Apcotex Industries Limited (NSE: APCOTEXIND) Q4 2025 Earnings Call dated May. 08, 2025
Corporate Participants:
Unidentified Speaker
Sachin J. Karwa — Chief Financial Officer
Analysts:
Unidentified Participant
Nupur Jainkunia — Analyst
Aditya Khetan — Analyst
Rudraksh Raheja — Analyst
Sani Vishe — Analyst
Raman KV — Analyst
Presentation:
operator
Sam. Sa. Sa. Sam.
operator
Ladies and gentlemen, good day and welcome to the Q4FY25 earnings conference call of Apcotex Industries Ltd. 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 then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nupur Jengunia from Velorem Advisors. Thank you. And over to you ma’ am.
Nupur Jainkunia — Analyst
Thank you. Good afternoon everyone and a warm welcome to you all. My name is Nupur Jain Kunia from Valorum Advisors. We represent the investor relations of Aquotex Industries Ltd. On behalf of the company I would like to thank you all for participating in the company’s earnings call for the fourth quarter and the financial year 2025. Before we begin a quick cautionary statement. Some of the statements made in today’s conference call may be forward looking in nature. Such forward looking statements are subject to 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 decision. 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 the management for their opening remarks. We have with us Mr. Abhirat Choksi, 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 J. Karwa — Chief Financial Officer
Thank you Lopur. Good afternoon everyone. It is pleasure to welcome you all to the earning conference call for the fourth quarter of financial year 2025. I hope you had an opportunity to review the financial statements and earning presentation which have been circulated and uploaded on the website and the stock exchanges. Let me provide you with a brief overview of the financial performance for the fourth quarter and financial year 31st March 2025. The operating income for Q4 stood at Rupees 349 crore reflecting a year on year growth of 12.5%. This performance was supported by highest ever quarterly volume and export volume which grew by 15 and 22% respectively on year.
On year basis, EBITDA came at rupees 39 crore marking a robust 23% growth primarily driven by higher volumes and improved capacity utilization. Consequently, the EBITDA margin improved to 11% up from 10% in Q4FY24 and significantly higher than 7.63% in Q3FY25. Profit after Saks stood at Rupees 17 crore. An increase of 10% on year on year and a strong 44.8% growth. On sequential basis, the pat margin for quarter stood at 4.81%. This performance highlights a positive trend in profitability supported by operational efficiencies and improved capacity utilization. Now coming to the financial performance for the year ended 31st March 2025.
The revenue from operations increased by 24% on year on year basis to Rs.1,392 crore. The company achieved strong operational revenue growth. This growth was driven by a 16% rise in overall volume and a 24% increase in export volume further supported by enhanced product mix and better price realizations. Ebitda margin was at rupees 125 crore which increased by 9.5% on year. On year basis, EBITDA margin stood at 89%. The profit after tax stood at 54 crore with a PAT margin of 3.89%. Crash profit for the year has increased by 10.3 crore to rupees 95.6 crore. With this, I open the floor for question and answer session.
Thank you.
Questions and Answers:
operator
Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Dikshant Gupta from JEEOC pms. Please go ahead.
Unidentified Participant
Good afternoon. So my first question would be, can you provide a mix of the revenue from various sectors like latex and rubber?
Sachin J. Karwa
Overall for the year I think yes. Good afternoon, Mr. Gupta. Overall for the year I think we are at about 6 2/3. A little over 2/3 is the latex segment. Obviously a large chunk of the growth over the last couple of years has come from the latex segments and the investments were there. So it’s about 2/3 latex and 1/3 rubber approximately.
Unidentified Participant
And going forward, will you be focusing on expanding the latex segment more or the rubber segment more?
Sachin J. Karwa
I think we’re making a plan to expand both in the rubber segment, specifically for NBR nitrile butadie and rubber. So as I’ve mentioned before that we are sort of waiting on the antidumping investigation, final conclusions before taking a call and going ahead with it. So we’re working so that project is ready and we would be, we’re quite hopeful that we would be able to expand there. And the latex segment, of course we would be expanding.
Unidentified Participant
And what is the capacity utilization and how much capacity are you planning to add every year?
Sachin J. Karwa
For last year in the NBR side we were almost at 100, I want to say about 95, 96% capacity utilization, close to 100%. And on the latex side, you know, for the new nitrile latex project, which we are at about 75% plus now I’m talking about monthly run rate for the year as a whole we were lower of course, but Q4 we were at about 75, 80%. Between 75 and 80% and so there, you know, we probably have another year or two left. But their margins is an issue. And as far as the other latex business is concerned, which most of those latexes are manufactured in a Talloja plant there we are at about 80, 85%, 82% capacity, 80, 82% capacity utilization.
So there again in the next year and a half we suspect we’ll need more capacity.
Unidentified Participant
Okay, and my next question would be, as the crude oil prices are falling, will it be beneficial to you and will it improve the margins further?
Sachin J. Karwa
Historically we have seen in the short term it’s not so beneficial because when prices fall so sharply, we are left with some inventory, both finished goods and raw material. And that’s going to be the challenge really this quarter in Q1 because as you’ve seen that compared to March end to now, crude oil has really fallen around. I think it’s odd brand crude is almost $60, a little over that, but around that versus it was over $80 perhaps couple of months ago. In the long term, of course I think we all prefer lower oil prices. It does help.
Unidentified Participant
Okay.
Sachin J. Karwa
But we have answer more about the margins.
