Ester Industries Limited (NSE: ESTER) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Arvind Singhania — Chairman and Chief Executive Officer
Pradeep Kumar Rustagi — Executive Director, Corporate Affairs
Analysts:
Gavin Desa — Analyst
Krushna Parekh — Analyst
Jatin Damania — Analyst
Aman Kumar Sonthalia — Analyst
Saket Kapoor — Analyst
Ritu Kumari — Analyst
Surendra B — Analyst
Aditya Vora — Analyst
Yash Dedhia — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Ester Industries Limited’s Q2 and H1 FY25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.
Gavin Desa — Analyst
Thank you, Neerav. Good day, everyone, and a warm welcome to Ester Industries Q2 and H1 FY25 Analyst and Investor Conference Call. We have with us today Mr. Arvind Singhania, Chairman and CEO; and Mr. Pradeep Kumar Rustagi, Executive Director, Corporate Affairs. We will begin this call with opening remarks from the management, following which we will have the floor open for an interactive Q&A session.
Before we begin, I would like to point out that few statements made in today’s discussions may be forward-looking in nature and a note to this effect was sent in the invite to you earlier. We trust you have had a chance to go through the documents on financial performance. I would now like to invite Mr. Arvind Singhania to make his opening remarks. Over to you.
Arvind Singhania — Chairman and Chief Executive Officer
Thank you Gavin and thank you everyone for joining us today. I will briefly talk about the key Business developments, post which Pradeep will walk you through our Financial Performance. We are pleased with our performance for the quarter under review driven by improved operating & financial metrices and a better macro environment for both BOPET films as well as Specialty Polymer. This is in line with our expectations that we shared with you all in previous calls.
We expect H2 to be better than H1, as both the businesses are expected to sustain their momentum. Let me now move on to individual businesses. Starting with Specialty Polymers, Q2 performance was steady on expected lines. We have seen a good pick up in volumes on a Year on Year basis. Demand for our marquee products namely MB03 and Innovative PBT remains buoyant. For the quarter, our overall volume of sales stood at 1,216 MT, almost double when compared to volume of sales of 599 MT achieved in Q2FY24. On a half yearly basis, volume stood at 2,198 MT compared to 1125 MT achieved in H1FY24, again almost 2x on a YOY basis.
In terms of our key products, MB03 volume stood at 284 MT during Q2FY25 as against 179 MT during Q2FY24. Volume of sales of Innovative PBT for Q2FY25 stood at 476 MT as against 185 MT of Q2FY24. Specialty Polymers as mentioned in the past is largely an export-oriented business deriving a significant portion of its sales to customers based out of USA and China. The end use of these products is mainly for carpet and consumer electronics industry based in USA. From margin and profitability perspective, the business is largely insulated given the IP protection available for major products.
Going forward, we expect H2 to sustain momentum amidst exciting product pipeline and growth visibility. Moving to the Film business now, I am extremely pleased to report that we are now witnessing an improved demand supply scenario which in turn is translating into better pricing & margin environment. Significant new capacities commissioned over the last two years resulted in massive oversupply that put pressure on pricing & margins in BOPET Films. However, the growth in demand both within India and across the world remained robust on account of growth in application segments, enhanced consumerism & growing GDP.
Our volume of sales during the quarter under review was affected by the plant shutdown undertaken for a couple of weeks. Despite lower volume, we were able to achieve improved margins and deliver significantly better profitability largely owing to improved demand supply scenario and better product mix. As I have been highlighting, our efforts are directed towards improving our product mix by increasing the share of Value Added & Specialty products. I am pleased to share that on consolidated basis, we have been able to increase the share of value-added products to 29% during the quarter, as against 17% in Q2FY24.
Our Wholly owned subsidiary, Ester Filmtech generated revenue of INR99 crores with volumes of 7,425 MT during the quarter. We expect the entity to deliver revenues of approximately INR375 crores in current fiscal and INR450 to INR500 crore upon achieving optimal utilization at reasonable prices margins during next fiscal. Further in addition to improving demand supply environment and better product mix, Plastic Waste Management Rules mandating utilization of minimum 10% recycled content in flexible packaging laminate, coming into force from 1st April 2025 is expected to further increase demand for Polyester Film with conversion taking place from other substrates to polyester.
