GRAVITA INDIA LTD (NSE: GRAVITA) Q1 2026 Earnings Call dated Jul. 29, 2025
Corporate Participants:
Unidentified Speaker
Yogesh Malhotra — Whole Time Director and CEO
Vijay Pareek — Executive Director
Naveen Sharma — Executive Director
Sunil Kansal — Whole Time Director & CFO
Analysts:
Unidentified Participant
Manish Mahawar — Analyst
Amit Dixit — Analyst
Amit Lahoti — Analyst
Rehan Syed — Analyst
Ankit Babel — Analyst
Sagar Shah — Analyst
Sunny Vishay — Analyst
Sumangal Nevatia — Analyst
Vikas Singh — Analyst
Alisha Mahawla — Analyst
Shweta Dikshit — Analyst
Ashish Kejriwal — Analyst
Alicia Mahavla — Analyst
Presentation:
operator
Ram.
operator
Foreign.
operator
Ladies and gentlemen, good day and welcome to Gravita India Limited 1QFY26 earnings con call. As a reminder, all participant lines will be in lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star than zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mawer. Thank you. And over to you sir.
Manish Mahawar — Analyst
Yeah, thank you.
Manish Mahawar — Analyst
On behalf of Antique Stockbroking, I would like to welcome all the participants on the 1Q FI 26 ARIN School of Gravita, India.
Manish Mahawar — Analyst
We have with us leadership team represented.
Manish Mahawar — Analyst
By Mr. Yogesh Malhotra, Full Time Director and CEO Mr. Navin Takash Sharma, Executive Director and Mr. Suheel Kansal. Hold Time Director and CFO on the call. Without any delay, I would like to hand over the call to Mr. Malhotra for opening remark post which we will open the floor for QA.
Manish Mahawar — Analyst
Thank you. Over to you.
Yogesh Malhotra — Whole Time Director and CEO
Thank you, Mr. Manish. Good afternoon everyone and welcome to our Q1FY26 earnings call. I trust you have had the chance to go through the earnings presentation and financial results that were uploaded on the stock exchanges. I’m pleased to share that Glavita has made an excellent start to the fiscal year delivering outstanding performance across our key business segments. The company reported healthy growth in revenue, EBITDA and PAC reflecting the strength of our operations and the resilience of our business model. Supported by a net debt free balance sheet. This performance underscores the momentum behind our continued progress.
Before delving into results, I will briefly discuss the strategic highlights and project updates on the capacity expansion front. Gravita is making steady progress with current capacity reaching 3.40 lakh metric ton per annum. The company is well positioned to cross the 7 lakh mark metric ton per annum marked by FY28 reflecting its long term growth vision. With a capex plan of Rs. 1500 crore extending to FY28, Garenka aims to deepen its presence in current businesses and diversify into new domains such as lithium ion, paper, rubber and steel recycling. Around 1000 crore is designated for existing business lines with the balance set aside for the next or emerging verticals aligned with our broader diversification goals.
The pilot lithium ion battery recycling unit in Mundra is advancing steadily and is expected to be operational in Q2 FY26. Delta remains firmly on track to meet its ESG targets for FY27 in line with its long term sustainability roadmap extended FY34 and FY15 embedding ESG at the heart of its strategy, Granta is cultivating responsible business practices, advancing innovation and reinforcing transparency to deliver sustained value and uplift local communities. Coming to the operational performance Government tightening of BWMR and EPR frameworks has significantly boosted the availability of domestic scrap. On the volumes front, total volumes witnessed a growth of 12% in Qi FY26 on a year.
On year basis, EBITDA per ton improved significantly across all segments. Rupees 21,790 in lead, rupees 17,140 in aluminum and 10,213 in plastics. Coming to the consolidated financial results for the quarter, Gerarda reported revenue of Rupees 1040 crores in Q1FY26 making a growth of 15% year on year. 47% of this was driven by value added products Reforming Progress toward our Vision 2029 targeting 50% contribution through January products adjusted EBITDA increased to Rs. 111.70 crores reflecting a growth of 22% year on year. The EBITDA margin remains strong at 10.74%. Profit after tax PAT rose to Rs. 93.26 crores making a significant increase of 39% year on year.
PAT margin stood firm at 8.97%. In conclusion, Gravita is advancing steadily towards its Vision 2029 underpinned by a well defined strategy to scale its core businesses and diversify into emerging sectors such as lithium ion, rubber, steel and paper recycling. The company has set forward looking goals including achieving a volume figure of over 25%, profitability growth exceeding 35% and maintaining a return on invested capital above 25%. It also aims to grow its non lab segment to contribute over 30% of total revenue derived more than 30% of its energy needs from renewable sources and reduce energy intensity by over 10%.
With a legacy spanning over three decades, 13 environmentally responsible manufacturing units and a commercial footprint in more than 70 countries, Gravita is uniquely equipped to long term value creation. Its growth is supported by a focused CAPEX program, capacity ramp up initiatives and adherence to evolving global compliance standards. This trajectory is further propelled by the company’s emphasis on operational efficiency, expansion into higher margin value added products, disciplined risk management including agent care duties, strong leadership and enduring stakeholder confidence.
operator
Sorry to interrupt sir. So your audio quality is not clear.
