Apcotex Industries Limited (APCOTEXIND) Q3 FY23 Earnings Concall Transcript

Apcotex Industries Limited (NSE:APCOTEXIND) Q3 FY23 Earnings Concall dated Jan. 27, 2023.

Corporate Participants:

Sachin Karwa — Chief Financial Officer

Abhiraj A. Choksey — Managing Director

Analysts:

Anuj Sonpal — Chief Executive Officer – Valorem Advisors

Ankit Kanodia — Smart Sync Services — Analyst

Aditya Khetan — SMIFS Institutional — Analyst

Aditya — Securities Investment Management Company — Analyst

Nagesh Jain — NB Investments — Analyst

Farokh Pandole — Avestha Fund Management LLP. — Analyst

Dhiral Shah — PhillipCapital — Analyst

Romil Jain — Elektron BMS — Analyst

Nikhil Upadhyay — SIMPL — Analyst

Saurabh Shroff — QRC Investment Advisors — Analyst

Vishwa Shah — Tamohara Investments — Analyst

Amar Mourya — Alfa Tech Advisors — Analyst

Rohit Balakrishnan — ithoughtPMS — Analyst

Karan Bhatelia — Asian Market Securities — Analyst

Anubhav Sahu — MC Research — Analyst

Presentation:

Operator

Ladies and gentlemen, good morning and welcome to the Q3 FY23 Earnings Conference Call of 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. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you, Mr. Sonpal.

Anuj Sonpal — Chief Executive Officer – Valorem Advisors

Thank you, Michelle. Good morning, everybody and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the third quarter and nine months ended financial year 2023.

Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings 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 call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.

Let me now 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. Abhiraj Choksey, Managing Director, and Mr. Sachin Sachin Karwa, Chief Financial Officer.

Without much 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, Anuj. Good morning, and welcome everybody to today’s earning conference call for the third quarter and nine months ended of financial year 2023. I hope you had an opportunity to review the financial statements and earnings presentation, which have been circulated and uploaded on the website and the stock exchange.

So briefly on the financial performance for the third quarter of financial year 2023. Revenue from operations were reported at INR234 crores, which declined by about 7% on year-on-year basis. The operating EBITDA stood at INR30.6 crores with EBITDA margin reported at 13.07%. The net profit stood at INR20.4 crores and PAT margins stood at 8.71%. For nine months of FY23, revenue from operations stood at around INR824 crores, which grew by roughly 21% year-on-year basis. Operating EBITDA stood at INR124 crores, a growth of around 22% on year-on-year with EBITDA margins standing at 15.1%. The net profit was around INR85 crores, a growth of approximately 25% on year-on year basis. PAT margin stood at 10.28%.

During the quarter, volume was flat with 1% growth on year-on-year basis as we were running actual capacity utilization. EBITDA margins were lower due to inventory losses in Q3 with respect to raw material and finished goods which was impacted primarily by supply chain constraints and price increase in raw materials. Lower margins were also seen in from older categories, partly due to falling resin rate, benefiting imported competition and falling [Indecipherable] market conditions.

On the capex front, both the positions, Taloja and Valia are expected to be completed in Q4 of the financial year. The delay in project is due to supply of key equipment. Additionally, I am pleased to announce that we have declared an interim dividend of INR2 per equity share and 7 February 2023 has been fixed as record date by the Board.

With this, I would like to open the call for question-and-answer session. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of from Dhiral from PhillipCapital. Please go ahead. Mr. Dhiral, I’ve unmuted your line. Kindly proceed with your question. Mr. Dhiral? As the current participant is not answering, we move on to the next participant. The question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you for taking my questions. Sir, my first question is related to the, I think slide number six on your presentation where you mentioned that EBITDA decline has been primarily due to raw material and inventory losses. So just wanted to have more color on this in terms of, say six months down the line or one year slightly longer term, how do you look at the raw material prices moving forward and how will that impact our performance and how we are geared up for that.

Abhiraj A. Choksey — Managing Director

Right. Good morning, Ankit. So in most of the quarterly con-calls, I have been saying that nature of our business is that there are times when we benefit from prices going up and frankly the last four, five quarters previous four, five quarters that has been the case. We definitely have benefited. Now things have turned since petrochemical prices started sort of falling steeply and that has obviously impacted our margin, partly impacted the margins, that was the only reason, but that’s one of the main reasons why that has impacted our margins for this quarter and likely to continue into Q4, mainly because we are dependent on a lot of imported raw materials and given the uncertainties in supply chain over the last two years and I think to some extent. uncertainties continue in China and in Europe, we had increased our inventory days and we continue to do so. So while we benefited when things were rising, obviously, this was expected, but we have no choice. It’s part of sort of this business. And in the long-term to answer your question, it’s hard to say, but obviously, we feel the prices have now almost bottomed-out. So things should start rising from maybe the next quarter or end of this quarter onwards as well.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you. That really helped. And my second point was related to again the same slide where you mentioned about falling ocean freight cost benefiting imported competition. In our last call, you mentioned that, we get the benefiting in terms of exports in the Middle East and Southeast Asia where freight cost is not a very large percentage of total costs of the product. So how do we see that as a percentage of our total exports or total sales. So assuming that the price of or the ocean freight remaining at this stage for some time, how are we positioned.

Abhiraj A. Choksey — Managing Director

Yeah. So obviously I think it’s a two-part question. So for imports, because for about 40%, 45% of our products, we are the only manufacturer in India. So for the Indian domestic market, obviously, the other our only competition is import. Now what’s happened over the last two years, I would say pre-September-October is that ocean freights have been obviously very high as we all know and that has benefited us for the Indian market. And that of course, that one-time benefit that we had for a few quarters is now almost — we are back to pre-pandemic kind of ocean freight level in most cases. So that one-time benefit is sort of gone now. And as far as exports is concerned, of course, because most of our exports are in countries close by was never a big impact. Obviously, those rates have also come down substantially and that’s benefiting us, of course, for exports.

Ankit Kanodia — Smart Sync Services — Analyst

Okay. And my last question would be, in relation to —

Operator

Sorry to interrupt, sir [Speech Overlap]

Abhiraj A. Choksey — Managing Director

Let him finish with his last question.

Operator

Okay sir. No problem. Proceed please.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you. Thank you so much for allowing me. My last question is relatively — in the last call we mentioned about excess capacity being there throughout the world in terms of the glove manufacturing. Any update on that? Do we see any changes or it remains to be like that?

