Ladies and gentlemen, good day, and welcome to the Q3 and 9M FY 2026 earnings conference call of Apcotex Industries Limited. 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 touchtone phone. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.
Thank you. Good afternoon, 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 third quarter and nine months of the financial year 2026. Before we begin, a quick cautionary statement. Some of the statements made in today's conf 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 belief 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 decisions.
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. Now, I would 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. Vivek Thakur, Chief Financial Officer. Without any delay, I now would like to hand the call over to Mr. Vivek Thakur for his opening remarks. Thank you, and over to you, sir.
Thank you, Purvangi. Good afternoon, everyone. It is a pleasure to welcome you all to the earnings conference call for the third quarter and nine months of the financial year 2026. I hope you all had an opportunity to review the financial statements and earnings presentation, which have been circulated and uploaded on our website and the stock exchange. Let me provide you with a brief overview of the financial and operational highlights for the third quarter and nine months. Beginning with the quarter, our total volumes have grown 10% year-on-year. However, the operating revenue stood at INR 332 crores, which is a decline of 7% year-on-year. Despite the volumes growing 10%, the decline in revenue is because of the overall fall in raw material and consequently finished goods prices.
Operating EBITDA for the quarter increased significantly to INR 44 crores. This, compared to INR 27 crores in quarter 3 of FY 2025, represents a very strong year-over-year growth of 61%. This growth is driven by higher volumes, improved margins, and operational efficiency. The EBITDA margin expanded to 13.12%. Profit after tax for the quarter was INR 22 crores, which was up 91% year-over-year. The PAT margin stood at 6.7%, 6.7%. This reflects very strong profitability and operational efficiency. This quarter, we also had an exceptional item, which relates to one-time provision of INR 4.8 crores in accordance with the new wage code notification. We are also pleased to inform that the company continues to remain net cash positive as of 31st December 2025.
This demonstrates sustained financial discipline and a good cash generation. The board has also approved an interim dividend of INR 2.50 per equity share, underscoring our commitment to shareholder returns. Update on anti-dumping duty. If you recall, during September quarter, the Director General of Trade Remedies, DGTR, had issued final findings on anti-dumping duty case. The duty notification from Finance Ministry was expected in December 2025. This, however, is not yet notified. We've started implementation on all previously sanctioned projects for INR 210 crore. Now, coming to the nine months number, the company achieved its highest ever sales volumes, up 15% year-on-year, and highest ever export volumes, up 21% year-on-year, which reflects a robust success in both domestic and international markets.
The operating revenue stood at INR 1,044 crore, broadly stable year-on-year, while operating EBITDA has grown 42% year-on-year to INR 123 crore. The EBITDA margin for this nine-month period is 11.75%. This was supported by volume growth, better margins, and higher capacity utilization. Profit after tax for the nine months increased by 79% year-on-year to INR 67 crore. Profit after tax margin is 6.39%. During this period, company reduced debt by around INR 94 crore, which highlights very strong cash generation and good financial discipline. The performance demonstrate the effectiveness of our strategy, which is focused on volume-led growth, margin expansion, and operational efficiency.
...We are also proud to share that the company has received CII award for top 100 most innovative companies. This reaffirms our commitment to innovation, technology development, and self-reliance. With this, now I open the floor for question and answer session. Thank you.
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 touchtone 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. In order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Yeah, thank you, sir, for the opportunity. So just a couple of questions. Sir, during this quarter, like, we have seen overall commodity chemical companies quite struggling because of falling prices of raw materials like styrene, acrylonitrile. Most companies are factoring inventory losses. On the contrary, sir, our numbers look better, like, prices although have declined, but there is a more steep decline in prices of raw materials contributing to EBITDA. Just want to know how those numbers are shaping up, and what are the benefits you have taken in raw materials, which has improved your EBITDA on sequential and on YoY?
Yeah. Thank you. Thanks, Aditya. This is Abhiraj Choksey. Thank you everyone for joining. So to answer your question, Aditya, it is been a challenging quarter, and we have also taken a hit on raw material pricing, because of the drop, you know, and of course, things are changing now. I would say December, Jan onwards, because of the oil price increases and the rupee depreciation, again, prices sort of started moving up quite sharply. But I would say that started towards the end of last quarter, meaning this Q3. I think we've managed it well.
