Apcotex Industries Ltd
NSE:APCOTEXIND
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
377.3
532.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Apcotex Industries Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Apcotex Industries Limited Q4 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Purvangi Jain. Thank you, and over to you, ma'am.
Good evening, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the fourth quarter of the financial year 2024.
Before we begin, a quick cautionary statement. Some of the statements made in today's con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management.
Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment 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, Managing Director; and Mr. Sachin Karwa, Chief Financial Officer.
Without any delay, I request Mr. Sachin Karwa to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Purvangi. Good evening, everybody. It is a pleasure to welcome you all to the earnings conference call for the fourth quarter of financial year 2024. I hope you had an opportunity to review the financial statements and earnings presentation, which have been circulated and uploaded on the website and the stock exchange.
Let me provide you with a brief overview of financial performance for the fourth quarter ended 31st March. The operating income for the quarter was INR 311 crores, which grew by around 21% year-on-year basis with increased volumes in spite of challenging market conditions. The EBITDA was reported around INR 31 crores, a decrease of approximately 8% year-on-year due to lower margins in some product categories due to market dynamics.
The EBITDA margin stood at 10.08%. The net profit after tax was at INR 15 crores, which grew by 38% on quarter-on-quarter and PAT margin stood at 4.93%. On the official front, we achieved an impressive 34% year-on-year volume growth. On the international front, we celebrated our highest quarterly export volume growth by 71% year-on-year.
Now coming to the financial performance of financial year 2024. Revenue stood at INR 1,125 crores, representing a 4% increase year-on-year. The operating margin was INR 114 crores, which declined by 28% year-on-year while the margin stood at 10.13%. The PAT was reported at INR 54 crores, which declined by 50% on year-on-year, partially because of increase in depreciation and interest costs due to commissioning of major expansion projects.
For FY '24, our company achieved remarkable growth with a 28% year-on-year increase in overall volume and extraordinary with 95% year-on-year surge in export volumes. With these figures -- while these figures showcase our robust market presence, it's essential to note that our revenue increased by 4% compared to volume increase of 28% due to product mix, fall in raw material prices and third lower realizations. Capacity expansion from new projects stood at 30% to 45% on a full year basis.
With this now, I open the floor for the question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of Aditya Khetan from SMIFS Institutional Equities.
Sir, on to the Nitrile Latex business, sir, what is the current utilization in Q4? And what you are targeting for full fiscal in FY '25 and FY '26?
Thank you. So as I mentioned last time, the utilization is definitely lower than what we had envisaged at the beginning of the year. We were hoping to be at this time at 100% for at least the last 1 or 2 months at 100% utilization. But the best we have done so far is about 50% utilization for -- in 1 month. Overall, for the quarter, I think we would -- for the year average I have -- for the average for the year is at about 30% capacity utilization. For the quarter, it would probably be about 40%, 45%.
And sir, what we are targeting for the next year FY '25?
Yes. So the whole issue there is, of course, we can scale up immediately, but the issue is about margins. So right now, the focus is just increasing the breadth of customers, making sure we are approved everywhere and doing business where contribution margins are at least positive. We're also looking at different ways to reduce costs, given that the market hasn't turned as much as we had hoped that it would or expected it to, the glove industry.
I think in the last couple of months, there are some signs of some turn, but there is still a lot of overcapacity in the market and inventory still of gloves that is still being depleted. From the recent report that I've read, that seems to be coming to an end, the post-COVID inventory. So we expect this year, if the contribution margins support us, then we will look at increasing capacity utilization, of course, immediately to 100% if we can, which we should be able to give in that we've got several approvals from new customers as well.
Okay. Sir, suppose -- on the Nitrile Latex business coming into the new -- so new fiscal year. So we are still witnessing lower margins only. And all this weakness of this persist for this full year, how we are expecting to increase our value addition because we have mentioned that we would be looking to increase our value-added product segment. But our Nitrile Latex is that business will continue to struggle. You think this fiscal FY '24 what margins we have made of 10%, we could be clocking a similar margin for the next year also?
Look, we have a couple of options. One option is to convert these at least part of the assets that we have made for nitrile latex. So on the flip side, I'll tell you for our Taloja expansion, that has gone exceedingly well. And there the capacity utilization at the maximum level for 1 month even got to 65%. On average for the year, it's been about 45%. So [indiscernible] I think, exceeded our expectations. And we expect that in the next 1 to 2 years, this will be fully utilized. So we -- one option is to use the nitrile latex plant if, for example, the industry doesn't turn soon to use part of the assets to make Styrene-butadiene Latex, Styrene acrylics latex and so on, other latexes in our Valia XNB Latex plant. So that is an option that we are considering.
Okay. So this plan is finalized or like we would be looking if situation doesn't turn good?
