{"id":176147,"date":"2026-01-22T13:59:27","date_gmt":"2026-01-22T18:59:27","guid":{"rendered":"https:\/\/alphastreet.com\/india\/apcotex-industries-limited-apcotexind-q2-2025-earnings-call-transcript\/"},"modified":"2026-01-22T13:59:27","modified_gmt":"2026-01-22T18:59:27","slug":"apcotex-industries-limited-apcotexind-q2-2025-earnings-call-transcript","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/apcotex-industries-limited-apcotexind-q2-2025-earnings-call-transcript\/","title":{"rendered":"Apcotex Industries Limited (APCOTEXIND) Q2 2025 Earnings Call Transcript"},"content":{"rendered":"

Apcotex Industries Limited (NSE: APCOTEXIND) Q2 2025 Earnings Call dated Oct. 25, 2024<\/span><\/strong><\/p>\n

Corporate Participants:<\/h2>\n

Purvangi Jain<\/strong> \u2014 Investor Relations<\/em><\/p>\n

Sachin Karwa<\/strong> \u2014 Chief Financial Officer<\/em><\/p>\n

Abhiraj Choksey<\/strong> \u2014 Vice Chairman & Managing Director<\/em><\/p>\n

Analysts:<\/h2>\n

Aditya Khetan<\/strong> \u2014 Analyst<\/em><\/p>\n

Jatin Chawla<\/strong> \u2014 Analyst<\/em><\/p>\n

Rohit Balakrishnan<\/strong> \u2014 Analyst<\/em><\/p>\n

Jasdeep Walia<\/strong> \u2014 Analyst<\/em><\/p>\n

Manav Vijay<\/strong> \u2014 Analyst<\/em><\/p>\n

Shivani More<\/strong> \u2014 Analyst<\/em><\/p>\n

Aditya Khandelwal<\/strong> \u2014 Analyst<\/em><\/p>\n

Hemish Shah<\/strong> \u2014 Analyst<\/em><\/p>\n

Presentation:<\/h2>\n

Operator<\/strong><\/p>\n

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY ’25 Earnings Conference Call of Apcotex Industries Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference call is being recorded.<\/p>\n

I would now like to hand the conference over to Ms. Purvangi Jain, Valorem Advisors. Thank you, and over to you, ma’am.<\/p>\n

Purvangi Jain<\/strong> \u2014 Investor Relations<\/em><\/p>\n

Good evening, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the second quarter and first half of the financial year 2025.<\/p>\n

Before we begin, a quick cautionary statement. Some of the statements made in today’s con-call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision.<\/p>\n

The purpose of today’s earnings conference call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.<\/p>\n

Now I’d like to introduce you to the management participating with us in today’s earnings call and hand it over to them for their opening remarks. We have with us Mr. Abhiraj Choksey, Vice Chairman and Managing Director; and Mr. Sachin Karwa, Chief Financial Officer.<\/p>\n

Without any delay I request Mr. Karwa to start with his opening remarks. Thank you, and over to you, sir.<\/p>\n

Sachin Karwa<\/strong> \u2014 Chief Financial Officer<\/em><\/p>\n

Thank you, Purvangi. Good evening, everyone. It is a pleasure to welcome you all to the earnings conference call for the second quarter and first half of the financial year 2025. I hope you had an opportunity to review the financial statements and earning presentation, which have been circulated and uploaded on the website and the stock exchange.<\/p>\n

Let me provide you with a brief overview of financial performance for the second quarter and first half of the financial year ended 2025. The operating revenue for the quarter under the review was INR351 crore, which has grown by approximately 26% on a year-on-year basis. EBITDA for the quarter was INR28 crore which declined by approximately 13% on a year-on-year basis. The EBITDA margin stood at 7.83%. The net profit was INR11 crore which declined by 28% on a year-on-year basis with PAT margin reported at 3.13%.<\/p>\n

In Q2 FY ’25 we witnessed highest ever quarterly volume and export — and export volume which grew by 12% and 31% year-on-year basis respectively. Subsequently, we also achieved the highest quarterly revenue driven by increased volume and product mix with export revenue surging by 48% on year-on-year. EBITDA declined due to margin pressures in Nitrile latex and Paper range of products due to market dynamics and also higher ocean freight rates.<\/p>\n

For the first half of financial year 2025, the operating revenue increased by 23.5% on year-on-year to INR688 crore. EBITDA for the period was INR59 crore which increased by 4% year-on-year. EBITDA margin stood at 8.62%. Net profit for the first half was around INR26 crore which declined by 6% on year-on-year. For this period, we achieved the highest half yearly volume and export volumes which grew by 13% and 22% year-on-year respectively.<\/p>\n

With this, I now open the floor for question-and-answer session. Thank you.<\/p>\n

Questions and Answers:<\/h2>\n

Operator<\/strong><\/p>\n

Thank you very much, sir. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Aditya Khetan. Please go ahead, sir — from SMIFS. Please go ahead.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Yes. Thank you, sir, for the opportunity. Sir, my first question is onto the NBR. We all know that, sir, that recently government — so you all have represented — so to the government onto the anti-dumping duty case. So when are we expecting the outcome of this?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. Hi, Aditya. Good afternoon. Thanks for the question. So, you know, the case has just been initiated. Of course, we’ve been working at it for the last few months, providing all the data. So the initiation is also an important part of the step, which means it’s by, prima facie, they feel that we do have some sort of case. And therefore they’ve accepted and decided to go ahead with the investigation. From what I’m told the investigation takes about nine months or so, give or take, one month or two months. So I would tell you between eight months and 12 months for the final findings.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. Okay. And sir, so currently NBR imports are high into India which is why the margins are lower. So just want to know our contribution on EBITDA from the NBR segment. Are we able to achieve a positive EBITDA from this segment as of now?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, yes, for sure. I think all across the board we have no segment except the nitrile latex or gloves where margins are fairly — EBITDA margins are reasonably positive. So there’s no question about that. And in fact NBR compared to Q1 and even last year, the margins are — have already been sort of lower and depressed. But our contention is that the margins are not healthy enough to sustainably grow this business. And so what we have applied to the DGTR saying is that look, we are okay competing, but if — we are expecting Indian manufacturers to compete effectively then we need effective price — pricing mechanisms as well to have fair pricing in India. Right now due to a couple of reasons, one is a China slowdown, a lot of NBR from East Asia, especially Korea is being dumped into India. And also because of the sanctions to Russia, now we are finding Russian NBR being dumped into India.<\/p>\n

