Ddev Plastiks Industries Ltd (BSE: 543547) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Ddev Surana — Director & Chief Executive Officer
Arihant Bothra — Chief Financial Officer
Rajesh Kothari — Director
Analysts:
Renuka Sivsankar — Analyst
Dolly Choudhary — Analyst
Sudarshan Padmanabhan — Analyst
Ankur Bhadekar — Analyst
Bhargav Buddhadev — Analyst
Arnav Sakhuja — Analyst
Anand Mundra — Analyst
Amish Kanani — Analyst
Abhijit Mitra — Analyst
Bobby Jayaraman — Analyst
Abhishek Asthana — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q3, FY ’25 and nine months FY ’25 earnings conference call of Ddev Plastics Industries Limited hosted by PhillipCapital PCG Desk.
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 then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Renuka from PhillipCapital India Private Limited. Thank you. And over to you ma’am.
Renuka Sivsankar — Analyst
Thank you Ruth. Good morning everyone. On behalf of Philip Capital Private Client Group I welcome all of you to the Q3 and 9 months FY ’25 earnings conference call of Ddev Plastic Industries Limited.
Today from the management we have Mr. Narrindra Suranna, MD; Mr. Ddev Surana, CEO; Mr. R Rajesh Kothari, Director and Mr. Arihant Bothra, CFO.
I now hand over the conference to Ms. Renuka for his opening remarks and then we will open the floor for Q&A. Over to you.
Ddev Surana — Director & Chief Executive Officer
Thank you. Good morning ladies and gentlemen and welcome to our quarter three and nine month financials year financial year 25 earning call. Our investor presentation has been uploaded to the exchange and we hope you had an opportunity to review it.
We are also proud to announce that Dave Trust was recently listed on the NSE, marking a significant milestone in our growth story. This listing enhances our visibility and strengthens investor confidence. We remain committed to leveraging this momentum to drive long term value for all our stakeholders.
I’m very pleased to share that Ddev Plastiks has delivered a strong performance in quarter three and the nine month for financial year 25. This fiscal year we witnessed a robust growth in all the cable segments and a strategic shift towards niche and high voltage products drove higher volumes particularly from domestic cable players. In quarter three our revenue stood at 661 crores marking a 19% year on year growth driven by strong trade volumes as well.
We reported an EBITDA of 75 crores maintaining an 11% EBITDA margin while our profit after tax grew 17% compared to previous year to standing at INR47 crores reinforcing our sustained growth momentum. Operating margins have also remained stable this year reflecting agility in navigating a dynamic market environment backed by resilient domestic economy.
At Ddev Plastics we have firmly established ourselves as a leading player in the polymer compound industry with a notable more than 50% market share in the XLP that is the cross linked polyethylene compound segment essential to the power cable sector.
Over the years we have diversified our Portfolios to include five key categories I.e. the XLPE compounds, engineering plastic compounds, PVC compounds and halogen free flame retardant compounds and anti fabrication compounds. These versatile products cater to a broad spectrum of applications ranging from food packaging and automotive components to wiring, cable and electronics reflecting our dedication to innovation and excellence.
Over the years our strategic investments in the manufacturing facilities, advanced equipments and state of the art RD centers have also solidified our leadership in the XLP and Sioplus compounds segment. Our largest facility located in Surangi in Silvassa boasts of world class infrastructure and cutting edge R&D center led by a team of highly skilled engineers.
As one of India’s largest manufacturing of polymer compounds, we operate at an impressive installed capacity of two 33,400 metric tonnes annually. Our operations are supported by five manufacturing plants which are strategically located in West Bengal, Dammanindu, Dadaranagar, Haveli. This geographical diversity enhances our logical efficiency significantly reducing our freight cost by leveraging the strategic presence in all sectors of the country.
In the first full year budget of this government an ambitious balance has been sought between three key objectives driving progressive economic growth while maintaining fiscal consolidation, sustaining momentum in capital expenditure and defense and strategically boosting consumption through targeted tax relief. Capex growth, including internal and external budgetary resources IEBR stands at 11% year on year based on the financial year 25 revised estimates, which aligns closely with the nominal GDP growth.
The budget places a strong emphasis on key sectors such as defense, power and renewables and critical infrastructure development as well. Key sectors like the renewable energy got a growth of 12% growth of annual allocation, power sector got a 21% rise in the growth annual allocation, defense got 13% growth in the annual allocation and urban poverty elevation got 48% growth in the annual allocation. Further, there was also emphasis on growing public private partnership mode as well.
The global supply chain continues to present challenges including the rising freight rates and container shortages across multiple shipping routes. However, with the new US President taking chair, his focus on reducing war escalations may pave the way for harmony and peace. This is expected to give exports a new trajectory in the upcoming quarters which would also revive faster with the depreciated Indian currency.
Moreover, domestic business remains strong driven by a surge in oil in order demand across all business verticals this quarter, a trend we expect to continue. Additionally, we are awaiting approval from the Underwriters Lab for exports to the US, which we anticipate we will be receiving by the end of this fiscal year. Furthermore, the export oriented measures announced in this budget aims to boost international trade through improved access to credit through FTAs and through development of global capability centers in tier 2 cities.
The global energy transition, particularly in the renewable energy sector, presents significant opportunities for us. India has set an ambitious target of achieving 500 gigawatt of renewable capacity by 2030, having already surpassed 200 GW milestone in the recent union budget. Various incentives were announced to support electricity distribution reforms and enhance intrastate transmission capacity. Additionally, the government has launched a nuclear energy mission targeting 100 gigawatt by 2047 with an allocation of INR200 billion rupees for the development of small modular reactors. This highlights the growing need for evacuation and transmission infrastructure which will drive demand for wires and cables and power polymer compounds.
Moreover, ongoing efforts to resolve bottlenecks in the power sector coupled with the expansion of data centers are further accelerating this growth. We anticipate sustained multiyear expansion across various segments including solar energy, wind energy, railways and data center cables, all of which will contribute to a significant rise in the demand for our products.
