GRP Limited (NSE: GRP) Q4 2025 Earnings Call dated May. 12, 2025
Corporate Participants:
Unidentified Speaker
Harsh Gandhi — Joint Managing Director
Shilpa Mehta — Vice President and Chief Financial Officer
Analysts:
Unidentified Participant
Jatin — Analyst
Rada — Analyst
Ajay Surya — Analyst
Rohit — Analyst
Presentation:
operator
SA. Ladies and gentlemen, good day and welcome to the GRP Limited Q4 and FY25 earnings conference. This conference call may contain forward looking statements about the company which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 Star then zero on your Touchstone phone.
I now hand the conference over to Ms. Harsh Gandhi, managing Director for his opening remarks. Thank you. And over to you sir.
Harsh Gandhi — Joint Managing Director
Thank you so much and a very good afternoon to everyone. I appreciate all of you taking the time to join GRP Limited’s earnings call for quarter four of fiscal year 2025. Joining me today are our CFO Shilpa Mehta and SGNA, our investor relations Advisors. The investor presentation has been uploaded on the stock exchanges as well as our website and trust you all had a chance to go over the same I’ll begin with a brief narrative on the key highlights of the quarter followed by an overview of our quarterly and annual performance. Also the operating environment as of today.
I will then walk you through a little bit around our strategic priorities going forward. A key milestone during the quarter ended FY25 was the commissioning of our crumb rubber facility which not only strengthens our capacity which now exceeds 122,000 tonnes, but also enables for increased downstream integration with our upcoming pyrolysis plant, our recovered carbon black plant, while also opening avenues in sectors like road surfacing. Our income during Q4 grew by about 16%, primarily driven by the sale and accrual of extended producer responsibility credits during the quarter. The volumes during the quarter were adversely affected by continued volatility in the macroeconomic environment.
The tyre sector, especially the OE segment, experienced a slowdown across key markets where we operate. The demand in the replacement tyre segment remained stable. However, on the global front, lot of uncertainty persists due to the proposed tariff measures in the us while final treaties are still pending. Early signs of the impact in Q4 were already visible in the form of reduced availability of containers and an imbalance in the demand across different markets where GRP operates. GRP responded proactively by diversifying its customer portfolio, strengthening certain regional supply chains and leveraging its inland customer network to maintain service levels.
Consequently, during the quarter, excluding EPR income, consolidated export revenues declined by about 2% while domestic revenues rose by 6%. On the profitability front, EBITDA margins rose by 45% in Q4, expanding by 404 basis points to reach an EBITDA of 333 million rupees primarily supported by EPR related income. However, at the stand alone level, operating margins in the reclaimed rubber business, excluding the impact of EPR income faced significant pressure due to persistent inflation in raw material costs, especially synthetic reclaimed rubber which as highlighted in the earlier calls, remains elevated. Profitability was further impacted by delayed price corrections from customers for certain grades and an unfavorable product and regional sales mix.
Additionally, a one time inventory write off of Rupees 10.5 million was recorded during the quarter affecting our gross margins. Employee costs rose from 9.9 to 10% of revenue driven by a combination of ESOP related charges and provisions for variable pay. On the other hand, other expenses saw a slight decline owing to ongoing cost optimization efforts and automation initiatives. Our standalone non reclaimed rubber business posted a 3% revenue increase in Q4. However, our rubber composite and the custom dye form segments which were closely tied to the US market saw a reduction in volumes compared to the previous periods.
On a consolidated basis, including our subsidiary GCSL which is GRP Circular Solutions, Ltd. Volumes grew by 29% year on year during the quarter led by the higher output from the specific subsidiary which continues to report sequential improvement in revenue. Looking ahead with the EPR framework for plastics in place from April 1st, 2025, we foresee increased demand from brand owners who will be now required to incorporate up to 30% recycled content in their packaging materials on the standalone basis. Focused efforts to improve margins in the non reclaimed segment through disciplined cost control have yielded significantly positive results.
Margins improved from a negative 7.3% to 7% on a year on year basis during the quarter. An annual update on the performance as far as the year has gone by, the outlook for circular materials continues to remain optimistic, supported by regulatory mandates, increasing consumer consciousness and the sustainability agenda of global brands. Both natural rubber and synthetic rubber prices remained elevated throughout the year. We made significant strides in expanding our infrastructure, deploying new technologies and extending our market presence. Against this backdrop, we are pleased to inform that the company has delivered strong performance, recording double digit revenue growth of 19% for the full year, driven by an overall 11% increase in consolidated volumes and accrued income of EPR.
This growth was achieved despite prevailing macroeconomic headwinds. The global economy showed a very modest GDP growth of 3.3% in calendar year 2024 compared to 2023 which was at 3.5%. This reflection of the sluggish global trade had an impact as far as the demand for overall rubber is concerned. India’s reclaimed rubber Exports increased by 10% in FY25 over FY24, reversing the stagnation seen in the prior year. GRP in this context outpaced the rest of the industry, enabling us to maintain a share of more than 35% of reclaimed rubber exports out of India. Domestically, India continues to demonstrate strong momentum with recorded GDP growth at 6.5% for 2024, making it one of the fastest growing major economies globally.