So India has become an easy dumping ground where it’s a large enough market and no local producer except for us. And therefore, our contention is that we want fair pricing in India as well. And therefore, we feel that we have a strong case. We will see how the next nine months to 12 months go. It was — just to remind everyone, it was — we had earlier in 2020, DGTR had recommended a duty, but the Finance Ministry had not approved it or not notified it. So we had gone into the courts along with many others who are in the same boat.<\/p>\n

And — but now I think the strategy has changed and the entire industry has decided to reapply. And now there is a good understanding with the Finance Ministry as well. So the idea is to now stop legal proceedings and restart the anti-dumping again. And on merit, I’m sure DGTR and the Finance Ministry will look at our case on merit and all other cases on merit. So — but it will take about nine months from the time it initiated which was last month.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Got it, sir. So, sir, any change of plan like — so earlier we were looking to expand in NBR segment. So any plans now, so we would be going ahead with the expansion which we have kept on hold?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

No, as of now, you know the margins are still fairly suppressed. So we would want to see the outcome of this DGTR case or this anti-dumping case and the findings and the quantum of anti-dumping and then take a final call on how to — what to do with this NBR. We’re also waiting to see what happens with the market currently with the geopolitical situation with China and Russia. As I mentioned, that’s an additional challenge that we’ve had. So we also want to see how that plays out. So, yes, it is on hold right now.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Got it. Okay. Sir, onto the nitrile latex, sir, is it possible to quantify the volumes or the utilization level during the quarter? And what is the outlook we are foreseeing? Are we witnessing a surge in prices as compared to last quarter, because there could have been some inventory rationalization also. So all these factors are playing out or you’re still witnessing that nitrile latex is still struggling with that lower margins only?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, I think, look, Nitrile Latex is still struggling with lower margins, but the reason was not — for the last year-and-a-half to two, it’s been higher inventory caused — higher gloves inventory caused by during COVID and a lot of production happened. Now that is definitely sort of cleaned out. But the issue was higher capacities that have been created. In China, Malaysia, we for example have also entered in the last year-and-a-half. So a lot of capacity of latex and gloves has been created. So that’s being rationalized a little bit. The other small silver lining and we will have to see how it plays out and the U.S. has recently imposed a 50% anti-dumping duty on gloves from China. So pre-COVID, China was hardly 5%, 7% market share. Now they are up to 25% market share for gloves. And so they’ve created gloves and latex capacity to that extent very quickly.<\/p>\n

Now with anti-dumping duty from the U.S. which is the largest market, maybe 50% of the gloves consumed out of the U.S. — medical gloves consumed. So we’ll have to see how that plays out. And that duty comes into effect from January ’25, and that’s going to be increased to 100% from January ’26. So the next 12 months should be interesting to see what happens. And for us maybe that’s a — maybe, I’m not sure how it will play out as I said, but our customers are all in South Asia and Southeast Asia. So obviously they will be benefited we feel by this anti-dumping duty. So overall I think the supply-demand without China may be better for the industry in Southeast Asia and therefore for us. But we’ll have to see how it plays out over the next few months as I said. But our margins will remain low. Capacity utilization currently is about 60-odd-percent, approx 60 plus\/minus percent and we’re running at that. We’re only doing business where we’re getting reasonable margins at least somewhat positive. And so that continues and now it issues excess capacity.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. But sir, onto this anti dumping duty which you mentioned, so you don’t foresee this as a risk. So China can dump their additional supplies into the ex of the South Asian countries wherein we are already like supplying to all the major players. So can this impact us in some of the exports market except for the U.S. definitely — so U.S. I’m not sure how much exposure we are having in terms of growth?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Nitrile Latex for NBR because NBR is anti-dumping, Nitrile Latex is no anti-dumping duty. Two different products. NBR [Technical Issues] and Nitrile Latex — which goes for several rubber in this rubber application and Nitrile Latex is only for glove applications.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Sir, this 50% anti-dumping duty U.S. has imposed that is on glove, right?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

On the final glove, yes.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. So that’s what, sir, I was mentioning. So suppose we are exporting to other countries. So when China export to other countries like since U.S. has put an anti-dumping duty, so wouldn’t our export competitiveness will go down into the glove segment?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Why would you say that? Why?<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Because of — so China will dump their excess supply into the other countries ex of U.S., wherein we are supplying.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Exactly that’s why I said we have to see how that plays out, latex from China. But you know, coming out latex export from China will be harder because one, their plants are a little bit inland, so they have to take it to the port, then the shipping freight rates from China to some of these countries like Southeast Asia. And I’m talking about latex exports, not gloves exports. You’re right, gloves exports to other countries will increase and there may be an issue. But for us, we are more interested in what happens with the latex. So latex is harder to export, especially from China all the way to Southeast Asia and South Asia. So our freight rates are much lower than that. So, therefore, I don’t think our latex competitiveness will be affected, but we don’t know. We’ll have to see how it plays out.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. And sir, just to — sir, one last question on to the Nitrile Latex, have we — has this contributed to positive EBITDA in this quarter since we had gone to 60% utilization level?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

It’s a little bit negative EBITDA, but positive on the overall gross contribution obviously.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. Thank you, sir. Thank you. That’s it from my side.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. [Operator Instructions] The next question is from the line of Jatin Chawla, RTL Investments. Please go ahead.<\/p>\n