Unidentified Participant
Okay.
Unidentified Participant
Okay.
Unidentified Participant
And my final question would be, are your sales like is your customer base diversified or is it dependent or on one or two customers?
Sachin J. Karwa
No, not at all. We have a very diversified customer base. In fact, I don’t think we have any one customer with more than 2, 3% total sales.
Unidentified Participant
Okay, thank you so much. And all the Best.
operator
Thank you. Participants, please restrict yourselves to two questions. If you have any more questions, kindly rejoin the queue. The next question comes from the line of Aditya Ketan from Smith’s Institution Equities. Please go ahead.
Aditya Khetan
Yeah, thank you sir, for the opportunity. Sir, with the lowering of crude prices earlier we have seen a trend that whenever crude prices goes down we always book some inventory losses. In this quarter, sir, like there has been some benefits on inventory despite crude oil prices declining. How could we look at this.
Sachin J. Karwa
Q4 was a little strange actually. The prices went up between December and February and then came down sharply in March. So overall you’re right. There has been a slight benefit for the quarter. But the sharp decline was in March, you know, March, April. So I don’t know if that answers your question. But yeah, there was a slight benefit this time. Generally, you know, we see, you know in a quarter there’s a general sort of increase and then decrease. But we didn’t have a clear trend this time. But we did benefit slightly.
Unidentified Participant
Got it. Got it. Okay. And sir, this sequential deep in top line. I believe that our volumes from nitrile latex is improving. So ideally the price reduction should have happened in the base business. Which is why our top line has declined.
Sachin J. Karwa
Because volumes sequentially are up by just one second. We’ll give you the data. But volumes sequentially are think up by 9%.
Unidentified Participant
Okay, so the decline is largely deep in the realizations in the base business.
Sachin J. Karwa
Yes, that’s right.
Aditya Khetan
Okay, so just one last question. On to the nitri latex. Earlier sir, we had given a guidance that we would be touching around 600 crore of revenue. Is that guidance still intact?
Sachin J. Karwa
Yeah, I think that 600 crores from what I recall was at 80,000 tons. At 50,000 tonnes we would be closer to sort of 400. 450 crores. So what’s the investment done so far? We have left a small investment for later. Which you would only do if the margins improve. So right now the nitrile latex business we expect to be about somewhere between 400 and 450 crores depending on the price of the latex.
Aditya Khetan
And what would be the top line contribution in FY25 from the Nitrile latex?
operator
I’m sorry to interrupt, Aditya. Those were two questions. If you have any more, please fall back in the queue.
Sachin J. Karwa
Maybe we can let him complete. But yes, I’d request, you know, just to give everyone a chance. I’m sorry Aditya, but just to give everyone a chance. However, since you started the question why don’t you complete it and we’ll close that?
Aditya Khetan
Sure. Sir, I was asking on FY25, so what would be the contribution from the Nitra analytics.
Sachin J. Karwa
Terms of revenue?
Aditya Khetan
Yes, sir.
Sachin J. Karwa
You know, it’s about 14% or so. 14, 15%.
Aditya Khetan
Thank you.
Sachin J. Karwa
Thank you.
operator
The next question comes from the line of Rudrak Shaheja from. I thought pms. Please go ahead.
Rudraksh Raheja
Yeah, thanks for the opportunity. First question is, sir, could you help us understand what led to this major expansion in gross margins for quarter four of FY25 and can we assume that we have bottomed out and recovery should start from here onwards?
Sachin J. Karwa
You know? Yeah, there were a couple of reasons. One is overall we saw improvement in nitrile latex margins, which were very low. The second was in general, in Q4, we did see slight improvement in margins across the board as well. And one of the reasons was there was some, you know, in Jan and Feb, prices went up and we were able to do some great buying. So there certainly has been some benefit to that as well. So a combination of two, three reasons. And the fourth reason is also volume going up. You know, as volume goes up, margins overall go up as well.
EBITDA margin. So that’s, you know, these are the three, four reasons. Obviously there’s been one big change which is compared to Q4 and Q1. So coming to your second part of your questions, whether that is bottomed out or not. So I think, look, that was our hope, but given these tariffs, the US tariffs and the uncertainty around that issue, what we are seeing in the market is a lot of uncertainty from some of our businesses that are more US focused. So for example, we are not directly, you know, we don’t have much exposure to the us but indirectly some of our customers have exposure to the us.
They export to the US and so obviously they are affected in these uncertain times. Obviously the duties, except for China, the duties worldwide is now 10% into the U.S. but given the uncertainty, and that could change again in June, right. After 90 days. Sorry, in July after 90 days. So I think there is a lot of uncertainty. So there is in Q1, at least in Q2, perhaps this US situation may create a lot of uncertainty in the world and for some of our customers directly, so far, at least in Q1, we haven’t seen our business affected too much.
But the outlook is. The best word I can use is uncertain.
Rudraksh Raheja
Got it, sir. And sir, on the Capex front, if the current trajectory continues, we’ll run out of capacity, as you have acknowledged as well. Can you Share more details on the capex.
Sachin J. Karwa
Yeah, we will run out of. So we expect that. Again, as I said, we’ll wait and watch. Of course we are making multiple plans for further expansion of our current product range which is nbr, styrene butyl latexes, styrene acrylic latexes and nitrile latex. We will not be expanding immediately. We will probably wait a year or two depending on how the margins play out. The plans are on and we expect we’ll be okay till perhaps middle of next financial year. So we should have enough capacity.
