GRP Limited (NSE: GRP) Q4 2026 Earnings Call dated May. 18, 2026
Corporate Participants:
Harsh Gandhi — Managing Director
Shilpa Mehta — Chief Financial Officer
Analysts:
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the GRP Limited Q4 and FY26 earnings conference call. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not 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 this conference, please signal an operator by pressing Star then zero on your Touchstone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Harsh Gandhi, managing Director for his opening remarks. Thank you. And over to you sir.
Harsh Gandhi — Managing Director
Thank you. Very good afternoon ladies and gentlemen. We appreciate your presence on GRP Limited’s Q4 and FY26 earnings conference call. I’m joined today by our CFO, Ms. Shilpa Mehta and representatives from SGA, our Investor Relations Advisor. The investor presentation has been uploaded to the stock exchanges and our corporate website and I trust you have had the opportunity to review it. FY26 represented an important transition year for GRP. While the operating environment remained volatile across global markets, the year was also characterized by significant strategic investments, commissioning of new business platforms, technology transitions in the existing business and portfolio recalibration initiatives that we believe strengthen GRP’s long term positioning within the circular materials ecosystem.
The year was shaped by geopolitical volatility, tariff related disruptions, fluctuating export markets, elevated raw material costs and pricing pressures across several segments. Despite these developments, GRP continued to prioritize long term competitiveness over short term optimization. Several initiatives progress from development into commercialization and stabilization during the year under review while investments across technology, renewable energy, automation and new business expanded the company’s future operating base.
Turning to performance, our Total income for quarter four stood at 1.450 million representing a 10% year on year contraction. While FY26 income closed at Rupees 5380 million reflecting a decline of approximately 3% compared to FY25. This moderation reflects a high comparative base of FY25 which had benefited from substantial recognition of EPR credit revenue including accruals from earlier periods. FY26, in contrast, witnessed persistent softness in export demand shaped by macroeconomic uncertainty and disruptions related to tariffs.
EBITDA for Q4 stood at 94 million rupees while FY26 EBITDA stood at 429 million rupees. The profitability was impacted again by softened export volumes, lower spreads in some product categories, inflationary pressures in key raw material categories, and incubation and scale up costs associated with the newly commercialized pyrolysis business. Profitability was further impacted by certain one time and non operational items including foreign exchange losses. Closure of the polymer composite business following a strategic review, losses during the ramp up phase of the pyrolysis business, labor code related provisions and expenses associated with the proposed QIP process following expiry of approvals without an issuance.
Importantly, a significant part of these pressures arose during a period where multiple investments and businesses remained in commissioning, stabilization or early commercialization phases while the associated cost base had already been absorbed during FY26. As these businesses stabilize and utilization levels improve, we expect operating leverage across businesses to progressively improve. In the medium term, the broader strategic relevance of circular materials continues to strengthen globally.
Increasing focus on resource security, import substitution, carbon reduction and resilient supply chains is accelerating policy support for recycling ecosystems across geographies In India as well, policy discussions around circular economy and waste tire recycling increasingly recognize the strategic role that GRP as an organization is performing and GRP remains well positioned within this evolving economic landscape. The external operating environment nevertheless remained difficult during entire FY26.
Global tire markets exhibited mixed demand trends while shifts in the U.S. Trade policy disrupted visibility, sourcing patterns and GRP supply chains. Approximately 33% of reclaimed rubber revenues from key U.S. Customers and nearly 44% of associated raw material margins were impacted by tariff central for the year following revisions in February, margin impact moderated to around 41%, offering some relief for two months. Out of the 12 domestically reclaimed rubber outperformed broader industry trends.
Overall rubber consumption in India grew about 4% while reclaimed rubber consumption rose by approximately 7% year on year basis, with share within the tyre industry increasing. In response, the company was able to rebalance its geographic mix and increase focus on the relatively lower margin domestic market to offset softness in the export demand. Export volumes for the company declined by about 15% while domestic volumes grew nearly 10%, supported by a proactive market development and selective pricing actions.
Raw material inflation was another significant impact. A factor impacting margins during the year. While the company undertook mitigation measures through price actions, inflation was as high as 43% in certain SKUs resulting in meaningful profitability pressures. Against this backdrop, GRP continued to accelerate its operational and efficiency led initiatives which focused on manpower productivity, energy optimization, automation and transition towards newer technologies. During the year under review, 38% of our capacity has transitioned to this new process platform with a savings of approximately 5% on the product while improving consistency, throughput, labor productivity and also customer acceptance in higher value applications.
