Yasho Industries Limited (BSE: 541167) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Masoom Rateria — Associate
Parag Jhaveri — Managing Director and CEO
Analysts:
Unidentified Participant
Parth Agarwal — Analyst
ASHUTOSH SOMANI — Analyst
Manan Shah — Analyst
DARSHIL JHAVERI — Analyst
Manish Gupta — Analyst
Karan Galaiya — Analyst
Anup Agarwal — Analyst
Prathamesh Dhiwar — Analyst
Malhar Sanghavi — Analyst
Sruthi Vora — Analyst
Preeti Agarwal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q1FY26 earnings conference call of Vsau Industries Limited organized by MUFG IR. 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 call over to Ms. Masoom Ratheria from MUFG. Thank you. And over to you Ms. Masoom.
Masoom Rateria — Associate
Thank you. Welcome to Yasho Industries Q1FY26 Business Call. Today we have with us from the management Mr. Paragravi, the Managing Director and CEO along with Mr. Chirag Shah, the CFO. Before we proceed. Before we proceed with the call I would like to give a small disclaimer that the call may contain certain forward looking statements which are based on the business opinions and expectations of the company. As on today, a detailed disclaimer has been given in the company’s investor presentation which was uploaded on the stock exchange. Now I would like to hand over the call to Mr.
Param Javeri. Over to you sir.
Parag Jhaveri — Managing Director and CEO
Good afternoon and thank you everyone for joining us for today’s results call for the quarter ended 30 June 2025. We truly value your continued support and interest in Yasho Industries performance. As we discuss our financial and operational performance for Q1FY26 I would like to emphasize our unwavering commitment to maximizing value for our stakeholders. We began this financial year on a strong note delivering the highest ever quarterly revenue of our company at 198.6 crore. This marks 14% year on year growth achieved despite a challenging global macroeconomic environment. What’s even more encouraging is the 33% growth in volumes underscoring the robustness of our operation and continued trust of our customers.
Segment wise contribution industrial chemical represented 87% of total revenue while consumer chemicals accounted for 13%. This volume led growth reflect not just robust market demand but also our ability to deliver value consistently even in a weak pricing environment. It reinforces our strategic choice being the capacity planning, customer engagement or product positioning and set a strong foundation for the rest of the year. While the pricing environment remains subdued due to correction over the past year, we are now seeing clear sign of a price stabilization which bodes well for the coming quarters. Our conscious effort towards product mix optimization have yielded results enabling us to maintain healthy EBITDA margin of 18.01 on a standalone basis and 17.05 on a consolidated basis.
From an operational perspective, our Pakhajan operated at over 50% utilization during the quarter. We are actively working to enhance utilization level through deeper customer engagement and potential collaboration with global partners. We expect those efforts to bear fruit in the coming quarters, further supporting our growth trajectory. Externally, the chemical industry is currently navigating a face of policy uncertainty, particularly on tariff and trade, leading to temporary delay in order finalization, particularly in industrial and auto ancillary segments. However, we believe this dispersion disruption is short term in nature and we anticipate greater clarity in the months ahead. Importantly, demand across our core chemical portfolio remains steady and we are consistently gaining market share even in this uncertain times.
On the CAPEX and RD front, we have already incurred rupees 30 crores of our planned annual capex of rupees 100 crore. Our state of the art R and D laboratory, a key pillar of our innovation roadmap, is progressing as scheduled and is slated for completion by October 25th. This facility will strengthen our product development capability and position us well for the future opportunity in performance chemicals. On the financial front, our endeavor is to improve our ROCE and debt to EBITDA ratio by following initiatives. We try to improve the asset curve by better capacity utilization and 2 further reduction in net working capital from 190 days to below 150 days, primarily by optimizing raw material and the finished goods inventory.
This will help us to improve our cash flow. Also backed by strong order visibility, a growing customer base and continued operational ramp up. We remain confident of delivering over 40% revenue growth in FY26 while staying firmly committed to sustainable value creation for all our stakeholders. In closing, I want to thank our employees, customers, partners and you, our valued investor, for your continued support and belief in our journey. We remain focused, resilient and optimistic about the future. Thank you again for your continued support and trust in Yashu and J. We are now happy to take any questions you may have.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on the Touchton telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Part Agarwal from Bastion Research. Please go ahead.
