Ladies and gentlemen, good day and welcome to the Balkrishna Industries Ltd Q4 and FY 2025 Earnings Conference Call. This Conference Call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Rajiv Poddar, Joint Managing Director. Thank you, and over to you, sir.
Good morning. Thank you for that. Thank you to everyone for coming on this call today and being here. I am joined, along with Mr. Bajaj, Senior President, Commercial and CFO; Mr. Satish Sharma, Senior President and Director of Strategy and Business Development; Mr. Ravi Joshi, Deputy CFO; Mr. Sushil Sharma, Head of Accounts; and SGA, our Investor Relations Advisor. Let me first begin with an overview of our five-year strategic plan. At BKT, we have set a clear and shared ambition, that is, to reach a revenue milestone of approximately INR 23,000 crore by 2030. To achieve this, we are moving forward along with three levers of growth. Lever one: the OHC business of ours. Here, we aim to achieve 70% contribution on the enhanced revenue by financial year 2030. Lever two: carbon black.
Here, we aim to achieve 10% contribution of enhanced revenue by financial year 2030 from third-party sales. Lever three: we now plan to enter new tire categories for the Indian market. This should deliver around 20% of enhanced revenue by the financial year 2030. However, the major contribution of this will come in the back end of this journey. I will now provide more details about all three levers individually. Lever one: the off-highway tire business. We have achieved global leadership in the agricultural tire sector, and we intend to reinforce this position across all geographies. At the same time, we are ready with a strong product portfolio in other sectors, that is, rubber tracks, mining, industrial, and construction tires. Our commercial entry into the rubber track segment has been well received and in response to growing demand.
The board has approved the expansion of our dedicated manufacturing facility for rubber tracks. This project is expected to commence production in the second half of financial year 2026 and will enhance both our product offering and market reach in the agricultural sector. In the mining segment, we are proud to say that we are the only Indian tire manufacturer to have developed the all-steel radial technology on our own, and we produce currently up to 57-inch. With full range in both bias and radial technology now in our portfolio, the global mining tire market offers us a clear runway for accelerated growth. Geographically, we maintain steady progress in Europe while driving expansion across Americas, India, and select high-potential markets. Our current production capacity stands at 360,000 metric tons per annum.
With the already announced CapEx of 35,000 metric tons and some de-bottlenecking, we are ready to scale up this production to 425,000 metric tons per annum. This gives us the capacity to target an 8% share of the overall market share globally. Any signs of improvement in the global macroeconomic and geopolitical environment will act as a catalyst for us to achieve the aspiration of 10% global market share. However, reaching 10% continues to remain our strategic goal to be pursued through modular, carefully phased investments. Lever two: carbon black. Over the past three years, we have laid a solid foundation for our carbon black business. Our product is now well accepted by major OEMs in India and globally. We aim to position ourselves as a preferred and strategic tire supplier to the tire industry.
We also see significant revenue and margin potential in non-tire segments, including the advanced carbon black line of ours, which has gone on stream last year. To capitalize on synergies with our tire operations and leverage energy and raw material integration, the board has approved the expansion of our carbon black plant from 200,000 to 300,000 metric tons per annum. Along with this, a 24-megawatt cogeneration power plant is taking our total cogeneration power capacity to 64 megawatt at Bhuj. This expansion is expected to be completed by early 2026. Lever three: new tire verticals for India. India's economy is growing, and so is the demand for all tire categories. Further, we also take inspiration from our own journey in the Indian OHC segment over the last five years.
From a modest presence, we now hold over 15% share in the agricultural replacement market and have also established dominance in other OHC subsegments. The brand investments that we have done in the Indian market over the last few years have further played a significant role in our success. Following the successful development of our all-steel radial platform, we believe we now have the right technological base to extend value to newer customer groups. With this, we are now planning a modular entry into the premium passenger car segment and commercial vehicle radial tire segment with the initial focus on the replacement market for India. The commercial vehicle radial tire pilot will launch in Q4 of financial year 2025-2026, and then it will gradually be ramped up. The PCR tires pilot will follow in Q3 of financial year 2026-2027, and then it will gradually ramp up.