Yogesh Malhotra — Whole Time Director and CEO
Okay, am I audible now?
operator
No sir, still the audio quality is not Clear. Let me figure out. Okay, so can you speak something?
Yogesh Malhotra — Whole Time Director and CEO
Hello?
Yogesh Malhotra — Whole Time Director and CEO
Yes, it’s better now.
operator
Okay, so do you want me to repeat it?
Yogesh Malhotra — Whole Time Director and CEO
So again, the audio quality went.
operator
Okay.
operator
Just a moment, sir.
Yogesh Malhotra — Whole Time Director and CEO
Is the auto quality better now?
operator
Yes, sir, it is better now. Yes.
operator
Okay, so do you want me to repeat the last again or.
operator
Sir, again, the audio quality, it’s echoing.
operator
There’s a network.
operator
Yes, yes. Ladies and gentlemen, the line for the management is disconnected. Please hold while we reconnect them. Ladies and gentlemen, thank you for being on hold. The line for management is now reconnected. Thank you. And over to you, sir.
Yogesh Malhotra — Whole Time Director and CEO
In conclusion, Gravita is advancing steadily towards its Vision 2029. Underpinned by a well defined strategy to scale its core businesses and diversify into emerging sectors such as lithium ion, rubber and paper recycling. The company has set forward looking goals including achieving a volume CAGR of over 25% and profitability growth exceeding 35% and maintaining a return on invested capital above 25%. It also aims to grow its non led segment to contribute over 30% of total revenue, derive more than 30% of its energy needs from renewable sources and reduce energy intensity by over 10%. With a legacy spanning over three decades, 13 environmentally responsible manufacturing units and a commercial footprint in more than 70 countries, Gravita is uniquely equipped for long term value creation.
Its growth is supported by a focused CAPEX program, capacity ramp up initiatives and adherence to evolving global compliance standards. This trajectory is further propelled by the company’s emphasis on operational efficiency, expansion into higher margin value added products, disciplined risk management including hedging strategies, strong leadership and enduring shareholder confidence. That’s all from my end. I would now request to open the floor for questions and answers. Thank you. And over to you, Mr. Moderator.
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 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 Amit Dixit from Goldman Shacks. Please go ahead.
Amit Dixit
Good afternoon everyone and thanks for the opportunity. Congratulations for a good set of numbers. A couple of questions from my side. So if I look at the overall results, while revenue and volume growth has remained a little bit lower than the expectations, EBITDA growth has been quite good. So is it due to the our sourcing, efficiencies continuing or we have got the semi pennies from Africa and refined them and sold them in India to take advantage of the difference in the LME and NCX price. So just wanted to get a little bit more color on that.
Yogesh Malhotra
Yeah, absolutely. So the reduction in volume also is partly because we have shifted some of the material from our African plants into India. And also the EBITDA is better because of our increased value added product contributions which has grown to around 47% last quarter. So both of these have contributed to increase the EBITDA margins for us.
Amit Dixit
So given the current EBITDA pattern that we have, and you know, it has increased quarter after quarter. So the current EBITDA that we see around 21,000 odd for net, is it the sustainable margin that we can expect going ahead as well?
Yogesh Malhotra
Yes, around 19 to 20 rupees per kilogram can be expected as a sustainable margin going forward also. So earlier we were saying around 18 to 19 rupees, but now we see that there has been some because the value added content has also increased and if you can keep that contribution coming, the overall EBITDA would increase to around 19 to 20 rupees. Per kilogram.
Amit Dixit
Okay, so that’s helpful. The second question is on aluminum. So is it possible to provide an update on the listing of aluminum noi on ncx? It’s the trading, I mean, then we can expect it to be listed so that we can also hedge it.
Yogesh Malhotra
Yeah, so aluminum on NCX is already on process and it’s expected to be done in this quarter. It’s already been considered in the board of N6 and all documentation work at their end are completed. So be hopeful that they should open their first go down somewhere in the north. These are the data which we received from the MCX office.
Amit Dixit
Then in this quarter. So what kind of exit capacity utilization in aluminium we can expect by Q4?
Yogesh Malhotra
So currently if you look at our overall capacity in aluminum in India, it’s almost under 10%, 5%. So it’s actually 5% currently because we are not even using that plant. So all the volume that is coming from for aluminum are coming from our overseas locations only. So we believe that once this MCX will start setting up mechanism for ADC12, we will start securing material and then I think by Q4 you can expect around 20 to 30% utilization of the plant for India and slowly we will build it up depending on how much trading gets done on the exchanges going forward.
Amit Dixit
Great, thank you. I’ll come back in the queue. Thank them on the desk.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow up question, we would request you to rejoin the queue. The next question is from the line of Manit Lahoti from MK Global. Please go ahead.
Amit Lahoti
Thanks for the opportunity. My first question is on capacity utilization from existing operations. So we have seen that volumes have been flat for three quarters in a row. So are we not sweating our assets hard enough to get more volumes as we are just at 65% utilization?