Parth Agarwal
Hi, thank you for the opportunity. I have just one question regarding our gross margin. So our margins peaked out in September and December quarters which was around 45% and which are now down to 40%. Can you just share some insight on this particular happening and where do you expect it to stabilize?
Parag Jhaveri
Well, our guidance for our base margin is always in the range of 38 to 40% only. That was one of the exceptional quarter we had with a very couple of our key performance chemicals had a demand and those are only once in a year demand. So that can happen in any one of the given quarter. But our general guidance for raw material to the finished goods consumption is in the range of 40% first minus 1%, 2% here and there.
Parth Agarwal
Okay, thank you so much.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Ashutosh Nemani from JM Financial. Please go ahead.
ASHUTOSH SOMANI
Yeah, hello sir, my first question is regarding the our margin segment wise. Can you please give the margin for industrial chemicals and consumer chemicals both for Q1FY26 and year on year comparison as compared to Q1FY25?
Parag Jhaveri
Well, as long as consumers consider our margins and a single digit on EBITDA side while in an industrial it is much more than 20%. So the aggregate margin comes to in the range of about about 17 to 19% and we believe that we will be able to hold on for FY26 also the same guideline.
ASHUTOSH SOMANI
Understood. And the second question is regarding the like I’m new to the company so I just want to understand the pricing decline that has happened in this quarter. So structurally what has been the like what product has been there there been a pricing decline and do you expect it to be stabilized? And can you please elaborate? Like was there a more supply capacity addition or there was a demand problem that led to pricing decline? Just want to understand it.
Parag Jhaveri
Yeah, well see the. We have already mentioned that in our industrial segment, some auto ancillary and automobile thing, we see the lot of pressure and that industry is going through a little bit of turmoil there. Our finished goods to retain the market what we had, we need to compromise on our margins and that has tagged us for this particular quarter. We are expecting in the next two quarters that should stabilize with a lot of clarity on the policy and the tariff and trades what we are challenging today. So at least by end of this Q3 we should have a stabilization on that part of it and we expect the price pressure should ease by that.
ASHUTOSH SOMANI
Yeah, and sir, I just didn’t catch the tariff part. So in case there is an incremental tariff, then would the price be passed on or how will the dynamics in that case work.
Parag Jhaveri
I think Asukas, this is just a very recent environment. We are all waiting for our government clarification and so we don’t get into it today. We need to review it which way it’s going to end actually the policy statement and then we’ll take a call on it. But yes, that if that don’t have resolved and we may have a challenge, a little bit challenge there and. And then we have to talk to our customers that how much we can pass it on and how much we cannot pass it on.
ASHUTOSH SOMANI
And so this 40% revenue growth guidance that we are given, is it assuming the pricing levels stay in when we are talking though?
Parag Jhaveri
Yes, I think we talk about 40% guidance is very much with the current market trend only. So we are very confident despite recent turmoil in the tariff statement, we are still confident that we’ll be able to achieve this 40% growth. At least 40% growth.
Parag Jhaveri
And the fixed asset turnover that we mentioned that will reach by, will reach to 3 by FY27. That says.
Parag Jhaveri
I think there’s no, there’s no change in that reason. Also we are very much expecting that we should be able to achieve as we have installed capacity last year and the current year in a 2 product line. We are increasing our capacity also which is giving us a lot of confidence. And with the current this year capex of about 75 crores in in a plant and machinery and 25 crores in R D. So we are looking at 75 crore which will give us a. Give us an additional revenue. But that will happen only in FY27, not in FY26.
ASHUTOSH SOMANI
Okay, understood. Thanks a lot.
operator
Thank you. Ladies and gentlemen, you may press Star and one to ask a question. The next question is from the line of Manan Shah from Moneybee Investment Advisor. Please go ahead.
Manan Shah
Yeah, hi. Thanks for the opportunity. So my question was that have you seen corresponding decline in our raw materials as well along with our end product prices?
