. Operating EBITDA stood at around 39 crores. That’s a robust 22% year on year growth. And the operating EBITDA margin improved to 10.3% up from 9.45% in Q1 of FY25. There was a strong growth on PAP as well. With the total profit after tax this quarter of rupees 19 crores. The PAAS margin for the quarter was 5.11%. The strong performance was driven by the highest ever quarterly sales volumes. Overall our volumes grew by 25% year on year even though the revenue grew only by 12%.
Combination of product mix, I guess. And of course raw material prices are lower in Q1 of this year compared to Q1 of last year. So overall 25% year on year volume growth and I would say mainly driven by export revenues that grew by 37% year on year as far as revenue in terms of Rupees crores is concerned. And overall Exports contributed to 37% of the overall revenue. So the highest ever that we have had in terms of exports. I’m also happy to report that we have delivered consistent sales volume growth for six straight quarters. Improvement in EBITDA margins were also driven by higher volumes and improved capacity utilization reflecting enhanced operating leverage and cost efficiencies.
Overall, while the environment around still remains fairly uncertain, especially around the tariffs and several geopolitical tensions, our capacity utilization in Q1 for the latex plant in Taloja is at about 85% and our Valia Nitrile latex plant was around 90%. And for NBR and other products we’re pretty much running at almost 100% capacity utilization. So we will be planning certain debottlenecking and expansion projects which we will announce shortly once the details are finalized. With this, we can now open the floor for the question and answer session. Thank you.
Questions and Answers:
operator
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 their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow up question, we would request you to rejoin the question queue. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Dhawal Shah from Girik Capital. Please go ahead.
Dhaval Shah
Am I audible? Hello.
Abhiraj A. Choksey
Hi, Dhanal. Yeah, go ahead.
Dhaval Shah
Hello, sir. Yeah, hi. My question is with respect to the export performance, it has been phenomenal. 25 volume growth. Can you share more details about, you know, the reasons you think for such a good performance on the export front? You know, with respect to, has it been more a product approval with our customer competition from other countries, other exporters, has it weakened or some other sector? And how do you see going forward from a strategic perspective, we are at 37% of our revenue for the exports. How do you see this number going forward? And also a little bit from a longer term perspective, how do we, once we do an expansion, what will be our strategy with respect to the exports? Thank you.
Abhiraj A. Choksey
Sure, thanks for the question. So just to correct you, there’s been a 37% growth in volumes for exports. The 25. Not volume, sorry, value. 37% value growth in exports. And that is, yes, largely come from new approvals. As you know, nitrile latex business. You know, we are at almost now 100% capacity utilization. I would say about 90% capacity utilization or 100%. So we are about 90% in Q1. So obviously a lot of new approvals have come through. We have been aggressive in terms of gaining market share as well. And in addition to that, there have been some new products launched for some specialty applications and construction applications which have also resulted in this increase in export revenue and export customers.
Dhaval Shah
Okay, okay. Yeah. How do we see this share going forward overall?
Abhiraj A. Choksey
I think once, if you recall, and I think you’ve been there on previous calls when we did about 200 and odd crores, 220 crores of expansion which we commissioned in April or March. April 2023. March 12, 2023. So it’s been a little over two years. And we had said that at that time we were a little over 1000 crores in revenue. And we had said that with these expansion projects we would be looking at about 16 to 1700 crores in about three years. I think we’re on a run rate to get there, if not this year, then early next year, a quarterly run rate.
So that’s what we are delivering on. And we also had said that it would be about 40 to 45% would be exports out of that. And I think that’s where we will end up by next year, somewhere between 40, 43%. 40, 42%.
Dhaval Shah
Great, great.
Abhiraj A. Choksey
And the idea is not just for the Sake of doing export just to, you know. Also if you again recall from about 10, 15 years ago, Aquatex has been mainly a domestic company and we were mainly depending on the India market. Now obviously we have diversified just as a diversification strategy that we do want a good chunk of our revenues to come from outside India and which is what has happened. But India still remains our main strategic market with over 60% of our revenue.
