UFLEX Limited (NSE: UFLEX) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Sachin Bobade — Moderator
Surajit Pal — Vice President of Investor Relations
Rajesh Bhatia — Group President Finance & Accounts
Analysts:
Chirag Singhal — Analyst
Prashant Rishi — Analyst
Unidentified Participant
Kaushik Poddar — Analyst
Aman Kumar Sonthalia — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, please stay connected. The conference call for Limited will begin in next few minutes. Thank you. Ladies and gentlemen, you’re connected for the UFLEX Limited call. Please stay connected. The call will begin in next few minutes. Thank you ladies and gentlemen, good day and welcome to the Uflex Limited Q3 and Nine Months FY ’25 Results Conference Call hosted by Dolat Capital. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Sachin from Dolat Capital. Thank you, and over to you.
Sachin Bobade — Moderator
Thank you,. And good evening, everyone. On behalf of Dolat Capital, I welcome you all to the Q3 FY ’25 earnings conference call of Linton. Hope you all and your family members are staying safe and healthy. From the management side, we have with us Mr Rajesh Batia, Group President and Chief Financial Officer; and Mr Subjit Pal, Vice-Chairman, Investor Relations.
Now I hand the floor to Mr Sujit Pal for his opening remarks and then we will have management remarks. Thank you.
Surajit Pal — Vice President of Investor Relations
Thank you, Mr good afternoon, everyone. Thank you for joining us today for the Q3 nine months and FY ’25 earnings conference call of EFLEX Limited. Let me draw your attention to the fact that our discussion on this call will include certain forward-looking statements, which are predictions, projections or other estimates about future events. These estimates reflect management’s current expectations about the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. I would now request Mr Rajesh Vatia, our Group President and CFO for his opening remarks, following which we will open the forum for an interactive questions-and-answer session. Over to you, sir.
Rajesh Bhatia — Group President Finance & Accounts
Thank you. Hello. Thanks a lot for introducing me on this call. So Rajit. Hi, everybody. I think I’ll start with saying that this has been a very decent quarter as you would have all seen from the quarterly reports, financials as well as the investors deck. The key highlights being the revenue is up 12.8% on a year-on-year basis, and to about INR3,774 crores. And while we’ve also seen a volume growth of 6.3%. So the differential between the revenue growth of 12.8% backed by the volume growth of 6.3% very well explains the — of the margin improvement in the business in the in the current quarter. So we had a 13.8% EBITDA margin for the quarter versus 11.4% in Q2. So they are clearly evident that the margin expansion has happened. And even when we look at the nine-month performance also, the EBITDA margin is at 12.6%, which is gives a Y-o-Y growth of 1.1%.
The other notable things are that aseptic packaging capacity utilization in the leanest period of the year, which is Q3 from October, November, December is also above 100%. It’s actually at 104%. While in the same-period of last year, the capacity utilization was 84%. So clearly you see 20% higher in this Q3 versus FY ’24 Q3. Similarly, you know, in certain other jurisdictions where we were having a lower capacity utilization because of various issues and all that Nigeria being one where you know the currency devaluation had played a havoc in the past couple of years. So we saw the plant utilization in the — for that improving to 90% in this quarter, which is the highest-ever we’ve achieved so-far. In Q2, we had achieved 64%. But we expect that going-forward Nigeria plant you know, we will be able to operate at 100% capacity utilization. Even the Mexico plant capacity utilization reached 98% in this quarter, which was 85% in Q2.
The Poland plant still continues to have a lower capacity utilization less than 70%. So that remains still there is a room for improvement in that. And this quarter, after many four quarters at least, we had a positive PAT of INR11 crores as we didn’t witness any negative currency devaluation. Rather in this quarter, there has been a positive currency devaluation of Nigeria of which — so the devaluation impact in this quarter is actually positive by about INR26-odd crores. So that gives us a PAT of about INR11 crore. The other things that we announced along with the highlights for the quarter was that the government of India from with effect from 1st April 2025 have mandated the norms for use of the recycled materials in the rigid plastics as well as in the flexibles. So in the rigid plastics, we — the country is starting with the 30% of, you know, recycled material to be used along with 70% virgin material.
So that — and in the flexible side, the stipulation is 10% to begin with from 1st April ’25. And given our previous experience into recycling where we mastered the art of recycling with smaller facilities over many plants over the last few years, you know, starting way back from mid 90s, there is a time now to look at expanding your recycling facilities because the customer will need a blended material, not only a virgin material, which we’ve been making so-far, but a blended material with the — with the recycled contents changing as per the government directives. This part, we have also — so this — we’re going to set-up a pet bottle recycling facility at a new facility in Noida. There’ll be polyethylene recycling also and the multilayered plastic recycling also for which we are going to spend about INR317 crores for setting up this facility.
I know that there has been — there’ll be a delay in the way that the market needs it, but we expect that even the implementation of this new facility will, you know, also have its own hiccups and all that and the present requirements, maybe we can — customer requirements, maybe we can meet with our existing capacities to the extent we can. But I think we — if we — if we invest in the — we need to invest in this because ultimately you know we need — our customer will need blended material and we need to be prepared ourselves today for achieving that. Other than that, we’ve also announced the WPP bags investment of about $50 million in Mexico, which will take care of the North-America and South America markets. So this is not flexible packaging.