Parag Jhaveri
Yes, we did see some. In some of the cases raw materials also declined. But more of we see the price completion on our finished goods rather than the raw material. So we see a challenge there because of the. Somewhere there’s a slowdown in some part of the world which is causing a crack.
Manan Shah
Okay. And initially we used to talk of four products. Product ABCD is how you used to classify in a presentation that we were looking to commission in the Pakhajan plant. So have all four products been commissioned or it’s any color on that?
Parag Jhaveri
If you can give three as in commission four should commission by end of this year.
Manan Shah
Okay. And approvals also we have received for all these three products.
Parag Jhaveri
Yes, absolutely. Absolutely. All the approvals.
Manan Shah
Okay. And what is the exposure towards the US market in terms of these new products or as well as the current products that we have?
Parag Jhaveri
Well, currently Yasho’s revenue share US is about 25% of the revenue.
Manan Shah
Okay. And this new product that we are developing in that also is US a major market or EU is also equally a large market.
Parag Jhaveri
Well, all our product has a market share across the globe. So USA will remain only up to 25%. We cannot grow share for 10%.
Manan Shah
Okay, sure. Thank you.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Darshul Javeli from Crown Capital. Please go ahead.
DARSHIL JHAVERI
Hello. Good evening, sir. Thank you so much for taking my question. Firstly, congratulations on a great set of results, sir. Hopefully I’m audible.
Parag Jhaveri
Your voice is crashing, so can you be little bit soft or.
DARSHIL JHAVERI
Hi. Hi. Is this better, sir?
Parag Jhaveri
Yes, thank you.
DARSHIL JHAVERI
Yeah, yeah. Okay, thanks so much, sir. So sir, just wanted to ask like we are saying 40 revenue growth but in Q1 we’ve done around 10 11. So by that logic next the three quarters have to grow more than 50% I think roughly. So how do we see that quarter on quarter increase in revenue? Sir,
Parag Jhaveri
I think generally the first quarter little slow if you look at even history. Also if you look at the 20 FY25 numbers, quarter on quarter over revenue growth and the third and fourth quarters are very strong quarter for Yasho. That’s a historically and we are very, very confident that with this, you know, the capacity and also the more and more customers are buying product despite slowdown in the market, we are regaining the shares from somebody. It’s not the market growth, but it’s what we what we gain the market more of market. And there we see the good opportunity and we are still very strongly bullish on that that we will be able to achieve that.
DARSHIL JHAVERI
Okay, okay, that helps. Okay, that helps a lot. And sir, when like our, you know, revenue increases by so much, so we’ll have better capacity utilization that will give us an operating leverage. So our EBITDA should also correspondingly increase. Is that a fair estimate, sir?
Parag Jhaveri
Yes, but you know Darshan, currently the geopolitical situation, we try to hold on our business rather to go for a higher margin. So currently that’s not the situation where we say that yes, we’ll be able to increase our EBITDA beyond 19%. So we are giving a range of 17 to 19. And in a worst scenario we are doing 17 on a good scenario we should do 19, 20. But we are not going for 20. We will say between 17 to 19 we will be able to maintain our margins on a consolidated laboratory level.
DARSHIL JHAVERI
Okay, fair enough. And I just wanted to know like what kind of rising power do we have with our customers in case this 25 margin is there? So how do we see that impact? The tariff is there. Then how do we see that impacting us? Sir, will be able to pass on some prizes or how does it work?
Parag Jhaveri
Sir, I think we need to wait and watch for over a week or 10 days more to have a lot of clarity on the subject because there’s lot of confusion is there? There is no official declaration there. So we will wait and watch. We might have more credit by end of next week and then we’ll start. Couple of customers are very large so we don’t know how they work. Okay. They also export globally back when they consume them and re export. So when they are re exporting that product they don’t have a impact of a tariff because tariffs get nullified there.
So it’s all depend. You know it’s not that simple. Your calculation sir.
DARSHIL JHAVERI
Okay, okay, fair enough. I just wanted to know what is our CAPEX outlook for current year and like how and what was it last year? Sir, how much capex have we done last year?