Yogesh Malhotra
Sir, if you look at the lead capacity, lead utilization, it’s around 75% of the total which is a kind of optimal currently at optimal level currently to increase capacity further, we will have to set up new capacities. And we are in line with increasing our capacities in India specifically looking at additional raw material availability. So you will start getting some results from those capacities as we build IT up from Q3 onwards.
Amit Lahoti
Okay, so when we target 25% growth for next year in terms of volumes, how much volumes are going to come from expansion projects and how much from existing capacity ramp up if you could break it down.
Yogesh Malhotra
If you look at the current scenario, around 15 to 18% could come from existing capacities only. This was 12% as I mentioned earlier was only because we have shifted some of the material from our overseas plants into Indian plants. But if you look at the production capacities, the growth would be around 15 to 16% in the first quarter. So we expect 15 to 16% growth from the existing verticals only. And then maybe the additional 10% would come from the additional capacity that we are going to set up.
Yogesh Malhotra
Okay, and then my second question is on aluminium. So globally there is a tight scrap supply and there is also a growing call in Europe to implement export controls and tariffs on scrap because they don’t really want to export their scrap outside of Europe. And on the demand side, Chinese have put up new capacities in aluminium recycling. So in that kind of market structure, how do we differentiate in terms of scrap sourcing capabilities and margin sustainability for aluminium.
Yogesh Malhotra
So to cover that we are already focusing more on Africa where we have control on the scrap supply. And as we mentioned that the Indian capacity as of now we have kept on hibernate until we have some hedging mechanism comes in. And to ensure profitability from Africa, we are the one who got BIS approval because there’s a mandate of QCO since November 2024. So our plant got BIS approvals and we are able to feed Indian market from our African facilities. So we have focused there to cover all these. And due to this.
Amit Lahoti
Yeah, yeah, yeah. Please go on. So due to this our EBITDA margins have also grown up from 14 to 15 rupees kg to 17 rupees because there was a shortage of raw material from Europe. And we are able to get better. Margins from our African supplies of alloy to India market. And being first mover in taking dis for our African plant, we are the few suppliers who are able to bring material in India.
Yogesh Malhotra
Okay. So Africa gets its scrap from Europe. And if there is any kind of export control in Europe where they are not able to export scrap to Africa, then would it not be difficult to procure scrap in African operations as well?
Yogesh Malhotra
No, Africa is dependent only within African scrap. So we have few countries together and we bring scrap to one location because we operate five plants in Africa and there are more than 52 countries in Africa. So five, seven countries has a boundary shared with that location and we are not importing anything over there. It’s domestic scrap within the African continent.
Yogesh Malhotra
To both increase the capacities also in the existing plants and going forward setting up new plants in geographies where we are not present.
Amit Lahoti
Okay, got it. Thank you and all the best.
operator
Thank you. The next question is from the line of Rehan Syed from three Netra Asset managers. Please go ahead.
Rehan Syed
Oh yeah. Good afternoon everyone and thank you for.
Rehan Syed
Giving me the opportunity.
Rehan Syed
Sister like mine, most of the questions are already answered and I have left it. So first of all you have highlighted the target of 7 lakh million ton per man capacity by F28. So could you please update on the current execution State of the F26 plan capacity additions and how much of the capacity expected to come online this year?
Yogesh Malhotra
So we are expecting a capacity increase of around 100,000 metric ton this year which is in line with our plans to take it to around 700,000 by FY28. So some of this will start coming up in Q3 also and some will be in Q4.
Rehan Syed
Okay. Okay. And just a second question on this one. Clarification regarding the subject of presentation mentioned increased share of value added products around 47% 1. So can you share with verticals like it? Growth comes from the aluminum side or from leaves, plastic or rubber.
Yogesh Malhotra
This is a consolidated value added content from all our existing verticals. It’s not only limited to lead, it is coming from all the verticals. Plastic also, tire also. But because the volume of these tire and plastic is very less, the leg would be around 40, 45% plus.
Rehan Syed
Okay, okay. And the Last question is on the export side like on the international operations front, particularly Africa and dominant how are currency fluctuations impacting profitability and what hedging mechanisms are you placed beyond the back to back hedging? What market matters?
Yogesh Malhotra
If you just clarify regarding on this. Can you, can you repeat the question again the first part I could not get. Sure, sure.
Rehan Syed
I’m asking about the hedging part. Like on the international operations front, particularly Africa and government Republic, how are currency fluctuations affecting profitability and what hedging mechanism are in place beyond back to back hedging technicals?
Yogesh Malhotra
Currency fluctuation does not impact us because our operations are in Africa but we are not selling anything locally there. So all of our sales and purchase, all the purchase is in local currency. But the calculation of the prices of raw material is based on USD only. And whatever we are procuring, we are selling it in USD only. So there is no impact of currency fluctuation in all of our overseas operations. As far as fluctuation in metal prices is concerned, we are 100% healthy in that. So whatever we buy on any particular day we hedge it.