As regard to our JV with Loop Industries Inc, I am happy to inform you that it is progressing well. An entity by the name Ester Loop Innovative Technologies Private Limited has been incorporated. Teams having members from both Ester & Loop have been formed for implementation of the plan and look after key functions like detailed engineering, project set up, raw material procurement planning, financing et cetera. Our target timeline is to commence commercial operations in the second quarter of calendar 2027. In summary, we anticipate a significantly better operating & financial performance during the current fiscal as compared to fiscal gone by.
Specialty Polymers highlighted its resilience and potential during the first half. Similarly, the outlook for the Film business on the back of a more stable environment, is promising. We are confident that both our SBUs are primed for growth and value creation. The partnership with Loop, a transformative and path breaking endeavour, is set to drive profitable expansion for the company in the future. That concludes my opening remarks, I now handover the floor to Pradeep, to walk you through our financial performance. Over to you Pradeep.
Pradeep Kumar Rustagi — Executive Director, Corporate Affairs
Thank you and good day, everyone. Thank you for joining us on our Q2 FY25 Earnings Call. Let me quickly walk you through our financial performance post which we can commence the Q&A session. I would like to start with financial performance of Ester Industries. Total income on standalone basis stood at INR302 crores as against INR244 crores in the corresponding quarter last year, higher by 24%. The primary reason for the growth is the strong revival in both Specialty Polymers and Film businesses.
EBITDA during the quarter under review including non-operating income stood at INR36 crores as compared to INR3 crores during Q2FY24. In percentage terms, it stood at about 12% as compared to 1% during Q2FY24. EBITDA during the H1FY25 stood at INR53 crores as compared to INR15 crores during the corresponding half year last year. Coming to the financial performance of Wholly Owned Subsidiary, Ester Filmtech, the revenues stood at INR99 crores as against INR68 crores in the corresponding quarter last year, higher by 46%, basis strong revival in Film business.
Reported EBITDA during the quarter under review including non-operating income stood at INR6 crores as compared to negative of INR3 crores during Q2FY24. EBITDA for the Q2FY25 would have been INR14 crores that is 14% but for impact of exchange fluctuation & mark to market losses on FCL and derivative availed by Ester Filmtech. EBITDA during the H1FY25 stood at INR7 crores as compared to negative of INR6 crores during the corresponding half last year. The same would have been INR15 crores but for impact of exchange fluctuation & MTM on FCL derivative availed by Ester Filmtech.
In terms of sales in volumetric terms, Ester Filmtech sold 7425 MT of Film during Q2FY25. With the pricing & margin trend improving and demand-supply mismatch narrowing, we are confident that the Ester Filmtech will contribute positively to the overall growth of the business in the coming years due to its low operating cost. We expect the unit to generate revenue worth INR450 to INR500 crore upon achieving optimal utilization by FY26. On consolidated basis, EBITDA for the quarter stood at INR43 crores as against negative of INR0.4 crore generated in Q2 FY24.
On half yearly basis, we could earn EBITDA of INR60 crores as compared to INR9 crores earned during H1FY24. EBITDA for the quarter and half year would have been higher by INR8 crores but for impact of exchange fluctuation & MTM on FCL derivative availed by Ester Filmtech. On consolidated basis, we could earn PAT of INR3 crores as compared to loss of INR30 crores incurred during corresponding quarter last year. PAT of INR3 crores would have been higher by INR8 crores but for impact of exchange fluctuation.
Liquidity position at consolidated level remains strong as can be seen from cash flow statement for the half year ended September ’24 provided in the Investor Presentation. Leveraging in terms of Net Debt EBITDA multiple is also improving with improved operating performance. All our accounts with all the lenders remain in order. In fact, we have repaid instalments of term loans ahead of schedule. We are also maintaining more than adequate headroom in working capital credit lines sanctioned to us by banks.
For funding JV, Ester Industries has come out with issue of share warrants through preferential route amounting to INR175 crores. We have received the requisite approval from both BSE and NSE. 25% of the issue amount that is INR43.75 crores is expected to be received in next few days from promoters & other independent investors. As stated by Arvindji, we have confidence in the growth potential and value creation of both our businesses and specialty Polymers has showcased its growth capabilities, and the Film business is showing improved performance with a positive pricing & margin trend.
The robust growth in demand for BOPET Film is aiding in balancing the demand-supply dynamics. Our partnership with Loop Industries is poised to be a game-changer. When operational, it is expected to substantially alter our growth trajectory and profitability. That concludes my opening remarks, we can now commence the Q&A session.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Krushna Parekh from Dolat Capital. Please go-ahead.
Krushna Parekh
Thank you for the opportunity, sir. My first question is, what is the present contributions for BOPET and where do you see them progressing over the next year?