This is the WPP bags which are used in the pet food industry, this very specific product. We’ve set-up a separate company in Mexico, which will implement this project and we are spending about $50 million in terms of making investing in this plant. Other than that, our existing expansion of our septic facility in India from 7 billion packs to 12 billion packs has already achieved the mechanical completion we have proceeded towards commercializing commercial operations. And similarly for our 216,000 MTP PET chips facility at Egypt also that has also achieved mechanical completion and we are taking steps to make that operational as well.
Our — we had also announced in the last quarter our aseptic packaging expansion even at Egypt also. So that’s also underway and. And during the quarter, we spent about $19 million on that facility and we look to complete that try to complete that within FY ’26, but let’s see as to we’ll be closer to the event, we’ll give you more updates about that. The debt has increased with all the expansions and all that. So while in a nine months period, we’ve spent close to about INR1,100 crores on the — on the CapEx. The net-debt increase is about INR550 odd crores, which means that we’ve spent we’ve liquidated even with this expansion, we’ve lowered our debt. And so the existing amortization is happening in a natural process. So as we get into FY ’26, I think we will get the advantage — start getting the advantage of our chips plant of our aseptic facility in Sanant.
And just by these two, we expect that these should add about on a full utilization basis, this should add to anywhere between INR2,200 crores to INR2,400 crores and will — plus the CTP in Mexico, which is already more or less completed. So these three will give us anywhere between INR2,200 crores to INR2,500 crores of the top-line at a full capacity utilization basis. So I think can and maybe FY ’26 we’ll achieve partial, but FY ’27, we will achieve its full potential. And then we will have these three new facilities of recycling WPP bags and 12 billion Acepto capacity coming into play from FY ’27 and onwards, which will give us additional revenues as well as the profitability. So the net-debt to EBITDA ratio is reasonable at about 3.24 times. And we expect that the earning momentum in the packaging and the packaging films, we’ve seen the EBITDA expansion. So that trend will continue in the current quarter as well in FY ’26.
And this will come from the higher margins as well as from the higher utilization of our various facilities. And for the year as a whole, we expect that the Mexico as well as the plant in Nigeria will — we’ll achieve 100% capacity utilization for the whole of the FY ’26, which will give us the margin expansion in these two. Our currency, you know, stabilization in Nigeria also gives a lot of boost in terms of planning in a much better way and that is what we saw in this quarter when we had an 8% currency appreciation vis-a-vis as on 30th of September. And that led to higher demand, higher more balanced planning for your cash flows for your receivables.
So I think that is sort of very positive for the business as such. In India also, the demand continues to be strong and the expansion in the export markets continue to be the main focus of the Indian players and we’ve seen in the last two years that there is a 52% increase in the exports from India for the BOPET and for a much lower export expansion in the BOPP side. But the real test of that will come later in this year when we will — you know the new capacities from the new facilities getting commissioned on the BOPP side comes into play maybe in Q1 towards the end of Q1 in the — in the fiscal FY ’26.
So that in nutshell is the you know our take on the Q3 performance and the operations and the, you know the proposed investments in the recycling and WPP bags. That is happening in Mexico, but the recycling investment is happening at our Noida facility. The new facility, it’s not in the existing premises, it’s a new land and building what we are building for this project. Thank you, gentlemen. And I would open the house to the questions and we’ll be happy to, you know, address all your queries to the best of my knowledge and abilities. And if there’s anything that we can’t answer, I think our teams can always be in touch and get back. Thank you.
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 R&1 on the touchstone telephone. If you wish to remove yourself from the question queue. You may press R&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. Thank you. We’ll take our first question from the line of Chirag Singhal from First Water Fund. Please go-ahead.
Chirag Singhal
Thanks for the opportunity. Just a couple of questions. Firstly, on the performance of overseas plants. So in Egypt and Poland, we saw a dec in the utilization. So is this due to some lack of demand or let’s say, some temporary issues such as technical issues at the plant? And if you can provide capacity utilization guidance for these two plants for FY ’26? No, which one are you referring to? Egypt and Poland, if — yeah, if you look at sequentially, there was a dip in the capacity utilization. So what are the reasons for that? And if you can provide guidance for FY ’26.
Rajesh Bhatia
So as I said that the Europe still continues to be affected, demand continues to be affected because of the specific things to the Europe, which we’ve already told many times on the call. And the other reason is that the India has, you know has increased its exports to two European countries and that’s the reason why you see that though in the Q3 of FY ’24, Poland plant capacity utilization was 61.5%. In Q2 of last year — this year, we achieved about 68%, but we are back to 61% in the current quarter. And we will try to achieve about 80% levels in the FY ’26 for this. Egypt will come up fast. I think Egypt had some technical, you know, issues at the plant and there may be their routine maintenance and all that. So that that’s a one-off. So Egypt will remain at about 90 plus percent utilization level.
Chirag Singhal
Okay. And this is for FY ’26. Yeah, FY ’26. Understood. My next question is on. So we are very close to the commissioning of the debottlenecking. So how much time will it take to ramp-up this expansion? And if you can also provide guidance in terms of sales volume for this sector for FY ’26?
Rajesh Bhatia
So FY ’26, if we are — if I think so out of 12 billion packs, if we can achieve anywhere around — between 10.5 billion to 11 billion packs a year, I think we target that as of now for FY ’26.