It's not finalized. We still think this is -- nitrile latex is a good business to be in the long run. In terms of the market cycle now it's been almost 1.5 years to 2 where it's been really down 1.5 years or so. So if the cycle turns and margins improve, then it's certainly something that we will focus on and ensure that we get to 100% capacity utilization very quickly and hopefully good margins, in which case, to answer your question, of course, one of the reasons for lower EBITDA margin is in the nitrile latex business, which has been a drag where honestly, EBITDA margins, I mean, it's positive on the contribution margin front, but EBITDA margin is just about breakeven if that. So that's, of course, been a drag.
Okay. Got you. Sir, you have any idea like how is the imports which are -- which is happening into NBR and into the synthetic latexes? Have you seen any sort of an increase in import intensity from our competitors like which is also impacting the realizations of our company also like so -- in order to maintain our market share, so we also have to cut down our realization. Have we done some of that often?
Yes, for NBR, we have seen significant imports. We have -- through some debottlenecking, we've increased our, of course, capacity a little bit also, but -- so we are running at full capacity for NBR. But yes, certainly, margins have been a challenge this year compared to last year. In FY '22, '23, especially in the first 6 months, we also had the advantage of the higher fee freight, which was causing imports to be even higher, which, of course, in the last 1.5 years has not been there. NBR has been a more challenging year than the previous 2 years, for sure, in terms of margins.
And in synthetic latexes?
No, that's fairly stable, by and large, no major ups and towns. In fact, those have gone quite well. There's been significant growth as well. As Sachin reported for the quarter, we have had 34% volume growth. This has been on the back of the nitrile latex as well as the synthetic latex, which is SB latex and styrene acrylic latex. So we have been focusing on growing volume this year, given the market cycles for most chemical companies has been difficult. So we think focusing on volumes getting more approvals, export is now 30% of our overall sales. So really focusing on volumes and when the market turns, hopefully, you will see EBITDA margins return back to sort of mid-teen levels as we expect.
Next question is from the line of Harshal Parikh from Acuitas Capital.
Sir, my question is again on nitrile latex. So realizations continue to be below pre-COVID level. And Kumho, which is a major player in nitrile latex, it's also coming up with a major CapEx by second quarter of this year. So how do you see realization spanning out in this segment? And especially given Kumho has already mentioned about their aggressiveness to re-gain the market share?
Well, a couple of things. One is that the margins currently are not at pre-COVID levels. They are the lowest that they've ever been at history, I think, or as far as -- as back as we have been tracking it for the last 6, 7 years, as far as nitrile latex is concerned. And look, I mean, I don't specifically want to address one particular player in this industry, but there are going to be -- there are a few players in the industry and a few players have announced expansion projects, but they are not sort of -- and most of them are on pause. So we'll see as and when that happens. I think the market is big enough for all of us. It's just a question of capacity utilization and margins.
Sir, here I meant realizations and not the margin. So sorry for that. And sir, given the realizations currently stay where they are, so from a 2- or 3-year perspective, what would be the ROCE, which we can expect from our nitrile latex plant?
Look, yes, I mean, as I said, we don't sort of give any data for the future. But certainly, the ROCE would be lower than what we had earlier anticipated when we initially started off doing the project given in the first year, our margins have not been there. We have not generated much ROCE. So certainly, overall ROCE will be effective. But as I said, we have the Plan B in place. Look if this doesn't turn soon, we will need some more capacity by the end of the year -- of this financial year for styrene butadiene and styrene acrylic latex. So we would utilize some of these assets to manufacture styrene butadiene and styrene acrylic in the XNB plant or the nitrile latex plant.
Okay, sir. Understood, sir. And sir, on the NBR part, you are thinking of requesting government for an anti-dumping duty. So have we -- do we have any conclusion on that part?
Look, I think we had already, as I told you, the DGTR, which is under the Ministry of Commerce had already recommended an anti-dumping duty, which was rejected by the Ministry of Finance. Now we, along with several other companies that are in our -- in the same boat have filed or have filed cases in several courts and those cases are ongoing. So since it's subjudice, I would sort of not want to comment much on that.
As of now, we are carrying on with our plans and we may think of reapplying for anti-dumping, I'm not sure, we'll see at the right time. But as of now, we're carrying on with our plans and managing our business without taking that into consideration.
Next question is from the line of Farokh Pandole from Avestha Fund Management LLP.
am I audible?
Yes.
The first question was that how -- what would be the time and the cost involved in this repurposing of the XNB capacity and sort of what proportion would we be looking at doing at least initially? And the second question is that ex the nitrile latex, what sort of margins are we currently running at the company level? And what is the net debt that we have at this point?
