Filatex India Limited (NSE: FILATEX) Q4 2025 Earnings Call dated Apr. 25, 2025
Corporate Participants:
Madhu Sudhan Bhageria — Chairman and Managing Director
Analysts:
Tanish Bansal — Analyst
Deepak Poddar — Analyst
Swayam Ranabhat — Analyst
Basant Pandey — Analyst
Aditya — Analyst
Reet Jain — Analyst
Madhur Rathi — Analyst
Ritika Dua — Analyst
Sasha Porwal — Analyst
Charvin — Analyst
Raj — Analyst
Niraj — Analyst
Rishi Solanki — Analyst
Darshika — Analyst
Nilesh Patil — Analyst
Pratik Vora — Analyst
Amit Vora — Analyst
Sumant Kumar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 and FY ’25 Earnings Conference Call hosted by India Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star and zero on your touchstone phone. I now hand the conference over to Mr Tanish Bansal from Share India Securities. Thank you, and over to you, sir.
Tanish Bansal — Analyst
Thank you. Thank you. Good afternoon, everyone. On behalf of Share India Securities, I would like to welcome all the participants for the Q4 and FY ’25 earnings conference call of India Limited. We are pleased to have with us the management team represented by Mr Madhu Sudan, Chairman and MV; Mr Ashok, Visionary Officer; Mr Nitin Agarwal, Chief Financial Officer; and Mr, Vice-President of Corporate Strategy. We will now have opening remarks from Mr Madhu Sudan to give an overview on the company’s performance. This will be followed by the question-and-answer. Thank you, and over to you, Madhuji.
Madhu Sudhan Bhageria — Chairman and Managing Director
Thank you. Good afternoon. A warm welcome to all attendees for this FY ’25 conference call. Joining me today are Mr Johan, Mr Nitin Agarwal and Mr. I trust you have reviewed the investor presentations, which have been uploaded on both our website and the stock exchanges. Let me begin with a quick recap of our key performance indicators. On a quarter-on-quarter basis, operating profits remain nearly unchanged despite a slight decline in sales volume, indicating a marginal improvement in EBITDA margin. On overall basis, FY ’25 was another important year for as the company continued to make steady progress across key metrics. With a focused strategy to enhance profitability compared to the previous year. For the full-year FY ’25, the revenue was INR4,252 crores as against INR4,286 crores in FY ’24. The sales quantity stood at INR390,000, a slight drop from INR4 lakh 1,000. Our EBITDA grew by 7.6%, 7.76 to INR257.71 crores, up from 239.16. PAT rose 21.6%, reaching INR134.6 crores, up from INR110.7 crores. In domestic market, competition remains intense and we anticipate gradual improvement. However, the export market for textile yarns continue to face pressure due to lower Chinese prices. Higher raw-material cost makes us uncompetitive in export market. In fact, raw-material prices price disparity is so high that suppliers from China find ways and means to dump yarn fabrics at low prices thereby causing pressures on margins in the domestic industry. To address this, the government has imposed a minimum import price across most for fabric imports. Indian government must urgently ensure that MMF raw-material prices are competitive enough to capture some of the China’s share in the US market. US tariff announcement has caused strong waves of uncertainty across many sectors and textile in one wherein there could be a gain. At operational level, our capacity utilization is above 95%. We are continuously looking at ways and means to reduce our energy consumption as well as the cost. We have tied-up with torrent for a capacity of approximately 20 megawatt renewable energy at a landed cost of 4.75 per unit. Energy is our second-biggest cost, first being raw materials. This power supply agreement will be effective from January 2026. Upon getting this energy, our green energy can end will be around 20 megawatt out of our total requirement of 36 megawatts. As this energy will be a cost lower than grid power cost, this will reduce our energy payouts by around INR19 crores to INR20 crores annually. We will also operate a 30 megawatt captive power plant with 20 megawatt been sourced from renewables, the utilization of our turbine capacity is expected to decline. To optimize the use of our boiler and turbine infrastructure, we are proposing a new model, generating approximately 15 megawatt of electricity and extracting steam from the turbine for plants for external sale this extracted steam can be supplied to several small companies in the surrounding area. The unique advantage of this scheme lies in its exceptionally unique advantage of this exceptionally low-power generation cost. Additionally, the recipient companies benefit by purchasing steam at a price lower than their cost of cell generation. We have received strong interest and preliminary acceptance from nearby industries, many of whom are ready to sign MOUs. To implement this system, an investment of around INR85 crores to INR90 crores is required for the steam pipeline and infrastructure inside the plant. Our projects and projected annual savings from this initiative are estimated to be around INR60 crores annually. We plan to add additional yarn capacities at plant, POI capacity of 19,800 metric tons per annum, DTY capacity of 14,400 metric ton per annum. Capacity has been doubled from what was initially planned. FDI capacity addition will be now 28,800 metric tons per annum instead of 14,400 crores. FDY market is gaining ground in domestic market. The capacity addition ensizes a capital expenditure of around INR235 crores. This additional capacity will be operational by August 2026 and will give it EBITDA additional EBITDA of around INR70 crores annually. Despite short-term challenges, the long-term outlook remains constructive, supported by strong fundamentals, proactive government policies Collective such as addressing the inverted duty structure of GST on polyester imports will provide further impetus to the domestic industry. On the raw-material supply-side, around 2.4 million tonnes of PK capacity will be commissioned by calendar year 