Despite the high GDP growth, rubber consumption in India grew only by 3% during calendar year 2024. However, reclaimed rubber grew at a faster pace of 8%, indicating a higher level of substitution for the virgin rubbers. GRP capitalized on this momentum and on account of the improved relationships that it has with its customers. Its domestic share from calendar year 23, which was at 16% has jumped and increased to 20% in calendar year 24, a testament to the strong customer penetration and the wider product acceptance of our company. Our volume performance both in exports and domestic markets has remained aligned with these broader geographic trends.
Our stand alone non reclaimed rubber business posted a 15% revenue growth for the full year primarily driven by a 14% increase in volumes within this segment. Engineering plastics saw a robust 20% growth while on account of the geopolitical tensions in the US market, volumes in polymer composites and custom dye form segments remained more or less flat for the year. On the profitability front, EBITDA margins expanded by 128 basis points leading to an EBITDA of Rupees 694 million for the year supported by EPR related income and improved operating performance supported by process automation and the transition to renewable energy.
Employee cost as a percentage of revenue reduced from 11.8 to 11.3% and this includes one time charges on account of ESOP and variable pay expenses for FY25. Our green energy initiatives are yielding tangible savings almost 73 million rupees of reduction in energy cost over the previous year in in FY25 when this is significantly contributing to reduced greenhouse gas emissions from our operations. Operational expenses for the year also include a 15.6 million write off related to obsolete equipment and product development costs on account of pyrolysis processes during FY25. GRPs R&D driven low CO2 reclaimed rubber technology under customer evaluation earlier this year has received formal approvals from one of the tire majors validating the effectiveness of our innovation strategy in engineering plastics, key initiatives during the year included streamlining of alternate materials, the adoption of automation, portfolio expansion for the product as well as securing approvals for the newly developed grades from an international compounding company for polymer composite and custom dye forms.
The strategic focus remained on cost optimization, margin enhancement and starting to tap into opportunities for a new market in India and some of the other geographies away from North America. With regard to capital expenditure, we have incurred approximately 49 crores during the year towards setting up of our integrated facility for converting end of life tire waste. To end, the necessary documentation for funding from the DFI was completed and part of the funds was also received in Q4 of FY25. While global uncertainties persist and the outlook for calendar year 2025 from Global Tire companies points to continued stability in replacement tire demand, the original equipment demand is expected to recover only in the second half.
This therefore means that FY26, based on all the projects that we are executing, is poised to be one of the most transformative years for grp. Driven by a strong sense of purpose, a clear vision and focused strategy, we are targeting a threefold capacity expansion across our key business verticals. Not merely scale but meaningfully becoming future ready for enhanced growth thereafter. First, in our reclaimed rubber business we are scaling rapidly with the deployment of the next gen high margin technology that will help us lead the market in both performance and sustainability. On the innovation front, we have an exciting pipeline of high performance materials that will be introduced in the coming year to help our customers, the brand owners, enable increased circularity.
Second, our end of life tire to energy vertical is moving from concept to reality with facilities for crumb rubber, tire pyrolysis, oil and recovered carbon black all entering its operational stage. This is a major milestone enabling us to extract even greater value from waste and contribute to cleaner energy alternatives. We are also stepping into a completely new territory road surfacing as an industry through our crumb rubber platform. The technology selection and validation of our recovered carbon black will be completed in the coming quarters and the strength of our relationships with brand owners in our view puts us in a pole position for exciting long term prospects.
Third, in the recycled plastic space under the subsidiary GCSL banner, we are responding to the surging demand to improve capacity utilization with a significant focus being placed on profitability and turnaround for financial profits. To support this entire scale of transformation, we are also making critical investments in technology. Our shop floor automation initiatives are already underway and digitalization of the shop floor has started to yield results and all of this will be crucial as we migrate towards SAP S4 Hana and we expect these to significantly enhance efficiency, transparency and decision making across the enterprise. Of course, none of this would have been possible without the backing of our investors.
We’re proud to have announced a bonus for our shareholders on the momentous milestone of our 50 year journey and as a reward for your continued trust and perseverance to further our ambitions. I’m pleased to share that we have received board and shareholder approval for equity infusion through a qualified institutional placement which along with Debt support from ProparEco gives us the financial muscle to pursue the above with confidence. With stronger fundamentals, improving return on capital employed, a deeply committed team and a mission driven approach, I truly believe GRP is well positioned to deliver lasting impact in FY25, 26 and beyond with this.
Let me now hand over the call to Shilpa Mehta to take you through the financial highlights of the quarter and the year gone by. Thank you.
Shilpa Mehta — Vice President and Chief Financial Officer
Good afternoon everyone. Let me take you through the consolidated financial highlights for Q4 and FY25. We start with Q4 of FY25. Total income in Q4 stood at Rs. 1606 million as compared to Rupees 13. 81 million in Q4 of FY24 which is up by 16%. We have booked EPR gain of Rupees 309 million in this quarter. Gross profit for Q4 FY25 was at Rupees 936 million as compared to Rupees 790 million in Q4 of FY24 and which is up by 18%. Gross margins is a percentage wise it is 58.3% for the quarter which is a growth of one hundred and eight BPAs on year on year basis.