Abhiraj A. Choksey — Managing Director

Yeah, it’s quite, I mean the downturn of the glove industry still continues. It started sometime last year in 2022 and that continues and that’s been one of the reasons of our lower margins also — while it’s a small percentage of our total sales ex-NB latex for gloves, around maybe less than 10% so far, we enjoyed extremely high margins in 2020, 2021 and early parts of 2022, and obviously those have kept coming down and they are really — compared to the pre-pandemic average much, much lower. That is expected to continue for the next couple of quarters, one or two quarters at least. From all industry reports, we have been in touch with customers and they feel that once the old inventory is used up, that will certainly help. Some of the excess capacity that’s been recently created, those companies are obviously not doing well with high investments. So maybe there will be some consolidation. So we think it will be the second half of this calendar year when things should change.

Ankit Kanodia — Smart Sync Services — Analyst

Thank you so much. I’ll come back in the queue for my other questions. Thank you so much and all the best.

Abhiraj A. Choksey — Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Aditya Khetan from SMIFS Institutional. Please go ahead.

Aditya Khetan — SMIFS Institutional — Analyst

Sir, thank you for the opportunity. Sir, my first question is on the nitrile latex side. Sir, on to the channel inventory now what we are witnessing, so that is at the minimum level into nitrile latex. So how you see the demand right now and we know that the nitrile latex prices also, so they are at the lowest levels. So what should be the trigger for prices and demand going ahead?

Abhiraj A. Choksey — Managing Director

Yeah. Look, for us, we are currently selling only 10% of our sales is nitrile latex, less than 10% also. Obviously, we’re coming up with the 50,000 ton plant for nitrile latex in Valia, which is still a small percentage of the global market. So selling 50,000 tons is not so much of a challenge. The issue will be of course, given that the current — there’s not much pull from the market, it’s a lot of relationship building and pushing that we’re doing. So it may take a little longer to get to full capacity for 50,000 tons, maybe a year or so. We were really expecting six months, but now we think it maybe a year or so.

And as far as margins are concerned, look, that’s anybody’s guess, but we think as I said, I mentioned to the previous caller that we think in six months, the market should turn, but it’s certainly going through its deepest downturn, the gloves market and therefore the raw materials that are being supplied to the glove market going through the deepest downturn that it ever has, so. But in the long-term, we are quite bullish that with the growth in healthcare requirements across the globe, we believe it’s a high growth market for nitrile latex as well as shift from natural latex gloves to nitrile latex gloves and we are well-positioned in terms of geography, raw material pricing everything and new plant at a reasonable capex compared to most of our competitors. So all those things in the long-run, we are quite bullish. Of course, we are entering the market at a time when there is a downturn. So that’s the reality.

Aditya Khetan — SMIFS Institutional — Analyst

So sir, you said to take the market to u-turn, it will take six months, So from May or June, we can expect a pickup in demand?

Abhiraj A. Choksey — Managing Director

Well, yeah that’s the — from all industry discussions we have had they’ve been saying second half of the year, yes.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. Sir, my second question is on to the benefit of the realizations, which we have got in the last three quarters, so [Indecipherable] made around INR45 crores of EBITDA, now we are down to around INR30 crores of EBITDA in this quarter. So how you see these things improve or maintain at this level at least for the next two quarters?

Abhiraj A. Choksey — Managing Director

I mean, look, this quarter, again the same challenges will remain, Q4, I’m talking about Q4. And then as the new capacities kick-in, we expect EBITDA to improve if there is no other major issue or change because raw material prices will also bottom-out I think in this quarter, So at least this quarter, we don’t expect a major improvement, but hopefully from Q1 of the next financial year, there should be some improvements here.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. Sir, just one last question, sir. You have mentioned Y-o-Y volume growth of 1%, so similar on quarter-on-quarter basis, how much was the decline in volume?

Abhiraj A. Choksey — Managing Director

There was no decline.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. So 17% decline in revenue that was primarily led by realization?

Sachin Karwa — Chief Financial Officer

That’s correct.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. Thank you, sir.

Abhiraj A. Choksey — Managing Director

Yeah. That’s a good point. So I’ll just clarify because I’m sure — we’ve been running at full capacity and we continue to run at full capacity. In Q3, we focused on total volume, holding market share. And yes, to some extent, the margins have come down in some of our product categories, but we’ve had to deal with that.

Aditya Khetan — SMIFS Institutional — Analyst

Sir, just one last question from my side, sir, one more question. Sir, are we witnessing any increase in imports, since you have also mentioned that the freight rates have gone down. So imports might have increased. So competitive intensity will have also increased. Is this also one of the reasons, which is leading to decline in realization?

Abhiraj A. Choksey — Managing Director

Yes, that’s one of the reasons. But as I said, we will hold-on to our volumes and market share and we had to correct our prices in some of the products where we face intense import competition. I think one of the other reason has also been overall slowdown in China over the last few months and a lot of imports have been directed towards India because we are one of the few — India is one of the few shining spots in the world today where demand overall has not been affected. So if you see our India demand, the demand is not being affected, it’s a question of raw material pricing, little bit higher intensity and competition in some product categories that is what has caused sort of reduction in EBITDA quarter-on-quarter.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. And sir, this expansion which we were planning [Speech Overlap] Sir, any reason why this has been shifted to Q4?

Abhiraj A. Choksey — Managing Director

Okay, I’ll take that question and then move on to the next caller if you don’t mind, Aditya.

Aditya Khetan — SMIFS Institutional — Analyst

Yes sir.

Abhiraj A. Choksey — Managing Director

Okay. I mean, look, the main reason has been that a lot of delay in semiconductor, wherever we were using — equipments, we were buying the used semiconductors where, I mean, incredible delays and that will I guess, the main reason. But now everything is in-place, we’ve got everything, we are in the mechanical completion stage. In fact, the plant is ready. And most plants are ready and we are already doing water trials and we will be by the end of — we expect by the end of next month, so about in a month from today to start the product trials as well.

Operator

Thank you. We have the next question from the line of Aditya from Securities Investment Management Company. Please go ahead.

Aditya — Securities Investment Management Company — Analyst

Yeah. Hi sir, thanks for the opportunity. So I just wanted to get a better understanding of synthetic latex business excluding the nitrile latex gloves. So what are the market dynamics over there. So do we face competition mainly from domestic players or are there imports as well. And I believe since we are the market leaders in most of these product, so are we facing margin pressure over here or are we able to pass on the price increase/decrease over here?

Abhiraj A. Choksey — Managing Director

So here I would say, we have mostly domestic competition, there is some import competition, but the margins have been fairly good I would say for synthetic latex outside of nitrile latex and we mainly have domestic competition, one major domestic competitor for this. And they’ve been by and large okay, but obviously this higher cost raw materials that we have had to import, I’m sure they have as well, but the market corrected quickly in terms of finished goods pricing. So to some extent, there has been some reduction, but not major reduction in margins in those products.

Aditya — Securities Investment Management Company — Analyst

Right. So just a follow-up. So what is the pricing policy for the company for the synthetic latex business. So what is the frequency of the price that we have with our customers and do we look at raw materials on a back to back basis to protect us from inventory losses?

