Tolins Tyres Ltd (NSE: TOLINS) Q4 2025 Earnings Call dated May. 29, 2025
Corporate Participants:
K. V. Tolin — Chairman and Managing Director
Sojan C S — Chief Financial Officer
Analysts:
Divakar Rana — Analyst
Keshav — Analyst
Prashant Galphade — Analyst
Pranav Shrimal — Analyst
Dhaval Jain — Analyst
Presentation:
Operator
Sa sadies and gentlemen, good day and welcome to the q4 and fy25 earnings conference call of tollens tyres limited hosted by add factors pr. We have Dr. K.v. tollen, chairman and managing director, Mr. Sojan c.s. cfo and Mr. Shankarakrishnan ramalingam. The Independent Director at Tollen Tyres Ltd. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions once the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the CONFERENCE over to Mr. K.V. toland. Thank you. And over to you sir.
K. V. Tolin — Chairman and Managing Director
Thank you and good evening everyone. Thank you for joining us today on Tallinn Styles earnings call for the fourth quarter and full year ended March 31, 2025. It’s my pleasure to speak with you today as you reflect on a year of transformational progress and sustained financial outperformance. FY25 has been a pivotal year for dollar dies in the face of global macroeconomic uncertainties, raw material price volatility and logistical disruptions.
We delivered a 28.7 percentage year on year revenue growth alongside a 49% increase in net profit. This outcome reflects not only our operational agility and strategic foresight, but also the fundamental strength of our diversified business model which includes a well balanced portfolio across geographies and products committed to innovation, cost optimization and market diversification. As yielded this commendable results, our international business, especially through our UAE operations, continues to be a robust growth driver. This combined with strong domestic traction positions us well for the continued performance in FY26 and beyond.
On a broader scale, the tire industry in India is undergoing a structural transformation driven by powerful demand side trends. The two wheeler segment, where we have a strong footprint is expected to grow at a CAGR of 5 to 7% fueled by rising rural incomes, electrifications and the gig economy.
The passenger vehicle segment is forecasted to grow at 6 to 8% CAGRADE supported by premiumization and pricing vehicle penetration. The commercial vehicles and tractors too are experiencing positive trends with a projected growth of 4 to 6% CAGR driven by. Infrastructure momentum, government incentives and a higher replacement demand. Most notably, tire exports from India are projected to grow at a 9.6 percentage CAGR, an area where dollar tires is strategically placed well placed with exports to over 40 countries across Middle East, ASEAN and Africa. The Indian tire industry saw a moderate recovery in FY25 after facing a volatile FY24 while OEM demand remained stable. The replacement segment witnessed a healthy uptick driven by increased freight movement and infrastructure development. Rubber prices saw fluctuation during the year Those stabilizing in H2FY25. The retread segment globally is gaining momentum as cost conscious logistics companies increasingly adopt eco friendly retreading solutions over new tires, a trend that directly benefits our PCPR segment. According to the Automotive Tire Manufacturers association, tire production volumes grew 7 to 8% year on year in FY25 with replacement demand contributing over 65% of total volumes over raw material prices, especially natural rubber and crude based inputs remained volatile impacting margin profiles across the industry. Our International Fund Trade Volatility in Europe on the international front, the trade volatility in Europe due to geopolitical tension slightly offset the gains. Tire markets in Southeast Asia and Africa demonstrated resilience despite geopolitical uncertainties. Export demand from Africa and GCC countries regions remain steady. The retreat segment, particularly PCTR is gaining increasing acceptance globally due to its cost effectiveness and alignment with environmental goals. As logistics companies seek ways to cut cost and reduce carbon footprint, retraining is gaining a second wind especially in the commercial fleet operations. I am happy to share that we ended FY25 on a strong operational note. Tires Division we sold 3.93 lakh tires in FY25 reflecting a 45.7% year on year growth. Utilization improved to 36.86% versus 31.68 percentage in FY24 driven by ramp up in domestic demand and expansion in Tire 2 and. Tire 3 markets trickute red rubber total PCTR volume stood at 4245 tons with a capacity utilization at 43.49%. Our wholly owned subsidiary foreign subsidiary Darling Styles LLC also contributed with a 36.24 percentage utilization up from 22.92 percentage. Exports stood at 6.40 percentage of the total revenue in FY25. We are also seeing improved traction in Middle east and East Africa. This will remain a key focus