Either we sell it directly to the customer, to the customer or we hedge it on a, on a metal exchange. So we don’t take any, I mean risk in terms of changes in prices of metal also. So 100% global operations are 100%. But in lead in aluminum we are looking at MCX to start having a contract for ADC12 to start hedging aluminum part also.
Rehan Syed
Okay, and like last question like what is your capex bound that you have spanned in this quarter and what was the Capex plan for 26 about quarter.
Rehan Syed
To quarter it would be very difficult to tell you but we are in line to add around 100,000 metric ton capacity this year. That is in line. I mean so the overall capacity would go up to 460,000 tons by the end of this year. Roundabout and FY28 it will be around 700,000 tons.
Rehan Syed
Okay, very much, thank you. I’ll join my.
Rehan Syed
Come again.
operator
Thank you. The next question is from the line of Ankit Babil from Shubkam Ventures. Please go ahead.
Ankit Babel
Yes sir. Good afternoon. A couple of questions. One was that this quarter the volume growth was 12% which is way below your 25% volume growth guidance. So I mean what kind of growth you are looking at for the full year? Considering the first quarter performance in terms.
Yogesh Malhotra
Of volume growth, I think year on year we are expecting a. I mean so as I mentioned that the growth is not going to be linear. So the 25% growth rate that we are targeting is for a period of three years. Because CapEx, as I mentioned earlier also will not take place every quarter. So it will take some time for us to set up new capacities. So the growth will not be very linear. But you can expect somewhere in the line of 25% only year on year also. So in some cases it will be 22, 23%.
In the other year it would be around 27, 28% but it will be 25% in the next three years.
Ankit Babel
This year also at least you expect 20, 22% growth.
Yogesh Malhotra
Absolutely it will be in line. So as I mentioned earlier also some of the capacities that we are doing will start giving us results from Q3 onwards. So the overall volume increase part of it is going to happen from the existing capacity which will be in the line of 15 to 16%. And the balance 7 to 8% would come from new capacities that will be increased in the next two quarters.
Ankit Babel
Okay, so will it be possible to give you some volume guidance on your products? Mainly the lead and aluminium and plastic, what volumes you are targeting? This year.
Yogesh Malhotra
We are more concerned about the profitability part and that is why whenever there is a chance we bring some of the material from our overseas plant into India. So you will not see that impact on the volume front, but you will see it on the profitability front. If you see even this year the volume growth is only 12% but the EBITDA growth is around 22% year on year. So that is because we have sacrificed some of the volume to have higher profitability. So that will keep on happening. So on volume camps you may see that sometimes it will be 25% plus, but there would be times when you will not see 25% growth in volume.
So that is not the right criteria to focus only on volumes. You will also have to look at the EBITDA margins or the profitability also.
Ankit Babel
Okay, so the improvement that we have.
Yogesh Malhotra
Led advertise because the. Because the production volume growth will not always reflect on the sales volume growth because sometimes we bring that material into India and then it does not get reflected in the overall volume growth.
Ankit Babel
Okay, okay. And your EBITDA per turn on the aluminium was lower both on YOY and QOQ basis. So what was the reason for that and where do you expect this to stabilize.
Yogesh Malhotra
Yearly basis? We have always said that there are times when there is some arbitrage opportunities or some other price fluctuations that makes it difficult to ascertain ebitda per ton on A regular basis. But on a sustainable basis around 14 to 15 rupees. EBITDA margins are our guidance for future. And even this quarter also we’ve done more than that. It’s around 17 rupees. Per kilogram. You know because in aluminium currently there is no mechanism for hedging. So there are times when we don’t get the margins. It does not get reflected in the pnl. So if you look at last financial year it was higher but financial year prior to that it was lower than.
I mean it was around 12 rupees. Only 12 rupees per kilogram. So this is all because there is a variability in the prices of aluminum which gets reflected in the profit and loss. But if you, if you talk about on a sustainable basis around 14 to 15 rupees per kilogram is a sustainable margin in aluminum.
Ankit Babel
But how change in aluminium prices impact your ebitda? Because you hedge your.
Yogesh Malhotra
We are not hedging aluminium. As I mentioned, we are only hedging currently. Lead, aluminum is not hedge.
Ankit Babel
Okay. And coming back to the volume guidance, if you can give for this year, lead, aluminum and plastic, I mentioned that.
Yogesh Malhotra
I mean volume guidance in terms of productivity around 15 to 16% would come from existing businesses. And as and when we put up capacities there would be around 7 to 8% increase from that additional capacity that we are expecting in this year. So it will be in the range of around 20 to 28%. 22 to 28%.
Ankit Babel
Okay. Okay.
Ankit Babel
Okay. That’s it sir. Thank you so much.
operator
Thank you. The next question is from the line of Sagar Shah from Spark pwm. Please go ahead.
Sagar Shah
Thank you sir for the opportunity. And first of all congratulations for these set of numbers. I had some few questions. My first question was related to your drivers behind the increase in the lead margin this quarter. We had. We saw our lead margins actually increase. I am talking of on the bit level. So I think we have reached out 12.5% as compared to the even quarter. On quarter we have a jump of around 150bps. So what are the drivers of the lead margin? Is it because of the increase in lead prices because or is it something else or operating leverage? What is it exactly?