Parag Jhaveri
Last year number I don’t have off my head. But I can check and come back to you later on. But this year we are talking about 100 crores capex 75 crore towards the capacity increased and about 25 crores for the R D facility.
DARSHIL JHAVERI
Oh okay. Okay. Great. Great. Sir. Yeah, that’s it. From my. Sorry, one more question. Sir, our tax rate is water because I think last 30 and even Q1, you know above 30. So can you clarify on a tax rate sir?
Parag Jhaveri
29 point something. So it’s come to close to 30%.
DARSHIL JHAVERI
Okay. Tax rate is around 30. Okay. Okay. So fair enough. Thank you so much sir.
Parag Jhaveri
Thank you.
operator
Thank you. A reminder to all the participants. You may press star and one to ask a question. The next question is from the line of Manish Gupta from Solidarity. Please go ahead.
Manish Gupta
Thank you for the opportunity. This 75 crore capacity expansion that we are doing is my understanding right that this capacity will be available effective for first April next year? Yes sir. We believe that it should be commissioned by January, February. Then trial runs for actual utilization or the revenue generation will happen from the Q1 of 27. FY27. Okay. And second question was that based on the March balance sheet the inventory was quite high. Now has the inventory reduced over this quarter and if we are seeing very strong growth. Any commentary on what the inventory should be by the end of March this year?
Parag Jhaveri
Well, we are looking at March at close to about 150 days.
Currently our inventory is down to 190 for more than 290. So we are able to down in this quarter 190. As I said in my speech that we will try to bring it controlled by the raw material and the finished goods inventory. We will try to impress for the current situation. Sometime you don’t have a prediction that when the customer put your orders on hold and inventory suddenly increase, it shoots up. But we do have an intention to bring down this to below 150 days. That’s our aim and I think we will be able to achieve that.
Manish Gupta
But a steady state for the business model. If we have 150 days inventory will we be able to generate an attractive return on capital?
Parag Jhaveri
Sir, 150 is also little high. Good inventory should be for you know the 110 to 120 days. But we need to it back. We are growing, we need to hold inventory. Currently the customers are asking material on call. They don’t give you the longer lead time. So because of that we need to carry unusually high inventory and we hope the situation change sooner.
Manish Gupta
Switching gears. Paragh Bhai, you mentioned that you are gaining market share.
So you’re gaining market share from which geography? Right now
Parag Jhaveri
I think we are growing very much into export market and it’s coming from the western world. And I can say that much. I cannot give a pinpoint answer of that from particular what geography. But it is growing in the western world.
Manish Gupta
Okay. Okay. Thank you.
Parag Jhaveri
Thank you.
operator
The next question is from the line of Karan from Keynote Capitals. Please go ahead.
Karan Galaiya
Hi. Thank you for the opportunity. So I have one question which is on. We were expecting our customers customer approvals in Q1. So did we get those approvals or. Are they pushed down the year?
Parag Jhaveri
I think that must have come. That’s why they started buying this product. So we are assuming. See we don’t get that answer. But we started getting a business from them. So we are presuming that we are. They must have received all the all the necessary approval from their customer. Okay, understood. And sir, what will be our revenue per kilogram? Currently it’s below on a aggregate level about 400 rupees a kilo. Okay, thank you.
Karan Galaiya
These are all my questions.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Anup Agarwal from Lucky Investments. Please go ahead.
Anup Agarwal
Yeah. Hi. Thank you for taking my question. Sir, my first question is can you call out your gross debt as of June?
Parag Jhaveri
One second. I can give that. Just give me helpless to brought it.
Anup Agarwal
If you can break it between long term and working capital please.
Parag Jhaveri
Sure. One second. I can get to that data. Long term Debt is about 280 crores. And short term is about 100 crore.
Anup Agarwal
Have we repaid debt sir in this quarter because our debt was 550 crores closing March.
Parag Jhaveri
Yes. Yeah. We have repaired some debt also. Current year. In our current quarter.