A one time inventory write off of Rupees 10.5 million was recorded during the quarter affecting gross margins. Further Rupees 22.7 million in SOP charges and provisions for variable pay included in employee cost and rupees 15.6 million towards solid equipment and pyrolysis product development cost are also accounted for in Q4 of FY25. EBITDA for Q4 of FY25 is at Rs. 331 million as compared to rupees 229 million of the Q4 of the last year which is up by 45% on year on year basis and EBITDA margins is at 20.6% as compared to 16.6% in Q4 of FY24 which is the growth of 404 VPs on year.
On year basis, profit after tax for Q4 of FY25 is at rupees 194 million as compared to rupees 117 million in Q4 of FY24. Percentage wise it is 67% up on year. On year basis, our subsidiaries GCSL and GSPL the revenue amounts to Rupees 75 million with an accrued loss of with an incurred loss of Rupees 13 million. However, as these businesses scale and mature, we expect them to contribute meaningfully to the bottom line. Now we go through the FY25 results. Total income in FY25 stood at Rs 5518 million as compared to rupees 4630 million in FY24 up by 19% on year on year basis.
This included Rs 220 million from the sale of EPR credit, an additional of Rs 214 million in accrued EPR income which is backed by a maturing EPR regime, consistent credit demand and price stability in the market. Gross profit for FY25 stood at Rs. 29. 80 million as compared to Rs. 2.37 million in FY24 up by 17%. Gross margin stood at 58.3% for the FY25 which is a growth of 108bps on year. On year basis, EBITDA for FY25 is at Rupees 694 million as compared to Rs. 523 million in FY24. EBITDA margins is at 12.6% in FY25 compared to 11.3% in FY24 which is a growth of 128bps.
Profit after tax for FY25 is at Rs 307 million as compared to Rs 226 million in FY24, up by 36%. Our debt equity ratio is 0.76 in FY25 compared to 0.68 in FY24. In addition, for FY25 the board has declared a dividend of Rupees 14.50 per share representing 145% of the face value. These actions reaffirm our continued commitment to delivering value to our shareholders while maintaining financial discipline and investing for long term growth. With this, I now open the floor for question and answer.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Divya Garwan from Simcom family office. You may proceed.
Unidentified Participant
Hi sir. Thanks for taking my question. So sir, firstly on the gross margin expand, I wanted to know the gross margins, if we remove the EPR income, it’s down by around 300 basis points and 400 basis points in Q4 quarter and year on year respectively. So what is the particular reason for that? And will this pressure continue in coming quarter as well?
Harsh Gandhi
Hi, thanks. Thanks for the question. Is that the only question? You have any other questions rather that you take them all together?
Unidentified Participant
Yeah, yeah, I do have other questions as well. Yeah, okay, okay, sure, sure. Secondly, sir, I just wanted to know the impact of the U. S tariffs on our on our operations and are you seeing any delay in uptake from the U. S clients? Thirdly on the new plant. So in the previous conversations you had said that the capacity would be around 40 to 50000 but I mean the capacity that was commenced was around 31,800. So why was there a deviation? And lastly, I just wanted to know the update on the RCB plant and process progress of the Phase 1 expansion.
Thanks.
Harsh Gandhi
Okay, so I’ll take each of these separately. So as far as the gross margin is concerned, I’ve mentioned this even on the previous call. I mean we’re seeing specific pressure of gross margin on a particular product category only, which is butyl recline, which is one type of a synthetic rubber recline. And as I mentioned then, unfortunately that is actually a much larger portion as far as our total revenue is concerned. This is two things. One is as far as our selling prices are concerned, they’re pretty much depending on the customer. Internationally it’s either annual six monthly or three monthly pricing contracts.
And as a result our ability to pass on that impact was not there. We’ve seen that the margins in this particular product category has declined for three quarters in a row. However, this quarter as we speak right now, a lot of the price adjustments and corrections have already started to happen. Bulk of our customers work on calendar basis when it comes to pricing and some of them work whether it’s quarterly. We’ve been able to adjust the prices in this quarter. So that is one particular product category where currently the demand has exceeded quite a bit the supply.
And this is true over the last nine months where as far as this particular quarter, more or less. Now that we’re midway through this quarter, I can say with confidence that that trend has kind of started to reverse a little bit because we’ve been able to effect pass on parts of those price increases to our customers. When it comes to the rest of our product portfolio from a volume point of view, that particular product category was one third of our total volumes. The remaining 2/3 of our portfolio, the margins continue to be gross margins continue to be equal to or better than what it was in the previous year.
But the product category where there is. The. Margin reduction, as I said, is 1/3 by volume but closer to 45% by value. Now the gross margin reduction is also as I mentioned and as Shilpa indicated, partly also on account of a one time write off of material costs. And that’s the other reason why the gross margin for the current quarter or for Q4 appears to be lower than that for the the second question which is as far as the US tariffs and its impact is concerned, I mean I guess in Q4 we did not we saw that there was obviously some amount of anxiety around the tariffs but the impact was not felt entirely in Q4, especially when it comes to us.