Dhaval Shah
Got it. And second question, I think with respect to our exports to Turkey, given the kind of hostility in terms of relationship between two countries, have you seen any impact on your revenue?
Abhiraj A. Choksey
You know, not because of the political issues between the two countries. I think we, I mean our sales, we’ve definitely had higher revenues to Turkey in the past. But I would say it’s more because of these wars and the issue around the Suez Canal that sometimes it’s taking longer to get to Turkey. The material as a result of it, some customers are not too comfortable with a long lead time. So that is the main reason why business to Turkey has been affected. I think maybe two, three years ago would have been our highest sale to Turkey. It’s definitely dropped since then. But of course it’s been made up from other countries and we continue to do business in Turkey.
Dhaval Shah
Got it? Got it. Okay. Okay. Thank you very much. I’ll come back immediately.
operator
Thank you. Our next question is from the line of Aditya Chetan from Smith’s Institutional Equity. Please go ahead.
Aditya Khetan
Yeah, thank you sir for the opportunity. The third question, both have contributed to volumes but that has not seen to ebitd. Any particular reason like cost? You had mentioned that the cost, the RL prices are lower and volumes are kicking in. Ideally also gross margin could have picked up but it is lower compared to Y and quarter on quarter.
Abhiraj A. Choksey
Yeah, I think the reason why is because the average EBITDA margins for nitrile latex are much lower than average EBITDA margins and obviously a good growth has come from there. So in spite of getting some operating leverage due to increase in quantities, the truth is that nitride latex margins have are still not great because of overcapacity. So while we have pushed through with volumes, the margins still remain a challenge and they’re still fairly low. Without nitrile latex our margin would be maybe we have to do the exact calculation but at least a couple of percentage points higher.
Aditya Khetan
Got it. We are talking about 600 crore addition to the top line. So 400 crore already has been added in a span of three years. But that has again not flown to EBITDA like as you mentioned that nitrile OPEX has lower margins sir when you see like that ticking point would be like any particular quarter you see wherein we would start making better margins in nitrile OPEX because that was our earlier. Ambition when we started this project when margins returning to normal .
Abhiraj A. Choksey
I would say we have added 400 crores in about two years, not three years and then as you’ll see that over the next one year or so further addition would happen. So you know hopefully 1600 crores or so by next year or a little bit higher, you know. I agree. Look what happened post Covid was unexpected. I mentioned in many calls that a lot of first there was a lot of gloves inventory, then a lot of overcapacity which continues in the industry. Difficult to say when it would turn. We also in the middle had a better quarter like Q4 we thought was a better quarter than the US tariffs uncertainty started in Q1 has again been not such a great quarter in terms of EBITDA from nitro latex I would say it’s been a little lower than Q4.
Again we see improvement in Q2 but until we now see 2, 3/4 of consistent improvement we won’t really know where the market is going. So there’s a lot of uncertainty around these tariffs as you know and finally where it will end we won’t know perhaps for another couple of quarters and that affected the glove industry. It’s affected you know because there’s glove industries in China, Malaysia, Thailand, so Vietnam, Sri Lanka, everywhere. So eventually it’s about you know how those tariffs will affect because the US does remain one of it does remains the largest market for medical gloves.
Aditya Khetan
Got it sir. One last question sir. Also the demand of end users select the paper and construction which is still muted like the last quarter we were mentioning how is how has that changed materially and second on to the expansion like we are planning to complete that by this discount and what would be the capex and the amount of the capacity.
Abhiraj A. Choksey
Yeah so to mention paper and domestic market overall does remain challenging. No question there is overall feels like a slowdown but we have still pushed to lsi. Some pockets have grown. Not as much as exports of course but some pockets have grown as far as expansion plans are concerned. I mentioned in my opening statement that once the details are worked out we will definitely sort of come back to you at the right time. I think shortly it will be quite shortly and we are going to focus on our latex, SBR latex Tyree, necrylx and ndr.