Okay. So time and cost, Farokh we're working out, initial estimates right now are -- so first of all, we don't need the capacity immediately. We have capacity for our other latexes for the next year, at least, year, 1.5 years. So we have enough time. So it will definitely -- whatever -- if we take a decision within the next 3, 4 months, and it shouldn't take more than 6 to 8 months because most of the assets are already bought, we would need to buy certain equipment and tanks and so on to be able to make other latexes besides nitrile latex in Valia. That would take about 6 to 8 months is our initial assessment.
And the cost would not be significant, maybe a couple of million dollars $2 million to $3 million is what we have initial assessment is. As far as net debt and margins without -- is that what you asked margins -- EBITDA margins without the nitrile latex?
Yes.
Sachin, do you have those numbers? Immediately I can tell you the net debt, the long-term debt as on March 31 is about INR 125 crores, right, Sachin?
Right. Net -- so the term loan is around INR 125 crores. So on a net debt, if you want to know, it's going to be around minus in the investments, we will be around -- including the short-term borrowing around INR 70 crores odd. So it will be around 0.1%, 0.2% of the net worth as such.
So what he's saying is working capital plus long-term debt minus our investment at market value is about INR 70 crores net debt.
Sure.
In terms of just looking at long-term debt minus investments, it's hardly some INR 14 crores.
INR 14 crores, yes.
And the margin without nitrile latex, can we get back to you? I don't think we would have it, but certainly at least a couple of percentage points higher because -- 2%, 3% higher. I am venturing a guess, but we'll get back to you on the exact number.
Great, if you could. And just another question, if I may. On the receivables front, there's been a sharp increase in receivables more than commensurate with what the increase in revenue was. And I just wanted to know what that was on account of and is it something we need to be concerned about?
No, not at all. Nothing to be concerned about. If you see our receivables are at around INR 200 crores, if I'm not mistaken.
Yes, that's right.
And we are at a run rate per month of over INR 100 crores now in the last couple of months, INR 100 crores a month revenue. So it's about 60 days credit that we typically give in the market. And the reason why there's a sharp increase is you would also have heard as Sachin mentioned, that a large chunk of these export sales have come from -- or sales -- sorry, this growth in sales has come from export sales. And with export sales, typically the 60 days term starts from the date it shipped. So it's another 10, 15 days.
So actually, we receive the money after 70, 75 days. And in a couple of cases, we've had to give 90 days credit as well. So it's just a customer mix kind of issue and the last couple of months, the revenue has been over INR 100 crores. So that's the reason. But certainly nothing to be concerned about, no significant issue.
Next question is from the line of Amar Maurya from Lucky Investments.
So Abhiraj, I just wanted to understand what would be our volume growth, let's say, for this quarter? And what was our full year volume growth on an overall business basis?
34% for the quarter and 28% for the year.
Okay. So volume growth was not a challenge. And we -- and this large volume growth is largely because of the capacity expansion, which we did?
Yes. Because the previous 2 years, if you recall, since you've been -- I know you've been following the company for a while, we had no -- we had -- I mean, not significant volume growth because you were at almost 100% capacity utilization for FY '23 and FY '22. So the additional capacity is certainly allowed for this volume growth. And we are -- of course, it takes time because any new plant, we have to again go through some amount of approval cycles and so on. So now we feel very good qualitatively where we are in the business. The nitrile latex business definitely has been a challenge. But qualitatively, we feel good. And when the market turns, we are quite confident of getting to 100% capacity utilization very quickly across the board.
And what would be our utilization currently?
You mean average for the year or...
Average for the year and average for the quarter?
So as I mentioned, the average for the year, again, it depends. For the new plant in Taloja, we were at -- I just mentioned those numbers I had them somewhere. New plant at Taloja, we were -- average for the year is almost 45%. And for the quarter, we would be close to 60%. And for Valia, the nitrile latex plant, the average will be 30% and for the quarter, probably around 45% -- 40%, 45%, yes.
Okay. And now given the realization, which is at the rock bottom, and do we see that demand slightly recovering? Do we see that now this kind of volume growth at least looks sustainable, high the double-digit volume growth sustainable for next year?
Yes. Look, for us, demand is not the issue. I mean the market is there. The issue is for nitrile latex issues margins. And for all the other products, I think the demand is pretty good. I mean the list from where we are looking at, and that's how we've been able to achieve a 34% volume growth in Q4 compared to Q4 of last year. So we're not too concerned about the demand. I think India is doing well. The industries that we are catering to are all doing reasonably well. 70% of our business is still India. So India has been actually -- has been a good market for us.
And exports are doing well. We've been able to break through to many customers that we have been working with, take a step jump this year after 2, 3 years of really trying with smaller volumes. We also had our own capacity constraints. So we feel qualitatively very good about the business.
Okay. Let's say, whatever is latex that Valia business, I mean, let's say, we continue to operate at whatever utilization we are operating because of the realization and the competition from China despite that also, do we expect that volume growth for next year would be high double digit because other business is broadly doing well for us.