2025. These plants have been set-up by Indian Oil and the other one in. This will reduce dependence on imports which have uncertainties like shipping schedule, exchange rate fluctuations. Also, Reliance Industries is putting up a 3.2 million tonne capacity plant for PTA, which is likely to be commissioned by mid of 2027. All these sectors are encouraging and will restore confidence in the future of pet fibers and filaments and boost domestic production. The global textile industry is undergoing a major transformation. It has been identified as one of the world’s major polluters with environmental degradation affecting reverse groundwater, air, soil, biodiversity and marine life, the industry is now transitioning from suggestive measures to regulatory enforcement. Environmental and social accountability is no longer optional but a prerequisite for global competitiveness. Consumers are increasingly demanding products made with environmental and ethical integrity they expect fabric died with responsibility exam stitch with sustainability and products backed by traceability. We firmly believe this is the time for textile transformation. Our in-house research is going on. We are actively pursuing effective steps to set-up our first textile to textile recycling plant, which can utilize polyester waste in all forms. We have developed and pretented a molecule regeneration process for polyester Textile recycling plant. Globally many companies are developing technologies to enable commercially viable recycling and we believe that although the path to sustainability in test is challenging, it is undeniably the future. To mitigate environmental impact, adopting a circular economy model is imperative. This model addresses global challenges such as climate changes, biodiversity, loss and waste. For us, sustainability is not merely a compliance requirement, it is a foundation for future growth. It is a survival mantra for people, businesses and the planet. Aligned with the vision we have been conducted R&D and textile to textile recycling, enabling and financial recycling. Our pilot plant is already operational, processing various pre-consumer textile wastes such as garment and home. We wish to inform that we have started execution of our a proposed recycling 26,250 tonnes per annum capacity plant. We are setting up this plant near our existing facility. This location has easy access to waste and raw-material, raw-material supply as well as good infrastructure. Project engineering consultants have been appointed, building construction has started and equipment ordering are being finalized. We expect to be in-production by July 2026.
Tanish Bansal — Analyst
Thank you. Yes, sir, should we begin the Q&A session?
Madhu Sudhan Bhageria — Chairman and Managing Director
Yeah.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. All participants are requested to use handset 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 Deepak Puddar from Sapphire Capital. Please go-ahead.
Deepak Poddar
Yeah, am I audible, sir.
Operator
Yes, you are.
Deepak Poddar
Okay. Thank you very much, sir for this opportunity. Sir, just first up wanted to understand, I mean, we have said in the past as well in terms of EBITDA margins we would like to see double-digit EBITDA margin. So by when we are targeting to reach double-digit EBITDA margins?
Madhu Sudhan Bhageria
I think maybe in the second-half of this financial year.
Deepak Poddar
Okay. And when we say double-digit EBITDA margin, we exclude other income, we are including — it’s including other income.
Madhu Sudhan Bhageria
No, we exclude other income.
Deepak Poddar
Exclude. So by second-half and what would be the trigger point to, I mean, because currently I think our EBITDA margin is close to 6% to 7%, right? So the 3%, 3.5% gap
Madhu Sudhan Bhageria
Only second-half is better because of winter, the demand of fabric is higher. First-quarter, there are lot of shortage of labor and there is a lot of pressure. And also in the 4th-quarter, I think one or one ETA plant will also start locally. So that will also give some savings in the form of raw-material cost. Okay. And gradually the demand is increasing, no major capacity is coming in. Only one plant of, which is expected to start somewhere in July is coming in the north. That there is no increase in the capacity, okay. All that will lead to some increase in the margin. Already we are seeing some triple happening from this month.
Deepak Poddar
Okay. Okay, understood. So by second-half, you’re expecting this 6.6% margins to go up to 10% at least, I mean by second-half. Okay. And I mean, when did government introduce this minimum support price to protect industry from
Madhu Sudhan Bhageria
Budget also they did it and recently also one-for-four HS code, they have done it three days back, I think two more, three days back.
Deepak Poddar
Okay. And
Madhu Sudhan Bhageria
For nine HS code and four more they have done it three days back.
Deepak Poddar
I understand. And in your opening remarks, you did mention that demand in domestic market remain challenging as well as export market prices also remain challenging, right? So how do we see that going-forward? I mean, is demand improving, there is a gradual improvement you are seeing in the domestic market demand?
Madhu Sudhan Bhageria
Yeah, there is a gradual improvement on. There is a gradual improvement in that.
Deepak Poddar
And what about the export market? How do you see that?
Madhu Sudhan Bhageria
But the imports of fabrics have reduced drastically, which was being met by imports. Now the local producers are producing more fabrics from second demand. So the yarn demand has also increased.
Deepak Poddar
That has seen a gradually improve. And what about the export market?
Madhu Sudhan Bhageria
Yarn export is a challenge because China, you can’t compete with them. We are doing very small volume, but not big.
Deepak Poddar
So how much? I mean 5% of revenue mix?
Madhu Sudhan Bhageria
We are very cheap in their country, almost more than 10% cheap project. So it’s very difficult to compete.