The company also commercialized its next gen low emission reclaimed rubber technology and expanded customer approvals for the same. In addition, it introduced recycled materials designed to improve substitution efficiency and reduce fossil fuel dependence in the formulations for the customers. Geopolitical developments in West Asia, albeit for the last 45 days of the year, contributed to volatility in energy and logistics related costs during the year. During part of the year, however, our investments in biofuel based heating systems and renewable energy projects has helped us ensure continuity and partially mitigating the fuel cost volatility that the rest of the industry has seen.
Within the non reclaimed portfolio, standalone businesses grew about 13% on a year on year basis and 22% on a Q on Q basis. In Q4, FY26 marked an important transition phase with several initiatives moving towards commercialization. This is mostly on account of pyrolysis startup during the second half of the year this startup was commissioning of the continuous pyrolysis operations at the integrated facility in Sholapur. While the industry tailwinds in pyrolysis and RCB that are expected to pick up along with operational stabilization that we have achieved in Q4 Pyroba Energy as this business is being christened will significantly strengthen GRPs position within the emerging circular carbon and resource recovery ecosystem across our plastic recycling verticals.
Underlying demand trends from automotive sector remained relatively healthy supported by domestic auto growth and increasing sustainability focused by OEMs. However, the lower virgin polymer prices and inflow of low cost imports for polypropylene especially impacted the industry environment and despite these conditions we remain positive on the long term opportunity because as a company we are also pivoting closer towards the automotive value chain. The customs diaphorm business demonstrated resilience and despite the tariffs from the US markets and being dependent on an individual country, we registered a 4% growth in volumes.
However, on the other side, as communicated earlier, the company also took a strategic decision to discontinue the polymer composite business, reallocating those resources towards businesses and product categories offering stronger long term growth and return potential. That was one of the other reasons for the revenue loss as a company as a whole. Speaking of our capital expenditure for the year and growth plans, we have broadly divided our growth capex for the PYROVA energy business in multiple phases.
This has been communicated through our Investor presentation. Under Phase 1A which was completed up to October 2025, we commissioned India’s largest single line reactor with a capacity of 15,000 tonnes at the facility in Sholapur along with the integrated crumb rubber facility which achieved operational stability in only Q4 of FY26. Under Phase 1B which is currently underway and likely to be commissioned entirely by February 2027 in phases, we plan to establish a recovered carbon black facility along with expansion of additional lines of tyre pyrolysis capacity.
Notably, our cumulative investment in the PYROVA energy platform up to March stands at approximately 79 crores, broadly equivalent to the cumulative EPR income recorded by the company between FY24 and 26 reflecting our approach of reinvesting these EPR inflows towards building future growth platforms and strengthening our long term presence and in the circular economy landscape in the country, a meaningful part of the capital intensity, incubation costs, commissioning expenses and organizational investments associated with these businesses have already been absorbed.
Going forward, our focus will increase towards improved utilization, customer approvals, operational stability and therefore value realization as utilization levels improve across reclaimed rubber, continuous pyrolysis, crumb rubber and the upcoming RCB capacities. We believe these investments position GRP to progressively improve both scale and operating leverage over the coming years. We’re targeting a growth capex of approximately 90 to 100 crore during FY27 with continued focus on disciplined deployment and further enhancement of solar and wind energy usage across our operations in Gujarat.
Ladies and gentlemen, FY26 was undoubtedly a demanding year for both the industry and grp. However, periods of volatility also create opportunities to strengthen our competitive positioning, build our capabilities and prepare for the next cycle of growth which we believe at GRP we are at an inflection point for while the near term environment may continue to remain dynamic, we believe the underlying direction of the industry remains strongly favorable and our focus therefore remains clear. Disciplined execution, operational stability, student capital allocation and converting the investments made over the last few years into sustainable long term growth and profitability.
Lastly, I’m pleased to share that the Board of Directors of the company has recommended a dividend of 3.5 rupees per equity share in line with our payout policy as a percentage of profit subject to approval of all shareholders at the ensuing agm. With this, let me hand over the call to Shilpa to take you through the financial highlights.
Shilpa Mehta — Chief Financial Officer
Good evening everyone. Let me start with Q4FY26 performance highlight total income for Q4FY26 stood at Rupees 1.450 million as compared to Rs. 1606 million in Q4 of FY25 reflecting a decline of 10% year on year basis. The base quarter had benefited from higher EPR credit recognition with epr gains of rupees 305 million in Q4 of FY25 compared to rupees 66 million in Q4 of FY26 that is reflected in gross profit and EBITDA as well. In addition to this, the further this income decline reason is continued pressure in export demand across certain key markets amid global macroeconomic and tariff related challenges.