This is going to be the focus of our expansion plan. Then we’ll come back to you with the questions that you asked very shortly.
Aditya Khetan
Got it.
Abhiraj A. Choksey
Thank you.
operator
Thank you. Our next question is from the line of Bala Subramanyam from Arihant Capital. Please go ahead.
Balasubramanian
Good afternoon sir. So my first question regarding the capacity, I think our current capacity may be sufficient for next one or two quarters. You mentioned about some debottle making and all. So how much capex expected in this financial year and how much is for growth Capex and how much is for replacement capex?
Abhiraj A. Choksey
Yes, I think we should have enough capacity for this year, for this financial year and perhaps for some amount of next financial year as well. We will come back to you with, as I told the previous caller as well, Mr. Alice that we’ll come back to you with the exact expansion plan perhaps by next quarter or maybe even earlier than that if you’re ready to announce.
Balasubramanian
Okay sir. So long term perspective we are targeting around 14 to 15% kind of margins. Like what are the levers in terms of product mix, fixed cost absorptions. So what are the levers to achieve those margins? Maybe mitigation long term perspective.
Abhiraj A. Choksey
So one of the strong, one of the levers of course is nitra latex margins that you know we need to ensure that that comes up in the, in the, to the you know, mid teens or early teens. In addition to that focusing on some specialty windows to improve margins and the third of course operating leverage will kick in. Already kicked in. I would say it has been a challenging few quarters of course in terms of margins mainly because of nitralytics but also because of capacity added for other products. And we have added for SBR latex, VP latex, several other things that we have done in the last two years.
So there has that capacity absorption takes time and we have seen that as capacity gets to about 85, 90% then you know, margins tend to improve as well. So that’s what we expect over the next few quarters. So three or four things that help in improving margins over the next few quarters.
Balasubramanian
Okay sir, so regarding that hybrid power project. So like it’s, it’s around, it’s around cover 65 to 70% of Gujarat power plant needs. I just want to understand what kind of cost savings and how this will impact in upcoming years in terms of margins and cost savings.
Abhiraj A. Choksey
Look, in terms of cost savings it’s not significant. That’s not the main reason why we are doing it. One is to of course be a responsible Corporate citizen and ensure that more and more of our sort of power comes from renewable sources so that we reduce our carbon footprint. That’s the main reason. The total investment from aquatech side for the Gujarat project is I think around three and a half crores or give or take three and a half, four crores. And the payback in the IRR is, is very good. Obviously that will start kicking in from next year once the project is commissioned.
But I don’t think it will very largely impact the total EBITDA of the company. I think we’ve done it more from a ESG standpoint and of course commercially is very viable.
Balasubramanian
Okay, so my final question regarding export side, I think US tariffs on Chinese flows and have disrupted trade flows. We are seeing any pricing pressure in non US markets because of redirected Chinese supply. And secondly, recently Israel, Israel Kazakh has impacted corporate latex exports, especially on Turkey and Egypt side. And how this demand is really right now. Any alternative markets we are exploring.
Abhiraj A. Choksey
Sure. So to answer the first question, yes, you know, the Chinese, the tariffs on China have sort of upended the glove supply chain overall. And our customers tell us that non US markets, there is more competition because of China. However, as you know, we are a small percentage of the total latex manufacturing for gloves. So I think our customers are. Overall, I think there is a benefit with what has happened for our customers. But still there is a lot of overcapacity in the market both on the glove side and the latex side. So that will slowly take some time for capacity utilizations to go up.
Obviously no new capacities have been announced. The second question on Egypt and Turkey, certainly our exports, especially to the carpet industry have been affected. It’s not that it has not been affected, but it’s not. But we’re still continuing to do business. Maybe our volumes have dropped somewhat over the last two years, but we continue to do business. Unfortunately, we can’t make it up specifically in the carpet segment because those are two large carpet manufacturing countries, of course, to some extent Saudi, uae where we continue to do business and grow that business.