area for FY26. Against this backdrop, our operational focus on capacity enhancement, product innovation, margin protection as margin protection has delivered concrete results during the year, we also achieved a sharp reduction in depth from rupees 61.8 crores to just 0.7 crores 0.7 crores significantly strengthening our financial foundation. The capacity utilization has improved for our entire manufacturing segment and at the same time we see solid traction for all our products across the board. As can also be visible from the improved production numbers, we also maintained our ROCE to 15.7% and have consistent profit margins reaffirming the effectiveness of our operational controls and capital allocation strategy. Looking ahead, we are focusing on expanding manufacturing utilization to 75% over the next few years, broadening our product portfolio across high margin and high demand segments and deepening our presence both domestic and key international markets. We are also actively exploring strategic acquisitions to further strengthen our capabilities in urban and allied sectors. In summary, we are building a future ready, innovation led and financially sound organization. We remain steadfast in our mission to deliver strong long term sustainable value to our stakeholders. With that, now I invite our CFO Mr. Sajan CS to walk through the financials in more detail. Thank you. Over to Mr. Sargent CS
Sojan C S — Chief Financial Officer
Thank you Tony sir and good evening everyone and thank you for being with us today. Let me walk through the key financial highlights for both. Fourth quarter and full year ended 31st March 2025. Quarterly performance for Q4FY25 Revenue for the company stood at 69.53 crores in quarter four. EBITDA for the quarter was Rupees 13.6 crore with an EBITDA margin of 19.5% up from 16% in Q4 last year. This margin expansion reflects operating leverage and better product mix. Path for the quarter came in rupees 9.3 crore up by 32.6% year on year and earnings per share stood at rupees 2.56 reflecting robust profitability and financial efficiency Performance for the full year. FY25 on a full year basis we recorded operational revenue of 292 crores up from rupees 227 crores in FY24, a 28.7% year on year growth. EBITDA came in at rupees 55.8 crores, a 20.2 percentage year on year growth with a margin of 19%. Path for FY25 was rupees 38.7 crores compared to rupees 26 crores in FY24. This is an increase of nearly 49%. We have also made major strides in delivering our balance sheet, reducing debt from 61.8 crores to 0.7 crore which not only lowers our interest burden but also strengthens our credit profile. Our current ratio now stands at 7 and return on capital employed stands at 15.7 percentage, underscoring our improved capital productivity Then Segmental and Subsidiary Highlights Our wholly owned foreign subsidiary Tollen Tires LLC in UAE has contributed significantly to our revenue and margin growth. The UAE facility enhances our access to GCC markets and act as a strategic export hub. Our product mix continues to evolve in favor of higher margin products and we are also reaping benefits from our backward integration into bonding, gum, vulcanizing solutions and tubes. Strategic Priorities Ahead as we start. Step into FY26. Our financial strategy will revolve around scaling, utilization and improving throughput efficiency at our remanufacturing facilities. Investing in innovation and R and D to support product diversification and maintaining prudent cost control and working capital discipline even as we explore inorganic growth avenues. In conclusion, we are entering a new fiscal year with strong momentum, a robust balance sheet and a clear path towards profitable growth. Thank you and we look forward to your questions.
Questions and Answers:
Operator
Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 comes from the line of Divakar Rana from Prudent Equity. Please go ahead.
Divakar Rana
Yeah. Hello sir. Good afternoon. My first question is on the Apollo uptake agreement. So have you started shipping?
K. V. Tolin
Yes, we have started shipping. It has already been operational and we are going to the next phase in the quarter, second quarter onwards.
Divakar Rana
Okay, so we started from Q1, right?
K. V. Tolin
Yeah. No, no. Q4 of 24. Sorry, 25.
Divakar Rana
Okay. So which month? Sir, I think we got the agreement in the month of November. So
K. V. Tolin
December.
Divakar Rana
Okay. Okay. Yeah. Okay. So in a rough calculation, sir, can this offtake agreement contribute around 100 crores to your top line in this financial year?
K. V. Tolin
No, no, no, no. Basically there is a two way agreement to the existing white labeling contract manufacturing on the PCTR which has been signed up with Apollo tags. Initially our proposal were twofold and out of which the first proposal was that we will do the entire outro thing and manufacture under the Dura band their Apollo brand and be given to them.
