Apcotex Industries Limited (NSE: APCOTEXIND) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Nupur Jainkunia — Investor Relations, Valorem Advisors
Sachin Karwa — Chief Financial Officer
Abhiraj A. Choksey — Vice Chairman and Managing Director
Analysts:
Aditya Ramesh Iyer — Analyst
Rudraksh Raheja — Analyst
Richa Agarwal — Analyst
Farokh Pandole — Analyst
Jasdeep Walia — Analyst
Ankit Kanodia — Analyst
Aditya — Analyst
Manav Vijay — Analyst
Chetanya Sharma — Analyst
Sukhbir Singh — Analyst
TK Pandya — Analyst
Himali Gandhi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Apcotex Industries Limited Q3 FY ’25 Earnings Conference Call, hosted by Valrom Advisor. 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 the conference call, please signal an operator by pressing star turn zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Nipur Jain Kunia. Thank you, and over to you, Ms. Jain Kunia.
Nupur Jainkunia — Investor Relations, Valorem Advisors
Thank you. Good afternoon, everyone, and a warm welcome to you all. My name is Nupur Jenkunia from Advisors. We represent the Investor Relations of Industries Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the 3rd-quarter and nine months of financial year 2025.
Before we begin, a quick cautionary statement. Some of the statements made in today’s con-call 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 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 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 opening remarks. We have with us Mr. Abhirad, Vice-Chairman and Managing Director; and Mr. Sachin Karwa, Chief Financial Officer of the company.
Without any further delay, I request Mr. Sachin Karwa to start with his opening remarks. Thank you, and over to you, sir.
Sachin Karwa — Chief Financial Officer
Thank you Nukur. Thank you,. Good afternoon, everyone. It is a pleasure to welcome you all to the earnings conference call for the 3rd-quarter and nine months of financial year 2025. I hope you had an opportunity to review the financial statements and earnings presentations, which have been circulated and uploaded on the website and the stock exchange.
Let me provide you with a brief overview of financial performance for the 3rd-quarter ended 31st December 2024. The operating income for the quarter was INR355 crores, our highest-ever quarterly revenue. The growth has been 38.2% on year-on-year basis. EBITDA for the quarter was INR27 crores, which grew by approximately 6.7% on year-on-year basis. The EBITDA margin stood at 7.63%. The profit-after-tax stood at INR12 crores, which grew by 4.5% on year-on-year basis and 5.5% on quarter-on-quarter basis.
In Q3 FY ’25, we witnessed highest-ever quarterly volume and export volume with a growth of 23% and 30% respectively on year-on-year basis, achieved highest quarterly revenue-driven by increased volume, product mix and price realization. Operating EBITDA higher by 6% due to volume increase. EBITDA percentage margin could have been higher by about 1% to 1.5%, but we were hit with a steep raw-material price fall in the middle of the quarter. We expect this to rebound in Q4. Capacity utilization of plant at Valya has reached 75% in December ’24 and for new SBR capacity in Taloja, it is at 60% to 65% for the quarter.
Now coming to the financial performance for the nine months ended 31st December 2024. The revenue from operation increased by 28.1% year-on-year to INR1,043 crores. EBITDA was at INR86 crores, which increased by 4.2% on year-on-year basis. EBITDA margin stood at 8.26%. For this period, we witnessed volume growth of 16% and export volume growth of 30% on year-on-year basis. The revenue increase of 28.1% driven by increased volume, product mix and price realization.
With this, I open the floor for question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question, press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question comes from the line of Aditya Ramesh Ayer with Value Educators. Please go-ahead.
Aditya Ramesh Iyer
Got it. Good afternoon, sir. Congratulations for your good numbers. I would like to know your perspective on some of my questions. So my first question is, what is the criteria for getting approved as a latex vendor then the margins in Nitile latex once the situation normalizes, so what could be the normalized Nitrile latex margins?
And the third is we mentioned in our previous calls that we are seeing traction in our other latex products. So from which part we are seeing the traction and exactly what is the kind of opportunity we have over there?
My fourth question is, what edge do we have over the global latex players as our capacity is quite small compared to them?
My fifth question is, we have recently appointed Mr. Mariwala. So what kind of value and skill-set does he bring on to the table? And I just wanted to know about the utilization of our plants currently. So these are my questions.
Abhiraj A. Choksey
Okay. Thanks,. Lots of questions you’ve thrown in. I’ll try and do my best. I’m not sure if I’ve got all of them, I’ll try and do my best to answer. So your first question was criteria for latex manufacturers. There are several criteria. Obviously, product quality is one of them. And not only product quality, but consistent product quality. The second is being able to logistically deliver to the customers at large volumes because ours is a large-volume kind of product for latex. It’s 50% water on average, 45% to 55%. So that’s another big criteria. Understanding the technical nuances of the product or the application is the third criteria. So I would say there is four or five different criteria the sales cycle time is generally quite long, takes anywhere between two to two to three years at least to break into a customer and that too if they — if they really need a third, second supplier, a third supplier, you know.
As far as XMB margins are concerned, yeah, look at pre-COVID levels, let me put it this way, pre-COVID levels, EBITDA margins would have been upwards of 15% 20%. During COVID, of course, they were very-high. We were making small quantities. They went maybe higher than 30% 35% EBITDA margins. And currently EBITDA margins are, you know I mean very, very low, just about close to breakeven or little over. So that’s the reality of the SMB business, although I must say it’s now turning. I don’t know if it’s going to turn quickly, but it is turning because the US has sort of imposed 50% duty on gloves from China as a result of which our customers, which are mainly in Southeast Asia, South Asia and now India is also growing are benefiting from that. And therefore demand for our latex in this region is definitely seeing a good rebound and margins also improving slowly. And this, I would say is from really December-Jan onwards because these duties came into effect only from 1st Jan ’25.
