Ladies and gentlemen, good day and welcome to the NOCIL Limited Q4 FY 2026 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 as on the date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in 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 is being recorded. I now hand the conference over to Mr. Anand V.S., Managing Director from NOCIL Limited. Thank you, and over to you, sir.
Thank you, Ikra, and good morning to everyone. I would like to start by expressing my appreciation for your presence today. Joining me are Mr. P. Srinivasan, our Chief Financial Officer, and our investor relations advisors from SGA. I hope you have all received our investor presentation. If not, it is available on both the stock exchanges and our company's website. Let me begin by providing an overview of the company's performance for quarter four f inancial year 2026. During the quarter, revenue from operations stood at INR 330 crores, reflecting a sequential growth of 5%. Volumes continued their upward trajectory, registering a 7% sequential increase. Domestic volumes witnessed a single-digit growth, primarily driven by improved demand following the implementation of GST 2.0.
Volumes in international markets also posted a steady single-digit growth, underpinned by our ability to convert our long-standing engagements into concrete business gains while further deepening and strengthening customer partnerships. Moving on to the full-year performance, financial year 2026 can broadly be divided into two distinct halves. On a year-on-year basis, the first half saw a volume degrowth of 5%. However, the second half witnessed a strong 12% volume growth supported by a GST 2.0-led demand uptake. This helped the company deliver an overall volume growth of 3% for the full year. We expect this positive momentum to sustain in the coming quarters. On the pricing front, realizations continued to be under pressure in the quarter due to the ongoing dumping of lower-priced imports. In this evolving global environment, we remain focused, maintaining an optimal balance between price and volume.
With respect to the anti-dumping petitions filed with the Government of India, the Directorate General of Trade Remedies, DGTR, recommended positive final findings in respect of the antioxidant TDQ and sulfenamides covering CBS and NS in March 2026. The same is subject to central government approvals. I would like to provide an update on the CapEx front. The TDQ CapEx at Dahej, which was announced on 26 March 2024, has been completed, and we have commenced trial production. After a trial run, samples will be sent to customers for approval. As mentioned earlier, the total CapEx incurred will be less than INR 250 crores. Additionally, in line with our overall growth plans, capacity utilization, and market demand, we announced another CapEx of INR 130 crores on 16 March 2026, which is expected to be completed by H1 financial year 2028.
This CapEx is for setting up a comprehensive integrated facility in the speciality portion of our rubber chemicals business. During the year, I would like to acknowledge the efforts of our teams in driving initiatives across our eight strategic levers, which are aimed at strengthening resilience and building sustainable long-term growth for the company. As an example, under our excellence lever, we continue to implement a series of operational and efficiency improvement initiatives across the organization, which have started yielding positive results. We believe there remains further scope to build on these improvements, and this will continue to be an important area of focus in the coming year. As we speak today, the geopolitical developments in the Middle East continue to create uncertainty across global energy feedstock and logistics markets.
For the chemical industry globally, the impact is being felt primarily through volatility in crude-linked raw materials, freight costs, shipping availability, and transit timelines. While the situation remains dynamic, we have been proactively monitoring developments and working closely with our suppliers, logistics partners, and customers to ensure continuity and reliability of supply. Our teams have responded with agility through calibrated inventory planning, diversified sourcing wherever feasible, and tighter coordination across the supply chain. In response to the significant increase in raw material prices, during the quarter, we revised our price upwards for the non-contractual part of our business and for the present quarter for the contractual business. At this stage, we see this more as a volatility and cost management challenge rather than a structural demand issue.
The global tire and rubber value chain continues to remain operational and resilient, although near-term fluctuations in input costs logistics may continue depending on how the geopolitical situation evolves. Over the last few years, including through the pandemic and subsequent global supply disruptions, we have built stronger operational resilience and customer engagement capabilities. We believe these capabilities position us relatively well to navigate the current environment in a balanced and disciplined manner. Our teams are closely monitoring developments and working proactively with suppliers, logistics partners, and customers to ensure dependable servicing and continuity. At NOCIL, our approach remains balanced and disciplined, focusing on safe operations, customer reliability, prudent cost management, agility in execution, and calibrated price actions to ensure continuity of supply and operational stability. We do this while continuing to advance our long-term growth and value creation plans.
That's it from my side. I now invite Mr. P. Srinivasan to provide an overview of our financial performance.
Thank you, Mr. Anand, and good morning to everyone. Let us run through the consolidated financial highlights. On the index parameters, volumes for Q4 FY 2026 stood at 150, considering a base of 100, which was Q1 FY 2020. The 150, I think this is the second time in history we have achieved this after four years, after 10 or 12 quarters. We are happy to be in that level, and we hope to build on this. Net revenue from operations for Q4 2026 stood at INR 330 crores as against INR 316 crores in Q3 FY 2026. As far as our revenue from operations for the whole year under review for FY 2026, it was at INR 1,303 crores as against INR 1,393 crores in FY 2025. For the quarter, we recorded a 7% volume growth as compared to Q3 FY 2026. For the full year, the growth was 3% as compared to FY 2025.
