Century Enka Limited (NSE: CENTENKA) Q4 2025 Earnings Call dated May. 07, 2025
Corporate Participants:
Unidentified Speaker
Suresh Sodani — Managing Director
Yogesh Shah — Chief Financial Officer
Analysts:
Unidentified Participant
Vikram Suryavanshi — Analyst
Vipul Kumar Anupchand Shah — Analyst
Dhaval Shah — Analyst
Madhur Rathi — Analyst
Amit Kumar — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the century and car Q4 and FY25 earnings conference call hosted by Philip Capital. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask a question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing then zero on your touchtone phone. Please note that this conference is being recorded. This conference may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call.
These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference call over to Mr. Vikram Suryavanshi. Thank you. And over to you sir.
Vikram Suryavanshi — Analyst
Good afternoon. Very warm welcome to everyone. Thank you for being on the call of Sinchinka Limited. We are happy to have the management with us here today for question and answer session with the investment community. The management is represented by Mr. Suresh Surani, Managing Director and Mr. Yogesh Shah, Chief Financial Officer. Before we start with the question and answer session we’ll have opening comments from the management. I will hand over the call to the Mr. Suresh Sudhani for now for opening comments. Over to you sir.
Suresh Sodani — Managing Director
Good afternoon everyone and welcome to our Q4FY25 earnings call. I would like to thank our host Philip Capital for hosting this call. Now let me first brief you on the operational highlights for the fourth quarter. FY25 for the tire cot segment. Demand for NTCF was substituted during the quarter due to poor demand from truck and bus segment while the two and three wheeler segments and the farm segment remained at similar levels of Q3. Volumes for the year were higher in FY25 compared to FY24 driven by strong performance in the first half. Imports increased towards the end of quarter four due to lower prices and uncertainty caused by tariff issues reducing demand from domestic suppliers.
Margins remained under pressure due to falling raw material prices and lower sales particularly in Q4 NTCF. Demand in FY26 is expected to depend on Indian GDP growth and geopolitical challenges related to tariff, tyre exports etc. Approvals of polyester tire cot fabric are currently in progress with multiple customers. We expect commercial supplies to start from Q4FY26 after clearing all stages of approval. In the filament yarn segment, sales were affected due to a fire in our one of the plants at Baruch in February end leading to sales volume loss in Q4. Despite this, sales volume for FY25 was higher compared to the previous year supported by an increased share of value added products.
Revamping and repairs of affected plant is in full swing and we expect the plant to be fully operational by the end of June. Falling raw metal prices and dumping at low prices from China impacted margins in Q4, although this was partly offset by higher contributions from value added products. Focus would continue on increasing share of value added products and niche products with better margins. Caprolactam prices continued to slide to record low levels leading to losses on stock and resultant margin pressure. We continue to focus on cost reduction initiatives to remain competitive in a challenging geopolitical environment.
I now hand over to Mr. Yogesh Shah to brief you on the financial performance.
Yogesh Shah — Chief Financial Officer
Thank you. Good afternoon everyone. Let me now brief you on financial results for the fourth quarter of the financial year 2025. For the quarter four operating results, our operating revenue stood at rupees 444 crores, down by around 5% year on year. EBITDA for the quarter stood at around rupees nine crores, a decline of 74% year on year. EBITDA margins were reported at 1.98%. Profit after tax was around Rs. 7 crores, down by around 67% year on year. VAT margin stood at 1.53% for the quarter. Total volume for quarter four grew by 1% year on year to 18,149 metric ton terracotte fabric revenue for quarter four FY25 decreased by around 6% year on year to almost rupees two hundred and three crores and filament yarn revenue for the same period decreased by around 6% year on year to almost Rs.223 crores.
Now coming to results for the financial year 2025. Operational revenue stood at Rupees 2022002 crores representing a growth of 15% year on year. EBITDA stood at Rupees one hundred and fifteen crores which increased by 39% year on year. EBITADA margin for the period was 5.73%. Net profit was around Rupees 66 crores which grew by 55% year on year and PAT margin stood at 3.32%. Total volume of financial year 25 grew by around 16% year on year to seventy eight thousand four hundred and twenty five metric tons. Paracore fabric sales for FY25 increased by 15%, that is Rupees 955 crores while filament yarn sales increased by 13% that is Rupees 958 crores.