But several of the other geographies and particular countries where the tariffs announced were fairly significant significant and they were large exporters of tires to North America. Case in point being likes of Thailand, Vietnam, etc. Our exports to some of those geographies did suffer a bit of a dip in Q4 and that was very immediate because there the lead times are not as long and therefore a lot of inventory correction as far as volumes are concerned continue to happen there. As we are having conversations with our customers, we are seeing that a lot of the tire companies are adjusting volumes and producing, you know, addressing their production in different countries to sort of in some way navigate the tariffs in the U.S.
i mean a case in point, somebody that has a plant in Thailand will now supply materials to other geographies and manufacturing plants in other geographies will now start diverting exports to the North American market. So this is something that a lot of the brand owners are going through and I guess until all treaties are in place, we will not know what sort of trade flow impact this will have globally and therefore consequently to our supplies as well. So early days and I would say as treaties get finalized, we will have better clarity but there has obviously from our customer portfolio perspective been in shift where we started to export to some other geographies and not to some of the other geographies that we were exporting to.
That internal shuffling is already taken place. When it comes to the stage of startup as far as RCB and pyro is concerned, I mean this plant of energy, or rather waste tire to energy is a consolidated plant which will be set up three phases crumb rubber subsequently followed by pyrolysis followed by recovered carbon black. The plant for crumb has already been established and commissioned as I indicated the plant for pyro should get set up within the next 30 to 45 days and when it comes to the RCB plant that will be set up and commissioned by Q4 of this fiscal so I think that’s to address your query on the startup dates.
As far as the capacity itself is concerned there are, you know, I mean the capacity that we have added as far as crumb is concerned is closer to about 40 odd thousand tons but you know that some part of it goes for different end applications and therefore the entire the nameplate capacity is very different than what we eventually end up producing. There is possibilities that we may produce a certain size of crumb which reduces our capacity. If we produce a certain other size, the capacity goes up, etc. So we take a more or less a safety capacity and that’s how the 40,000 tons of capacity is the reported number.
As far as this 122,000 tons is concerned I believe that answers all your questions. We can move on to the next.
Unidentified Participant
Thanks. Thanks a lot, that was very helpful.
operator
Thank you. Before we take the next question we would like to remind participants you may press Star and one to ask a question. The next question is from the line of Jatin from Invest Savvy, you may proceed.
Jatin
So we’d like to know that when you’re accruing the EPR benefit, the pricing that you are taking is it. Does it have a margin of conservatism in that against the realized price and the price for accrual? Is there a difference which you have been seeing?
Harsh Gandhi
Any other questions Jatin, or is this it?
Jatin
No, that’s about it.
Harsh Gandhi
So we take the again, I mean given as I mentioned that now that the portal is established, the demand for the credits is more consistent and the whole regime and the regulatory mechanism is now in place, there was comfort in us being able to take an accrual basis accounting. We are accruing everything at the minimum price as Specified under the guidelines which is 2.52 rupees a kilo. The range is 2.52 until 8 rupees. In the past we have sold credits at also a price higher than the minimum reserve price. But when it comes to the accrual of the income, we have taken everything at the base price of 2.52.
Jatin
And how do you see this price moving with the increased emphasis on environmental, you know, focus of on the environment by the government.
Harsh Gandhi
I think the prices, as I said this, this band that is specified between 2.52 to 8 rupees a kilo, as I said again, we have conservatively accrued all the income at the base price. How this evolves I think will be a function of demand and supply in the long run. At this stage I can only say that we have accrued it at the base price. While in the past we have been able to realize a number which is even higher than that.
Jatin
And in this quarter have you sold anything? As in what is the average price at which you have sold and how much?
Harsh Gandhi
In Q4 we have sold roughly at the same at the base price. In some very small cases or instances it may be a little marginally higher as well. But by and large, I mean just a little higher than the floor price is what we have sold. When it comes to the absolute number, I think it’s given in there, but I think it is closer to 7.0.
Jatin
Total for the year is 30.
Harsh Gandhi
Yeah.
Jatin
Okay, thank you.
Harsh Gandhi
Move to the next question.
operator
Thank you. Before we take the next question, we would like to remind participants. You may press Star and one to ask a question. The next question is from the line of RADHA from BNK securities. You may proceed.
Rada
Yes sir. I thank you for the opportunity.
operator
Sorry to interrupt, ma’ am.
Harsh Gandhi
Yeah, rather we can’t hear you clearly.
operator
Could you be a bit louder, ma’ am?
Harsh Gandhi
Can’t hear you clearly. Could you. I mean your voice is muffled.
Rada
Yes, sir. So what is the full year sales volume for RR and non RR business?
Harsh Gandhi
Full year sales volume.
Shilpa Mehta
Sales volume for RRN.