Coming to the operating EBITDA parameters. Operating EBITDA for Q4 FY 2026 stood at INR 21 crores as against INR 27 crores in Q3 FY 2026, with EBITDA margins shrinking marginally to 6.4% in Q4 FY 2026, p artially due to rising costs in shutdown activities and also some inventory effect, which has been seen in the stock change effect. Which we can discuss separately. Operating EBITDA for the year under review stood at INR 101 crores as against INR 137 crores in FY 2025, with EBITDA margins at 7.7%. Coming to PBT. PBT for Q4 FY 2026 stood at INR 21 crores as against INR 13 crores for Q3 FY 2026. PBT for the year under review stood at INR 76 crores as against INR 114 crores for FY 2025. Coming to profit of tax, PAT for Q4 FY 2026 stood at INR 17 crores as compared to INR 9 crores in Q3 FY 2026.
PAT for year under review stood at INR 56 crores as compared to INR 103 crores in FY 2025. One of the reasons for lower tax in previous year was because of the long-term capital gains structure change in last year's budget. Which impacted previous year's tax credits. Whereas in this year, everything is in the normal tax rate. With this, we would like to open the floor for questions and answers.
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 Nirav Jimudia from Anvil Wealth. Please go ahead.
Good morning. I have a few questions. Sir, first is on the current situation, like you've touched upon the raw material cost increases and also on the contractual and non-contractual part. If you can help us understand what's the current situation in terms of imports of rubber chemicals coming to India . Based on your interactions with the customers, are the customers currently negotiating on the prices or they are more concerned about the volumes which they want to secure for their production? That is A. B, you said that we have increased the prices immediately for the non-contractual customers. Typically, how are volumes based in terms of the percentages between the contractual and the non-contractual part?
Thank you, Nirav. Coming to imports, the first part of your question. Yes, we also see that there have been price revisions in the imports. That's one sign that we are seeing due to cost increases that have gone up across the value chain. Coming to our own price increases, like I mentioned, the discussions with customers are positive. It's always a combination of supplier reliability and price. Given the current situation, the focus is also ensuring supplier reliability because across the value chain, there are continual disruptions. That's the response on that. The last part which was on what's the kind of ratio, I would put it somewhere around 65%-70% is contractual and the rest is usually non-contractual.
You touched upon the price revisions on the imports, but what is on the volume side? Has those volumes seen a dip, which could give us an opportunity to increase our volumes? How has been that situation in last one and a half months?
It's still early days on that. But I would say we are continuing to see our volume positive development . Also importantly, to be able to manage the supply chain to ensure that we can produce and deliver to our customers. We are still seeing positively .
Mr. Srinivasan said in his opening remarks that we are seeing, l ike last Q1 of FY 2025, we have seen this sort of volumes, which now have been achieved. Given the kind of volume run rate we have achieved in Q4 and taking, let's say, FY 2026 as a year, we are already at 10% volume growth based on Q4 run rate. If you can help us understand or let's say, is there a sense of confidence within NOCIL that 4Q volumes can now become a base volumes given the spare capacity, what we have, and the expansions which we have undertaken? How are you seeing these volumes getting built up on Q4 run rate volumes?
I think if you may recall, at the last call, we had mentioned that we expect to be able to complete the year on a positive note in spite of the first half not going entirely along the lines we expected. That did happen, and that means there has been a momentum in the second half, especially on the volumes front. We expect this to continue going forward. So we are quite positive that we will be able to build on this into the next quarter.
So can one assume 4Q volumes can now become a base given the kind of confidence we have in terms of customer approvals and the expansions, what we have done?
Yes, Nirav. We can.
Perfect. The second question is on the realization part. If I see last 17, 18 quarters, this is probably the lowest one. So, when we had touched that peak volumes in Q1 FY 2023, that was an abnormal period of COVID times. Today also seems to be abnormal time in terms of the lowest prices, what we have seen. So where are we seeing our average realizations moving in between those periods, like the best of the periods, what we have seen during COVID and worst of the times? Because now we have seen the pricing momentum also gaining traction. Generally, our observation is that during an inflationary trend, we tend to gain more in terms of the gross margins part.
So if you can share your thoughts here. Where are we in terms of the current realizations and what one could expect from NOCIL in terms of the expansion on the gross margin side?