The third thing about global competitiveness, while of course, there are larger companies than us, but this business worldwide is quite regional, I would say, especially the latex side. So from that point-of-view, we are one of the largest players in this region now. So we are quite competitive from raw-material standpoint, power, manpower from all angles, we are fairly competitive, I would say. Okay. And even if you compare our margins to some of our global competitors in this business, we are actually better than them, even with this — with these depressed margins in the last few quarters. I think utilization, Sachin already mentioned earlier, so I won’t repeat it.
And the last thing about Mr. Rajan Mariwala, you know he is he runs a large chemical company. He’s been in business for many years and obviously brings absolutely incredible value to us. He is also on the Board of a couple of very good companies with good corporate governance. So from a governance angle as well, he’s bring a lot of value to us. So he joins our Board from the next Board meeting.
Aditya Ramesh Iyer
Okay. Thank you, sir.
Abhiraj A. Choksey
Thank you.
Operator
Thank you. Next question comes from the line of Rudraksh Rohija with ITOT Financial Consulting. Please go-ahead.
Rudraksh Raheja
Yeah, thanks for the opportunity.
Abhiraj A. Choksey
Hi, Rudraksh, I’m not able to hear you.
Rudraksh Raheja
Yeah, am I audible now?
Abhiraj A. Choksey
Yeah, let’s try again.
Rudraksh Raheja
Sure. So my first question is, I wanted to confirm about the peak revenue guidance that you gave around 1,800 to 1900 CRs at the existing capacities. Are we still sticking with that number? And if yes, what would be the segment contribution when we release that level?
My second question pertains to the nitrile latex segment. So the current prices of nitrile latex from what I could get are only 8% lower than the pre-COVID levels, considering that this product used to make 15% 20% margins in pre-COVID times and currently we are only at EBITDA neutral level. So could you help us understand the economics of that?
The third question is about nitrile latex only. Since many global players have additional capacities, how do you see that affecting the market revival in this segment? And any timeline…
Abhiraj A. Choksey
What was your last question?
Rudraksh Raheja
Yeah. So global players in this nitri latex, some of them have kept their additional capacities at a reserve state, the Ball state. So how do you see that affecting the market revival? Any timeline that you foresee when we could attain the 15% margin in this space? That would be all.
Abhiraj A. Choksey
Okay. So yeah, look, we had said that at current capacities that we have, you know, of course, it depends on the selling price per kg of our materials as well and the product mix and so on. But if you see the run-rate that we have for this year, itself is about INR1,400 crores to INR1,450 crores. It was INR1050 crores for the first 3/4. So just by extrapolating that, we’ll be at somewhere between INR1,400 crores INR4,50 crores is what we expect. And we still have reasonable amount of capacity for both nitrile from an annual basis, yeah. So we still have nitrile latex as well as for styrene and styrene acrylic latex in our Taloja plant. So if you add the capacities at full capacity, yeah, of course, I mean, I don’t know exactly know what will be around those levels, INR1,700 crore or so INR1,700 crores. That’s correct.
Your second question was on capacity utilization. You’re right, some look, there have been some capacities that have been mothballed, some expansion plans that have been put on-hold. But at the same time, there have been some capacities like ours that have come in the last couple of years and there is one large capacity also is which was commissioned this year in Malaysia. So those were already plants that were already in the works and the last bit of the commissioning was left. So now we don’t see any more new plants commissioning. And given what’s going to happen with China, we don’t know-how that will play-out. Of course, we’ll have to see over the next six months. But — but we think the capacity utilization overall in Southeast Asia should improve. It is still below that 80% to 85% level, which will get us to a healthy EBITDA margin state, we believe. So I think how long it takes is anybody’s guess, all I can say is it’s improving slowly for us for sure. I mean, I would say starting the last couple of months we can see that improvement.
Rudraksh Raheja
Sure.
Abhiraj A. Choksey
Okay. Thank you.
Rudraksh Raheja
Yeah.
Operator
Thank you. Next question comes from the line of Richard with Equity Master. Please go-ahead.
Richa Agarwal
Sir, thank you for the opportunity. My question is related to the impact of US tariffs on nitrile latex. So could you help me understand the effect of it? I think what I got from your commentary is that it is benefiting us, but from what my understanding is, it should actually negatively impact us because China would end-up dumping it in other Southeast Asian countries. So if you could elaborate on that part, how we are benefiting from that, that would be helpful.
Abhiraj A. Choksey
The US tariffs is not on nitrile latex, it is on nitrile gloves. So if the production of gloves in China, you’re right, gloves can come out to other areas, but obviously gloves doesn’t affect us. Latex on the other hand is harder to export from China into other countries just because of the larger distances involved and the freight from China coming out of China is always more expensive than anywhere else. So — and it’s always 55% water, there’s nitrile latex. So while gloves are more — are easier to export, latex is not as easy to export.
So we believe — and as I said, we don’t know-how it will play-out. You never know it’s China, they find novel ways to do things. But as of now, from what we are hearing from our customers, they are at least seeing the short-term benefit and we will see it’s just been the first month. So it’s a little bit early to say because some of some of this duties led to some stocking up in October, November by US customers had bought more material from China, but then that will last only maybe one or two more months. So we’ll have to see how the next six months play-out.