We are currently in the exciting phase of growth. The real estate market has also currently in a multiyear up cycle which is expected to grow to rupees one trillion by 2030 and 1.5 trillion rupees by 2034. Driven by the urbanization as well as the emergence of global capacity centers in tier 2 and tier 3 cities, sectors like energy and mobility are too expected to see growth. While growing demand as well as increasing investments in barks for the sectors will also boost it.
Over and above this niche upcoming sectors like data centers, electric vehicles, aerospace and defense exploration are expected to witness exceptional growth. By going ahead, these factors can completely create substantial opportunities for wire and cable industry and according to us, to meet the growing demand and capitalize on the rising opportunities in India, particularly in the wiring cable sector, the company also plans to invest in expanding capacities in the existing location as well as new sites to enhance our capabilities over the next three financial years.
Now I would like to our CFO Mr. Arihant Bothra to take it forward.
Arihant Bothra — Chief Financial Officer
Thank you Dev ji. Robust execution capabilities, fiscal discipline, strategic volumes have enabled us to deliver a better financial performance in this quarter.
Speaking of our roadmap for the upcoming quarters, we have planned an investment over next three years to expand our manufacturing facilities at existing as well as new sites, address operational bottlenecks and develop new greenfield sites as well. Around 43 crores has already been deployed in the first nine months and a total commitment up to the first nine months have been close to 70 odd crores.
Having said that, on the financial front, quarterly Financials for this third quarter FY ’25 are as below. Revenue from operations stood at 661 crore giving growth of 19% year on year basis. EBITDA stood at 75 odd crores reflecting a 19% year on year growth with a margin of 11%. In the third quarter Pact stood at 47 odd crore at 17% year on year growth with a Margin of 7% for the third quarter.
Now moving on to the nine months results. Revenue from operations stood at 1867 odd crores for the first nine months. EBITDA stood at two hundred and eight crores with 9% year on year growth with A margin of 11% while PAD stood at one hundred and thirty four odd crores with 11% year on year growth with A Margin of 7 odd percent.
As of December two thousand and twenty four, our installed capacity has stood at 233,400 metric tons per annum with the capacity utilization overall at 79% first nine months of FY ’25 our total volume stood at 139 odd thousand tonnes accompanied by an improved and better revenue per ton of 137,000 rupees and an EBITDA per ton of 15,599 for this quarter.
We now open the floor to question 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 the touchtone 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 Dolly Choudhary from Niveshaay. Please go ahead.
Dolly Choudhary
Hello. Am I audible?
Operator
Yes you are. Please go ahead.
Dolly Choudhary
Thank you for the opportunity. I just had a few questions. First of all I wanted to understand on HFA for site. So like seeing our volumes and traffic utilization. So HSFR has been consistent from the last quarter. But our PVC compound has shown a good growth in comparison to this. So I wanted to understand on HFR adoption as we have also been the case in that. So what is the current scenario on that?
Arihant Bothra
Kothari ji?
Rajesh Kothari
Hello Arihant. I was not able to hear the question clearly.
Arihant Bothra
She is asking about HFFR adoption in the country.
Rajesh Kothari
Okay, so HFFR adoption part as we have discussed in previous conferences also HFR adoption in the building wire where it is very important to have safe electrification in the residences. There the pickup is not that great yet because people are happy with the PVC cables with flame retardant properties. So there the adoption is very slow. However in the rest of the areas where say multiplexes, complexes, public places the awareness is growing. In general awareness for HFR is growing and that is why the adoption is improving.
And also the project, various projects which are coming up supported by good technocrats and the electrical authorities. There the HFR congestion is growing even for power cable application where the jacketing earlier used to be PVC or polyethylene non-flame retardant.
Now people are putting more of effort to make HFFR as a jacketing compound. So there the adoption is happening. But the key driver where the exponential growth can come in HFFR area which is the building wire, the residential electrification. There we see a very slow movement.
Dolly Choudhary
Perfect. Just in this quarter there has been no volume growth in comparison to last quarter. So but going forward we are positive on it that it will have a good growth because our utilization level still is 57% in comparison to last quarter.
Rajesh Kothari
Yeah, see if you look at quarter and quarter I’m sure HFR utilization has improved compared to last quarter and we see this quarter it will improve further and that is why we have planned the next capacity for HFR and as we have discussed earlier also that it takes a little bit of time for getting customers approval and building an order pipeline or a building of approval.
When you are having huge number of approvals in your kitty, then the orders keep on coming rotationally. So that process is going on. We hope that by end of this year we’ll be reaching almost full capacity utilization of the HFR capacity what we have today and then we’ll be installing fresh capacity next year.
Dolly Choudhary
Okay, so and the next question I had that are gross margins have been reduced in comparison to last quarter and year and so what would be the reason for it?
Rajesh Kothari
Arihant?
Arihant Bothra
Yes, it is mainly the product mix. There has been some increase in the PVC and the film compounds in this particular quarter which has led to this. However, since on a broader sense the exports are down for this quarter again. So that is the major reason why it is so the export is contributing close to 89% which was on an average last year at 25 odd percent. So we expect the same to improve from next quarter and accordingly the margins and other rather the gross margin is also expected to improve from next quarter.
Dolly Choudhary
Okay. The follow-up on HFFR, sir, when are we expecting — we are expecting in FY ’26. So when will the facility is expected to commercial for HFFR?
Rajesh Kothari
HFFR 5,000 tonnes is already in operation. Another similar capacity has been ordered and it’s expected next financial year. So you can expect by end of end of H1 of next year will be the operational timeline rather the Q2 will be the operational time. And you can say.
Dolly Choudhary
Okay. And just the last question. Like in XLP we are already operating at a 87% utilization levels as of now. New capacity will come in financial year 2027 if I’m not wrong. So like we should expect similar volumes in next year also in FY ’26 because we are almost at 87 to 90% utilization level?