Abhiraj A. Choksey — Managing Director

Yeah. So there are a couple of pricing models we have. One is we have formula pricing for some large customers who are willing to commit volumes and the rest of them are on spot basis. So I would say, wherever we were on formula basis, we obviously lose out when we were buying — formula is based on some published raw material rate and our actual rates of buying are obviously different. And when prices are going up, we benefit when prices are coming down, its a disadvantage to us. With spot, of course, we are quicker at sort of passing along the price increases or decreases. But sometimes when you’re stuck with a lot of high-cost inventory, maybe there is some pressure in the short-term to reduce prices when prices are coming down. Because they do get prices, what the imported prices are. So even though imports may only be 15%, 20% of the total market, it still impacts the entire market in terms of pricing.

Aditya — Securities Investment Management Company — Analyst

Right. And what will be the proportion of the formula-based pricing and spot-pricing?

Abhiraj A. Choksey — Managing Director

I mean, totally as a company, I think it’s about — can I come back to you on that, but it’s still a smaller percentage. I think maybe about 25% or so will be formula pricing and the rest would be spot, as a company on whole, I am saying.

Aditya — Securities Investment Management Company — Analyst

Okay. And if I look at the margin profile of the company pre-2016-2017, we used to make around 8% to 10%, but now we are guiding for around 13% to 16%. So just wanted to know what has changed for the company in this year, which has led to the increase in margins. Is it just scale or are there any other factors, which have helped us achieve such margins, because when I look at the product profile of the company, you have added nitrile latex, but it is currently constituting in single-digit revenue and we have added NBR which also makes company-level margins only. So margin accretion wouldn’t have come from change in product mix. So what has led to the increase in our base level and profitability?

Abhiraj A. Choksey — Managing Director

I mean couple of reasons; one is of course, as you said, economies of scale kick-in as we kept growing. The second is our customer profile, our product profile. We have moved into some specialty grades also which are much higher margin, obviously, lower-volume. So all combination of reasons have helped overall margin and of course as you grow the ability to buy at a lower rate, better procurement buying, so all, I mean multiple reasons, four or five different reasons.

Aditya — Securities Investment Management Company — Analyst

Okay. But sir, will the change in product mix would have led to increase in margins because the products have remained more or less the same, right.

Abhiraj A. Choksey — Managing Director

But within the product — as I said, there is customer mix as well. So earlier, for example, we had, I mean if I were to give a specific example in the paper industry, there was a large focus on or large percentage of our sales were towards the large customers. Now as we have grown and as the industry has grown, now there are a bunch of middle and smaller level customers, our margins are better. So we have not grown because of volume has been capped, we have purposely sort of focused on customers, which are higher margin. Similarly on exports as well. Initially while we were getting in the approval phase, we had to give pricing at a much lower level to break-in and now that we have broken in and proven to be a consistent and good quality supplier to some of our export customers, we’ve been able to increase margins over-time. So these are just couple of examples I’m giving you.

Aditya — Securities Investment Management Company — Analyst

Okay. And what is the capex guidance for next year and what kind of maintenance capex is required in our business?

Abhiraj A. Choksey — Managing Director

So as of now, after this capex is done, which is around INR200 crores this year, we have not taken a call on further major capex and we expect the maintenance capex of about somewhere between INR15 crores to INR18 crores per year. And that also includes improvements. Some of those projects are not necessarily maintenance, some maybe debottlenecking, some maybe cost reduction. So some of them will benefit and some are pure maintenance, which is just replacement of materials. So we have some small projects, which also help in overall margin improvement, either because of revenue increase or cost decrease. I’m talking about in general that we see over the last three, four years and we expect that to continue in the next year.

Aditya — Securities Investment Management Company — Analyst

And what percentage of our power requirements are met through capital resources since power cost is big cost for us?

Abhiraj A. Choksey — Managing Director

Yeah. So in our Valia plant, I think our entire power comes from captive power plant. We have a co-Gen Power plant which manufactures steam as well as power for us. And in Taloja, we are dependent on MSCB. We do have some small percentage of wind and solar power, but it’s a very small percentage of Taloja required.

So can we give an opportunity to the next callers, other callers as well.

Operator

Thank you. We have the next question from the line of Nagesh Jain from NB Investments. Please go ahead.

Nagesh Jain — NB Investments — Analyst

Hello?

Abhiraj A. Choksey — Managing Director

Yeah. Go ahead. We can hear you. Good morning.

Nagesh Jain — NB Investments — Analyst

Very good morning. First of all, regarding the inventory loss that you’ve mentioned. Is it possible to quantify how much was it in the last quarter?

Abhiraj A. Choksey — Managing Director

Yeah. It’s possible, but we are not revealing those kinds of numbers. But I would say at least, I mean, it would have made an impact of at least a couple one or two percentage in EBITDA.

Nagesh Jain — NB Investments — Analyst

So was it there in Q2 as well?

Abhiraj A. Choksey — Managing Director

Sorry.

Nagesh Jain — NB Investments — Analyst

Was it there in Q2 of this current year?

Abhiraj A. Choksey — Managing Director

Q2 was a benefit, right. As I mentioned to the previous callers, that the previous three, four quarters, we had a benefit of inventory gain rather than inventory losses.

Nagesh Jain — NB Investments — Analyst

Okay. And you are saying that this loss may be there even in the current year, current quarter Q4?

Abhiraj A. Choksey — Managing Director

Yes.

Nagesh Jain — NB Investments — Analyst

Okay. My second question is regarding the NBR project. I know, to the previous caller you said that there is no significant capex for the next year. So does it indirectly mention that you have still not taken any decision on expanding the capex of NBR metrics?

Abhiraj A. Choksey — Managing Director

Yes, that’s correct. We’ve not taken any decision. We are in the middle of completing our sort of detailed engineering for that project, but the final call we’ll take because we wanted to ensure that our balance sheet numbers are also healthy and we’re not taking too much of a risk on that. So we have not taken a call on that yet, yes.

Nagesh Jain — NB Investments — Analyst

Okay. So this latest gloves part, you said that it will take more than six months to ramp-up to the full capacity, but at the same time the margin expectation also will be low from that product?

Abhiraj A. Choksey — Managing Director

Yes, exactly. And it will take longer than six months. We think maybe up to a year now, it would take to ramp-up to full capacity.

Operator

Thank you. We have the next question from the line of Farokh Pandole from Avestha Fund Management LLP. Please go ahead.

Farokh Pandole — Avestha Fund Management LLP. — Analyst

Yeah. Hi, Abhiraj. Just wanted to check. Hello.

Abhiraj A. Choksey — Managing Director

Yeah. Go ahead. Hi Farokh. I can hear you.