With this we open the floor for questions and answers.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vikram Suryawanshi from Philip Capital. Please go ahead.
Vikram Suryavanshi
Sir, last time you talked about the operational efficiency gains as well as the power cost saving. So how was this in this quarter? If you can highlight an outlook on the same one going forward.
Suresh Sodani
Yeah, thank you. Yes, so we continue to focus on operational efficiency both in terms of purchase rate of the power as well as the power consumption. So this year we would have gained a significant amount. Just to give you a number in terms of per unit we have about a four rupee differential between the grid rate and our hybrid power rate and that power constitutes about close to 15 to 20% depending on the total requirement of our total power demand. So to that extent we continue to save. Similarly where we get an opportunity to buy power on open access at a cheaper rate compared to grid power, particularly for our Bharuch plant we have continued to do that.
We are also investing in power reduction consumption at our old equipments since some of them are quite old and they are giving good returns of in excess of 25% on the capex that we are making investments on. So we will continue to invest on reducing our power cost power and fuel cost which is also reflected in the increase of Only close to 3% in the total power and fuel cost Whereas the top line has grown by close to 15%. So that itself reflects that we are working on improving our efficiency on power and fuel cost.
Vikram Suryavanshi
Hello. Am I audible?
Suresh Sodani
Yes,
Vikram Suryavanshi
there is a significant increase in the other cost also. Is it because of the fire or is there a one time expenditure we have incurred in this quarter?
Suresh Sodani
Yes, so the we had a fire as we. I mentioned my opening comments in end of February and we started post our survey by the insurance company to revamp and restart the to repair the damaged machinery. So in this quarter we have spent about 8 crores which is part of our other expenses and we have since the claim has been accepted and insurance company has given go ahead to make the repairs and maintenance. We also accounted for the insurance claim receivable to about extent about 6 crores which is reflected in our other income. So these are the two income which are coming in two different line items in our published accounts.
Otherwise compared to last year we have increased our expenditure on particularly on the repairs because last year’s financial performance was weak because of multiple factors and whatever was non essential or non critical repairs were actually postponed and actually incurred in the current year. And to that extent our other expenses particularly on repairs of machinery is higher. But now we are on we don’t have anything pending in terms of normal repairs and maintenance and going forward it will be regular repairs and maintenance from FY26.
Vikram Suryavanshi
Understood. And can you share what was the caprolactam prices for this quarter and how is the outlook?
Suresh Sodani
So caprolactam prices have been falling consistently since September. I will give you just a quarter on quarter number so that just to give a feel of how fast and sharp the capillarium prices are falling it was 1688 in March end I’m talking in dollars per ton fell to 1683 in June 24, was 1623 in September 24. It fell sharply to 1483 in December 24 and again to 1368 in March 25. In fact it has fallen to about 1278 in April. So it has been falling consistently. Almost 300 to $400 is the total gap almost $400 reduction between March 24 and April 25.
And we hope it is close to its bottom because that is one of the factors which has impacted our financial performance and such sharp fall is not conducive to our business model.
Vikram Suryavanshi
And would it be able to quantify the impact of this inventory loss in a quarter?
Suresh Sodani
We will not be able to give the exact amount. But I think as we have mentioned and you have the amount of inventory we carry, it will be easy to identify that or calculate that what is the kind of because we value the inventories, particularly the semi finished as well as the finished goods or even if it is raw material on the current prices so that loss has already been accounted for. So everything as of March end is equivalent to the prices prevailing either in March or in case of finished goods expected prices in April.
Vikram Suryavanshi
So post March are prices stabilized or how is the trend?
Suresh Sodani
As I said in April itself there was a fall of $90 and due to the geopolitical challenges, particularly in China, we still see there is some fall in caprelactum prices in China. However these are unviable levels even for Chinese producers because normally there is a benchmark margin over benzene which is one of the Key raw materials for Caprolactam and that has fallen to a record level. We have not seen these levels in last 10 or 15 years that I have seen the data and this is completely unviable for producers of Caprolactam. However, there may be some players who are fully integrated up to two more three levels of downstream products.