Rudraksh Raheja
Got it, Got it sir, I’ll come back in.
Sachin J. Karwa
Like you, we will be sort of informing our investors about our CAPEX plans once they are firmed up and approved by the board.
Rudraksh Raheja
Understood.
Rudraksh Raheja
Okay, thank you.
operator
The next question comes from the line of Sani Vishay from Access Securities. Please go ahead.
Sani Vishe
Yeah, thank you. Good afternoon sir, coming on to the answer that you gave to the earlier participants. So margin improvement is driven by multiple factors and besides volume, I think the most of the factors are excellent. So are we saying that our margins will keep varying depending on external factors or is there something that we are doing to improve the margins in on a steady basis?
Sachin J. Karwa
So one is of course we are growing volumes that will obviously as you said, expand margins. There are, there are a few other plans as well to kind of reduce costs which are ongoing. But however, yes, external factors, especially in the nitrile latex business which has pulled down the margin overall for the year and for the quarter as well. Although there’s been an improvement in Q4, there is that external factor. There are external factors right now and over time the other external. I don’t know if I’d call it an external factor but the whole industry added a lot of capacity just post Covid.
Now in the last two years there’s not been any major capacity expansion in any of the latex businesses. So when the capacity utilization sort of goes to a healthier level like we for example are 80, 82% capacity, we generally find that 80, 85% capacity utilization and above, things start improving in terms of margins. I don’t know if you would call it an external factor, but that’s more of an industry dynamic. And so if you see our four year results, we had two years where our margins of EBITDA margins of 15, 16% and in the last two years where the EBITDA margins have been, you know, obviously lower, maybe closer to 10%, 10, 11%.
So yeah, so I would say that industry dynamics are also changing now. Going forward, the whole post Covid boom, during post Covid boom, a lot of capacities were created, you know, in Asia. So that kind of slowly is sort of petering out. Right, the excess capacity.
Sani Vishe
Okay, so that’s what I was trying to understand. So things have improved. I mean, it’s not just that the food prices help us or something like that, but I think we can expect relatively better margin going at compared to the dips that you had.
Sachin J. Karwa
Sorry, I didn’t understand. I’m sorry, it’s not very clear.
Sani Vishe
Okay, so I was trying to say that. That’s what I was trying to understand, that it’s just not just the crude prices, but I think in general the things have improved and we can be hopeful of more stable margin levels to reside. Right?
Sachin J. Karwa
Absolutely. And honestly, the crude prices for us, you know, unlike maybe FMCG companies that are using crude as a base or FMCG is the wrong word. But any company where. Yeah, you know, where. I don’t think. Okay, let me put it this way. I don’t think crude prices in the long term affect us too much. Whether they’re up or down, we obviously prefer them lower than higher. But in general, it’s about the margin between our raw material prices and the finished goods prices. So being a B2B company, we have to move quickly and reduce and increase prices as the raw material prices go up and down that we focus on.
Sani Vishe
And lastly, if possible, could you share now or later the realizations? Average realizations for the whole year?
Sachin J. Karwa
You mean. What do you mean by realization per.
Sachin J. Karwa
Kg for.
Sachin J. Karwa
Mr. Vishen.
Sani Vishe
Okay, thank you.
operator
Thank you. The next question comes from the line of Justin Balia from Clockwise Capital. Please go ahead.
Unidentified Participant
So thanks for taking my question, but can you just give us a general performance update on various segments of the business for FY25? Specifically, if you could talk about volume and margin trends in the SP latex business, nbr, HSR and nitrile latex and any underlying trends which drove growth or margins in FY25 and your prognosis for next year in all the different segments.
Sachin J. Karwa
Okay, so as I mentioned earlier, you know, we’re at about six, let’s say two thirds is latex and one third is the rubber segment. I’ll start with the easy one, the HSR segment. The margins are sort of steady. Volumes are actually somewhat declined in the year compared to last year. So it’s only about 5% of our total business. Now, it’s not a growing business. In fact, it’s a de growing business. So we Are sort of continuing with the business without investing any funds. So that’s a little flavor on high stein rubber. In terms of nitrile rubber we are at 100% or close to 100% capacity level for FY24.
Sorry FY25 and we will be the same for FY26. No new capacity is going to be added. Margins we are dependent a little bit on international prices and of course now there’s anti dumping that we have filed. So there Also margin in Q4 were better overall they were steady for the year. On the latex side where we’ve, you know as far as the paper carpet construction for the year it was definitely more challenging than the previous couple of years. Again as I mentioned, capacity being added. On top of that some of our exports were affected especially in the carpet industry to Turkey, to Egypt because of all these, the war issue in Israel.
Israel, Gaza issue. So. So because of all these issues carpet was affected. However overall for the year we have seen, as you can see we have still pushed through growth. Overall we had a 16% growth in volumes, 24% growth in value terms and.
Unidentified Participant
For the year 16% growth in volume is including nitrile latex as well.
Sachin J. Karwa
Yes, absolutely. Including nitrile latex.
Unidentified Participant
Can you give us numbers for. Only for the SP latex we don’t.
Sachin J. Karwa
Give sort of each, you know, for each segment we don’t give growth numbers. I’m just trying to give you a flavor without. Unfortunately I’m not able to give those numbers for sort of obvious reasons because we have different competition for different latexes and you know, we just don’t want to talk about them individually.