Rajesh Kothari
So, we are already ordering on phased basis. We have already ordered one machine for east and in process of installing the same we’ll be able to get the output by next financial year. So capacity will again go up from next financial year rather from April to some extent and similarly, all the planned CAPEX is in pipeline so whatever targets we are doing on HFFR on XLP similar capacity are already being added as and when it is required.
Dolly Choudhary
Okay, thank you, that was helpful. I’ll just join back in this. Thank you.
Operator
The next question is from the line of Sudarshan Padmanabhan from JM Financial. Please go ahead.
Sudarshan Padmanabhan
Yeah, thank you for taking my question. Sir. If I look at the last three to four years we have expanded or the towards high value products have improved visibly. Now with the new capacity also coming in, I mean, where do we see the mix? I’m just talking about say in the next two to three years.
And my second question is also, you know, in line with this, I mean if I’m looking at our supply chain, I mean I would assume that, you know, a fair amount of raw materials is basically supplied by, you know, large players like Reliance or Indian Oil. So. So from that side, can you talk a little bit more about your supply chain strategy? How does this movement towards high value kind of help you to improve or even keep your gross margin fairly stable in a turbulent scenario?
Arihant Bothra
Thank you Mr. Sudarshan. Good morning. First of all, I would like to take the first question and we’ll hand over the call to Mr. Kothari for a second. On the first question, currently the wire and cable segment is contributing close to 80 plus percentage of the overall turnover and we expect the same to continue. And with the capacity additions in the same line, probably for some time it may go beyond 80% also. But we expect the same to continue over next three to four years of time.
On the supply chain front, I will request Kothari ji to take up this.
Rajesh Kothari
Yes, good morning. See on supply chain side we see if you look at the major segment is this wire and cable and within that the major products are based on polyethylene. And India is having multiple players offering polyethylene be it LLDP, SDP or LDP. And we are having a very strong relationship with all these local players.
And also we are having a long relationship with the overseas players also because our volumes are so large that we are able to handle multiple relationship, multiple offtake agreements with all these suppliers. So we are having tie ups with all local players, be it Reliance, be it IOCL, HMEL, OPaL, and also international players like Sabic, Exxon, Dow. So this kind of wide ranging arrangement for our product, we are well secured as far as availability is concerned.
And if you look at the global capacity scenario that what is the demand and supply situation of polyethylene products? So I would say that from today till 20, 28, 29, we foresee that there will be no shortage of availability of the polyethylene, so it will be reasonably good period for people like us who are using polyethylene because the capacities are being added all across the world. In the Middle east, in China and also in India constantly. So that should make product availability quite easy.
Sudarshan Padmanabhan
Sure. And sir, with respect to the pass through, I mean if I look at the last few years, I mean there is a little variance in the gross margins. But considering the raw material which tends to be a little bit more volatile, our gross margins has been fairly stable and growing. I would assume it would also be because of the mix moving towards more value added products. But going forward, I mean do we have a pass through in place or if there is a spike, do we pass it across over a period of time? Can you give some color on that as well?
Rajesh Kothari
Yeah, see I tell you our margins have been stable and going up because of purely because of product mix change. Now if you look at the proof of our capability to pass on the volatile movement in the prices, the good example is the COVID period. Because in Covid period supply chain was so disrupted and prices were moving up and down depending upon the availability of the material. Some quarters it was down by 5% and some quarter it was up by 5%. And during that volatile period also we were able to pass on this increase or decrease to the customer almost instant.
So generally our prices are linked means increase and decrease of our product prices are linked with the price list of the Reliance industries. So whenever the price of any polymer product from Reliance goes up, our price list goes up. When it goes down, it goes down. There is a ratio settled. For example if it is based on PVC. If one rupee of PVC goes up by Reliance, our product price will go up by 50 paisa. Because the ratio is one means half. In case of polyline it is almost one is to one. So if poly price goes up by one rupee, our price list goes up by one rupee. It goes down by one rupee instantly, our price list goes down by one rupee. So whatever orders you have in hand, of course those are on the old price. But against that you are holding the inventory. But the new orders will come at the new rate. The pass-through is instant.
Sudarshan Padmanabhan
Sure. So one final question before I join back with you is if you look at our exports, we talked about opportunities in your geographies. I mean given that currently the export component is relatively small and also in the context of the uncertainty which we are seeing in the global market, how do we see the export market being an opportunity for us in the longer term to mid to longer term?
Rajesh Kothari
Yes. Now see export opportunity is basically driven by the demand growth in the international market. So every market is looking for new suppliers who can fulfill their product requirement. And also new category of products are required in various markets, for example the Middle east or North Africa, they are now trying to export as Indian companies are trying to export to America, because which is the biggest buyer as of today for the cables.
So everybody is trying to export to those market. Now, since we are good at making products for US market and supplying to Indian customers, we are having an experience in that area. So the customers from North Africa, from Middle east are also approaching us for those products because they also want to export to US market. So this is how the demand is getting generated for us.
And you look at whether all western market, be it US or Europe, they are all adding capacity of power distribution. So that is opening up a window for all of us to supply them product either directly or by proxy. For example, the cables are being exported to Europe, Australia and America. And they all are having a raw material component from our side.
Similarly, the company and the cable capacity is not being added with the same speed in particularly in US and European market. So maximum demand there of the cable, increased demand is being fulfilled at the moment through imports. So a lot of people, be it from India, be it from UAE, be it from Egypt, be it from Israel, those cable companies are exporting the cables to these markets. And that is where the opportunity comes our way.
Sudarshan Padmanabhan
So as a proportion of sales that should keep expanding, I mean, over a period of time?
Rajesh Kothari
Yes, yes. Last. Last year. Last year I would say that export market was in difficulty because of high sea freight. And we decided deliberately because if we are not getting better EBITDA in export market, then we step that for some time because local demand was very strong. So we moved the material for the local market. And now we are adding capacity for XLP as Ariant has explained. So. And also seafood rates are now much benign compared to what it was say two quarters back. So we are gaining back our export share now.
Sudarshan Padmanabhan
Sure. And the profitability should be better in the export market because the working capital I would assume would be higher, right, for the exports?