Richa Agarwal
Okay. And sir, any freight rates that were impacting our margins last quarter, have we seen any kind of softness and improvement? And what is the outlook for the same?
Abhiraj A. Choksey
Yeah. Okay, they’ve been slowly coming down. And now given that the war in Israel seems to be Israel, Palestine seems to be throwing the whole Red Sea issue also maybe. So we expect it to further fall in the next one or two months. Of course, it’s a little sort of too recent and we’ll have to see how the truce plays out. But certainly freight rates have come down and it will help the margins going-forward, especially to countries like in the — you know in Egypt, Saudi, Turkey, basically everywhere that we are — we need to pass-through the Suez.
Richa Agarwal
Okay. And sir, I missed on the capacity utilizations and current margin on latex nitrile latex, if you could repeat that please.
Abhiraj A. Choksey
We are at a run-rate capacity utilization of over 75% now in the last couple of December, Jan and 75% to 80% in fact and margins are still challenge, partly because we are also growing in this space and we are getting more-and-more approvals from customers. So I would say margins are improving, but not substantially. We expect — but I think we expect better margins in this Q4.
Richa Agarwal
Okay. And sir, you had also mentioned that you would be looking at new products or specialized products where the consumption could be diverted. So any progress in that on that front?
Abhiraj A. Choksey
No, we don’t — I mean, look, for the current capacities, we are focusing on these — the current products that we have. We are looking at some new products and new chemistries. But as I said, as and when we have some significant news to share, we will share it at the right time.
Richa Agarwal
Okay. Thank you and all the best.
Operator
Thank you. Next question comes from the line of Farok Pandol with Avista Fund Management LLP. Please go-ahead.
Farokh Pandole
Yeah. Hi, Abhiraj. Good to see the strong revenue growth. My first question was with respect to this duty, I gather this is a pre-Trump duty. And am I right in saying that this duty scales up to double, that is 100% next year?
Abhiraj A. Choksey
Yes, that’s correct.
Farokh Pandole
Okay. And I didn’t related to that question, I didn’t catch your answer to the earlier participant quite clearly is that what is the risk of gloves being you know, the location being changed and then being supplied into the US thereby sort of nullifying any impact of anti-dumping duty.
Abhiraj A. Choksey
But it’s hard because 40% to 50% of the market is the US another 20 to 30 would be Europe and then the rest is Asia so it’s hard for China in my opinion to completely divert all their capacities to other areas, there isn’t that much of a market. And even don’t forget that the Malaysians, the Thai, they have been in this business for much longer than China and they have also worked at several things in the last couple of years to improve their competitiveness.
So I think it — I mean, look, as I said, it’s — we’ll have to wait-and-see how it plays out, but it will certainly impact volumes from China coming out into the world. Certainly, they will look at other places to sort of focus on, but US being the largest market for nitrile gloves, it’s not going to be that hard and not going to be that easy for China to substitute that loss.
Farokh Pandole
Also, no, my question — the earlier question was also not just what you responded to, but also the China sort of buy subterfuge, camouflaging their end source and exporting it to another location and then from there effectively accessing the US market without the effect of this anti-dumping duty. So basically just shopping for a appropriate source, jurisdiction from which where they can export to the US.
Abhiraj A. Choksey
Yeah. I mean, look, the Chinese companies are quite large and it’s — I mean, we see this in India also when there are so many duties and all over the world, it’s not very easy to hide the certificate of origin if you’re a large company. And most of these companies in China are larger and they don’t want a situation where the band completely. They perhaps want an option to at least export some amount to the US. So it’s not easy to divert from other geographies. Obviously, there are competitors as well who will be keeping a watch. And generally the competitive sort of landscape, make sure that the US government is then involved — is informed, something like that is happening at a large-scale. On a small-scale, that could happen.
Farokh Pandole
And my next question was on the at the time of our expansion in nitrile latex, we also had the option to expand further as a second step at a very marginal cost. Now is it possible that expansion could be accessed by us, but given the situation in nitrile and the uncertainty down when margins will come back that we could access that fresh capacity at a low-cost and maybe repurpose that fresh capacity towards maybe other products or other areas that you may be looking at?
Abhiraj A. Choksey
Absolutely. Yeah, absolutely. So we could do that. Yeah. And we have — as I said, we have created the infrastructure. As I’ve said in previous calls, we have created the infrastructure for a few more reactors in the same building as well as enough space around that and we could make any kind of latex product in those buildings or in those — in that space — in that space in those buildings that have been left open.
Farokh Pandole
Great. And sorry, just one last question. In the introduction, there was a comment about I think the reduction in raw-material price for this quarter resulted, I think what was said was in a temporarily lower-margin for this quarter, which hopefully can be recovered in the current quarter. So exactly what was that? What was the extent of that? And did I catch it right? Was it a 1% of margin?
Abhiraj A. Choksey
Yeah, about 1% to 1.5%. So what suddenly happened between November and December in the last month and a half, I’d say the second-half of the quarter was we saw a sudden drop-in one of our major petrochemicals, but in general, there was a slight — not slight, a significant drop, a little bit unexpected, I would say, and there was no great reason for it to happen and already that has started rebounding in January, you know, towards the end of December and early-January that started rebounding.
So there was, I would say, 1% to 1.5% hit on our EBITDA margins because of the stock losses that we had. We had stocks that we had built-up obviously for finished goods and raw materials, whatever regular stocks, not anything significant, but that did result in a lower — a little bit of a lower EBITDA margin this quarter than what we would have expected. We see this rebound now in Q4. So I think that 1.5% will probably be a little bit of a bump in Q4.