Deepak Poddar
And so what would be our revenue mix? I mean, 4%, 5%? Expect export?
Madhu Sudhan Bhageria
1% or 2%.
Deepak Poddar
1% to 2%, understood. Fair enough. And regarding your recycling plant that you mentioned, we are expecting it to start by July 2026. I mean, more than a year from now, now, right? I mean that’s what
Madhu Sudhan Bhageria
We just started construction and ordering, it takes time.
Deepak Poddar
Correct. So that will be margin-accretive for us, right, because that particular plant would have bigger —
Madhu Sudhan Bhageria
Yeah, the margins there are good, although the sizes are not that big, but the margins are good. So once this plant is operational and is good, then we will multiply these kind of plants.
Deepak Poddar
Okay. Okay, okay. And but what is the revenue potential? I mean that INR300 crores at, 35%, 40% margin
Madhu Sudhan Bhageria
Around INR300 crores.
Deepak Poddar
Okay. And just my final query, I mean, because you mentioned that our capacity utilization is already running at 95%. So what would be the growth that we might be looking at because that — I mean,
Madhu Sudhan Bhageria
That’s what I said, we are expanding some capacity, which will be operational by August ’26 in the process of ordering those machines. So then it will increase by another 12% 13% capacity.
Deepak Poddar
Fair enough. 12%, 13%. So ideally that means that is coming in August ’26. So ideally FY ’26, we might see muted growth, right? This year.
Madhu Sudhan Bhageria
It will be similar point.
Deepak Poddar
A similar so similar, I mean, and
Madhu Sudhan Bhageria
FY ’25, FY ’26 will be similar one.
Deepak Poddar
FY ’26. And in terms of ASP, I mean you expect ASP to be similar as compared to FY ’25 as well?
Madhu Sudhan Bhageria
What is ASP?
Deepak Poddar
What is realization, realization.
Madhu Sudhan Bhageria
Yes. Realization see top-line depends on the raw-material prices. The raw-material prices are lower, then the top-line reduces a little, but the margins will remain what I have indicated.
Deepak Poddar
Understood. Fair enough. Okay. Okay. That would be from my side. All the way back to you. Thank you so much.
Operator
Thank you. Thank. The next question is from the line of Swam Ranabat from Pinpoint X Capital. Please go ahead.
Swayam Ranabhat
Yeah. So my question is about like I wanted to know the effect of minimum import prices, like are we witnessing any positive impact on-ground regarding this for domestic player? And if, yes, can you please explain it in more detail to understand — understand how things are really playing out.
Madhu Sudhan Bhageria
There was import of lot of knitted fabric from China at very low prices which are below the cost prices. So there the government has put $3.5 as the minimum price. So after that, there is a good demand in the kitted fabrics in India and that’s why the demand for yarn is going up.
Swayam Ranabhat
Okay, got it. That’s it from my side.
Operator
Thank you. The next question is from the line of Vansat Pande, an Individual Investor. Please go-ahead.
Basant Pandey
Good afternoon, sir. Hello. Hello.
Madhu Sudhan Bhageria
Yeah, good afternoon.
Basant Pandey
Yeah. Sir, with all these expansion programs going on, where do you see our EBITDA margin — EBITDA in real term in FY ’27, sir? Yes, the, the absolute number I see
Madhu Sudhan Bhageria
An absolute number by as an absolute number. You want our percentage?
Basant Pandey
No, sir. I would prefer an absolute number.
Madhu Sudhan Bhageria
Absolute number we expect in the full-year to be more than 30% more than the last
Basant Pandey
FY ’27, sir, I’m talking about. Yeah. Should we expect about INR450 crores or so,
Madhu Sudhan Bhageria
20% more than FY ’26.
Basant Pandey
Okay. And what would be FY ’26 approximately in your opinion? Hello,
Madhu Sudhan Bhageria
You know the FY ’25 number, you can add 30% and you get the number while you ask me to
Basant Pandey
Okay. Okay, sir. So FY ’26 will be 30% more than FY ’25
Madhu Sudhan Bhageria
Yeah, that’s what.
Basant Pandey
And FY ’27 will be again 30% more.
Madhu Sudhan Bhageria
Yeah, because they’ll be adding more capacity and then the markets would be very good.
Basant Pandey
Thank you very much
Madhu Sudhan Bhageria
Because we’ll get additional capacity, we’ll get savings on the power oil.
Basant Pandey
Exactly.
Madhu Sudhan Bhageria
It could be much more than 30%.
Basant Pandey
Thank you so much, sir. And another question, sir, the INR68 crores of traded goods, we’ve never traded goods in such a huge number earlier. So any reason for that,
Madhu Sudhan Bhageria
Basically gas, which we had to take and sell from RFC.
Basant Pandey
Okay. Thank you so much. Hello.
Operator
Thank you. The next question is from the line of Aditya from Securities Investment Management. Please go-ahead.
Aditya
Hi, sir. Thanks for the opportunity. Sir, I am not getting new to the industry. So pardon me if my questions are a little basic. Sir, this synthetic lung industry, sir, if you could just help us understand what are the demand and supply dynamics in domestic market. So what would be the demand in metric tons and what would be the current supply and how much of it is catered by domestic players versus imports? If you could just give some understanding on that?
