Ester Industries Limited (ESTER) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1 FY27 earnings conference call of Esther Industries Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Sharma from AdFactors PR. Thank you, and over to you, sir. Thank you, Sagar.

Good afternoon, everybody, and a very warm welcome to you all. Thank you, everyone, for participating in the earnings call of SR Industries Limited for the first quarter ended 30 June 2026. On the call today, we have Mr. Vaibhav Jha, CEO, Mr. Pradeep Rustagi, Executive Director, Corporate Affairs, and Mr. Saurabh Agrawal, CFO of the company. The management will take us through the operational and financial performance for the quarter, following which we will open the forum for the question and answer session. Before we begin, please note that 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. The statements are not a guarantee for future performance and involve risks and uncertainties that are difficult to predict. And now request Mr. Vaibhav Jha to take us through the company's performance. Thank you, and over to you, sir.

Thank you, Amit. Thank you, everyone, for joining us today. I will take you through the industry environment and key business development during the quarter, following which Saurabh will walk you through the financial performance. I would first share with you a short perspective on the industry landscape before I move to company-specific key updates. The operating environment for the Bopet film industry continued to improve during Q1 FY27. Global prices of Bopet have seen stability due to tighter trade flows, raw material shortage, as well as increase in raw material and freight costs. At the same time, the disruptions and uncertainties caused by imposition of reciprocal and punitive trade tariffs by USA during Q2 and Q3 of FY26 have largely moderated, subsequent to rejection of such trade tariffs by the Supreme Court of USA. India now enjoys a favorable import tariff scenario for imports into U.S. This has resulted in regaining of lost market share in U.S. between Q2 and Q4 of FY26 in this quarter. We continue to see strong structural tailwinds emerging from the circular economy. The implementation of plastic waste management rules and the increasing requirement for the PET and BOPET films, which stipulated post-consumer recycled content, are creating additional demand opportunities for ARPET and recycled content BOPET films. Amongst the various films and substrates used for the flexible packaging, Bofet film is the only food-grade approved substrate and the only substrate which can have sufficient post-consumer recycle content to help brands meet their sustainability targets. Further, new capacity additions are projected to be moderate and evenly phased out given the volatile scenario experienced by the industry players during last 2-3 years. Overall, while industry cycles will continue to influence the business, we believe the combination of improving industry discipline, currency in international prices, and growing demand for recycled content products provides a more favorable operating environment for the Bopet industry. Sustainable solutions are at the core of Esther's strategic growth platform. The regulatory environment is becoming increasingly supportive of recycled materials. In India, recycled content requirements under the Plastic Waste Management Framework are stipulated to increase progressively. For Esther, this creates an opportunity to participate across multiple points of the value chain. Esther has invested in creating recycled PET capacities of 30,000 tons per annum. This enables us to produce recycled PET for use as feedstock in the recycled content fence. In addition, this gives us a platform to supply best-in-class bottle-grade recycled PET to prestigious brands, as well as textile-grade and film-grade recycled PET to various leading customers. We are also building capabilities to participate in higher-value circular applications over time through Elite. Against this backdrop, Ester continues to strategically transform itself into manufacturer of specialty Bopet films and polymers. The consistently increasing volume and proportion of value-added speciality products and strong business development pipeline of new products within speciality polymers showcase this key strategic focus. Exploring new customers in new markets in various other geographies continues to be highest priority. We continue to invest rapidly in R&D to innovate at a rapid pace and fast-track our journey to speciality manufacturer. These strategies are aimed at improving realizations, enhancing the overall product mix, and importantly, reducing earning volatility arising from the inherent cyclicity in the commodity BOPIT film products caused by demand supply imbalances from time to time. Now, moving on to the key business updates, starting with the polyester film segment. In this segment, we delivered a healthy improvement in the performance during the quarter. Consolidated film volumes increased 2.7% year-on-year to 22,120 metric tons, while film segment revenue grew by approximately 38% to 399.5 crores. The significant difference between volume and revenue growth reflects the improvement in realizations and margins, as well as the continued improvement in our product mix. Consolidated capacity utilization also improved to 84% compared with 82% in Q1 FY26, supported by the better market scenario. A particularly encouraging development was the continued growth in our VAS Films portfolio. VAS volume increased 23% year-on-year to 6,368 metric tons in this quarter, and their contribution to total film volumes increased to approximately 29% from 24% a year ago. We consider this shift in mix to be an important indicator of the progress we are making in As the volume and proportion of vast products increases, our ability to compete is increasingly based on product performance, satisfying new application requirements, and customer qualifications, rather than being driven purely by price. Encouraged by the