Srinivasan here. So one of the things which has happened in this quarter, April onwards, that the input prices went up and market also corrected the finished goods prices in relation to the input price rises. So that was one good point. Second on your question is on that whether in an inflationary or in high price, high cost regime, we tend to expand. Maybe you have guessed something based on past track record. It moves, but I think typically, in a situation where India is not self-sufficient, any industry which is depending on imports to meet its requirement or the input requirement generally tend to get that advantage for a short period.
It's not a big period, but it's a shorter period because you need to cover little earlier because your lead time is much higher as compared to domestic procurement. To that extent, you may get some marginal benefits.
Just to add, I think Srini mentioned it in the initial part, and I'll just kind of build on that. So in this particular quarter, there were some impacts that actually is reflecting a lower EBITDA. That is on account of the inventory change.
So basically, Nirav, one of the things which is very important is, in the inventory change, the inventory as per the accounting standard is valued at raw materials plus overheads. So you have a situation in a quarter where there's a stock change is debit, which means that debit includes some portion of raw materials and some portion of overheads of the previous legacy quarters.
That may come in. Typically, if you maintain the inventory, that particular debit of extra INR 8 crores, [inaudible] INR 7 crores-INR 8 crores is there. Maybe that would not be there. Because in March we had to face some production cuts, et cetera, because of this energy prices, et cetera, h ad we not had that thing, probably we would have improved our EBITDA also.
Perfect. And sir, last question from my side before I join back. How are we placed in terms of some of the critical raw materials, specifically on the amines and MIBK? Because some of the amines are available locally, which were also facing disruption due to ammonia shortage, while some are imported in India. Also on the MIBK, which is totally an imported product. Are we getting or are we sufficiently stocked up for our targeted production or let's say the committed production which we have anticipated? How has been the situation there?
I think you're right. Like I mentioned, there is supply chain disruptions on account of multiple factors. But until this point, we have been able to secure supplies so that we can reliably deliver to our customers. At least for the next few weeks and horizon we see, we are still in a good position for that.
Perfect. And lastly, congratulations on an excellent working capital management because when I see our cash flow statement, we have been able to save close to around INR 170 crores-INR 180 crores on the working capital, which is taken care of the CapEx is what we have done in FY 2026. So congratulations to the team. Thank you so much.
Thank you.
Thank you. Next question is from the line of Nilesh from HDFC Securities. Please go ahead.
Good morning, sir. To Anand sir, the first question is on the strategy. You mentioned in the opening remarks the company is optimizing between volumes and margin, but volumes are going steadily up for the company while the margins are falling since Q3 FY 2025. Is company changing volume and compromising on margin? Your thought on this will be helpful to understand the company strategy, sir.
Thank you, Nilesh. Clearly intention is not to compromise on the margins, but to look at improving the overall consolidated. And there has been that positive uptick which we have seen. But I think, like I said, Q4, which Srini just explained, is also due to some specific instance in that quarter. But we are still in line with when we say it’s a mix between price and volume. Very clearly, the intention is why the specific margin might drop because we have to get some additional volumes in. Absolute overall number is what we are looking to increase with our available capacities. That is clearly the direction and the strategy.
Thank you. And sir, in Q4 volume growth, is there an element of volume increase as customer want to keep some inventory level at their end so that their production remain steady. Is there that volume growth element?
No, w e don't see any significant overstocking that will spill into Q1. I'm kind of reading between the lines of your question and trying to answer it.
And just one question on this expansion. On brownfield expansion project at Dahej that you announced a couple of months back. What percentage of this INR 130- crores CapEx will be spent on debottlenecking of capacity and how much volume you will add with this?
This is largely additional capacities. Not much of debottlenecking.
Whatever volume you are going to add will be consumed captively or it will be the merchant sales?
It is merchant sales. This is growth CapEx.
Lastly on this INR 250 crore CapEx at Dahej, the overall capacity will be increased by about roughly, say, 20%. When you are saying 20% volume increase, is it the merchant sales volume or again, it is internally consumed?
You are referring to the 20%, which is for the INR 250 crores, right?
Yes, sir.
That is all merchant sales. Let me just clarify. Some part of the earlier INR 130 crores we have announced has got a bit of intermediates also included. But largely it is captive sales on that one. But your second question, it is completely merchant sales.
Just for my understanding, INR 130 crores largely the captively consumed volume.
No, not largely. It is related to part of the finished good that will be coming out. For that, whatever is required, there is a part of it which will go into that, the intermediates. The other INR 250 crores is completely merchant sales.
Thanks a lot, sir. All the best.
Thank you.