Farokh Pandole
Great. All the best and thanks for taking.
Abhiraj A. Choksey
Thank you.
Operator
Thank you. Next question comes from the line of Justip Palia with Clockpoint Capital. Please go-ahead.
Jasdeep Walia
Hello. Sir, can you hear me?
Abhiraj A. Choksey
Yeah, go-ahead.
Jasdeep Walia
Sir, thanks for taking my question. Sir, in the past few quarters, you’ve talked about pricing pressure in the SP latex business in India due to your competitors setting up capacities and scaling them up. And in Europe because last-time you said in Europe, the price of butadyne is lower, so hence it has increased their competitiveness versus. So what is the situation on-the-ground as of now with respect to both these pricing issues?
Abhiraj A. Choksey
Yeah. I mean, look, both remain. I think as far as Europe is concerned, it’s come down a little, although Asia is still higher for one of the raw materials. For the — for the other important one, we are lower. So on average, I’d say it’s now sort of fairly even with Europe, maybe we’re still at a disadvantage, but not as bad as it was two, three months ago. But again, in Asia, prices are going up. So we’ll have to see how this quarter plays out. This is against Europe as far as Europe is concerned.
As far as India is concerned, look, we have added capacity, our competitors added capacity that still remains and is likely to remain for the next one year, for sure because both of us do have excess capacity. So we definitely don’t want to give up any market-share at both ends. So that’s causing a little bit of a lower-margin scenario, I think over the last few quarters and that’s likely to remain for the next quarter or two for sure.
Jasdeep Walia
Got it, sir. So in this year, there you’ve seen significant growth in exports. So how sustainable is this growth going-forward? What are your views on that?
Abhiraj A. Choksey
Yeah. Look, I mean, if you see the first-nine months, YTD our exports have grown by, I think 35%. Difficult to keep that growth up, of course. It’s on the back of two or three things. One is, of course, is latex, which is a new product and largely for exports. So that’s obviously giving us that bump. And then the second reason is, of course, there have been a few other product groups where we have really pushed and some approvals have come through. Difficult to see the kind this kind of percentage growth continuing.
In terms of volume growth, of course, we have some plans to keep growing in the export market, but I’m not sure if it will be at 35% for next year. We’ll have to see. We’ll try and do our best.
Jasdeep Walia
So what kind of sustainable run-rate of growth will you budget for future?
Abhiraj A. Choksey
I’m sorry.
Jasdeep Walia
What kind of sustainable growth rate you budget for exports of SB latex products?
Abhiraj A. Choksey
We don’t give separately for each product group, but I would say that given let me put it another way that currently our total exports are 1/3 of our total revenue. Over the next couple of years, we expect that to go to probably around 40 — mid-40s, somewhere between 42% to 45%. So obviously, export is going to grow faster, continuing to grow faster than the domestic where we already have high market-share. So yeah, that’s what I would say. Exact percentage growth guidance we don’t typically give because honestly, I mean, we haven’t even worked it out yet properly, but it will continue to grow faster than the domestic.
Jasdeep Walia
Got it, sir. And sir, what’s the status on the NBR market? So there was pricing pressure from imports that remains or you’re seeing some easing in that?
Abhiraj A. Choksey
Look, in the last — again, this Q4 seems to be slightly better than before. We’ll just have to see how it plays out. We have filed for anti-dumping duties, of course, but they still remain, I mean, you know, not as healthy as we would like. And then the anti-dumping investigation and the findings should be clear in the next, I would say, two to 3/4. Got it, because we’ve already filed the application in September of ’24. So typically takes not more than a year.
Jasdeep Walia
Got it, sir. Thanks a lot, sir. That’s all from my side.
Abhiraj A. Choksey
Thank you.
Operator
Thank you. Next question comes from the line of Ankit Kanodia with Smart Sync Services. Please go-ahead.
Ankit Kanodia
Thank you for taking my questions. My first question is related to the slide on the presentation where we mentioned that the higher realization is due to as in higher revenues due to better volumes and also product mix. Can you throw some more light on the product mix this quarter?
Abhiraj A. Choksey
Yeah. I mean, I have the segment-wise. But overall, I would say, look, the nitrile NBR and nitrile latex. So one is, of course, higher volumes across-the-board that obviously will change — will increase the revenue. The second is product mix and the third is price realization. So there’s a combination of all of those. As far as product mix is concerned, typically nitrile latex is a little bit more is more you know, is a higher price than styrene latex.
Similarly, VP latex is a higher price than styrene. Those two have been the large driver for growth in the last quarter. And as well as our NBR volumes have also gone up slightly. So NBR is also the highest price because it’s all solid and not liquid. So that’s what we meant by-product mix that could have a slight impact. But it’s a combination of the three that have resulted in the higher-value growth of about 38% for the quarter.
Ankit Kanodia
So can you just help me understand one thing. So when — at one end, we are saying that the realization have gone up in this quarter, but on the other hand, we are talking about the raw-material prices facing a lot of pressure. So from an industry perspective, how — I don’t think this adds, I mean, how can raw-material prices be so low and then also realize and go up?
Abhiraj A. Choksey
No, no, raw-material prices are not slow. So if you compare Q3 of this quarter to Q3 of last year, the raw-material prices are higher than the realization. Therefore, the pressure on EBITDA. Although EBITDA — that’s why the pressure on EBITDA percentage. I think — sorry, you got a — maybe it’s a little confusing. So one is if you compare Q3 against Q3.