Jatin Chawla<\/strong><\/p>\n

Yes, hi, good evening. Thanks for the opportunity. My first question is on the — in your presentation, you mentioned pricing pressures on the carpet and paper range of products. So just wanted to get some more understanding on that. Is this linked to — earlier our competitor had — in India had increased capacities and there was some margin pressure, but it seems this quarter that margin pressure has increased further. Just a comment on that?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. So for paper that’s true. That’s exactly the reason. And also the paper industry in the last three months, four months is really not from what I — what we hear from our customers not been doing so well as well in terms of overall revenue and volumes. They are facing some dumping from China and all that. So there is pressure on the paper industry and the entire paper supply chain including us. So we are buying from market share, and I mean, I would say that the primary reason is includes in market — increase in capacity by our China competitor. So carpet is a different region. Carpet, the large chunk was coming from exports and that’s really due to this Middle East war that’s going on and a lot of ships that were flying through the Red Sea have to now go around the cape of Good Hope. So basically shipping rates compared to exactly 12 — I would say 12 months ago, 12 months or 14 months ago have increased multifold. And Q2 was really the highest that we have ever seen in some of these routes like from India to Turkey, India to Egypt, even India to UAE, even though that you don’t have to pass through the Red Sea for UAE, but overall ships going through the UAE have reduced because they’re all going around now.<\/p>\n

So supply has dried up in terms of ships going through that area. So all the freight rates were at an all-time high only in the month of October. Now we’ve seen it correcting, but it is still much higher than what it was about a year, year-and-a-half ago, like at least six times or seven times higher even now and it went up to like eight times, 10 times higher just last quarter. So that’s the reason for carpet. And a lot of our contracts are CIF contracts, so we have to honor them. While the pricing on raw materials we can pass through, the pricing on freight is something that takes some time to renegotiate and pass through. As I’ve said before, when prices are going up, whether it’s raw materials or freights, we are generally able to pass it through with a time lag.<\/p>\n

So in the last quarter, we have seen a double whammy of ocean freight rates across the board as well as raw material prices climbing as well. Both these are the reasons why carpet has been affected. Third reason is also one of our important monomer butadiene for the last few months compared to Europe has been much higher in Asia. So that’s benefited our European competitors. This was exactly the other way around about two years ago, but now it’s reversed that trend. So that’s also helped them — the European competitors a little bit, but the rest of our cost structure is both from a freight and monomer point of view. That’s where the carpet margins are down.<\/p>\n

But our strategy has been very clear that we’re going to push through with volumes as far as possible even at lower margins. And as and when overall the external scenarios change, we’ll benefit from that. We did during the COVID years — post-COVID years ’21, ’22, benefited from a lot of the tailwinds. Now we are facing a lot of the headwinds that are together, not helped by geopolitical tensions and situations, of course now.<\/p>\n

Jatin Chawla<\/strong><\/p>\n

Got it. Just a quick follow-up on this. You said the freight costs have to be borne as long — I’m assuming that is as long as the previous contracts are in place. So what is the length of the contract that you do and how much time does it take to kind of renegotiate things?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I mean, as I said, we have monthly pricing. In that sense, we don’t have contracts like long-term committed contracts, but we do have a certain understanding. And it’s also a case of competitiveness. So for example, for — just to give you, Turkey and Egypt, if there the customers are importing from Europe, the freight is much lower now than from India. So we will ask or we are even now asking for higher rates, but we have to be competitive against European competitors. So I think it’s likely to continue even into Q3.<\/p>\n

Jatin Chawla<\/strong><\/p>\n

Got it. So you expect this margin pressure to continue on the carpet side also in 3Q as well?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I think — so I think as I said, the freight rates have come down by about 20%, I would say, in the last month. That will help certainly, but it’s still much, much higher, as I said, six times, seven times higher compared to a year ago.<\/p>\n

Jatin Chawla<\/strong><\/p>\n

Six times, seven times?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, during — in these routes. I mean, routes are actually $500 now. And in Q2 were at like $3,500, $4,000 per container, just to give you an example. Now they’ve come down to $2,000 $2,500.<\/p>\n

Jatin Chawla<\/strong><\/p>\n

So as a percentage of sales, in terms of percentage margin impact, what does that broadly come to?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I think overall we have almost — 1% impact on because of ocean freight this quarter for us. Right, Sachin, that’s what we analyzed.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes. [Indecipherable]<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

0.75% to 1%?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes.<\/p>\n

Jatin Chawla<\/strong><\/p>\n

Understood. Thank you. Thanks a lot. I’ll get back to the queue.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Rohit from ithought PMS. Please go ahead.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Hello, am I audible?<\/p>\n

Operator<\/strong><\/p>\n

Yes, sir.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Hi, sir. So just wanted to understand, sir, I mean, from a top line point of view with the expanded capacity, what is the total peak revenue possibility that you have now? I mean, I understand the prices are a bit low, but whatever they are at this point of time, can you just share what is the peak utilization in terms of revenue that we can…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Currently, we are at a run rate as you can see from our financials, we finished H1 at almost INR700 crores. So we had a run rate of about INR1,400 crores, right?<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Right.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

And we think this — I mean at the current prices and so on, we could — Sachin, we could add another INR300, INR400 crores? INR1,700 crore INR1,800 crores.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes. So total we should be around INR1,800 crores to INR1,900 crores…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Depending on the price range, INR1,700 crores to INR1,800 crores, I would say, maybe INR1,900-ish,yes.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Yes. Got it. And this is at these level, right? I mean this is not factoring any improvement in the variation that may happen at some point.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

At this current pricing level, yes, average pricing level for the first half.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Got it. Also, I mean, this also does not include what you are also thinking of doing another debottlenecking of NBR in Taloja, if I’m not wrong. This also does not…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Say that again, your voice is not very clear.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

No, I’m saying this was also — I mean, this also does not include the — another capex that you would…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