By 2030, these new verticals are expected to contribute to around 20% of our overall sales, leading to approximately 5% market share in India, allowing BKT to participate in the non-OHC total addressable market of additional INR 80,000 crore in India alone. I now move to capital expenditure. To support these three levers, we have outlined a CapEx plan of INR 3,500 crore to be spent over the next three years. Please note, this is to be funded mainly through internal accruals. Let me now touch briefly on our competitive advantages. Our carbon black plant is integrated to generate power, which is consumed directly by our tire facilities. It helps us mitigate one of the key cost components in tire manufacturing. Additionally, it also gives us control over one of the key raw materials in the tire manufacturing journey.
Second, we already own the land, have upstream equipment in place, and also possess talent and systems required to scale up as we move in this journey. Thirdly, our past investments in brand building in India will now generate greater value across a wider revenue base for us. On the basis of the above-stated competitive advantages, we expect blended margins post full commercialization to be in the range of 23%-25%. This will allow us to grow our absolute EBITDA significantly. On enhanced revenue backed by our superior product mix and operational strength, we do not anticipate a significant decline in growth once we have achieved full potential. I hope this has provided a clear and structured view of our strategic direction for the next five years. Let me now give you financial highlights. Despite ongoing geopolitical tensions and global economic uncertainty, we have delivered strong performance.
We achieved our highest-ever annual sales revenue, driven by our global footprint and resilient business model. Volume growth exceeded expectations, highlighting the robustness of our business strategy and also a well-laid-out execution plan by our team. Looking ahead, we remain focused on strengthening our product lines and market presence. Any improvement in market conditions will act as a strong tailwind in this journey. For the quarter, our volume stood at 82,062 metric tons, similar to the same period last year. For the full year, volume stood at 315,273 metric tons, recording a growth of 8% year-on-year. Our standalone revenue for the quarter stood at INR 2,838 crore, registering a growth of 5% year-on-year. This includes realized gain on foreign exchange pertaining to the sales of INR 91 crore. For the whole year, the standalone revenue stood at INR 10,615 crore, registering a growth of 13% year-on-year.
This includes realized gains on foreign exchange pertaining to the sales of INR 202 crore . The standalone EBITDA for the quarter was at INR 703 crores , with a margin of 24.8%. For the whole year, the standalone EBITDA was at INR 2,682 crore , registering a growth of 16% year-on-year basis. The margin for the full year stood at 25.3%. Other income for the quarter stood at INR 550 crore , while for the full year, financial year 2025, it was INR 267 crores . Profit after tax for the quarter was recorded at INR 362 crores , down by 25%. This was primarily on the account of M2M loss to the tune of INR 580 crore and higher financial costs compared to the same quarter last year. For the whole year, the financial year of 2025, we have recorded INR 1,628 crore , registering a growth of 13%. For this financial year, our capex spend was INR 1,500 crore .
Our gross debt stood at INR 3,212 crore at the end of 31st March 2025. Our cash and cash equivalents were INR 3,327 crore. Accordingly, we have a net cash of INR 115 crore approximately. The Board of Directors has declared a final dividend of INR 4 per equity share, subject to shareholder approval in the AGM. This brings the dividends to INR 16 per share, including the earlier three interim dividends that were given. I reiterate once again before ending that this vision is not just a destination, but we see it as a continuous journey of organic growth via modular expansions driven by long-term commitment to product and operational excellence, brand building, and most importantly, stakeholder value creation. At BKT, we are focusing not on the near term, but for the next 25 years of business growth. With this, I conclude my remarks and leave the floor open to Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Siddhartha Bera from Nomura. Please proceed.
Yes, sir. Thanks for the opportunity. Sir, the first question again is on this new segment which we are planning to enter over the next five years.
Some more clarity, if you can share, because these are quite competitive segments in terms of the number of players who are there being operating here for quite some time, and we probably being one of the quite late entrants now. What gives us the confidence of probably the right to win here? How do you think in terms of the product or the brand, the sort of ramp-up will be here? I'm sure you need to maybe invest a lot more on network and building as well. Some color there. How do you think about some of the investments now as we enter these new segments going ahead?