Arvind Singhania
The current value additions that we have is about INR45 per kg for 12 micron plain over PTE and MEG. It is expected to be in the same ballpark going forward as well.
Krushna Parekh
Okay. Second is what is the maximum utilizations can we achieve at Ester FinTech?
Arvind Singhania
When, in what period?
Krushna Parekh
In next year.
Arvind Singhania
Next year will be substantially better than this year. If we talk about — if we talk about FY26, I think we should be in the range of about 75% to 80%, maybe even 85%. And H2, we could be 65% to 70%. H2 of this fiscal.
Krushna Parekh
Okay, got it. Got it. And what will be the annual revenues and margins do you foresee from our Loop JV?
Arvind Singhania
Sorry, say again.
Krushna Parekh
Annual revenues and margins do we foresee from our Loop JV?
Arvind Singhania
No, Please understand that JV is a completely separate company. So in the Loop JV, the JV company the capital expenditure is in the range of about $165 million which is about INR1,450 crore. We expect revenues to be in the same region say about INR1,500 crore. And the EBITDA margins will be in the region of about 35%.
Krushna Parekh
Okay. And what are the competing technologies available?
Arvind Singhania
As of now, we don’t see any technology which is ready to be deployed commercially, globally.
Krushna Parekh
Okay. Okay, got it. Thank you. That’s it from my side.
Operator
Thank you. Next question is from the line of Jatin Damania from Svan Investments. Please go-ahead.
Jatin Damania
Thank you for the opportunity. So on reset of.
Operator
Jatin sorry to interrupt. Your voice is echoing. Can’t understand.
Jatin Damania
Yeah. So it’s audible?
Arvind Singhania
Yes. You are right.
Jatin Damania
Yeah. So in your opening remarks, you alluded that there is an oversupply in the BOPET market. But despite that oversupply, we have seen a significant improvement in our spreads across both the businesses. So can you help us understand what is the demand-supply scenario that we are seeing as compared to the past year and how shall we foresee going ahead?
Arvind Singhania
So as far as the specialty polymer business is concerned, there is no oversupply. It was a demand problem arising of the recessionary situation in the US, which has changed. Now the demand has picked-up. So there is no oversupply in the specialty polymer business. I said the oversupply was only in the polyester film business, which over the last two years has improved substantially. Now the demand/supply has closed quite a bit. And I think in the next 12 to 18 months, this will — this will be completely balanced.
Jatin Damania
Yeah. But in the last con-call, you indicated that the demand-supply has narrowed down to almost 15,000 tons on a monthly basis. So like-to-like basis, if someone wants to compare it, though what is the number right now?
Arvind Singhania
Yeah. Yeah. So right now the demand-supply gap would be in the region of about 15%, 20% max.
Jatin Damania
So that should continue to remain in the same level only.
Arvind Singhania
No, no, no, it will keep improving because the demand is going to continue to grow while there are no new major capacities expected, the other demand-supply will become better and better over the period of time. There are two triggers. One is the continuous growth in-demand in the domestic market, which is expected to be in the 11% to 13% range and the global demand at about 6%. And then from 1st April onward, the plastic waste management rule is likely to trigger a spurt in demand.
Jatin Damania
Okay. So sir, now the demand — since there is no new incremental supply that is going to hit in BOPET as of now and with the demand improving by probably a higher single digit globally, don’t we expect the spreads over MEG and PTA to improve from INR45 a kg that what we reported in the last quarter?
Arvind Singhania
See please understand this is domestic supply. Globally the situation is different because a lot of capacities are coming up in China and global demand supply is going to take a little bit longer but it is not going to affect our domestic demand supply. So, the domestic will be very good but the pricing of the export market is not going to be that lucrative as it used to be before. But we expect just to be a little bit more prudent, we don’t expect our margins to go up substantially over the existing INR45 or INR50.
Jatin Damania
Okay. So one should work with the numbers because imports [Speech Overlap] Yeah, so you are saying something on the import numbers.
Arvind Singhania
No, no, no, no. Hello. Please go ahead.
Jatin Damania
No, sir, you are saying something on the imports.
Arvind Singhania
No, no, no, nothing, nothing. That is nothing.
Jatin Damania
So now when you said that, on the specialty we don’t see any problem. But because the demand now started it improved. But since our specialty doesn’t have any competition and margins are also protected, despite that and improvement in the BOPET, we have seen a decline in specialty polymer business margin on a sequential basis. So, what was the reason for that?