High double digits, meaning -- I mean, I don't know what you mean by high double digits.
Is it 20% kind of volume growth for next year?
I don't want to predict anything. But look, if -- obviously, there's a big -- the big question mark is nitrile latex, if you were able to -- if that turns quickly, then that could be possible. But given that we have grown 100% in the nitrile latex business between last year and this year because of the extra volume, but it's been that very low margins.
I'm not sure if this 30%, 35% growth, we can do without nitrile latex growth. The rest of the business will grow at a good, I would say, mid-teens growth rate. But the high double digits that you're calling it will be dependent on nitrile latex export.
Okay. And this kind of margin, even if whatever is the pressure on the latex -- nitrile latex, this kind of margin looks sustainable or there is a question on the 10%, 11% margin on EBITDA level, which we are making?
Look, if you would ask me on an annual basis, this is really the lowest we have seen in 4, 5 years -- 4 years, I think, after 4 years. So we think it is quite sustainable. I mean, we -- obviously, our endeavor is to only improve on it. And yes, that's what I would say.
Next question is from the line of Ankit Kanodia from Smart Sync Services.
Congratulations on good numbers in terms of volumes and exports. Sir, my first question is related to, sir, in Q3, we mentioned that the highest quarterly export growth was led by nitrile latex, corporate and construction. Are these the only -- because this time we are not specified, which has been the main contributors of this growth. Are these 3 the main contributors this quarter as well in Q4?
When you -- yes, these 3 have been the main contributors, which is not to say the other businesses have not grown or the other industries have not grown. But this is what is called -- these 3 are definitely the higher ones. The other one that's been good as well as in the Tyre Cord business. We've been able to get a lot of export approvals for the Tyre Cord business. So we have grown that business. And we've done some debottlenecking as well and we continue to do in the next 6 months as well, which is it's not much, but it will grow like the Taloja plant capacity by another 4%, 5%. We plan to do that in the next 3 to 4 months, complete that project. And that will be more for the Tyre Cord business.
Got it. Sir, in Q3, we clearly mentioned that we were not making profits on nitrile latex. Is it the case in this quarter as well. We have not made profits?
Yes, that's correct.
Okay. So -- and as you have mentioned in the call as well, where that nitrile latex has been the highest growth in terms of volumes, right? So hypothetically speaking, if you get another 30%, 35% growth opportunity in nitrile latex, considering the price remains the same, the margins remain the same, would you be still going for it or will protect the margin?
I think we would want a little higher margin to go for more growth. We will be doing a little bit more because we have certain customer commitments that we have made. So we have to grow with them, but -- we will grow because of those commitments. But the margins, yes, remain a challenge. Now we are seeing very early signs of a turn, but I don't know if it's permanent again. We saw 1 or 2 months of good margins and again, some challenges. So yes, difficult to say right now.
So now April has already gone and we are into May, so have we got any signal there, any greet shoot in terms of margin?
It is better if we talk up until March 31.
[Operator Instructions] Next question is from the line of Aditya from Securities Investment Management Co.
So my first question is on nitrile latex. So what I understand is that 2 issues are affecting the nitrile latex. One is excess destocking by the glove manufacturers? And second is higher capacity by latex players. So has the first issue the destocking by glove manufacturers receded or that is actually still going on?
I think the destocking is still going on from the last report I read there. I mean, it's towards -- it's almost done is what they say, but it's still going on. The other issue is, of course, China has sort of played a significant role in the last year or so where by putting up capacities for glove manufacturing and latex, backward integrating into latex as well. So that's been a challenge for the rest of Asia. So that's been a second challenge. The destocking and the excess capacity, both. Destocking is probably coming to an end soon if it's not already.
Got it. And sir, in terms of nitrile latex capacities. So what would be the supply-demand gap between for the nitrile latex capacities means how much is the capacity in excess of the demand for the nitrile latex?
Obviously, look, any industry, at least in this industry, between 80% to 85%, 80% to 90% is where then we think the balance of margins versus volumes is good. Clearly still below that. It's hard to exactly predict quarter-on-quarter because we don't get the data every quarter from every -- from all countries, but we think it's still below or around 70% or 75%.
But the good thing is that the capacities have, of course, stopped this year, barring the people that are already in the like of who had already invested a significant amount we had to come in with our capacity, then the growth in the industry is still in double digits. So at some point, the growth -- the demand growth will reach healthy capacity utilization level.
Understood, sir. In terms of our NBR segment. So currently, the margins are lower than Financial Year '22 and '23. But those years, we had exceptional margins because of the trade restrictions. But are the margins now back to pre-COVID levels or they are lower than the pre-COVID levels as well?
Well, it's not fair to compare pre-COVID levels because even pre-COVID levels, NBR margins were up and down. So I would say the NBR margins are in this year if I -- the average of year, there were a few good months and a few not so good months. On average, I would say NBR margins were a little lower than what we think they should have been for a healthy -- what's the word -- for healthy business -- sustainable business.