Yes. Good morning, Siddhartha. This is Satish Sharma this side. Like you rightly said, nothing is ever easy, but our strategy is based on various principles that we have.
The first and foremost is the way Rajiv explained that the way we have entered, the demonstrated success that we have in the agriculture and other segments of off-highway in the Indian market over the last five years is very much evidenced in the kind of things that we can do in the market. India is a growing economy. The other thing is that our all-steel radial technology in off-highway also lends itself very strongly to our entry into the truck bus radial market in India, which is the commercial vehicle segment. Given the fact that the Indian economy is growing at 6.5%, there is a growth in all these categories. Given our business model and our demonstrated success, we do believe that we can create a difference in the Indian market, and we are fairly confident about doing that.
Got it, sir.
On the investments, like I was checking, we do spend around 5% every year to sort of improve the brand visibility in both India and global markets. Now with this new FURRET, do you think that also changes because you need to maybe reach out more to, and we are targeting the replacement segment, so we maybe need to reach out more to the consumers in India and on the network also? Do you think these areas also there will be some change to the investment plans you have over the next few years?
No, we see ourselves maintaining the level, and you'll see the benefit towards the end of this five-year journey. You'll see a cumulative benefit coming in. As the enhanced turnover starts getting accumulated, we start reaching it, you'll see these spends in percentage terms come down.
The benefit, once it is reaped, you will see it come down.
Got it, sir. Lastly, sir, on this CapEx spend of INR 3,500 crore, possible to break up how much you are planning for each segment and what does it mean for our CapEx spend for FY 2026?
No, we do not have, I mean, we are not ready with the breakup since the budget has just been approved to be spent by the Board of Directors over the next three years. Now we will work out in more detail and work on that.
But sir, for FY 2026, how much should we assume? Any color there?
About INR 1,000-INR 1,500.
Okay, sir. Got it. Thanks, sir. I'll come back and meet you.
Thank you.
Before I take the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Arjun Kannan from Kotak Mahindra Asset Management. Please proceed.
Sure. Thank you for taking my question. Sir, just continuing with the previous participant question. When we say pilot plans of PCR and TBR, what capacities are we talking about for the pilot plans? And B, in terms of selling of the output, are we looking at just the domestic market or potentially are we looking at export and tie-up with OEMs abroad?
Arjun, to answer the last part first, essentially the capacity is being put for the domestic market in phase one.
As you would know, earlier we had announced our entry into mining TBR. Our truck bus radial tire likely is going to come from that capacity. That also allows us to enter the market relatively earlier.
Ladies and gentlemen, it seems like the management's line has got disconnected. Please stay connected. I'll rejoin. Ladies and gentlemen, thank you for waiting patiently. We have the management's line connected with us.
Sorry for the technical glitch. We got disconnected. We are reconnected now. We'll restart our answer. Yeah. I was saying that the truck bus radial tires are going to come from our existing already announced mining TBR capacity in the earlier times. That will allow us an early entry in the truck bus radial market. As far as car radial is concerned, it's going to be a little later in the time horizon.
The entry is in the domestic market only and in a phased manner. The capacity planning, etc., is still being worked out.
Sure. There is no capacity outgoing letters now at this point in time for both of the segments?
No, as you said, we are working on that, and we do not have that breakup.
Right. Sir, the second question, just moving to the core business currently, is there any guidance you could provide us with for in terms of volumes, given that we are starting the year? Secondly, in terms of the specialty carbon black, if you could help us with how is that trending, given that it would have come on stream during FY 2025?
Regarding the core business of ours, the off-highway, we cannot give any guidance under current global scenario because it is very volatile with the trade wars going on in one part of the world, geopolitical wars going on in the other parts of the world. We cannot give you any visibility on that. As far as the carbon black specialty is concerned, I'll give it to Mr. Bajaj.
Good morning. The carbon specialty business started only in the last quarter. Only trials are going on. It will take some time to take the business forward.
Sure. Do we see, what would be the outlook before fiscal year 2026? Would we see peak utilization in 2027?
For the advanced carbon black?
Yes, sir.
Are you are asking for new capacity or advanced carbon?
For the specialty carbon black, sir.
2027, yes, we should see 2026, 2027. Some utilization will be there. Sure.