Harsh Gandhi
You want to take that? I think RR sales was around 66 odd thousand. 65 and a half to 66,000 tons of 66,000. Yeah, 66,000 tonnes. As far as the non RR is concerned, again it’s different categories of products. So we don’t look at those because each of these there are some categories where as far as the composites and CDF is concerned, where sales are on a per piece basis, etc. But by and large if I was to aggregate everything in tonnage form it would be closer to 48 or 100 tons would be the sales of the.
Shilpa Mehta
Non RR and the 60, 66,000 is RR and 5,000 is non RR.
Rada
Yeah. Thank you ma’ am. Thank you sir. The second question is a follow up on the first one. So on the basis of these volumes, the EBIT per metric ton of RR has fallen from last year around 7 rupees to 5 rupees this year and non RR some 12 rupees to 2.5 rupees this year. So could you please give us a bit of color on what has led to this and how do you see this pan out in the coming year?
Harsh Gandhi
So you said the EBIT has dropped too. I didn’t understand where you coming from.
Rada
Yes, it’s a EBIT for RR X of ECR and unallocable is coming to 5.5 rupees per kg compared to 6.9 last year and non RR is coming to 2.4 compared to 12.5 last year. On the basis of volumes that you have just stated.
Harsh Gandhi
Yes. So what’s your question? I didn’t understand.
Rada
Yes. What has led to this drop in EBIT for both the businesses and how do you see this pan out in this year?
Harsh Gandhi
As I said, I think as far as ARA is concerned, we’ve been making it very abundantly clear over the last two calls that the gross margins are what are affecting the margin overall margins. I mean the reduction in the EBIT as you mentioned is clearly a function of the gross margin reduction. As far as the RR is concerned in non rr. I think we’re not comparing entirely apples to apples given that, you know, some of the businesses like as I mentioned the rubber composites and cdf, the volumes are very different. So I think within the non RR it’s not I would say 100% comparable to have all of the businesses together.
Having said that, at an EBITDA level, actually quarter to quarter when you compare it our non RR the margin has actually gone up. Last year was 11 a negative 7 point versus 7. So I’m a little unclear and confused about your non RR EBIT margins that you talked about. But I think at a quarterly level there is actually a reversal and the margins are actually grown is very clearly it’s a gross margin impact.
Rada
Yes, I have taken full year FY25 number based on the 5,000 volumes that Ma’ am has mentioned.
Harsh Gandhi
So again I’m happy to address this offline. Currently we may need a couple of minutes to sort of pull out the data.
Rada
Yes sir. So please give us the geography wise breakup of exports.
Harsh Gandhi
What about it? Sorry,
Shilpa Mehta
geography wise?
Harsh Gandhi
No, we could give you an overall export versus local but I mean geography wise it’s tough to sort of be able to provide as far as the volumes are concerned.
Rada
Okay sir, so this last question in pyro plant, have we received any customer approvals considering the plant has been commissioned?
Harsh Gandhi
I mentioned that the crumb rubber plant has been commissioned. Pyro plant has not been commissioned so far.
Rada
Yes. So regarding that in the last quarter you mentioned that the company has received one approval from a large carbon black player. However final decisions were pending. So just wanted to understand what is the customer feedback in terms of the the crumb rubber or the pilot or the sales from the pilot plant of TPO and carbon black.
Harsh Gandhi
Those are only to sort of work for assessing our own product and the msds as well as get some validation done. I mean those are really soft approvals. We need to demonstrate the same once the commercial plants are set up. So obviously it’s a success but I would say it’s too early to start, you know, in any way counting our chickens yet as far as crumb rubber is concerned until pyrolysis starts, we started supplying this to the road surfacing companies where they are starting to blend this along with bitumen for manufacturing of crumb rubber modified bitumen.
So sales to that segment has already begun and we are waiting for our pyro plant to start before we can start utilizing the plant, you know, to use the material in house for our own needs.
Rada
Yes sir. Thank you sir and all the best to you.
operator
Thank you. Before we take the next question we would like to remind participants that you may press Star and one to ask a question. The next question is from the line of Ajay Surya from Niveshare.
Ajay Surya
Thanks for the opportunity. A couple of questions from my side. First question is I wanted to know how much capex have we deployed till now in the phase one and if you can break that into how much of that source was from internal approval and like if we have taken any debt and follow up on this is how much more do we plan to deploy further in the current financial year. And Also like in HR1 and H2 if you can break that further that will be helpful. My next question is we have taken a one time inventory write off in this fiscal so can you please highlight what was that about or which product category was it and going forward do we see any more such write offs? And last question because of the EPR coming into place and the working capital days for the company has reduced significantly from what I can see is 94 to 76 days.
So going forward with the capex and everything coming in line what sort of working capital days do we envisage going forward? So that’s the three questions from my side.
Harsh Gandhi
I’ll let Shilpa take all these questions all on the capex spent during the year versus internal, external and planned for the current year. The second question was on material write off Whether it is one time or likely to go on and then the working capital days I think let shilpa take these three questions.
Shilpa Mehta
So capex we have incurred in FY25 total of 66 crore. As we have already mentioned that 49 crore is for our new project for this spiro and crumb and for sourcing of this capex it was 23 crore of term loan we have received and rest is Internet accrual and going forward the Plan is of 80 to 90 crore which again as we have already said that we have this properco loan, DFI loan is that approved and we we are taking it in trenches and additionally we are going for UIP also so and internal approval also.