And so that the entire purchases, revenue booking, everything will accrue into our books which will enhance the revenue. New line and profits on the contract will automatically get accrued to the tolerance balance sheet. But initially, in order to have their supply chain secured, they had already procured materials for a reasonable period of time for pctr. So for the initial few months, the manufacturing contract that has been entered into is they would supply all the raw materials required for the product. We would manufacture them under our dedicated facility which has been created for Apollo Tires within our Kalidi factory, existing factory. And we will only be eligible for the conversion charges, which is equivalent to our earlier proposal of whatever margins that we need to protect, which is around 8 and a half to 9% is what we assigned with them. So the first few months after November signing December onwards, the first quality control checks, standard operating procedure, all those things were checked. And from December end onwards, the first consignments have started going out. So during the fourth quarter of financial year 2425, it has contributed something close to about 1 to 1.25 crores of conversion charges that has accrued to us, which if we had done through an outsourcing methodology would have probably added to about you know, equivalent amount of turnover in the top line, etc. Right now we are engaged with them for two things. One is to enhance the capacity of current production lines because the requirements are huge and they had closed down the entire PCTR facility all over the country. Apologize. So the quantum of the outsourcing is also going to be stepped up periodically. Now it will be doubled from whatever quantum that we have been doing for the fourth quarter from the first quarter onwards. And we are already engaged in discussion with them and closer to finalization that since they are also exhausting their existing raw material supplies that they have got under them, that the contract will be, the entire contract will be outsourced to us, maintaining the same profitability margin. So from this year there are good chances that though the margins will continue to be protected, that there will be a quantum jump in terms of the sales as well as the purchases. Also, this is the clarity that I want to give you on Merge. So far it has been. Whatever has been executed is only on the conversion charges.
Divakar Rana
Okay? Yeah,
K. V. Tolin
Clear.
Divakar Rana
So the next question is basically, sir, on the consolidated basis, your employee cost is rising as percentage of the revenue. So I believe we have hired some people. Employees in the execution of this order. Right?
K. V. Tolin
We have. We have. We have. Because see, if you look at the capacity utilization of tires and PCTR both here as well as in the subsidiaries as well as in the overseas subsidiary as well as in the Indian subsidiary. I’ll give you product wise FY24 in tires we were only at about 31.68% of capacity utilization.
And this year we have been able to up the capacity by FY25 to the extent of almost about 5.34%. So 5% increase in capacity utilization. An increase in number from 2,88,829 tires to 3,93,253 tires. The substantial increase requires quite a number of organized labor to be recruited in the production channels.
See basically what we had done prior to the ipo. You are aware that the promoters had gone in for acquiring the radio tires. Then the promoters are also invested heavily prior to IPO to the last two years in increasing the capacity utilization. That’s why our IPO are the next two to three to four years of time we will not have the constraint with regard to capacity. So capacity has been adequately built.
The IPO was targeted mainly with regard to the repayment of loan, making the company debt free and also augmenting some working capital towards seamless manufacturing facility to be taken care of. So the overheads had gone up primarily on account of the recruitments that have taken place both in the Tallinn tires tire manufacturing unit then in the subsidiary with regard to PCTR. Again if you’ll see the from 31.22% in replacement market PCTR 3 rubber manufacturing facility capacity utilization it has gone up to 43.49% in terms of tonnage it has gone up from 2100. Yeah. 2154.85. About 4245 tons of PCDR manufacturing.
So all this expanded capacity utilization requires the overheads to go up because for quite a period of time that we have not had a wage revision. So one on account of the wage dilution for the existing employees, second in terms of the employee benefits and the third is on account of the increase in number of people that have been recruited with regard to cater to the increased capacity utilization.
So these are the three components that have contributed the increase in wages and if you still go through the operational efficiency of the company visa vis the rest of the peer company peer comparison competitors, employee productivity wise. Visa, Visa turnover tolerance is the lowest in the industry.
Divakar Rana
Okay, two more questions. Yeah, two more questions.
K. V. Tolin
Go ahead please.
Divakar Rana
So do you plan to basically hire more employees in the coming quarters? I believe the capacity internationally
K. V. Tolin
On an ongoing basis, this will keep increasing because right now during 24, 25 we have taken two major steps. One is to rope in on the PCTR front a white labeling contract with Apollo Tires. So obviously the volumes are going to pick up there which will require more number of people to be recruited.
So as we go to the next higher levels of growth and higher levels of capacity utilization. Right now we are at an average of 35 to 40% of the capacity utilization. We want to reach a threshold of about 75% in the next three years time. So year on year, as we keep ramping up the capacity, there will be requirement of people on the ground and we will continue to recruit.
But that will again commensurate with more cash flows, more revenue growth and things like that. So it’s not going to impact the margins or it will only facilitate better utilization of capacity and more revenue to accrue in terms of the stack from the stakeholders point of view.