Unidentified Participant
Got it.
Sachin J. Karwa
But overall of course SB latex also we have. I can talk about overall for the non nitrile latex latex segment has also grown. I will pull out the growth numbers in a second but I hope that gives you a little bit of a flavor in terms of margins as I said it has been challenging for paper and carpet for sure. Compared to the previous year construction has been steady. Overall we have seen cash profit grow by about from 85 crores to about 96 crores. So how would you percentage is about in about 13, 14%.
Unidentified Participant
And so your prognosis next year for SP latex business?
Sachin J. Karwa
Oh we’re quite sorry. 12% growth in latex. No. Yeah, 12% growth in cash profit. And he’s asking about non light trial latex if you have that available. We don’t really give a prognosis or a guidance for the following year but yes. For SB latex we are quite bullish that we have a very strong market share. We are number one in that segment. In India we are growing well exports. So as long as the India growth story continues and we are able to continue to grow and export there also we expect good growth. Obviously it will not be like nitrile latex because we are, you know, nitrile latex.
We just started a couple of years ago but we expect good growth there as well.
Unidentified Participant
Got it sir.
Sachin J. Karwa
So even in the non nitrile latex segments we have grown at about 8 to 10%.
Unidentified Participant
Volumes.
Sachin J. Karwa
Volumes? Yeah, probably a little bit more.
Unidentified Participant
So in the night side latex business.
Unidentified Participant
You were of the view.
operator
Sorry to interrupt. Just you’re done with your two questions. Could you please fall back in the queue if you have any more?
Unidentified Participant
Sure.
operator
Okay, thank you. The next question comes from the line of Raman KV from Sequent Investments. Please go ahead.
Raman KV
Hello sir, can you hear me?
Sachin J. Karwa
Yes, go ahead.
Sachin J. Karwa
Mr. Raman,
Raman KV
I just have two questions. One, with respect to the guidance for the coming year, so what sort of volume growth are we expecting in terms of the latex and rubber segment? And secondly, are we expecting any further price margin improvement driven by the declining crude oil prices?
Sachin J. Karwa
As a policy we don’t give guidance. But as I mentioned in the rubber segment we do not expect growth because we don’t have capacity this year. So we will try and improve our margins in the rubber segment if possible. On the latex segment of course we expect growth. We have Runway so we will push. Again, we don’t give specific guidance in terms of growth in for specific segments or even as a company as a whole.
Raman KV
So. So with respect to the rebel segment, so are we adding capacity in this year?
Sachin J. Karwa
We will be deciding in the next three to four months I suspect.
Raman KV
Okay. And sir, other thing is I want to understand. See this quarter we had a bit. The operating margin has improved from 8 to 11% on quarter. On quarter basis. And you said it was because of you a better price realization. At the same time you said the inventory which you have is of a higher crude or crude was basically when the crude price was higher. So when will the effect impact of lower crude price be impacting on the company level?
Sachin J. Karwa
See, as I said again I’m repeating that lower crude prices don’t necessarily mean it’s great for the company. Lower crude prices, once they’re steady, if it remains steady, it does help of course from a working capital angle customers also from a pricing angle it helps a little bit. But while they are falling as we have seen in the last couple of months. It’s actually a little bit not great for the company because we are forced to sort of reduce finished goods prices very quickly and we may be stuck with some higher cost raw materials or finished goods.
So of course we try and manage it as best we can. But we are sometimes what we’ve seen historically, we are sort of sometimes a quarter or so can be affected with these kinds of sharp movements, as we have seen. And not just crude, it’s more than crude. It’s the raw materials we specifically buy which are petrochemicals, which are downstream crude. So even if crude goes down by 20% does not necessarily mean that our raw materials will go down by 20%. In fact, some raw materials have gone down by 10, 15%, some have gone down by 25, 30%.
So I hope that answers your question.
Raman KV
Yes sir. Yes sir, only one last question. It’s on the part of price realization. What is the realization per turn with respect to latex and rubber for FY25?
Sachin J. Karwa
Again, we don’t give sort of per kg numbers as I told the previous caller as well. Sorry.
Raman KV
Thank you.
operator
Thank you. The next question comes from the line of T.K. pandya and individual investor. Please go ahead.
Unidentified Participant
Good afternoon. Thank you for taking my questions. First thing I would like to know that kotex had acquired 26% of shares from Oparu Narmada and this company is a special purpose vehicle and has no business operations. What prompted you to take this line of going in for power generation? Wind power generation. Because wind power generation production is very erratic and shutdowns are very frequent. You have a power purchase agreement and your power purchase agreement. Have you safeguarded yourself from any of these of wind energy production?
Sachin J. Karwa
Yeah. Thank you for your question. So this is specifically for the Gujarat plant where we Gujarat facility where we are investing in a hybrid power project. It’s not only wind and whatever power is generated, we get a credit in the consumption of our Gujarat plant. So it’s a Gujarat government scheme to promote renewable energy. And obviously the payback and the savings from this project is quite lucrative. And that’s the reason. And more than that and over and above that, more than the savings and the commercial aspect of it, we are Also from an ESG perspective, we will be sort of moving at least 60 to 70% of our current consumption, 65 to 70% of our current power consumption in our Gujarat plant to renewable energy and therefore reducing.
Unidentified Participant
The cost of green energy, wind power, or vibrate, whatever you are Saying as compared to the conventional cost of power from conventional services. How much is the difference? How much profit or whatever. How much savings would you be able to make?