Thank you. Next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Thank you, sir, for the opportunity. Just a couple of questions. Sir, just wanted to give you one perspective. When we look at the aniline prices history from July 2025 to around December 2025, for that period, aniline prices has been ranged quite well between INR 100/kg to around INR 112 / kg. Thereafter, for the last three months we have seen that INR 110/kg becoming INR 90/ kg. So ideally any company which has around 15-20 days of inventory keeping of raw materials would have benefited from that inventory gains. On the contrary, we have not seen that benefit. Even after adjusting for the INR 7 crores-INR 8 crores which you mentioned on the legacy cost, the numbers still look on the lower side there. What should we judge like the inventory management is not proper of RM or what has actually happened like?
I think, Aditya, there are two challenges in the beginning of the year I think we mentioned. We had a legacy cost inventories at the higher cost in the previous year where we had a plan of higher sales volume which didn't happen.
That spilled over into the first half of this year. That affected our costing in the first half. In the second half, we got more of market cost, et cetera. The larger challenge which has been for us in this, the spreads got narrowed down because one of our products was imported largely from FTA regime, where the protection which was there earlier in the form of basic duty, that got wiped out. That impacted the profitability. That is one of the key factors in this year which happened. That was very significant in that sense.
But also coming to more recent quarters, that should play out, Aditya. I think surely whatever is in the pipeline should play out.
Is it a structural thing, sir? Because that FTA has been now wiped out and that will remain, obviously. So in terms of cost-wise, do we see at a disadvantage?
No, it is not at a disadvantage. I would say it has just been a certain correction, but there has been a certain normalization also in the last few quarters.
Got it. Sir, coming to ADD, we know that DGTR has announced some INR 40/ kg duty. Sir, this is applicable on roughly any sort of a percentage numbers that can you give onto how much product basket and coming to products also like that there also we are pending on anti-dumping duty. Any thoughts, sir, on these three products, how much is the duty and these two products upcoming, what duty could be there? When the M inistry of Finance would give the final call, any timeline on that?
First of all, this is a recommendation from the DGTR after doing a thorough investigation, which is a quasi-judicial body. That is number one. Number two, so far, they have announced for TDQ and sulfenamides. They are yet to announce their findings for Pilflex 13 and 4-ADPA, which we are expecting any time in the few months. I think Pilflex 13 should come in the next one month or so. That is the deadline which they have an internal deadline, which is already announced on the website. Now, coming to the impact, I think what we have shared with the investors at large is that, overall, we had about 40% of revenue getting impacted by anti-dumping products. So the quantum of duty, how much is approved by M inistry of Finance , it is a post factor.
The second very important factor is generally what we have seen historically, and you can even refer to insoluble sulphur case very specifically, where you propose the duty, the exporters absorb it. Then again, you have to see what is the net effect to the industry. So those are all subsequent event which we will analyze and we will take a call. Then only we can derive. The approval time for the central government is about generally 90 days. So we expect somewhere around middle of June their viewpoint.
Thank you for that. Sir, now coming to when we look at the anti-dumping duty history from 2014 to 2019, sir, at that time, we have seen like margin spreads have peaked out around INR 65 / kg. Into this cycle, suppose if this anti-dumping duty is imposed, what sort of a number, sir, we can look at the peak and considering a five-year from now on, from today, how you see numbers of NOCIL and spreads and volumes moving out considering if ADD is imposed?
Aditya, it is premature to comment on that. I think let the final decision come, and see the reaction, how the foreign competitors adopt, then we will take a call.
Sir, just one last question. Sir, coming to this quarter, obviously, like sir, taking a history of the last two years, this quarter numbers looks quite poor. Anand Sir has also reiterated since last four, five quarters, every quarter we have stated this is the bottom. This quarter, sir, any thoughts like you see this pain to be continuing or again, like we are saying, this could be the bottom here?
Like I mentioned, there is an uptick in pricing, and we should see this playing out in the coming quarter.
Got it, sir. Thank you.
To add, I think, clearly there is a strategy and a long-term view in terms of how we want to scale the business. There are also many other measures that we are taking internally in terms of our competitors' intensity and what we need to do on our efficiency. There are several other measures, so it is not only dependent on one of the external measures.
Got it, sir. Thank you, sir, for that explanation.
Thank you. Next question is from the line of Harshil Parekh from Acuitas Capital. Please go ahead.
Hi. Thanks for the opportunity. Sir, I think in last two, three years, E.U. and the U.S. were planning to ban 6PPD rubber antioxidants due to its toxicity on aquatic life. They also started some investigation on that. Can you throw some color on this investigation?
This has been a finding which started in California. There is a discussion in terms of the aquotoxicity of this largely used product, which is the largest rubber chemical used, the most reliable rubber chemical from a safety point of view. There are discussions and all players are looking to find an alternative, including us, and we are working on it. But it is still some time away. There have been some new alternatives that have been announced. But they are still in trial and testing stages. You must remember, it is a very large volume product, so the time required will also be large, because apart from the testing and the assurance on safety, the execution of these products also will take time. But that is an ongoing topic .