Rajesh Kothari
No, no working place is in cases. It is better than even the local market. For example, whenever we are exporting on cash against document basis, we get our payments in 30 days’ time, okay? And, and maximum is 90 days. So it is, it is better than the local market, number one.
Number two, to begin with, the starting, this operating margin itself or EBITDA itself is around 2 to 3% higher always compared to the local margin. And that is why Arian said in the beginning when somebody was asking about the margins not being so great this quarter compared to last quarter. One of the factor is that export volume has been down and export contributes more margin and improving the average margin.
Sudarshan Padmanabhan
Sure. Thanks a lot, sir. I’ll be right back.
Ddev Surana
Thank you.
Operator
Thank you. The next question is from the line of Ankur Bhadekar from ULJK Financial Services. Please go ahead.
Ankur Bhadekar
Hi sir. Thanks for the opportunity. So, a couple of questions from my side. First question is we have observed an increase in capacity utilization in the engineering plastic compounds. So wanted to know the reason behind the same and is it sustainable going forward?
Ddev Surana
Arihant?
Arihant Bothra
So, we have reduced the overall capacity of engineering plastic. Earlier it used to be having 14,500 tons. Now it has been reduced to 2400 tons. So as a percentage you see a better and there is a marginal, you can say requirement in this particular quarter which has gone up by close to 100 tons. Otherwise on a regular basis we have a target to only achieve 50 to 60% of the utilization just to recover the cost. Unless we get a niche product. If we are getting niche product like this quarter, then definitely we’ll utilize more.
Ankur Bhadekar
Okay. And are we on track to achieve guided volume growth for FY ’25? And how do you look at the business going forward in FY ’26? So like what is the strategy and outlook for FY ’26? If you could give some light on that part.
Arihant Bothra
So, as of now for 25 we have already achieved close to 1,39,000 tons of volume versus a target of 1 lakh 85. So definitely we are on course of our targets as far as the next year is concerned. Definitely. As we explained earlier that we will. We are targeting CAGR growth of 15% on the volumes. And since we are maintaining the same for the last couple of years, we expect the same to be there. Rather apart from the XLP and HFFR compounds, we are now adding capacities for PVC compounds as well because we see a good opportunity coming in those compounds as well.
Ankur Bhadekar
And have we finalized any sites in the east or west for capacity expansion and if so, where are they located and when will they become operational?
Arihant Bothra
In east we are, we have sufficient space in the existing site. We are doing the expansion at that site while invest. We have already taken one land and that particular process is on. Whilst we already for the interim, whatever machines are in pipeline, we are doing it in the existing sites.
Ankur Bhadekar
Okay, that’s helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Bhargav from AMBIT Asset Management. Please go ahead.
Bhargav Buddhadev
Yeah, good morning team and thank you for the opportunity. First of all, congrats on a good set of numbers and a detailed presentation. My first question is on the application of HHFR in solar power. So we believe that here in the application warrants far importance. So what is the update on this? If you can share your thoughts.
Arihant Bothra
Mr. Bhargav, hello, can you repeat your question please?
Bhargav Buddhadev
I’m saying sir, if you can share your thoughts on the adoption of HHFR in solar power. How is the acceptability in solar power of HHFR?
Rajesh Kothari
Yeah, solar acceptability in solar power of HSR is quite high. Means this solar power application is outdoor application and from the solar panel to the battery position the connection is through the cables which should have the weather ability. Means they should handle the weather hazard, they should handle the high temperature and also they should be able to protect against fire in case it happens. So halogen free flame retardant is the most suitable material for this application which can impart properties like EV resistance, weather ability and flame resistance. So fire resistance. So that is where the most of the requirement is met by HFR compounds only.
Bhargav Buddhadev
So sir, are we selling to this segment?
Rajesh Kothari
Yes, yes we are selling because we are selling to the cable producers. So they are making the cable for solar application as well as other applications also. So our product are going for this application also because in The Solar Application 2 kind of free flame retardants are generally in market. One is thermoplastic and another is cross linkable. So for several application the products are cross linkable. So we are selling cross linkable variety of HFR as well.
Bhargav Buddhadev
So what percentage of our revenue will be coming from solar in HHFR?
Rajesh Kothari
I would say the cross linkable variety which may go to solar and other applications also because it is difficult for us to really identify the cross linkable variance going which one is going for solar and because it goes for the oil exploration cables also. So I would say that around current capacity relation whatever sales we are achieving around 20% is coming from the crafting cable variety.
Bhargav Buddhadev
And secondly sir, is the industry growing for HHFR or are we taking market share from say Shagun or from any other import players?
Rajesh Kothari
It is growing. It is growing.
Bhargav Buddhadev
Okay. Secondly sir, any update on we were planning to move up the value chain to 220kV in the future. So if you can share any updates?
Rajesh Kothari
Yes. So now on one first we discussed that first is 132kV now 132kV the product in our plant is capable of making the product. Our what you call prototype testing in the laboratory has been done, okay? But the challenge is to find space and time with the cable supplier to make a prototype cable and get it tested.
We are in touch with two key supplier two key customers in India who made a promise to do it trial every quarter it is getting shifted. But now we have got a firm promise from two of them to try on their cables of 132 KV in the first quarter of 202526 FY ’26. So that is the time when we hope that we’ll be able to try this product on the cable and then the type test whatever time it takes. And then then we can move towards the commercialization.
Bhargav Buddhadev
So generally the gestation period will be how long sir for this trial process.
Rajesh Kothari
See, if they start trying say for example if they make a cable somewhere in the April May. So then another nine months’ time would be taken for testing the able type test. The entire test completing. So Entire calendar year 2025 will be taken to test it. And once the test is done then those will the customers will start using a small quantum because they want to see the repeatability. One cable is not a final what you call out means confirmation or product being good. So they will they will start taking small loss. But I in earlier some discussions I told that commercial aspect may happen in calendar year 2027, ’25, ’26 will be the years of development and approval and testing and getting the third party approval.