I'll come back in the queue. Wishing you all the best.
Thank you. The next question is from the line of Basudev Banerjee from CLSA. Please proceed.
Yeah. Morning, Poddarji. Couple of questions. One.
Good morning, sir.
This kind of tariff uncertainty scenario and geopolitical aspect which you highlighted, what is the inventory situation in your end distribution? Has there been any pre-buying before fearing tariff effects? This wholesale number, how to look at that from inventory perspective?
The inventory at our distributor level is stable. At the level that we wanted to, desired level, so it's stable. Okay. That's perfect. Second thing, sir, as you rightly said, domestic OHT tire market being around INR 80,000 crore, and your desired revenue of INR 4,300 crores is 5%. By FY 2030, this INR 80,000 crores might move up to INR 1,000,000 plus, and then the market share after FY 2030 at your initial investment is going to be sub 4%. Do you think that at such a marginal presence, it will help you to derive industry competitive profitability as such from that angle?
Like Rajiv has already explained, we derive a fair amount of competitive advantages in the way that we plan to enter the market, and we see that playing out for us. As regards the marginal presence that you mentioned, our plan is going to continuously evolve given the, and we will base it on the response that we get from the market.
We are hoping that we'll get a strong response, and if that plays out the way we have envisaged, we will accordingly keep on evolving our own plan to enter the market.
That's it. Last question, Rajiv sir, or Poddarji, this new project which you said, INR 3,500 crore combined capex and existing business capex of INR 1,000-1,500 crore, would it be right to assume INR 2,500 crore kind of capex in 2026, 2027, 2028 each year?
Three years, INR 3,500 crores we envisage will be spent.
That is for the new projects and existing OHT business maintenance and growth CapEx that
will be separate. that will be separate.
So combined capex per year can be INR 2,500 crore?
No, it will be between INR 1,500 and INR 1,800 at a peak because those capex may also come down once we've already done those capex, so it won't be continued in the OHT business so much.
Okay. So largely the new project capex will be more towards FY 2028 to 2030 and not 2026 to 2027. And by 2030, the OHT capex will slow down.
It will be 2026 and 2027, and then you will start reaping the benefits of it in 2028 to 2030.
Sure. Understood. Thanks, sir. That's all.
Thank you. The next question is from the line of Pramod Amthe from InCred Equities. Please proceed.
Yeah. Hi. Thanks for taking my question. First of all, I wanted to understand what criteria did you use other than your expertise in the normal radial technology to expand the new segment?
The reason to ask is, are there any financial ROCE parameters used, or why did not you try to enter two-wheelers, which might be relevant considering the rural penetration for two-wheelers?
We have used a mix of a lot of, I mean, there are a lot of parameters which go behind the scene to make a decision and convince the board. That was all for internally to be used to convince the board. Now that they have given those clearance, we are going ahead with our project. It may not be possible for us to explain all the decisions at points that we were looked at to convince our board. A lot of parameters were definitely looked into.
Any reason to keep the two-wheeler tires out, or you may look at it at a later stage?
We are already present in two-wheelers, albeit in a very small way, and we hope to grow that business as well.
Sure. The related question is, if I have to look at your manufacturing processes, there seems to be relatively on a lower volume, very high size tires, which is more of a batch production.
Can you repeat your question? Can you repeat it?
My question is more like the new segments which are entering, there seems to be a continuous process-driven tire production versus the existing one where you specialize into a batch production for OHT or farm tires. What type of manufacturing expertise do you need, and what do we need to, as investors, watch out in terms of scrap or efficiency of the existing plants to bring in?
Firstly, you're very right in your observation. My compliments to you.
From our existing manufacturing, there are obviously we'll draw synergies and capabilities which are also needed in the business that we are getting into. At the same time, we have to develop new capabilities. We are pretty much ready to deliver what it takes in adding the new capabilities which are needed. At the same time, we are going to be enormously helped by the existing capabilities. After all, it's a tire manufacturing process which is not very different, though the nature of businesses, as you pointed out, is different. It's a mixed bag there
Thanks for the detailed answer. If I can ask one more question, you guys have been smart enough to identify niches within the tires and command the market share or the profitability.