The other thing that I was just mentioning is that within that also, within the increase of raw-material prices also, there was a slight — there was a significant drop for one month-in between, which is what resulted in some stock loss. So that’s what perhaps confused, but it’s not low raw-material prices at all. It’s much higher than Q3 of last year.
Ankit Kanodia
Okay. And compared to Q2 and Q1 of this year, the raw-material prices?
Abhiraj A. Choksey
Prices you have the number.
Ankit Kanodia
Of this year.
Abhiraj A. Choksey
I think Q2 give me one minute compared to Q2, it’s about the same.
Ankit Kanodia
Okay. So my simple question is this. So one thing which we have seen in the last couple of quarters or maybe even more is that volumes have not been a problem for us. We have been growing well, we are growing all-time highs. I think this is the 3rd-quarter on where our volumes have been all-time high. Yeah. The only problem we are facing is the margins, okay. And the reason for margin is the raw-material costs.
Abhiraj A. Choksey
No, that there is couple of reasons. One is that, look, some of the — a good chunk of the volume growth is coming from XMB latex, nitrile latex where margins are close to, as I said, breakeven. Therefore, that’s obviously pulling the overall margins down. And yes, there is a raw-material pressure as well and competitive pressure more than the raw-material pressures, competitive pressure.
Look, in good times and during — I mean during COVID times, raw-material prices after sort of the pandemic, I would say in the year ’21 and ’22 were galloping. For about eight quarters in a row, we had like raw-material prices going up every quarter, but we were able to pass that along and more because at that time competitive pressures were less. We were running at full capacity, our competitors were running at full capacity, so we were getting better margins. Now I would say the main reason is competitive pressures due to capacities built over the last couple of years post COVID.
Ankit Kanodia
But in the last couple of quarters, we have been saying that many people have actually either stopped their capex or have probably gone out-of-the business because of the…
Abhiraj A. Choksey
But there is still enough capacity. In-spite of all of that.
Ankit Kanodia
There is still excess capacity, that is what you said.
Abhiraj A. Choksey
Yes.
Ankit Kanodia
So is it fair to assume that this margin pressure given all these reasons can continue to be a problem for next few quarters?
Abhiraj A. Choksey
Look, as I said, it’s improving for XMB latex for sure slowly. And we are seeing — at least in Q4, we are seeing a margins improve for other products as well. We don’t know if it’s short-lived or not, but at least for Q4, we are seeing it. So as capacity utilizations keep going up, as the growth happens and capacity relations keep going up, I think margins will improve slowly.
Ankit Kanodia
Yeah. But I think nitrile latex is where the bulk of our revenues comes from.
Abhiraj A. Choksey
No, not really. Nitrile latex is what is the total revenue of nitrile latex in Q3, less than 15%, right?
Ankit Kanodia
Our latex and NBR, if we club both NBR and nitriolated, they would form somewhere around 40% to 50%, right?
Abhiraj A. Choksey
And 40%. NBR and together is 40%.
Ankit Kanodia
Yeah. So only if we talk about these two categories, what is the margin — directionally, how do we see the margin in Q4, Q1…
Abhiraj A. Choksey
We assume it will keep growing slowly. For NBR, it will be choppy. There are months or quarters that are very good months or quarters that are not-so-good. On average, they are not healthy. Therefore, we’ve filed an anti-dumping case also of course. So for NBR chopping for should improve.
Ankit Kanodia
Okay. So right now, if I got it correctly, the — in the immediate future, our margin expansion would be largely driven by the expansion of — in capacity utilization. When the capacity utilization go up, it will definitely help you spread-out your fixed-cost among larger number of units and that will…
Abhiraj A. Choksey
Not only that, not only that, but I think when capacity utilization for the industry goes up as a whole, pricing power also improves.
Ankit Kanodia
Okay. Got it. Got it. Got it. And any color on build? That’s my last question.
Abhiraj A. Choksey
Nothing new. It’s still a small part of our business, we continue to grow it, nothing significantly new there.
Ankit Kanodia
The growth would be in double-digits.
Abhiraj A. Choksey
Yeah, yeah. It’s small things. So every year we grow at, 15% 20% minimum, yeah.
Ankit Kanodia
Thank you so much, sir.
Abhiraj A. Choksey
And I think geographies are adding cities, so that happens. We’re still in the West Coast only right now. East of Maharashtra, Gujarat, little bit in.
Ankit Kanodia
I think you said you said Goa, Karnataka and Goa, Karnataka…
Abhiraj A. Choksey
Within those states also we are — we are at a nascent stage I mean we were at a nascent stage. We continue to grow in different areas within those states.
Ankit Kanodia
Okay, okay. Thank you so much, sir. All the best for the future.
Abhiraj A. Choksey
Thank you.
Operator
Thank you. Next question comes from the line of Aditya with Securities Investment Management. Please go-ahead.
Aditya
Yeah. Hi, sir. Thanks for the opportunity. Sir, if you could just help us understand what is our customer concentration in our nitrile electric segment. So is it — is it that we are dependent on three, four players or is it pretty much well-diversified?
Abhiraj A. Choksey
Yeah look, I think we have — we do have four or five large customers and then we have a few small customers. We feel at this stage, fairly comfortable now with the diversity of customers. But as we — once we get to full capacity utilization, which we expect in the next six months, we will try and sort of add more customers. The problem is that some large customers there — so just to give you an example, I mean there are customers that monthly capacity is more — I mean, I would say is half of our — our is annual capacity. So their monthly consumption, sorry, the monthly consumption is so high. So for those customers and we do want one or two large marquee customers. We need to ensure that those customers are — stay-in our portfolio.