Farokh Pandole — Avestha Fund Management LLP. — Analyst

Just wanted to check, have we started manufacturing from Valia. And if so, what is our utilization at this stage. And is any of this capacity, given the issues that you highlighted, is any of it sort of swing wherein you can maybe divert some of it to other segments?

Abhiraj A. Choksey — Managing Director

No. We have not started manufacturing. As we mentioned in the opening remarks as well as to previous callers, there has been a further delay. I know, earlier we were supposed to be September, October and December, but because of some delays in semiconductor, a lot of our automation equipment was delayed by a huge sort of I mean, it was ordered in a month time. So now that everything has come, of course we’ve received everything and we have installed everything. We’re in the middle of final testing and final approval, the CTO, as they call it, consent to operate for both our plants in Taloja and Valia. To answer you also, both will start-up by the end of February, early March with trial runs and then of course ramp-up over the next six months to one year.

Earlier, the plan was to make Nitrile latex in both plants here, 50,000 tons we had in Valia and 10,000 tons in Taloja. Last time I mentioned that the Taloja plant was a swing plant and so we have made some additional investments to make it a swing plant because we believe that our current set of products in NB latex, there has been a lot of pull and demand and therefore, what we have done is converted that plant to be able to manufacture any product. So that’s a full swing plant and ready to go from next month. The good thing though is that we have now while we have 50,000 tonnes of nitrile latex, we can make up to 35,000 tons of NB latex in Taloja. So totally, in terms of revenue, it would amount to about — current price is about INR600 crores to INR700 crores. So earlier I had mentioned INR450 crores to INR500 crores I believe was the thing. So with the current INR200 crore investment, we should get about INR600 crores to INR700 crores. So this is how we are looking at the next couple of years that we would have nitrile latex coming from Valia and other latex from Taloja, where obviously the margin profile in the current context are better and tomorrow a year later as the margins in nitrile gets become better, we can always switch. So that’s the kind of provision we have left for Taloja.

In Valia, we’re unfortunately unable to do that. And so it will be a Nitrile latex plant only for now. In the long-run, if we want to make some additional investments and we have some options, but we will have to have additional investments made to do that. We still believe the nitrile latex will be a good market in the long-run. Obviously in the current context, last six months, in the coming six months, the margin profile is quite poor, glove industry is not doing so well. But in the long-run, I think it should — we strongly believe that things will turn, especially since it’s a 10% to 15% growth market. So I think that will turn.

So overall, the way we are looking at the projects is that this investment of about INR200 crores will give us a revenue of about INR600 crores to INR700 crores in addition to the INR1,000-odd crores that we already have. Plus, we have left provision for additional investments at a very low cost. So I mean, I want to say maybe around additional INR30 crores, INR35 crores will give us additional revenue of INR300 crores. So we have built the company or built these projects to ensure that we can get to INR2,000 crores without any significant investments.

So I know it was a long answer, but I hope it answered all your questions.

Farokh Pandole — Avestha Fund Management LLP. — Analyst

Yes, it does. Also can we get some idea of the level of profitability in nitrile latex today versus maybe six or 12 months ago. What has been the dilution in profit, because of inventory issues and the other things that you mentioned.

Abhiraj A. Choksey — Managing Director

Nitrile latex is not because of inventory issue. That’s been mainly because of overall market being sort of very weak because — yeah, the inventory of gloves, yes, you’re right, because of higher inventory of gloves. So I mean, margins are pretty much crashed from — let me put it this way. If there were 100 pre-COVID or pre-pandemic, they went to almost 300 and now they’re down to less than 50. So it’s half of what they were pre-pandemic, less than half of what they were pre-pandemic.

Operator

Thank you. We have the next question from the line of Dhiral from PhillipCapital. Please go ahead.

Dhiral Shah — PhillipCapital — Analyst

Yeah. Good morning, sir. Thanks for the opportunity. Sir, I missed that part. As you said that from the incremental capex of INR200 crores, now we are looking at a revenue of INR600 crores to INR700 crore. So just wanted to recheck sir, what kind of change in the product mix we are looking at. Sorry, I missed that part sir.

Abhiraj A. Choksey — Managing Director

No. What I mentioned is that, as far as our Taloja plant is concerned, we will be focusing on our existing latex product, styrene butadiene latex, styrene acrylic latex, VP latex and so on from that swing capacity. And because the cycle times for those products are lower than nitrile latex, we were able to make about 35,000 tons against 10,000 tons. And in Valia, it’ll be 50,000 tons of nitrile latex, so totally 85,000 tonnes of latex, which amounts to about INR600 crores to INR700 crores at current prices.

Dhiral Shah — PhillipCapital — Analyst

Okay. Got your point sir. And sir, what kind of utilization we expect from the nitrile latex in FY24, as you are expecting some change in the situation from the H2 FY24?

Abhiraj A. Choksey — Managing Director

Yeah. Look, it will be obviously — in the first few months, it will be very low and ramp-up slowly. We hope that by the end of the year, we will be at — in the last couple of months of the financial year, we would be at full capacity. And for the year, we may be less than 30%, 40% because obviously the first few months, we’ll be at very low capacity utilization, because we will still be going through the re-approval state because it’s a new plant, so customers require small amounts of material and then ramp-up slowly. So maybe 40% for the year.

Dhiral Shah — PhillipCapital — Analyst

And sir, lastly, because of the fall in the realization and the margin, at what utilization is breakeven.

Abhiraj A. Choksey — Managing Director

See, operating costs there, I mean, what do you mean by breakeven. Overall, there is hardly any increase in fixed costs, so we would be breaking even at a very low capacity utilization.

Dhiral Shah — PhillipCapital — Analyst

Okay, got your point sir. Thank you.

Abhiraj A. Choksey — Managing Director

On-field projects. So the additional cost is mainly just additional manpower needed to run the plant.

Dhiral Shah — PhillipCapital — Analyst

Sure sir. Thank you so much.

Operator

We have the next question from the line of Romil Jain from Elektron BMS [Phonetic]. Please go ahead.

Romil Jain — Elektron BMS — Analyst

Hello sir, thanks for the opportunity. Sir, I just wanted to understand the Taloja plant that you mentioned the ongoing capex, which will I think start next month. So 35000 additional [Technical Issues]. But apart from that also we can manufacture other products which can give similar revenue. Just clarification on that front.

Abhiraj A. Choksey — Managing Director

I did not understand the question.

Romil Jain — Elektron BMS — Analyst

No. So I think as you mentioned, 35,000 tons of additional nitrile latex can be manufactured at Taloja. [Speech Overlap]

Abhiraj A. Choksey — Managing Director

Styrene-Butadiene latex, Styrene acrylic other products.