In spite of some losses due to, due to the sharp fall in prices at the beginning of first half of the quarter, our team has managed quite well, and we have, managed to hold our prices and taken some advantage of the drop in raw materials. So that's helped us, and as you can see, that, in spite of all of that, our operating EBITDA, has been better this quarter than I would say the last, you know, 6, 7, 8 quarters, probably.
Sir, just to follow up on to this, so, so the main contributor of your EBITDA in this quarter would be the nitrile latex, because earlier that segment was not able to contribute on EBITDA. And now prices, how is the movement in prices and what contribution in EBITDA, or is there any, any other segment like which is contributing, like your synthetic latex, any other segment NBR which is contributing to EBITDA?
Yeah. Look, as the volumes go up, you know, as I've said before, in our kind of business, as the volumes go up, obviously, contribution goes up, you know, in terms of total contribution, not percentage, I'm saying. Of course, in this case, in this quarter, even the percentage has gone up. And so that automatically, automatically increases, EBITDA as well. But besides nitrile latex, which definitely has seen a turnaround, turnaround in the last six months, not to the extent, that, you know, we would have hoped or it's not pre-COVID levels yet, but certainly better than the last couple of years. In addition to that, I think, you know, we also had, a lot of excess capacity created by us and some of our competitors or one specific competitor in India.
So the paper segment, also, the margins were very muted for the previous couple of years, I would say, and, you know, I would say almost an unhealthy level. They've gone back to sort of reasonably okay levels. So paper has also helped, to some extent, one or two other segments like construction also has helped. So I would say, no, not construction. I think more about rubber. The rubber segment also, we've seen a better improvement in margins because we're running at full capacity there. So I think as capacity utilization has gone up, we have tried to extract maximum margins. Customer mix has improved, product mix has improved. You know, all these levers come into play when capacity utilization is at a high, higher, sort of at high level.
So I would say it's a bunch of things, it's not just one thing. Sorry, it's a long-winded answer, I know. But it's been a bunch of things along with some of the cost saving measures that we have taken. So everything is sort of coming together and, you know, it's looking reasonably good this quarter, where we have had EBITDA margins of about 13%.
Got it. Got it. Sir, just one second question, sir. I remember that 1-2 years back, you had mentioned, like, the sustainable EBITDA margins would be around 12%-13%. Now, in this quarter, we have achieved this to 13%, and you are saying paper segment construction are still struggling. So suppose if that segment comes back in terms of demand, so meaningful comeback in demand, you see further improvement in margins from here on or, or we are standing at the peak?
No, so I think, no, I didn't say they were struggling. Sorry, it may-- I think I said that they were struggling. They've done better now this quarter, especially paper is one I'd want to call out. I think that, as volumes go further up, we still have, in the next one year, we, we have capacity utilization. Automatically, you know, more volume gets added, more contribution gets added, automatically, EBITDA goes up, and EBITDA margins will also go up. So I think there is still some leeway, of course- you know, there is a lot of uncertainty in the world as, as you can see, and I think we've managed it so quite well so far.
But of course, you look in the short term, there can be issues of suddenly runaway prices of, you know, raw materials, and certain things could happen in the short term. But in the-- as I said before, that, you know, anywhere between 13%-16%, 12%-16% is, you know, we could margins for us. And I think we'll try and endeavor to do a little bit better than this quarter as, as well.
So I just one last question.
Sorry to interrupt, Aditya. You can stay for more question.
Let him finish one last question, then we can move on to the next caller. Sorry, Aditya, but, you know, we want to give everyone a chance, so.
Yes, sir. Thank you.
Go ahead.
Yes, sir. So my question was on to the anti-dumping duty. You had mentioned that December 25, the government was to notify for the duty. Sir, we have seen, like in other chemicals also, whether it is rubber chemicals, soda ash, the Finance Ministry has not imposed the anti-dumping duty, but the DGTR has. In our case also, like, there is a delay. So what is your opinion whether this would be not imposed now, and if it is not imposed, what happens to our expansion plans of NBR?
Look, I mentioned this last time that this anti-dumping duty was always... You know, we had asked the government for this anti-dumping duty because we felt that the Indian industry needed to be supported. We are the only manufacturers of NBR. We have not filed any anti-dumping petition for any other products of ours, where we have local competition. In this case, we are the only manufacturers of NBR. If we cannot sustain this plant, India will have no manufacturing of NBR, which I think is a very important synthetic rubber for, for all, several segments, including auto, agri, you know, gas hoses, several segments, industrial products. So, you know, we wanted some help from the government to...