Do you see such opportunity within the broader truck tire space or within the car tire space which exists, which you can exploit over a period of next three, four years?
Thanks for complimenting us on the strength that you have identified. We do hope to carry this strength forward.
Just to add on to that, we are looking at such niches, and that is why we are confident that despite entering competitive segments, our overall at peak, once we achieve full expansion and revenue, our EBITDA margins may not be diluted that much because we are going to focus on premium niches within these sectors. We are not going to be catering at a generic level. We will continue our specialized approach. That is what has got us to this level and will be continued in that.
That is why we are confident of our EBITDA margins and growth being at the levels where they are currently. Marginal decline.
Sure. Thanks a lot.
Thank you. The next question is from the line of Raghunandhan from Nuvama Research. Please proceed.
Thank you, sir, for the opportunity. Firstly, on the point which you highlighted that the focus will be on premium niches, can you elaborate more on the target segments within the PCR? Would you be focusing on certain diameter and above? And within the TBR, what would be the focus areas for you?
Let us work on it. We would not like to divulge this information at this moment. As and when things play out, we will definitely keep everybody aware of what we are doing, but not at this stage.
Got it, sir.
I understand that out of INR 3,500 crore, the exact breakup plans, everything are yet to be finalized. Not asking for the near-term number, but by 2030, you're working with about, say, INR 4,600 crore of revenue target, which would mean that even if I assume a 1.5x gross asset turnover, a minimum CapEx of INR 3,000 crore would be required. Would that be a fair way to think about the long-term CapEx requirement?
Roughly, yes. Good rule of thumb. Roughly, yes. With that, we have to remove some of the synergies that are already there. As I mentioned, we have the land, we have some upscale equipment. You can remove that and reduce that cost, which will be accommodated in the OHT and carbon business.
That's why we are quite confident that with this spend of INR 3,500 crore, we should be able to hit our expected revenue of INR 23,000 crore.
Understood. With this INR 3,500 crore, we should be ready to achieve the targets of that 30% revenue from both carbon black and 20% revenue from TBR and PCR?
Yes
Got it. Sir, on the U.S. tariff which you alluded to, currently, would you be incurring the 10% base tariff for current exports to the U.S.? Is this passed on to customers, or are you absorbing the impact?
It is being partly split between us and the customers.
Got it. Currently, I mean, the earlier tariff was, say, 2.5%-3%, and now it has gone to 10%. That delta of, say, 7% you are saying is partly being passed on and partly being absorbed. Would that be right?
The tariff is over and above whatever was there existing. 10% is being split between us and the customers.
Got it, sir. Very near term, can you indicate your expectation for commodity cost for Q1 and freight expectation, whether you expect any benefit on gross margin?
Okay. Freight is almost stable, and raw material prices are coming slight down. Maybe some benefit we will see in the next quarter.
Can you quantify, sir? Would it be like 2-3% benefit on a QOQ basis, Q1 versus Q4?
Approximately 1%.
Got it, sir. Lastly, can you share the hedge rate for FY 2026?
We do not have any number as of now. We will circle back with you.
Thank you so much, sir. Wishing you all the best on all the new plans.
Thank you.
The next question is from the line of Lokesh from Vallum Capital. Please proceed.
Yes. Hi. Good morning to Rajiv and team. My first question was.
Good morning.
Good morning. My first question was on the margins. If we see the peers in the Indian market, they enjoy somewhere around 12% on an average cycle-adjusted EBITDA margins. So just briefly, what gives you the confidence that margins will not be diluted? I mean, we are talking about a double jump when you say 23%-25% you'll be able to maintain your long-term average within these segments. It's a big jump. Just trying to understand.
Firstly, let me clarify. In the next two years' operational financial years, there will be no dilution because our new business will not come on stream.
One, as I mentioned, that revenue and the sales will come towards the back end of this. Secondly, it will be a very small component of my overall business. It's going to be rather small. It's going to be 70% of my revenue yet comes from the OHT part of the business. Thirdly, as I mentioned earlier, we are going to focus on premium niches and not at a very mass level and generic sort of commodity business within those segments also. All these three put together and some certain competitive advantages that I enjoy, all of that put together, I am quite confident that along with my team, that we are going to be able to maintain our blended margins. We are not talking about individual margin of the new vertical or carbon or OHT.