Romil Jain — Elektron BMS — Analyst

Okay, other products. But which is also manufacture in nitrile latex, what’s the capex.

Abhiraj A. Choksey — Managing Director

Could also do that, yes.

Romil Jain — Elektron BMS — Analyst

Okay. And still make similar revenue?

Abhiraj A. Choksey — Managing Director

No, the revenue would only — earlier the plan was to make only nitrile latex, because margins are very strong. So the earlier, the revenue was lower. Earlier, the plan was totally 50,000 and 10,000 tons, so totally 60,000 tons, 50,000 at Valia and 1,0000 tons in Taloja for SNB latex with a revenue of about INR450 crores to INR500 crores. Now that has changed because we are able to make much more than other kinds of latex through the same plants. So now the revised revenue that we will generate from these plants will be INR600 crores to INR700 crores with an option of sort of marginal investments to get another INR300 crores from there.

Romil Jain — Elektron BMS — Analyst

Okay, got it. And just second question is the current margins that we have, that we have reported I think on the EBITDA side, about 13% odd. So this is with the pressure on the nitrile latex part of it, which is less than 10% revenue. So I’m assuming that the other part of the business, right, that is broadly still stable and still sustainable in terms of margins.

Abhiraj A. Choksey — Managing Director

Yes. As I said, broadly yes, but in the short-term because of some high-cost raw materials we’ve had an issue and also in some pocket, some product categories where we get a lot of import competition, for example, from our synthetic rubbers we have seen margins also dropped due to-market conditions, but we think those are sort of temporary phenomena, part of the business cycle it happens for a couple of quarters and goes back up. But by and large, yes. The other part of the business is okay.

Romil Jain — Elektron BMS — Analyst

Okay. So that means, as you mentioned that maybe this next six months to whatever six months to nine months, I think as things stabilize on the nitrile latex front also, utilization increases, these margins maybe broadly quarter margins and there may be a swing towards better margin strategy, is what I am trying to understand.

Abhiraj A. Choksey — Managing Director

We hope so, yes, we think so. Look, overall, there are two, three things that we are quite bullish on. One is that, look, the company is now well-positioned with very minimal investment to get to INR2,000 crores over the next maybe four to five years. So there is no additional major investment required. Number two, our return on capital, even at these margin return on capital return listed on-net worth is quite healthy. And number three, we feel that we are a quite well-diversified company and we’ve created — one of the things that COVID has taught us to is to be more flexible and now our plants are much more flexible. So in case there is a downturn in one industry, we can always make it up with the product. So to some extent we are able to do that, not 100%, as I mentioned to the previous caller for a new nitrile latex plant as of today, the 50,000 tons is only built for nitrile latex and the whole plant is build for nitrile latex.

Romil Jain — Elektron BMS — Analyst

Okay, got it sir. Thank you a lot sir. I will come back in the queue.

Abhiraj A. Choksey — Managing Director

Sure.

Operator

Thank you. We have the next question from the line of Nikhil from SIMPL. Please go ahead.

Nikhil Upadhyay — SIMPL — Analyst

Yeah, hi, good morning. Can you hear me?

Abhiraj A. Choksey — Managing Director

Yes, can. Good morning.

Nikhil Upadhyay — SIMPL — Analyst

Yeah. Just three questions. One is sir, you mentioned in 40%, 45% of our business, which is where the dynamics are driven by imports. Even after the price drop, would you say our volume share in the industry are sustained. So we are maintaining our market share even though imports have increased. Would that be a right assumption?

Abhiraj A. Choksey — Managing Director

Absolutely. 100% right assumption. As I mentioned again earlier that we are running at 100% capacity utilization and even we continue to do so this quarter as well. In Q3, prices fell overall and we had — obviously we have to correct our prices, but we held on to the volumes and the market share.

Nikhil Upadhyay — SIMPL — Analyst

Okay. Now, second on the glove latex. I understand — sir, two questions. One is in the previous calls you had mentioned that even though the industry dynamics have gone bad, we would still be able to maintain our ROCE on the capex at 20% plus. The conditions which you mentioned that pre-COVID if we were at 100, today we are at 50. Would you say if this sustains for some time that 18%, 20% ROCE is still sustainable for our new capex or would it be dilutive to some extent?

Abhiraj A. Choksey — Managing Director

So I think over, I mean, of course, when I were talking about 20%, 25% ROCE, we were looking at the next five years. And obviously, the expectation was that margins would improve, that they would not remain at these levels and they would at least improve to pre-pandemic levels. But as I said, so even at pre-pandemic level, ROCE would be even better. But even if you have to sustain one year of low margin, for example, and then margin improve after one year, we would still — that’s what I mean I meant that over a five-year period, we are still quite confident that at least a 20%, 25% ROCE on this new project would also be possible.

Nikhil Upadhyay — SIMPL — Analyst

Okay. And just last question. On the glove latex, we understand that there is a lot of capacity which came from the glove manufacturers. But how is the capacity addition, which has happened at the latex side. So has the latex side capacity addition been in-line with the glove manufacturer capacity addition or is —

Abhiraj A. Choksey — Managing Director

No, I don’t think it has been as much because the gloves capacity is easy to add quickly. As far as latex for gloves is concerned, the current player, largely the current players are the ones that have increased capacity. So some capacities were already in the work. And like all for example, we have already started investing and some were announced. So I believe the ones that were announced and no money was today and all have been put on-hold. So our view is that the latex capacity has not obviously gone up as much as the overall gloves capacity in both China and Southeast Asia. And it’s more the gloves capacity that is an issue and the glove manufacturing that happened over the last couple of years which caused a lot of excess inventory. So once those things correct, I think over-time in a market which is growing at 10% to 12% minimum, if not 15%, things should correct itself in a couple of years.

Nikhil Upadhyay — SIMPL — Analyst

Okay. And just one last question, if you permit. If you look at most of the suppliers in this industry, the latex manufacturers are backward integrated with the petrochemical channel or petrochemical backward integration or based out of Malaysia. While we have to import a lot of RM or we don’t have such a strong backward integration advantage, so if we have to understand our advantage and market share gains, is it more on incremental market share gains or is it more on we are replacing someone else with our new capacities in the glove latex side. So how are we gaining market share there, and what is the advantage we enjoy?

Abhiraj A. Choksey — Managing Director

Please understand that it’s not necessarily true that they’re all backward integrated. There are a couple of competitors that are not completely backward integrated and even a few of them that are they have many other products. So the two main raw materials for this latex is butadiene and acrylonitrile. Now butadiene we have sources that are very close to our plant and that is true of some of our competitors as well. In fact, some competitors in Korea are importing butadiene into. We are not importing, we are hardly importing any butadiene. So that is an advantage to us. And acrylonitrile, I don’t think anybody is backward integrated, they’re all buying from the market. Yes, in some cases acrylonitrile is available in the same country. So to that extent freight, raw material, price, volatility, all that is avoided, but we believe that we are not at a major disadvantage because large quantities of acrylonitrile is also imported into India at pretty competitive prices and we are able to get those. So we feel in terms of raw material pricing, we’re not in any way at disadvantage to any of our competitors.