Sachin J. Karwa
It’s a significant difference Mr. Pandya. It will. It will result in reasonably good savings per year. For the. For the Valia plant. It’s at least it’s. It’s quite a. It’s. I mean I don’t have the exact numbers with me but it’s a significant saving.
Unidentified Participant
Do you think we are investment of 3.227 crore is worth it? You will not regret it.
Sachin J. Karwa
Yes, we definitely.
Unidentified Participant
Okay. The second question is your current liabilities and non current liabilities. Total is about 184 crore. So where have we utilized these borrowings?
Sachin J. Karwa
So the. The current liability you know are on two fronts. The total borrowing was. One was used for the. The project that we invested in two years ago where almost 200 more than 200 crores were invested in two expansion projects. And the second is gone obviously to fund the working capital. And our total as on 3-31-25. The long term liabilities would be or not long term total borrowings would be about 185 crores.
Unidentified Participant
That is what I say. But 185 crores is very high as compared to your. Your profit is only round about about 50 crores or so. 51 crore. How much is it.
Sachin J. Karwa
Long term?
Sachin J. Karwa
It’s about 54 crores. Net profit is 54 crore. Your net profit. So it will take about more than three years to square off this borrowing.
Sachin J. Karwa
Some of it is term loan. So against that we have debtors as well. Sorry, some of it is working capital loan. So the working capital loan is probably more than half of this. And the term loan is probably a little less than half now. So we don’t see it. In fact on the contrary I think our balance sheet is extremely healthy. And we also have cash in the books of about 100 crores that we have kept for future sort of opportunities or immediate opportunities. So I beg to differ. But I think our balance sheet is one of the healthiest that you would see.
Unidentified Participant
Okay, no discussion on that. At the last our hope.
operator
Sorry to interrupt Mr. Pandya, you’re done with your two questions.
Unidentified Participant
One second, just one second please. The margins at the end of the financial year, profit margins. Earlier you had about 10 between 10 and 15%. Now it has. In the last quarter it was 4.8. When do you expect your profit margins to come around? 10% profit margins.
Sachin J. Karwa
So as I mentioned that you know in the last Couple of years. There have been some internal challenges and some external challenges which in the year FY22 and FY23, obviously we had better margins compared to the last couple of years. We expect that in the next year or two things should turn around as capacity utilization goes up across the industry. I think things should turn around. Of course there are certain uncertainties right now with the, you know, tariffs from the U.S. i think that’s the main issue right now. And of course the India Pakistan situation, I don’t want to comment because it’s too recent and no one knows how that will play out.
But for now the tariff is the big issue and how it affects us and the customer and the economy as a whole. But overall we obviously expect the margins to improve over time.
Unidentified Participant
Thank you so much. Thank you. Sir.
operator
The next question comes from the line of Rohit from I thought pms. Please go ahead.
operator
Yeah, go ahead Rohit.
Unidentified Participant
Yeah.
Unidentified Participant
Okay. So most of the questions have been answered. Just two questions again. So sir, I think historically.
Unidentified Participant
We’Ve been.
Unidentified Participant
Talking about so nitri latex. When we envisioned this project it was higher margins and of course the situations have changed post Covid. However I think in general you’ve spoken about improving your overall margin band from let’s say around the peak margins that I can see that you have done around 14, 15% during the good years of COVID But I think you talked about the normalized margins being around 14% to 15% going on from here of course save for these tough periods. So I just wanted to get your comments around that how confident you are. I’m not saying this year, I mean I’m not talking about the immediate quarters.
So I just wanted to understand from you from if I look at the last probably 10, 12 years of your historical numbers the highest margin that you’ve done is during the COVID years. Now you’ve been saying that those will be your normalized margin and probably you have a, if you get some good years and probably go even higher. So maybe if you can just help us understand what gives you that confidence. I’m not talking about the current times. I understand these are tough times and there is over capacity and we are all trying to get the way out of it.
But if you can just maybe help us understand. So yeah, that’s my first question.
Sachin J. Karwa
It’s not fair to compare 1012 years because the company was very different 1012 years ago when we were probably a 400 crore company. Now we’re 1400 crore company. So you know, and so one is we are achieving scale slowly but surely. Right? We are achieving, going closer and closer to global scale. So for example, our styrene butyne latex and styrene acrylic latex plants are now the global scale. I would say, obviously what has happened is because of the COVID year boom, a post Covid boom, between 21 and 23, a lot of capacity was added. That typically doesn’t happen in this industry.
It gets added slowly. I think the whole industry was running at full capacity very quickly in that 22, 23 year, 2022 to 2023 period. And so quickly a lot of capacity got added, which typically doesn’t happen. So therefore when that normalizes, we expect margins of those products to go back to normal. Nitrile latex, because it’s used in medical gloves mostly, even more capacity than normal was added. I mean, more capacity was added in the last two years in nitrile latex than the previous 10, 15 years. So it’s really, really been a very unusual period in terms of capacity addition.
So as the capacity utilization normalizes, we expect the margins to normalize at about 14, 15%. Now had it been seven, eight years ago, Aquatex may not have been able to achieve those margins because we were subscale. And therefore the confidence that we can do this, we would have to of course increase margins for NBR for all our products as well and introduce some higher sort of value add products. So all that helps, you know, overall. So I think even in, let me put it this way, even in years that have been very challenging, we have achieved margins of about, for the last two years, close to around 10%.