We are talking about a blended margin to be maintained at these levels.
Right. Fair enough. Rajiv, second question was on the rubber track. If you can just throw some light, some more details on what are these applications and where they're going. And just a follow-up to that is, with your new strategy to enter new tires in India, are you targeting replication of your distribution network? As in, your current distribution network is also doing an OHT, and are they also present in TBR and PCR, which is giving you confidence to scale?
Regarding the rubber tracks, as you are aware that we had started our pilot project earlier, and we have got good response, good feedback for our products. With the success of that, we are now looking to expand that.
We are going to be catering to agricultural tracks as well as construction and industrial tracks. That completes the whole gamut of applications in the rubber track segment. As far as the production—sorry, the distribution network for the new verticals, we are yet working on it. We have just got our approval now, and we will start working. It is too early to comment on what kind of a network we will use and all. But Yes, we have a lot of in-house strength and knowledge about the route that we need to take. We are going to start putting it into action, and we will come back with more details as and when it plays out in the marketplace.
Just last clarification, rubber track would be domestic and export, boh?
Yes, yes. All of our OHT line is going to be for global market, including India.
It is just the new verticals which are going to be pertaining to the Indian market.
That should take you to the 8% conservative market share and the 10% of the macros in your favor.
Yes. Absolutely, you're correct. You've actually taken the words out, what I was going to tell you, that we are currently at 6%, and we are seeing the business growing to about 8%. However, as I mentioned, our global vision yet remains, or ambition remains, to be 10%. Please note that we are under a slow-moving economy. There are wars happening. There are trade wars happening. Uncertain times are there. That is why we are looking at it very conservatively. In case anything changes and there's a catalyst, we are absolutely ready to pounce on that opportunity and go back to our original vision of 10%.
So that yet remains our ambition at BKT.
Fair enough. That's it from my side. All the very best. Thank you so much.
Thank you.
Thank you. The next question is from the line of Sonal Gupta from HSBC Mutual Fund. Please proceed.
Yeah. Hi. Good morning and thanks for taking my question. Sir, just like you've announced this plan on premium PCR, etc. So premium, I mean, are we talking about price positioning, or are we talking that we'll be in the 16-inch and above sort of categories? That's the target.
As I mentioned earlier, it's too early to give out these details. As in, when we have executed our plans, we will share those details. But it's too early to share that at the moment.
I mean, related to that, right, would we need any sort of technological tie-ups here? No. We already have them.
So far at BKT, we have done more complicated stuff like the mining tires, radial technology, as I mentioned in my opening comments. We do not envisage a requirement for any tie-up. We are quite confident of our in-house capability.
Got it. Could you give me what is the revenue from carbon black for FY 2025?
It is roughly about 8%. 8%-9%.
8%. I mean, over the medium term, just trying to get is your understanding now that on the OHT side, we will sort of be able to grow at about 10% odd, and then given that the cash flows we are generating, we can invest in these new areas to speed up our growth. Is that the thought process?
Yes.
Okay. Got it, sir. Thank you so much.
Thank you.
The next question is from the line of Amar kant Gaur from Axis Capital. Please proceed.
Hi. Good morning, everybody. Thanks for taking my question. I had two-pronged questions. One is if you could maybe elaborate a little bit more on maybe lowering your market share target and maybe throw some light on how has that market share trended over the last three to four years.
We have not lowered any target. I'm sorry, your voice—
Yeah, it is in the near term. Hello?
Yeah. Sorry, your voice was muffled. We could not pick that up.
Is it better now?
Yeah.
Yeah. So maybe you can throw some light on how has our market share trended over the last maybe five, six, eight years, and from that maybe build upon what now we are looking at a maybe 8% kind of market share versus 10% that we had earlier.