Arvind Singhania
Very simple, actually in this quarter we got a one-off business of a product in the domestic market at very low margins. It is a one-off business. We decided to take it, [Foreign Speech] so we took that business. This is not going to be repeated again. So actually, you will see a slight dip in the revenue also in the coming quarter because this business will not come back. And the drop in margin was because of this and because this will not be sold again, the margin percentage will go back up in the next quarter.
Jatin Damania
So that means to say that sequentially in third-quarter and fourth-quarter, our revenue will dip with a lower-margin — lower-volume, but our margin will improve. Is it fair to assume?
Arvind Singhania
Exactly. Yeah. Exactly. Yeah. Yes, the revenue will be slightly lower than Q2 in — but the margin percentage will go back to 37% 38%.
Jatin Damania
And in terms of the Loop, now we have indicated in next 18 months, we’ll be commencing the production. So just wanted to understand how much we have spent till-date on the same?
Arvind Singhania
Right now, we haven’t spent much at all. The company has just been formed and now the funding will start and now the next step will be — we’ve already given the engineering contract to Tata Consulting. So the expenditures are now going to begin. Nothing, nothing has happened till now.
Jatin Damania
So for ’25 and ’26, what shall we assume as far as the capex on the Loop business?
Arvind Singhania
Sorry, say again.
Jatin Damania
For ’25 and ’26 for the remaining half of this fiscal — for the next fiscal, what will be the capex for the Loop?
Arvind Singhania
See the capex for loop is $165 million, which is about INR1,450 crores. And this will be spent over a period between now and June ’27.
Jatin Damania
Yes, I agree, but I mean in terms of the spending — actual spending, I mean, are we going to spend a major portion in the latter half of the — I mean, mean towards the commissioning?
Arvind Singhania
The major portion will be spent after third-quarter of next year.
Jatin Damania
Okay, sir. Okay, sir. That’s all from my side and thank you and all the best.
Operator
Thank you. Next question is from the line of Aman Kumar Sonthalia from AK Securities. Please go-ahead.
Aman Kumar Sonthalia
Yes, sir, what are the chances that the government will implement this recycling by 1st of April 2024?
Arvind Singhania
It’s already notified.
Aman Kumar Sonthalia
It’s notified but is there any chances that they will change the dates again?
Arvind Singhania
I cannot read the Government’s mind. I don’t think so because if they had to get extension, they would have already done it by now. Now only four months are left. I don’t think now there is any chances of it getting extension is low I would say in my opinion. But it’s the government. Anything can happen. But we doubt that it will happen because now sustainability is a very strong requirement everywhere across the world. And even India has made commitments and our Prime Minister is so clear about it that the sustainability project will not be postponed anymore.
Aman Kumar Sonthalia
So what are the chances that it will improve the demand of the BOPET?
Arvind Singhania
We feel so because I have said this before, polyester film is the only substrate which can offer material with recycled content, BOPP it’s not possible.
Aman Kumar Sonthalia
Right, sir. And sir, lot of companies are setting up plants overseas. So what are the benefits they are getting instead of setting up a plant.
Arvind Singhania
Which company, which product are you talking about, people are setting up?
Aman Kumar Sonthalia
BOPET and BOPP like SRF and like Polyflex, like UFlex, they are setting up plants outside India.
Arvind Singhania
No, I think you got your information wrong. No more new lines are coming up by any of these companies except for one line by SRF which they’re setting up in India of BOPP. No new polyester expansion by any Indian company have been announced right now. SRF is also BOPP in India, not BOPET.
Aman Kumar Sonthalia
Not BOPET. And sir, what is the current split at the moment? Previous quarter, it was INR45 and what is the split currently in the month of November?
Arvind Singhania
Yes, it’s about INR45, INR47, INR48 right now.
Aman Kumar Sonthalia
And it’s quite a stable year.
Arvind Singhania
Yeah.
Aman Kumar Sonthalia
Okay. Thanks a lot.
Operator
Thank you. Next question is from the line of Saket Kapoor from Kapoor & Company. Please go-ahead.
Saket Kapoor
[Foreign Speech] Thank you for this opportunity. And sir thank you for a very detailed investor presentation and also the description given there in line by line explanation, it clears maximum question, sir, we hope the continuity of the quality of presentation to continue and kudos to the team for the same. And sir, when, sir, first, when we look at your capital work-in-progress.
Operator
Saket, sorry to interrupt you. You are losing your flow.