Divakar Rana
Okay, and so last question. So what kind of growth are you looking for this financial year? Revenue growth.
K. V. Tolin
I think conservatively we are company, you know, you are aware that we have never been in the habit of guiding for the next year. But given the robust domestic as well as the international market scenario and the huge demand that is developing around our overseas subsidiary in Ras Al Khema, we are conservatively looking at about 20% CAGR, though the internal numbers are little higher.
But to commit, we always, you know, every word of what we spoke in the road shows in the ipo, be it Apollo Tires contract, be it TV motors on tire factory tire manufacturing, or be the capacity utilization or making the company debt free, or maintaining the profitability margins, or stocking the raw materials during March every year to higher levels.
So that July to August there is no tapping of rubber that happens during the monsoon time. So there is an artificial increase in raw material prices. So we almost talk up to about six months stocking for every every March in the last five years. So all these strategies, whatever that we explained, we have maintained every word of it.
So we are conservatively looking anywhere between 20 to 25% CAGR growth in tune with what we did in 2425. And our aim is to protect and enhance better product mix and supply chain efficiency to improve by at least a few point, few basis points. The profitability margins.
Divakar Rana
Thank you sir and good luck for the future.
K. V. Tolin
Thank you so much.
Operator
Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Keshav from Counter Silicon pms. Please go ahead sir.
Keshav
Thank you very much for this opportunity, sir. And I’m new to the company so please pardon my ignorance. So I’m trying to understand that roughly one third of the come of our revenue is coming from sale of tires. So this sale of tire is basically refurbished tires that we are selling. We are basically buying scrap tires or old tires, getting them retreaded and then selling them. Is that the model?
K. V. Tolin
No sir. We are actually in two main segments and means of ancillary segments. The main segments are original tire manufacturing and original thread rubber manufacturing for the replacement market. The company started as a retrading company only and only in the year 2005 onwards. We got into a very small original tire manufacturing in two wheelers. Now we have ramp up the facility. Now our sale composition is almost about 65.84% is red rubber. We still continue to be a replacement market player largely and about 34.16% is new tire manufacturing. And in the new tire manufacturing also we are not present in all the segments.
We are only in two wheeler, three wheeler and we are not in passenger cars etc and tractors and agricultural tires. So LCV also. So these are the small segments which are growth oriented in nature where even the crystal report reflects that. These are the 3, 4 segments within the tire industry which is going to grow in double digits.
So those are the segments that we are present. And our distribution channel also is very widely held. We are not dependent on public sector undertaking etc. Our products are mostly sold through 3377 distribution network across the country and through our eight depots which are very strategically located across the country.
This is our business model and in terms of the ancillary business, we are also into the like what the CFO and our chairman explained, we are also in the ancillary products of bonding, gum, flaps, tubes and some rubber components. Thank you.
Keshav
Right, so basically we are manufacturing brand new two wheeler three wheeler tires from scratch. Is that correct? Absolutely. That business has nothing to do with the heat reading part of the business. They are two independent businesses.
K. V. Tolin
No, no, both are in the. Both. Both are two different verticals of the company. Yes, of course they are in the same company, but yeah, they are two separate businesses. There is no. Basically yeah, one is between the one one. One is the new tire manufacturing, another is the replacement market product.
Keshav
And sir, in the new tire only two wheeler and three wheeler tires. We are manufacturing
K. V. Tolin
Two wheeler, three wheeler, LCV and tractor tires.
Keshav
Okay, LCV and LCV and
K. V. Tolin
Tractor tires. Agriculture tractor tires.
Keshav
Okay. Okay. So are we selling the tires to OEMs or to replacement?
K. V. Tolin
About 10% of our sales goes to OEM. Remaining 90% goes into the through the distribution market.
Keshav
Right, sir. So the tire business is more profitable or the retaining business?
K. V. Tolin
No, I think margin wise it’s almost the same. We are, we entire. We are at about anywhere between nine to nine and a half percent of pack is what we are able to realize.
Keshav
Now if we see all the other retreading manu companies like indirect rubber is there, Eastern tread is there, LG Rubber is there which are all listed. So the industry is not doing well at all. I mean they are in stuck in low single digit operating margins. And sir, I think the GST has also in fact adversely impacted the industry because the input credit is not available because tire I think it is in the. I think the logistics is in 5% GST bracket. So hence there is no import.