And of course, the DGTR did agree with us on most fronts, and on several countries, the anti-dumping duty was imposed, or was recommended rather, but it has not been notified by the Finance Ministry. Our expansion plans continue nonetheless. We have found an innovative way to expand our product volumes by almost 80%-90% in a much lower CapEx cycle because of our CapEx amount than what we had initially envisaged two years ago. The reason why we didn't do it two years ago is because at that time, you know, we were thinking it'd be INR 200-INR 250 crores. Now we're able to do it for maybe INR 130-INR 140 crores.
So we are going to do it for much lower, and we think the ROCEs and the, you know, the margins, even currently without anti-dumping, will support that. We would have hoped that the government would have supported us further, but it's... The expansion plans continue nonetheless. And to answer your question, I don't know what's going to happen. Honestly, we are still, you know, along with the rest of the industry, as you said, it's not just been us, but I would say a majority, about 80%-90% of the cases in the last three months have not been notified yet. We don't know whether that means an outright rejection. We don't know if it's a delay. We do not have communication yet from the Finance Ministry, and we're trying to work through it.
Got it. Thank you, sir.
Thank you.
Thank you. The next question is from the line of A.K. Pandya from BHEL. Please go ahead.
Thank you.
Sorry to interrupt, Mr. Pandya. We are unable to hear you.
Are you able to hear me now?
Uh, no.
Okay. I'm just waiting, now are you able to hear me?
Yeah, yeah, please go ahead.
Now, first thing I wanted to know about the wind energy. You had invested about a couple of years back in wind energy. How is your finance? Is it paying off that investment, or you are able to check out how, what is the benefit? How much have you financial benefit out of this wind energy project? You had invested in the wind, some wind energy. So what is the status, financially on this?
So I'm not sure what you're referring to, but we have one windmill, which, which is a small percentage of our total consumption, which is a captive windmill, where we get credit in our Maharashtra factory. We, and that's in Maharashtra, the windmill, of course. That was more than a decade ago. If you are referring to that, I think maybe about-
No, no, I'm not referring to that. I'm referring to about three, four years ago, you had some, there was some company, wind energy company, in which you had invested about INR 3 crore or so.
No, no. So that, not 3, 4 years ago. This was announced only a couple of quarters ago, where we had taken board approval to invest. That investment will be completed by the end of this financial year, and we should start receiving, you know, the credits. That is in Gujarat. Yes, you're right. That's about INR 3.5 crore investment, and we should receive the credits starting from sometime early next year. The exact date is not out yet, so that's not yet started.
Okay. Okay, second thing I wanted to know, your expansion plan, you had to say in the last quarter of 2026-2027, you'll be completing your expansion plan, and with that, the turnover would increase around INR 200 crore. What is the status of progress? Is it on time, online, or delayed?
So we have started the project. Yes, our endeavor is to complete it by the end of the next financial year, which is FY27. We expect sometime between March, April of the year 2027, around that time or four, three different projects, three, four different projects ongoing. So they will start commissioning slowly from the end of this year to maybe, you know, April of next year. That's on track. We are, we have already started the investment cycle, and the planning, the, some of the long lead item POs have all been done. And just to correct you, it's not going to be about INR 200 crore. It's, it's likely to be around INR 550-INR 600 crore that'll be added to the top line.
Oh, good. Very well. Best of luck.
Thank you.
Hopefully, you... Thanks.
Thank you.
My questions are, my questions are over.
Thanks.
I hope by in 2026-2027, the turnover would be around, will touch INR 2,000 crore. Are you expecting that in 2026-2027?
Unlikely. Honestly speaking, unlikely, because we don't have the like capacity, and if the prices remain where they are currently, I don't think we'll reach INR 2,000 crore, but we'll definitely do better than this year. So, we'll continue to grow.
Thank you.
Thank you.
Before we take the next question, a reminder to all: if you wish to ask a question, please press star and one. The next question is from the line of Karan Sharma from Credent. Please go ahead.
Hi, Abhiraj. Am I audible?
Yes, you're audible. Can you please speak a little louder?
Yeah. My question, Abhiraj, there was in the last call, last year-
Sorry, Karan, can you please speak a little louder? We are unable to hear you properly.
Sorry about this.
Can you use a headset mode, please?
Yeah.
Yeah, yeah. Please go ahead. Thank you.
Yeah. Abhiraj, so then, in the last year call, there was a duty that U.S. had imposed on Chinese gloves.