Balasubramanian
Got it, sir.
Abhiraj A. Choksey
Thank you.
operator
Our next question is from the line of Farooq Pandole from Avista Fund Management. Please go ahead.
Farokh Pandole
Yeah, hi Abhiraj. For the strong result, I just firstly wanted to ask about and what sort of level of productivity are we at and what are those signs that you see going forward?
Abhiraj A. Choksey
Voice is not very clear. Can you repeat that question?
Farokh Pandole
Yeah. Can you hear me now? Yeah. So I. My first question was on nitride Latex, what kind of sort of margin level are we at this point? Because obviously we’ve now come up to a almost whatever full capacity and so are we. What is the sort of way forward you feel given the experience of the last few quarters?
Abhiraj A. Choksey
Okay, the other questions.
Farokh Pandole
And the other question is I know you mentioned that you will revert with the CAPEX plans etc but I just wanted to ask that. Would that mean that we will be running a higher debt equity going forward or will we be largely be able to fund things organically?
Abhiraj A. Choksey
So as far as the nitro latex. Yes, I mean it’s at low margins. As I mentioned, it improved in Q4. Q1 was, I mean again, you know, actually deteriorated in Q1 to be honest for Nitrile Litex overall margin again Q2 we are seeing some small improvements. So let’s see how the rest pans out. As I told the previous caller that overall, these economies of scale plus overall main issue, overall market honestly. So the market needs to improve for us to go back to about 12, 15% EBITDA margins as we were expecting. And as far as the CAPEX plan is concerned, we would, it would be a combination of debt and internal accruals.
Farokh Pandole
Okay, but do we see a substantially higher debt equity ratio going forward?
Abhiraj A. Choksey
Not substantially higher. I mean our debt equity ratios anyway you have one segment currently it’s at 0.3 and I mean it would maybe go up slightly in the short term. Right. Not difficulty.
Farokh Pandole
Right. Okay, great. Thanks.
Abhiraj A. Choksey
Thank you.
operator
Thank you. Our next question is from the line of Manav Vijay from MV Investment. Please go ahead.
Manav Vijay
Yes, thank you very much sir. Am I audible?
Abhiraj A. Choksey
Yeah. Yes.
Manav Vijay
Okay, thank you. So first question is regarding the small investment that you have made for the wind power FPV. So apart from this 3.4 crores, do you intend to invest more for such power going forward?
Abhiraj A. Choksey
Yeah. Hi Manav. Yes, our intention is to invest more in fact for Maharashtra. We were very close to also signing an agreement for our Maharashtra plant. Unfortunately there have been some rule changes that have been announced recently as a result of which we’ve kind of. We’re just waiting to see how that lands MSC DSL has made some rule changes on not allowing banking etc. Which has changed the commercials completely. So in the short term maybe a Taloja plant. But in the long term as our power consumption goes up in Baliya with further expansions then we would look at it but not immediately, maybe after a couple of years.
Manav Vijay
Okay. My second question is regarding your freight cost. So now after power cost this has become the second biggest item and now almost equivalent to your power cost. So has the freight cost normalized? Because now exports are forming a large part of your sales and going forward you’re mentioning that exports will continue to move up.
Abhiraj A. Choksey
Yes, yes. So what’s the question? Sorry.
Manav Vijay
So my question is, so has the freight cost normalized? All the, so all the volatility that we were witnessing, it’s a couple of quarters back. So that volatility has subsided.
Abhiraj A. Choksey
Yeah, I mean, look, certainly things are not as bad as they were, you know, just during like the post Covid sort of years. And there are certain corridors, especially around the Suez Canal, where freight costs are still reasonably high. But they’re settled. This is what it seems, what it’s going to be. You know, I mean, unless those RFS awards are all obviously will have an impact from time to time. These tariffs may have an impact from time to time, but it’s not what it used to be that during that Covid period two years ago.