So please correct me if I’m wrong. But sir, basically the unorganized sector has actually got a boost post gst. Is that understanding correct?
K. V. Tolin
No, I think I’ll put it in two different ways with regard to the comparison of companies that you mentioned. You mentioned it. Right. And your observation also is absolutely valid the business model. If you had listened to my opening remarks, I mentioned that our channel of distribution of revenue and sales is through our eight depots and the distribution network.
That means there are two different set of markets that are available in India for retreading. I’m talking only about retreading now because you mentioned some of the index index and all those kind of companies. I’m making my reference with regard to that. Most of those companies are all volume driven and they are all dependent on the public sector undertaking business.
Collins is never into public sector undertaking business at all. The main reason being you will lose on volume. But the public sector. Undertaking business is tender based in tender. What happens is it is always cost plus model. So if you get into a tender and do a contracting with, let’s say one of the state rate transporting undertakings, if there is a hike in the raw material cost, your profitability will get impacted. Let us say indirect participates in about 10 tenders during a financial year. In about five or six they will be making profits. In about three, four they will be losing out on the margins because of the hike or volatility in the raw materials as well as in the crude oil prices. So in effect what happens is out of those 10 contracts that tenders that they have serviced the net margin, cumulatively taking the profits and losses into account, they will end up at a lower margin, which is the case, which is what is happening with organized players at a higher level when they go for volumes. What we have consciously tried to do in tolerances never participate in any of the state transport corporation. Because our capacity and products we have been in the retraining line for almost about 35 to 40 years now. And our distribution channels and depots and connect to the customer through large commercial vehicle fleet owners who are the main users of this replacement market on the retrading material is very strong. So we have continued to maintain our presence only through that. So we are able to for every retraining material, every ton of retaining material sold, we are still able to protect, retain the margin and also have the operational efficiency and the supply chain efficiency leading to our revenue sales keeping our demand intact. So this is the basic difference
Keshav
That I understood the no government business point that you made and which is obviously low margin and cutthroat business, which you are not participating. That point is well appreciated. But as far as the logistic companies are concerned, who are own a fleet of truck, let’s say, like for example, we are logistic who they have I think 6,000 trucks. So. So now if they, if you service them, then will they be able to claim input credit?
K. V. Tolin
Yeah, of course.
Keshav
Okay, so that is not a problem. I mean, no,
K. V. Tolin
That is never a problem. That is never a problem. One problem is actually for the tire and PCTR manufacturing companies. The problem that we face is see the moment, because since we have a distribution network in the depot network, we are actually once our fleet of trucks leave with the finished goods to these distributions and to our own grounds, the moment it crosses the EVA bill from our own factory gate same day, 28% GST is. Levied by the time the sales happen and the realization of this 28% comes back, there is a lead time of over 120 days. So basically your tire manufacturing or a PCTR manufacturing company has to have a very efficient working capital management system because the gestation period for working capital is quite long. So the industry association has represented this particular factor to the government. The government has always come up with the reply that since there is an anti dumping duty and there is a ban of Chinese goods in India, the demand in India for tire industry in the last three years has been very, very robust. And it has also Europe and the US has also banned the Chinese tires. So there is a huge export market which the top players like mrf, JK Tires see it and Apollo and all those people are catering. So it has opened up a big avenue and opportunity for all of them. So because that opened up market concession has been given by government. The the revisit on the GST and percentage is still not happening. So this is the current scenario,
Keshav
Right sir. Now sir, coming to our sir, our international business is far more profitable, the UAE business than domestic business. So. So going forward sir, how is the mix expected to change? Is it that the contribution of international operations is going to increase in our overall revenue and hence the margin should increase. So basically you already told us to expect 20, 25% sales growth. So. But what about margins? What kind of margin should we expect on a consolidated basis?
K. V. Tolin
There is a good scope for improvement there because right now our Russell Khema unit in UAE is only operating at about 36.24% of capacity. And with the current environment of Trump tariffs, etc. UAE is one country where there is no tariff that is applicable. And it will be very heartening to note that Tallinn Tires, Ras Al Khaimah unit is the only unit in the entire Middle east and Middle east which is into PCTR manufacturing.