But sir, on a worst-case scenario basis, are we ready with the alternative product as such?
We are also in advanced stages, and we have got full teams dedicated working on this.
Sir, the next question would be on the quantum of price hike that we have taken in March due to RM inflation. Can you just throw a tentative quantum of price hike?
It is a dynamic situation, Harshil , but I have given a direction. That is the way it is .
Thank you. The last question is, can you just give the volume and value mix between domestic and export for this year?
Just one second, please. Let us just check that. In terms of volume, 70% is domestic, 30% is exports. In terms of value, it would be 67/33 .
Thank you so much.
Thank you. Next question is from the line of Nitesh Dhoot from Anand Rathi Institutional Equities. Please go ahead.
Hi, team. Good afternoon. Thank you for the opportunity. My question is on the demand of tech in the domestic market that would have been on the back of GST and the tire growth as you mentioned. But there would be an element of higher sourcing with respect to the ADD that is likely to be implemented. Do you see the customers raising their levels in anticipation, and is it likely to slow down the volumes after the ADD actually gets implemented? While I do understand that there may not be overstocking on account of West Asia crisis, anything in anticipation of ADD is what I wanted to know.
Nitesh, we haven't observed such a situation. Not that . We've not seen it. I think, like you rightly said, the current situation is also not being very conducive for that.
Can you clarify on how much has been the domestic industry volume growth and how much has our market share moved in the last quarter, maybe?
I think surely by the volume growth, 100 basis points- 150 basis points improvement should have been there.
And sir, on the price increases that you mentioned for the non-contractual position, which month did we exactly take this price hike? Because when we see the blended realization, that shows a decline of 2% sequentially. Which month? Did we take it in March, or probably that would have happened in April?
You would not see it so much in just the quarter gone by, because a lot of it started playing out. That was not in the early part of March. It was more towards the second half of March. So very few days in the quarter and in the year. But more it's in the upcoming quarter.
Understood. Just one last maybe on the Dahej expansion. When the CapEx was announced, the margins were in the 13%-15% range. Currently at around 6%-7% EBITDA margin. Probably I understand that this is not a sustainable number. We probably will be moving higher. There's a INR 250 crores incremental capacity. Your internal IRR assumptions and the investment thesis, has there been any change around that?
No, not significantly. We are quite positive, like we've said, also that we're looking to improve the EBITDA numbers through different measures. Also with the production from the Dahej, we should see further improvement and better operating leverages there.
Thank you so much, sir, for answering my question. Wish you the best for the future. Thank you.
Thank you. Next question is from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Thank you for the opportunity. I have got two questions. First is, as approvals and customer qualifications are becoming increasingly important, h ow do you measure the stickiness of your customer relationships today versus, let's say, three to five years ago?
If you look at our presence, Sajal, we have always been present with all tire companies, not only domestic, but also internationally for many years. What I would say in the last three to five years is, it has been more deeper penetration with our international customers, especially with the additional capacities that we have brought on stream in the last few years. And with all the approvals and the increased volumes that we have got, with also the ability to prove our supply reliability and with the trust that we have gained, the stickiness needle has significantly moved over the last three to five years.
So price alone is not the only criteria. There are other factors that customers consider before deciding on the sustainability of the relationship. Is that understanding correct?
Absolutely. While price is critical, it is not everything. That is why we need to prove our capability, our ability to supply reliably, in quality, and also during difficult times. I think these are also other criteria that our customers look at.
Thank you. The second question is, i f this anti-dumping protection does not materially improve industry pricing, can NOCIL still structurally improve margins through a combination of mix, efficiency, and speciality growth alone?
I think that I was just alluding to it a little while ago, in the sense that we have to be prepared for all scenarios, and we have to work towards that. We are building on that. There is both internal measures to enhance, at the same time consolidate and see what we can do. At the same time, in the product portfolio front also, we are looking at how do we enhance the product mix. It is a combination of both, as well as geographical expansion at a quicker pace.
Some of it is already getting reflected in the financials for FY 2026 in terms of the other expenditure. If you see, there is a reduction of INR 18 crores or INR 20 crores. These were the efforts which we undertook to optimize cost, to control cost very differently, look at various aspects of business operations critically, and try to see how best we can optimize it. Those efforts are seen in the results in terms of, I would say, this controlling cost. Second is the working capital management. We try to make an improvement in working capital management, and that also is reflected in the non-operating other incomes. These were some initiatives which we already took, which is already reflected in FY 2026 results. Going forward, we have several other such initiatives to work on that.
Thank you so much for answering that question.