Saket Kapoor
Now can you hear me, sir?
Operator
Can you please through the handset?
Saket Kapoor
Yes, yes, just a second. I am with the handset only. Give me a second. Hello. Now am I clear sir? Hello?
Arvind Singhania
Yeah, go-ahead.
Operator
Yeah, you are clear now.
Saket Kapoor
Yeah. I was looking at the closing work, capital work-in progress closing balance of INR85 crore, if you could just provide the breakup of the same since for this quarter, it is only in the purchase of property, plant and equipment. So if you could just provide the breakup and when — where is this money being spent?
Arvind Singhania
INR85 crores, I don’t know where — I don’t know where you got this number from.
Saket Kapoor
Yes, yeah, I’m giving you the number, sir. This is in the consolidated statement of account for the balance sheet. The capital work in sorry, sir. I’m wrong. That’s a closing bar no.
Arvind Singhania
We have placed an order for an extruder to be installed in Hyderabad for recycling of the PET for which advance has been given if you look at the consolidated balance sheet, it’s similar.
Saket Kapoor
Yeah. It is INR85 crore.
Arvind Singhania
So there are advances for extruders. And then there are certain capital work-in progress related to modifications in our existing Khatima plant. So there is a CP continuous polymeration plant revamping. There is an offline quarter for which advance has been given, which is we have three coater, there is advance given for fourth-coater for producing value-added films. So it is not for expansion of existing capacity, it’s for downstream value-added products. And to take advantage of the plastic waste management rule which will kick-in from 1st April 25.
Saket Kapoor
Correct sir. So when are we going to capitalize these and the benefit will start accure?
Arvind Singhania
Most likely by June of ’25.
Saket Kapoor
June ’25. And sir, you mentioned that for this.
Arvind Singhania
These are imported machines, there are machines which are under-construction, so it will take about that much time.
Saket Kapoor
Okay. So these are — this will be — this will add to our margins going ahead. This is what.
Arvind Singhania
We have always maintained that we are going to focus on building up or increasing the volume of VAS products. So these value actions are to achieve that objective.
Saket Kapoor
Okay. What was our sales mix sir in this for the first-half in terms of the value-added? It’s a unit-wise.
Arvind Singhania
On a consolidated basis we have done 29% of our volume has been in value added and especially products, 29% of consolidated basis. On a standalone basis 33%.
Saket Kapoor
Correct, sir. And with the implementation of these modifications, what are we eyeing in terms of the contribution to rise to?
Arvind Singhania
40% to 45%.
Saket Kapoor
Come again, sir?
Arvind Singhania
40% to 45%.
Saket Kapoor
40% to 45%. And this will be apparent for the next financial year itself.
Arvind Singhania
No, the extruder will start up sometime in July, June July. So, I think we will miss one quarter next year and then we will also see how the ramp up happens for the demand for film with recycled content. But we expect we will have a substantial number next year itself.
Saket Kapoor
Okay. Sir, when — when we look at.
Operator
Thank you very much. Saket, sorry to interrupt you. Can I request you to come back for a follow-up question?
Saket Kapoor
Yes, sir.
Operator
Thank you. Next question is from the line of Ritu Kumari from Emkay Investment Managers. Please go-ahead.
Ritu Kumari
Hello.
Arvind Singhania
Yes.
Ritu Kumari
Yeah. Hi, good afternoon.
Arvind Singhania
Good afternoon.
Ritu Kumari
So I have two questions. The first one is what are the new products in specialty polymer, which you believe could do well? And the second one is, where do you see the business, the specialty polymer business in the next three years, both in terms of revenue and margins?
Arvind Singhania
Yes, okay. So I’ll give you an answer to that. As far as our existing specialty polymer business is concerned, we expect it to grow by about 25% to 30% year-on-year. And some new products are in the — are in the pipeline, which are — some of which are under trial and qualifications with customers. One or two qualifications have already been achieved. I will refrain from talking about the exact product right now because of confidentiality, but that’s the kind of business growth we expect from specialty polymers over the next few years. Apart from that, once the Loop project is commissioned, we will get to — we will be doing tolling for the Loop project to the extent of about 50,000 tons per year which will — which will give Ester major boost in the specialty polymer business.
Pradeep Kumar Rustagi
Conversion of certain material into polymers on a job work basis.
Ritu Kumari
Okay, that’s quite helpful. Thank you. Yeah. Thank you so much.
Arvind Singhania
That will be substantial volume of 50,000 tons starting around June or July of 27.