So maybe they are able to break even because of their integration. But still is very difficult price levels to sustain continued operations with this kind of margin.
Vikram Suryavanshi
Got it. Thank you very much.
Suresh Sodani
Thank you.
operator
Thank you. The next question is from the line of Vipul Kumar Anupchand Shah from Sumangalam Investment. Please go ahead sir.
Vipul Kumar Anupchand Shah
So I was disconnected from the call for few minutes. So if my question is repetitive, please bear with me. So why other expenses are much higher? Although our turnover has fallen sequentially and other expenses are higher even year or even year over year also. So what is the. Is there any one off there? So
Suresh Sodani
yeah. So other expenses. One of the reasons for increase in other expenses is that we had a fire in end of February in our one of the NFI plants of Baruch and we started incurring the repairing cost to that extent. So about 8 crores was spent on repairs and revamping of the plant and equipment damaged in fire. That is included in this number. Second is last year since the financial performance was under stress some of the non urgent, non critical repairs were deferred and they were incurred in the current year. That is second reason.
And third is we had commissioned some of the value added products during the year which were given on operations to the particularly the normal operations on contract basis. So that amount that contract value is not reflected in I mean manpower employee cost but comes under other expenses. So these were the three major reasons for increase in the both quarterly expenditure as well as the increase compared to the previous year.
Vipul Kumar Anupchand Shah
Yeah, but so your third reason then employee cost then any increase in other expenses should be compensated by equally lower employee costs, no?
Suresh Sodani
Yeah. So if you look at our employee cost it has gone up by 4.92% only. So only for the operating team, the. I mean the workman category are outsourced. Other people who have to be hired for in the staff category or managerial category or supervisory category come under the employee benefits. Plus because of the increase in volumes of polyester tire, I mean operations of polyester tire cord at Pune we have had more people. So overall increase is still within well within our control in the employee benefit expenses.
Vipul Kumar Anupchand Shah
Okay. And the expenses towards this damage due to fire that must be recoverable to Insurance claims or no, we are fully.
Suresh Sodani
Covered both for material damage and loss of profit. And we expect with. The surveyor has already visited and we are in constant touch. Our team is constantly interacting with them. So we expect a major part of insurance claim to come in FY26 and similarly we will be pushing for getting the loss of profit portion as well in FY26. However, insurance claims are subject to, I mean approvals at multiple levels. So we, I mean cannot give a guaranteed timeline. But we will be pushing and making all efforts to get the maximum, maximum insurance claim within FY26.
Vipul Kumar Anupchand Shah
Due to falling caprolactam prices. We’ll have inventory losses in this quarter also. Or those are behind us. Hello.
Suresh Sodani
Whether you missed our.
Vipul Kumar Anupchand Shah
Yeah, I missed. Yeah, I was
Suresh Sodani
between. Have you. Did you get the numbers when I was speaking about the.
Vipul Kumar Anupchand Shah
No, no, I was thrown out of the call, that’s why.
Suresh Sodani
Okay, okay. So I’ll just repeat in short, the capleactum price in March 24 was $1688 per ton. It has fallen to $1278 per ton in April. So it’s almost close to $410 fall, which is a very steep fall and particularly the fall has been very steep between October to march from 14, it had fallen to from September to March. So fallen to from 1623 to March was 1368. So most of the losses are already built into our financials for March quarter. However, if the prices fall further, which there has been some fall even in May in the first few days as well, there could be some inventory losses.
However, the current margin, I mean the current economics of Caprolactam even in China at these prices does not seem viable. So either it has to bottom out or the prices have to actually slightly go up because the benzene has not reduced to the same extent. So we are hopeful that the kind of fall that we saw in FY25 should not be there and if things do improve, actually the prices should move up in FY26.
Vipul Kumar Anupchand Shah
And lastly, sir, when we commence the manufacturing of this polyester tire core in the later part of this year, will that product have a higher EBITDA margin as compared to nylon tire code?