Yogesh Malhotra
First of all the lead prices have gone down in last quarter and it has been going down regularly for the last three to four quarters. It has not impacted the additional margin. What has happened in the past. If you look at our margin profile for the last years you can see. So you can see. Hello. Yes, there is another voice coming in.
Sagar Shah
Sorry to Interrupt, sir. So there’s a background noise. Noise from Mr. Sabar?
Yogesh Malhotra
Yes, sir. Hello. Yeah, so. So if you look at the overall margins in let, you can see a steady increase in some of the margins over the years. And part of it is because of economies of scale. As we have grown the business, the overall overhead remains almost same. So that has contributed to some extent to increase the margins overall. And the value added content has also gone up in the last quarter. The total value added products that we sold is around 47%. So that also contribute increase in margins over the years. And then market arbitrage also plays a role because we have global operations.
So sometimes when the Indian market prices are higher or the global market prices are higher, we take advantage of that and that also contribute to. Sir, to the increase in overall margins for us on a sustainable basis. Our guidance is that we can get around 19 to 20 rupees per kg of EBITDA margins on a sustainable basis.
Sagar Shah
Okay. Okay, thanks sir.
Sagar Shah
My second question was related to our plastic segment. The plastic segment, our margin has in this quarter has come down actually. So going ahead, what’s your view on this segment? Sir, basically because we saw a huge drop in the plastic margins as well as I wanted some few aspects on the rubber segment we haven’t incurred. We haven’t actually got any revenue from the rubber segment, although you have guided that going ahead you’ll be selling some other products, wireless, soil and some other products from the rubber segment outside of our to the industry. So what are the updates on that segment as well as on plastic?
Yogesh Malhotra
In the plastic segment, the EBITDA per ton is similar. It’s the same. It’s 10 rupees per kg which is a steady margin. The only thing is that the volumes have not gone up as much as we wanted it because it’s a long. Developing plastic products is going to take some time. It’s under developmental phase right now and we expect that by the end of this year you can see some growth in plastic volumes because currently some of the developments have started taking place already. As far as rubber is concerned, the Romania plant where we bought it, we’re getting a EBITDA per tonne of around 7 to 8 rupees per kg.
But it’s in the stabilizing phase right Now. Hopefully by Q3 or Q4 we’ll be able to. You will be able to start getting some results from that plant also. In addition to that, we are also putting up a plant of rubber recycling in India this year itself. So then you will start getting some results of that also coming either in Q4 this year or maybe Q1 next year.
Yogesh Malhotra
Okay, so since the EBITDA pattern is quite stable. So is it fake? Assume that the plastic, the plastic realization was low and that led to the drop in the event margins.
Sagar Shah
Sorry. Yeah, so the volumes were lower. Yes.
Yogesh Malhotra
Okay.
Sagar Shah
Okay, fine.
Sagar Shah
So my last question was related to the capex. Can you highlight that? What kind of capex is going to be getting FY26 by 10? How much are you planning in lead as above copper? And.
Yogesh Malhotra
So in current year we are planning to put up, I mean to increase the capacity to 100,000 metric ton per annum. Another. So this will be mostly in India because we see a lot of scrap availability in India. So we have kind of increased the pace of setting up plants in India. So maybe in lead mostly the capacity expansion will take place followed by rubber and lithium ion. These are the three segments we are targeting in current fiscal year. And the total capacity that we are Targeting is around 100,000 metric ton.
Sagar Shah
So can you highlight the amount, sir? The amount to be incurred in each segments. Sorry sir, do you have any follow up question? You can rejoin the queue. There are several participants in the queue.
Yogesh Malhotra
Yeah, but that was the last question actually which I was going to answer, so.
operator
But there are several participants waiting for their questions.
Sagar Shah
Okay, fine.
operator
Thank you. Thank you. The next question is from the line of Sunny Vishay from Access Securities. Please go ahead.
Sunny Vishay
Yeah, thank you. And congratulations on another set of good results. So my first question is a kind of follow up on the earlier discussion. We said our volume growth was partially lower because of value added product addition. So is my understanding correct that if you have some additional value added products, the end volume is lower than the initial volume, Is that correct?
Yogesh Malhotra
No, sir, actually what we mentioned was that our volume growth was lower because we shifted some of the material from our African plants to our Indian plants.
Sunny Vishay
But then the volume should indeed increase, right? In terms of value added. So like somewhere it should reflect.
Yogesh Malhotra
No, no. So what we do is.
Yogesh Malhotra
Sorry, the volume should somewhere reflect, right? Even if it is shifted from Africa to India.
Yogesh Malhotra
So what happens is that because the Indian market is higher generally we do partially some process in Africa and shift it to India for the, for the balance processing. Because of this you can only count it. So there is a process. Either we can sell it overseas or we can bring it to India and then do some processes in India. It’s not entirely a value added product that we make. We make normal products also. But some of the Processes we shift to India only. And that is why it does not get. It gets eliminated when you do the consolidation.