Ritu Kumari
June, July. Okay, yeah, that’s helpful.
Operator
Thank you. Next question is from the line of, Surendra B, an individual investor. Please go-ahead.
Surendra B
Hello.
Arvind Singhania
Hello.
Surendra B
Hello, I am hearing[Phonetic].
Arvind Singhania
Yeah, I can hear you. Please go-ahead.
Surendra B
Good afternoon. Congratulations for very good results. Congratulations to Mr. Singhania especially. Sir, my question is that regarding in the standalone balance sheet, the top-line, and in consolidated top-line, the difference is not reflecting about sales of Ester Filmtech that is INR99 crores. Can you just elaborate that point?
Arvind Singhania
In consolidation there is a certain amount of sales made by Ester Industries of polyester chips to Ester Filmtech. So, when you consolidate the accounts of two companies, the inter company transactions are eliminated. So, these sales made by Ester Industries to Ester Filmtech was about INR75 crore which has been eliminated.
Surendra B
Okay, sir. Sir, number-one — another point is that, sir, have you any identified location for our JV project?
Arvind Singhania
Yes, in Gujarat. It will be in Gujarat.
Surendra B
In Gujarat. And sir, what I’m saying that regarding this specialty polymer business, because now in the presentation, you are showing only two items, that is PBT and one more the MB03. Is there any more items that is under our sales team?
Arvind Singhania
We have only mentioned two because these two are the biggest. There are many other products which are smaller volumes, so we haven’t because if I start mentioning all the products it doesn’t make any sense. We just mentioned two of our major products. Apart from that we have five or six other products which are being sold but in smaller volume. And there are two or three other products which are under qualification right now which are new products.
Surendra B
Okay. And sir, all the best for your new JV. Thank you very much.
Arvind Singhania
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Aditya Vora from Share India Securities. Please go-ahead.
Aditya Vora
Good afternoon, Arvind ji. Congrats on a great set of numbers.
Operator
Aditya, sorry you’re not very clear.
Aditya Vora
Can you hear me now, sir?
Arvind Singhania
Yeah, I can hear you.
Aditya Vora
Good afternoon, Arvind ji. Thanks. Great set of numbers. Sir, I have two questions. One is we export the specialty polymer business. I think majority of it is exported. So are we facing any issues in terms of logistics costs going up or the logistical delays?
Arvind Singhania
It was, if the logistics cost had gone up. But our specialty polymer is done on FOB basis, so it really doesn’t matter. Everything is a pass through. The freight rate go up and it gets passed through. If they come down it gets to them. So, we supply on FOB basis.
Aditya Vora
Right, right. And sir, Secondly, I was looking at your margins. Your commodity margins, the polyester margin are at 8% in this quarter. I mean logically how do we see that over the next two-three quarters? I mean you mentioned that you are at INR45 per kg in terms of gross spread. But because in Covid we did up to 20%-22% EBITDA margin. I understand that is not going to come back. But how do we see margin ramping up going ahead?
Arvind Singhania
No, so like you rightly said and I’ve said it before the margin we saw during COVID period we don’t expect them to come back, at least not in the near future or the medium-term future. And I think the margins we have today of INR45-INR48 are in any case very healthy margins. And for the moment we don’t expect these margins to improve any further. The margins are expected to remain at the same level. Only thing that will happen is that capacity utilization will keep improving between now and the next, relatively quarter-on-quarter.
Pradeep Kumar Rustagi
And that will result into an improved margin.
Arvind Singhania
And that will result into improved profitability.
Aditya Vora
So basically, the polyester business operating leverage will play an important role and the margin expansion could come from your specialty polymer business, right?
Arvind Singhania
Yes. Please understand, these are two separate businesses Aditya. So, the specialty polymer business will keep growing in volume and polyester film business will also keep growing on volume because the capacity utilization will keep improving but the margin per kilo is not expected to improve in polyester film business.
Aditya Vora
Okay, sir. That was helpful.
Arvind Singhania
Yeah.
Operator
Thank you. Next question is from the line of Yash Dedhia from Maximal Capital. Please go-ahead.
Yash Dedhia
Hello. Good afternoon, sir. Thank you for the opportunity. Sir, I just joined the call a little late.
Arvind Singhania
I can’t hear you. You’re breaking up. I can’t hear you. You are breaking up.
Yash Dedhia
Hello. Hello. Am I audible now?
Arvind Singhania
Yeah.
Yash Dedhia
Yeah. Good afternoon, sir. Thanks for the opportunity. I joined in a little late.