Chirag Singhal
Got it. So regarding this WPP, so can you like provide some data points on what is the optimum capacity utilization and how much time it will take and you know the kind of top-line and EBITDA margins that we can expect from this expansion? Thank you.
Rajesh Bhatia
So I think this — we spent $50 million in this and the top-line that we will need — we are looking to generate from this will almost be the same number. The margins would be — margins in this are higher because you know, US imports about 80% of its pet food bags, packaging from all over the world, but there is no nearshoring. So there is nothing which is being supplied by Mexico, which is next door to this. So that is where we spotted this opportunity. So the same product we make in India also and — but that plant had a limited capacity and the larger players of the world which are brands which is Unima of Nestle and the two brands of Mars which are pedigree and Royal canning. I think we are — they will be looking at selling them largely.
So overall, this business should generate anywhere between 22% to 25% EBITDA margin. The ramp may take a bit of a time here because you know like in Acepto in anything wherever you pack food, you know it takes time for you to get the customer validation of the product and all. So the ramp-up will be — ramp-up here might take about a couple of years time. Okay. So this is more like maybe initially it will take time to ramp-up till we have a base. And then I think just like in, we saw the expansions coming in and ramping-up very fast. Are we also looking at this line of design? We have a small capacity plant that we are you going ahead with. And as you rightly said, when the product is accepted and America has a huge deficit.
They import as much as 80% of their pet food requirement — packaging requirements are from outside of USA. So the opportunity here could be could be big. Right. So actually my next question was on the exports from Mexico to US. So you mentioned that we have strategically put this plant in Mexico because there is a good demand from the US. Now with this new scenario of 25% tariffs, if they get imposed and whenever they get imposed, what are the alternatives available for us because given that, I mean our existing Mexico plant, we have one-line that is dedicated to the US. So if the tariffs are imposed, then what are the alternate is available so I think there are multiple options here. The first scenario is that this is — this does not get implemented. And as we saw this was livid, but then withdrawn the next day and postponed for a month period.
And in the meanwhile, there have been positive statements from Mexican side also in terms of the increasing the border security and all that and inflation. So hopefully, if that gets taken care of this, there’ll be no duty. Other aspects are that if there are duty on Mexican products, if not ’25, maybe 10, maybe 15, maybe five, we don’t know as yet. So in all likelihood, all the other countries exporting to US will also have some sort of duties or the other, which will you know, put us on a level-playing field vis-a-vis others who are exporting to America. But let’s see there are a couple of other options as well maybe job work things also but I think those are very, very premature as of now but once there is something final which is to be done by which is done by US, then only we’ll take a final call as to what needs to be done on?
Chirag Singhal
Understood. Thank you. I’ll turn back-in the queue. Thank you.
Operator
Thank you. We’ll take our next question from the line of Prashant Rishi from Cascade Capital. Please go-ahead.
Prashant Rishi
Hi, good evening, sir. My question was slightly related to the industry situation right now. If you could give us some color on the current overcapacity in the BOPP and segments and some clue on the upcoming capacities in both the segments.
Rajesh Bhatia
BOPET is, yes, overcapacity is there and that is where we are seeing that, you know after the Q1 around 15th of June around you know there was you know everybody start started to look at exports in a big way and that is where we are seeing that the exports from India have increased. There is a natural demand increase also in India by about 10% or so. So over the last year and a half, we’ve seen also that coming into play and higher exports from India means that there is a lesser domestic availability.
So to that extent, you know, as of now, there is a — there is a near balance in the capacity. With the result that the capacity utilization levels across, if we see Q3 of FY ’24, in India, we had a capacity utilization level of 73%, which is now 77%. It will gradually increase in FY ’26 as well. So more or less, the pain on the pet side seems to be over.
On the BOPP side, it’s quite balanced as of now. There is no — not much overcapacity, but there are four new capacities which are coming on-stream in FY ’26 June onwards. I think there will be some impact of that on the BOPP prices but and it will take maybe a couple of quarters the way pet industry behaved during this while, while there was a price war that got started, but everybody realized that it does not help anybody. And so there has been an overall discipline and there has been export orientation by all the players, which has helped stabilize the prices on the pet side. So maybe if similar things happen on the side also, I think we’ll see the much lesser pain than what was seen at the COVID times.
Prashant Rishi
Okay. Thank you, sir. What is the extent of capacity that is coming? You said four, four different capacities are coming in the BOPP line in FY ’26, if you have any idea.
Rajesh Bhatia
Each plant if you take about 4,000 tons also per month, so about 15% and 80% capacity utilization level so Karib, every month there’ll be an excess product of about 12,000 to 13,000 ton given the present — presently it is balanced. 12,000 to 13,000 tons per month of capacity will be there by FY ’26 in BOPP. Hello.
Prashant Rishi
Yes, yes. Okay. Okay. All right. And sir, in pet segment, is there any new capacity in the offering in next one or two years.
Rajesh Bhatia
I think next one year or so there’ll be one plant more which will be coming. That will be maybe in FY ’27 or maybe later part of FY ’26.
Prashant Rishi
Okay. And the extent of capacity there, which is coming, 4,000 tonnes a month-to 4,000 tonnes a month, okay. All right. Okay. That’s it, sir. That’s it from my side. Thank you.