Sunny Vishay
That is what I’m asking. If it is not reflected in Africa, it will reflect in India somewhere it will reflect.
Yogesh Malhotra
But India India volume it reflects. But India volume is already at optimal capacity utilization. So that is why it does not. So it cannot. You cannot count it. So the point is that we can sell it overseas directly to valued product there. And so you do all the processing in those units there on ship it overseas or we bring it to India, process it in India and then sell it to Indian customers. So it gets eliminated. The overseas overall volume gets eliminated and it’s sold only in the India India volume.
Sunny Vishay
Okay. Okay. And that leads to better ebitda.
Yogesh Malhotra
Yes.
Sunny Vishay
We have been always guiding EBITDA per turn around 90 rupees per kilogram. But it seems we keep adding value added products. It can easily sustain about rupees 20 like it has happened in this quarter. Is that correct?
Yogesh Malhotra
Yes, definitely. But what happens is that over the years our overall Indian scrap availability is also increasing which does not give you as much margin as the imported material does. So what we expect is that it will depend on the same machinery. Because the Indian volume will increase but at the same time the valuation will also go up. So it will remain in the same band of around 19 to 20 rupees. Per kilogram.
Sunny Vishay
Okay. Okay, fine. And one small question. So our other other income which includes I think the hedging gate. Hedging incomes. So that hedging income I think would be around 11 crore this quarter. That’s a rough calculation. So if you exclude it there is still around 19 crores of other income that is net and which was a similar amount last quarter also. So this remains higher compared to earlier all of the quarters. So can you just throw some light on it and can we expect it to be around this level going forward?
Yogesh Malhotra
Yeah. So basically this 19th crore belongs to our treasury income.
Yogesh Malhotra
The money which is kept ready for future capex in the working capital till. The time we spend this money to. For expansion of our existing business and upcoming business. So then after which the this treasury income will not be there but there. Will be some operation income. So gradually we are utilizing this liquidity for extension of the business. Till the time we get we are. Getting this treasury income which is close to 19 crore in this quarter.
Sunny Vishay
Okay. So that’s why it increased after the qrp. Understood.
Sunny Vishay
Thank you.
operator
Thank you. The next question is from the line of Su Mangal Nivedya from Kotak securities please go ahead.
Sumangal Nevatia
Yeah good afternoon everyone. Thanks for the opportunity. So my first question is on capex so if you see last 2, 3 years we’ve been targeting around 200 crore annual capex but 24, 25 both we’ve spent around 100 crores only. So one is just want to understand what has been the reason Is it, I mean some visibility on growth which we are looking at or some other constraint which has led to lower capex and then on this year and next year we have a very significant jump in CAPEX being planned. So how confident are we of putting the capacities on time and if we put such significant capacity I mean what is the scrap availability situation we are looking at? Are we confident of running the plants at decent utilization?
Yogesh Malhotra
Yeah so basically capacity expansion whatever we.
Yogesh Malhotra
Planned for this year and for upcoming.
Yogesh Malhotra
Years it is 100% on.
Yogesh Malhotra
We are 100% confident of execution of that capacity expansion plan. So we as already mentioned that this year we are going to increase approximately 100,000 tons of capacity addition as the plan from current capacity of around 340,000 tons to approximately 440,000 tons so that’s. 100% online and in future also we are going to stick on the plan. Of taking it to 700,000 tonnes by. FY28.
Sumangal Nevatia
And Sunitar any reason why last two years we have spent the 100 odd crore was it a capital constraint or some other issues?
Yogesh Malhotra
So frankly speaking part of it was because most of that was going to take place in some newer diversification, newer verticals and we couldn’t go and do it because I mean we came and we started doing it now but in paper and steel which were major going to be major contributor to these CapEx we have put them in that burner because right now in the existing verticals we are seeing growth rates so we are going ahead and putting up capacities in lead, rubber, lithium ion and to some extent aluminum recycling and maybe the steel and paper and other verticals will take place in the later part of the three year period.
So earlier we were focusing on these things and it was taking more than because we had to understand the technologies also. So that is why we could not do those capexes but because now these capex that we are targeting now in the next two years are going to be in the existing verticals majorly and looking at the scrap availability in India most of this is going to take place in India So we are fairly confident that those expansions will take place now.
Sumangal Nevatia
Understood, understood. So my second question is with respect to M and A opportunity. Now we have a very comfortable balance sheet. So one is which areas are of interest to us and are there any sizeable opportunities available in those areas which we are in the process of evaluating?
Yogesh Malhotra
We are looking at opportunities in geographies like Eastern Europe, Middle East, Asia Pacific for the existing verticals. These are the areas we are looking at for opportunities for merger and acquisitions. We have set up a new division which is looking at only at opportunities for merger and acquisition. So we are fairly confident that we do some acquisition in the next maybe in year, year and a half, major reconciliation.
Yogesh Malhotra
And this will be new commodities or existing commodities.
Yogesh Malhotra
Mostly existing commodities. New commodities we would like in new commodities. We would want to set up our own plant first to understand the technology better rather than going and acquiring a new plant anywhere else.