No, no, this is — this is just all the capex that has been already done.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Right, right, right.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I mean, some minor things may be required, some debottlenecking at times here or there, but nothing major.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Right, right, right. And sir, are you quantifying the loss that you are seeing in Nitrile Latex at this point of time?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So we’re not seeing a loss as such. It’s not a loss. But yes, I mean, yes, I guess EBITDA margins are zero to a little bit negative, I guess, right now currently between 0% to 1% negative.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Okay. Okay. So you’re broadly breaking even at about 60% utilization there.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Got it. And sir, historically, I mean, I think you were articulating this few quarters back that, I mean typically in the last seven years, eight years or probably even before that, structurally you’ve taken the business from the low like high single-digit margins to close to 14%, 15% margins, obviously right now even through a bad cycle. But anything that has changed in the last two years, three years in terms of maybe last 12 months to 15 months in terms of competition or in terms of butadiene supply, etc., where you think that what you had talked about 14% to 15% kind of margin is what you think the business can do. Has that changed or you still hold on to those numbers?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So, look, I don’t think — and I’ve always said this before as well, like in our business quarter-on-quarter, it’s very hard to predict very consistent margins. This is the nature of our business. Having said that, obviously, these kinds of margins of 8%, 9% or anything in the single-digit is something that we would not have — we would never hope for or we wouldn’t think would happen. But unfortunately because of three or four headwinds coming together of — you know three or four issues rather and all put together as multiple headwinds like as I mentioned, ocean freight, nitrile latex or gloves, that business continues to be difficult, extra capacity in the Indian market for SB latex. These are three main reasons I would say why margins are a little depressed.<\/p>\n

But I think in the long run, we are quite — the competitive intensity of the industry has not significantly changed as far as — so except for nitrile latex. Yes, nitrile latex will come too, but the rest of it is the same, right? In NBR, we are the only manufacturer here in India. We are facing dumping for the last year, year-and-a-half, mainly due to geopolitical reasons from China and Russia and the other two, three things I don’t want to repeat again. So I think once those things turn and the external environment is more in our favor, then things could look better. But in the short-term, it’s certainly a challenge — I mean, the most challenging environment that we have faced now in four years. The last time was COVID, right, which is a little bit difficult when COVID initially hit in the Q4 of ’19-’20.<\/p>\n

Rohit Balakrishnan<\/strong><\/p>\n

Right, right, right. Got it. Okay, sir. Thank you very much. I’ll get back in the queue. Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. [Operator Instructions] The next question is from the line of Jasdeep Walia from Clockvine Capital. Please go ahead.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Hi, sir. Thanks for taking my question. Sir, how the exports done in first half if we exclude nitrile latex? So primarily in the SB latex, how are the exports — how have exports progressed in first half?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Look, overall they continue to grow. Obviously, nitrile latex has been one of the reasons, the drivers for growth. But I would say in terms of percentage, when you say how has exports progressed, I think as I said, margins have been affected, but volumes we continue to push. So I don’t have the exact data in terms of without nitrile latex what it would have been, but I’m assuming that instead — Sachin, do you have that data maybe what is our percentage of sales for H1? 32% or 34%? 32%, right? Sachin, are you on the call?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes, yes, 32%.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

32%, okay. And how much would it have been without nitrile? Is that the question, Jasdeep?<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Yes. Sir, my question is how have SB latex exports grown in the first half of this year?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

We have the data separately…<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes. I just got — just pulled it off. So we’ve grown by almost 16% to 17%.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

This is by volumes?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

By value.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

By value, okay. And what would be approximate volume growth?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

I need to find out.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I think maybe half that because we’re seeing volume growth and value growth is up to 7%, 8% probably. I’m just guessing, but we’ll come back to you, Jasdeep.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Yes. Got it, got it. And sir, how are SB latex margins right now, let’s say, versus what the normalized margin which you used to see pre-COVID?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So for textile, specialty and construction, I think they are similar compared to last year — oh pre-COVID you’re asking.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Yes<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So I don’t have the number pre-COVID, Jasdeep, but I can talk about the last year compared to this year. I know for the fact that construction specialty textiles, those are still good because they’re most — for different reasons. But paper certainly has been more challenging this — this quarter especially.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

I’m asking on the overall portfolio level, not separately by segment. Just on the overall portfolio level, how are SB latex margins this year versus last year?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Lowered, lowered by about on average because of carpet and paper that’s probably about 15%, 20% contribution margins.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Okay. So they are lower by how much this year?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Do you have that number, Sachin? I’m just mentioning you again, saying 15%, 20% lower than last year, H1 of this year compared to H1 of last year for SB latex margins. We’ll come back to you Jasdeep, but my guess is about 15%, 20% lower.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Got it. And sir, have you decided about capex that you’re going to put in, let’s say, next year or in the second half of this year?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. There is no capex, no major growth capex plan for this year. There is going to be capital expenditure, but we are focusing more on the future. So we are building a new R&D building, for example, [Indecipherable] it won’t be that much, but obviously, that’s one capex that we are looking forward to. And then it’s going to be more maintenance capex and debottlenecking capex, some small projects here and there. As far as major capex here, right now, we have enough SB latex capacity for a year-and-a-half. So we are looking at different options of building SB latex capacity either in Taloja or in Valia or in a third location. So all those three are open. We are — we will take a call in the next three months to four months by the end of this year regarding that. We’ll have to start that project by early next year. So SB latex is one part that we’re definitely looking to expand. As far as nitrile latex for gloves is concerned, we are not going to expand currently given the current market scenario and NBR also is on hold. So we are looking at other inorganic options as well and looking at newer — new product lines that we could perhaps add value in.<\/p>\n