recent performance and positive outcomes of our strategic focus, we are targeting proportion of vast products at about 50-60% over the next 2-3 years. We will therefore continue to invest in product development, customer approvals, and capabilities to serve more specialized applications. CHIP business revenue during the quarter was around Rs. 5 crores, driven by higher third-party sales volume. In this quarter's performance, we saw significant improvement in realizations driven by growth in vast sales as well as favorable industry dynamics. Consolidated film revenue grew by approximately 38% year-on-year, while the segment delivered around 10% EBIT margins, supported by better throughput and a higher contribution from vast products. Going forward, our focus will remain on maintaining price discipline, improving utilization, and increasing the volume and proportion of vast products. We believe this will help us improve the overall quality of earnings and build greater resilience in the film business through industry cycles. Now turning to specialty polymers. The segment reported consolidated sales volume of 725 metric tons during the quarter compared with 954 metric tons in Q1 FY26. Consolidated revenue stood at 32.7 crores compared with 48.1 crores in the corresponding quarter last year. While the overall volumes and revenue were lowered due to demand pressure in one of our high-margin specialty products, the profitability of business improved meaningfully, with EBIT margin increasing from 31.7% to 45.3%. This was primarily driven by a better product mix during the quarter. We continue to focus on optimizing the product mix and expanding the portfolio while maintaining the healthy margin profile of this business. The growth in specialty polymers will be driven by increase in volume with a mix of high-margin specialties as well as mid-margin value-added products or WAP. The focus on WAP will help us improve operating leverage and cash flows while also diversifying our business while the growth in high-margin specialties will provide the profitability buoyancy. However, given the strength of our business development pipeline, we expect to recover the revenue growth in this business by the end of this financial year. We are targeting growth at a CAGR of 20% over next 3-5 years in the specialty polymer segment. Coming to the RPED business, consolidated volumes increased 19% year-on-year to 1,394 metric tons, while revenue grew 24% to 17.5 crore during the quarter. We continue to see RPED as an important part of our broader film strategy, as well as an important sustainable solution that we offer to our customers at large. Coming to Esther FilmTech, we saw meaningful improvement in the business during the quarter. Capacity utilization reached approximately 83%, the highest level achieved so far, while sales volume increased 22.7% year-on-year to 9,807 metric tons. More importantly, the business is now beginning to demonstrate the better operating leverage that comes with higher capacity utilization. The improvement is being supported not only by higher throughput, but also by better production efficiency and a healthier product mix. As we continue to ramp up utilization and increase the contribution from VAS and recycled content products, we see Esther FilmTech becoming an increasingly relevant part of the consolidated business. Our focus will remain on continuing this ramp up, improving the mix, and translating the improvement in operating performance into consistent cash generation. I would now like to touch upon Elite, our 50-50 joint venture with Loop Industries. We see Elite as strategically different from our existing recycling activities, as the objective is to establish a chemical recycling platform for polyester textile waste and enable textile-to-textile recycling. The project is progressing through the engineering phase. The free study has been completed by Tata Consulting Engineers, and Toyo Engineering India has been appointed for detailed engineering. Land acquisition is also progressing and is expected to conclude within the next two months. The facility is targeted to become operational in CY20-2028 and will use LOOP's proprietary depolymerization technology to convert 100% textile waste streams into virgin-quality monomers, which will then be polymerized into virgin-quality polyester resins. An encouraging development for Elite has been early and regular customer validation. Following Nike's earlier commitment as an anchor customer, our JV partner Loop Industries has now secured a letter of intent from a leading global sports and athletic brand for the potential offtake of up to 15,000 metric tonne per year of Loop Pet fiber grade resin annually under a multi-year commercial framework. The resin will be supplied from the upcoming manufacturing facility in Gujarat to be operated by Elite, the 50-50 joint venture between Esther Industries and Loop Industries. With commitments from these marquee global brands, a substantial portion of the planned capacity is now covered with contracts and LOIs well ahead of commercial startups. We view this as an important validation of both the technology and the market opportunity, and it reinforces the growing interest from global brands in circular textile-to-textile recycled polyester. We will continue to progress the project through the remaining qualification permits, approvals, and execution stages in a disciplined manner. Looking ahead, our priorities remain clear. We will continue to focus on sustaining the improvement in film realizations and capacity utilization, increasing the volume and proportion of vast products, and expanding the specialty polymers through new products, customers, and geographies. At the same time, we will continue to scale our RPED capabilities and integrate them more closely with BOPED film business, while progressing elite in a disciplined manner towards its targeted commissioning in calendar year 2028. With that, I hand over to Saurav to take you through the financial performance. Over to you, Saurav.