Yeah
... for 100%. It was supposed to happen 2 times. So it was 50% last year, and 50% was supposed to happen in January this year. So has that gone through?
Yes, I believe that's now, now in place. Yes, it's been imposed from January 26.
Okay. What's the utilization in the nitrile latex plant right now?
I would say for the YTD, we are at about 70%-75%, around that much. And the imposition of Chinese duty has definitely helped some of our customers in Southeast Asia and South Asia, and therefore, we can see that our utilization rates have also gone up. We've, you know, we've continued to do that, and I think by next year, we'll be at sort of full utilization. Or, I mean, we'll have-
Cool.
We'll be at full utilization run rate at some point next year. Yeah.
Okay. So our clients are primarily in Malaysia, or have you added any other new client as well from any other nation?
No, all over Southeast Asia. I would say Malaysia, Thailand, Indonesia, Vietnam, Sri Lanka, India. India also has now quite a few glove manufacturers that have increased their capacities and are doing reasonably well. So all over Southeast Asia and South Asia. Bangladesh as well has one or two players, so.
That's great to hear.
We're also exporting to Turkey. So I would say six or seven countries mainly.
Okay, great. Great. So my next question was, post this new expansion at Valia, would we be left with spare land for further expansion, or if in future you might have to then go for a new greenfield with land?
I think we will have some more land. Depending on what we want to expand in, we will have some spare land.
Oh, okay. I have one other question. Can I ask that one as well?
Sure, go ahead.
Yeah. So I was reading on a product called super absorbent polymers, which is found in powder form, used in basically female hygiene products. In our emulsion polymer chemistry, does that product fit in, or this is something totally different from what we do?
I think it's completely different from what we do. I know it's been a product that's been of interest to many people, but yeah, it's different from what we do.
Okay. And in future, do we probably can we go into this product if the selling is good?
We have not evaluated in detail, but technology-wise, it's quite far from what we do. But now that you mention it, I'll look into it again.
Okay. So not in our chemistry probably right now. Okay.
Yeah.
Thank you.
Thank you.
You're welcome.
Thank you very much.
Thank you. Ladies and gentlemen, a reminder to all. If you wish to ask a question, please press star and one. The next question is from the line of Chanpal Singh, an individual investor. Please go ahead.
Hello, am I audible?
Are you-
Yes. Go ahead, Mr. Singh. Yes, you're audible.
Abhiraj, any views on the raw material security that you might be taking in the future?
If you can expand on that, what do you mean? I'm sorry, I didn't understand.
Actually, the business is quite volatile because of the raw materials, prices are going up and down. So any views or any efforts by the company to get the raw materials, raw material security or, backward or forward integration?
Oh, okay. So, see, backward integration, we are not able to do with our major raw materials because they are, you know, petrochemicals, which are part of sort of, you know, big petrochemical plants or refining plants. As far as security is concerned, in general, there is for all our raw materials, even though styrene and acrylonitrile are not available in India currently, there is enough imports coming in from countries close by. And, while there can be some short-term hitches, you know, like currently we are facing that in styrene, where, you know, a couple of plants, large plants that supply into India, have gone down together. One was a planned shutdown, one is an unplanned shutdown.
So there are some shortages, but short-term shortages are there, but otherwise, you know, most of these raw materials that we have have enough capacity for our requirements. In general, long term, we don't expect any issue. There can be short-term issues as far as security is concerned, and security of raw materials. The other question you asked is on raw material price volatility. Now, that's here to stay, you know, that's been going on for now 15-20 years. I don't know, I joined the business more than 20 years ago, and I've seen many cycles, where, you know, prices have been, you know, from plus, minus, you know, 100%. So that we have continued to manage, and we manage it quite well.
We're able to pass along the prices if the raw material prices go up, and we are also forced to sometimes reduce our prices when prices come down drastically. So that's part of the game and, you know, quarter-on-quarter, those kinds of, you know, pluses and minuses do happen in margin.
Okay. Any views of ApcoBuild?
No, I mean, continues to do okay. This year has been more challenging for us because we had a few years of good growth. It's still a small part of our business, I, as I continue to say every time. This year has been a little bit more challenging for us. I think a lot of competition has also come into the construction chemical segment recently. We are in a few geographies, so the growth hasn't been as great as previously. But we continue to sort of push through it and focus on the margins there, and, you know, there we are backward integrated into the polymers. So that's where, you know, it's the, it's the additional margin that we get by supplying directly to a few regions in Western and Central India. So that's what we are focusing on.