Operator
Yash, sorry to interrupt you. Can you please speak through the handset?
Yash Dedhia
Is it now audible?
Operator
Slightly better.
Arvind Singhania
You are echoing a little bit.
Yash Dedhia
Hello. Hello, is it now better?
Arvind Singhania
Yeah, better now go-ahead.
Yash Dedhia
Yeah, yeah. Sir, good afternoon, sir. I joined a little late, so my question could be repetitive. Sir, I just wanted to know an industry-wide update on the polyester business. So any capacity which is going to come in near-to-medium term?
Pradeep Kumar Rustagi
No, I mean we have one line which is already started up a month, two months ago. And apart from that the next line is expected to start up only in early ’26. And by that time the demand is going to grow substantially. With the current demand growth, we will need two new lines every year ’26 onwards. Otherwise, there will be a shortage.
Yash Dedhia
And so in industry, you are saying that the new line which is going to come is now going to come in FY26.
Pradeep Kumar Rustagi
Yeah, late ’25 or early ’26, I’m not sure, but somewhere there.
Yash Dedhia
And is it substantial?
Arvind Singhania
Sorry.
Yash Dedhia
Is it substantial?
Arvind Singhania
Sorry, I can’t understand.
Yash Dedhia
Is it the new line which is going to come? Is it huge?
Arvind Singhania
No, no, no, same size. All the lines are same size, 44,000 tons per annum capacity.
Yash Dedhia
Okay. So this line you are talking about for us or for the industry.
Arvind Singhania
I’m sorry, your question is not — I am not understanding your question.
Yash Dedhia
Hello, this line you are talking about, is it for us or for the industry?
Arvind Singhania
It’s not for us. It’s somebody else who is putting it up. We are not expanding anymore in our capacity.
Yash Dedhia
Understood. Understood. And then I’m not able to comprehend why we don’t foresee any rise in margin when the consumption is going to go and the new capacity is not going to come.
Arvind Singhania
Excess demand, there is still excess supply over demand.
Yash Dedhia
Understood. Understood. But then that gap between demand and supply is also narrowing down.
Arvind Singhania
It is narrowing, it is not finished.
Yash Dedhia
Correct. So margin which were there six months ago and margins which are there now have improved.
Arvind Singhania
Sorry, I can’t understand your question. What is your question? I am really not able to comprehend your question.
Yash Dedhia
So margins which were there six months ago and margins which are there right now have improved.
Arvind Singhania
Yes.
Yash Dedhia
Yeah. That has been the case even when the supply was more than the demand.
Arvind Singhania
What is the question? Again, I’m not able to understand your question.
Yash Dedhia
I’m just not able to comprehend why the margins would stay where they are and only the capacity utilization will improve. I mean, the capacity utilization was never the constraint six months ago as well.
Arvind Singhania
That’s why I’ll explain it is our projection that they will remain stable. Actually, if they go up, we don’t know. But as of now, we expect it to remain stable.
Yash Dedhia
Okay. And sir, in our specialty, this mix of specialty products in the polyester business. So how do we see it improving?
Arvind Singhania
See, Pradeep just mentioned a short while ago, I don’t know if you were there on the line. Right now, we are doing about 30% value-added products, which by I think by March of ’26, we should be at about 40%, 45%.
Yash Dedhia
Okay. And the margin for this business is sustainable respective of the commodity prices?
Arvind Singhania
Yeah, largely, largely.
Yash Dedhia
And what is the delta?
Arvind Singhania
Oh, various products have different products.
Yash Dedhia
On an average for us, what would be the delta, say, for the key products?
Arvind Singhania
So I’ll give you just the proportion in the volume and the value. So like 30% of the value-added products have given us 45% of the contribution in the sales. So that gives you an idea of what kind of margins could be there in value-added and specialty products. It ranges from INR50 to INR120 also.
Yash Dedhia
Understood, sir. Understood. And sir, one last question on — I just wanted to know that there are several players in this industry and everyone is having different capacity utilization. So for example, some of our competitors are running on optimum utilization and some of our competitors are running, say, maybe on 50%, 60% as well. So going ahead, do we see an excessive ramp-up in the capacity utilization from those players and somewhere.
Arvind Singhania
I don’t know where you’re getting the capacity utilization number of individual companies. We don’t have it.
Yash Dedhia
No, no, not all the companies, but few players who are listed at least.