Right, right. So this is when nitrile latex is pulling our margin down for the company as a whole. So without nitri latex, we would have had, you know, maybe 11, 12% margins, 2% more so around, let’s say 12% margins, I’m told. And that’s not such a great year. So once capacity we should go back to 14, 15%. That’s what I feel.
Unidentified Participant
Very clear, sir. Thank you. And so just one more question. So given you mentioned that we will probably run out of capacity probably sometime next year, I mean this financial year, and you’re deliberating on capacity expansion and you said that we are now in many products, we are like a player of scale. So given that the margins are not great across the board, given the capacity increases and general realizations being down, would that not impair our margin recovery as a company? Just wanted to get your views.
Sachin J. Karwa
Sorry. I didn’t understand the question. Why would it impair margin recovery?
Unidentified Participant
Because of, I mean you putting more capacity, I mean more supply coming in but because you are there of a decent scale for all these products now, would it not impact like in excess supply scenario? We’re putting more supply is what my question was actually.
Sachin J. Karwa
So what I’m saying is. Yes, but look again I’m just trying to mention what happened two years ago was we came in with a capacity and our competitors came in with capacity. So as a result of it, a lot of capacity was added. Now we will of course now I think it will be sort of normal capacity expansions going forward. It will not be in the sort of post Covid, you know, capacity gold rush as we called it and how it’s going to be sort of more measured capacity increase for what we need. Because if we don’t increase capacity, that’s also an issue.
Right. And obviously one eye is going to be a return on capital. So whatever additional capacity we do set up, we will want to utilize that capacity also in two to three years. And we would want to do it at a cost where our return on capital is quite healthy. As a company we look at 20 to 25%. We target at least 25% return on capital. So as long as we are convinced that there is a high probability of that happening, we will invest.
Unidentified Participant
Can I squeeze one more question if it’s okay?
Sachin J. Karwa
Sure, go ahead.
Unidentified Participant
I think sir, you mentioned in the last couple of calls about the status issue probably helping you given there’ll be a tariff on Chinese gloves exports and given the current situation, there will be the tariffs on largely the tariffs on China stand and other tariffs are not at that rate. So how is the situation now evolving for you guys specifically and your customers?
Sachin J. Karwa
Essentially the difference between last time and this time is that last time it was specifically, I mean last time when we met in January, it was specifically on Chinese gloves that the US had imposed 50% duty starting January 1st. Now what’s changed dramatically was in April, so since early April is that tariffs were announced across the board and then reverted back. And now obviously only China has more than 100. I don’t even know the number anymore. It keeps changing, but more than 100% tariffs on all products from what I understand. So as a result of it, of course the Chinese glove industry has been affected.
And what we are seeing is that what we are hearing from our customers is that now China is, it’s not viable for them to supply to the US So they’re Coming to Europe and Asia and other parts of the. They see more Chinese gloves hit those markets and similarly on the latex as well. Because their overall glove, or I understand glove industry has been affected in China. They have excess latex. So that’s also coming out of China and we are seeing it in some markets. It’s a little early to say because all this started only in March.
April I would. Or April, rather after April, when the tariffs were increased even further. So far, no direct impact on us, but we have to wait and watch. For example, some of our customers who are in Sri Lanka, Indonesia, Malaysia, they are not sure what their duties will be when they export into America two months later. Right. So there is a lot of uncertainty. People are basically holding off on building big inventories or sending big parcels to the U.S.
Unidentified Participant
Got it.
Unidentified Participant
Thank you very much. And all the very best for this coming year.
Sachin J. Karwa
Uncertain. Really don’t know how it will play out so far. I can tell you this, at least so far this quarter, which is almost half of the quarter, is done our business, our volumes have not been affected. We are still pushing through and it’s not. It’s all okay. Sounds looking okay so far, but the outlook is uncertain. So it could change at a short notice. Right. Depending on what happens.
Unidentified Participant
Sure.
Unidentified Participant
Thank you, sir. All the very best for this year.
Sachin J. Karwa
Thank you.
operator
Thank you. The next question comes from the line of Shrushti Hansura, an individual investor. Please go ahead.
Unidentified Participant
Hello. Yes. Thank you. So for the opportunity, my first question is any updates on ApcoBuild?
Sachin J. Karwa
No, actually it has been a little bit of a challenging year this year. I think overall the Indian market that Akbo build is entirely for the Indian market and more for the sort of western and central region. We have seen growth, but slight growth, but we don’t, as I said, it’s still a small part of our business, so we don’t really report on it.
Unidentified Participant
Okay. What exactly are the triggers for our nitrile latex segment to grow which could potentially lead to higher margins overall?
Sachin J. Karwa
Sorry, didn’t understand the question.
Unidentified Participant
What exactly are the triggers for our nitrile latex segment to grow which could potentially lead to higher margins overall?
Sachin J. Karwa
Yes. So in terms of volumes and we are perfectly on track. Our original thought was that we would reach 100% capacity utilization within two years. I would say we are at a run rate now of about 80%, so we are a little bit short on that. But that is also because the margins have been very low. So we are only focusing on customers where we are Getting at least some margins. So there I think we’re just waiting for the whole industry to kind of turn because the capacity utilization in the industry really became very low with so much capacity added and then post Covid demand going down as well.