Gross profit for Q4 of FY26 was at Rupees 666 million as compared to Rs. 936 million in Q4 of FY25 while gross margins stood at 46% for the quarter. Margins were impacted primarily due to adverse product mix export related pressures and continued volatility in raw material costs across select categories. EBITDA for Q4FY26 is at Rupees 94 million as compared to Rupees 331 million in Q4 of FY25. EBITDA margins for Q4 of FY26 is at 7% as compared to 21% in Q4 of FY25. The decline was largely attributable to lower gross margins, weaker export volumes, initial scale up cost in newer businesses and impact of subdued operating leverage.
During the quarter the company reported a loss of Rupees 13 million for Q4 of FY26 at PAT level. Our subsidiaries GCSL and GSPL reported combined income of Rupees 48 million during the quarter with an incurred loss of Rupees 12 million. However, these businesses continue to scale and stabilize operations. We expect them to contribute meaningfully to profitability over the medium term. Now coming to FY26 performance highlights which is annual highlights. Total income for FY26 to date Rs. 5380 million as compared to rupees 5.
5518 million in FY25 reflecting a decline of 3% year on year basis. Again, this is the same reason of FPR credit recognition which was the which was recognized in quarter Q4 of FY25 for past period that that is coming to EPR credit recognition during FY26 stood at rupees 202 million whereas the same was rupees 434 million in FY25. So that reflects the 214 million of prior period accruals considered in Q4 of FY25 creating a higher base for comparison. They are continued to witness software export demand, tariff related disruptions and pricing across certain businesses.
Gross profit for FY26 stood at rupees 26. 37 million as compared to rupees 29. 80 million in FY25 while gross margin stood at 49% as compared to 54% in FY25. Margins were impacted primarily due to pressure on export realizations, raw material volatility and lower spreads across select businesses. EBITDA for FY26 today rupees 429 million as compared to Rs. 694 million in FY25. EBITDA margins for FY26 is at 8% as compared to 13% in FY25. Adjusted profit after tax for FY26 stood at rupees 46 million after accounting for one time impact related to labor code implementation amounting to rupees 14 million.
Other one time impacts during the year included discontinuation of operations within the policy composite business resulting in a write off of rupees 79 lakhs. Additionally, expense of 42 lakhs were incurred towards QIP process following expiry of approvals without issuance. The company also incurred forex related losses of Rupees 41 million during the year. PYROVA business commercialization phase resulted in EBITDA and fat loss of rupees 24 million and rupees 85 million respectively during the year from September 25 onwards, our subsidiaries GCSL and GSPL reported combined income of Rupees 211 million during the quarter.
During the year with an incurred loss of Rupees 47 million, the company’s debt to equity ratio stood at 1.15 in FY26 as compared to 0.76 in FY25 primarily on account of strategic growth, capex and investments in new business initiatives. In addition, the Board has recommended a dividend of rupees 3.5 per share for FY26 representing 35% of the face value subject to shareholder approval. This reflects our continued commitment towards delivering long term value to shareholders while maintaining the financial discipline and Investing in future growth opportunities.
With this I now open the floor for una.
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 touchtone telephone. If you wish to remove yourself from
Unidentified Participant
The question queue,
Operator
You may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Tanmay Golecha with 361. Please go ahead.
Unidentified Participant
Hi, am I audible?
Operator
You are audible. You may proceed.
Unidentified Participant
Hi, I wanted to ask how much the one time loss be accounted for from the polymer composite business in Q4?
Shilpa Mehta
It is 79 lakh on account of actual write off. But business wise also could be notionally it could be to the tune of 40 to 50 lakhs more.
Unidentified Participant
Okay. And considering crude prices are so high, did we benefit while selling the pyrolysis oil? Were the realizations higher on that side and does that continue to happen in Q1 and Q2
Harsh Gandhi
As far as Py Oil is concerned? Tanmay, I think we got some benefit as far as March is concerned because there was the impact was only to that extent limited to the month of March in this quarter. Yes, we are seeing a realization which is higher than what we saw in more or less October to EB of last year meaning October 25 to February 26. Whatever we saw as a realization definitely in this quarter we are seeing it marginally higher than that. But the demand for fuel oil in the country is mostly in the road surfacing industry.
And while oil prices are up, the road construction activity in the country is down on account of bitumen non availability due to the West Asia conflict. So there has been some sort of impact on volumes even though the price is marginally better than the previous period.
Unidentified Participant
Can we quantify net margins for our different business segments, the RR and non RR
Harsh Gandhi
Come back again, what’s the specific question?
Unidentified Participant
Can we quantify the margins we estimate for FY27 for each business segment that we have?