Operator
Thank you. We’ll take our next question from the line of Darshil Zaveri from Crown Capital. Please go-ahead.
Unidentified Participant
Hello. Good evening, sir. Thank you so much for taking my question. Firstly, congratulations on a great set of results, sir. So just wanted to know on a broad basis, like how do we see the industry currently and like the performance that we did in Q3, will it be similar in Q4? And how do we see FY ’26 panning out for us, sir?
Rajesh Bhatia
Thank you. So I think Q4 should be better for us, given that this is the peak period for aseptic and the new capacity will give us some extra volumes for sure. The Q4 will also have some impact of your facility coming into play and giving us additional volumes. So these two are the incremental ones. And if we are able to maintain our base in the way we’ve done in the Q3 of with the base being there, these two add-ons should give us a better numbers in the Q4. And obviously, FY ’26 when we have a full-year working of these three investments available. I think as I said already, we are looking to add from there about 2,000 to 2,400 kind of a you know, the revenue and taking an EBITDA — average EBITDA margin of about 15% odd or so. So that should give you additional EBITDA for FY ’26 over and above your baseline for FY ’25. And there might be some impact of the BOPP extra capacity coming into play, I’ll not be able to or foresee that. But given that as you flex, we are a very small player in BOPP in India and we are a much larger player on the BOPET side in India. I think that impact can be easily absorbed quite comfortably.
Unidentified Participant
Correct, sir. But I think are the three new capacities, you were saying INR2,000 crores, but that’s at optimum level, right? What kind of utilization do we expect in for like the next year, sir.
Rajesh Bhatia
Yeah, so I think the first year because the pet chips will not add to the revenues much why I’m saying so is because ultimately, if we are using that in our own plants and all that. So that sales will get negated. That will ultimately add to the margin profile. But septic first year we are able to utilize from the new plant 80% capacity, I think we would to go in the next year. Okay, fair enough, sir. So any broad like revenue guidance on a consolidated or EBITDA consolidated basis that we could look for sir. So I think we should look at that about 15%, 12% to 15% over FY ’25.
Unidentified Participant
Okay, okay. And with margins getting better. So margins better only so sector, but so FY ’25 looks like we’ll be able to achieve about INR2,000 crores of EBITDA as I had said at the beginning of the year.
Rajesh Bhatia
So we were already achieved INR1425 crores in the first 3/4. And if we replicate the same number as what we achieved in Q3, in Q4, then we are about INR1,950 odd crores. And the additional volumes from the pet chips and the expansion should take us to about INR2,000 odd crore of numbers for sure.
Prashant Rishi
Correct, correct, correct, sir. Yeah, that’s it from my side. All the best. Thank you so much, sir. Thank you.
Operator
Thank you. We’ll take our next question from the line of Koushik Poddar from KB Capital Markets. Please go-ahead.
Kaushik Poddar
Yeah. This debt — you have given the debt-EBITDA at around 3.25. How do you see that panning out for ’26 and ’27? ’26, we’ll have to add-on the debt because the two projects that we’ve announced, you know we are looking at about INR750 crores of expansion, the money to be spent on these two expansions. And then there is a $126 million of Acepto packaging expansion announced in Egypt, of which about $19 million $20 million is already spent.
Rajesh Bhatia
So I see about I think we will spend about INR1,700 crores more of in the new expansion, what is happening in the next couple of years. And so that will increase the debt. But as I said that if you see FY ’25, nine months, we’ve — we’ve spent INR1,100 crores and the net-debt increase is about INR550 odd crores. So the natural amortization which is which is already into play, which is about INR1,000 crores a year will take care of that. You know the debt not much of the debt will get added to the you know, the overall numbers as of now. But still, I think we will have to see as to how much given that there is INR1,700 crores of the new expansions which are announced, which have to sort of get concluded over the next couple of years. So there’ll be — there’ll be some debt which will get added and about INR2,000 crores is the normal amortization during this period as well?
Kaushik Poddar
Okay. And but you don’t have a ready-med number in at hand. Have that number as of now. Okay. And see, in Egypt for the packaging, has the first phase come into operation, when will it come in operation?
Rajesh Bhatia
No, no. Egypt, we just announced in the last quarter. So we are expecting a completion in FY ’26 that had given to the team, which means that even if it happens on-time, so only FY ’27 onwards, the operations will come into play. And it is — see — so this is a new 7 billion units, right? This is new 12 billion units. Oh, it’s straight away 12 billion.
Unidentified Participant
Yes, yes. Oh, okay. Okay. So initially it was 7 billion, you have hiked it to 12 billion and it will be 12 billion at the — whenever it gets up this income. Egypt, we plan directly for 12 billion, 7 billion is India existing capacity, which has been upgraded to 12 billion packs now
Rajesh Bhatia
. Okay. But this but this 3.25, whatever you have shown for right now, can this be a ballpark figure at least for the next two, three years or maybe four lakhtagra Jaga, but then as the operations will — because when you complete the project, the debt get added, but the revenue and profitability does not. So it might go up a little bit when the project is implemented — under implementation. And as to the recycling — recycling of used polymers, so the — for example, like sir, the Hindustan lever or Nestle, they will obviously be using you for that percentage, is that right? I mean, so you — you’ll be supplying them the combined recycled as well as virgin plastic. Is that the way it works? They are to their converters. Yeah. So they will push their thing to the converters, right? So you will be giving a certificate that this packaging is say 30% recycled and 70% virgin. Is that — will it work that way as a converter? Yes. You said yes, is it?