So now the demand is back to kind of pre Covid levels and a little higher. And all the inventories that were in the sort of the glump inventories have been utilized that additional gloves produced during those Covid years. But we are seeing a lot of capacity utilization, idle capacity utilization. So when that turns, margins will go up. That’s the main trigger.
Unidentified Participant
Okay, and what about freight cost updates? Are they reduced or.
Sachin J. Karwa
Let us finish one question. Okay, sorry, go ahead.
Unidentified Participant
I was asking about freight cost update. Are they reduced or.
Sachin J. Karwa
Sorry, were you talking about freight cost? Ocean freight? Yeah, ocean freight have been definitely better. They’ve reduced over time. Some pockets still remain a little higher than what we would like. Especially you know, to Middle east and Turkey and so on. Middle east meaning, sorry, Egypt. Anyway, we have to pass through this Suez Canal, even Europe, those costs remain high because some ships are going around South Africa now. But overall I would say freight cost is not so much of an issue now. Except for the markets in textile, for carpets mainly, which is Turkey, Egypt, that area Saudi.
Unidentified Participant
Okay, thank you, sir.
operator
Okay, the next question comes from the line of Himalay Gandhi, an individual investor. Please go ahead.
Unidentified Participant
Hello. Hi sir, can you hear me?
Sachin J. Karwa
Yes, we can hear you.
Unidentified Participant
Thank you for taking a question. I wanted to ask that. Currently exports contribute 30% to our revenue. But given the current scenario, how do you see that panning out ahead and you know what could be the headwinds and tailwinds we could see
Sachin J. Karwa
in exports?
Unidentified Participant
Yeah, yeah, in exports.
Sachin J. Karwa
Okay, so currently we’re at about 1/3 32, 33% is. 32% of our total turnover is exports. You know, honestly it’s. For us it’s not so much about exports domestic obviously over time since we are very strong in the domestic market for most of our products that we are in. The real big driver for growth is exports. So we do expect it to go above 40% over the next couple of years. There is no major headwind, I would say because we are focusing more on regional exports. Southeast Asia, Middle Eastwood, Middle East, North Africa, Southern Mena.
These regions are probably two thirds of our total export and remaining in other parts of the globe.
Sachin J. Karwa
So.
Sachin J. Karwa
Headwinds. It’s mainly this overall global capacity addition that has happened in nitrile latex and some in other latexes as well. Other synthetic latexes, that’s the main headwind. Otherwise we don’t see much of an issue.
Unidentified Participant
Okay. Okay, just add another one question. Can you like on a broader basis, can you give us the industry wise revenue segmentation? We cater to seven industries.
Sachin J. Karwa
So approximately, you know, the rubber we are at about 31 third, about 30%, 32, 33% is the rubber industry. Tires is probably another 10% or so. And then largely we have paper, construction, carpet, textiles, which would be all around 15% each. So 15% paper, 15% construction, 15% carpet and textiles put together. I may be missing one. And nitrile latex of course is another 15%. So I mean may not exactly add up to 15% but add up to 100% but gives you a phase little bit of a flavor.
Unidentified Participant
Okay, so can I take one more question?
Sachin J. Karwa
Sure, yeah.
Sachin J. Karwa
Thank you. If the geopolitical issue turns favorable, would we be able to capitalize it in the short term? Like can we do capex within a few months or would it take more than a year to do Capex and you would be able to have benefits of capex led growth like how will it go?
Unidentified Participant
So again, din perhaps understand your question fully. But from correct me if I’m wrong, but you’re asking geopolitical issues, is there any benefit that we can take out of this?
Unidentified Participant
Are you specifically asking if the current scenario somehow turns favorable, will we be able to capitalize it in the short term?
Sachin J. Karwa
In the short term, certainly, because we have from the latex side, we have capacity on both nitrile latex and other synthetic latexes. Is it’s a question for next year. We expect that the capacity will be ready by the time we really need it. But in case, as you said, if there is certain demand this year and we get some 25, 30% growth suddenly, then yes, we will not be able to capitalize in terms of volumes, but we’ll take advantage and try and improve margins in that case. But honestly, given the current geopolitical environment, I don’t think that’s going to happen.
There is not a lot of stuff that’s looking great.
Unidentified Participant
Okay. Okay. Thank you so much.
Sachin J. Karwa
Thank you.
operator
Thank you. The next question comes from the line of Ankit Kanodia from Zen Nivesh Advisors. Please go ahead.
Unidentified Participant
Yeah, thank you for taking my question and congratulations on defense setup number Given the external environment, most of my questions have already been answered. Just a couple of one. Number one is in one of the questions you said that you had a difficult year for Aspobari. Can you Just throw some more light as to what happened there.
Sachin J. Karwa
Difficult year in the sense that, you know, we have been used to 18, 20% or maybe more growth earlier this year. The growth is in single digits. So I just mean from that point of view it was, you know, not such a great year, but the last because the previous sort of many years, 6, 7, 8 years, we have had good growth. We’ve just seen the Indian sort of construction, chemical space is crowded, the growth hasn’t been there. And I think you can see that in the other sort of allied building material segments as well.
I think that’s just a, I think that’s not a. Not such an issue.
Unidentified Participant
Got it. But I think we started this somewhere in 2017. Even after eight years, if it forms less than 5% of our, or maybe slower single digit to our revenue, don’t you think we are growing this much lesser than what we would have liked?