And many reports say the same about the NBR business in the last year. And one of the main reasons for that has been that China is very slow. So China being the largest consumer of NBR in the world, if their demand is slow, then what tends to happen is all the suppliers, whether it's in China, Korea, Japan. India is one of the second -- I think probably the second largest market in Asia. So obviously, find its way into India.
Understood, sir. Got it. And sir, my last question is, what was the revenue contribution from our nitrile latex segment?
Revenue contribution from our nitrile latex segment is probably around 10%, 12% -- between 10% and 15%. I said lower digit, 10%, 12%. Sachin, do you the exact data?
Yes, it's sub 10%.
Sub 10%. Okay. So less than 10% I guess.
So around INR 100 crores to INR 110 crores for this year?
I think I don't have the exact data with me, but I mean you can do the calculations, yes, sub 10% is what we're saying.
Next question is from the line of Mohit from SOIC Research.
What is the capacity utilization in the NBR business?
In NBR, we are almost at -- I mean, 100%, almost 100% -- 95%, 98%, yes.
And when do you think we take a call on further capacity expansion?
Yes. Look, everything is ready. We finished the detailed engineering for this project. But for any major future capacity expansions, Board will take the call -- management and Board, of course, that stabilize our current operations and cash flow. And let's see how the first 3, 4 months of this year go and then take a call on further major CapEx decisions.
And sir, apart from our current portfolio, are you looking at any other product in the latex industry?
Yes. As I said, look, in the current portfolio, we are always adding more products, and that's how the growth has come as well. It is by adding new products and new customers. But it's been within styrene butadiene, styrene acrylic, even nitrile latex, we've added another new grade for a different type of glove. So all this helps in sort of growth. In addition to that, if there is any significant other completely new business area, business line or business chemistry that we are looking to get into, we'll announce at the right time.
Right, sir. And sir, just one last from my side. When it comes to nitrile latex dividends, when do you expect to take a call that we might manufacture some other products? Will it be like 3, 4 quarters down the line or 5, 6 quarters down the line? Because it just seems that the market is very oversupplied and there's a lack of demand at present?
I think it would be 1 to 2 quarters, max, yes.
Next question is from the line of Karan Bhatelia from Asian Market Securities.
Sir, styrene-butadiene raw material prices were seen on the downside for the entire year. So can you give us some flavor as to adjusting for the inventory losses, we could be 2%, 3% higher on margins, or my calculation could be wrong?
Your voice is echoing a little. I can hear you clearly, but I'm not sure if I understood the question. Were you asking if raw material prices -- about -- something about raw material prices?
So with respect to inventory losses for the current year, so if I adjust a 10% kind of margins, will be at 2%, 3% more than what we delivered?
No, I think for the year, on average, there was no major -- for quarter-on-quarter, there has been some inventory gain and losses, but nothing significant for the year as far as I know that would I mean, affect margins by a huge amount. Maybe 0.5% here or there, but I don't think that much because don't forget in '20 -- in fact, '21-'22 and '22-'23, we had very large stock gains because raw material prices were going up during those years on an average. This year, they have gone up, they've also gone down in a few quarters. So we have had some stock losses also. So you can't look at April surge prices between '23 and '24 and then decide because in between what happens also is important. However, Sachin, do you have an idea of the annual approximate stock gain or loss in terms of percentage. How much it would have affected?
It would be 0.2 to -- in between 0.2 to 0.5, not more.
Yes. So it's not significant, exactly what I...
Yes. Right. And some color on the revenue mix in terms of synthetic latex and liquid latex compared to Y-o-Y number?
Sachin? For the year?
Yes, for the year.
For the year.
So synthetic latex, we are 66% and rubber is 34%.
A large chunk of the growth has come from the latex business this year given that both are expansion -- major expansion projects for latex. I think at some point a year or 2 ago, we were closer to 50, 50 or 55, 45. And obviously, that has changed now 2/3 is latex and 1/3 is rubber.
Right. And we are yet to freeze the NBR CapEx, right? So in a quarter or so, we'll be able to give some concrete update over there?
Yes, 1 to 2 quarter, I think, yes.
Yes. So apart from that, maintenance CapEx should be not more than INR 50 crores?
Say that again?
I'm saying apart from that major CapEx, maintenance CapEx would not be more than INR 40 crores, INR 50 crores?
INR 40 crores, INR 50 crores, no, no, much less. Our maintenance CapEx -- I mean, look, there is -- there are other CapEx happening also, which are -- the way we look at CapEx is 3 types of CapEx. One is cost savings. The other is expansion and the third is maintenance. So if it's a cost saving CapEx, then it generally has a very good payback, typically 2 to 3 years is what we look at maximum.