Okay, thanks. Thanks a lot.
Thank you. The next question is on the line of Rudraksh Raheja from ithought Financial Consulting. Please go ahead.
Yeah, hi. Thanks for the opportunity, sir, and congratulations. Great day. I wanted to get a qualitative outlook on different industries that we are supplying our products. Like you mentioned, paper is coming back and, so what's your outlook, outlook on other industries? Maybe nitrile, latex, glove suppliers or whatever else where we supply our products.
I think, see, the paper industry is still going through a tough time because the Indian paper industry is facing a lot of dumping, from what I understand. So their margins are under pressure compared to the last couple of years, is what I understand from our customers. What I meant was that our latex, margins, which were very low, have improved a bit because our capacity utilization has gone up, and the extra capacities that were created at the same time are now, you know, at a higher capacity utilization level. So that's what I meant. Rest, construction continues to boom in India for us. Carpet, carpet and textiles has been one industry that's actually been a degrowth for us. I should have mentioned that earlier. So it's a good question.
Carpet, textiles, and tire, all three industries, we have seen a slight degrowth in volumes in this last quarter, and I think even for the nine-month period, it's flat. Mainly because of these tariffs from the U.S. So a lot of the carpet manufacturers, not only in India, but in the Middle East, have also been affected by these U.S. tariffs and the uncertainty around them. Similarly with textiles and tires, we see the same thing. But gloves continues to do well for us. The U.S. imposing anti-dumping duty on Chinese gloves has helped some of our customers in Southeast Asia and South Asia. So that's been good for us. Overall, the glove industry continues to grow. Obviously, it's an essential medical, you know, product.
I think that will continue to grow at 7%-8% year-on-year, especially for nitrile gloves. At least 7%-8%, if not 10%-12%. I hope that gives you a flavor of the different industries.
Definitely. And, do you see, the demand-supply situation, getting better in nitrile l atex?
I think, look, there is still globally an overcapacity. China especially has created a lot of overcapacity, so we could see some Chinese latex now come out and, you know, come into East Asia, which was not, Southeast Asia, which was not happening earlier. Even so far, we have not seen that much, but it could happen. So I think that will still take, you know, a couple of years for it to go back to sort of pre-COVID levels in terms of, you know, 80%-90% capacity utilization levels. Maybe there'll be some consolidation, some capacities may even shut down, which are not viable, the old ones. Recently, in the last one year, one capacity in Malaysia, for example, was shut down, from what we heard. Old plant, not commercially viable.
You know, 25-year-old plant, I think it was now. And so that could happen and, you know, then margins could improve even further quickly. But I think it's still overcapacity, and it may take another couple of years. But at least right now, the margins have improved for sure, for nitrile latex, and the gloves, from what I understand, from what they were in 2023 and 2024 and 2025.
Understood. Sir, you also said, we are-
Sorry to interrupt, Mr. Raheja. Sorry to interrupt. Please rejoin the queue for more questions.
Okay, Mr. Raheja, you can finish your last question since you started. I think we'll allow you.
... Yeah, thanks. You mentioned that we have done better on the rubber side as well, if I'm not wrong. Could you provide more details on that?
I think, look, after sort of the pandemic, we had a couple of good years, and then the margins were again depressed. Now, I think margins are a little bit better. That's what I meant, compared to the last couple of years. Slightly better, but overall, as I said, we are still hoping for, you know, an anti-dumping duty to be notified because it's been recommended. And, you know, there was a detailed investigation for a period of one year. The DGTR did agree with us on most countries, except one. They did recommend a reasonably good anti-dumping duty to support us for five years. We're not asking for it for full, you know, forever, but at least some support for five years to support an industry which is essential for India.
But things are better for sure in the last 3-4 months.
Thank you.
Thank you.
The next question is from the line of Saurabh Shroff from QRC Investment Advisors LLP. Please go ahead.
Yes, hi. Thank you for giving me the opportunity. Congratulations on a very strong performance. Abhiraj, just one request and a suggestion. If you could maybe more regularly disclose utilization across lines or geography, it will sort of on volume numbers, because it will really help us appreciate if the business is moving in the right direction and what the meaning is that-
Sorry to interrupt, Saurabh. We are unable to hear you. Your voice is muffled.
I think I'm getting the gist of the question, but it definitely is not clear, very clear.
Yeah, sorry. Is this better?
Yes, I think so. Go ahead.