Bhargav Buddhadev
And sir coming to the adoption issue on the residential housing side of HHFR. So as a what we are trying to do to get that up to speed. Because obviously cable and wire companies may not push the real estate developers to adopt HFFR. So as an industry are we planning to liaison with the real estate developers to get this adopted?
Rajesh Kothari
See this is one way of doing it. But the difficulty is that we are ultimately we can sell this idea and this idea is being sold by some of the cable players for quite some time. But unfortunate part is the real people who can move the things in this segment are either the builder themselves or the construction code or the cable producers. Because even if I means they plastic go and promote HFFR products properties ultimately the cable made with HFFR with the right pricing should be available in the market. If that is not there then the promotional impact will be lost. And we see that none of the cable players are willing to make investment or changes in that area. We have fielded very strongly with all our cable customers.
Bhargav Buddhadev
So is the pricing and issue or they’ll have to align their production line?
Rajesh Kothari
It is pricing and production line both.
Bhargav Buddhadev
Yes. Okay, sir, thank you very much and all the very best.
Operator
Thank you. Participants who wishes to ask a question may press stars and 1. The next question is from the line of Arnav Sakhuja from AMBIT Capital. Please go ahead.
Arnav Sakhuja
Hi. Thanks for taking my question. So I just wanted a bit of insight into the raw material prices. So I think, you know, in the last quarter call you had mentioned that there was a drop in the raw material prices which is why the revenue per ton figure took a bit of a hit. We just want a bit of an insight as to how the RM prices are progressing now.
Rajesh Kothari
Ariant, would you please respond to this?
Arihant Bothra
The RM prices have started to move on. It has bottomed out in the last quarter. And this quarter there has been some revival. And that is reflecting in our average realization as well. If you see the blended realization for the third quarter, it is standing at close to 137 rupees versus the last quarter of 130. The first quarter stood at 136. So we can fairly say that it is in line with first quarter now. So the prices have already bottomed out and started to revive again.
Arnav Sakhuja
Okay, sure. And this would be the RM across product, right? Not for any specific product?
Arihant Bothra
Mainly it’s petrochemical products.
Arnav Sakhuja
Okay. Okay. Thank you.
Operator
Thank you. The next question is from the line of Anand Mundra from Soar Wealth. Please go ahead.
Anand Mundra
Good morning, sir. Congratulations on good results. So what is the volume growth for quarter three, sir?
Arihant Bothra
Good morning. Just a second. On the third quarter the volume growth is close to 7 odd percent. However, when you see the same growth on year on year basis, then the grain growth is around 22 odd percent.
Anand Mundra
So 7% is for quarter on quarter.
Arihant Bothra
Q-o-Q only.
Anand Mundra
Okay. And 22% year on year.
Arihant Bothra
Yes.
Anand Mundra
Okay. And sir, I missed that part. What. What is the reason for the slowdown in export business for the last two, three years, sir?
Arihant Bothra
It’s mainly the current year. We have seen the slowdown is mainly because of the war rates issue and escalating shipping rates. That was the main reason. Now with as Devji highlighted with the new US President coming in, you can see in the news that a lot of water escalations are coming down. It is expected the shipping rates will also come down. The most important factor is whether the shipping rates come down or not. But if the transit time comes down, definitely the shipping rates will come down. So that is something which we expect now to be happening. And it is also showing some signs of recovery now, as and when the results were out. Before joining the chair there has been some sitting softening so we hope to export the market to be reviving the next financial year.
Anand Mundra
Arihant ji, what I was saying is last year FY ’24 also there was a degrowth in FY ’25 also but you are saying now things may improve from here on but someone would have taken our market share over there?
Arihant Bothra
No, no. Let me give you a number in FY ’23 versus FY ’24 when you see the absolute numbers definitely have come down but when you see the average pricing the last year overall average I’m not considering only export the overall average selling price was 174 which came down to 146 in the last entire financial year. The last year in export market there has been a volume growth because of the prices coming down. This was showing a downward trend. However in the current financial year both the prices and volumes have come down.
Anand Mundra
Okay, so this year lower volume from our side but whether the customer over there would have bought from some other place or the…
Arihant Bothra
Yes, definitely. They would have bought from probably Europe or other country where the freights are viable because from India to a lot of countries, even for that matter to few countries of the Middle east the freights were unviable.
Anand Mundra
Understood sir, understood. And sir one guidance which you have given for 2030 about 4,500 to 500 quarter revenue. How much capex we need to do to achieve that revenue sir over the next three, four years?
Arihant Bothra
So, it’s in tranches. We have already announced for up to FY ’27 that whatever capacities of close to 45,000 tons of HFR and PE we are adding however in addition to that we are also adding some capacities of PVC compass which will be close to 12 to 15,000 tons. So all put together we are targeting a capex of close to 200 to 300 odd crores in the next couple of years Rather you can say in 2, 2 and a half years’ time but FY30 when you are talking about it will require another 250 to 300-odd crore.
Anand Mundra
So, total 500 crore capex is required over the next 4, 5 years to achieve that kind of revenue?
Arihant Bothra
Technically you can say it will generate a turnover ratio of close to 1 4.5, 5 times.
Anand Mundra
Okay, understood. And so my last question last year quarter four we had very good EBITDA margin because of the annual incentive scheme on purchases which you settle in that last quarter of the financial year. Similar thing can be expected in this financial year also?
Arihant Bothra
So this year there is a minor change. There has been some income which have been as for the negotiation with all the MoU players have been already got in the first three quarters on a quarterly basis. Yes, there will be some part of it coming in the next quarter, but not exactly the same jump.
Anand Mundra
Understood, sir. Understood. Thank you. Thanks a lot, sir. Thank you so much.
Operator
Thank you. Participants who wishes to ask a question may press star and 1. The next question is from the line of Amish Kanani from Knowise Investment Managers. Please go ahead.
Amish Kanani
Yeah, hi sir, partly my questions are answered regarding exports. You know, is there any particular geography sir, where we are facing challenges or it’s across the board because of the freight issue, sir? Yes. Can you hear me? Hello?