Nikhil Upadhyay — SIMPL — Analyst

Okay, fine. I’ll come back in the queue. I have a few questions.

Operator

Thank you. We have the next question from the line of Saurabh Shroff from QRC Investment. Please go ahead.

Saurabh Shroff — QRC Investment Advisors — Analyst

Yes. Hi, good morning and thanks for the opportunity. Abhiraj, just first question on the balance sheet. So as of September we were at about INR145 odd crores of debt. Should this peak-out at about INR200 crores by the end of March once the plant gets commissioned?

Abhiraj A. Choksey — Managing Director

Sachin, can you answer that question. Are you there?

Sachin Karwa — Chief Financial Officer

Yes, it will be.

Abhiraj A. Choksey — Managing Director

So yeah, and from what I understand currently, because prices are coming down — even working capital requirements have come down. To some extent that helped us and I think when you are counting debt, I think you are looking at overall long-term debt as well as working capital, right.

Saurabh Shroff — QRC Investment Advisors — Analyst

Yes, correct.

Abhiraj A. Choksey — Managing Director

[Speech Overlap] I don’t think it will even get to INR200 crores. Sachin, what do you think. Maybe INR160 crores, INR170 crores, because a large chunk was already done, right.

Sachin Karwa — Chief Financial Officer

So right now I think you have almost utilized and we should be in that range.

Abhiraj A. Choksey — Managing Director

Yeah. Around INR180 crores, INR200 crores.

Saurabh Shroff — QRC Investment Advisors — Analyst

And this should include the additional working capital debt also that you will need once the [Indecipherable]

Abhiraj A. Choksey — Managing Director

Yeah, I think so.

Saurabh Shroff — QRC Investment Advisors — Analyst

Okay, got it. And Abhiraj, I think you had mentioned maybe it was a few quarters ago, is there any sort of work by any of these major that acrylonitrile could start becoming available locally. I’m guessing it’s a couple of years away, but is —

Abhiraj A. Choksey — Managing Director

There has been some talk, but I don’t think there’s anything that hit the ground as far as I know.

Saurabh Shroff — QRC Investment Advisors — Analyst

Okay. So no progress has been made on that front.

Abhiraj A. Choksey — Managing Director

As far as I know, in the last three, four months, I don’t think there has, yeah.

Saurabh Shroff — QRC Investment Advisors — Analyst

Fine. Okay. And finally, on the last question. These new capex that sort of value-out Taloja, their new plants, are there any more or less sort of labor-intensive, i.e. more automated and hence the confidence that with a very little fixed cost base you are sort of going to breakeven. Is that the understanding?

Abhiraj A. Choksey — Managing Director

It’s literally, I mean, I was personally surprised with the level of automation that we have been able to pull-through. And so just to give you an example, in our Taloja plant, 35,000 tons, which will give us at least INR200 crores, INR250 crores of revenue, we need an additional maybe six, eight people per shift, just that fit. So it’s highly, highly automated. Everything is run from automated DCF system. And of course some amount you do require physical manpower for backing and such, but a lot of it is automated, much more than our current plant, yes.

Operator

Thank you. We have the next question from the line of Vishwa Shah from Tamohara Investments. Please go ahead.

Vishwa Shah — Tamohara Investments — Analyst

Hi, good morning, sir.

Abhiraj A. Choksey — Managing Director

Yeah, good morning Vishwa.

Vishwa Shah — Tamohara Investments — Analyst

Sir. I just wanted to get an understanding on the raw-material pricing that you said affected us because petrochemicals prices have gone down. So what I wanted to understand is because we’ve stocked up on inventory during lockdown at a very high price is why we are being affected by the steep crash in the raw material right now. That’s question one.

And secondly I wanted to know about what happened with the anti-dumping duty case that we had filed with these stats. So could you throw light on both of them.

Abhiraj A. Choksey — Managing Director

So the first one, I mean, just repeating what I’ve mentioned before. Yes, over the last two years, we have continuously had to have higher amounts of raw material inventory just because of the uncertainty around imported. I just want to make it even domestic raw material inventory, we also increased some of our inventory days because some of our domestic suppliers were also dependent on imported raw materials. So we wanted to ensure that — we didn’t want to have this false sense of comfort that because we are buying from a domestic source, everything will be okay. So as a result of it, overall inventory days have gone up and we continue to maintain those. Maybe in the next three months, we may reevaluate three to six months. But as of now, we will continue to maintain those. So while we had that benefit when prices were going up for three or four quarters, four, five quarters I would say, obviously from this Q3 onwards that has reversed. So that has been part of the reason why our margins have been lower, not the full reason, but part of the reason.

And your second question on anti-dumping duty. Absolutely, we have appealed for anti-dumping. We’ve got some favorable sort of judgment in our favor as well, but nothing has come out of it as of yet. I think it’s still in the court, basically the appeals and all are going on. So I mean it is going on on the side, but it was something that doesn’t affect our day-to day business right now.

Vishwa Shah — Tamohara Investments — Analyst

Okay, thank you so much. And sir, just last question. The borrowings had increased from March 2022 to up till now. That was mainly for the two capex that we’ve entered in the two plants, right.

Abhiraj A. Choksey — Managing Director

That’s the only reason. Yes, absolutely.

Vishwa Shah — Tamohara Investments — Analyst

Okay. And so in the last call you had mentioned that it is 50-50 like 50% internal accrual and 50% debt. So that is the case or is there some change?

Abhiraj A. Choksey — Managing Director

Approximately, yeah, you’re right. Maybe 55%. I will have to work-out the exact numbers finally, but maybe — Sachin, what do you think 55%, 60% debt or —

Sachin Karwa — Chief Financial Officer

Yeah. 50% approximately would be [Indecipherable] and balance would be internal approvals.

Abhiraj A. Choksey — Managing Director

Okay, got it. Thank you.

Vishwa Shah — Tamohara Investments — Analyst

Thank you so much and all the best for the further quarters.

Operator

Thank you. We have the next question from the line of Amar Mourya from Alfa Tech Advisors. Please go ahead.

Amar Mourya — Alfa Tech Advisors — Analyst

Am I audible. Hello.

Abhiraj A. Choksey — Managing Director

Yeah.