Anup Agarwal
What’S our repayment schedules for FY26? How much debt are we going to repay?
Parag Jhaveri
Well we already repaid some debt. So only the repayment will start by November 25. For balance thing about 9 crore rupees we have to repay.
Anup Agarwal
Starting November we’ll repay 9 crores.
Parag Jhaveri
Yeah. That’s it for the rest of the year.
Anup Agarwal
Okay. I’ll take this question offline as well. My second question is sir, what was the utilization at the Wapi plant?
Parag Jhaveri
I don’t have exact number of that but the Wapi plant is running at about about 70 75%.
Anup Agarwal
Understood. What was the revenue contribution from Pakajan in this quarter?
Parag Jhaveri
Pakam quarter should be. I don’t have those. Breakup. Okay. Plant wise breakup we don’t have. But utilization is more than about 55% in Pakhajan while Wapi is running at about 70% relation.
Anup Agarwal
So the average selling price per kg in Pakhajan should I also assume to be around 200 rupees a kilo?
Parag Jhaveri
I think so you can.
Anup Agarwal
Okay. Sir, when you call out your debt to EBITDA by March 26 you want to come below 4. What is the plan going forward in terms of further paying off debt or maybe the second plan of action when it comes to phase two. Capex. How are we planning that and by when are we planning that?
Parag Jhaveri
Well for debt to EBITDA we want to bring it on below three. So we are confident that by FY27 we will be bringing those that somewhere close to that number we do have some expansion plan. Let’s finish this and then we’ll see how much we are growing further. And for 27 we’ll we’ll inform you guys somewhere in our April call what capex we are doing for FY27.
Anup Agarwal
Got it. My last question sir, if you can maybe just give an idea about how 40% growth in this year. I understand it’s largely going to be Volume LED itself. Can you call out the difference between how India market is going to be compared to your export markets in terms of growth and what segments of industries are driving that?
Parag Jhaveri
Well, we do see the export will grow further. So we are at 67% and we expect to grow to 70% of our total revenue. The export will contribute 70%. Domestic market is growing but not at that rapid speed. There’s a lot of challenges in local market. We are facing cheap import, we need to fight with that. So yeah, 70% of revenue should come from export going forward.
Anup Agarwal
Any specific segment because you called out your industrial and auto ancillary is kind of facing a bit of a tough time because of the tariff uncertainty. Which other segments are driving that 40% growth in exports?
Parag Jhaveri
Well, we say that there is a challenges not in entire industrial segment. One of the part of the industrial segment we are facing. Industrial segment we contribute to the lubricant, rubber, we talk about performance, chemicals, we talk about some of the coating industry. So we work in a wide variety of the. We are serving wide variety of the industries within industrial segment and one of the segment is not doing good. So that is somewhat, you know dragging down our margins mainly rather than volume. I will say say that the margins are under pressure and we hope that we should be able to overcome with a different chemistry within our portfolio.
Anup Agarwal
So we are kind of working also on product. Better product mix within the portfolio. Absolutely.
Anup Agarwal
Okay. Okay. I’ll come back in the queue if I have further questions. Thank you sir.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Prathamesh Diwar from Tiger Assets. Please go ahead.
Prathamesh Dhiwar
Yes, just a follow up on the previous participant question. So as we said like in bifor27 we are planning to be around 3x. Of debt to EBITDA and post that we are also going to announce some capex funds. So sir, just wanted to know at. What range we are expecting our debt to EBITDA should be for let’s say coming three years, four years.
Parag Jhaveri
Well, debt to beta. I think we’ll be comfortable in the range of two and a half times in the long term. Listen.
Prathamesh Dhiwar
Okay, got it sir.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Ashutosh Nani from GM Financial. Please go ahead.
Unidentified Participant
Yeah, I just have, I have one question. So what is the percentage revenue contribution from auto and auto ancillary segment and what it is it now in this quarter that’s only about 25%.
Parag Jhaveri
25%? Yes.
Unidentified Participant
And this is majorly Europe geography.
Parag Jhaveri
I think also Bro.
Unidentified Participant
Okay. Yeah. Thank you.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Darshul Zaveri from Crown Capital. Please go ahead.