Madhu Sudhan Bhageria
More or less it is balanced, the total production of polyester filament yarn is something upward of 4.5 million tonnes annually. And so is the demand. There is some imports of yarn and there are some exports also, so they balance out.
Aditya
So imports would be of how much?
Madhu Sudhan Bhageria
The exports would be roughly around 400,000 to 500,000 tonnes and similarly imports are also close to these numbers.
Aditya
Understood. And now sir, if I have to understand export dynamics, maybe China will be
Madhu Sudhan Bhageria
Because imports are slightly lower. I mean, if this is 400, INR500, that would be like 250 300, something like that.
Aditya
Understood. Understood, sir. And sir, to understand the export markets. I believe China would be the largest player. So now with US imposing tariffs on China, now is the cost between Indian players and Chinese players has reduced as we can get advantaged because of these going-forward?
Madhu Sudhan Bhageria
US doesn’t import yarn that much, so it doesn’t affect so much. US is importing finished garments mostly on the side exports from China are to the country where fabric is being made like Brazil, Egypt, Turkey, Bangladesh, Vietnam. These are some of the major companies in Pakistan.
Aditya
Understood. And now if you understand
Madhu Sudhan Bhageria
There is a tariff on the yarn side so much.
Aditya
Okay. Got it, sir. Understood, sir. Sir, if I could understand the cost differences between us and the Chinese players, what would be the approximate cost difference — difference advantage that they would have over an Indian player like us.
Madhu Sudhan Bhageria
So they have their raw-material cost our product is today around $1, $1.10 spot price and they have an advantage of $0.10 in the raw-material, so 10% on the finished part, they have the advantage.
Aditya
Understood. And that is purely because CTA is imported in India, which they have a local source of
Madhu Sudhan Bhageria
Mainly because of PTA, which is short supply in India and they have abundance of PTA rather they export a lot of PTA. So they are costing we have to pay a price, which includes transfer to the port, freight, clearance charges, everything. All that comes to around $100. So that is what we over and over what the local in China gets the.
Aditya
Got it. And now, sir, if I have to understand, you mentioned that there is some sustainability initiatives going on around the world. So now if I have to understand the — how do we color our fabrics or is it using conversion methods using dyes or we use a bearing method?
Madhu Sudhan Bhageria
We make yarns only. We don’t make fabrics. So we make doped. But people who make fabrics, both they use doped idea and they color the fabrics also, they used yarn also everything.
Aditya
Got it. Got it, sir. Sir, thank you, sir for answering your questions.
Madhu Sudhan Bhageria
Thank you.
Operator
Thank you. The next question is from the line of Jain from First Water. Please go-ahead.
Reet Jain
Yeah, good afternoon, sir. My question is regarding the recycling plant. So how are we going to source the waste material for the recycling plant? Is it sufficiently available or we need to set-up the collection
Madhu Sudhan Bhageria
Actually available around Surat and area where people use polyester yarn to make fabrics and process houses. So they sufficiently available there.
Reet Jain
Okay, but that is for the one plant. But when we expand more, what are the
Madhu Sudhan Bhageria
Also develop the technology where we can use the used fabric. So then there’ll be no problem of availability.
Reet Jain
Okay. So going-forward, you see no
Madhu Sudhan Bhageria
Problem in just sorting of the fabric. So we will develop that technology to sort out the fabric. We can use fabrics which have cotton or in there with polyester which we cannot use fabrics which have nylon or spend axe. 1%, 2% is okay but nothing more than that. But these three constitutes more than 95% of these fabrics. So there should not be any challenge in getting the raw-material for the future plants.
Reet Jain
Got it. And are we in talk with any of the clients for the recycling material to be supplied?
Madhu Sudhan Bhageria
We are talking to some buyers directly they will not buy, but they make us like a nominated supplier to the people who are making fabrics and garments for them.
Reet Jain
Got it and one more thing there is one company called Ambercycle which had a tie-up with Zara. So how are we positioned against them? I mean is our cost of
Madhu Sudhan Bhageria
Not come out with a commercial production as of yet. They have work with some company in Taiwan, I think FMC almost I think. So once their product comes, then only I’ll be able to comment on that.
Reet Jain
Okay, okay. Got it. And one more question regarding the steam power project, it is saying that on the INR85 crores of, we are going to save INR60 crores of cost. So just wanted to understand what is the life of this project? Are we going to incur again and again or 85% just one-time cost?
Madhu Sudhan Bhageria
No, this is a one-time cost. Then there is a maintenance cost of 1.5%, 2% of the capex, that’s all And the life of these pipelines and everything will be more than 15 years.
Reet Jain
Okay, okay. Got it, sir. Yeah, thank you. That’s it from my side. Thank you guys.
Operator
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask your question. Thank you. The next question is from the line of Madhur Rathi from CounterCyclical Investments. Please go-ahead.
Madhur Rathi
Sir, thank you for the opportunity. Sir, if I just go back up the envelope calculation for your recycling projects, sir, it’s coming out to be $1.3 to $1.4 that we’ll be charging to our customers. So is there a market for a yarn that is similar polyester yarn, but at a higher-rate because it is recycled or as the technology are
Madhu Sudhan Bhageria
Being sold right now also at a higher price than the virgin, the price difference is roughly 35, 40 rupees than the virgin.