Thank you. Next question is from the line of Sailesh Raja from 360 ONE Capital Market. Please go ahead.
Thanks for the opportunity, sir. Sir, in this quarter, excluding raw material cost, there has been a healthy improvement in the conversion cost. Could you please elaborate on in which area where we have seen there is a good cost saving? Additionally, for FY 2027, which specific area that we are being targeted under the cost reduction initiatives? Also, company had announced performance-linked ESOP allocation. Could you highlight the area that we are still lagging versus its initial targets, and what are the measures that we are taking to improve those performance?
I request Srini to take the first part, and then I will come to the last question of this.
Sailesh, I think I just said to the previous participant who raised the question. There are some measures which we took on utilities, which improved the overall expenditure or reduced the overall expenditure by INR 10 crores-INR 11 crores. There were some expenses on maintenance, which we worked on hard and tried to see how best we can structure that. That also we reduced during the year. I think on utilities and operational, other expenses, et cetera, we try to control it. That is one. There are other administrative aspects also, which we need not highlight. These are small items aggregating to a significant amount, but every team task force was formed to look into the areas and to see how best we can optimize. At the same time, on a capital employed for the business, that was the working capital management.
If you see, the large part of working capital management happened in inventory, so that we could get something. Of course, some inventory went further, more than what we expected. Some corrections will happen. Nonetheless, we made a fundamental shift in terms of how to serve the customer with the least amount of capital employed, is what we were looking at. This releases the cash . To an extent, the entire CapEx this year was largely financed out of internal working capital efficiency. Thus, the investments, of course, which was there at the beginning of the year, largely retained income on the contrary, it has increased. That enabled us to manage the things better efficiently. The other part, I think Anand will elaborate.
Sir, what about the next year, sir? How much we are planning to reduce it? Say, with the similar volume, 55,000 tons, say today the conversion cost is 100. So how much we can able to bring it down?
There are quite a few initiatives which are underway, and they should start coming on stream. We expect it to improve further on the absolute conversion per kg. That we see it to go down further. There is not a specific number that I can give you at this point in time, Sailesh. There were other initiatives also in the R&D area, which is also reflected in the other expenses. That is also something that has given us a positive flip. Coming back to the last part which you mentioned. Our metrics were along the lines of profitability and volume growth. We are a bit behind as far as what we had set out to do. There are significant measures internally, which we have taken.
A combination of external environment has also played a role, but we are kind of really creating a roadmap to see how we can get back on track on that front.
Sir, one last question. We had installed capacity of 115,000 metric tons. That time our effective capacity was 80,000 tons. Now, the installed capacity has increased to 138,000 tons- 139,000 tons. What is our effective capacity? Also, we have announced that INR 130 crores of CapEx. What is the number that you are looking for, both installed as well as the effective capacity?
First of all, the new capacity's trial production is on, so let it become commercial. As far as 115,000 metric tons, we have never said 80,000 tons or 75,000 tons anywhere. It is a ballpark of 65%, 35% is what we do. We do not give the specific numbers for business sensitivity. As far as the INR 130- crore project is concerned, we will let you know as we get into the advanced stage of project completion.
Sir, with the commissioning of new capacity, incremental capacity, do you see the fixed cost absorption would be low in this year, or do you think the ramp-up of capacity will happen faster?
There could be some initial uptick in the stabilization. But overall, as the plant stabilizes, enhance our operating leverage on the site. Because we already have the other utilities and everything else on the site.
Thanks.
Thank you. Next question is from the line of Nirav Jimudia from Anvil Wealth. Please go ahead.
Thanks for the opportunity. Sir, one question on the export market, specifically on Europe and other parts of Asia where we are currently exporting. How has been the situation there in terms of the disruptions at the plant in Europe and other parts of Asia, which could provide us some opportunity in the short term to export our volumes there? Are we seeing any traction in terms of the improved sales volumes to these geographies?
We are not seeing any significant deviation. It is not too much positive or on the negative side. It is pretty much quite stable. There are those ongoing interruption due to transit timelines and things like this, and freight costs. But I would say from a volumetric requirement point of view, there has not been any significant difference that is playing out.
Sir, last quarter you informed us that U.S.A., where the duties were on a higher side, which were then subsequently reduced, our volumes were affected by close to around 50%. How has been the situation there in terms of those improvement in U.S.A. volumes?
That is moving up like we had mentioned also, so that is a positive development. I think it normally takes some time before supply chains can kind of adjust to any change of this sort. But we are seeing it in the positive direction, and we should see it gain traction in this coming year.
Sir, also your thoughts on the latex market. Has those volumes to the latex market improved in Q4, or how do you see FY 2027 panning out so far as the latex volumes are concerned?