Unidentified Participant
Yeah. Okay. Okay. So have you — have you been talking to the likes of Nestle and Hindus San on this issue as we were talking to all our clients of that this is — they need this support very, very on an urgent basis because the law comes into force from 1st of April and industry as a whole is not ready with this capacity. Industry as a whole. But so because of this industry not being ready and you people are ahead of others probably in this industry. Some amount of see it’s a yearly commitment to sort of first year may everybody feels that the government will not be as rigid as it will be, but I think we’ll have to see that you know-how does this pan-out. Do you see any scope for increase in margin because of this new regime?
Rajesh Bhatia
There will be definitely a scope to increase your margin because not many people will be able to sort of do that do you expect the margin to be around 15% next year? Margin, I think let’s keep 14% as of now, but that’s a bottom is it? I mean, 14% to 16%, can we take it or it’s around 14 around plus is more comfortable, let’s see one more quarter. This quarter has been 13.8% but let’s see the next 1/4 and then probably for FY ’26 then we can make a better guidance. So plus-minus 14 is what we can take it is it?
Unidentified Participant
Hello. You’re right. Okay. So if you for the year FY ’25, nine months is 12.6%, okay, yes. Okay. So while for this quarter it is 12.8% sorry, it is 13.8%, but for nine months, it is 12.6%. So our guidance of 14% for the whole year FY ’26, I think will be a decent numbers to not very aggressive and not very, you know, unduly lower also. And which hopefully will get ramped-up with the commissioning of the other plants in ’27, fully at a functioning of some other plants, right?
Sachin Bobade
Recycling will definitely give you more margins to begin with as the industry will settle and all that. Obviously the margin profile will get India may it be normal behavioral. So subco see field, because subco margins margin leading players lead, but recycling capability and this pet packaging plant will be coming up in Mexico in when we are the pet food packaging rather, sorry the pet food packaging, the packaging. Also we are targeting completion at the end of ’26.
Kaushik Poddar
Okay. Okay. Okay. Thanks. I think I have taken a good amount of your time. Thank you. T
Operator
Hank you. We’ll take our next question from the line of Mehul Sawla from RW Equity. Please go-ahead.
Kaushik Poddar
Sir, just on the packaging business, while we are seeing growth, it’s mainly coming from the liquid side. So flexible packaging pay outlook, if you can give, it will be greater.
Rajesh Bhatia
Okay. See flexible packaging may unlock, you know, we are doing — we’ve not done any capacity expansion there. But only thing we are trying to do is we are trying to improve our profile in that moving on to the more retort pouches and all that and leaving the roll form business of the lower margins roll form business. So there that trend has been doing that trend. I saw posted only about 5%, 5-odd percent operating margins, EBITDA margin in that business. So I think that business, clearly nobody is expanding the capacity. And even we are also not expanding any capacity over there. So that — that in a way the focus remains to do more value-added products rather than you look to expand capacity because the margins still are very — very, very low in that business. So it’s a business which is — which is there for us, but clearly not focus of any growth or any new initiatives other than that you move-up the value chain in terms of what you are doing.
Unidentified Participant
Got it, sir. And sir, just while I think this whole shift to this monopolymer, that also, I think seems to be more regulation driven rather than voluntary adoption. So does that impact us in any way?
Rajesh Bhatia
I mean business. Monomer, so with the new guidelines, which do not differentiate between a monomer or a multiple, multilayered from a recycling perspective, I think India has settled the things Europe also the recycling is coming into play in a big way in the next few years. They are also starting now but I think India has said that irrespective of whatever you use, whether you use monomer or X or Y, you have to have so much of recycled content in your material. Now BOPP clearly cannot be recycled mechanically. While PET and PE, polyethylene can be mechanically recycled. So if the guideline is 10% Hona is made to begin with, and BOPP is not recyclable. so PET may impact Tajaga Uskar balance after balancing up ukarni Pet may after Jada percent percent P, Meh,, Jada. So I think those adjustments have to be — have to be made because the concept is on a mass balance basis and not if you have a structure where you use BOPP, BOPP and PE and the regulation is overall cut 10% should be recycled content. So Joe cycle, who’s cut of 100% virgin use or do you recycle whose whose may have higher recycled content use per k, overall may you will achieve 10% of the norm. But from a technology point-of-view, that is not like a big challenge or no, no-no, no, that’s not a challenge.
Unidentified Participant
Okay, okay. That’s it, sir. Thank you very much. Thank you
Operator
Thank you. We’ll take our next question from the line of Aman Kumar Sonthalia from AK Securities. Please go-ahead.
Aman Kumar Sonthalia
Sir, my question is related to. Sir, these are two-part of this question. Number-one is that, sir, recently, and UP government has announced that they make it mandatory to use aspective packaging in local. So how much market will it create for UP and and if it rollovers to other state also, then how big capacity requirement will be there? This is number-one. And number two, sir, 40% our total capacity of Acepto, 60% we sold a sale-in the domestic market and 40% in the overseas market. So sir, when we start this Egypt facility to that 40% which we used to export in the international market, Egypt will take care of that market, but that 40% will be increased in the domestic market. So 40% plus this 5 billion extra capacity. So whether we will be able to sell the entire capacity in the Indian market?