Harsh Gandhi
I think the segment reporting is done in accordance with the stock exchange requirements at the moment the segment reporting and the margin is provided on that basis in the stock exchange financials.
Unidentified Participant
Yeah, no, I’m asking for the estimates of FY27. Where do you see margins?
Harsh Gandhi
I mean again not been giving too much in terms of the guidances in that sense but yeah, I mean we are seeing the reclaimed rubber margin actually through most of 2026 has been impacted on account of the split between domestic and exports. If you see the export revenue has dipped by about 1112 percent while domestic revenue has grown by about 11%. But as we keep saying that the domestic margins are lower by about 200, 250 basis points over the export margins typically. And so therefore to that extent the overall margin number has been lower as we attempt to recapture the lost export share.
And assuming that we get back to the similar levels of higher of export revenue from past, I would imagine that the restoration of the margins will happen through this year as far as the reclaimed rubber is concerned. And this is mainly because the US volume that was lost is starting to come back and we expecting that that will be entirely restored in FY27. So that’s as far as reclaim is concerned. As far as the other non reclaimed businesses are concerned. Again as mentioned earlier on the call, the pyrolysis business, while is now stable, is continuing to only supply to the fuel oil sector.
The margins will be meaningfully impacted once recovered carbon black facility is operational which is likely to be in the second half of the year.
Unidentified Participant
Got it. Okay, thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question you may please press Star and one. Our next question is from the line of Rohan Mehta with Max Capital. Please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity, sir. Firstly, you have indicated that US tariff related disruption impacted the Reclaim rubber revenues materially this year in FY26. Now, since tariff conditions you’ve seen improving since February onwards, what has been the kind of recovery trend that we have seen in exports and customer order inflows since that time? During April and May now? So how has the customer engagements been since the tariff situation started easing?
Harsh Gandhi
Sure. Do you have any other questions more so I can sort of take them all up together or. I’ll be happy to answer this one.
Unidentified Participant
Yes, yes. So I’ll just add one more. So you also added a meaningful, you know, a lot of margin pressure due to elevated RM cost in the key reclaim grades. So I just wanted to get a sense that you have the RM cost stabilized now and you know, how much pricing pass through has been achieved, you know, in quarter one so far. And lastly just, you know, what is the kind of incremental EPR income that we can generate from the new pyrolysis and RCB capacities. So that those are my questions.
Harsh Gandhi
Thank you. So I answer each of these as far as EPR and I’ll go backwards as far as the questions are concerned as far as the EPR income from pyrolysis is concerned, we’re awaiting certain government approvals for the project before which the grant of the EPR credits will accrue to us. So as of now, the numbers do not accrue. So what do you call it? Include accrual of EPR revenue for the year of FY26. We will accrue the income only once the approval from the PCB comes through for the particular unit.
Given that there are delays as far as the portal is concerned, we are expecting and hoping that within the next couple of weeks we will have the approvals in place and as a result accrual on a retrospective basis for the entire pyrolysis business will be accounted for either in this quarter or in Q2, which will be in H1. So definitely by H1 the EPR income will get accrued as far as the quantum of credits is concerned. I think there’s a detailed slide explaining the extent of credits that we would generate.
And because this is a continuous plant producing both pyrolysis oil as well as the char to begin with, we will generate credits at the rate of 0.8% in terms of the weightage after the conversion factor. As and when we build the RCB business and we are able to successfully sell that to the tyre companies, then the weightages change for the char which is converted to RCB and the revenues from that will be proportionately so. Hopefully that answers the question on the EPR as far as the RM margin part is concerned.
I maintained that on multiple calls that this is a particular SKU where we’ve seen a 43% increase in the RM cost and that led to margin erosion for most of Q2, Q3 and part of Q4, we were able to sort of restore it because there was some sort of softening of that particular product category in Q4, but post February. However, on the other side, I maintain that some of our major sales of that particular SKU is to tire companies where we have either annual or half yearly contracts when it comes to pricing and therefore our inability to pass the pricing is why we kind of took a hit on the margins.
But to answer your question, as far as the margin is concerned, it has been now entirely kind of factored into our cost structure. And the Revised pricing starting April 27th captures the entire. Sorry, April 26th captures the entire impact of the raw material cost. So going forward in this financial year, at least as things stand right now, the pass through of the margins has been a pass through of the cost has been entirely obtained by way of price increases. The last question, which was your first question, I’m taking it last, is the impact of the US tariffs.
So the impact of the US tariffs on volumes was on two counts. One is direct exports to the US which we had a direct hit and reduction in volumes. But there was also an indirect hit on volumes to countries where we exported and tire companies use those as base for export of tyres into North America. I mean these are countries like Thailand, Vietnam, Indonesia where we supplied a lot of our reclaimed to and that then in turn produced tyres were sold in the North American markets. So as far as recovery is concerned, we more or less recovered the entire volumes of volume that was lost in North America directly.