Arvind Singhania
I don’t know. I don’t know. I can’t predict the capacity utilization of my competitors. We can share our — there are numbers. I can’t talk about others.
Yash Dedhia
Okay. Thank you so much.
Operator
Thank you. Next question is from the line of Saket Kapoor from Kapoor & Company. Please go-ahead.
Saket Kapoor
Yes, sir. Sir, can you provide me with the net-debt number on a consol basis and also what are our current maturities?
Pradeep Kumar Rustagi
So, the term debt in Ester Industries interest bearing is about INR181 crore, Ester Filmtech it is INR350, total INR530 crore. Working capital, both the companies put together is INR197. That makes it about INR725 or INR730 crore of debt. But we have net cash of about INR74 crore in the balance sheet. So, we have net debt of INR650 crore. And the repayment obligation going forward from next year onward would be about INR35 crore in Ester Industries and about INR50 crore in Ester Filmtech. So, the repayment per year on a consolidated basis would be about INR80 crore.
Saket Kapoor
Right, sir. And for this Loop JV part, sir, what would be the ratio of investment. How much will be invested by Esther and then our partner?
Arvind Singhania
Equal — equal, it is a 50-50 joint-venture and both of us will be investing about INR250 crores each in equity.
Saket Kapoor
Okay. And when will be the first tranche of money will be made available, sir, when will be drawing that — investing our money, INR250 crore will be at one-go itself?
Arvind Singhania
No, no, no. So they will be done over a period of next as per — as per requirement, we’ll keep on investing. The first tranche of investment that we expect to make is in the second-half of November. In the second-half of November, this month, this month, this month.
Saket Kapoor
This month, okay, this month. And what would be the amount sir?
Arvind Singhania
The first investment by Ester and by Loop into the JV will be made in this month between 15th and 30th of November and we expect the first tranche of investment will between INR25 and INR30 crore each.
Saket Kapoor
Okay. Okay, sir. Thank you for all the answers, sir. And for the raw-material mix, if you could give me the trend for the MEG and the PTA prices?
Pradeep Kumar Rustagi
PTA and MEG, both are quite stable, in international terms, dollar terms, 700 is the range for PTA, 550 is the range for MEG. On a per kg basis, currently the PTA is about INR75 and MEG is about INR55.
Saket Kapoor
Correct, thank you, sir, and all the best, we hope for a consistent set of results going ahead as alluded by you.
Arvind Singhania
Thank you.
Operator
Thank you. Next question is from the line of Surendra B, an Individual Investor. Please go-ahead.
Surendra B
Hello.
Arvind Singhania
Yeah, go-ahead please.
Surendra B
[Foreign Speech] Sourcing of raw-material will be from where.
Arvind Singhania
All the raw-material is scrap [Foreign Speech]. Of all kinds — of all kinds, so it will be bottle scrap, it will be textile scrap. The whole — the whole project is based on sustainability is to be able to consume scrap and make it into virgin quality material.
Surendra B
Will that amount of [Foreign Speech] available right now?
Arvind Singhania
Yes, yes, yes, we’ve done our — we’ve done our survey already and there is plenty of material available.
Surendra B
So sir, [Foreign Speech].
Arvind Singhania
We are shifting the specialty polymer from Khatima, we are going to be shifting it right next to the joint venture because we are going to be tolling and doing job work of such a huge volume 50,000 tons per year. It doesn’t make sense to transport 50,000 tons from Gujarat to the north and bringing it all the way back when everything has to be exported. So, it is cheaper for us to shift the entire operations on Khatima and located right next to the JV company. Only specialty operations polymer operations.
Surendra B
[Foreign Speech]. So is it viable?
Arvind Singhania
[Foreign Speech] please understand [Foreign Speech].
Surendra B
[Foreign Speech] because I’m saying raw-material. So heavy finished product you are transferring from Khatima to.
Arvind Singhania
[Foreign Speech] because we have capacity available and marginal cost input is viable. And a major portion of the chips that we need at Hyderabad are purchased from Gujarat-based suppliers.
Surendra B
Okay. Thank you, sir.
Arvind Singhania
[Foreign Speech]
Surendra B
But the [Foreign Speech]
Arvind Singhania
[Foreign Speech].
Surendra B
Okay, sir. Thank you, sir.
Operator
Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments.
Arvind Singhania
Thank you very much for joining us for the investors call for Q2 FY25 and we look-forward to seeing you for the next Q3 call in January. Thank you.
Pradeep Kumar Rustagi
Thank you.
Operator
[Operator Closing Remarks]