DARSHIL JHAVERI
Hello. Thank you so much for taking my question again. Sir, I just wanted one small clarification like we are holding for. You know so that we can serve our customers faster. But if the price is reduced. So do we suffer any inventory loss, sir?
Parag Jhaveri
Well, we have a renegotiation quarter on quarter or maybe it’s with some customer six months, some customer quarter. So yeah, only happen during that time. Not in between.
DARSHIL JHAVERI
Not in between. But so just like. Because our FY25 inventory was on the bit of a higher side. So we had packed up a lot of inventory and I think we are saying that the prices of our finished goods have dropped. Did we suffer any inventory loss? This.
Parag Jhaveri
I think so. There’ll be some. Definitely some inventory loss will be there.
DARSHIL JHAVERI
Okay. Okay. Could that be quantified, sir?
Parag Jhaveri
No, I don’t think. I don’t. We have not done that. If required just drop an email. We will try to help you with that.
DARSHIL JHAVERI
Okay. It would not be a very significant but number is. Okay. Okay. Fair enough. That’s it for my sir. Thank you.
operator
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Malhar Sanghvi from Bodhi Capital. Please go ahead.
Malhar Sanghavi
Hello.
operator
Yes mister. Please go ahead.
Parag Jhaveri
Your voice is not clear. Is it better now? No. Too loud.
Malhar Sanghavi
Just give me a second. Is it better, sir?
Parag Jhaveri
Yes. Thank you.
Malhar Sanghavi
Okay. So my question was primarily on the fact that you mentioned that growing by gaining more market share. So I want to understand how much is the probability like the market, the entire market growing at.
Parag Jhaveri
I think for industrial segment total market share would be in the range of about 15, 16 billion dollars. And we are trying to gain only about 0.2% of that. We aspire to grow to 902,000 crore in this year.
So we are not looking at a very huge market share. Very nominal market share.
Malhar Sanghavi
Right. And how cost competitive are we as compared to China?
Parag Jhaveri
Your voice is cracking again.
Malhar Sanghavi
So how cost competitive are we as compared to China or compared to EU
Parag Jhaveri
compared to Europe and usa? We are quite competitive compared to China. At times we have a challenge in certain segment.
Malhar Sanghavi
But you’re getting more requests from clients to de risk from China and coming towards you. Is that. Is that correct?
Parag Jhaveri
Yes.
Malhar Sanghavi
Okay, sir. I think that’s it from my side. Thank you so much.
Parag Jhaveri
Thank you.
operator
Thank you. The Next question is from the line of Anup Agarwal from Lucky Investments. Please go ahead.
Anup Agarwal
Yeah. Thank you for the follow up, sir. So Wapi was is. Vapi is about 12,500 metric in capacity and pakhajan is 20,000. With the 75 crores of capex that you looked at how much capacity addition will happen in Pakhajan?
Parag Jhaveri
I have no idea about that. Capacity wise we are not going to be disclosed. But. But this 75 crore should add a revenue of about 200 crore plus.
Anup Agarwal
Okay. Are these products at a far higher ASP compared to today or what?
Parag Jhaveri
Same level.
Anup Agarwal
Same level.
Anup Agarwal
Yes. Okay. Understood. What sort of interactions or dialogues are you having with potential customers outside of India?
Parag Jhaveri
I didn’t get you. What do you mean by that?
Anup Agarwal
I mean in terms of the new products that we are trying to make in Pakhajan. What sort of engagements, inquiries,
Parag Jhaveri
what we. Are putting Capex already we are making it. We only we see the certain. We as we informed earlier that we have about seven product in Pakhasan. Out of that two product we already see the good utilization and we try to increase that. So that’s that to product we increase in the capacity. So we don’t need an additional approval. It’s an existing product.
Anup Agarwal
Okay. And for the other five, sir, what is other five? We need approval.
Parag Jhaveri
No, they are running product. But that has not achieved a full capacity relations. So once they achieve we’ll see that where to expand.
Anup Agarwal
All seven products are approved.
Parag Jhaveri
Yes.