Suresh Sodani
It will have a similar margin. Only difference is that while nylon tire cord we have already established our quality and we are already serving all the major tire companies in India. This will go through a process of very detailed approval at each of the tire companies. So how we ramp up the volume is going to be a key factor. And we expect that since the approval process is at various Stages in the tire companies that we have already given samples to. We expect that commercial production should start in Q4. And if geopolitical changes happen and it gets expedited, then we could actually have almost similar levels of margins as we are able to realize on our nylon tire coat fabric.
Vipul Kumar Anupchand Shah
Lastly, is our plant fungible? Means can we switch between nylon tire code and polyester tire code depending on demand of each product?
Suresh Sodani
Only on the downstream side, the spinning is not fungible. The spinning machines and since the properties and the raw materials are different, so the spinning would remain are different. And that’s why we have invested in the spinning as well as the downstream. But it is fungible to the extent of the post spinning processes up to the dipping of the fabric. In future, it provides us opportunity to just add spinning and make it more fungible in terms of switching between the capacities of NTCF and ptcf.
Vipul Kumar Anupchand Shah
Okay, sir, thank you and all the best.
Suresh Sodani
Thank you.
operator
Before we take the next question, we would like to remind participants that you may press Star and one to ask a question. The next question is from the line of Dhaval Shah from Girac Capital. You may proceed.
Dhaval Shah
Yeah, thank you for the opportunity, sir. So I have one question. Are we planning to get into the manufacturing of, you know, forward integrated to making nylon 6 6? Given the increasing demand trend, what we are seeing domestically as well as exports, and given this trade wars, India could benefit over a longer term.
Suresh Sodani
Yeah. So Nylon 66 is similar to Nylon 6, except that particularly on the conversion which is to make the fabric and to dip it. And spinning is slightly more tricky because the raw materials are different and the properties are different. So we are looking at Nylon 6 6. But our approach would be to not to start with the spinning, but start with the imported yarns or and convert it into dip fabric and supply to the customer. And at a later stage, once we establish a product on this route, we could evaluate as an option to backward cigarette.
But to start with it will be. We would want to first establish the product through a import of yarn fruit.
Dhaval Shah
Okay, so is this a guarded technology or. It can be. It can be easily imported or it can be engineered, self engineered in terms of making the. In terms of spinning actually.
Suresh Sodani
So nylon 66 yarn is not as widely produced as nylon 6 yarn. So which obviously means that there is a technology challenge to and it is more technically difficult to make compared to Nylon 6. But all the same, we have our technical team has the capability to adjust to requirements of that and we may not need to add any significant Hardware to change that. So it is more of understanding the raw material properties and the yarn properties that are required and do the right changes in both hardware as well as our operating conditions. But we will cross that bridge when we come.
But I mean when we do it when discussed technically it is our technical team can actually do that at a later stage.
Dhaval Shah
Okay. Okay, great. Thank you. Sir, I just had one question. Thank you.
operator
Thank you. Participants who wish to ask a question may press star and 1. The next question is from the line of Madhur Rathi from Countercyclical Investment. You may proceed.
Madhur Rathi
Right. So thank you for the opportunity, sir. I wanted to understand. Sir, it seems that our value added products in the yarn segment are improving. So what percentage of our 950, 950 odd crore revenue that we did in FY25 would be from value added segment? And where do we expect this to go over the next two to three years? And similarly what kind of effect can it have on our margins?
Suresh Sodani
Yeah, so actually we have grown our value added portfolio compared to last year by close to 15% and it is now close to about between 25 to 30% of the total value, 30% value terms of our NFI top line. And the margins are also better than our base products. So we will continue to expand or make more of value added products and reduce our portfolio of baseline products. And this will continue as because we also need to make investments in a gradual ways, gradual period and also develop the market in certain cases. Because as mentioned in our communication multiple times, we are within the value added products also.
We are looking at niche products so that we can maintain the competitive edge. So it is going to be between two to three years period. We will continue to expand and ideally we should take it to close to between 50 to 60% or even more of our total NFI portfolio.
Madhur Rathi
What would be the margin delta between value added product and our normal commodity product?
Suresh Sodani
It is varying from product to product. I will not be able to share the exact margins that we realize on competitive reasons. But all these projects that we implement on capex have a good return on investments and they have also given us value even in this severe competition from Chinese market to be able to sustain this kind of top line and also the margins.