Yeah. So I was saying, congratulations, just one request. If you could perhaps give us some more details on volume and utilizations. I think it will help us appreciate which direction the business is going in, because we've sort of obviously, a long-term stated objective has been 13%-15% margin, something that you've said multiple times. We've reached it a few times, and given the volatility of, I guess, the end commodity and the raw material, it's far more important for us to look at the spread than the percentages. But we can't do that if we don't have the volume numbers. So if you could maybe consider in whichever way, given the competitive, whatever you are comfortable disclosing, I think it then gives us a far better idea that when we are really should be margin accretive.
I mean, nitrile latex, let's say, is an unfortunate event that otherwise should have been very profitable but is not. And you did allude to that outside of nitrile latex, last quarter, we were already at mid-teen kind of margins, if I remember correctly. So, you know, this will just help us understand where the business is going, when the leverage sort of kicks in, and what we should expect. So otherwise, I mean, I guess all other questions have been answered. I do hope you would consider doing this.
Sure. So Saurabh, fair question, and honestly, you know, as a company, we try to be as transparent as possible. But as I've said again before, that we try and balance out, you know, revealing all numbers, because there's also something, you know, that we also have to worry about competitive information we are providing to competitors through these, you know, through these very transparent dealings with investors and analysts. And that is actually counterproductive in the long run. So the reason why we don't give volume numbers, because specific volume tonnage numbers, is because we are in so many different industrial segments, and it could happen then, you know, once you go down that rabbit hole of revealing volumes, then, you know, it's easily decodable for some of our, for some of our competitors. I'm being very honest here.
You know, we do provide volume growth overall, because we do want to give the investors and analysts a flavor of, you know, like in, for example, this quarter, the revenue growth, if you were just to see the revenue growth from the numbers, it's flat. But we've actually grown in volumes. For the first nine months, we've grown at 15%, but the revenue's been flat. So that's the kind of flavor that we do provide. As far as capacity utilization is concerned, I think we've been quite transparent, but noted, and what we'll do is in the, perhaps, Vivek, in your, you know, opening remarks or in the investor presentations, we can maybe give a flavor of the capacity utilization of the various product lines.
Yes, that will be helpful. At least it gives us a handle. Like I said, that the business is because it, exactly like you said, it feels like the business is in much better shape it was than, let's say, two quarters ago. But it, you know, something that doesn't come out in the presentation or in the speech. So this will be highly appreciated.
Okay, thank you.
Thank you very much.
Just to answer your question, we for NBR, we're at 100% capacity utilization. We have been now for the whole year. For nitrile latex, we're at about 70%-75% capacity utilization. 75, perhaps closer to that for the YTD, I would say the numbers. For the other products, which is construction, carpet, paper, textiles, you know, we it's all one plant. And overall, there also we are at about 85%-87% capacity utilization. So for nitrile latex and for, you know, other synthetic latex products, we have at least one year of growth left, and then obviously, new you know, the new capacity will come on stream. NBR, we're already out of capacity, but that capacity won't come on stream for another year.
Yeah, I think those are the three main product lines. We also have a separate tire cord, which is almost at, again, 85%-90% capacity utilization. But that's a little bit of a swing plant we can use it. So just broadly, we're at very high capacity utilization levels currently. We have one year of growth left in the latex side, and then we'll have new capacity come on stream.
... Great! And so, just then, sort of addition to that, so this does mean that you can further optimize on clients, on slightly higher margins or better terms of business, just given that now we are running at pretty close to full up, right? And that's something that will be the endeavor for the next 15 months.
Sir, we have the option to do that. Yeah, we would have. Next year, for sure.
All right.
Thank you.
Yes. Thank you. Yeah.
Thank you. The next question is on the line of Sani Vishe from Axis Securities. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. I just have a couple of bookkeeping questions. One is on the interest part. I can see the interest has dropped significantly this quarter. So what is our expectation and what is the reason behind this? And secondly, on what is our expected tax for the year?
Okay. May I request Vivek to take these questions? Vivek, on interest and tax, please.
So, basically, on interest, at the beginning, we mentioned that the year has been good from a profitability point of view, so good cash generation. So that cash, which is generated out of profitability, plus the working capital release, that has been used for repayment of some of the borrowings. So the borrowings have come down. Also, the interest rates have fallen, and we have been able to negotiate better rates from the banks. So mix of these two factors have led to a reduction in finance cost. I would say 75% of the reduction in interest cost is through the reduction in borrowings. The rest is all interest rate related. On the second question of yours on the tax, so we expect an effective tax rate of about 27%-28% for the year.