Anup Agarwal
Okay. By which quarter sir are we looking to hit that 70, 80% utilization.
Parag Jhaveri
I think by quarter four F526 we should achieve that utilization.
Anup Agarwal
Exit quarter four 80%.
Parag Jhaveri
Yes.
Anup Agarwal
Okay. Okay. That’s it. From my side. Thank you so much, sir.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Ruthie Vora from SAS Capital. Please go ahead.
Sruthi Vora
Thank you for the opportunity. So you mentioned that 30 crore has already been incurred out of the plan. 100 crore annual capex for FY26. So could you elaborate on which specific facilities or this investment is being directed towards?
Parag Jhaveri
Well, this has been directed at the Pakistan facility. Partly money has been spent on R and D facility and partly for machinery advances we have paid.
Sruthi Vora
Okay. And additionally could you share how this capex is being sourced either like it would be helpful to understand how this investment align with your growth strategy. Particularly in terms of product innovation and market exchange expansion.
Parag Jhaveri
Well, the R and D will help us to improvise our existing process wherever we require optimizing the minimizing the waste. And third we Are working on a lot of new chemistry where we can improve introduce new chemistry into the industrial segment. So the R and D work on a 2, 3 strategy. One on an existing process product and two for a short term in the long term projects.
Sruthi Vora
And what kind of financial returns or operational efficiency you expect to generate from this spend over the next few years?
Parag Jhaveri
Well, we are looking between three to four times which we were enjoying before 24.
Sruthi Vora
And I have another question that is like you mentioned that the operated at over 50% utilization during the quarter and the efforts are underway to ramp it up further. So like could you share more about the next phase of expansion plan for this site?
Parag Jhaveri
Already I said that we are expanding some capacity in Pakhajan by investing Rupees 75 Crores in FY26 and that will translate into the revenue in FY 2027.
Sruthi Vora
And additionally, what will be the scale of this expansion in terms of added capacity of product lines and what kind of capital expenditure is planned for it for 27?
Parag Jhaveri
We don’t have plan yet. We have something on a drawing board. We will come back to you only in the April 26th. What about 26, 27 Kazakhstan.
Sruthi Vora
Okay. Okay. Thank you so much.
Parag Jhaveri
Thank you.
operator
Thank you. The next question is from the line of Preeti Agarwal from SK Associates. Please go ahead.
Preeti Agarwal
Yeah, thank you for the opportunity. So you spoke about optimizing raw material inventory as part of your working capital strategy. So could you elaborate on your current sourcing model of raw material?
Parag Jhaveri
Well, of our total inventory almost 60% is imported and rest is domestic. We are working a lot of local sourcing where we can buy material locally. We are developing those chemistries are not yet been produced in the country. We have identified one or at least two or three supplier where we can source from them. If they can produce for us, that will help us. Because when you are having a lot of imported material, you need to carry large inventory due to the logistic challenges. Even today we are facing that challenge. So that’s a major thing.
What we want to. What we want to do it.
Preeti Agarwal
Okay. And how much of your raw material requirement is met through imports and what percentage is dependent on China?
Parag Jhaveri
Well off total import China is about 20, 25% only. And this comes from the rest of the world.
Preeti Agarwal
And given the ongoing global supply chain uncertainties and global tensions, how are you mitigating risk associated with import dependency especially from single geography?
Parag Jhaveri
As I said, we don’t have very few products come from single geography. Majority of product has a multiple source either from Asia, Europe, North America, South America. So we have multiple channel partners from where we can source a product.
Preeti Agarwal
Okay. All right. Thank you so much, sir.
operator
Thank you. Thank you. That was the last question for the day. I would now like to hand the conference over to the management for closing comments.
Parag Jhaveri
Thank you. Once again, I would like to thank everyone for taking our time and joining us on the today’s conference call. I hope we have been able to respond to your queries adequately. Your continued interest and feedback plays a vital role in our journey forward. Should you have any further question, please feel free to reach out to our investor relations partner. Thank you once again for joining the call today. Good day.
operator
On behalf of Yeshu Industries Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your line points.