Sumangal Nevatia
Understood?
Sumangal Nevatia
Understood. And just one last question on VWMR.
operator
So I request Mr. Sumangal to rejoin the queue for the follow up question.
Sumangal Nevatia
Okay, no problem.
Sumangal Nevatia
Thank you sir. And all the best.
operator
Thank you. Thank you. The next question is from the line of Vikas Singh from ICICI Securities. Please go ahead.
Vikas Singh
Good afternoon sir. And thank you for the opportunity. Shall I see that in our future. Growth the next highest grain segment is Nabar. We just wanted to understand what kind of the revenue and margin contribution we. Can expect from this segment.
Yogesh Malhotra
So the margin contributor. I think we’ve already mentioned that we are expecting around seven to eight rupees per kilograms from rubber. But it will change from geography to geography depending on what is the prices of the end product in that particular geography. So it will be really changed. And we are planning a revenue of around 300 to 400 crores by FY2728. Sir, this second question pertains to our sourcing basically. So given our capacities are increasing across segment is the sourcing is entire sourcing would be available especially for the lead we will be in India or because you just said that you are bringing some material from Africa.
So are we facing some problem with the sourcing and enough material is not available in the system? No. So we are focusing both Indian sourcing also and overseas sourcing also. The only thing is that earlier Indian scrap was not available to us. But now we have started getting Indian scrap also. And that is why we are increasing the total capacities in India much faster. Because now we have both overseas scrap also available to us and the Indian scrap also available to us because of EPR regulations. And this is second part of the question that are we facing near term sourcing challenges because we are importing some material from Africa and for being placed there.
No, no we are not, we are not facing any sourcing problem. The only thing is that imported material gives you better margins. So that is why we will keep importing material as far as possible but we will keep increasing the capacities as and when more Indian scrap will get available the sourcing is not going to be a problem, at least for the next two to three years.
Vikas Singh
Noted sir. Thank you and all the best.
operator
Thank you. The next question is from the line of Ashish Kejriwal from Nuama Institutional Equities. Please go ahead.
Ashish Kejriwal
Yeah, hi, thanks for the opportunity. So quickly one, is it possible for you to guide the effective tax rate for the year? Because tax rate has been increasing, quote, unquote. Yeah. So basically the effective tax rate for. The operational part is approximately 13 to 14%. But since on temporary basis we have.
Yogesh Malhotra
Some treasury income also. So till the time we use this money, treasury money for the extension of the business which is planned, we are going to have this treasury income which is attracting a full tax instead of. Some locations where we have the tax exemptions. So this treasury income is going to. Affect the tax rate. So currently with this treasury income we are expecting tax rate, effective tax rate. Of approximately 15 to 16%. But currently it is slightly higher because of some jurisdiction in Africa. We got some, the tax exemption got. Expired but we have another option to spend, do some CapEx and we, you know extend this tax.
Yogesh Malhotra
Rebate in that geography. So we are doing that and hopefully we will get the tax rate effective. Tax rate that seem at 15 to 16% at this moment with the treasury income. When the treasury income is not there, it is used in the business. The effective tax rate will come back. Again to 13 to 14%. But for this year you can assume. It will be near by 15 to 16%.
Ashish Kejriwal
That’s great sir. And secondly in terms of capacity expansion we understand that obviously you are going to expand capacity by around 100,000 tonnes in FY26 and the work is also going on the ground.
Yogesh Malhotra
But I don’t know whether we have.
Ashish Kejriwal
Started work on FY27 numbers also where we are expanding capacity. So My question is one, this 100,000 tonnes, is it possible to break into different segments? And what about FY27? Have we started the work over there? And thirdly on CapEx, how much we have already spent in first quarter because our overall CapEx guidance is around 375 crore for this year. Thank you.
Yogesh Malhotra
In terms of verticals I think it will be very difficult to shine the capacity increasing different verticals. But majority I can tell you is going to be in lead, followed by rubber and lithium ion recycling this year. And there would be some increasing capex in aluminum also. But we have also started work on FY27 and we have plans to set up a plant in East India also. That is also part of the process. And then some of the capacities that are going to come in FY27 is overseas Dominican Republic extension that we have planned. New greenfield project in Dominican Republic that we are planning.
So that is also we are expecting a license by Q4 this year for that capacity also. So we, we are in line with setting up capacity expansion for FY27 also.
Ashish Kejriwal
Answer CapEx in first quarter, how much we have spent.
Ashish Kejriwal
We spent around 60 crores in CapEx in the first quarter.
Ashish Kejriwal
Okay, great, thank you and all the rest.
operator
Thank you. The next question is from the line of Alicia Mahavla from Truth Mutual Fund. Please go ahead.
Alisha Mahawla
Hi sir, Good afternoon. Thank you for the opportunity. Is it possible to say how much is the lead capacity going to increase by after this capacity expansion that we’re talking about when in Q3, is it expected towards the end of Q3?
Yogesh Malhotra
Yeah. So some of the capacity would be happening in Q3 and Q3 part of it would happen in Q4 also. So roundabout around 50 to 60,000 tons of capacity increase you can expect in this year. Inlet.