Madhur Rathi
38, 40% higher-than-normal normally on.
Madhu Sudhan Bhageria
Yeah, yeah.
Madhur Rathi
And sir, what would be the margin potential for this project currently? And as we scale — where do we see this margin going?
Madhu Sudhan Bhageria
We should we should have EBITDA of anything upward of the.
Madhur Rathi
Okay. But I’m sir, what would it — so we have highlighted that due to this minimum import price, the fabric manufacturing is growing in India. Sir, what would be the other treasure for realizations to go up or at least our margins to go up other than the cost-savings initiatives that we have done?
Madhu Sudhan Bhageria
See, one is the power saving which is when we are adding capacity. The third is the demand-side will increase. So I think margins will increase in India. So these are the main reasons that the demand of the yarn will increase. There are lot of PLI schemes of the government. Those plants will also be upgraded. So we don’t feel that the demand of the yarn will be much more than what it is today going-forward. So 34% extra demand can change the whole gain in commodities.
Madhur Rathi
Okay, got it. So do we — are we eligible for some kind of realized for our new expansion that we are doing for?
Madhu Sudhan Bhageria
Right.
Madhur Rathi
Okay. Got it. Thank you so much and all the best.
Operator
Thank you. The next question is from the line of Ritika Duva from Bandan AMC. Please go-ahead.
Ritika Dua
Yes, sir. Thank you. Just some basics. Firstly, what is our capacity today?
Madhu Sudhan Bhageria
Our capacity today is roughly around 4 lakh tons annually.
Ritika Dua
And that you are saying that would be increasing by 10% to 15% next year?
Madhu Sudhan Bhageria
And we’ll be roughly by 48 49,000.
Madhur Rathi
Okay. And a similar run-rate may be in ’27.
Madhu Sudhan Bhageria
Yeah.
Madhur Rathi
Okay. And obviously because it’s separate — so it’s the — so we are not really obviously looking out-of-the current geography that we are in. So we are just expanding in the same geography that we are in today or other state we are in today.
Madhu Sudhan Bhageria
Yeah, yeah. We are expanding in this and the new which we said, recycling which we are doing, that’s a new venture in 100 subsidiary.
Ritika Dua
Sure.
Madhu Sudhan Bhageria
That’s a new thing which we’ll be doing. And in future, once that is operational, we would like to grow in that because that will be unique to us. That’s our own technology. And that is what the world is demanding these days.
Ritika Dua
And sir, have we shared the — sorry, all of you already shared if you can just again share the number on the capex for that new facility?
Madhu Sudhan Bhageria
See, INR235 is for the yarn manufacturing and around 300 million is for the recycling.
Ritika Dua
Sure, so okay. So that’s the two numbers. And sir, generally on the —
Madhu Sudhan Bhageria
The steam 24 for green power from.
Ritika Dua
Sorry, sir, I couldn’t hear that if you could repeat?
Madhu Sudhan Bhageria
85 crores for the steam project and around INR24 crores is for the torrent power which we are taking, which will be operational from January 2023.
Ritika Dua
Okay. I think I’ll come back-in the queue, sir. Thank you. Yeah.
Operator
Thank you. The next question is from the line of Shasha Porwal, an Individual Investor. Please go-ahead.
Sasha Porwal
Hi, good afternoon, sir. My question was how has your product mix evolved over the past financial year and are you seeing any sustained advantages towards any particular category?
Madhu Sudhan Bhageria
Sorry, I couldn’t forget you properly
Sasha Porwal
So my question is, how has your product mix evolved over the past financial year? And are you seeing any sustained demand shift towards any particular category going-forward?
Madhu Sudhan Bhageria
Are you talking about the production in the demand?
Sasha Porwal
Yeah.
Madhu Sudhan Bhageria
Yeah. So production, I mentioned that we have capacity utilization above 95%, which is virtually full capacity utilized barring some technical glitches in the year. And the demand is also good because we’ve been able to solve whatever we have produced. It’s only the margins which are under pressure because the mismatch of demand and supply slightly is there. And also crude prices have been falling for last three, four months. So that also creates a pressure on the sales because prices are going down, so the customer is not buying freely. So once the crude prices like they have stabilized now, the margins have started increasing.
Sasha Porwal
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of, an Individual Investor. Please go-ahead.
Charvin
Yes, sir. Thank you for the opportunity. So my question was that do you face any challenges from the e-commerce platform with respect to margins since they all sell at a lower-margin, right?
Madhu Sudhan Bhageria
No, we have no e-commerce is not a threat to us at all. Our products are not sold or traded on e-commerce.
Charvin
Okay. Okay. Thank you so much. That’s it from me. Thank you.
Operator
Thank you. The next question is from the line of Raj from Arjav Partners. Please go-ahead.
Raj
Hello, am I audible?
Operator
Yes, sir, you are.
Raj
Sir, overall, we are doing an expansion of around INR650 crores right. So how are we going to fund it?