Okay, that's it. Thank you.
Also, to add that, obviously, look, we will now for the new projects, we will be raising more sort of long-term debt for this project. Partly, it will be through internal accruals, but we will be raising some debt. So now interest rate, interest cost may go up also in the next sort of next year, you know.
Yeah, of course. Well, that will move with the debt levels, right? So in terms of, the effective interest rate also, I think this should be a comfortable level.
Right. And just to add to Vivek, we are also, you know, net debt-free. So we have, in fact, we have, reasonable amount of excess cash right now in the books, which we will be deploying for these new CapEx projects, of course.
Okay. And the working capital may go, may increase towards the end of year, right? Or does it, tend to be similar?
Yeah. Material prices going up, certainly that it, I think it will... There's another thing that's helped is overall raw material prices in the last six months have been quite low.
Mm-hmm.
So as we have seen here. So that's again started to move up. So I think our working capital utilization will also go up, I think in the next three, four months.
Understood. Understood. Okay, perfect. Thank you.
Thank you. The next question is from the line of Karan Sharma from Credent. Please go ahead.
Yeah. Hi, Abhiraj. Thanks for the follow-up.
Yeah, go ahead.
On nitrile latex, you mentioned that this year, sorry, in FY 27, we get 100% utilization. And, if I go back to pre-COVID, this was a business where we had big plans. So now that the market is shifting and, we are a very small player in the global market, considering the global size is huge and we are not even 1% of the capacity, are there now again thinkings on expanding capacity in the nitrile side?
Just to clarify, first of all, I mentioned NBR, which is NBR solid rubber, we are at 100% capacity utilization. For nitrile latex, we still have some capacity left. I expect that at some point next year, we will hit a run rate of full capacity utilization. For the year, we will have to see how that goes. As far as additional capacity is concerned, as I mentioned to one of the previous callers, look, globally, there's a lot of overcapacity, so it doesn't make sense to add capacity right now, maybe in a couple of years, and we have left some space for that. Unfortunately, the margins don't warrant currently don't justify additional capacity at this stage.
Yeah. My question was that only. If the pricing comes back, how soon can that new capacity kick in, I guess, since you had-
So once it comes back and once the decision is taken, I think it'll take us about 9-10 months, and really the long lead time will be just certain equipment, specifically reactors, which take that long, you know, 8-9 months. Otherwise, civil structure, everything is ready, so we don't, you know, we don't need that much. So it would depend on how long some of these long lead time equipments take. I suspect 9-10 months.
Yeah. Okay. Our current capacity is 50,000 tons a year, right?
Yeah, about 48,000-50,000, depending on. Yeah. Correct.
How much can that expand by?
Sorry to interrupt, Karan. Please rejoin the queue for more questions.
Just to answer the last question, how much can we expand that by? We can probably expand it by about 50%, 50%-60%.
Okay. Okay, great. Thanks, that was all.
But we will have to rework the cost at the time we take the decision and see if it justifies doing it. So, you know, we will see at that time. As I mentioned earlier, that, you know, we have taken certain assets, you know, from the nitrile latex plant, because, you know, towards this new you know, studying the synthetic latex that we are developing in Valia. So it's going to get a little complicated going forward, which I don't want to get into now. As and when the decision, we take the decision to expand, I'll let you know. I, I seriously doubt it'll happen in the next year or two.
Okay. Okay. Thank you very much, sir.
Thank you. The next question is from the line of Rudraksh Raheja from iThought Financial Consulting. Please go ahead.
Yeah, thank you for the opportunity again, sir. I want to get the stance on the EBITDA margin front, like, this is the margin that we have done in last 11, 12 quarters. How do you see that sustaining or, or what kind of risk that you're still foresee in the market that we could fall behind again?
No, honestly, I'm so sorry, but I couldn't hear the question properly. I think I've got the gist, but if you can repeat the question, please.
Yeah. I think this is the highest that we have done in last 11, 12 quarters, this 13%. And, generally we believe 13%-16% is, what we should do in the normal course of the business. So do you see this 13% sustaining going forward? If, and what kind of risk you foresee are there that would make us fall behind that number?