Alisha Mahawla
And what kind of. And is it possible to Quantify next by 27 how much will our capacity expand by like if 26, how much is it in 27?
Yogesh Malhotra
Sorry, I. I didn’t.
Yogesh Malhotra
I wanted to understand that the capacity expansion how much in FY27 it would.
Yogesh Malhotra
Be around 125 to 150,000 tons overall total capacity increase.
Alisha Mahawla
Understood. And considering that most of our capacity is coming towards the back end of the year, will it still be possible for us to achieve the 20 plus kind of volume?
operator
Yes, there’s a background noise from Mr. Alicia’s line.
operator
It’s Ms. Alicia. Miss. My bad. Ms. Alicia’s line.
Alisha Mahawla
How? Sir, just wanted to understand, since most of our capacity is coming in H2 of the year, will it still be possible for us to do the 20% plus kind of volume growth in this year?
Yogesh Malhotra
Yes, but as I mentioned earlier that it may not reflect in the actual numbers because sometimes we bring some of the material from our overseas plants into India. So in the end you’ll have to look at the EBITDA numbers and that will reflect around 20% A plus growth in any case in FY26. So the total production growth would be around upwards of 20%. But whether it reflects in the revenue numbers or not, we see. But yes, the capacity will definitely impact the numbers this year.
operator
Thank you. The next question is from the line of Shweta Dixit from Systematics Group. Please go ahead.
Shweta Dikshit
Hi, good afternoon. Thank you. For the opportunity number for this year and how much was it in first quarter?
Yogesh Malhotra
So the overall CAPEX number in this year I can’t accurately tell you but We’ve spent around 60 crores already this year. The plan is to spend upwards of 350 crores this year and add additional capacity of 100,000 tons. So we are in line with adding that 100,000 metric ton capacity this year. It will be done in this year. We are very confident of doing that.
Yogesh Malhotra
Okay. And two other questions. Firstly on the rubber side, as you said that your plant in Romania is currently making seven to eight rupees per kilogram and it is ramping up of stabilizing as well. Similar thing is expected when the India plant comes on stream. So even after, you know, operational efficiencies are achieved and the capacity ramps, are we still looking at 7 to 8 rupees per kg of EBITDA per ton in rubber or can we expect this number to be higher?
Shweta Dikshit
Yeah. So yes, the ETA number would. Be in the same.
operator
Sorry, please you continue. Ask me the second question also.
Shweta Dikshit
And the second question is on lithium ion. While it is expected to be a part of major bar like following lead and rubber, this is going to be the third largest capex the drawer for the year. But since this is just a pilot project, any, any light that you can throw on the financial side whether it is expected to contribute to profitability as well or is this just something that’s going to be a CAPEX allocation but not yet to contribute to profitability from.
Yogesh Malhotra
Yes, yes, absolutely. So lithium ion project, we don’t see that it is going to contribute at least this year because there are a lot of variables that will affect this lithium ion project. It’s partially a plan for the future because we believe that actual scrap will start coming around two to three years from now. So we just want to be future ready as far as lithium ion battery recycling is concerned and technology also we need to work on to finally streamline technology for lithium ion battery recycling as well. So it will not contribute. Actually if it contributes that will be additional to what we have said so far.
As far as rubber is concerned, the margins are Going to be around 7 to 8 rupees per kg. The only thing is that when the actual. When we streamline the operations in Romania and in India the volumes will keep on increasing. And that is when it will start adding to the bottom line.
Shweta Dikshit
Understood, sir. Again a follow up on the volume side. I understand that this expect a major chunk of volume growth this year from their existing operations and around 7 to 10% from the new expansions that come on stream. But that’s happening at Q3. Q4. But when we look at a Y and y growth in FY27 since we will always. We will already be at a peak utilization level of our existing capacity. How do we see growth panning out in FY27 when we can be. When we achieve the maximum operational optimum utilization of existing capacity.
Yogesh Malhotra
As I mentioned, some of the capacity increase will start giving results in Q2 also. And some will. But major part of that will come in Q3 and some part will come in Q4 also. So overall from Q2 onwards you will start seeing some improvement in the overall volume growth. So overall 6 to 7%. When we shave, it takes into account that the capacities will start coming from Q3 onwards. Because if you look at the total capacity increase it’s around 100,000 pulses. That is around 30% increase in capacity, new capacities. So even if you start getting it partially, they will start giving you some impact.
Of the total 78%.
Shweta Dikshit
This entire 1 lakh should operate at optimum utilization.
Yogesh Malhotra
Yes. Yes.
Shweta Dikshit
Okay. Thank you.
operator
Thank you. Ladies and gentlemen. This was the last question. I now hand the conference over to the management for the closing comments. Thank you. And over to you, sir.
Yogesh Malhotra
Thank you everyone for participating in this call. We trust that we have addressed all your queries during the session. However, if there are any remaining questions, please feel free to reach out to our investor relations team. Once again we extend our gratitude to all the participants for joining us today. Thank you and have a great day.
operator
Thank you on behalf of Gravita India Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.