So all these sources will fund the capex. Then second question is about the stock write off material. So it was like this raw material which lost its property old raw material and some imported which came for trial purposes. So that was some that stock line that we wrote off and this is something one time we have considered working capital days. Yeah, it is 76 days from 94 days from previous year and stock creditors, debtors everywhere considerable improvement days we have seen and we are striving to achieve 70 to 72 days further working capital cycle. So that is what we want to see.
Ajay Surya
Just again only raw material. It just had losses property. Which product category was it like? Was it in the reclaim business or the non reclaim or the engineering like. Everyone give more details
Shilpa Mehta
Mixture of all it is reclaim and non reclaim also and plus some consumables also where machineries it’s machinery itself was obsolete and no longer in use. The spare still lying that and actually write off is the word we have used but it we have devalued so we will dispose it off and there again there will be value. That is what it is.
Ajay Surya
Okay ma’ am. Thank you, all the best.
Shilpa Mehta
Thank you.
operator
Thank you. Before we take the next question we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Rohit from I thought you may proceed.
Rohit
Good afternoon. I hope I’m audible.
operator
Yes sir.
Rohit
Yeah, congratulations sir. And I think fantastic performance on especially the other expensive side where we’ve seen very good cost control and this is despite all the one offs that you just sort of alluded to. So sir, coming to the coming year in FY26 you sort of mentioned that the headwind in terms of reclaimed, a segment of reclaim reclaimed that is sort of now abating and with plastic recycling also coming in and also I think your and those losses also probably will reduce or will start to contribute in some form. So how do you see the margins in the coming year? And also with the new CapEx, at least it come we started.
So how do you see that sort of ramping up in this financial year? If you can just maybe give an Overview this this 12, 13% margin that you’ve done in this financial year, how do you see this sort of inching up in FY26 and then maybe something in FY27 given all the initiatives you’ve done with respect to cost and also product introductions and the new technology with respect to reclaim etc. So I mean I just wanted to get a sense from that.
Harsh Gandhi
Sure. Thanks Rohit. So as far as the so again, three questions I’m just sort of reiterating if you can confirm. One is the question on when will the gross margins normalize as far as reclaimed rubber is concerned? Secondly, what’s the likelihood of the subsidiary company getting to, you know, steady state of profitability? And the third is the plan of the new CAPEX utilization. Am I correct in these three?
Rohit
In this, yeah. Yes. And as an overall what kind of impact will these have on your operating margins in this financial year?
Harsh Gandhi
So guidance is the last question which we generally prefer not to answer, but I’ll answer the three and hopefully you’ll get an answer to your own question. I’d say as far as the normalization of the gross margins for this one particular product category is concerned, I wouldn’t say that we will be back still up at historical levels as we speak right now. As far as this quarter is concerned, we do expect and anticipate that as the monsoon set in, the supply of this material type does improve and on the other side the demand in our view will not significantly grow from the level that it has reached so far.
So I do assume that there will be some sort of softening of prices over the course of the next Q2 and Q3. That’s, that’s been the historical trend and assuming that the kind of sales prices and the renegotiation of prices we’ve been able to get from the customers so far and some of it which will come in from July, we do hope that for the whole year I’d say we would kind of be marginally better than what we’ve seen in H2 of last financial year. As far as the rest of the product categories are concerned, as I said, the margin continues to be robust and obviously with the operating efficiencies kicking in, we are hoping that for the rest of the product categories we will see an improvement in margin by a few percentage points because of the impact of energy as well as manpower cost rationalization.
As far as the GCSL or the subsidiary company’s performance is concerned, as I indicated that we are seeing demand is growing month after month. With the regulation on EPR and plastics already in place, we should start seeing a profit scenario once we get past 75% of utilization of the capacity. So I would say for the year as a whole we may about get to that number. And that’s when I would imagine that the profitability and the numbers will be more in the black compared to what they are in the current year. The third question as far as new CAPEX utilization is concerned, I mean assuming we start the Pyro line within this quarter, we are fairly confident that we will get there as we start, I’d say take a couple of quarters for the stabilization of the process, the reciprocation mix as well as the energy mix is concerned and we are fairly confident that for H2 of the year we will certainly start operating at beyond 70, 75% utilization because this product, especially the oil is concerned, is sold as a replacement currently to fuel oil.
But given the partnerships that we are working on, we’re very confident that we will be selling this as upgraded oil and not just as fuel oil. So yes, I think utilization of the Pyro plant will pick up pace and get to 75 plus percent within a fairly short span of time. Unlike other businesses where we need to look for markets etc. This is a product category where it should not take as much longer. As a result of all of this, you know, we’ve been giving indications of what the CAPEX turns as well as the potential EBITDA margins for each of these businesses could be so one could assume that reclaimed rubber will operate at the closer to the 85, 90% utilization.