However, some part of the indirect volume that was lost has come back but a large part of that indirect volume is not recovered yet. On the overall front, however, because we were able to offset this and grow in the domestic market as things stand today, our order book as of now is much stronger and higher than what we’ve had for most part of FY26 on account of this new business and the recovery in the North American markets. I hope that answers the questions that you put out.
Unidentified Participant
Yes, yes, definitely. Thank you so much sir, that was very helpful. Thank you and wishing you all the very best.
Harsh Gandhi
Appreciate it.
Operator
Thank you. To ask a question, ladies and gentlemen, you may press star and 1. Our next question is from the line of Divi Agarwal from Ficom family office. Please go ahead.
Unidentified Participant
Yeah, hi sir, thanks for taking my question. So sir, I list down my questions and then maybe you can answer it.
Harsh Gandhi
Sure.
Unidentified Participant
So sir, first question is in the presentation you’ve mentioned that you have spent around 170 crores on capex from FY24 to 26. So can you help us with the breakup in terms of how much went to the pyrolysis plant, the new plant? Another segment as well. A detailed breakdown would be very helpful sir. Secondly, on the pyrolysis side, what was the revenue contribution from the crumb and TPO in Q3 versus Q4, FY26 and specifically on the TPO side I wanted to ask, can you throw some color on the feedback received from the petrocam players on the usage of GRP tpo and what is the strategy for maintaining the consistency of the TPO grade And what where are we right now in terms of the customer approval in terms of tpo?
Next, in terms of the prices of oil that has gone up. So I think the TPO prices might have also gone up. So just wanted to know what margins can we expect from the TPO business? And lastly, on the new RF side, what has been the adoption and feedback from the customers?
Harsh Gandhi
Sorry, can you repeat the last part? And what is it? The new what
Unidentified Participant
New reclaimed rubber. The new reclaimed rubber. The new technology reclaimed rubber that we produce. What has been the adoption and feedback from the customers?
Harsh Gandhi
Can I just summarize your questions because I see five questions. Just want to make sure I don’t miss anything. First question was on a breakup of the capex of the 170. The second is standalone. How is the TPO crumb in CHAR or the whole pyro value chain doing as a business in terms of stabilization? Third was within that TPO prices are moving up. How is or rather oil prices are moving up? What is the correlation on the TPO prices? Fourth question was feedback on customer approvals and the petrochemical industry.
You know, feedback on the
Unidentified Participant
Tpo. Yeah,
Harsh Gandhi
On the tpo. And the last is on the new reclaimed rubber. Everything. So as far as the I’ll not do it in any particular order, but so one is that the TPO crumb and char, as I mentioned that the stability in the operations is kind of coming in or rather has come in entirely. We are kind of operating at beyond 85% utilization on a monthly basis, which is is equal to or ahead of what our expectation as far as the plant is concerned. And therefore that stability is now kind of helping us with better predictability around the product as well as the processes.
I think we have therefore a good sense of what we need to do in terms of changes from the original configuration to what is required when it comes to the new lines that we sort of invest in as far as feedback from or rather as far as the TPO itself is concerned. The current market is combination of three outlets. One is in the fuel sector and used again as a replacement to fo, mainly in the road construction industry, used in industrial furnaces as fuel. And third is the petchem value chain as far as the first is concerned.
And I mentioned to another question that there is softness in demand for road construction. So therefore there’s some sort of demand drop in there, but the prices remain comparable to how or rather behave in similar fashion to how FO prices are moving as far as the industrial furnaces are concerned. There is still some work to be done to improve the properties of the product to kind of be able to use as the fuel for industrial furnaces. And we are more or less close to achieving those specs. And we are in the validation with several Customers for uses use in the industrial furnace application.
As far as Petchem is concerned, it will be a longer wait. Our approvals are ongoing. Conversations with several in the Pet chem value chain have been initiated. Sampling is ongoing and as and when there is success we will sort of announce that as well. As far as the new reclaimed rubber is concerned, approvals are coming through, trickling in slowly but surely. Customers are taking a slow approach in improving or increasing the volumes. But we have committed to add another line because we have seen the traction on ground.
So therefore by end of first quarter another line of that new technology will be commissioned in the same location in Sholapur. And with that the two lines together will get to a capacity of closer to 700 tons a month from the current, about 350 tons a month. So that is a positive development. Utilization is moving up. We’re not close to the 90% yet, but we have adequate visibility of orders and therefore we sort of decided to go ahead and add the other lines. And the last part is, you know, the breakup of the CapEx.