If it is an expansion project, it's generally a big expansion project, which we announced. Sometimes there are small debottlenecking projects or expansion projects, which we don't announce, it's part of our overall CapEx cycle. But the maintenance CapEx is not more than -- would not be more than INR 20 crores or so for both plants.
I'm referring more from all 3 categories on capacity expansion plus on cost savings and other maintenance expenses.
Yes. So that we expect like last year, our entire CapEx was INR 35 crores, CapEx outflow, but that also included some sort of expansion -- this expansion project, some of them we completed in April, May, also. Some CapEx continued into April and May. So I would say, from those projects -- so this year also, we expect overall INR 30 crores, INR 35 crores.
Next question is from the line of [ Om Prakash Dhoot ], an individual investor.
[Foreign Language]
[Foreign Language] That is a better indication of the company is performance.
[Foreign Language]
Next question is from the line of Aditya Khetan from SMIFS Institutional Equities.
Sir, you had mentioned to an earlier participant that this INR 35 crores CapEx in this fiscal FY Q4, you had some expansion also which were going on. So which expansion was this, sir?
No, no. What I meant was FY '23, we finished the majority of our -- both the new expansion projects, right, the nitrile latex in Valia and for a synthetic latex in Taloja. And most of the projects were capitalized and the plant was commissioned. But there were still some equipments like in finished goods storage tanks and a few other things that actually were installed in April, May and June. So they did have an impact on the production, but we needed them. So the same CapEx about -- I don't know exactly Sachin do you recall, but I think about INR 10 crores, INR 12 crores would have been spent from those expansion projects that came into Q1 of this year, this financial year.
Right, INR 12 crores to INR 15 crores.
INR 12 crores to INR 15 crores. Yes.
Okay. And sir, into the nitrile latex also, you had mentioned that you have launched some new grade. So sir, can you elaborate more. So it is a simple grade as compared to our current grade, which we are making or it is some new grade, which has some higher value addition or improved, you can say, some mix is there into this?
Yes. Look, there are different types of gloves. One is, I mean we'll get into those technical details if you want, but just very simply, there are different types of gloves like examination gloves, surgical gloves, industrial gloves. Industrial gloves also used for different applications. So depending on the application, there are different tweaks required to our latexes. Obviously, the large volume is examination gloves. It's what mostly doctors or dentists and all wear, that's the largest segment, and that's where the most of the volume comes from.
So when I say new grades, it's for other types of gloves, which obviously are higher value addition, fewer companies making those kinds of gloves. Because we -- one of the advantages of having -- not having a very large capacity is that we can cater to these kinds of specialty niche applications, which are certainly higher priced gloves and higher value.
Okay. Good. Sir, at current -- so depressed prices of nitrile latex, what sort of peak revenue we can make at peak utilization levels of nitrile latex?
I mean 50,000 tonnes is our current plant capacity. So I think we can -- about INR 300 crores -- INR 300 crores, INR 350 crores.
INR 300 crores, INR 350 crores. And sir, the remaining so 35 to 40 -- remaining so 35,000 tonnes expansion that was NBR latex and all, how much that can contribute to top line?
It would be another INR 230 crores, INR 240 crores -- INR 250 crores, close to INR 250 crores. But as I said, nitrile latex, I mean, I've taken last year's prices, which has really been the lowest ever. So the last 1.5 years. So we expect that, that will also increase.
Top line guidance, which we had given earlier.
Yes.
Okay. And sir, just in terms of per kilo, I know, sir, so we don't mention this, but earlier, like so when we compare the nitrile latex business, as compared to our other traditional businesses like the styrene-butadiene latex, [ ABS ] latex. So in terms of per kilo, is it like -- is it a superior or is it lower? In terms of per kilo margins, if you look at?
Nationally, it was always higher during COVID and pre-COVID. During COVID, of course, it was very high. But pre-COVID also, it was always 10% to 20% higher. In the current context, it's lower. That's the problem or about the same or a little lower. So that's the issue.
So sir, this is lower also so by -- if suppose if the overall business say at EBITDA level if it is at INR 15 per kilo, how much would -- so the nitrile latex would be commanding per kilo margins?
We don't give those kinds of numbers on per kilo margins.
And sir, so this INR 600 crores of top line, so what sort of margins like we are expecting on this?
When we started the -- I mean, when we -- as far as -- when we started it -- when we started the project, obviously, our intention was about 15% EBITDA margin at least. That was the plan based on which we invested this INR 200 crores or closer to INR 200 crores.
Now has that plan changed because now we are -- we'll be sure we will not be making that sort of margin. Any sort of change in that? So what margins are you all targeting internally?
We have certain internal targets, but as I said the market has to allow for those kinds of margins, no matter what we target. That's a different issue. So as I said, what we can do is take actions and steps based on what's in our control and what's in our control is once we are done with the synthetic latex capacity in Taloja, then one thing we could do is repurpose our nitrile latex capacity to make other synthetic latexes in that capacity, at least partially.