So there is good scope. There is of course some challenge with regard to the receivables because that market is also open to China and China is normally in the habit of dumping. And not only dumping, there is an extended one year credit period which Chinese company extend to that market. And so what we are trying to do is step up the exports from Ras Al Khaimah into other markets, especially Middle east and Africa in a matured way where we are not participating with the Chinese. Companies in terms of the land, gas station receivables, and only to amenable countries and amenable partners where we are still able to graduate. Now, for example, from 22% of capacity utilization of FY24, we have moved up 12 percentage notch in the last one year. So there is good scope and there is good opportunity. And with no competition of manufacturer being there and the markets being very robust, I’m very sure that FY25 26 will see substantial focus being put on Ras Al Khaimah in order to improve not only the capacity utilization and revenue, but also try and scale up the margin flow on a consolidated level.
Keshav
So what kind of margins should we.
Operator
I’m sorry to interrupt. Keshav, if you have any more questions, can you please fall back into the queue so the.
Keshav
Yeah, sure. Thank you.
Operator
Thank you. A reminder to all participants, you may press time one to ask a question. The next question comes from the line of Prashant Galvade from ISJ Securities. Please go ahead.
Prashant Galphade
Thank you for the opportunity. Sir, I have two question. So my first question is what percentage of our sales come from OTR tire? And my second question is do PCTR using radial tire and tubeless tires? Thank you, sir. These are two questions from my side.
Sojan C S
Both the questions, the answer is simple. No, we are not in OTR segment. Second, we are not in radial tire segment. As I explained earlier in my question to Mr. Keshav, we are only in two tires, two wheelers, three wheelers, LCV and agricultural tires. And mainly for commercial vehicle tires is where the retrading goes. And that’s exactly the market that we are concentrated in a large manner in terms of pushing our quantum of sales.
So the OTRs and rest of the things that we are not there. But there is a current evaluation by the top management for the last few months, especially to get into OTR on a contract manufacturing basis where under the Tallinn brand somebody will make the tires and your presence would probably get created during the financial year 2526 in that particular segment.
Radial tires is something which is not in the outlook because we feel that it’s already a very overcrowded market and there are two large players already present there. Our main focus in terms of improvisation of margins etc is mainly in the retrading market. So that’s where the main focus will be. That’s where we are.
Prashant Galphade
Okay, sir, thank you, sir,
Operator
Thank you. A reminder to all participants, you may press star and one to ask a question. Question. The next question comes from the line of Pranav Shal from Pink Wealth Advisory. Please go ahead.
Pranav Shrimal
Yeah, I. I hope I’m audible, sir.
K. V. Tolin
Yeah, yeah, very much. Go ahead please.
Pranav Shrimal
Yeah. Hi, I just had a few questions, sir. Going forward, have you any CAPEX plan for this year?
K. V. Tolin
No. As I explained, you know, prior to the IPO itself, two years preceding the ipo, IPO was never in the radar as far as Talent Tires was concerned. So in terms of catering to the demand etc. And also to increase the presence in the original tire manufacturing, the promoters had gone ahead in 202122 itself to go ahead and acquire brand new tire manufacturing facility from Radau Tires in Kerala itself to take the quantity capacity five times more.
And also in PCTR they had invested heavily in the machinery to ramp up the capacity. So both in tires as well as in PCTR we have adequate and more capacity at our disposal which does not warrant any CAPEX requirement. Which is why if you observe in our RSP that we had only gone in for the repayment of loans, augmentation of working capital to be the main objects and also to investments in the subsidiary etc.
So whether it is in main standalone unit of Talentise are in the rubber commode manufacturing subsidiary of TRPL or in the Russell Kmart unit, they are all now currently, even after ramp up in FY25, they fall between 35 to 40% of the capacity utilization. So for the next three years at least there will be no necessity to go in for any capacity utilization. We simply have to work on the operational efficiencies, product mix, geographical penetration and little bit of more OEM concentrations are ramping up the production facility with the TV at motors on tires as well as Apollo tires on the pctr etc so there will be no, no requirement of any CAPEX for the next three years.
Pranav Shrimal
Got it? Got it, sir. And so going forward, how much capacity do we expect Apollo to take up?
K. V. Tolin
No, it’s getting ramped up because they have now closed down the entire PCTR production all over the country and have started outsourcing. It took almost a year for us to for Apollo to freeze the vendor which is Tallinn. Now they were in the evaluation with so many units, about at least seven or eight of them. Them and finally it got down to 2, 3 and finally on the quality which is what tolerance is known for in the market for the last several decades and the cost efficiency etc, they have now zeroed down to us. So these are like, you know, the initial stage in college where you are trying to get a foothold and test whether everything is going as per the plan. The first experience for Apollo in the last quarter of financial year by 24, 25 has been pretty good for them. So obviously from this quarter onwards that small quantity is getting doubled. So I’m sure in the next one or two years the quantity will consistently keep growing higher and higher leading to higher revenue growth and protecting the margins etc is the way we look at it. We are not putting any number because the pressure comes mainly from OEM to us. We are not putting any extra pressure on extracting volumes.