Jasdeep Walia<\/strong><\/p>\n

Got it, sir. Thanks a lot, sir. That’s all from my side.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you, Jasdeep.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Manav Vijay, MV Investments. Please go ahead.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Yes, thank you very much. Am I audible?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. Go ahead, Manav.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. Thank you. Sir, first question is regarding the quarter-on-quarter. So our sales has grown by approximately 5%. If you can just help us understand that some of your customers in the Southeast Asia, for them, the pricing on the metal glove side, it has become at least constant, prices are no longer falling. So how is that translating to you in terms of your latex prices? Have they moved up on quarter-on-quarter or are they still constant?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Well, they have moved up because raw material prices slightly moved up, but by and large margins have not improved. So more than the pricing, margins is the issue. And the reason why margins have not improved, as I mentioned earlier is just there is a lot of overcapacity. Some new capacity has come this year into Malaysia. Like us, people that have started building are finishing their plants. So that’s come up now between last year and this year. There is one plant in Malaysia that’s recently come up. So as a result of which there is pressure on the latex margins, but the glove industry is definitely doing much better than they were last year in Southeast Asia.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I mean, they were making losses last year. Let me put it that way. They were making losses till last year, at least they are now in the green. So if you read some of the big love companies who are — if you read some of their financial results, they’re quite upbeat and positive now.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Yes, sir. So except I would say one player, almost everybody has turned into black now.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, exactly, exactly. And especially with this recent announcement of U.S. anti-dumping duty against China, I think that will play out over the next few months, from the glove industry at least, yes. I don’t know about the latex industry.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. Okay. Sir, my second question is regarding — so in your PPT, you talked about three pain point nitrile latex, paper and carpet. Nitrile latex and carpet you talked about — so you explained well. Sir, regarding the paper industry, so some of the paper companies who have declared the results so-far, numbers are not good. So actually — so there is pressure both on the raw material, the demand as well as the pricing of the finished product. Now — so do you believe that this pressure can continue even in H2, which in turn will continue to put pressure even on our fresh product prices?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. I think there is pressure in the entire supply chain in the paper industry currently. When the market is bullish and there is good growth, then the supply chain benefits as well. Currently, it’s the other way around, as you rightly have said, a lot of the paper companies have not done too well in the last quarter or so. And that’s put pressure on us. Yes, I mean, that looks like it’s at least — I can’t speak for H2, but at least in the next — in Q3 that we expect that challenge to continue. Nothing is going to happen overnight. They are also in some cases facing dumpling issues, and I’m sure the industry as a whole is working towards correcting that.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. Sir, my last question is regarding — so on a Y-o-Y basis, our sales has moved up by around 25%, 26%, whereas our other expenses are down by approximately 5%. Now within our other expenses, roughly 50% are basically variable cost, your power and your freight. These two are the major line items. And you have also mentioned that majority of the Y-o-Y growth is actually volume growth. So I just could not — so if you could help in understand that if majority of the Y-o-Y growth is actually volume-led growth, then how your other expenses can come down by 5%?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

First of all, it’s not entire — majority volume-led growth. I would say it’s partly volume-led growth, probably, 50% or 60% is volume-led. The rest is due to pricing. I mean, product mix plus the cost of materials that has gone up, which we have then passed along to as much as we could. Obviously, we have not passed on — passed it along enough now. When you say other expenses, I don’t have an answer. Sachin, would you know this question to this answer?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes. So if you remember, Abhiraj, we have also done — we have done cost saving of expenses. Basically what we have done is we have also changed the power mix. So the power mix costs have come down in our case.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Right.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

So that is helping us to also reduce the cost. Major of the costs which is power and fuel has come down compared to what it was in the last H1. So that has supported us. Yes.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. And Abhiraj, if I’m correct…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

[Speech Overlap] your question, I think the issue — the main issue and if I have understood what you’re asking is that while our revenue has gone up, our raw material costs have gone up by higher than our revenue, right. And we have not been able to pass along the entire cost increase and therefore margins are down, main issues is raw material costing versus pricing.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. No, so actually — my question was very simple that actually on a Y-o-Y basis, the sales have moved up around 26% and majority of that is led by the volumes. Whereas…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Not majority. 50%.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. 50%. Whereas our — whereas actually our other expenses have they have actually come down by 5% where I would say 50% to 60% of the total cost comes from only two line items, which is power and freight. And these two line items are completely variable. So if your volumes moves up, these cost-to-cost also moves up.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Manav — Abhiraj, can I take this question?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, please.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Manav, we understand that what you’re trying to make a point to. But however, the major thing is when we change the power mix, we used to co-generate the power in the plant earlier, which we have now only — which we only use for boiler purposes, okay. We have moved on to grids [Phonetic] because of — because the power cost is much more lower than generating the power. So that has supported us in reducing the power cost.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

And I think, Sachin is talking about only a Gujarat plant. So at least in Gujarat that has been the case of reducing power cost. Yes, that’s one factor for sure.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Yes.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

But sorry, just one thing is, I mean, I don’t agree with the analysis, Manav, because other expenses besides power and freight, there are other expenses as well, right, that we have sort of controlled those and given the difficulty in margins. Just to give you an example, there could be repairs and maintenance, painting and some of those kinds of costs, which we have definitely held back on given the more challenging environment. So there are other ways to reduce costs as well.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Sounds good. My last question, sir, I think — I think last…<\/p>\n

Operator<\/strong><\/p>\n

Sorry to interrupt Mr. Vijay, but could you return to the question queue?<\/p>\n

Manav Vijay<\/strong><\/p>\n

Yes. Yes, I will. Thank you very much.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

[Speech Overlap] It’s the last question, why not finish it?<\/p>\n

Operator<\/strong><\/p>\n

All right. Sure.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. Sir, I think last quarter or maybe last fiscal [Phonetic] I think you — I think you talked about putting up our solar capacity. Is there any, let’s say, further steps that we have taken in that regard?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. I’m glad you asked. So, yes, we will be — just we had a Board meeting yesterday and we have got approval in principle from the Board to go ahead and explore and we have sort of narrowed down. I think in the next three months to six months, we will be investing in — I don’t know, I would not say the next — I would say next one year to two years, eventually the investment would happen over the next one year to two years, but we’ll start the project in the next three months to six months. Over the next one year to two years to invest in solar and wind, it will be objective. Obviously, one is savings, but the other is also we expect that our power consumption would be anywhere between 60% to 70% renewable and our target is that within the next two years to three years, 50%, 60% — around 60% power consumption to be through renewable sources, which today stands in mid single digits, maybe 5%, 6% totally.<\/p>\n

Manav Vijay<\/strong><\/p>\n

Okay. Perfect. This is helpful. Thank you and all the best.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Shivani More from Axis Securities. Please go ahead.<\/p>\n

Shivani More<\/strong><\/p>\n

[Technical Issues]<\/p>\n

Operator<\/strong><\/p>\n

I’m sorry, we are not able to hear you. We are not able to hear you.<\/p>\n

Shivani More<\/strong><\/p>\n

Hello. Am I audible?<\/p>\n

Operator<\/strong><\/p>\n

Yes. Yes, you’re audible now. Please go ahead.<\/p>\n

Shivani More<\/strong><\/p>\n

Yes. Thank you for the opportunity. Sir, do we see any improvement in EBITDA margin from here? And what efforts or measures have been taken by us to improve it?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I’m sorry, I’m sorry. I didn’t — a lot of breaking. I can’t hear the question. I mean, I can hear her, but not clearly. Shivani, I can’t hear you very well.<\/p>\n