Madhur Rathi
Got it, sir. Another question would be sir, what would be the steady state margin if I consider that capital raw material prices stabilizing in both our divisions. So what would be a steady state margin that we would be able to achieve based on the current value added mix in both our segments?
Suresh Sodani
So we expect Operating EBITDA margin of between 6 to 8% in steady state condition. And as I mentioned, volatility is not good for our business model. And our performance has been better when there is either a gradual fall or a gradual rise in prices of raw material. So that is a very key case condition to get these kind of margins. Especially when there is so much of geopolitical challenges and so much of capacities available in China which could. Which could have a severe impact on the Indian production producers competitiveness. So I mean in a normalized condition we should be able to between 2 to 6 to 8%.
Madhur Rathi
Okay, answer. What would be the frequency in which we are passing on these raw material price hikes or price declines to our customers? Is it on a daily or weekly basis or it’s longer than that.
Suresh Sodani
So in case of reinforcement it is on a monthly basis. However, I mean monthly also means that there are variations which happen in both in terms of stock in hand as well as the indices. However, in case of NFY it is normally we set the price every month looking at the market situations both from imported material as well as domestic market conditions. So these are also set on monthly basis but there is no guaranteed pass through because these depend on the market conditions as well as the imported price that is landing in the domestic market.
Madhur Rathi
Okay, got it. And so this is a final question from sir, what would be the volume growth can we expect for FY26?
Suresh Sodani
So we have done this year was the highest ever volume of 78,000 we have done. And as I said, there are so many geopolitical challenges that to really comment on one volume. But yes, we expect between 5 to 10% growth in the volume for the current year. In a good case it can be even more than 10%. In a adverse scenario where we are threatened by more imports, it can be close to this levels or about 5%. Hello.
Madhur Rathi
Hello.
Suresh Sodani
Could you get that? Yeah.
Madhur Rathi
So what is the PTC of capacity that we are coming up with and what kind of utilization can we expect in FY27 and what would be the break even for that capacity?
Suresh Sodani
So we have about. We will be having about 10% of the capacity, 10 to 15% of the demand. We do not give breakup of our volumes for the various products that we make. And since it’s an approval process, we are currently marketing our the yarns in the market in various segments. We are also planning to look at export markets because of the current geopolitical challenges and opportunities. So the breakeven is again a function of how the prices behave both in domestic market for the polyester industrial yarn as well as the international market. However, on a normalized basis we should break even at about 60% of our capacity utilization easily break even at 60%.
Madhur Rathi
Got it. And sir, what is the current demand for domestic for this product as well as export that we can the market that we can cater to in a short period of time. What would be the demand for both of these segments?
Suresh Sodani
So for polyester tire cord the. I mean as per our information, the demand is close to 35kt. It could be lower by 2,3000 plus minus 3,3kt plus or minus depending on the demand side. Exports is a. I mean polished industry. Polyster tire cot fabric has good export opportunities as well which we will explore only post our approvals and regular sales to the domestic market. However, unlike NTCF which is not consumed by the western company, polyester tire cot fabric is a regular consumable item because of the passenger car production. Passenger car tires production at in both all the advanced economies.
So that is an opportunity we will explore post our domestic sales getting stabilized. And that also offers us opportunity to do expansion in future.
Madhur Rathi
Got it sir. Thank you so much and all the best.
Suresh Sodani
Thank you.
operator
Thank you. The next question is from the line of Amit Kumar from Determined Investment. You may proceed.
Amit Kumar
Yeah, hi, can you hear me?
Suresh Sodani
Yes, yes.
Amit Kumar
Yeah, thank you so much. Just one point on this. You know, ptcf. So our understanding the plant is sort of operational, but you think commercial orders will, you know, take a little bit of time. Would it be possible for you to quantify, you know, roughly how much of drag, you know, in terms of your ebitda? You know, this would be, you know, at the present time.