At the same time diversify and make sure. So our main objective is that no customer should be more than you know, I would say about 15% of our overall product portfolio. And from a company point-of-view, no customers should be more than 2%. That’s something we learned the hard way over the years. So that’s what we continue to do. That’s what we’ll drive towards.
Aditya
Sir, just one question. So these top three, four customers, would it currently contribute around 70% to 80% of our revenues in nitrite latex?
And sir, secondly, would these customers…
Abhiraj A. Choksey
Probably six, seven, eight, 7, 8 customers probably have 70%, you’re right.
Aditya
And would the sales of these customers majorly be to US?
Abhiraj A. Choksey
Your — I mean, as I said, the nitrile gloves market is largely US Europe driven. That is also changing as we go along. There is more Asia coming along now. You know as hospitals and as doctors and the protocols change in India, China, Southeast Asia, the Middle-East, those markets are of course growing very well. But still I would say 60% to 70% of all these guys sales would probably be coming from the West all our customer sales, Europe and US.
Aditya
Sure. And now sir now you mentioned that the US has imposed a duty on the glove market. So we understood the implications on the glove market, but how would it impact the latex market because what we understand is China has also added quite a lot of latex capacities in the past few years. So how do you think the latex market will play-out? While the glove players will I think enjoy higher margins, but the same then translate to latex players as well.
Abhiraj A. Choksey
Yeah, look, they will be under pressure for sure. The latex will also be under pressure. There is one thing, one scenario where the latex could start getting exported from China into other countries, but it’s harder to export latex because it’s 55% water in nitrile latex — latex is case. So you know it’s from a freight perspective to go long — and the freight from China, as you know, is much higher than the freight to China, going into China. Similarly, freight from China to Southeast Asia is much higher than from India to Southeast Asia. So they may not be as competitive then as to come out of China.
So that’s — but it remains to be seen as we know and recent events have shown that China has, you know some capabilities of doing things that could never be thought of. So we’ll have to wait-and-watch. I mentioned that two or three times earlier in the call as well. The next six months will give us more clarity. But as of now, our customers in Southeast Asia and South Asia are quite bullish on this duty there is 50% that starting from Jan 1st on nitribe and this will become 100% from Jan 1 26 and this is all pre-Trump this all was announced 3 4 months ago.
Aditya
Now sorry, just to harpos this issue again. So now these top four, five customers which we have, would they be buying the latex from China or they are retain has diversified…
Abhiraj A. Choksey
And they’re not buying any latex from…
Aditya
Understood. Okay. Understood. And sir, next question was on NBR. So now for the last three, four quarters, we have been having issues in this segment. But so if you could just help us understand what is exactly impact happening in this segment? So because is the demand lower or the competition has increased, what is exactly happening in this segment?
Abhiraj A. Choksey
No, nothing significant is happening. What do you mean?
Aditya
So because the End-User of the NBR segment, I presume it goes to automobiles and the industrial segment, which have been doing pretty well for the last one year. So ideally, this segment should be doing well for us. So what is exactly you know, hampering the segment because the margins are lower in this segment?
Abhiraj A. Choksey
No, margins are not lower than last year, I would say the margins have been difficult in general for the last, I would say, six quarters, six, seven quarters for NBR. And the reason have been two things. One is, see, look, NBR is more of a global business than latex. So for NBR, where main competition is Korea and Russia. Now what’s happened on the Korea front is Korea’s main export market for NBR used to be China. The China imports of NBR from Korea have become half in the last three years for two reasons. One is that China has maybe their own MBR plants. They have a couple of NBR plants have improved their capacity.
And number two, the Chinese auto market, which is the largest consumer of NBR is has moved quite drastically towards EVs. So there is a glut in the China market as far as NBR is concerned. Obviously, this NBR has to come somewhere. India market is growing for NBR. There are three main segments in India, auto, industrial and agricultural. So industrial and agriculture are growing very well. Auto is also growing because EVs in India have not taken off the way they have in China. So all three are growing in India. So obviously, that’s one reason why Korean material is coming into India and the second — or the competitiveness in India, the competitive landscape is quite sort of intense.
And the second reason is Russia. Russia because of all the sanctions, they have lost the entire US market initially a few years ago. Now Europe is also in the last year and a year, year and a half. So the only place they can export is China and India, same issue in China. So again, the Russian material is coming into India. So these are the reasons why the India market has become a very intensive in terms of competition for NBR. And that’s why we’ve rightfully we have filed this anti-dumping petition because we believe our case is very strong.
Operator
Thank you. Mr. Aditya, please fall-back in the queue for more questions.
Abhiraj A. Choksey
And just to complete and we want a level-playing field. So what is happening is because they have a glut of NBR and they don’t have placed their dumping in the Indian market. So we want to compete and we can compete. We just want a level-playing field. And so Russia takes a view that, look, the cost of oil for us is not $70, $80, it’s $20 and that’s how we will price our NBR, then there’s very little we can do and that’s not fair competition. And that’s — that’s one of the sort of our petition to the government or to the anti-dumping authorities.
Operator
Thank you. A reminder to all the participants that please restrict yourself to two questions. Next question comes from the line of Manov Vijay with MV Investments. Please go-ahead.