Latex volumes, last year there was a bit of a disruption due to all the tariff back and forth that happened in the initial part of the year. It has been quite stable in terms of production. There is increased competitive intensity from Chinese players in that market. I expect for this year it should be stable, barring any significant disruption.
Sir, you mentioned that we are already in the process of sending the samples for our expanded plant to the customer. Typically, based on your experience with the earlier expansions and the customer approvals time cycle, when can we see a material improvement in or material capacity utilization uptick coming from our newer expansion coming off?
Usually we expect the non-tire-based business to start much earlier, whereas the tire-based customers will take the time on the approval. We are in engagement to see how we can speed it up. I should expect that it should take about six to eight months by the time we see real traction from a larger customer.
And sir, last question from my side is since on an indexation basis, we have already touched 150 levels. So, on the operating leverage part, what is your internal assessment in terms of the real benefit of operating leverage coming up? So let's say, can the indexation of 160 a benchmark where we would start seeing some sizable improvement in our conversion cost? What's your internal assessment about the indexation levels where we can start seeing those operating leverage benefits?
I think I tried to kind of consolidate it when I mentioned the last call that we are looking to improve our EBITDA from the base of financial year 2026 to another 150 basis points going forward. This will all kind of kick in into that.
Any volume growth is going to have operational leverage benefit definitely there. That's well understood.
Perfect. And sir, last thing from my side. Sir, on the newer products on which we were working and you had informed us in the earlier calls also that we could see the volumes coming from those newer products in FY 2027. Where are we in out of the volume growth which we are expecting in FY 2027? How much of the volume growth could be contributed by these newer products?
We do expect to gain higher volume transaction on those new products. I would still see that financial year 2027, it will still be in a pickup mode. It might not make a significant impact on the overall volumes, but gradually moving towards the end of the year, we should start seeing more volume uptake. I am not able to give you a specific number, Nirav, at this point.
Perfect, sir. Thank you so much, and wish you all the best.
Thank you.
Thank you.
Thank you. Next question is from the line of Praveen Kumar from Acuitas Capital Advisors. Please go ahead.
Thanks for the opportunity. I had a couple of questions. The first one was on the imports of antioxidants. If I look at the overall import data, it looks like in the January, February, the first two months, the year-over-year basis volumes of imports in antioxidants picked up significantly. Could you throw some light into what could be the causative factors behind this?
You are talking about January to February of this year?
January of this year compared to the January of the previous year.
I also see that potentially also, like we said, some of it has come through the Thailand and Korean FTA. But overall also there could have been a slight uptick because the overall demand in the market per se is also on the positive side.
Basically what has happened is you have a situation where the domestic demand is projected to grow at 7% as per ICRA estimates. Incidentally India is the second largest consumer of rubber globally. We have surpassed U.S.A. Given that background, you could have seen customers importing more from the FTA route because it is coming up cheaper, stuff like that.
Do you expect that to persist or is there some corrective action or something that can be done on that?
No. On the FTA front, we are kind of highlighting to ensure that the value addition is within the norms of the FTA. And we are highlighting it. And it's been taken up at this point, but no specific outcome at this point in time .
Understood. The second question was on the global rubber consumption chart that you presented. Just going through that. Again, I look at it in two parts. One is, let's say, 2013 to 2018 kind of a time period. During that time it went from 25.5% to 29.3%, which is like a roughly 5.7% kind of a CAGR increase. Now, if I shift my focus to, let's say, 2022 till 2025, the last three odd years. There the growth rate went from 29.4% to 31.9% as per your data, which is more like a 2.8% kind of a CAGR growth rate. Just wanted to understand, what do you think are the reasons for almost more than halving of the growth rate which the overall industry was growing at? Could you throw some light into this and how do you see this panning out?
One, if you really see another layered information on this, more of it is also in Asia. The growth is much more stronger in Asia compared to the Western markets . While globally also due to the continual disruptions that we have had in the last few years, that's also played out at a lower growth rate. But I see overall, we typically take about 2%- 2.5% growth. That is a safe number to achieve on a medium to long-term CAGR basis . Anything above that sometimes is really not very realistic .
So basically you are implying that the 2013 to 2018 kind of a growth rate which happened at a broad level, that was kind of more unusual and this 2.8%, 3% or whatever, 2% - 2.5% is more a realistic growth rate assumption.
Correct. That is what we also use here. That is the parameter we use even for our evaluations of future demand scenario.
Understood. Just to, again, go back to my earlier question on the imports picking up in the first two months of this year. We also noticed that in one of your large Chinese competitors, the largest one, in one of their recent calls they had alluded to Indian players putting up CapEx. Probably they were referring to you, I guess. I am just wondering that, given that your most recent CapEx is the one which is going to come on stream is also for antioxidants, is there a likelihood [inaudible] aggressive and before you start commercializing the CapEx?