Shivani More<\/strong><\/p>\n

Hello?<\/p>\n

Operator<\/strong><\/p>\n

Yes, Shivani, are you using your handset?<\/p>\n

Shivani More<\/strong><\/p>\n

Am I audible?<\/p>\n

Operator<\/strong><\/p>\n

Yes, you are audible. Could you please speak up?<\/p>\n

Shivani More<\/strong><\/p>\n

Yes. Sir, do we see an improvement in EBITDA margin from here onwards? And what efforts or measures has been taken care by us to improve it? And my second question is, we invested around INR150 crores, INR160 crores in Valia plant for glove project. So how it is progressing and what is the capacity utilization for the same?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, Shivani, I answered some of the questions earlier. So the nitrile latex, in terms of volume and revenue it’s progressing reasonably well. We’re at about 60% capacity utilization. But in terms of — in terms of margin, it’s still — it’s still been very challenging, a challenging environment. As far as EBITDA margins is concerned, as Sachin just mentioned, we have implemented some projects only in the last two months, three months to try and improve some cost-saving projects to improve EBITDA margins. The other thing is external factors like ocean freight and also are coming down right now, so that will help. And the third is, of course, focused more on specialty products and really pushing those sales. And the fourth will be an anti-dumping duty on NBR.<\/p>\n

So on several fronts, well, whether it’s cost savings or anti-dumping duties, focusing more on specialty products to improve overall product and margin profile, customers with better margins. So all that is of course part of it as well. But as of now, the external environment is such that overall capacity utilization for SBR and XMB, as an industry, there is enough capacity. So capacity utilizations are a little lower than what we would expect, but as of growth, that changes. So every industry and every business goes through a cycle and we feel like this is a difficult — more difficult cycle for our industry and our business specifically. And I think it will turn at some point. We are quite hopeful that in the next couple of quarters, things should turn.<\/p>\n

Shivani More<\/strong><\/p>\n

And sir, one last question, what is the percentage to total sales contributed by nitrile latex?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

It’s less than 15% currently.<\/p>\n

Shivani More<\/strong><\/p>\n

Okay. That’s it from my end. Thank you, sir.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Aditya Khetan from SMIFS. Please go ahead.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Yes. Thank you, sir, for the follow-up. Sir, on to the raw material prices, you had mentioned that butadiene prices were a bit higher in Asia market as compared to the European players. So has that correction been happened right now? First point. And second, sir, I believe so butadiene is only around 15% to 20% of the total RM cost, whereas your 80% comes from the acrylonitrile and same styrene. So how was the price trend during the quarter? And we know that because of the crude prices having a good volatility today, so how well are we managing the prices and what is your outlook on the per ton margins? Can we maintain at this level or we see some improvement in second half from here on?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So first of all, to your question, butadiene is actually a much higher percentage than the 15%, 20% that you mentioned. For us, as a company, I don’t have the exact number. I don’t know, Sachin, if you have it ready, but my guess would be that out of the total raw material costs, butadiene would be our number one spend at about maybe 30% to 40% of our total cost, 40% even. As far as Europe and Asia is concerned, it continues to be — Asia prices continue to be maybe 25% higher, 25% to 30% higher than Europe. Things are expected to turn, but last six months, we have seen this is a situation. But from all analyst reports and I — obviously we’re not butadiene manufacturers. So — but we keep a track of what’s going on and it’s typically these kind of arbitrage things correct over a period of a few months. So I think it should correct in the second half.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. And sir, what is the outlook on acrylonitrile and styrene? How was the prices during the quarter versus last quarter?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

I think they’ve all gone up a little bit compared to Q1. And certainly, this first half has been a lot higher than the first half of last year. So quarter-on-quarter also, there has been a slight increase.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. Okay.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Overall, on average. I mean, I don’t know each raw material specifically, but I think there’s been a slight increase overall.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. And sir, we have — and we have not passed on all the cost to the end-user industry considering the weakness in demands from paper and carpet, which we can subsequently pass on in second half.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

We have not been able to.<\/p>\n

Aditya Khetan<\/strong><\/p>\n

Okay. Got it. Okay. Yes, thank you, sir. Thank you. That’s it.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. [Operator Instructions] The next question is from the line of Aditya from Securities Investment Management. Please go ahead.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Yes. Hi, sir. Thanks for the opportunity. Sir, in the presentation, you have mentioned that revenue growth was partly because of volumes and partly because of product mix. So if you could elaborate what kind of products have higher realization for us, which has contributed to higher revenue?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

[Speech Overlap] partly due to overall pricing going up also.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Okay.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. I mean costing — if cost goes up, then price also goes up, right? Q2 against Q2 of last year. Sorry, sir, what’s your question?<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Yes. So my question was you mentioned that product mix has also improved — has also helped us improve our revenue. So what kind of products have higher realization, which has helped us to post a higher revenue growth?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So NBR, for example, NBR, we have grown reasonably well in this quarter compared to Q2 of last year or first half compared to last year. So NBR being a solid rubber product, the pricing is higher. I’m just talking about revenue, not margins. Then tire cords, for example, is a — for latex for tire cord, we make a latex called Vinyl Pyridine Latex for the tire cord industry. There the pricing compared to SB latex is typically 30% to 40% higher. There we have seen very good growth and we have also invested in a new reactor for that product. So that’s another example.<\/p>\n

And in the construction industry, we have some specialty products for the oil application and some other application where we have seen good growth where again the pricing is at least 15%, 20% higher compared to paper and carpet and nitrile latex and so on. So that — the growth in those industries has helped to some extent in improving the revenue as well. I hope that answers your question.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Understood, sir. And sir, now if I look at your exports, so majorly we are catering to the carpet industry. So do the exports — do our exports majorly cater to distributors or we are giving it to carpet manufacturers?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