Manav Vijay
Sure. My next question is regarding the ADD case that we were having that we had filed with the government. Any update on that, if you can share?
Abhiraj A. Choksey
Yeah, so that’s in sort of, I would say advanced stages of the investigation. Definitely move forward. And it’s been about nine months or so since, or maybe more nine and a half, ten months since we initiated the case. Generally these cases are, you know, disposed within a year. So if not a year, there might be a delay of a couple of months, I think in the next four months.
Manav Vijay
Hello?
Abhiraj A. Choksey
Yeah, I said in the next two to four months. We should have an idea of how that, how that pans out.
Manav Vijay
Sure. Okay. So my last question is regarding your, your XNB latex. So if you look at the results of some of these companies, like let’s say your, your toddlers and, and the Hertiliga types. So we said the volumes for them have moved up on a Y basis very strongly. But actually prices haven’t. So if so, so is there any kind of a, let’s say your discussion that you’re having with them, that they are, let’s say, telling you what kind of outlook that they’re having on price improvement for next, let’s say one year or two years? Is there any kind of a decision that you’re having with them?
Abhiraj A. Choksey
I mean, look, those are constant discussions, but they would all, they’re all generally speculation. And we have seen in the past that customers have also been wrong both ways. You know, sometimes they’re too pessimistic and suddenly things improve Due to some, as I said, the tariffs for example in April actually helped them in terms of their volume, the American tariffs on China, now some of these customers. But overall as I said, the main issue seems to be capacities that were created for gloves and for latexes in 2022, 2023 that slowly obviously the utilizations have improved.
But till they get to about 80, 85%, you know these margins will, will be under pressure for sure.
Manav Vijay
Okay, so my last question to you. So in your annual report you have disclosed that you had a 12 crores of export incentives. Are there a 450 crores of export sales which is every 2 and a half percent. So is that a maximum benefit that we are eligible for?
Abhiraj A. Choksey
Yes, that’s the maximum benefit eligible for. Correct.
Manav Vijay
Okay, thank you and all the best.
Abhiraj A. Choksey
Thank you.
operator
Thank you. Our next question is from the line of Rohit from I thought pms. Please go ahead.
Rohit
Good afternoon sir. Am I audible?
Abhiraj A. Choksey
Yes, go ahead.
Rohit
Just a couple of clarification. So you mentioned that we are pretty much almost at the peak utilization most of our products and maybe another quarter or two or maybe let’s say two, three quarters, we probably get to the peak utilization. So and you also mentioned that we’ll probably do some debottlenecking and some capex. So at the same time the margins for most of the things have. Most of our products have not especially nitrile latex have not really improved. So I mean previously you mentioned that you sort of wait for the things to improve especially on the nitro nitric spark.
So can you just share your thoughts at this point of time? How are you thinking? Because as you as you have alluded that you’ve really improved on the top line but the cycle has really not enabled us to. So with more capacity getting added from our side for most of the products we are the leaders. So how do you see the margins? Except of course nitro and latex. But how do you see the margins evolution and in that context the capacity expansion that you’re planning, let’s say in a year.
Abhiraj A. Choksey
Obviously we are not looking at expansion for nitro latex at all in the current context. It doesn’t make sense. The expansion would be for other products that we are currently already in and those products, even though there also some of the margins or EBITDA margins have not been as strong as they were let’s say a couple of years ago. The returns on the investments and as I said once I have the exact numbers of the Capex investments in cores as well as the additional Volume and value that we would derive from this. Even at sometimes difficult margins, the return on capital on the IRR for these projects will still be above our threshold that we look at while investing in any project.
I hope that answers your question. But clearly we’re not looking at any nitro latex investments right now.
Rohit
Okay, and in data analytics, what is the utilization that we are at?
Abhiraj A. Choksey
Roughly about 90. In Q1 we were close to 90. Around 90.