Sachin J. Karwa
Yeah, I mean look, we are obviously we could have done better. We can do better, but as I said, it’s more of a downstream play. We have a few of the main raw materials so we’re trying to capture the downstream margin and we are quite happy with the way things are progressing. Things could have been better, of course, and we would have preferred to be a bigger business than it has. But it’s still a profitable business on its own. We run it like a standalone P and L and it’s a good, small, profitable business.
Unidentified Participant
Got it. My second question, sir, is slightly longer term. So if I, if I could look at how we have grown and how we have basically added more products, added more geographies and also added, I mean reduce the customer concentration risk over the years. What we have, what I have generally observed is that yes, you have to newton achieved scale also and inherently the margins, EBITDA margins have also increased over the years even though in between there have been periods when margins have been very high and then they are very low. So is my understanding correct when I see that in the last two years and the margin we are closer to the bottom yet in the next two years, two, three years from there we should see both from margin and effect and perspective, the number should go up.
I’m not asking for any definite number.
Sachin J. Karwa
Can you repeat the last part? You said from a margin and what.
Unidentified Participant
Perspective asset terms, even your asset turns also sometimes become more than eight, sometimes it comes down to two, three. So that’s a very wide range of asset terms which we see in the business from a short term perspective.
Sachin J. Karwa
As I said this, what happened in 2320, you know, 2324 was unusual because a lot of assets added more than 200 crores of assets literally in one quarter. So therefore the asset turn fell and then obviously as the capacity is used up, the asset turnover goes up again. So whenever I look at Roce or for the company or asset turn, I think you have to, at least I look at it for any company, not just my company, for any company. You can’t look at it as. I don’t look at it as in one point in time but an average over a period of 5, 7 years that gives a better flavor.
And as far as margin is concerned, again the same issue, right. There’s a lot of capacity that was added in that FY23 24 period for us and for the industry as a whole which is main reason why EBITDA margins are lower. But as a business, and we’re definitely much stronger now in terms of scale in terms of, as you said, geography in terms of industry coverage. So we’re not dependent on any one industry. And so therefore the downside is quite well protected. And so you know, earlier our margins were between, you know, I remember many years, I mean 15, 20 years ago margins would be between 3% and 8%, you know, depending on good years and bad years.
Now what we are looking at is 10% and 15%, 15% between good years and bad years. I think over time that will keep improving as we scale up more and more.
Unidentified Participant
Thank you so much sir, that’s really helpful.
operator
Thank you. The next question comes from the line of Rudraj Raheja from I thought pms. Please go ahead.
Unidentified Participant
Thank you again. Could you tell us about your day three payment plan if you have any.
Sachin J. Karwa
We don’t have, as I mentioned to the previous caller, we had one long term loan that we had taken for about 125 crores for the projects that we did and we are paying it back as per the schedule we expect. Go ahead Sachin. Sachin will give you a flavor that it takes.
Unidentified Participant
How long? We have already repaid a year of term loan installments and in next three years we will close the loan.
Sachin J. Karwa
So it’s a four year period in.
Sachin J. Karwa
Which the loan will get closed.
Sachin J. Karwa
I honestly think it’s not a big deal. We have 100 crores of cash against our term loan which is Also currently what 95 crores? About 100 crore. So against the term loan we already have that cash and the rest of the borrowing is working, capital borrowing. And if you see for 1400 crore company working capital borrowing is about 80 crores, which is less than a month of working capital. So we’re very sort of. In fact, we’ve got feedback from some of our board members that we’re being too conservative and we should have more debt.
Unidentified Participant
Okay, okay, sir. In terms of the latex product, sometime back when we expanded our capacity, you mentioned that another player in the industry also expanded at the same time. So that’s why prices crashed.
Sachin J. Karwa
So specific to that margins, margins were affected because, you know, we wanted to. Everyone’s holding on to market share or trying to improve market share. It happens, you know, and it’s just that also, don’t forget that post Covid, that huge jump in 21 which no one was expecting, you know, in fact, if you remember calendar year 20, everyone was so worried about COVID and what would happen to businesses. And suddenly in calendar year 21, what we saw was a huge pull from the market as people were sitting at home and ordering goods. So all manufacturing went up.
So in 21 and 22 and parts of 23, we were running at 100% capacitance. In those two, three years, everyone panicked that we didn’t have enough capacity. And when I say we, I mean the manufacturing industry as a whole and our industry in latex and these products. And we built more capacity than we perhaps needed to at that time, thinking, you know, you know that it will be used up quickly in our case. But we have been conservative, we have been very good at using it up and I think we have done a good job overall.
So that unusual period has gone away now. Now people are a lot. I think companies are going to be a lot more measured about adding capacity.
Unidentified Participant
True, sir, but are margins coming back there? Capacities we have filled. That is true.
Unidentified Participant
They will, they will. They have to have. Because to invest further, you need a healthy return on capital, so you need healthy margins.
Unidentified Participant
Right.
Sachin J. Karwa
Otherwise no investment will happen.
Unidentified Participant
Got it, sir. Got it.
Sachin J. Karwa
Okay, good. Thank you. Thank you.
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 the closing remarks.
Sachin J. Karwa
Thank you everyone for joining us on the Q4 and financial year 25 conference call. We look forward to seeing you in the new financial year. Now for the Q1 results in July. Thank you very much for your time.
operator
Thank you, sir. Ladies and gentlemen, on behalf of Apcotex Industries limited, that concludes this conference. You, you may now disconnect your lines.