Rajesh Bhatia
So, our, some JAK, Aceptica, Joe, Egypta plant,, Usmet, Avi Sal Bakia okay up existing joke past say Bharan Kia, call Jal. Joke balancing Hooga whose plant,,,, Baha De Kenya, Ketna, India is a shiftover, India grow Katrana market. There many plant like India may Bharaka, Bhara used Karlia, this may say supposed 5% export be Horaho or India market be grow correctly to up cheese and, you know., Johan, Hamara, Tetra,, Araha and all that. Yes, both broader market UP already here but special category. So Ushmei opportunity to both and last-time you know Gunna capacity,, other sublob, Sasari States,, categorized.
So opportunity has both the — it’s a very large opportunity. Unfortunately, Serum though player had its industry may or is may Hamari domination hand for the catar pack is category may Itnam Bhara hand. So industry-wide Johamara focus on our is category may who are making. But governments themselves are realizing key to prevent any counterfeiting and any death due to liquor and all that. This is the packaging they need to go to. So achieve eight they achieve ethny capacity India making a you know, use the VHU recycled business there to right now our plant is running at 65% and we are again in Jew recycled India capacity here or Hamblu plant or La in Noida. So,, raw-material will be like our utilization, whether we will achieve around 100% utilization.
If you give raw-material or cards or hair pack bottles or India may be or its industry may mainly allow Kia, you can import that also. So raw-material side may constraints many home. The existing capacity utilization for this recycling facility is low because nobody wants to pay extra money for the recycled material given that there is no legal requirement to do so. So all the big brands will do this under the compulsion of the law voluntarily Ithna scope Hotta Shayat you know the self discipline, the self self-think that we say probably are only seen in the in the media reports and all that.
But when it comes to actually putting the money on the table and spending a bit extra in terms of the recycled content. You know the companies don’t do that. But with the regulation coming in, so Abhita, we have not done any large investments in this line because there was no regulation. But we were just keeping ourselves — we knew that this is going to happen one day or the other. So we were just keeping ourselves up-to-date with this smaller pilot plants or smaller investments to test the waters, to test the efficiencies, to test the technology so that as and when it comes, we have the head-start that we have got gives us an advantage over the rest of the competition. That’s what the whole endeavor was.
Aman Kumar Sonthalia
So sir, every 1st April say,,, ABB out there. After Aj February and Nani, Kuch government has not given any relaxation so-far.
Rajesh Bhatia
So assumingly Hojaga, but if the testing will be done for the year as a whole only. So for the initial months, probably because the material is not going to be available so widely. So it will take time for things to mature. And as the battery charging stations versus the EV cars. Sir, the Hungary ultra-high barrier film Bananika plant. Already is, say customer go-ahead media. So yeah, market here or Muhammari capacity, I think I’ll have to address this offline.
Aman Kumar Sonthalia
Okay, sir. Okay. No issue, sir. And sir, one last question, sir, regarding this debt. Sir, we hung over every quarter some debts say,,, Halse exciting project. And I think this is little bit stock market may price go dampener rather to whether the company is planning to take this leverage — high leverage OE planning, in a DIJI or Sami.
Rajesh Bhatia
I think as of now, I have no sort of guidance on this as to, you know. So whatever we are planning as of now, we are planning through a mix of debt and internal accruals. And as I said that those, or those are crore gets repaid. So it’s not added on to your ultimate debt level. Okay, sir. Thanks a lot. And overall debt-to-EBITDA, there are big, so those are say OCMA investment, we’ve done investment, but debt-to-EBITDA ratio is around the same only. Sir, last question is, sir, Hamlo BOPP or Mitma Bharaji Investment. Whether Hamlou is my value-added film, or concentrate Usmek CapEx or from plant currently, instead of putting new in BOP plant, if we consider it more on value-added films, which will give us more margin. And we had planned value-added films only in Hungary and Egypt. But when you COVID came and there was a huge shortage of the raw-material.
So Ustein pay film, that time everything was selling because the material was in short supply. So we didn’t get the opportunity to sort of start working on that value-added films. And sir, value-added films, so we made good money during that period. Our plants, our investments got implemented at the right time by the grace of God, you know, those were the good times to, you know, implement and start producing. But eventually, I think you are right because we’ll have to go that. But sir, value-added film, based films to. Makes sense. Value-added film, based films to up to banana. So I think we are now realizing 23 24-K bath name normal, that is where we started putting emphasis on the value-added products.
Aman Kumar Sonthalia
Okay, sir. Thanks a lot. Thank you.
Operator
Thank you. We’ll take our next question from the line of Saket Kapoor from Kapoor Company. Please go-ahead..
Saket Kapoor
Yes, sir. Sir, Amara presentation released. Who — Abuth or Sare points, Savi code, descriptive manner may put a literature form may express curtain is pattern good continue. Is this, I’m Co Analyst. Kelly sir up, sir or sir? We ask that I just this suppliers internally if you would. This happens. So sir, Amara debt level ski sir.