Suresh Sodani
Will not be able to give you an exact value. But
Amit Kumar
roughly, I’m not sort of looking for an exact value. Also
Suresh Sodani
let me complete. So as I said, we are not keeping the plant idle. We are producing and marketing forester industrial yarn in the interim so that we stabilize the spinning and. And the approval process is going on parallelly. So as I said, these are very volatile times. So in a normal, I would say steady state condition, it should almost be a breakeven product, breakeven case even to make policy industrial yarn. And we are in the progress, we are in the process of getting approvals and as mentioned in the opening remark, we expect that we should start commercial supplies from quarter four of FY26.
So that would definitely help it to make EBITDA positive for the year as a whole.
Amit Kumar
For FY26. You are basically Saying
Suresh Sodani
yeah, yeah.
Amit Kumar
So I was basically seeing the current quarter, you know, what would be, you know, the drag, if any, you know. From this basically
Suresh Sodani
current is you’re talking of which quarter?
Amit Kumar
Fourth quarter?
Suresh Sodani
No, fourth quarter. As I said, we had a break even. We didn’t have a drag on our operating costs.
Amit Kumar
Fourth quarter itself, you had a drag and you were saying that, you know, sorry, you had break even and that breakeven will sort of, you know, continue.
Suresh Sodani
Yeah.
Amit Kumar
Second point was, you know, you know, why is it taking such a long time to, you know, get, you know, approvals, you know, for this product? Because our sense was that, you know, you’re supposed to sort of start getting commercial orders from 1Q and now we are talking about, you know, 4Q. This is, I think just at the end of last year, I don’t think the plant was operational. So maybe there might have been some delays out there also. But why does this process take so long? If you can just help us a little bit.
Suresh Sodani
One is see polyester tricord fabric is slightly new to our team. So there is also a learning part. But more importantly, this is the first time we are getting an approval from the tire companies and you know that this is mainly used in the passenger car tire. So it goes through a very stringent process of approval and since we are supplying for the first time, it goes through multiple approvals including making of tyres and running it for thousands of kilometers and then giving a. Giving us. So there is almost a four stage approval that we have to go through and it applies to all producers of tire cot.
So it’s not unique.
operator
Ladies and gentlemen, we lost the connection with the management. We’ll connect.
Suresh Sodani
Hello,
operator
we have the management on the line, so you may proceed.
Suresh Sodani
Yeah, sorry, our line got disconnected. So I was just explaining. The question was why it is taking so much time for starting commercial supplies of ptcf. So as I said, one, it’s a new product for us. So our team is also getting used to understanding the nuances related to this product compared to the nylon. Second is this is a more stringent process because it is going to. Passenger car tires and tire companies follow a very detailed approval process, stage wise process with tires made from this fabric and then tested in multiple terrains for a very large number of, I mean thousands of kilometers and then only it becomes a commercial supply.
So our understanding compared to, because we were into NTCA for a long time, we had estimated that it would take shorter time. But I think this is a learning that any new product, particularly new category goes through a different process and we are hopeful that now we are on the right track to we would not have to go beyond Q4 for starting off Q4 for our commercial supplies, at least to some of the customers.
Amit Kumar
Is there any chance that the approvals can come in quicker? I think earlier than 4th K is highly unlikely.
Suresh Sodani
It could be since I said it’s an approval process and how satisfied and how. Because they are. As I mentioned in some of the earlier calls, almost 80% of the polished tire cord is currently imported. So the expectation obviously is to match the import quality in all parameters. So if we are right on bank in terms of our quality parameters in comparison to imports, I think, I mean I’m hopeful that there could be some expeditious approvals as well. But they still will have to go through the process. They do not in any case shut down, cut down on the the process that is required for approval of a critical product like a reinforcement for passenger car tires.
Amit Kumar
Thank you. Thank you so much for the detailed response.
Suresh Sodani
Thank you.
operator
Thank you ladies and gentlemen. That was the last question for the day. I would now like to hand the conference over to the management for closing comments. Thank you. And over to the management.
Yogesh Shah
I’m Yubesh sir. So thank you everyone for joining our earning call. I hope we were able to give the answer to your queries and I hope those were to your satisfaction. If you have any further question or would like to know more about the company, please reach out to our investor relations manager at Wallaram Advisors. Thank you.
operator
On behalf of Philip Capital. That concludes this conference. Thank you for joining us. And you may now disconnect your line.