Rajesh Kothari
Yeah, so these challenges are across the geography, across the globe because sea freight rates have gone up for Middle east, for Europe, for USA. For every market these have gone up. So in some of the markets it has impacted our competence, price competitiveness and in some of the markets it has not impacted to that extent. But freight rates were high across the globe.
Amish Kanani
Okay, sir. And sir, also the previous participant asked about the fourth quarter incentive which has bumped up our EBITDA in the fourth quarter. The question is for, for a decent YoY growth, sir, nine months we have seen a good and good growth. But for a decent YoY growth, sir, fourth quarter, you know, profitability, high profitability will be a challenge for us. So any thoughts on annual profitability given that the fourth quarter incentives are not repeated?
Rajesh Kothari
Arihant?
Arihant Bothra
Yes, yes. So if you see the numbers which have been already announced, we are constantly giving a guidance of 15 plus rupees of EBITDA and close to one like 85,000 tons of volume. So you can calculate yourself. But this is the guidance we have been giving in all the earlier quarters.
Amish Kanani
How much EBITDA, sir? How much, sir? Sir, I missed the number. How much per capita, per kg?
Arihant Bothra
INR15-plus per kg and 185,000 tonnes of volume is the target we are working on.
Amish Kanani
So that that includes the incentives?
Arihant Bothra
INR15.5 rupees and on a blended basis we have achieved close to 14.9 rupees or rather you can say 15 rupees of EBITDA. So we are, we are already on course.
Amish Kanani
So that includes the incentive is what should resume is what you’re saying, right? Hello?
Arihant Bothra
Yes.
Amish Kanani
Okay. Okay. And sir, about that 220 also has been answered. So. So then the last question sir is how is the top five customer as a concentration and any interesting addition that we are getting in terms of new application or any new customer addition that is exciting that we should look forward to for FY ’26 sir?
Arihant Bothra
So, if you see the top five contributors, they contribute close to 20 odd percent of the revenue. However the major players remain the same. People like APAR, Havells, Polycab, KEI are the top leaders who are, who are in the top five. However when you talk about the top ten definitely there are many big players. which you will add on the queue.
Amish Kanani
Okay, thanks a lot and all the best.
Operator
Thank you. The next question is from the line of Abhijit Mitra from Aionios Alpha. Please go ahead.
Abhijit Mitra
Yeah, thanks for taking my question. I hope I’m audible.
Operator
Yes, you’re audible.
Abhijit Mitra
Good morning.
Rajesh Kothari
Good morning.
Abhijit Mitra
Yeah, so I’m just trying to understand the impact of exchange rate depreciation that we are seeing both on the OPEX and on the revenue as well as on the balance sheet side. If you can help me sort of understand, you know, what has been the impact in this quarter and what kind of impact or benefit that we can expect in the, you know, in the next quarters both on the P&L side and on the balance sheet side?
Arihant Bothra
So when you talk about on the P&L side this quarter have a minor impact of close to 30 odd lakhs on a net basis. However, it is important to understand over here we have been a net exporter for last couple of years and this year also we are a net exporter. So whatever depreciation happens it will be on benefit side to us only.
Abhijit Mitra
Okay. And on the balance sheet side there are no receivables or any other unhedged foreign currency exposure which can sort of impact…
Arihant Bothra
We have a risk management policy which says that for the next three months whatever receivables are due, we need to hedge the same. So accordingly the same has been hedged and restated and the impact of debtors and debaters put together is at 30 odd lakhs in this particular quarter.
Abhijit Mitra
Understood, understood, that’s very clear. And also if I, if you can help me understand what are, what are the components of this interest cost that we are seeing because you know, I mean the debt levels and all are quite low but still we are seeing around 13 crores or actually on a run rate basis, you know, six, six and a half crores of interest cost for the quarter. So I mean what all components are there if you can help me understand?
Arihant Bothra
So generally if you see this interest cost came down last two quarters a bit. This particular quarter has a marginal increase because of the processing fees and everything. So this quarter you cannot say that is in line with the regular exception because of the renewals and processing fees. Otherwise the utilization levels have come down and the average finance cost is expected to remain within 5 crores of payment.
Abhijit Mitra
Okay, understood, thanks. That’s all from my side. Wish you all the best. Thank you.
Operator
Thank you. The next question is from the line of Bobby J [Phonetic] from Falcon. Please go ahead.
Bobby Jayaraman
Hi, good afternoon. I wanted to understand your financial structure a bit better. So your gross margins are only 10% to 15%. So it’s mostly an inventory management gain that you play right, because your asset turns are very high. Your profitability depends on how well you manage your inventory. Is that correct?
Arihant Bothra
Kothari ji, Would you like to take this question?
Rajesh Kothari
Arihant, I could not understand the question very clearly. So it is better if you can answer.
Arihant Bothra
So your question is highlighting towards the inventory management. But our policy as a principle is that we book the orders and the raw material simultaneously. As well as whenever there is a change in price, we pass on the same rather than new orders are booked at the new prices. So in our particular raw material side, there is no hedging structure like in metals and other things.
So we hedge in two ways. One, getting the raw material lined up immediately as soon as the order is there. Second, in case there is a volatility, the market get the raw material and trade it off when your required grades are available. So yes, inventory management is important. But inventory is tied up in one on one basis. With the orders available in on hand.
Bobby Jayaraman
Sir, how long do you hold the inventory?
Arihant Bothra
Generally one month at max.
Bobby Jayaraman
So within this month the prices can easily drop, right? For PVC or LDP, that is what we always see with companies like Supreme Industries. They hold for a month. So anything can happen within a month. So in that case you will have to take a margin hit or an inventory loss, correct?
Arihant Bothra
No, no, no. Here the you are seeing only the inventory values. While I am saying that if I have a one month inventory, then definitely I have an order pipeline of one month in hand. So I have a one to one correlation between my order book as well as the inventory pipeline.
Bobby Jayaraman
So you get actually direct order. You don’t sell anything in the wholesale market. So you get direct one to one orders from your customers?