Madhu Sudhan Bhageria
The recycle project, we are taking a term-loan of INR200 crores, INR100 crores will be infused by equity from the parent company. And in INR235 crores, we will be taking a ECP of around INR125 crore INR26 crores. Balance will be internal accruals. And rest of the other two, it will be all under internal accruals.
Raj
All right. And sir, I just keep the point. Earlier on the call, you said you are expecting 30% jump-in EBITDA in FY ’26 and in FY ’27, am I right?
Madhu Sudhan Bhageria
No, no. 30% I said for the recycle project when it is on-stream. Otherwise for Filatex, I said first-quarter will be slightly better than what we have achieved. And second-half — second-half of this year, we should have around 10% sorry,
Raj
Second-half of this year would be
Madhu Sudhan Bhageria
In the second-half of this financial year and first-half will be slightly better than, I mean maybe 150, 200 basis-point better than last year.
Raj
All right. And sir, for the
Madhu Sudhan Bhageria
Increase in the EBITDA. If you see as an absolute number, last year we did around INR257, so 30% around over and above that, we should do year as a whole in this year.
Raj
So in FY ’26, all right, overall in FY ’26, all right. And sir, in FY ’27, you are expecting another 30% improvement in EBITDA for FY ’26, right, due to all the expansions coming on
Madhu Sudhan Bhageria
More maybe more online because we are adding capacity. We are also — we’ll be having power also all these projects which we are doing will be on-stream, so we could have much better than 30%.
Raj
Alright. I think in FY ’26 sales growth would be and in FY ’27, we will see a line
Madhu Sudhan Bhageria
. There will not be much change in the top line.
Raj
Much change in top-line in FY ’26, all right. So the change will be in FY ’27.
Madhu Sudhan Bhageria
Yeah. But FY ’23, definitely top-line will change.
Raj
All right. Okay. Thank you.
Operator
Thank you. The next question is from the line of Niraj from White Pine Investments. Please go-ahead.
Niraj
Thank you. I just wanted to know on the capex of polyester side, is it back-ended or front-end? I mean the capex is complete totally or
Madhu Sudhan Bhageria
Mostly back-ended? I mean in the later half of the year, we just do ordering and then the second-half of the time like from main capex will happen from next financial year.
Niraj
And your capacity of the debottlenecking that you said of INR200 crores, you will be adding 20% capacity on the yarn side,
Madhu Sudhan Bhageria
Around 13% capacity to 13% to INR235 crores.
Niraj
Got it. So then so the — if the margins improve because of some demand improvement, so there’s a 13% jump because of that and the remaining is because of the improvement in the industry scenario. Right, right. Sir
Madhu Sudhan Bhageria
Right.
Niraj
, but one more thing. Do you see this government reducing their import duty for polyester because that has been the biggest thon in the entire India governmenting side. So any thoughts on that
Madhu Sudhan Bhageria
Reducing polyester duty on
Niraj
Import duties and polyester and the BIF
Madhu Sudhan Bhageria
Means what
Niraj
Policest yarn for polyser yarn, Yarn or the — or the
Madhu Sudhan Bhageria
Raw materials of that 5% duty what they introduce?
Niraj
And okay. And the raw-material for that, the, does it create a create
Madhu Sudhan Bhageria
5% duty. So we are asking the government to make our duty 7.5%. So we have some prediction because there are lot of taxes which we don’t get for that road was introduced. So we say that when you recognize there are certain taxes which are not available to a local manufacturer-based imports. So there should be some safeguards.
Niraj
Right. And is there a BIS norm in the raw-material for the polyester that you manufacture?
Madhu Sudhan Bhageria
Raw-material also, finished goods also, are three finished goods. PTN image is the raw-material, they are both in the BIS then finished its POI, DTY, FTY so FTY and PYI under BI. DTY is yet to come.
Niraj
Okay. So two questions a little bit. Do you see the BIS norms being relaxed for the raw materials? And do you see that BIS norms to be implemented for DTM?
Madhu Sudhan Bhageria
So they are already implemented. There’s not a problem of norms. It is that you don’t can’t import from China because government doesn’t issue BI certificate to Chinese. Norms are not a problem.
Niraj
Okay. So it’s only the raw-material difference in the import duties is what is the issue, right?
Madhu Sudhan Bhageria
Yeah. Okay.
Niraj
Okay, great. Thank you.
Operator
The next question is from the line of Rishi Solanki from Securities. Please go-ahead
Rishi Solanki
Sir, given the high volatility in the raw-material prices, how do you mitigate that risk? Do you hedge work on long-term contracts? That would be my first question. And sir, second question is in preference with ecosyste product, are there any plans to license this technology? And how are you plan to planning to compete with global people players like Loop Industries and Reliance who also offer recycle for.
Madhu Sudhan Bhageria
Can you repeat please?
Rishi Solanki
So am I audible?
Madhu Sudhan Bhageria
Yeah, yeah.
Rishi Solanki
Okay. So my first question is, sir, the raw-material prices is very volatile. So how do you hedge that risk? That would be first?
Madhu Sudhan Bhageria
Okay. So raw-material prices, we have annual contracts with the local suppliers and the prices are changing almost every week locally. So based on the international prices. As far as international imports are concerned, the price we are charged is the average of the month of second-quarter but it evils out in the whole year.