So just to correct your — correct you, carpet is not a — I mean, obviously, carpet is an important export product, but nitrile latex, carpet and construction and tire cords, all four, we have significant exports in all four. So 32% of our sales overall as a company is export. So it’s not just one segment that does this. And to answer your question, it’s a combination of the two, direct as well as with the distributor. See, today we don’t have any sales people outside for carpet.<\/p>\n

So we do work through distributors and they work on two levels. One, they act like our sales agents where we just pay them a commission and they take care of the sales relationship. Of course, our guys from India also — our sales and marketing team — we have a strong sales and marketing team based out of India and they go visit once every few months. There is a relationship manager in charge of each customer. But day-to-day, like if you are in Egypt or Turkey, some of our distributors have local offices. So that only helps with day-to-day relationships and day-to-day logistics that they help us with and we give them a commission for that.<\/p>\n

In some cases where we don’t want to take any payment risks and smaller customers, then we supply to the distributor and where the distributor stocks it and then sells it in turn. So I hope that answers your question. It’s partly both. But in carpet, I would say larger majority would be direct and giving commission to the distributor.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Understood. So my question was more majorly related to synthetic latex exports. And now for this segment synthetic latex exports, now who would be the major players we would be competing against? So are these majorly European-based players or these are Chinese or Southeast Asian-based players?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Firstly, European.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Okay. So because the export growth which we have witnessed in the…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Latex or the carpet industry is European, nitrile latex for — it’s a different story. So for carpet and construction, it’s all European competitors. For nitrile latex, it’s Southeast Asian and East Asian competitor.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Understood. Understood, sir. And sir, just last one question now. This — you have mentioned that higher freight cost has impacted our margins was part of the reason that has impacted margins. But when I look at your other expenses, those have come down on a year-to-year basis. So how has the higher freight…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

The freight has definitely gone up. The other expenses, as Sachin mentioned to one of the previous callers is on account of other fixed costs that we have held back or reduced and a lot — the power cost in Valia that has really helped us as well. But we can — next time we’ll be more prepared in terms of line item, while we will tell you exactly how much percentage reduction in power, percentage increase in freight and so on, especially since those two are the highest.<\/p>\n

Aditya Khandelwal<\/strong><\/p>\n

Understood, sir. Sure, sir. Thank you, sir, for answering my questions.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. The next question is from the line of Hemish Shah [Phonetic], who is an individual investor. Please go ahead.<\/p>\n

Hemish Shah<\/strong><\/p>\n

Hello? Can you hear me?<\/p>\n

Operator<\/strong><\/p>\n

Yes.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. Got ahead, Hemish.<\/p>\n

Hemish Shah<\/strong><\/p>\n

Yes. Hi. So since I think, we are facing three or four headwinds that we faced in Q2, do you really think that in the last — like over the last decade or so, this is kind of one of the worst phases, if not worst phases, I mean, one of the most challenging situations or times that you’re facing for the company?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes. I mean, look, I think, COVID, nothing was more challenging than those four months, five months of the — first few months of the COVID period. But even pre-COVID — pre-’19-’20 — I mean, FY ’19-’20 was a challenging time. There the major issue was NBR anti-dumping, I mean NBR dumping and we had filed anti-dumping, which didn’t work-out. And then of course, two years, we had two reasonably good years in the middle, two to three good years. But I would say, yes, this is definitely one challenging time.<\/p>\n

And look, every period is different and the reasons are different. This time, I think it’s partly geopolitical, partly this post-COVID nitrile latex, which is a business we invested in and that is pre-COVID. During COVID, there were always very healthy margins. We still believe in the long-run, it’s a good business to be in because it’s growing at 10%, 12% a year — 10% to 15% a year. It’s just that a lot of overcapacity has been created thanks to COVID. It would not have happened, had it not been for COVID, people got very excited because of COVID.<\/p>\n

In our case, it was a natural progression. We were anywhere going to invest. We had invested in this project — started investing in 2018, ’19 developing this product. And so it’s been a different set of challenges this time, but sure it is one of the challenging periods. Having said that, look, I’ve been with the company for almost 20 years now. We’ve gone through several challenging periods, some caused by external circumstances, some caused by internal circumstances. In this case, it’s certainly mostly external circumstances that are causing this.<\/p>\n

Having said that, even with this, our company is very well-positioned. We feel very happy with where we are because we feel the competitive intensity of this industry is still not changed significantly except in nitrile latex recently, but — and we still feel in the long-run, it’s a good business to be in. We don’t need margins of 20%, 30%, EBITDA margins to have good ROCE and even 13% to 15% ROCEs and that’s our main goal, right, to have margin of 13% to 15%, so ROCE is around 25%. And if we can do that, I think we’re in good shape and we continue to grow and we do have sustainable — we can have sustainable growth at those ROCEs and EBITDA margins.<\/p>\n

Hemish Shah<\/strong><\/p>\n

So definitely the current scenario in the industry, this is — for the entire industry, this is unsustainable, right, because if all players in the industry are not making good margins, then — I mean, this has to change, right, because then there’s not going to be any capex, so like demand and supply will balance out at some point of time, correct?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Yes, exactly. The question is when?<\/p>\n

Hemish Shah<\/strong><\/p>\n

Yes, yes, yes. Got it, got it. So I mean…<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

The next question is when? And it’s tough to say. So as I said, and we have also created a business which is quite well-diversified now. If you see from a geography — geography standpoint, India is certainly one of our strategic markets and it will continue to be. And that’s where our real strength is. But we have still diversified 30% to 35% of our sales into other markets. From an industry standpoint compared to 10 years ago, we are in eight different industries. Earlier we were only three or four. So we have really grown in geography, in diversity, and at the same time, we’ve kept our balance sheet clean. Today we have I think as on 30th September, we have probably around INR210 crores or so — Sachin, correct me if I’m wrong, but about INR200 crores to INR220 crores of debt, all including long-term and short-term debt. Against that we have about INR120 crores of liquid investment.<\/p>\n