Suppose if we go towards that...
Khetan, sorry to interrupt. Could you please return to question queue for follow-up questions as there are several participants waiting for their turn.
Next question is from the line of Prathamesh Sawant from Axis Security Limited.
So just wanted to understand, sir. So when we say that we are seeing demand, but at the same time, there is no strong realizations. So aren't those two statements contradictory by themselves because if there was strong demand, we could have seen a better realization. So what exactly is happening because are the prices been dictated by the international players?
Yes. So for nitrile latex, for example, so demand -- I'm not saying the demand is strong. In fact, as an industry, it's obviously down. But since we are starting from -- or we started from a very low base, it's easy to increase volumes by giving -- by proving that your product is as good and in some cases, better, but you still have to give the price that is available, that is there in the market, right? We can't charge 20%, 10% higher than what the price is in the market. So we're not able to get that kind of premium on it.
So when I say demand is there, I mean, the market is there for nitrile latex, specifically. As far as the other products are concerned, we are growing with the market and better, and that's how we've been able to get 34% growth Q4 over Q4 of last year. The combination of both these.
[Operator Instructions] Next question is from the line of Priyank Chheda from Vallum Capital.
Just a clarification, sir. Synthetic latex, Taloja facility, you said the utilization were 45% or 65% for the full year.
So I said it's about 45% for the full year average. But obviously, we have grown, right? The first month was much lower, demand went up and so on. So I think at the peak, we were at 65% or so in the last, I think, 1 month in the last quarter.
Correct. And last year, we were at 65,000 tonnes as a capacity. So what would have been the utilization side last year on that capacity, synthetic latex?
The old capacity is at 100%.
100%. Okay.
Yes. The old capacity is 100%, and we added another 35,000 tonnes sort of 100,000 tonnes. So when I talk about capacity utilization, it's the new 35,000 tonnes.
Right. And then just, again, clarifying the styrene rubber plant in Taloja as well as nitrate rubber plant in Valia, we are running at full capacity?
Yes. Sorry, the old plant of synthetic latex in -- sorry, what was the question in Taloja, your voice was not very clear.
Taloja high styrene rubber plant as well as...
Yes. High styrene rubber plant is not running at full capacity. Nitrile rubber plant in Valia is running at almost full capacity. The high styrene rubber plant, as we have mentioned before, it's -- our capacity is quite high, but we have been running at 50%, 60% because the market is not there. It's kind of flat for the last 3, 4 years, and we are the only player in India. So we are running at the maximum level that the demand -- that demand is there for the market.
And just the last question from my side. So nitrile latex, we understand the glove industry has been into overcapacity supply. So the correction at that level -- at the industry level on the glove side will take -- will lead to higher utilization for nitrile latex, while for synthetic latex, which is the combination of multiple products, what can lead to high utilization over there?
Well, same thing, right? Because I think if you see what happened in Kumho was that there are lot of people who put up gloves facilities very quickly because those are easier to put up glove lines than latex plants. But at the same time, a few players in China back in 2021, started building latex plants as well, and most of them were -- or some of them were the glove manufacturers so that they could secure their raw materials. And they were able to do it very quickly.
So they built very large plants. I think most of it is to do with China. And of course, the rest of the current players in the market that are out of Korea, Japan and Malaysia. They also announced many capacity expansions. A lot of them have been put on hold now, but they also expanded capacity to some extent. So overall, capacity did expand for the glove industry, for glove-makings as well as for nitrile latex.
And what would be the gap versus the supply versus the demand, the gap which we should think which would get existed over a period. The supply versus demand in terms of tonnes, if you have any sort of sense on that?
I don't have exact tonnage data, but I can tell you in terms of percentage, as I mentioned to the previous caller that typically healthy margins are achievable when capacities are at between 80%, 85% and 90% -- between 80% and 90%. Clearly, even in the current context, both gloves and latex, the capacity utilization is below that. Exact numbers are very hard for anyone to kind of get absolutely recent data, but you can judge from the pricing and the margins that we have not reached a healthy sustainable capacity utilization level yet.
And this would be the case for even the Chinese players who would have added the capacity, even they would be running at lower utilization?
Yes, probably, yes. Not that we are running at high utilization -- see it's not very -- it's easy to run a high utilization. If I give a price or if we give a very low price to somebody, we can utilize our entire capacity. So maybe they're running at high -- some of them are backward integrated also. So maybe they're running at full capacity, but the point is that the pricing does not allow any of us to make good margins yet, healthy margins.
Next question is from the line of Ankit Kanodia from Smart Sync Services.
Sir, we have not mentioned anything about ApcoBuild in the last few con calls. So what is the progress on that front? How is ApcoBuild doing? Because since last 5, 6 years, you have been saying that you are getting good growth. But from a total revenue perspective, I still think it is not adding too much, right?