Pranav Shrimal
Okay, so is there any fixed volume commitment or sales commitment that
K. V. Tolin
As I explained in the earlier question, the quantification of revenue will happen probably during the year because we are moving away in the contract from the conversion charges into your full fledged outsourcing. So once the full fledged outsourcing starts sometime in the from the next quarter or end of this quarter, then we will know what exactly is the quantum that they are going to be giving. But it will be a very decent and sizable one.
And we are extremely confident that this relationship between tolerance and Apollo is going to grow from strength to strength and she will be Apollo Tiles will be only one of the top notch OEM customer for us in terms of percentage to revenue.
Pranav Shrimal
Got it? Got it sir. Thank you so much and best of luck.
K. V. Tolin
Thank you. Thank you. The next question comes from the line of Keshav from Counter Silic pms. Please go ahead.
Keshav
So the point you are making about the profitability of PCTR which basically is under stress for most industry players due to the participation in low margin state transport government business. So. But now if we are dealing with giants like Apollo Tires, so will they not also squeeze us in terms of margin and credit period and so on so that we will end up making a very low return on capital on that Apollo business.
K. V. Tolin
I will answer it in two ways Keshavu. First thing is we don’t compromise on quality, we don’t compromise on our operating margins. If it is not fitting within that there is enough and more demand for our products within the country itself. We will continue to deal through our 3700. Distributors and eight depots to compensate for because Apollo was never in the radar till 2024 in the last 40 years is an entrant only in this year. And there is a dire need for Apollo to be operating with tolerance. One, in terms of the market demand that they have got on hand, two to retain their brand, three, at the end of the day that the difference between margins is what, 150 basis points or 200 basis points is nothing for the kind of quality that they are able to extract from us. So I don’t foresee that as a challenge at all. I think we are well positioned and in fact I don’t know whether I can make that bold statement that is a mutually dependent relationship where the dependency on Apollo on us is little higher.
Keshav
Great. Sir. Sir. And coming to the operating margins on consolidated basis, we are doing something like 19, 20% operating margin. So will this margin hold or Sir, I understand recently rubber prices have increased, so will that adversely impact our margins or sir, what should the shareholders expect as far as operating margin is concerned?
K. V. Tolin
All I can say is we’ll protect the margins.
Pranav Shrimal
So 20% margin we can assume going forward.
K. V. Tolin
I have always mentioned in every roadshow as well as in the earlier earning calls that we never give a particular percentage. We always operate keeping the raw material volatility for which we have taken adequate and enough steps. If you look at our balance sheet, we are holding about 139 crores of inventory as of March. Whereas through the entire year, if you see, the average holding will be hardly about two and a half or three months.
So every month of March we stock the highest, keeping in view that we are proximity to the natural rebel production center. Kerala. In Kerala, from our factory and from the month of June onwards, invariably up to about August, there is no tapping of rubber that takes place, creating an artificial demand in the market. Thereby the raw material prices are always not words.
So in order to insulate us and in order to protect our margins, we always talk for about five to six months of our next financial year requirements so that we are not hit by the volatility in the raw material prices. Which is why in the last three years we have been able to protect, retain and have a very efficient supply chain efficiency and protection of margins in terms of our profitability.
In terms of going back to your original question, I would probably put it that we would always operate in the region of about 17 to 20%. % on the EBITDA side and about 10 to 13% on the net profit margin side. And the net profit margins in our case is slightly better compared to rest of the players because we have a very strong Russell KMA unit which is operating at almost at about 20 to 22% of the PAT margin business that we’re able to get that because of no taxation and being only manufacturing unit the entire Middle East.
Pranav Shrimal
Now if we see our receivable, sir, you explained why inventory has increased and it makes a lot of sense to stock up sir now but as far as the receivables are concerned, our consolidated revenues increased by around 28% but receivables have increased by 56% year on year sir. So is it a just a temporary increase and it will come down going forward or is this the new.
K. V. Tolin
You have to always case of look at it on an average basis. You can’t go by a 31st of March figure alone in terms of deciding the number of days of receivables etc. Through the year. If you see we are always at about 77 to 80 days of receivables which is the market practice. Now probably we are at 117 because of two factors.