Rishi Solanki
Okay. And with the ecosyste project, sir, are there any plans to license this technology? And how are we planning to compete with
Madhu Sudhan Bhageria
No branch is operational, then only people will be interested to license. They would like to see it first, then we will see. We are open to that.
Rishi Solanki
It is. And plans to compete with loop industries and recycle — recycled offerings.
Madhu Sudhan Bhageria
Reliance is not doing any textile to textile. Lube industry is doing, but I don’t think they are coming with any plans of putting up a big plant. It’s still in the air, I think ground reality, they have not started anything. This is what my feedback is.
Rishi Solanki
Is there any help that you are getting from the government in terms of PLI and schemes?
Madhu Sudhan Bhageria
No, nothing.
Rishi Solanki
Thank you,
Madhu Sudhan Bhageria
Please trying, but as of now
Rishi Solanki
Thank you. That would be all from my end. Thank you.
Madhu Sudhan Bhageria
Thank you.
Operator
Thank you. Thank you. The next question is from the line of from AV Fincorp. Please go-ahead.
Darshika
Hi, thank you for the opportunity. My question was regarding the new plant plant that will come in. We had earlier highlighted that our capex is specific to the total of INR300 crores. What is the amount that we’ve already spent on this
Madhu Sudhan Bhageria
Speak slowly. We can’t hear you.
Operator
Sorry, we are not able to get you what you are asking. Can you repeat?
Darshika
Hello? Yeah. So my question is around the recycling plant. No, you had earlier highlighted that our capex is expected to be to the tune of INR300 crores for this. What is the amount that we’ve already spent?
Madhu Sudhan Bhageria
So already we have spent only around INR15 crore INR16 crores. We’ve acquired land and some construction work has started and some few advances to small suppliers.
Darshika
Okay. And major capex for this is specific to be spent in this year and the next year. Would we have a split on this
Madhu Sudhan Bhageria
Capex will happen somewhere end of this financial year and early next financial year. So right now only building and advances would be there.
Darshika
Okay. So can we get total capex split for FY ’26 and FY ’27, sir?
Madhu Sudhan Bhageria
We can provide you right now. I cannot give you that number of fact.
Darshika
Okay. Thank you.
Madhu Sudhan Bhageria
The next question is from the line of Nilesh Pateil, an Individual Investor. Please go-ahead.
Nilesh Patil
Hi, sir. Good afternoon. Thanks for the opportunity. I have two questions. The first one is on margin development, margin improvement we can say. So in the PPT, we have mentioned that the import curves and tariffs are likely to be act as a good pointer for margin improvement, but I deem to it as an external factor. So I just wanted to check at the company-level, what are the triggers that you see for margin improvement?
Madhu Sudhan Bhageria
Like I said, we are working on reducing our power cost, that is one. And from time-to-time, product mix will keep on changing as per the market to improve. Margins.
Nilesh Patil
Yeah, but in the earlier discussion, we had mentioned that we are likely to touch double-digit margin in the H2 FY ’26. And at present we are about 6.5%. So bridging at 350 bps gaps, what will be the key growth and we can say that margin for the same? If you can highlight
Madhu Sudhan Bhageria
The point of demand-supply. Main thing is demand-supply.
Nilesh Patil
Okay. So you mean to say higher demand with, we can say
Madhu Sudhan Bhageria
Demand will give a reasonable profits. Right now, our profits are such that we cannot plan to put up a new capacity. Any greenfield project will not come at these margins. The margins have to go to at least 12%, 13% to justify greenfield project.
Nilesh Patil
Understood. Understood. Okay. Thank you. And the second point, sir, I see there is a sharp increase in the other income in the recent quarter. It has grown 3x into Q-o-Q and year-on-year basis.
Madhu Sudhan Bhageria
That was written back. That’s a major now.
Nilesh Patil
Sorry, sir, can you please come in?
Madhu Sudhan Bhageria
Some interest provision we had made in earlier years.
Nilesh Patil
Okay. Okay.
Madhu Sudhan Bhageria
That was written back. That was some interest and all so that we were not able to win the case and not need to pay. So that’s what we have written back that.
Nilesh Patil
Okay. Okay. Thank you. Thank you. Thanks a lot, sir. That’s it from my end. Thank you.
Operator
The next question is from the line of Rishi Solanki from Securities. Please go-ahead.
Rishi Solanki
So my question would be, do you see any strategic rationale to enter spinning technical textiles like geotextiles or B2C branded products where we can see better margins.
Madhu Sudhan Bhageria
I didn’t get you, please. Can you.
Rishi Solanki
So in the whole supply-chain, do you think we can enter into other places where the margins are better? So geotextiles?
Madhu Sudhan Bhageria
Definitely in other places right now. But right now, the margins are not-so-good to I mean want us to get into those places in new territories.
Nilesh Patil
Okay,
Madhu Sudhan Bhageria
The investment to margin ratio even in those areas is not very good. Okay. Thank you.
Operator
Thank you. The next question is from the line of Prateek Bora, an Individual Investor. Please go-ahead.
Pratik Vora
Yeah. Thank you for giving me an opportunity. Sir, for the financial year, the working capital cycle has increased. So for what is the reason for that?