Yes. I mean it's still a small portion of our overall revenue, of course, so that, therefore, we don't focus too much on it. But we were growing slowly. And this year also, I think we have had a reasonably good growth. Sachin, would you have a percentage growth in terms of revenue for ApcoBuild or for our B2C business, about 18% was it?
Just -- yes, it is around 18% to 20%.
What would be its total contribution to the revenue?
Sorry, What's the question?
Roughly total contribution to revenue, ApcoBuild's contribution to revenue, total revenue?
Very little. We don't report it. So you can imagine it's in single digits, right?
Yes, it's in single-digit. And any new geography because we were majorly into the western part of the country with respect to ApcoBuild? Have we added any...
We're going deeper into those same states. We've added 1 or 2 -- so we're in MP, Gujarat, of course, Maharashtra, Rajasthan a little bit now and 1 or 2 southern states as well Karnataka. But we are going deeper into, for example, we were weak in East Maharashtra, so we're focusing on Nagpur in that area. Similarly Gujarat, we have added people in 2 or 3 different cities. So going deeper into these states because the opportunity is still -- we are learning growing organically, but profitably.
Sir, and what is your view on the overall market of this product and in terms of competitive intensity?
So it's a very intense market in terms of competition because there are a lot of players, but also construction chemicals is a little misunderstood in the sense that there are so many different -- there are, of course, large companies that pretty much have everything, they do everything for everyone. And you know some of the large brands, but there are many niche companies, and we are also -- we are focusing to be a niche company where we are utilizing our expertise into polymers and really focusing on products that we understand and working on waterproofing, repair work and tiling work where we really are gurus at chemistry in many cases, we're backward integrated.
And in other cases, we do outsource some amount, but again, we control the technology there. So we're focusing on our game and not really looking around because we think we have enough value addition and enough -- what's the word knowledge about polymers. So we are utilizing that to grow in the B2C space in construction chemicals.
[Operator Instructions] Next question is from the line of Bijal Shah from RTL Investments.
So a couple of questions. First one, when I look at on a quarter-on-quarter basis, your gross margins are down by almost 400 bps. So this gross margin pressure is a function of, are you seeing some pricing pressure in any particular segment? Or is it just a function of mix where nitrile latex, there the margins are lower, that contribution has increased or some other segment contribution has increased?
So nitrile latex certainly has put significant pressure on the overall company margins. In addition to that, as I said, in last year, there was still -- the NBR margins were still higher because of higher freight rates and so on. So the NBR margins have been lower as well. China, as I said, has been also not doing well. So a lot of NBR gets dumped into India when that happens. So NBR and nitrile latex is the main reason.
The other is, in general, post-COVID, we had a couple of good years, right? So margins have been a little bit under pressure, but partly us as well. I wouldn't lie. We had to achieve -- we had this additional capacity utilization, and we went for growth. So we want -- and therefore, we pushed for 28% growth this year, which is fairly commendable and we exceeded our expectations on all fronts, except nitrile latex, I would say, in terms of volumes.
So we're very, very happy with where we are. We have also done it in a healthy way where we are almost net debt free or net long-term debt free anyway. And quarter-on-quarter, margins go up and down. They may even go lower, they may go higher. But I think for the year, we expect margins -- this has been a challenging year. And I think when the market turns, when we also reach good capacity utilization levels, I think things will only look better. This is our overall outlook at least.
Sure. Just a follow-up. On the paper segment, again, there was some pressure on margins there because both you and the competitor had expanded capacities. So how are you seeing the situation there?
Again, yes, compared to last year, there has been -- we have both expanded capacity, and there has been some pressure on margins. But as I said, these kinds of cycles happen. In our kind of business, we can't linearly expand capacities. So capacity, there's a step jump. So when that does happen, for a year or 2, margins do fall, and then once good capacity utilization levels are reached, then again, margins are healthy for a few years and the cycle starts again. So the good thing is largely there are two players in this market. So those kinds of cycles will happen. And yes, there is -- to answer your question directly, yes, there has been -- the margins in paper as well has been lower than previous years.
And do you see it stabilizing in FY '25 or we will need to give it one more year?
Hard to say. I would think so. I think FY '25 should be a little better for paper. That's my view, but difficult to predict.
Ladies and gentlemen, that was the last question of the day. I now hand the conference over to Mr. Sachin Karwa for closing comments. Over to you, sir.
Thank you, everyone, for joining Q4 conference call. We have finished the year with good volume growth and impressive export growth in spite of challenging market conditions. In FY '25, we will be focusing on increasing the volume, capacity utilization and improving margins. We look forward to see you all in Q1 of FY '25. Till then, take care and bye.
Thank you. On behalf of Apcotex Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.