Manav Vijay
Yes, sir. Thank you very much, sir. Am I audible?
Abhiraj A. Choksey
I’m honor. Yeah.
Manav Vijay
Okay. So sir, my first question is regarding the gross margins that we have. So we have 22.8% in this quarter and 24.6% in first-nine months of this year. Now these margins are the lowest that you have done in last 10 years. So last-time you had these margins actually in 2014. Now, so now you have mentioned about all the — all the all the pressure point that you are facing. In last nine months only, we have lost roughly 400 basis-points on gross margins. Now you have been able to squeeze-out some I would say some efficiencies from your labor, some from your other expenses. Now beyond a point in time, I believe that it becomes impossible. So I just want to understand that this 22.8% or 23%, so beyond what point it becomes difficult to take a hit in terms of doing a sales.
Abhiraj A. Choksey
So look, see, one of the reasons for this gross margin, as I mentioned is XMB, right, where our margins are much lower and we expect that to improve. So the nitrile latex has dragged EBITDA margins as well as gross margins down.
Manav Vijay
Okay.
Abhiraj A. Choksey
So that’s one major reason. The other reason is, of course, as I mentioned in the previous caller is NBR margins also not healthy that we would expect. So with the anti-dumping that we have petitioned that definitely will help also.
And the third is for paper — of the four reasons. Third is for in the paper industry, mainly because of the capacity expansion that we have done, our competitor has done, suddenly a lot of capacities came in the last four quarters. So as the capacity utilization goes up, our pricing power will go up, our negotiation power will go up. And again, gross margin should improve.
And the last reason is carpet, which is mainly exports, we’ve seen freight rates really skyrocket upwards. Now they’re coming down, slowly now expect it to come down even further. Hopefully, if the truce holds between Israel and Palestine and the Red Sea, crisis is averted, again, we’ll know in the next three, four months.
So these four reasons are the reason for this together sort of perfect storm on gross margins and therefore EBITDA margins. Each of them, we have an action plan on how they will improve. Some will improve automatically as capacity realizations go up, the others will improve slowly. And of course, we are also focusing on now the next one year focusing on more specialty products with higher margins and we’ll try and see if we can cut-down on lower-margin customers to improve gross margins again.
Manav Vijay
Sure. Okay. Sir, in nine months, what is the amount of total sale that you have done on the nitral latex as a percentage of total that you have done?
Abhiraj A. Choksey
And then again, what’s the question?
Manav Vijay
So of the total sale that you have done, what is the latex sale that you have done in first-nine months?
Abhiraj A. Choksey
About 15%.
Manav Vijay
Okay. So that means in first-nine months you have done roughly around INR150 crores to INR160 crores of sales where you’re actually EBITDA margins are zero, correct?
Abhiraj A. Choksey
Yeah.
Manav Vijay
Okay, perfect.
Sachin Karwa
So our calculation, our EBITDA margins would have been at least at least 2% to 2.5% higher for the first-nine months without nitrile latex. I mean, had nitrile latex not been in the portfolio.
Operator
Thank you. Mr. Vijay, please rejoin the queue for more questions.
Next question comes from the line of Chetanya Sharma with Tradewark Research LLP. Please go-ahead.
Chetanya Sharma
Hello, am I audible?
Sachin Karwa
Go-ahead.
Abhiraj A. Choksey
Yes, you are.
Chetanya Sharma
Yeah. So my first question was, do you have any updates on your expansion plans? And what are the updates or when are you expecting any updates on the — all the dumping cases that you filed.
Abhiraj A. Choksey
Expansion plans right now, as I said, we have some runway. We are looking at some projects to improve productivity. So I think for the next year, year and a half, we should be okay. As I was mentioned in the previous caller, INR1,700 crores or so should be possible with what we currently have, plus with some minor investments, another INR200 crore INR300 crores. So we are working on further expansion plans, which you know, some clarity will emerge over the next three to six months.
As far as the anti-dumping case is concerned, we filed in September ’24, typically takes about 20 — takes about 12 months-to reach a conclusion. That’s what we have seen in the past with other cases. And so we should have some clarity in the next two to 3/4.
Chetanya Sharma
Okay. And the borrowings of the companies have gone up quite drastically in the last few years. What’s your viewing on that?
Abhiraj A. Choksey
Sorry, what’s gone up?
Chetanya Sharma
Yeah, your borrowings have gone up quite drastically in the last few years. What’s your view on that and how is the company looking and reducing it?
Sachin Karwa
Yeah. But look, it’s not gone up that drastically in a sense. I think currently, we have about INR200 crores of all long-term and short-term loans put together. Against that, we have INR110 crores of cash. So our net borrowing is only INR90 crores, which includes working capital, long-term everything. So for a company with an overall turnover of INR1,400 crores, you know, EBITDA we expected INR120 crore crores, it’s okay. It’s not high at all. Debt-equity ratios are very, very low in fact. We are not at all concerned. In fact, I think the balance sheet is very healthy. We may in fact, for future expansion plans think of taking more debt because our balance sheet can easily afford it.
Operator
Thank you. Mr. Sharma, please rejoin the queue for more questions.
Next question comes from the line of Singh with Smith Limited. Please go-ahead.
Sukhbir Singh
Thank you, sir for the opportunity. Sir, my first question is like can we consider the demand to be like muted for the like from the paper and segment for in the near-future.