There is always a certain capacity to hold inventory. I don't see that as a major impact on account of us coming up with the CapEx.
Thanks for the response.
T hanks.
Thank you. Next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Thank you, sir, for the follow-up. Sir, my question is on to the speciality segment. Sir has stated that this CapEx of INR 130 crores will come largely into the speciality side. Just recalibrating some numbers, if you can through what is the speciality segment mix as on FY 2026, and what are the volumes or utilization level at this segment is working on. With this capacity coming in by FY 2028, I suppose, what sort of capacity addition are we looking at into speciality side? What is the demand outlook into this segment into the export market? If you can just highlight on this.
By and large, when we look at the sector that we operate, typically, we have a slightly higher skew towards the specialities than what the industry reflects. That is, while the industry reflects a single-digit spread on the speciality versus the non-speciality, we would be at about 15%, and I think with this, we should be able to go to 20% is what our expectation is.
20% mix post commissioning of the capacity and reaching peak utilization level, so we can reach 20%.
That's right. Because, again, volumes are not typically very high.
Got it. And sir, the speciality segment is focused on which particular end users and which particular geographies, like U.S., Europe, any sort of mature markets versus emerging markets where it is specifically used?
It is across all the markets.
Got it. Sir, coming to the question on the higher imports in this quarter. Sir, also we have seen many times that before any anti-dumping duty comes in, generally customers looks to stock up inventory right before this announcement and trying to mitigate some of the higher cost which when post anti-dumping duty, whatever is there. Are you seeing this trend to playing out and this is leading to higher imports? Or general you see because any sort of a change why imports have suddenly spiked up?
There was a question earlier on this also. While I said that there could be a tendency or inclination, we have not seen it so much also due to the fact that the current situation has not been so conducive towards that. There could be pockets of it here and there, but by and large, due to the environment, it has not played out to that extent. Because it is still at this point, DGTR is still only a recommendation.
Sir, just one last question onto the volume growth. For FY 2027 and 2028, sir, what sort of numbers are we looking at?
Sorry, come again, please. I just could not hear you there.
Onto the volume growth guidance, what numbers are we looking at for FY 2028 and 2027 in terms of growth?
We are looking at double-digit growth in terms of volumes. That's our target for the coming years.
Got it, sir. Thank you.
Thank you. Next question is from the line of Tanvi Warekar from Anand Rathi Institutional Equities. Please go ahead.
Hi, team. Thank you for your presentation. We have INR 220 crores of CWIP in FY 2026. Going forward, how much of this comprise of the project debt and what will be the cost of debt in one direction?
As of today, we have not borrowed any debt. We are having some lines above INR 400 crores from the bank, but we are yet to utilize it. It depends on that, and it is repo- linked interest rates.
Nothing that is in the CWIP, right?
No. So far nothing is there.
Thank you so much.
Thank you. Next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead.
My question is on anti-dumping duty, sir. What we have observed is that in an inflationary scenario, the Ministry of Finance is very reluctant to approve anti-dumping duty, though there is a recommendation from the Ministry of Commerce and Industry. It is okay that happened for our products. What are our plans to expand margins and how we are related to that?
Nilesh, a gain, I think one of our earlier people on the call participants did ask this question. I think it was Mr. Harshil. There are plans. Like I said, there is a lot of cost efficiency measure improvements that are ongoing within the organization at our manufacturing sites. We expect that will also positively play. There is also product mix areas that we are looking at as well as the geographical expansion is another area. There are multiple actions in play that we are looking at.
Secondly, to Mr. Srini. Sir, what are the tax rate guidance for FY 2027? Any reduction there because of this new plant commissioning and the revenue coming from there?
No, Nilesh, there are normal tax rates.
Great. Good. Thanks a lot, sir.
Thank you, Nilesh. I think there were two questions again on this improved volumes from both Aditya and Praveen on the increased volumes which were coming in through the imports. Just one of my colleagues just mentioned that towards the end of the year, typically you see this where some of the importers tend to use the Advance Authorisation and there is always a chunking up of it during the last quarter. That's potentially one reason. I just thought I'd add to that question because it came up twice. Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Anand V.S. for closing comments. Over to you, sir. I'm sorry, sir. We are not able to hear you, sir, speaking.
Thank you. Thank you everybody for your time, and we appreciate that you could be here today with us. I hope we've been able to address all your queries. For any further information, kindly get in touch with any one of us or Strategic Growth Advisors our investor relations advisors. Thank you once again and wishing you a very pleasant day ahead. Thank you.
Thank you very much. On behalf of NOCIL Limited, that concludes this conference. Thank you all for joining us today . You may now disconnect your line.