Rajesh Bhatia
So as on-date, sir, is standalone net-debt KI and consolidated paid net-debt KIA, sir. Numbers, absolute numbers with Engage so ARPO India Tower overseas touch AG net-debt level secondly, Johan engineering activities specification provide or Agash may growth come exchange. So net in that India may have this of, okay, or the total consolidated has our. Okay, sir. Or sir, split between long-term and working capital. So long-term, India may or overseas may long-term as our crude gross higher gross, okay. So our net cash balance cap net scope. Our net cash balance, so don’t get some again, working capital B or slide number 27, PPT may, maybe team carryouts may be, the Vara process. So point, yeta engineering activities Johan line-item says may key constituent here, sir or work engineering activities McClub concerned. So engineering activities those are Hamara, engineering key facility this may print where we make printing machines and packaging machines, including aseptic packaging machines also.
Saket Kapoor
Okay. So those facility — that facility is used for making printing machines for the — for the converting industry and also for the packaging machines at the customer end.
Rajesh Bhatia
Agar, Usme,,, Uskeley packaging machines, yeah,, Appu Liquid,, Ushme packaging machine, yes, some machines,. Dusra, other subset of that business is cylinders which are required in the printing. So those cylinder because they are form part of the engineering activity, they also get — they also get clubbed under the engineering activity activities.
Saket Kapoor
Okay. So sir,, materials are source curtain and we do the finishing work as a job work, total engineering, everything in-house Sara work everything is totally.
Rajesh Bhatia
We buy the raw materials, others say cylinders may copper, Laka, yeah, engineering may AP JOV components steel, aluminium,, JOB, we buy all that. We have a full workshop of our own where we make these machines here. We don’t do any trading as such. We make at our plant and give it to the customers. Like I said, I joined a bit late to, Arun, Abhi, BOPP flames and margin skele trajectory as you on the December quarter may end what average would say upward trend currently car levels per sir, same level there.
Saket Kapoor
Okay., sir. And sir, value-creation exercise per sir Pale maybe investors could address forum may uplog could thought process, this company derive was okay oversee subsidiary skill listing, Karna Yako demerger, yeah, other M&A — other corporate exchange activities, Kaik, Rujan,.
Rajesh Bhatia
Sir, are we up — level is level or press Cup mills at the discussion stage pay or we could finalize or we could not keep discussion, keep his stage Raega. So Jap Hungi to uplo Patal but Koshish Koi, Joe Hame, Guide, consultants and all that value-create Karan. Unfortunately, Abhita Hamlo final Abitak by hand. But look up to 100%. So we’ll keep you informed. Our endeavor is there clearly, but kindliness of the final decision-making and all that is clearly unable to give you any guidance on that say but Kobi, Kobi Uday, Kobi completes LAG to, that is timeline, though — though, though calendar year-makering. Other than that, after bath chemical. Definitely very beside curling Karna hair, ARPU guidelines, the timelines they buying a Uske Nahi, they buying yourself.
So is stage being hanky Kia Karna. Decide Karling itsca guidelines, Uska timeliness, Pur they buying with you. Okay. Comes your PAT margin of those 15% key rangement. So it’s a long-run maybe yeah,, said the investors over EBITDA number to definitely important here, but your PAT numbers open, your PBTK numbers okay., earning, other than that is a line-item to Arcade Banco may go fast Nikhal. So yet though percent margin business and sir, the incremental margins from Kellyan Ori Oka Java employee cost, your finance cost, other line-item may rationalization a, sir. So sir, as a business we see at EBITDA margin basis. You know is industry makes you know our capital may today be more financed from the debt levels and all that and that is why at a PAT level, we have a higher interest. And you know, the depreciation we use that money to pay our loans. But eventually when these get knocked off from the balance sheet, then only depreciation so sir, which we balance sheet base. Lookhi ESR charge has called use, Same, actual cash outflow we had because that charge is what is used to pay your debt repayment back. But with that repayment zero B Agar, Toby was charged to balance sheet, Joe, sir was charge come so it would Charge come year Kahi sacrifice up whatever is the new trending in the business and all that. So we see unless the management says, we will fund our growth subsequent from the IPO market or from raising the equity and all that and very — very nominal amount from the debt financing levels and all that, then it’s a different story, sir.
Saket Kapoor
But at present today, with the kind of projects we have and the debt financing we’ll take for that, I think you know, I feel that you know these two liabilities expenses on the balance sheet interest as well as principal will remain so and last two points to conclude, sir. Amara, other operating income and other income due to line-item income with, consequent, but that are factors in, other operating income or other income co-influence concern.
Rajesh Bhatia
I think we can — we can get back to you offline on this.. Said EAGU quarter performance right, Amara. I think so this has been the best quarter in terms of the profitability also and also the operational performance. So A quarterka performance, Abhi Tat Kay Jo Amara working. Has a consistency the cookie this may have exceptional line number could concentrate current that is the PBT number before exceptional item for consolidated number was at INR147 crores. So if you a constituent major other income and other operating income, Vi, other numbers key consistency keep me the exactly going ahead.
Usual factors may contribute is quarter may score. Four factors are VB, be Majupi say, hey factors reverse okay by. It’s number by Hame high comp platform Aga key is number two per project trucks are working quality. For 100%, has key achievable consistency achievable factor manager of Bola, BOPP may overcapacity expected first-quarter FY ’26A. Uska impact aski or,, Usko Industry address, Koshish, Patega, Baki, Chizo May, I think I’m quite clear Ki Usme Usmet OE other than that, all other aspects of the business seems manageable. So sir, Bamajo sales mix, Usme BOPP, and aesthetic packaging, is car percentage difference — different percentage representation. India May Hoga or India May Hamara BOPP capacity given 300 31,200. India may total capacity 164,000, just may says our ton BOPPS. So could we be stuck-up BOPPA Hamara India May capacity or up 3% touch or CPTS.