Amar Mourya — Alfa Tech Advisors — Analyst

Good morning, Abhiraj. Thanks a lot for the opportunity. So I wanted to understand, like as you indicated that this quarter, EBITDA, I mean, EBITDA per kg or realization were down because of the inventory loss. So is it like, let’s say, by two quarters, we will come to our historical average EBITDA kind of level. And what was the freight cost, like what was the higher fee freight costs which were seen into the realization, if you can indicate that?

Abhiraj A. Choksey — Managing Director

Difficult to exactly say how much freight cost. Look, I look at it from a long-term point-of-view. Today, we are about a INR1100 crore company this year with an average EBITDA of about 15%, I think. I mean we feel fairly confident that in the long-term to maintain these kinds of EBITDA levels and maybe even improve them as economies of scale kick-in as SMB margins return to normal pre-pandemic levels etc. So the way we are looking at it is that the capex that we have made today will take-up from INR1,000 crores to INR2,000 crores with some additional marginal capex over the next three years and we want to maintain those EBITDA margins. Now, there could be some quarters where EBITDA margins are a little lower, like this quarter we have had, maybe even, it may go down further in some quarters. I have no idea, maybe they will be 11% one day, I’m not sure, but we have also maybe we will do 17%, 18% in some quarters. So that’s the nature of the business that we have to live with these fluctuating EBITDA margins due to the raw material volatility and sometimes market dynamics in some of our product categories. The good thing is we have created a well diversified business. We’re not only focused on one or two industries. So those industries go down suddenly, our margins will go to 5%, those kinds of things which used to happen in the earlier days I don’t think will happen going forward and I think economies of scale will help as well. So that’s the way we are looking at the business. But quarter-on-quarter, very difficult to predict.

Amar Mourya — Alfa Tech Advisors — Analyst

Got it. And secondly, the capitalization will happen in Q4, right, for both the asset, the INR200 crore capex?

Abhiraj A. Choksey — Managing Director

Yeah, that’s right.

Amar Mourya — Alfa Tech Advisors — Analyst

And for INR200 crores capex, you indicated we took some 50% debt, correct.

Abhiraj A. Choksey — Managing Director

Yes, approximately. I think 60%. Totally, I mean INR200 crore capex was for these two projects, plus we had other maintenance and other projects going on. So for the year, maybe INR200 crores — I want to say for the year, but for FY23 as well as part of FY22 totally INR220 crores, INR230 crores was our total capex and about INR125 crores will come through long-term debt.

Amar Mourya — Alfa Tech Advisors — Analyst

Okay, perfect. Thanks a lot sir.

Operator

Thank you. We have the next question from the line of Rohit Balakrishnan from ithoughtPMS. Please go ahead.

Rohit Balakrishnan — ithoughtPMS — Analyst

Yeah. Hello.

Abhiraj A. Choksey — Managing Director

Yeah. Go ahead Rohit. Good morning.

Rohit Balakrishnan — ithoughtPMS — Analyst

Yeah, good morning, sir. Thank you. A lot of the questions were answered already. And thank you for giving the detailed answers. So just couple of questions. So one was you talked about being very diversified in terms of your industry mix. So can you broadly give the share of your top five industries in terms of your revenue mix. I couldn’t find it in the — I mean, you mentioned the industry, just give a broad sense. And if you could also give like what it was, let’s say, five years back from now.

Abhiraj A. Choksey — Managing Director

Sure.

Rohit Balakrishnan — ithoughtPMS — Analyst

Very broad numbers. I don’t need exact numbers.

Abhiraj A. Choksey — Managing Director

So that’s a good point. I mentioned about seven years ago before we made the acquisition of Omnova Solutions India. Before that, I would say maybe 30% to 40% of our sale was to the footwear industry, 25% to 30% was to paper and rest 10%, 15% to tire, 10%, 15% to construction and so on. In the current context and I’m talking about FY23, I would say about 15% to 20% would be paper and paperboard, construction would be another close to 15%, carpet would be 10%, carpet and textiles put together would be 10%, 12%, tires would be another 10% and nitrile latex is another, less than 10%, 7%, 8% and the rest is all rubber products, which includes footwear, automotive, hoses, rice roll, all different kinds of applications from agriculture to auto to all different kinds of industrial hoses, three different applications. So the final industry consumers are very varied now and no one industry has more than 20% and once gloves market also starts kicking-in, obviously gloves will become a larger chunk, maybe 20% of our overall sales, but the others will grow as well.

Rohit Balakrishnan — ithoughtPMS — Analyst

All right, very helpful. And just in terms of you mentioned the next, I mean this capex would help you to reach to about INR2,000 crores with some more smaller investments. So I mean, this is like over the next four, five years or earlier than that, how do you see that.

Abhiraj A. Choksey — Managing Director

Yeah. I mean our endeavor is next four years, that would be three to four years that we should be able to get to INR2,000 crores with this capex. And of course, any additional capex projects that we may take for example, as I’ve been telling additional NBR capacity is something that’s in the works that we are looking at, plus some new projects potential inorganic growth opportunities as well. So that’s all additional to this. I’m just talking about the investments already made.

Rohit Balakrishnan — ithoughtPMS — Analyst

Right. And the peak debt you’re saying is about INR200 crores, right — INR172 crores, right, included term working capital?

Abhiraj A. Choksey — Managing Director

It depends on the working capital requirement and when prices go up, because we find it when suddenly prices shoot up, obviously, our working capital requirement goes up and when they come down, it comes down again. But yeah, I mean I don’t think it’ll cross INR200 crores, maybe 180 crores or so.

Rohit Balakrishnan — ithoughtPMS — Analyst

Right. And last question sir, I mean you talked about this diversification of product and industry. So just from a — like a slightly different question, but in the same light, is that, so typically when the prices fluctuate, let’s say, if they go down versus, you also mentioned in the earlier call that, like for example, import prices now becoming competitive, so how frequently do your customers switch from lets say you versus somebody else and how fungible is that if you can just give some example. I’m sorry if you’ve already answered in some of the previous con-calls, but —

Abhiraj A. Choksey — Managing Director

It’s actually — not as long as they are buy and large price competitive, customers do not switch. So obviously, for example, market falls by 20% and we don’t decrease the price at all, customers would be unhappy and then I’m looking for alternate options. So generally, they have two options. But given that we are — one of the things Apcotex has done over the last 10 years is become a strategic source of supply for most of our customers in most of our industries, we have major tire cord manufacturers, all the major paper and paperboard manufacturers, all the major construction chemical companies. I mean I don’t think any of them have had even one month where they’ve not bought anything from us. So as long as we’re price competitive and we assure them that we would be, we have high amount of stickiness with our customers.

Operator

Thank you. We have the next question from the line of Karan Bhatelia from Asian Market Securities. Please go ahead.

Karan Bhatelia — Asian Market Securities — Analyst

Hi sir, thank you for the opportunity. Am I audible?

Abhiraj A. Choksey — Managing Director

Yes.