I would say roughly 50% of the CapEx has been spent on the Pyrova energy business. Roughly about 30 to 35% if I may, is in the reclaimed rubber in terms of this new capacity expansion as well as the new technology that we put in. And roughly about the balance, about 15 to 15 odd percent is in other businesses including in the energy space because we have invested in SPV for power offtake in Sholapur and in Panoli which will be set up towards the second half of this year. But investments to that have also been made and these are mostly in solar and wind energy investments in addition to some amount of investment for the plastic business as well, mostly for debottlenecking and so on.
So that’s broadly the breakup of the 170 that has been spent over the last three years. FY24, 25 and 26. I think I’ve answered all your questions.
Unidentified Participant
Yes. So just a follow up on this. So on the TPO time, sir, can I request for the
Harsh Gandhi
Follow up to be taken up later? I think I’ve given enough time that maybe more people waiting in the queue, you can come back once we
Unidentified Participant
Thank you. Thank you sir.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may press star and 1. Our next question comes from the line of Rajvi Shah from Bright Securities. Please go ahead.
Unidentified Participant
Sorry to interrupt.
Operator
You have a lot of disturbance in the background, Ma’. Am. You are audible but there’s a lot of disturbance. In the background.
Unidentified Participant
Now is it better?
Operator
All right, please go ahead.
Unidentified Participant
Yeah, so my first question was that you discontinued the polymer composite contract manufacturing business due to weak viability. Are there any other non core or low return segments under strategic review? And the second question I had was. I’m really sorry
Harsh Gandhi
Rajiv, but I didn’t follow the first part of the question. I did pick up till the time you said that you closed the polymer composite business but I missed the part after that. Can you please repeat?
Unidentified Participant
Yeah, so I said you discontinued the polymer composite contract manufacturing business due to the weak viability. Are there any other non core or lower return segments under strategic review? This is the first question and the second one is over FY24 to FY26 the company generated nearly 79 crore of EPR income. As Pyrolysis, Crown Rubber and CR RTB capacity scale up further. How should we think about the long term contribution of epr? Lend shares to the overall profit.
Harsh Gandhi
Again, I’m sorry if I didn’t follow the last part. You mentioned something about 79 crore of EPR but I didn’t catch the rest. I’m sorry, could you get to a more clearer line or place because it’s very difficult to pick up. But I’ll attempt to answer your first question in the meantime which is on polymer composite. Yes, we closed down the polymer composite because of the weak viability, mostly to do with the tariffs from North America. And for the period of time where it was at 50%, the customer of ours decided to relocate.
So by the time the decision to sort of rescind the tariffs came, which was in the month of February, the call on closure of the business had already been taken and therefore the equipment has already been moved out and therefore that particular business was already shut down. Are there any other non core businesses that are under review along similar lines? Answer is no. I think we clear that the plastic, which is a combination of nylon and polypropylene will continue to sort of will require some patience but have a strong potential and therefore we continue to maintain our position there.
Reclaim rubber of course continues to be the mainstay and therefore we are strengthening technology and making the processes more efficient. And the newer business is the energy business, Pyrova as we’re calling it. Obviously it’s too early to say that they’re doing any review because that’s a business that we have extreme confidence in. I hope that answers your question.
Unidentified Participant
Yes sir. Just one more question which I had. Was that over FY24 to 26 the company generated nearly 79 crore of EPR income. I think pyrolysis from Prabhur and RCV capacity scale up further. How should we think about the long term contribution of EGR link revenue to overall property?
Harsh Gandhi
Sure. So again I think we put out of the first time the capacity aspirations or targets that we have in our investor deck on this entire business. And I guess you know part of it will be towards crumb and the rest of it would be from pyrolysis in the sense that we will produce the tpo, char and carbon lakh out of it. At this stage it is very difficult to estimate what will be the percentage mix of crumb, char, DPO and RCB and steel. So therefore a little difficult to be estimate. But yes, there will be a meaningful impact and meaningful contribution of the EPR income coming in from there with the new weightage for these materials and at the new conversion factor which is be at about 0.8 which in Reclaim’s case we have at about 1.3 times is the conversion factor.
As far as pyrolysis oil and char is concerned the weightage would be at about 0.8 and the conversion factor would be roughly I think one and a half times or thereabouts. So you can estimate on that basis. But at this stage we are not in a position to give you a complete breakup of percentage volume of char, pyro oil and crumb rubber.
Unidentified Participant
Okay sir, that is helpful. Thank you.