Rohit
Okay, so we are pretty much. So I think, Sorry, maybe I misheard you or I, I didn’t hear you properly but you said that margins will improve our utilizations. Right.
Abhiraj A. Choksey
What I meant is industry utilization, not company.
Rohit
Okay, sorry, sorry. I understand.
Abhiraj A. Choksey
Yeah, we’ve been fortunate. You know, we honestly have a small plant compared to some of the global giants and we are the only company in India. Glove manufacturing India has increased in the last couple of years. We are able to export to Southeast Asian countries. There is, you know, there is the India, Asian fda. So there’s no duties freight is quite reasonable to these countries. So as a result of which we have been able to improve our capacity utilization. But the reason why margins have not improved is because of industry. Overall industry utilization rates. We’re not able to drive the prices that we would want.
Rohit
And sir, how do you see the overall industry position? I mean from your customers they must also be dealing under pressure in terms of low realizations.
Abhiraj A. Choksey
So there are no investments happening in the industry of course across the entire latex entire gloves value chain. So the investments that happened a couple of years ago that’s being sort of slowly utilized, the growth continues. If you see any report there’s double digit growth in medical gloves, obviously there was this one or two years of this huge one time kind of bonus growth due to Covid but obviously now it’s normalized and the normalized growth continues. So we hope sooner than later honestly.
Rohit
And any shutters, I mean any capacity shuttering down because of this low pricing and low margins.
Abhiraj A. Choksey
A company in Japan has announced that in 2026 they will come out of the nitrile latex. Maybe it’s an old plant.
Rohit
And any sense on what kind of capacity is that?
Abhiraj A. Choksey
I think these are all publicly available. So you can get this data.
Rohit
And you’re not sharing the quantum of Capex yet, right? Or have you shared that?
Abhiraj A. Choksey
Not yet. We’re not fully ready. We’re just working out the last parts of the details. So perhaps in the next con call or if you’re ready before that then we would inform the speaker exchanges and.
Rohit
This would be largely brownfield.
Abhiraj A. Choksey
Sorry. Yeah, brownfield for sure, brownfield.
Rohit
Okay sir, thank you very much and all the very best for the coming. Thank you.
operator
Thank you. Our next question is from the line of Dhaval Shah from Gary Capital. Please go ahead.
Dhaval Shah
Yeah. Yes sir. So my question is with respect to the outlook on the ROC of the company, since you are you know, on the drawing board for the Capex plan, a better be a better margin, better product. How do you see the ROC, our historical ROC of the company as being 15, 16% and that was also the number for FY25. You know, leaving aside those two years of abnormal profits where we made very high ROCs. So do you think that this number can inch up to 3% higher or go towards 20%? How should we look at this going forward?
Abhiraj A. Choksey
Yeah, so look before we embark on any project, you know, unfortunately the ROC has been lowered and been pulled down by nitride latex for the last couple of years. Otherwise it would have been even higher because then we’ve definitely not got the returns that were expected when we embark on the project. Overall, when we embark on any new project which is any significant investment, we look at an ROC of at least 20 to 25%. Between that number below that we don’t, you know, that’s generally our threshold. So the idea is to if the returns on nitrile latex improves and at least we feel confident in our brownfield side, we would be closer to 18, 18, 19% ROC if not more. In fact Q1 also the ROC I think has been 18 plus percent.
Dhaval Shah
Got it. And sir, does your product go in for the application of this, you know, new age manufacturing which is coming, you know, the companies are putting, our PCBA factories are coming up in India, printed circuit board and then related electronic manufacturing. Anywhere there is an application of the.
Abhiraj A. Choksey
Products there is an application for in batteries, in these car batteries I think specialty application. Unfortunately it’s not a big market in India. I think, you know, the large battery plants are in China and Japan, US and so on. So while there is an application and we’re working at it, it’s not a big market in our sort of geographic strength. But no, not, not the electronics manufacturing that you are talking about, no signal. The current products don’t have any significant application.