Karan Bhatelia — Asian Market Securities — Analyst

Sir, on the exports, what was the contribution and the growth we’ve seen?

Abhiraj A. Choksey — Managing Director

For which period, but I have those numbers somewhere. So overall, we have been at about 20% of our total sale is exports. And in terms of growth, I mean I have numbers for the YTD, for first nine months, we have seen about 11% growth in exports this year compared to last year.

Karan Bhatelia — Asian Market Securities — Analyst

Right. I think that was helpful. And sir, you mentioned that nothing probably could change materially in terms of realizations and in terms of margin for the fourth quarter. So we’ll be running at peak in volumes for the fourth quarter as well?

Abhiraj A. Choksey — Managing Director

Yes, that we continue to do so. Yeah, we are running at full capacity even now.

Karan Bhatelia — Asian Market Securities — Analyst

And the capex outflow for FY23 could be?

Abhiraj A. Choksey — Managing Director

Around INR200 crores.

Karan Bhatelia — Asian Market Securities — Analyst

Okay, thank you. That’s it from my side.

Abhiraj A. Choksey — Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Anubhav Sahu from MC Research. Please go ahead.

Anubhav Sahu — MC Research — Analyst

Yeah. Thanks a lot for the opportunity. So most of my questions have been answered. Just one on the peak revenue guidance. Now given that being the market conditions have changed and now that both the plants would essentially be targeting different set of products. So would it be possible for you to give a breakup between two plants in terms of investment and expected revenue, I mean basically breakup of INR200 crore investment and INR600 crore to INR700 crore expected peak revenue?

Abhiraj A. Choksey — Managing Director

Yeah. So out of the total capex of about INR200 crores, I would say 70% is in Valia and 30% is in Taloja. Between 70% and 75% in and 30% in Taloja. And in terms of revenue, maybe that will be a higher percentage for Taloja. So maybe 40% Taloja and 60% Valia. 35%, 40%. Yes. Going forward, yeah, from the new plants.

Anubhav Sahu — MC Research — Analyst

Okay. So the change in strategy. I mean, I understand that the plant has already, was to be filled one, but the change in strategies decided by both the regions, right, the changing dynamics for the latex and gloves as well as to be strengthening in demand for the other latex products, right.

Abhiraj A. Choksey — Managing Director

Yes. That’s correct.

Anubhav Sahu — MC Research — Analyst

Okay. And sir in that context, could you also talk a little bit about the demand outlook for the non-auto end-markets like construction, paper and carpet.

Abhiraj A. Choksey — Managing Director

Fantastic. I think overall demand in India has been fantastic for these products. All our customers in India as well as abroad, both I would say abroad meaning Middle-East, Southeast Asia, wherever we are doing exports. I mean, the demand has been phenomenal. In fact, we have not been able to cater to the demand, because of our limited capacity and our team is quite confident that in the next two to three years, we will be able to utilize even with Taloja plant 35,000 tonnes extra that we have now invested in here.

Anubhav Sahu — MC Research — Analyst

Okay. Thanks a lot.

Abhiraj A. Choksey — Managing Director

Thank you.

Operator

Thank you. We have the next question from the line of Sandeep from Anand Rathi. Please go ahead. Mr. Sandeep, I have unmuted. I’m sorry, Mr. Nikhil I have unmuted your line. Kindly proceed.

Nikhil Upadhyay — SIMPL — Analyst

Hello. Yeah, thanks for the repeat. Just one question on the glove latex industry. Now, as we mentioned that the capacities have not come up to the extent the way glove manufacturing capacities have come up, but what we understand is that, gloves there are a lot of, it’s a very fragmented industry, where there are many glove manufacturers, but on the latex that how is the industry structure, is it pretty consolidated. And where I’m coming from is that if the industry is concentrated and there are multiple glove manufacturers, which are finding pressure on inventory and capex on-demand. So if the pricing also being impacted on the latex side or is it more of the utilizations have dropped significantly, which is another concern for the industry.

Abhiraj A. Choksey — Managing Director

Yeah, I think — yeah, so to answer your question first, obviously, the latex industry is much more consolidated than the glove industry. In the glove industry, guys from small $2 million, $3 million revenue to billions of dollars of revenue as well, large manufacturers in Malaysia, Thailand, China and so on. So it’s fairly consolidated. Obviously as the demand has gone down, utilization has come down because all these current latex manufacturers also added capacity over the last couple of years and therefore when utilization is down, there is automatically demand on or pressure on margins and that’s what’s happening, on both the gloves and the latex.

Nikhil Upadhyay — SIMPL — Analyst

Okay. So in a way if you look at the price fall, will it commensurate with the RM fall, but not like a steep fall, other than what RM fall has happened. So it not like some people are trying to get to market share at whatever price and impacting the industry dynamics.

Abhiraj A. Choksey — Managing Director

No, that has also changed, right, because even for the new players, existing players, plus off like we are a relatively new player. We have come into the market that way. There are one or two others that also that are coming into the market or I don’t think they have come in yet, but will come in this year. So as a result of which the current nitrile latex manufacturers, they are trying to hold on to market share and it has become much more competitive, it’s not just raw materials.

Nikhil Upadhyay — SIMPL — Analyst

Okay. And just one last question. If you have any idea of what would be the utilization at which the industry would be working, the latex industry would be working currently versus what it was pre-COVID, any rough estimate or just to get a sense.

Abhiraj A. Choksey — Managing Director

I don’t have that with me ready right now.

Nikhil Upadhyay — SIMPL — Analyst

Fine. Thanks a lot.

Abhiraj A. Choksey — Managing Director

I’m not sure, because it’s changing every month-on-month, things are improving now slowly, But difficult to give an exact number.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

Abhiraj A. Choksey — Managing Director

I’d like to thank all of you for joining this Q3 con-call. Just to summarize, while we are in a challenging phase and given the overall current macroeconomic environment, plus some specific local industry issues like the glove industry etc, we are quite bullish and confident of where the company is positioned currently, we’re quite comfortable at much lower capex than most people could do in the world. We have been able to generate this additional — we will be able to generate a revenue of INR600 crores to INR700 crores, which can go up INR1,000 crores, for the minimal investment, at which we will come back to you, of course, in a year or two as and when we are ready to do that. And while margins quarter-on-quarter can vary in this kind of business, we are hopeful that we will stay in the mid-teens and yeah, continue to grow the business in a healthy manner, keeping in mind, diverse product range, diverse customer range, diverse geographical reach and of course, a healthy balance sheet.

So look forward to seeing you all in the next quarter. Thank you very much.

Operator

[Operator Closing Remarks]

Abhiraj A. Choksey — Managing Director

Thank you.

Sachin Karwa — Chief Financial Officer

Thank you.