Over the last two years, we have constantly been taking market share. We have grown from modest levels of 2-3%, and for a long time, we were at about 4-5%, and now we are at about 6%. That is of the global OHT market segment. As I mentioned earlier, we are currently, under the current geopolitical and uncertain economic times, we are envisaging it to grow to 8% market share globally. In case there is any improvement from here, we are ready to go back to our vision of 10%, which is our dream and ambition. In case that can be speeding up or hastened up, we will not leave an opportunity to pounce on that. We are being conservatively saying that by 2030, we now see it to be 8%. Anything from here will be an improvement.
Conditions will only help us improve our vision to get to 10%. That yet remains our strategic goal.
Okay. Thanks. Thanks. My next question is on the new lines of business that we are building in, and you talked about maybe the new businesses not being very ROCE dilutive. What would be the internal targets or anything, aspirations that you would have in these new businesses that make you confident that you'll be able to maintain your ROCEs to current levels?
We are working on that internally. I would not like to disclose my strategy out at the moment. As I mentioned earlier, once it is played out in the marketplace, we'll come back and share those details with you.
Finally, again, on the new lines of businesses, now we see that you guys are, in terms of our business, quite resilient in terms of volatility of RM having an impact on your overall margins, gross, and EBITDA. Now that we are getting into 30% of our business would be outside of this and would be more exposed to raw material volatility, how do you cope with that and any thoughts you have on that? Bexause that will lead us to be more cyclical in terms of our margins.
I think it is a work in progress. We have proved in the current set of business also that we are able to counter a lot of scenarios, and that has been our strength. We will continue that strength. As and when any issues are coming up, we will come up with a way to tackle it.
It's too early to give you a definitive answer on our strategy and thought process because we would like to let it play out in the marketplace and then come back to you. But internally, we have covered our bases. So if that gives you confidence, we have covered our bases.
Thanks and all the best.
Thank you. The next question is from the line of Joseph George from IIFL. Please proceed.
Hi. Thank you for the opportunity. I just have one question, which is on CapEx. I just want to get the numbers right. The INR 3,500 crore is only in relation to the new projects, and that you mentioned will be front-ended with heavy weights in FY 2026, 2027, and maybe a smaller amount in 2028 because for new projects, we'll have to do the CapEx upfront. Is that right?
Yes, absolutely. Okay.
Sir, what is the guidance for the CapEx on the OHT side? You did not give us specific numbers, but should we think of similar numbers as we have seen in FY 2025 continuing in 2026, 2027, 2028 broadly?
Yeah. I mean, we've already, in our earlier approvals from the board, we have got a 35,000 metric ton expansion approved, which is ongoing. After that, there will be only a maintenance spend on the OHT part of the business.
Does that mean much lower levels, maybe INR 700 million-INR 1,000 million annual CapEx on OHT for the next two, three years? Just trying to get a handle on the numbers.
Yeah. Maybe INR 500 million-INR 700 million on the maintenance side.
On the maintenance side. Understood. To get to the 425,000-430,000 tons, you do not have to spend anything more. I mean, nothing major. Yeah.
Maybe some minor demodeling, but in this current spend of maintenance, we should be able to do that.
Understood, sir. The second
this is after the CapEx done for 35,000.
Understood . The second clarification I needed was on the margins. You mentioned that the 23%-25% margin is something that you are seeing in steady state. That is once the new projects of the India TBR and India PCR reach steady state. Does it mean that in the interim, maybe FY 2028, 2029, when those businesses are really subscale, we will see lower levels of margins? Then when those businesses reach maybe sufficient scale, on an improving trajectory, get to 23%-25%? Hello?
Little bit. Marginally lower. Very marginally lower.
Understood. Understood. Just wanting to get a hold on the trajectory. Understood, sir. Thank you.
Thank you.
The next question is from the line of Shashank Kanodia from ICICI Securities. Please proceed.
Yeah. Thank you again for the opportunity. Just wanted to check, in this tariff thing, does it put us in any advantageous position vis-à-vis other Southeastern economies?
Yes. It puts us in an advantageous position because on Thailand and Vietnam, these countries, the tariff is more than India.
Okay. Sir, have you witnessed any shift in volumes towards vis-à-vis these countries, sir? Is that trend evident now in the numbers?
They are majority on the TBR, PCR, those segments. Not any visible sign.