Dhaval Shah
Okay, so the new project which will be, which you are working upon, so the applications will be similar to where they are. So what will be the major applicating and industry?
Abhiraj A. Choksey
So it will be all our latex products other than nitrile latex so it’s paper, carpet, construction, textiles and also nbr. So all kinds of rubber products whether it’s an automotive or industrial applications in agriculture use. So all of those wherever NBR is used. So those are the two sort of main thrust areas for now for the upcoming capex.
Dhaval Shah
Okay, got it sir. Hi. Thank you very much.
Abhiraj A. Choksey
Thank you.
operator
Thank you. The next question is from the line of Rudraja from I thought financial consultancy. Please go ahead.
Rudraksh Raheja
Thanks for the opportunity. Am I audible?
operator
Yes sir, you’re audible.
Abhiraj A. Choksey
Yes, go ahead.
Rudraksh Raheja
Yeah. How do you see the pricing trend in nbr? Not latex nbr.
Abhiraj A. Choksey
Can you elaborate on that? What do you mean by pricing trend?
Rudraksh Raheja
So what I recall is that for the past few years the pricing we are almost at full capacity utilization in MBR and you mentioned similar, along the similar lines. So I’m trying to get if there is any pricing improvement or any trend of increase in prices. So that would help our margin.
Abhiraj A. Choksey
Yeah, pricing is a factor of many things. You know, obviously raw materials is a pricing factor. So when raw material prices go up, NBR prices go up and vice versa. And as far as predicting where the price goes is very, very difficult. I would say in the last few quarters we’ve had some quarters where prices have suddenly fallen. Like in Q1 prices have fallen compared to Q4. So it’s very hard to predict because it’s all linked to oil and down there downstream, not even only oil, I would say crude oil and downstream petrochemicals that go into nbr mainly butadiene and acrylonitrile. So hard to predict pricing.
Rudraksh Raheja
Understood, understood. And sir, any specific applications or products that we are working currently which could be as exciting going into the future?
Abhiraj A. Choksey
Well, we don’t talk much about that honestly because of competitive sort of reasons. But yeah, we already have launched quite a few products in specialty applications. They’re not large volume but specialty applications which could in the future have a lot of potential. So yes, that’s true but we’d rather not talk a lot about it right now. If there is anything significant to report, we’ll let you know.
Rudraksh Raheja
Understood sir. Thank you.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on the Touchstone telephone. Our next question is from the line of Deepak Ajmera from IGE India. Please go ahead.
Deepak Ajmera
Thanks for the opportunity. If I heard correctly you mentioned Japan, the capacity it is coming in FY26.
Abhiraj A. Choksey
So shut down. Oh, being shut in FY26. Sorry to cut you off but just Wanted to clarify.
Deepak Ajmera
Okay, got it. And what sort of capacity that is getting introduced and.
Abhiraj A. Choksey
Yes sir, I don’t have the exact number but if you can look it up online, it’s, it’s very. I mean it’s all available.
Deepak Ajmera
Thank you.
Abhiraj A. Choksey
Thank you.
operator
Thank you ladies and gentlemen. We will wait for a moment while the question queue assembles. The next question is from the line of Om Prakash, an individual investor. Please go ahead.
Unidentified Participant
[Foreign Speech]
Abhiraj A. Choksey
Thank you. Thank you. Thank you for your support.
operator
Thank you. The next question is from the line of Meera from an individual investor. Please go ahead.
Nirav
Hello. Am I audible?
Abhiraj A. Choksey
Yeah, go ahead Neera.
Nirav
Yeah, so just wanted to know about APCOVild and the update. Like what are, what is the revenue contribution and the road prospect and the utilization for.