Madhu Sudhan Bhageria
I think business has grown-up by one day and inventory also, you will see maybe one or two days. So it depends on the market situation in March that could make a slight difference. It’s not a very major in the cycle.
Pratik Vora
Okay. So for the second question is mine, then the net is reduced. So for the current capex, will the debt is required or not?
Madhu Sudhan Bhageria
Already explained what that will be there.
Pratik Vora
So what will be the amount of debt will be required and what will be the financial charges for that?
Madhu Sudhan Bhageria
We are taking one recycle and 126 for the additional capacity in.
Pratik Vora
Okay, okay, sir. Thank you, sir.
Operator
Thank you. Thank you. The next question is from the line of Amit Mora, an Individual Investor. Please go-ahead.
Amit Vora
Good afternoon and thanks for taking my question. Sorry if I’m sir, repeating something which has been spoken. Sir, you mentioned that ECB, you are going to borrow. Any rationale behind that you are taking ECB and not taking you know, Indian loan or India loans?
Madhu Sudhan Bhageria
ECBs are slightly cheaper than the.
Amit Vora
So you would again would incur something on the hedging side as well. So that was the reason why I was asking.
Madhu Sudhan Bhageria
So today, ECB from Euro would cost after-hedging around 80% or below interest. You can’t get below 8.8 or in India.
Amit Vora
Sir, and you mentioned about 30% growth in EBITDA for next two years. Cumulatively that comes around INR750 odd crores. So we would have enough cash flows — sorry,
Madhu Sudhan Bhageria
The numbers are not fair.
Amit Vora
So you mentioned INR250 crore pay 30% growth on EBITDA, which comes about INR330 crores. And on that another 30%, we get around INR430 crores. So cumulatively, both years together,
Madhu Sudhan Bhageria
We get about INR400 —
Amit Vora
Sorry, right?
Madhu Sudhan Bhageria
So it doesn’t come to INR700 crores in the one year. Total it will be more than INR700.
Amit Vora
Yeah, I’m saying that cumulative, exactly. So cumulative, we are going to get about INR75 crores in yes. So we should be very comfortable to repay off all this borrowings as well.
Madhu Sudhan Bhageria
Yeah. So as and when if we have these numbers achieved, we will not borrow now. This is a line we are taking. It’s not necessary to borrow.
Amit Vora
Okay. And on the pricing side, sir, how is it moving Q4 to-Q1 right now as we are already in one month of Q4, Q1 FY ’26, how is the pricing sir? How is it moving
Madhu Sudhan Bhageria
Towards the margins are good, but there was some reduction in the raw-material drastic when the crude has filled from 75 to 65. So there would be some inventory loss, but overall we should be better than Q1 of last year, much better than Q1 of last year.
Amit Vora
And even some improvement over Q4.
Madhu Sudhan Bhageria
Yeah, yeah.
Amit Vora
And sir, one more last question, sir, that you mentioned on the traded goods that were done in this quarter. If we hadn’t done that, the margins would have been certainly better. Is that correct understanding?
Madhu Sudhan Bhageria
Yeah. Credit was a very small margin. There is some commitment that we need to fulfill. That’s why we are doing it.
Amit Vora
So if we were to remove that, the EBITDA margins would have been much better. Is that the correct assumption is what I’m trying to say?
Madhu Sudhan Bhageria
Yeah, yeah.
Amit Vora
All right. Thank you, sir, and all the very best.
Madhu Sudhan Bhageria
Thanks.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one at this time. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go-ahead.
Sumant Kumar
So sir, assuming current scenario and the tariff and India — India is still a higher par in the export market in man-mate-based fiber product. I’m talking about products. So I’m sorry cotton products. So do you expect man-made-based fiber product export from India or will export — will increase in next, say, three, four years and that benefit to all the yarn manufacturers and what kind of support you want from the government and what kind of support of the ecosystem you want in terms of raw-material and others.
Madhu Sudhan Bhageria
The textile is now predominantly ruled by polyesters. In last four years, whatever growth in textile fibers has come is from polyesters. So going-forward, polyester demand has to increase and if the demand for fibers increases, it is only polystal which can provide. Cotton production is going down worldwide. There is no other fiber predominant which can take-up the space. You need at least around 4 million, 4.5 million tons of extra fiber every year. China, which is growing for last 25 years has also stopped and slowed the growth in synthetic which they were doing it. Now India being number two, although we are very small compared to them, they are like 72% and India would be around 9%. So the additional volume India can take whatever share they would like, rest will go to other countries. India PTA plants are also coming. There are two PTA plants I already mentioned, which is a bottleneck. Third, Reliance is putting up a big PTA plant. So once the PTA is available locally, the margins will drastically improve. We are paying $100 more on PTA compared to China. Even if we get $50, that becomes around INR4.5, INR5 in the margin extra. So going-forward, I feel progester will do well definitely.
Sumant Kumar
Thank you so much. Thank you. A reminder to all participants that you may press star and 1 to ask a question. As there are no further questions from the participants. I now hand the conference over to the management for closing comments. Thank you.
Madhu Sudhan Bhageria
Thank all the participants for sparing their time and joining us for our con-call and hope to get-together again after the first Q1 ’25. Thank you so much. Bye.
Operator
Thank you. On behalf of India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you