Saket Kapoor
Okay. And control level pay, some sol level pick is not hold 1,000, 4 lakh, 1,000, 150,000 development. Consol level page.
Rajesh Bhatia
So what’s the total 618,000 total capacity as sir or say VOPP has 150,000 to 8 clock Suzar, which is 24%. Okay. Okay. Okay. So overcapacity because of the commissioning of the new capacities that are going to be.
Saket Kapoor
Okay. And sir, power and fuel line-item., line-item, SI this may renewable may investment, Hamatna cost lower last experi manufacturing that’s occurring.
Rajesh Bhatia
So Abhi Hamara Investment renewable segment may — car sourcing gas or total power the renewable segments are peer, Nivesca,. So Abhi Hame, Gujarat, plant, sector of 3% power renewable. Dusra plant, Hamara Noida to Noida May contract, yeah, where but UP which policies change, just keep say Hammo contract which lay by. Hamara Vijar ultimately plants make say a 3% renewable power key. Okay. Mix Amara. Pay key plant may, 3%. Okay, are the totals from the can be okay. Total number. That’s perfect. Lastly, sir, 10 numbers, line-item just may have mentioned items that will be reclassified to profit and loss account.
Saket Kapoor
So yes, sir investment card losses are substant changing — is it, sir. Equity investment.
Rajesh Bhatia
So company is. Yes. So sir, Mr losses barras so INR10 crore got to review for that? Conversion key say for FX conversion key. Okay. It’s a translation loss only. Yes. Correct, sir. Sir after visit Jankari in case I’m in the city other thing is definitely Mena team. Whenever sir.
Saket Kapoor
Thank you, thank you.
Operator
We’ll take our next question from the line of Aman Kumar Sandalia from AK Securities. Please go-ahead.
Aman Kumar Sonthalia
Sir, how is the energy prices in Europe? Because in the past, it was very-high. So whether it has come down and synergy prices are now normal, double of what they were pre-COVID, but it’s manageable now. And sir, this — there is — there will be an overcapacity of BOPP. So whether it is confined to India or it is applicable to Hungary and Egypt also. Or in — you will have some one plant coming in Turkey also, but it is more of an India problem, it’s more of a Indian problem. And sir, there is a comment from Trump that EHO paper only removed Kurkey, he’s made he with, plastic stock and only re-implement. So do you think that this plastic relie edge of Phenomena Turkey, a plastic band overa, make over. I think that’s a very valid point,
Rajesh Bhatia
Sir, what you have raised that you know he has endorsed plastic in a big way through his statement of this thishaik movement from a plastic key around with me noise hair, hair and all that but let’s see its long-term implication I think it’s good for the industry as such because he realized he — there is no life without plastics and he said that I don’t want to even manage this plastic like everybody else is saying. It’s a good beginning, but sir, you know, I don’t have a clear visibility on this as to you know whether it will remain or it goes when he has to leave the office after four years because he is not coming back again after that, that no ever. But in the short-term, there is no problem for next four years. The short-term there is and sir, we have flexible packaging work ya marginal let’s say hand Chika balance sheet to Miljaga Unka is to 5.3%. Amara clearly on say much better here because we are more of a integrated play, Hamari, B of, Packaging, B of, Hamari Chemicals and of Neha, we definitely have a better margin profile than the competition at present. But again, the fact that we’ve not grown in that business in capacity, that itself is clearly shows that the margin profile in the industry is not up to the desired level and that is why we are not investing in that business. We — in fact, in the last seven years, I’ve been with this company. I think we would have invested only in some balancing equipment here and there, but never added any capacity in that business.
Aman Kumar Sonthalia
Okay. So the miracle is may plays worth away in competition, that’s why the margin has come down a lot.
Rajesh Bhatia
So I think multiple reasons. One, you rightly said that this is a business in India where MNCs also look to buy at the cheapest cost rather than look to buy from the quality suppliers and they use those players to bring the quality suppliers, value also down. So if you compare me with a person who is father and son who are operating the plant at a shop level basis and all that do not comply to labour guidelines, do not comply to any directives or you know when, when I do all that and I am subjected to audit also from these setups vis-a-vis so they show-me that this person is able to give them at a lower-cost than me and I should match its price.
Aman Kumar Sonthalia
So achieve holy, sir. I don’t know. You know this factor is only there in India, not in other matured jurisdictions.
Rajesh Bhatia
So Isketch, as I said that, because the margin profiling because of these small outfits is not-so-good. So that is why we are not expanding this capacity. And sir, yeah, may be a a consistently business per act and margins is matching. Holographic business to Uski it and the margins are quite good.
Aman Kumar Sonthalia
Okay, sir. Thanks a lot.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir. Thank you.
Rajesh Bhatia
Thank you, ladies and gentlemen, for your engaging questions and active participation, we will soon have the transcript of this call on our website, www.eflexlimited.com. We look-forward to connecting with you again in the next quarter. Thank you, and have a great day. Thank you.
Operator
We thank the management for this call. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.