GCSL by the end of the year should get to about 75 odd percent which means for the year would be trending at closer to 60, 65% utilization. And the new line as far as energy and I mean tires to energy is concerned should for the year assuming that we Commission it in Q1 for the rest of the three quarters should also be beyond 66 to 70% utilization of assets. I guess using that one can simulate what could be the possible both revenue as well as bottom line numbers. So without giving guidance I guess there is adequate information for you to out what’s the likely.
Rohit
No, no, that’s fair. That’s pretty clear sir, thank you. And so just one more question in terms of CapEx, so we have to deploy another hundred crores around for the phase one. So this phase also, I mean this will be largely through debt and internal accruals or are we going to raise QIP for this as well? Because we are generating around 45, 60 crores of cash. I mean we generated around 45 crores cash flow this year. I think it could be similar or higher in the next year. So just wanted to get a sense on that.
I understand for the overall cap you may need some more money but just to get a sense from you this phase one.
Harsh Gandhi
So I think you answered your question Rohit. I think we will have adequate internal accruals plus the debt that we have, we have adequate cash flows. However, as Shilpa alluded to, we do have the approvals both from the board as well as from the shareholders to do a QIP if there be a need. Yes, we continue to be wanting to be in the driver’s seat when it comes to funds just so that if we have to, if I may accelerate the pace of investment that we had earlier planned and if some of the businesses, you know, require cash at a much faster pace than what we’ve anticipated, it’s always good to sort of have a certain cushion of equity available but it’s not something that we need for the first phase.
So you’re absolutely right in that as far as therefore whether we will do it or not, I think a lot depends on the timing, interest, etc. And we will at all stages make sure that there will be a prudent mix of debt and equity such that we are not either either over leveraged or we will not sort of have excess equity which we cannot deploy. So I think we’ll maintain that prudent mix and you know, invest as we sort of need.
Rohit
Got it Very clear. Thank you very much and all the very best for this financial year. Thank you.
operator
Thank you. The next Question is from the line of Kaushal Shakar from Vermillion llp. You may proceed.
Unidentified Participant
Yeah, hi Harsh. Congratulations on a set of good numbers. My question was that what is the impact of this tariffs and changing tariffs. Since April there’s been a lot of movement, especially in North America. What has been the impact and where do you see the settling down? And the second question is that do you see selling reclaimed rubber from India into US having some tariff advantage over other geographies?
Harsh Gandhi
Yeah, thanks for the question. I think I’ll take the second question first, Kaushik. I mean, when it comes to the North American markets, imports of reclaimed rubber have been from three or four major geographies, India being one of them, second being China, third being Europe, and fourth being certain Latin American countries. From a volume perspective, India was always the largest exporter into North America, followed by China, followed by Europe and I think Latin America was last. Whether this gives us an advantage clearly over the Chinese players for sure. Of course we don’t know enough about the fine print of the US China tariff deal that has been already signed up and I don’t know whether this particular product category falls within that ambit or not.
So yes, for the last few months there was obviously that innate advantage that we had over the Chinese. However, the European and Latin American exports to the US were at lower duty than 10% as far as India is concerned. So from that perspective there was that ambiguity which existed. Having said that, and I would sort of say that import of tyres into the US was a much larger determinant or factor of reclaimed rubber consumption than the import of reclaimed rubber itself. And put it in context, our exports or consumption of reclaimed rubber in, let’s say Thailand or in Vietnam or in Indonesia, that would have a much larger play, an impact on the overall importance to the US because these countries were exporting a large part of their tire production into the North American market.
So again, as I mentioned in the previous comment or in the previous question, our exports to some of these geographies were affected because there the duties were for the tires were much higher than the duty for tires from India. On the other side, therefore, tire manufacturers in India had an advantage over the likes of Thailand, Vietnam, Indonesia, because tires into the US were cheaper being sourced from India than it was from some of these countries. To that extent, our export reduction in some of those markets got offset by an increase in consumption domestically by the tire companies here.
So that’s broadly how the last three months have been, whether this is a likely trend going forward. Which was part of your first question. Actually I don’t have an answer to that Kaushik, because depending on how some of these tariff deals get structured, we don’t know whether we will sell more reclaim to North America versus sell more reclaim to countries that are going to finally export tyres into North America. I think that’s something that is currently still a fluid state. And as we’re talking to customers, they are themselves realigning their capacities to cater to different markets.
I don’t have a clear cut answer. I’d say once most trade treaties are in place, we will have a better sense of how this will affect both our exports of reclaim as well as tire imports into the us.
Unidentified Participant
My last question is reclaim rubber and tires on the table. As far as these free trade agreements are concerned, the negotiations with usa, I.
Harsh Gandhi
Believe they’re all at standard. I don’t think there’s any preferential duty at least so far being talked about either for reclaim or for tires being exported out of India. I believe it is still all part of the same basket under that 10% duty structure.
Unidentified Participant
Okay, thank you. Thank you so much for your question answer.
operator
Thank you. The next question is from the line of Diwan Shah from Credent Asset Management. You may proceed.
Unidentified Participant
Hello sir, I’m audible.
operator
Hello, so could you be a bit louder?