Okay. Okay. Secondly, sir, what is the sustainable margins in the carbon black division? Because some of the peers which are listed and with decent amount of specialty domains are clocking something like 15-16% margin at the peak.
What's the margin trajectory right now, and what is the outlook over there?
We don't have that breakup handy of each division.
Okay. Are we looking, sir, more of an export play in the carbon black domain, or is it going to be more domestic sales because the peers are also kind of expanding aggressively in this domain?
Both. Export. Currently, it is domestic more, but in the coming time, export also.
Okay. Lastly, given the HP's data currently, with 425,000 tons of tonnage, the realizable revenue seems to be closer to INR 13,000 crore versus our target of INR 16,000 crore by 2030. How do we reach this 20% gap? Is it going to be more of a product mix change, led to realizations, or are we building some inflation to our ASP?
It's a mix of everything.
So some marketing spend, which will take us to improve our ASPs, product mix will change. There are a lot of factors to put in that. Inflation will come, dollar exchange rates will come, market positioning will improve, product mix will improve. It is a mix of everything.
Sure. Thank you. Thank you so much. Wish you all the best.
Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please proceed.
Yeah. Thank you, sir, for the opportunity. Sir, this quarter realization has improved Q-on-Q by 3%. Can you explain what led to the improvement?
We cannot hear you. We cannot hear you. Please can you speak clearer?
Can you hear me, sir? Is it better, sir?
Yeah.
This quarter, realizations have improved Q-on-Q by 3%. What has led to the improvement?
Any price hikes have been taken, sir? In U.S. market, what kind of price hike have we taken post the trade changes, sir?
There has been no price hike. It is product mix and hedge rate. In U.S., there is no price hike on the trade share. As my colleague mentioned, we are sharing the, I mean, some sort of share arrangement is there for the trade impact.
Got it. That is all from my side. Thank you so much.
Thank you. The next question is from the line of Aditya Vikram from DB Securities. Please proceed.
Hi, sir. Thank you for taking my question. One of the things which we have noticed is that Q1Q and YOY, the margins have dipped down, right? What led to these pressures?
Can you please call it out as to the raw material prices have been benign, but still the margin has come down?
No. Last call also, we told that raw material prices are going up and will be peaking in this quarter. So there will be some decline. There can be 1 or 2% decline in the margin, and it is in line with that.
Okay. Thank you. And sir, so going forward, what would be the steady state of margin which we are trying to achieve as a firm? Considering all the geopolitical pressures and everything which is surrounding us, what would be the steady state of margin which we can price in?
Around 25%.
Okay. So this is one quarter blip. You do not foresee that, right, to continue as a trend even with the trade wars. Okay. Sir, one other question.
Most of our businesses are in Europe, right? Or most of the revenues which we derive are from European region. Now, if from conversation which happened after the results which were published yesterday, the tariffs are significantly high from June 1st. Do you see our company to be impacted significantly from that, or do you not see a lot of difference in what is happening and how the sales will pan out?
Too early to comment. There are statements which are coming up on a daily basis. We are tracking it, but too early to comment on its impact.
That is fine, sir. If at all it happens, do you see a significant pressure on our firm, or do we have the levers to ensure that these impacts are not impacting us?
No, my friend, we can't offer any comment on that at the moment.
Okay. Thank you very much, sir.
Thank you. The next question is from the line of Alok Shah from Sri PMS. Please proceed.
Am I audible, sir?
Yes.
Sir, just want to understand the part of your manufacturing process that do you use recycled content in your tire manufacturing? And if yes, then can we foresee an improvement in the future margins of the product?
Some marginal is used. We cannot but comment a lot on that because that gives up our some recipes decision. So for the macro level, yes, we are using some recycled part of it
Okay. And secondly, is there any government regulation coming or any compulsion by the government that you have to use recycled content or some percentage of recycled content in the tires?
\There is no regulation at the moment.
Okay. Thanks. Thanks a lot.
Thank you. Ladies and gentlemen, we take that as the last question. I would now like to hand the conference over to the management for closing comments.
I would like to thank everyone for taking the time out and hearing us. We look forward to meeting you next quarter. Thank you. Stay safe. Bye.
Thank you. On behalf of Balkrishna Industries Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.