So we are a conservative company. We’ve grown with our internal accruals with a little bit of debt and knowing full well that this business goes through cycles like these. They go through cycles of low EBITDA margins. There can be some quarters that are very low, some quarters that are very high. And so we have to ensure that at quarters or periods like this, our financial ability to withstand this is there and not only [Indecipherable] but also invest. So we’re in fact putting money in solar, we’ll be putting money in R&D, we’ll be putting money in perhaps some growth projects as well over the next six months to 12 months. So we feel pretty confident given our current debt\/equity ratio, EBITDA serviceability ratios. And so we feel pretty good overall.<\/p>\n

Hemish Shah<\/strong><\/p>\n

And how much was the volume growth ex nitrile latex business compared to Y-o-Y?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Compared to last year, I think H1 to H1, Sachin would have been what about 100% nitrile latex growth?<\/p>\n

Hemish Shah<\/strong><\/p>\n

Yes. No, no, sort of excluding nitrile latex, that was my question. Have they grown in volumes in Q2?<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Excluding nitrile? Yes, sure, sure. There is growth in nitrile latex excluding. Yes, of course, because nitrile latex existed with a small base, right? So overall, we have grown at about 12%, 13% volume as a company for H1. So I don’t have the exact number, but I’m going to say about 8%, 7%, 8% is for other products, Sachin, do you have that?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Okay. So we are protecting our margins — we are protecting our market share, right? Market share is increasing and we have not given away any market share.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Exactly right. We will do everything — probably protect it and grow it in some cases.<\/p>\n

Hemish Shah<\/strong><\/p>\n

Okay. Okay. Thank you. Thank you so much. All the best.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you. Sachin, anything to add to the last follow-up?<\/p>\n

Sachin Karwa<\/strong><\/p>\n

No, no, you were right. Perfect.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Okay.<\/p>\n

Operator<\/strong><\/p>\n

Thank you. I would now like to hand the conference over to the management for closing comments.<\/p>\n

Sachin Karwa<\/strong><\/p>\n

Thank you, investors, for joining our earning call. We wish you and your family a happy and a safe Diwali. Thank you so much.<\/p>\n

Abhiraj Choksey<\/strong><\/p>\n

Thank you. Happy Diwali to everyone.<\/p>\n

Operator<\/strong><\/p>\n

[Operator Closing Remarks]<\/p>\n","protected":false},"excerpt":{"rendered":"

Apcotex Industries Limited (NSE: APCOTEXIND) Q2 2025 Earnings Call dated Oct. 25, 2024 Corporate Participants: Purvangi Jain \u2014 Investor Relations Sachin Karwa \u2014 Chief Financial Officer Abhiraj Choksey \u2014 Vice Chairman & Managing Director Analysts: Aditya Khetan \u2014 Analyst Jatin Chawla \u2014 Analyst Rohit Balakrishnan \u2014 Analyst Jasdeep Walia \u2014 Analyst Manav Vijay \u2014 Analyst […]<\/p>\n","protected":false},"author":2377,"featured_media":147581,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6349],"tags":[10169,9175,9104,9092,14492,10089],"class_list":["post-176147","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-transcripts","tag-earnings","tag-earnings-call","tag-earnings-conference","tag-earnings-transcripts","tag-financial-results","tag-quarterly-earnings"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/Transcript-thumbnail.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":41715,"url":"https:\/\/alphastreet.com\/india\/wipro-limited-wit-q2-2020-earnings-snapshot\/","url_meta":{"origin":176147,"position":0},"title":"Wipro Limited (WIT): Q2 2020 Earnings Snapshot","author":"Toby","date":"October 15, 2019","format":false,"excerpt":"-- Wipro Limited (NYSE: WIT) reported second-quarter 2020 earnings of $0.06 per share, in line with Wall Street projection -- Revenues grew 4% to $2.14 billion, vs. $2.13 billion expected. -- In Q2, IT Services revenue grew 2.5% to $2.05 billion. -- Wipro expects IT Services revenue to be $2.065\u2026","rel":"","context":"In "Earnings"","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"Earnings Update by AlphaStreet","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2019\/04\/Earnings-Coverage-5.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2019\/04\/Earnings-Coverage-5.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2019\/04\/Earnings-Coverage-5.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2019\/04\/Earnings-Coverage-5.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2019\/04\/Earnings-Coverage-5.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":136258,"url":"https:\/\/alphastreet.com\/india\/apcotex-industries-limited-apcotexind-q2-fy23-earnings-concall-transcript\/","url_meta":{"origin":176147,"position":1},"title":"Apcotex Industries Limited (APCOTEXIND) Q2 FY23 Earnings Concall Transcript","author":"IRS_INDIA","date":"October 21, 2022","format":false,"excerpt":"Apcotex Industries Limited (NSE:APCOTEXIND) Q2 FY23 Earnings Concall dated Oct. 21, 2022 Corporate Participants: Sachin Karwa -- Chief Financial Officer Abhiraj Choksey -- Managing Director Analysts: Amar Maurya -- AlfAccurate -- Analyst Anuj Sonpal -- Valorem Advisors -- Analyst Aditya Khetan -- SMIFS Limited -- Analyst Anand Kumashi -- Company\u2026","rel":"","context":"In "Earnings Call Transcripts"","block_context":{"text":"Earnings Call Transcripts","link":"https:\/\/alphastreet.com\/india\/category\/transcripts\/"},"img":{"alt_text":"Earnings Conference Call Transcript","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2020\/09\/Transcript-thumbnail-e1657213425955.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2020\/09\/Transcript-thumbnail-e1657213425955.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2020\/09\/Transcript-thumbnail-e1657213425955.jpg?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":144596,"url":"https:\/\/alphastreet.com\/india\/apcotex-industries-limited-apcotexind-q4-fy23-earnings-concall-transcript\/","url_meta":{"origin":176147,"position":2},"title":"Apcotex Industries Limited (APCOTEXIND) Q4 FY23 Earnings Concall Transcript","author":"IRS_INDIA","date":"April 29, 2023","format":false,"excerpt":"Apcotex Industries Limited (NSE:APCOTEXIND) Q4 FY23 Earnings Concall dated Apr. 28, 2023. 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