One, because of the sales that has happened in March which will get subsequently realized in April and May, number one. Number two, as I explained we have a consolidation of a Rasul Khema unit which has got a longer gestation of receivables. So on consolidation those figures also will come into account if you do a standalone analysis. We are still at the same level of last year for the Indian unit.
So it is a consolidation effect and there we are competing with China and those people are giving one year credit into the market whereas we had restricted ourselves not more than three to four months. So that’s, that’s a basic difference.
Keshav
Great, sir. So going forward sir, are we planning to expand our product portfolio like I think something to that effect is mentioned in the investor presentation also sir. So what exactly are we planning to launch some new kinds of tire which we earlier non manufacturing or what exactly are we planning on that side?
K. V. Tolin
Tolling is known for innovation. Tollene known in the market for quality. Tollene is known more in the market for different varieties of SKUs within the existing product lines that we come up with? Okay. This has been established over the years. So there will be new varieties of tires, new varieties of product, product mixes both in the PCTR as well as in the new tire manufacturing. And there are also some plans in respect to expanding the product base with regard to working with few players on an outsourcing model where they would manufacture certain amount, certain tires under our brand in the segments in which we are not present, like. Like one of them which I mentioned was otr. Etc. Those are the plans which are still ongoing. And I’m sure Dr. Tallinn is a doctorate in technology etc and he has been working with the very high end R and D professionals who have been with him for more than 15 years. 20 years of experience. So I’m sure as and when something matures, a relevant announcement and intimation to the defect once it gets crystallized will be put out in the public domain.
Keshav
Sure. Sir, as far as our retreading, I’m sorry to interrupt. Keshav, could you please reach in the queue if you have more questions? Yes, sir.
Operator
Thank you. The next question comes from the line of Dhaval Jain from Sequent Investments. Please go ahead.
Dhaval Jain
Hello sir. So I’m on the slide number 11 of the presentation and shows me the sales, sales mix that we have had. And I’m just seeing that our trade rubber and tire split has kind of. I mean from 75% of trade rubber we are down to 65% and tires have increased from 25 to 34%. So I just wanted to understand that the trade rubber if I see a yoy growth is just of 12% whereas tires is around 80% if I see the yoy growth. So I just want to understand that going forward is the growth going to be similar pattern or next three years time?
Divakar Rana
Next three years time we want to actually get Both the segments equal. 50, 50. The revenue in the next three years would be 50% from PCTR, 50% from Time Manufacturing.
Dhaval Jain
Okay. And also the fact that I want to know if you can provide me the margins with the tree dropper as well as tires if you can.
Sojan C S
No, I think tires, the thread rubber will be about 100 to 150 basis points at that level higher than that of the tires.
Dhaval Jain
Okay. If the trade rubber is higher and the tires is like a 100 to 150 pieces much lower. If we go at 5050 on the console basis, we might have a little bit of margin dip then. Correct,
Sojan C S
Sir. I am talking about it on current date when we get into the increase in percentage of market penetration. Obviously we will go in with product mix and products which are going to probably enhance our profitability. Mix and use our geographical positioning on the UAE front. Also in protecting the margins. Whatever we do will be always at the behest of protecting the margins. It is not some, it is not something that you have to achieve. 50, 50. So even if it, even if it is the sacrifice of margins. So no.
Dhaval Jain
Okay. Yeah. And one more on the same point that we have our domestic versus the exports a bit skewed right now. Like it’s 94%, whereas it used to be 83%. So is there any figure on our mind that we want to have that split geographically?
Sojan C S
We want to go from 6.7 to at least 10% this year.
Dhaval Jain
Okay. And that will be still lower than the 17 that we did in FY24.
Sojan C S
See, 24 was a different challenge because it had few markets where we had experience for the first time. And when that. When there is lack of. There is. See, there is no great incentivization in terms of the penetration into export market. The domestic market realization and margins itself are much better. And there are huge challenges in the export market, especially in areas where there is a presence of a Chinese portfolio. Also because you may get a little better margin, you may have some percentage accrued in terms of exports, but the realization period becomes much longer.
So if we are able to have that, whereas if you are going to go into the developed markets like Europe and US etc, then it’s a different story. So that is something which is work in progress for penetration into those kind of markets.
Operator
Thank you, sir.
K. V. Tolin
Thank you,
Operator
Ladies and gentlemen. We will take that as the last question for today on behalf of Tollens Tires. That concludes this conference. Thank you for joining us and you may now disconnect your lines.
K. V. Tolin
Thank you very much to everybody.