Yeah, look, I think given the current, where we are currently, you know, I don't see any reason why EBITDA, overall EBITDA should reduce. One thing that could happen is, you know, like what's happening now, is suddenly the raw material prices, you know, are going up by 20%-30%, you know, very quickly, in which case we focus on EBITDA per ton. So you could see the percentage margin come down, but overall, EBITDA, PBT, ROC being quite healthy. So we look as a company, as a company, we don't only look at EBITDA percentage margins, we look at EBITDA per ton, and ROC is very important for us. So as long as ROC is healthy, sometimes we are okay with EBITDA percentage margins falling. So for example, oil was at $60, now it's become $70.
Let's say it goes to 90. So that means, oil, if oil goes to 90, there's an increase of 50% in raw material prices. We're not sure if we'll get the 50% increase in finished goods prices to keep the EBITDA the same. It may be less, so the EBITDA percentage may reduce, but the ROC will still remain strong. But overall, we are quite positive of the release in the next year, year and a half, you know, till new capacity comes on stream. When we have limited capacity, we're able to take the advantage of, you know, picking and choosing the right customers with higher margins, with good payment terms and payment performance. So, so I, I don't see any reason.
Of course, other risk could be, again, so, you know, if the anti-dumping doesn't come through and suddenly, you know, there could be some dumping of rubber products. For latex, it's little harder, but for rubber products, that could happen. So there are, of course, inherent risks. Again, in the annual report, if you see, there are certain risks that we look at. All those factors are there. Raw material risks in terms of sometimes raw material is not available, and our plant is shut for some time. You know, all these kinds of risks are there, of course, but they are, I think, low probability risks at this point that we see.
Understood. So thank you for the detailed answer.
Sure. Thanks.
Thank you. Ladies and gentlemen, a final reminder to all. If you wish to ask a question, please press star and one.
I think we're almost done with an hour, so if there are no further questions,
Yes, sir.
Is there anyone in the question queue now?
Yes, sir. We got one question from Aditya Khetan-
Okay.
From SMIFS Institutional Equities. Please go ahead.
Thank you, sir, for the follow-up.
Yeah, go ahead.
So the question is on to the per ton, per kg, like you mentioned to earlier participant. If you can give some flavor, like how has that been fared over the last 3-4 years? And are we nearing that range of 15 rupees, like I think we have said some quite a few years back. How are we, like, standing in terms of per kg today?
So honestly, I am not able to give you the exact number. And I certainly don't have numbers from the last three, four years in front of me. But overall, as I said, it's gone to reasonably healthy levels, perhaps not as high as what we had in FY 2022, 2023, but reasonably healthy levels. And with the volumes going up, I think we're quite comfortable with these margins. And of course, our endeavor will be to improve these further.
Perfect. Sir, just one question on ApcoBuild. Like, sir, how serious are we like to build this business? Because we have seen like no material contribution to top line. Do you think like, to work on such a smaller business which has no meaningful scale for us, should we focus our energies towards this sort of business, or like focus on the core businesses like your latexes and all?
Yeah. As I've told you before, our strategy for the ApcoBuild business has been a little different. It is actually quite related to the core business. I would not say that it's very far from the core business. We are, you know, focusing mostly products that we are manufacturing and is where we have technical expertise. We do have some outsourced products as well in our product range. But really the focus has been to capture the additional margins that we, you know, anyway, we're supplying to some of the customers that have a brand. So the endeavor has been to capture that additional margin, and while we may not see it on the top line as being significant, but it's a reasonably healthy bottom line, and it's still a small percentage of the bottom line as well.
But we are capturing that additional, you know, additional contribution at a lower cost, you know? So I think we will continue the business. Whether we choose to invest large amounts and become a large player in that, that I agree that is something that's not our focus or chosen not to focus on it right now. But we'll continue to, you know, manage and grow this business.
Got it. Sir, just one last question. Sir, is there any plans to, like, forward integrate to make surgical gloves also, because we are into latex and directly we should manufacture gloves and export it to the global markets? Any sort of an understanding on this?
So we had considered it earlier. We said, first, let's focus on manufacturing latex and get that right. And as I mentioned earlier, also, given the current entire glove industry and the glove supply chain, including latex, there's so much additional capacity. At this stage, it doesn't make sense to add more capacity.
Oh, got it.
Maybe at a future date, if it makes sense, yeah.
Got it, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, we'll take this as a last question for today. I now hand the conference over to the management for closing remarks.
Thank you, everyone, for joining us in this Q3 conference call. We look forward to seeing you at the end of the financial year. Happy New Year to everyone, and, thank you again. Thank you once again for joining us.
Thank you very much. On behalf of Apcotex Industries Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.