Operator
Thank you. Participants who wish to ask questions may please press star and one. Our next question is from the line of Jigar Shah with elevate. Please go ahead. Jigar Shah, your line has been unmuted. You may proceed with your question.
Unidentified Participant
Yes, yes. Sorry sir. So good evening. I just had a couple of questions sir. How should we think about the demand recovery in the engineering, plastics and repurposed polyleafins business over the next 12 months? I mean which end user industry are we are which end user segments are showing the strongest traction currently?
Harsh Gandhi
I didn’t mention in the thing but it’s clearly automotive. It’s driving the demand there both impact in PP as well. While packaging demand continues to be steadily growing as I’ve indicated in the past, margins from the packaging sector are fairly low and therefore our pivot towards automotive is starting to help us and we’re seeing the strongest demand coming in from automotive. I think there’s enough literature out there to figure out that automotive industries coming under EPR wherein there will be mandates on use of circular materials within vehicles and I think that is driving A lot of projects on ground with several OEs.
And that in some ways we are seeing as likely offshoots of demand growth for us within the plastic ecosystem. If you look at an automotive, polypropylene and nylon are the top two polymers, or rather top two plastics that are used in the vehicle. So clearly as the drive towards circularity in the automotive space increases, demand for recycled polypropylene and recycled nylon, which is polyamide, will be the strongest. And that’s what we are banking on.
Unidentified Participant
Okay, got it. Secondly, the low cost Chinese imports continue to impact recycled polyurethanes. So I mean, has the competitive intensity worsened further post Q4 or are the spreads beginning to stabilize?
Harsh Gandhi
Didn’t follow that entirely. Can you please repeat that question, Jigal?
Unidentified Participant
Yeah, so I wanted to ask that you mentioned that low cost Chinese imports continue to impact recycled polyole fins. So has the competitive interest intensity worsened or worsened post Q4 or are the spreads beginning to stabilize?
Harsh Gandhi
No. So when I said the imports, the Chinese imports, I meant the Chinese imports of virgin polypropylene has been very, very aggressive as far as India is concerned. So as a result, virgin polypropylene prices have dropped. And that is the reason why the competitiveness of recycled material vis a vis the virgin polypropylene that Delta had reduced or diminished. And that’s the reason that our margins as well as the volumes took a hit on the PP side. And this is mostly true for the packaging sector, which is honestly a little, I would say less stringent in terms of the quality expectations compared to automotive.
Not saying that it’s poor quality or inferior quality, but ability for the packaging industry to absorb the Chinese material was far greater and that affected both the demand as well as margins for that portion of the business.
Unidentified Participant
Got it, got it. And sir, what is the normalized EBITDA margin post PYROVA stabilization and export recovery?
Harsh Gandhi
I think when you talk about PYROVA stabilization there’s again happening in phases. As I mentioned. First phase was the one line of the reactor. The next phase which will be in this year will be the setup of the recovered carbon black and thereafter the additional lines of reactor capacity that will come through. So net net the full year effect of that will kind of be known only in FY28. But we are expecting that the PYROVA energy as a business in itself will be high double digit EBITDA margins is the expectation and overall benefit on the reclaim will also come through because of the synergy of raw materials.
And therefore there’s expectation of a few hundred Basis point improvement in the reclaimed rubber EBITDA margin as well. So that’s the outlook as far as I can see it and as far as we are aiming for and I would say the full impact will be all available in FY28. Of course some improvement will also already be seen in FY27 as the utilization improves.
Unidentified Participant
Got it. And just last question from my end. I mean with a targeted FY27 capex of around 9200 crores and with subdued profitability currently, how should one think about funding internal accruals or incremental debt or strategic partnerships or maybe even qit?
Harsh Gandhi
So I think as of now, as things stand right now, and I think Shilpa has taken you guys through the debt EBITDA as well as the serviceability ratio. I think our serviceability ratio remains fairly strong. So at this stage there’s no major pressure as far as the balance sheets are concerned. We do have unutilized limits from the loan sanctioned by DFI Proparco and as a result we will use prudent mix of both that debt as well as internal accruals. We have some amount of EPR credits that remain unsold which we could sort of also trigger for sale and as a result be able to realize cash.
So there’s comfort on the cash flow. There’s no pressure as far as the cash flows are concerned.
Unidentified Participant
Got it, Got it. Thank you. Thank you very much.
Operator
Thank you. Our next question is from the line of Ritesh Poladia with Girig Capital. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity sir, just on apr, what’s the APR credit in the balance sheet? Also what are the prices going for the EPR credits? Second on Paralysis Oil you said your right now usage is more into the road construction but I believe it can be for the industrial fuel in cement, steel and power companies also. So what are the changes to be done or how this pyrolysis oil application moves? Also if you can give us the capacity once the entire capex is over by February 2027 so we can have some idea on the EPR.