Abhiraj A. Choksey
Honestly, you know. Yeah, again we don’t give exact numbers because it’s a smaller part of appcodex and we are not required to kind of give separate numbers right now. It has been challenging, I would say in Q1 in general the Indian market, as you would be seeing in general all coatings and construction has been a little challenging. So the growth has been a little muted. We have grown but not significantly in Q1 we are also looking at some internal sort of manpower changes that we have made. So quite optimistic that we’ll be back on the growth pattern by the the of end of the. I mean for the annual annual numbers will be good but Q1 has been challenging on Apple Build also.
Nirav
Okay, so in general or in domestic market going forward?
Abhiraj A. Choksey
Look in, in the domestic market we already have high market share in most of the products that we are in. So we are growing I would say along with the market plus some increase in market share. Some that’s generally the domestic, some new applications that we have been adding over the years. That’s the domestic industry growth. The one opportunity that does remain in NBR where we have a very low market share, not very low, I would say we have a lower market share but 70% of the product is still imported from outside the country. So that remains an opportunity.
Last couple of years we’ve not gone ahead with the expansion because of certain margin reasons. Now they are evaluating it as we speak. So yes, the growth is largely driven by exports I would say over the last couple of years and definitely in Q1 as well.
Nirav
Okay, sure. So you said that there is over. Capacity and some more lower capacity utilization for several players. So are the capacity utilization numbers improving for competitors in nitride latex margins going forward?
Abhiraj A. Choksey
They are improving. I don’t know when as I said in our case we are at you know, almost 90% or we are at 90% capacity utilization. So we have done a bit but overall in the industry it remains tight. So you know we are not able to get that pricing. You would like to get maybe $100, $150 more, you know, than what the current prices are. So that remains a challenge. The rest of the product range which is, you know, more than 80% of our overall sales there we are seeing some improvement in margin slowly as well as capacity utilization increase.
Nirav
We are having 70% source from imports, right?
Abhiraj A. Choksey
Yes.
Nirav
Okay, so what, what are the factors for this? They are being imported and not being sourced domestically. Like are the cost very low for imports?
Abhiraj A. Choksey
There’s a lot of dumping happening as well, which is what we’re. That’s why we’re fighting the anti dumping case. And you know, for example China has, China has imposed a duty of I think anywhere between 12% to 20% on imports from Korea. So they have levied an anti dumping duty and it’s been going on for the sixth year, been renewed after five years since China is seeing. So there are none of that material. So China imports from Korea have less than halved, become less than 50% of what they were let’s say three years ago. Obviously some of that material is finding its way into India and other markets.
So India is a good market where especially they’re fully export oriented companies and countries then they have no option, they don’t have a domestic market. So they will get you know, price at any. And they’ll get, they’ll try and get market at any cost or any price. So that’s what we are representing to the government of India and hopefully we’ll see what happens.
Nirav
So is there a big difference in the pricing of.
Abhiraj A. Choksey
No, we are competing with them. Obviously you would not have 30% of the market and not be running at almost full utilization for a while if you are not competing with them. But margins could be better if there’s high competition.
Nirav
Right. So and we are focusing on several products like paper, garbage and other industries. So where are we, where do we. See usually the highest margin?
Abhiraj A. Choksey
You know, I’ve said this before, it’s not by industry and it varies quarter on quarters. It just depends on what’s happening in those industries. So I would say customer wise, sometimes if you have a specialty product, even within paper, we get very high margins for that on average. I would say they’re all very comparable. Paper has been little lower over the last year and a half or so. Construction and carpet have been higher. Construction, carpet, textiles. But just because of the nature of the industries and more specialty products in those segments. So I would say in the last couple of years, paper has been the lowest out of these. These four segments at least.
Nirav
Okay. Okay. Sure. Thank you.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on the touchdown telephone. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Ladies and gentlemen, as there are no further questions, I now hand the conference over to the management for closing comments. Over to you, sir.
Abhiraj A. Choksey
Thank you everyone for taking the time and attending our Q1 conference call. We look forward to seeing you in Q2. Hopefully, you know, sometime around Diwali it will be so so thank you very much and thank you for your support.
operator
Thank you. On behalf of Apcotex Industries Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.