Arihant Bothra
Yes, yes. It’s all order driven sales.
Rajesh Kothari
Yeah. If I can add to what Arihant is saying that you have mentioned about Supreme. See, the business of supreme and our model are different because they are B2C and we are B2B. So our raw material procurement is basically driven by the order book in hand. So most of time our inventory is sold off inventory, not unsold inventory. The portion of unsold inventory is what is going to give you inventory price increase, advantage or disadvantage. So generally the inventory, what we have is most of the time is sold maximum percentage.
Bobby Jayaraman
Okay, understood. And the other question is, you see your value add is not that much. Like I said, it’s, you know, 80% of your cost is just the raw materials. But still you are consistently profitable. But if you look at someone like you know Chem plus and Mar, who does PVC resins, they are constantly making losses. So is it because the competitive structure is different?
Rajesh Kothari
No, their business structure is different. Different because if you talk about the Chem Plast, they are polymer producers and we are basically converters. So the margin picture and the cost picture will be entirely different for this two set of industry. Because if you look at the capex per turn basis, their capex would be much higher than ours and asset turnover ratios would be much different than us. And that is why even at 20% gross margin they may not make money, but the converter can make money at 20% gross margin. If you look at the cable guys, they are also kind of a converter who buy all commodities and then they convert it into a finished product like cable. So there you see their gross margins would be in the similar ranges still they are making profit. So these are two different set of industries.
Bobby Jayaraman
No, no, I understand. I was also wondering whether it’s because the competitive structure is better in your industry because there’s enough competition, your margins can come down. Right? Because your value add is not high and it’s not a technology driven industry. So the process which we use could be used by all of your competitors. So I’m wondering if the competitive intensity is not high, which is a good thing.
Rajesh Kothari
No, see that when the margins are not so great, you will not have competition. This is a cycle.
Bobby Jayaraman
Right. So, it is not that high is what you’re saying?
Rajesh Kothari
Yeah.
Bobby Jayaraman
Right. And the other question was when you say you actually supply to the solar sector for solar cables, how do you know that? Are the compounds you supply different for solar cables versus general power cables?
Rajesh Kothari
Yes, there are different specifications. Every cable is made based on certain specification. Okay. So the specification for power cable is going to have some different component and the specification for the solar cable are going to have some different specification. As I told in an answer to Mr. Bharga’s question, that a cable which is going for power cable generally HFR is thermoplastic. But if it is going for solar application or if it is going for oil sector, oil refining sector, then the cable has to be cross linkable. So the moment you see that specification demand cross linkable, you know for sure that either he’s going for the solar sector or for oil or those kind of applications. So cable are supplied as per the specification.
Bobby Jayaraman
So essentially you have to guess a bit, right? I mean they don’t tell you, your customers don’t tell you what it’s going for. They just order the compounds.
Rajesh Kothari
Yes, yes, yes. They know because there is a governing standard like IEC VD is. Those standards govern the cable specification. And based on that you have to offer a compound a raw material. And we declare to our cable customers that look here, this is a grade of ours, this is product of ours which will meet these specifications and then they order accordingly.
Bobby Jayaraman
I see. Got it. And who do you supply to in the for exports? Is that what when you say you have, you do exports to the U.S. is it American companies?
Rajesh Kothari
No, see, U.S., we are not exporting directly, okay? U.S. we are giving our product because for exporting to us you need to have Underwriters laboratories certification for your product. That is where the certification is. Certification turns out to be very important. So what we do, we are supplying our raw material because we are not cable suppliers. So US is mostly buying cable as an import, not the compounds. Mostly we are supplying to the cable producers, whether they are in India exporting to USA or in Middle east or in North Africa or in Europe, who are exporting to US market.
Bobby Jayaraman
So it’s deemed exports actually not really exports.
Rajesh Kothari
Yeah, yeah, it is proxy. It is proxy. It is deemed because for me it is a physical export. If I am exporting something to a company in Israel and I know for sure that they are exporting it to US market because they are asking for those kind of specification of the product. So I know it is going to US market or to Canadian market. So this is how we offer our product to other customers also for that market.
Bobby Jayaraman
So your compounds are actually exported to other countries. What you are saying is they are not exported directly to the us? It could be to Dubai.
Rajesh Kothari
It could be Dubai, it could be to Israel, it could be to Egypt, it could be to Turkey, it could be to any European country. And we know that when they send us the specification that we need a product meeting UL number. So and so then we know that it is going to US market.
Bobby Jayaraman
Understand. But how do these suppliers in Turkey and all these countries know about you? How did they find out about you?
Rajesh Kothari
Yes, because some of our products are listed on UL website. Partially approved. Fully approved. So they know about us that yes, we are having a product meeting UL requirement.
Bobby Jayaraman
So you don’t have any marketing organization in those countries or anything? You actually get a reverse inquiry?
Rajesh Kothari
Yeah, we get a reverse inquiry for the UL based product. But otherwise our marketing setup is like this, that we participate in various trade fairs happening globally to promote our product. And then by now we are a very well-known name. Any cable producer globally, be it the biggest one being Prysmian, Nexans, Elsewedy’s, Ducab all they know us for years.
Bobby Jayaraman
I see. Okay, thank you very much.
Rajesh Kothari
Thank you.
Operator
Thank you. The next question is from the line of Abhishek from Taskk. Please go ahead. Abhishek, your line is in the talk mode. Please go ahead.
Abhishek Asthana
Sir, can you just explain the competitive intensity…
Operator
Sorry to interrupt but we are not able to hear you.
Abhishek Asthana
Hello?
Operator
Yes sir, please proceed.
Abhishek Asthana
Sir, can you please explain the comparative intensity in this polymer compound please?
Arihant Bothra
We compete with people like Dow, LG, Hanwha and Borealis on the global front. Whereas when you talk about India, a lot of these players are having export in India as well. When you talk about in India there is no Apple to Apple competitor as such there will be product specific competitor available in India. But when in terms of capacity they will be much smaller in terms of capacity than us. So when you talk about right competition to be compared definitely is people like Dow, LG, Hanwha and Borealis on the global front.