These are the three questions.
Harsh Gandhi
Thank you so much. So I’ll again answer these in repeat as far as the capacity is concerned after all of these investments again we put out that we are adding two reactors of pyrolysis which will take us to about 45,000 tons of pyrolysis capacity and our recovered carbon black facility that is being set up is about 12,000 tonnes. So roughly give or take with the pyrolysis process roughly 40 to 45% after removal of the steel. Between 42 to 45% is the generation of oil, about 40% is the generation of char, which part of it will get covered, will get converted to recovered carbon black.
And we do have surplus crumb rubber capacity as well. Because our crumb rubber capacity is in excess of 45,000 tonnes, it will be closer to about 65 odd thousand tonnes. So that’s the broad breakup after this phase of expansion or this phase of Sholapur Capex is concerned is completed. To go back to your question on the EPR pricing, I think the EPR credit pricing remains at more or less the floor price at the moment, which is at about 2.52 rupees a kilogram. And we have contracts with several tire company customers for quarterly sales of such credits.
We do have some credits that we prefer to sell on the spot market. So while I would say about 85% of our credit generated are contracted, about 15% of our credits remain open on the spot market and we trigger sales based on cash flow and pricing requirements. Your question was whether there’s any EPR credit sitting on the balance sheet. Answer is no. We kind of are approving everything in the income, so more or less everything is reflected in the in the balance sheet on an accrual basis, but it also in the revenue portion.
And the most important and interesting question that you asked on the oil application, in fact I mentioned this when somebody else asked the question. The current EPO has three applications. I mentioned road surfacing, industrial fuel and the PETCHEM value chain. And I think the value accreditation or value accrual will be based on those three. I mean with the road construction activity and being sold in that segment will be the lowest price point. Moving up the price point when it is used in the industrial furnaces and boilers and then even higher if it is used in the PET Chem value chain.
At the moment we are able to sell it to the fuel market. But in the industrial furnaces and steel plants and cement plants, as you mentioned, there is some amount of refining required to move up the value chain through upgradation of the flash point and reduction of the sulphur and so on, we’ve achieved that in the process. We are in the process of homologation and validation. So I mentioned this to one of the other speakers as well, that we will soon start to recognize or start to sell some amount of our TPO to that sector as well.
As far as the Petchem is concerned, the approval process and cycles are a little longer. So as and when we do get those approvals, as I mentioned, we will make those announcements to the investors at appropriate time. But yes, efforts are being made to upgrade the EPO such that it is usable in the PET Chem value chain as well. And when I say petchem value chain it could go straight away into the refinery or for manufacturing of carbon black or for production of certain type of specialized polymers as well.
And we are exploring and working closely with companies across all three Petchem value chain players.
Unidentified Participant
Just one addition to this, sir. If road sector application is X, what will what can be a realization for petcan?
Harsh Gandhi
Too early to predict given the way oil prices itself are changing. So I mean you know, earlier the delta between FO lshs which is the diesel and then the NAFTA or cbfs which is carbon black feedstock, there was a lot of predictability and the delta between each of these different product categories was more or less fixed given the way the geopolitics is. From what I understand, and pardon my ignorance or pardon my limited knowledge, but the understanding is that those deltas are no longer the same as they used to be until a few months ago because the crude availability from different parts of the world is changing.
So given that context, I mean it’s very difficult for me to put out how many X of the price or you know what the percentage to fo price vs lshs price vs CBFS price etc. But broadly when one looks at replacing in the Pet Chem value chain you’re looking at an equivalent of an after CBFs. When you’re looking at an industrial fuel you’re looking at an equivalent of an LSHS comparison. And when you’re looking at road construction you’re looking at an FO equivalent. So that’s broadly the benchmarks but the delta within those are changing quite dramatically.
So very tough to put a number to this.
Unidentified Participant
That helps. Thank you very much.
Operator
Thank you ladies and gentlemen. That was our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you sir.
Harsh Gandhi
Thank you again for the call. Again as I mentioned, but I’d like to reiterate that FY26 has been a challenging year in terms of short term performance but our belief continues to grow stronger for each of the three businesses that we are sort of building the long term play for. And therefore with that conviction we continue to invest in the capex to ensure that the long term plans continue to be adhered to even though there will be short term blips on account of externalities which are beyond our control.
Thank you for the support, understanding and the depth of questions that are being raised every conference call. It gives us a lot to think about as well. Thank you again.
Operator
Thank you on behalf of GRP Limited that concludes this conference. Thank you all for joining us. You may now disconnect your lines.