Unidentified Participant
Hello sir, am I audible now?
operator
Yes.
Unidentified Participant
Hello.
operator
Yes.
Harsh Gandhi
Yeah, please go ahead.
Unidentified Participant
Yeah, so actually the 31875 crumb rubber capacity that we have. So just wanted to know the breakup in the pyrolysis segment, I mean how much have we allocated or rather how much capacity are we adding in pyrolysis, the reclaimed rubber in phase one as well as phase two? And how much capacity will we be adding in the non reclaimed rubber segment across phases?
Harsh Gandhi
Is that the only question or is there?
Unidentified Participant
Yes sir, that’s the only question, sir.
Harsh Gandhi
Okay, so as far as I’ll answer, I mean, you know, pyro as a segment we are setting up two plants, I mean two lines. First line which will be operationalized as I mentioned, within the next month or so, which is by, by the end of this quarter and there the capacity is going to be 15,000 tons annualized. The second line that we will put up will be an additional 15,000 tonnes. So therefore the pyro will take 30,000 tonnes of crumb rubber in total we will have some part of the crumb rubber allocated for reclaimed rubber consumption and some part of it also for the sales to the road surfacing industry.
As I mentioned, I think some of these capacities are fungible. So depending on the size that we require or we take for the reclaimed rubber plant, the rest of the capacity gets sort of exchanged. As far as crumb rubber is concerned, it is a fixed size of material. So there our capacity will be closer to. To begin with around 6 kilometers. But the. But the. Pyro is more or less therefore clear. As I said, it will get to 30 km. Crumb rubber will be at about 6 km. The remaining would be more or less for reclaim. Now having said that, as I said, capacity of crumb rubber is fungible. Depending on the size we want, Reclaimed rubber takes a certain size, crumb rubber takes the finest and pyrolysis takes the coarsest. So within that spectrum we have the choice to kind of switch interchangeably and therefore a correction that the capacity indicated 31875 is based on a certain size. However, what we have commissioned can flexibly go up to 40,000 tons of overall capacity.
So I hope that answers your question.
Unidentified Participant
Yes sir. And so for the non reclaimed rubber segment as well, are we planning some capex in phase one or phase two?
Harsh Gandhi
As far as non reclaim is concerned, it will be incremental. I mean there won’t be a major capacity expansion as far as FY26 is concerned. Or at least there won’t be effective capacity in FY26. We may undertake investments in CAPEX for optimization of production as well as being able to take alternate materials to use. As far as the subsidiary is concerned, we will make investments to be able to clean and do sorting of the materials and so on. It is going to be incremental investments but to augment and strengthen our production processes, nothing at this stage is envisaged to be adding to capacity in FY20.
We may start spending in FY26 but effective capacity for that in the non rubber side may come in only in FY27.
Unidentified Participant
Okay, but that is a plan of our. That includes in the 250crores capex that we planned, right?
Harsh Gandhi
Yes, it’s part of the overall 250. But you know, it won’t be adding adequately to capacity in FY27. Another part of the investment of what, 80 to 90 crores that Shilpa mentioned. There is also some amount of investment earmarked for renewable energy substitution. Mind you, we have been constantly saying that we do have a internal target to take up our energy from renewable sources to closer to 50%. So there will be some amount of investment being made in renewable energy sources.
Unidentified Participant
Got it sir. So just last one. The 30,000 tons is in phase one itself or both the phases
Harsh Gandhi
for pyro. It will be both phases put together. Okay so phase 1 but phase 1 is divided into phase 1A and 1B and therefore this entire 150 crores of capex and outlay that we’ve talked about is a combination of 1A and 1B. 1A is what we complete in Q1 of this fiscal and 1B gets completed originally invest envisage to be completed by December 2025 but likely to be more or less complete by March 2026 which is still in this financial year.
Unidentified Participant
Got it. So one the phase one in total of 1A and B includes 15 15,000 and the phase two that might take the next year.
Harsh Gandhi
1B together is 30,000. 1A is 15, 1B is 15. That’s a collective 30,000 of pyro.
Unidentified Participant
Understood sir. And any excluding this 30,000 anything else? In the phase two of the other 100 crores that we are going to spend in pyrolysis
Harsh Gandhi
there is a plan. To expand the capacity even further. I think our long term stated plan is to get to 60 KTA of pyro capacity and that’s, that’s part of the phase two.
Unidentified Participant
Understood sir. That’s also. Thank you.
Harsh Gandhi
Thank you so much.
operator
Thank you. Due to time constraint. That was the last question. I now hand the conference over to the management for closing comments. Thank you. And over to you sir.
Harsh Gandhi
No, thank you all for attending the call. Again, appreciate the set of questions that have been asked. If anybody has had questions and was not able to ask it on the call, I’d encourage you to be more than open to reach out to our investor relations advisors and we’d be happy to schedule a one on one call separately. But other than that appreciate all the inputs that we’ve received and we’re looking forward to FY26 with as I said, renewed vigor and hopefully we’ll be able to improve significantly the performance for this facility. Thank you all for taking the time.
operator
On behalf of GRP limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.