Abhishek Asthana
And given the demand trends in the wire and cable space, have you seen capacity expansion by these players also?
Arihant Bothra
Yes, yes. Kothari ji, can you guide on this?
Rajesh Kothari
Yeah. See, we have seen expansion — capacity expansion from these suppliers. These competitors also Burur, Hanwha, they have added capacity. The important thing to note here is that how we are different from these competitors are that we buy our polymers and make compound. So adding capacity for us is much faster because we simply need to buy machines, set up and then start producing. Whereas these competitors, they have the back to back integration with their polymer manufacturing capacity. So if their polymer availability is tight, if they don’t have a spare polymer to convert into compound then they have to think of expansion from the cracker stage. So their expansions take longer time. So we have seen some capacity expansion happening at Hanwha and Borealis in last one year.
Abhishek Asthana
And even like for the incremental capacity expansion which you are doing, the asset turn will be upwards of eight to ten times.
Rajesh Kothari
For us?
Abhishek Asthana
Yes.
Rajesh Kothari
Arihant, you should be able to answer it in much better way.
Arihant Bothra
Can you repeat the question once again?
Rajesh Kothari
Asset turnover, he is looking, he is asking that whether it is going to be the range of 10.
Arihant Bothra
No, no, it’s not going to be 10. As I explained the existing assets were much older in terms of physical infrastructure. That is why you are seeing an higher asset turn while going forward. For fresh capex, we are eyeing four to five times of asset turn.
Abhishek Asthana
Okay, sir. That’s very helpful.
Rajesh Kothari
Thank you sir.
Arihant Bothra
Thank you so much.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Saket Kapoor
Yeah, Namaskar, sir. Thank you for the opportunity. Firstly sir, congratulations on a consistent set of numbers. As alluded in the earlier call we have been posting very disciplined set of financial and operational performance and we hope for the continuity. As Arian sir mentioned about our EBITDA per kg in the vicinity of 15.5 should be the number we should look for the overall for the financial year ’24, ’25 closer to 15 rupees year for nine months.
Arihant Bothra
So the guidance is only 15 plus because first quarter have been at 14 rupees odd. So we cannot commit right now 15.5 plus. But definitely we are working very hard and we are committing 15 plus of EBITDA numbers depending on the existing scenarios available in the market once the export revives. Definitely that is also an opportunity going forward in the coming quarters.
Saket Kapoor
Right, sir. And sir, if you could just throw some light on our expansion initiative and also the initiatives on the efficiencies that can build into the number to improve the gross profit margins going ahead. Where are the areas where we are working that may result?
And third point is we have mentioned in our presentation that about the five key players in the wires and cable segment that contributes to 22% of the revenue. So taking into account their numbers in public domain and their outlook, what is the fillers we are getting and how and how traditionally Q4 is for industry and for us and how are things currently trending? These are my submissions. Thank you.
Arihant Bothra
On the second question we are going ahead with the CAPEX plans. As explained in earlier calls. We have already taken the land at Wapi near Wapi and just to highlight what activity we are doing to ensure increasing efficiency is that at the existing sites we are replacing smaller machines with a higher capacity machines so that we can get better output as well as on the smaller machines the which can be used we are using for making master batches on a small items which are part of the existing.
You can say a package. So we are not discarding those machines. We are shifting them for the smaller ones which can be made at a smaller output and not wasting the higher machines higher output. So that is how the efficiency is being worked out.
On the new site. Also let me guide you that whenever it completes the operations, we will drive our focus more to drive the power from solar and other renewable energy resources whichever is possible to reduce the overall cost.
So everywhere our focus is to work on efficiencies. Just to highlight a small point in our Surangi plant which is the biggest plant we do have, we have a pond type of Reservoir for 27 lakh liters of water. And every year post rain, rather during the rain and post rain we collectively do a rainwater harvesting of 1 crore plus liter every year. So that is the kind of efficiency we are using. We are not wasting the water where rather we are reusing and making it more possible to use as much as possible. On the third front, the additional question which you mentioned, I think Kothari ji can highlight better on that.
Rajesh Kothari
Yeah. So Mr. Kapoor, if you can repeat the question it will help me to respond in a better way. The last portion of your question.
Saket Kapoor
Sir, I think this was regarding the key fillers from our existing pipe players in the wires and cable segment. And traditionally sir we see that financier closing of financial year Q4 is the year of lot of buoyancy in the economy. Economic activities are at peak. But just to reframe my questions, what we have seen overall in the in the nine month with this being an election year things have been very somber and even the budget part also there is reduction in the type of expenditure on some certain line items. So [Foreign Speech].
Rajesh Kothari
[Foreign Speech] which is there in public domain. So everybody is talking that despite the challenges of last year because local demand was strong all cable industries despite the year being slow and somber on new order releases from the government side private sector expenditure particularly on the renewable side is very very strong. And the key driver is key electricity demand. [Foreign Speech].
Saket Kapoor
[Foreign Speech] we congratulate you on a very very descriptive presentation that highlights all the aspects that are needed for the investors to have an informed to make informed decisions and we hope for the continuity of the same going ahead. Thank you sir. And all the best for the team.
Rajesh Kothari
Thank you.
Arihant Bothra
Thank you.
Operator
Thank you. Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.
Rajesh Kothari
Ddev, you would like to speak something?
Ddev Surana
You go ahead.
Rajesh Kothari
You go ahead, [Foreign Speech] You go ahead.
Ddev Surana
So just wanted to thank everybody for your time. We’ve maintained a robust and consistent performance as we’ve always promised. And even for the next quarter and the next financial year, we are quite optimistic that we’ll continue with this momentum.
And just thank you. Thanks. Thank you everybody for joining. I’ll see you. Thank you.
Operator
Thank you members of the management team. Ladies and gentlemen, on behalf of PhilipCapital India Private Limited. That concludes this conference call, we thank you for joining us. And you may now disconnect your lines. Thank you.