Abhiraj A. Choksey
Look the paper industry in India for sure is has had a challenging period for the last six, eight, six to eight months, maybe longer. I think, look, we are not — we are looking at expanding in the export front on the paper side where we have not really focused on that. There are also a few product gaps that we’ve had in the paper industry. So we’re looking to bridge that over the next six to 12 months and grow there. So we expect to grow in the paper industry, although the overall the paper industry has not done so well. The carpet industry overall, as I said, the main issue was freight for us, which is sort of improving. So that we should see improving again over the next three to six months.
Sukhbir Singh
Okay, sir. And sir, my second question is like on the capex, like that you are still under discussion like regarding the expansion. So can we assume like in the — for Q4 and for FY like ’26, it will be like maintaining capex only on any — is there any growth CapEx-related to it?
Abhiraj A. Choksey
Yeah, I know there will certainly be some growth capex because we — we envision that at some point in the next few quarters, maybe six, five, six quarters, we will run-out of all capacities that we have, in some cases, maybe even sooner than that, like in nitrile latex should be sooner than that. So then we will look at — well, we are already planning different options for capexes. We have not pulled the trigger on any of them. Of course, we’ll inform — we’ll inform our investors and analysts as and when we have any significant news to share. And as I mentioned, we are also always looking at potential acquisition opportunities or partnership opportunities. So something of that also works out, that could be an option for further growth.
Operator
Thank you. Mr. Singh, please rejoin the queue for more questions.
Next question comes from the line of TK Pandia with Kanesh Stock Invest. Please go-ahead.
Abhiraj A. Choksey
Yes, Mr, go-ahead.
TK Pandya
But I think disappointing with the share value at least for the small investors who are putting a lot of weight in your company is your value is not going up, continuously decreasing. If the market from the market point-of-view, it seems that the company is going from downhill. How do you explain that?
Abhiraj A. Choksey
Well, we would hope that our investors can see the long-term and not look at one or two, one year to two years or a few quarters. If you see a period of 15 years, the company has been, I would say, done fairly well and beaten most of the indices that you could look at. Assured, the company is going through a difficult period in terms of margins. But if you can see — as you can see with the growth, with growth we are in the chemical industry, we’ve been one of the few companies that has grown quarter-on-quarter for the last six quarters every year and we’re really pushing through with growth at this time.
So we feel fairly confident that when the margin story turns, we’ll be in the right place at the right time and it will turn quickly. So and the balance sheet is very healthy. We have not taken on huge amounts of debt or anything of that sort. We remain focused on our businesses, focused on our core competencies. And sure, in the short-term, look, it’s the stock market. I can’t — I can’t comment for that. I mean, there are some very good companies over 40, 50 years and have been going through — always go through some bad patches. There’s not a single company I know that hasn’t gone through a bad patch in terms of the stock market. A lot of it is out-of-the control of this of the company as well. So that’s where I’ll leave that.
TK Pandya
Okay. Sir, one more point I would like to point, your profit-after-tax is around about INR53 crores at this year maybe about INR60 crores or so and your debt is about INR90 crores. So that is it’s where you can repay the debt within one-and-one and a half year that of course is certainly a very good position, which can allow you to take — if you want to go for some capital expenditure, you can take loans and your debt position will be — equity to debt will be quite good.
Sachin Karwa
Yeah, absolutely correct. That’s correct. That’s what I meant by that balance sheet is quite strong. We have no value on that front at all.
Operator
Thank you. Please rejoin the queue for more questions.
Next question comes from the line of Himali Gandhi, an Individual investor. Please go-ahead.
Himali Gandhi
Can you hear me?
Abhiraj A. Choksey
Yeah, go-ahead, Himali. You can hear you.
Himali Gandhi
Yeah. Hi, thank you for the opportunity, sir. I wanted to ask which gives us the highest realizations and highest-margin usually?
Abhiraj A. Choksey
Highest realization, obviously, a rubber products NBR realization, what I mean by realization is sales realization. In terms of rupees per kg there ton, they are the dollar per ton, they are the highest because it’s 100% polymer. Some of the other products that we have are, you know, liquid polymers or emulsions, which obviously lower. So NBR would be the product with the highest sort of price.
As far as margins is concerned, and I mentioned this before, we don’t have — it varies from quarter-to-quarter, year-on-year depending on what’s going on. Percentage margin-wise, we have seen things go up-and-down. I would say it’s more customer-driven. Larger customers in each product group is able to obviously negotiate better with us and those margins are lower, some margins are higher. So it’s quite even if you look at it over a period of three to four years, you.
Obviously, some specialty segments which are only 10%, 15%, 20% of our total revenue, those would be higher margins. But again, I don’t want to sort of mention specifically what those products are or anything of that sort.
Himali Gandhi
Okay. Okay. Thank you. Can you give the…
Abhiraj A. Choksey
Each application that are specialty and that have higher margins.
Himali Gandhi
Okay. Are you seeing any recovery signs in latex and how much do you think it will contribute to the revenue in the near-to-medium future? Any…
Sachin Karwa
Eventually, it will probably be around 20% — between 20% and 25% of our total revenue at full capacity. It depends on how the other segments grow as well or the other areas or the products grow as well. And margins, as I said, are improving slowly and we expect them to improve as capacity utilizations keep going up globally.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Abhiraj A. Choksey
Thank you. Thank you, everyone. Thank you for joining us for the Q3 con-call. We look-forward to having you all for our Q4 and FY ’24-’25 con-call sometime in the — in early May. Have a good evening. Thank you.
Operator
Thank you. On behalf of Apcotex Industry Limited. That concludes this conference. Thank you for joining us. You may now disconnect your lines.