Thank you, Babav, and good afternoon, everyone. Let me take you through the financial performance for the quarter, after which we will open the floor for questions. I will begin with the standalone performance of ASTRA Industries. Stand-alone total income for Q1 FY27 increased 22% on a year-on-year basis to Rs.347.7 crores, compared with Rs.284.9 crores in Q1 FY26. The improvement was timely driven by the film segment, where higher realizations, better capacity utilization, and an improved product mix supported the revenue growth. Standard on EBITDA increased 25.2% on a year-on-year basis to Rs. 40 crores, with the EBITDA margin improving to 11.5% from 11.2% in the corresponding quarter. Profit after tax increased 50.5% to 14.5 crores, compared to Rs. 9.6 crores in quarters on FI 26, resulting in an improvement in PAT margin from 3.4% to 4.2%. Overall, the standard of business delivered improvement across revenue, operating, profitability, and the bottom line. Coming to Esther FilmTech, our 100% subsidiary, the quarter marked a significant improvement in the financial performance of the business. Sales volume increased 22.7% year-on-year to 9,807 metric tons, while the total income increased 62.7% to Rs. 159.6 crore. EBITDA improved to Rs 19.5 crores compared with a loss of Rs 2.7 crores in Q1 F526, resulting in an EBITDA margin of 12.2%. PAT also turned positive at Rs 4.7 crores compared with a loss of Rs 16.5 crores in the corresponding quarter last year. As Weber mentioned earlier, capacity utilization in Boppet Film in Estre Industries stood at 85%. Capacity utilization in Estre Film Tech reached approximately 83%, which is the highest level so far. This resulted in a consolidated capacity utilization standing at 84%. Coming to the consolidated performance of the company, consolidated total income increased 27.4% Year-on-year to Rs.441.9 crores compared with Rs.346.9 crores in Q1 FY26. Consolidated EBITDA increased 103.4% to Rs.58.9 crores with EBITDA margin expanding to 13.3% from 88.3% in the corresponding quarter. Profit after tax turned positive at Rs.18.6 crores compared with a loss of Rs.7.2 crores in Q1 FY26. Paid margin stood at 4.2%. The improvement in consolidated profitability was broad-based with all businesses, including polyester chips, polyester film, specialty polymer, ARPET, contributing meaningfully to the operating profit through polyester film segment remained the principal contributor. Within the film segment, consolidated revenue increased approximately 38% year-on-year to Rs. 399.4 crores, while segment EBIT increased significantly to Rs. 39.1 crores from Rs. 6.9 crores in quarter 1 FY 26. Consequently, EBIT margin improved to 9.8% from 2.4%. Film volumes increased 2.7% year-on-year to 22,120 metric tons, while ARPET volumes increased 19% to 1,394 metric tons. Specialty polymer SBU also continued to demonstrate the strength of its business model. While volumes and revenue were lower year-on-year, segment EBIT stood at 14.8 crores, with EBIT margin improving significantly to 45.3% from 31.7%. This reflects the continued strength of specialty polymer business and its contribution to the overall quality of earnings. As on 30th June 2026, the gross total debt of the company was Rs.722 crores and liquidity of Rs.236 crores. The company aims to gradually deliverage in the coming year by paring its debt on an overall basis. Overall, the company has demonstrated resilient operational progress with enhanced margin and profitability during the quarter and setting the stage for improved profitability in the coming quarters. This concludes our opening remarks. We can now commence the question and answer session. Thank you.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, you may press star and then 1 now. Your first question comes from the line of Shlok Patel with Benfler Finance. Please go ahead.

Hi, am I already?

Yes.

Firstly, congratulations on a good set of results. I just wanted to know that can we maintain similar run rates for the rest of three quarters, and were there any one-off gains in this quarter?

Thanks for that question, Shlok. So, yes, as you must have seen in the financial statements, there is another income component. Other than that, I think the industry structure is quite favorable to us on the Bopet film industry side. We are seeing very stable and reasonably priced global markets. We are seeing that there are enough opportunities to place volume profitably in India as well as across the world. And we are also seeing opportunities to be at a sustained higher volume compared to our past quarters because of the current supply-demand balance in the industry. So, all these give us confidence that we should have sustainable good earnings going forward, not only for the next three quarters, but I would go on to say for next six to eight quarters.

Okay, thanks. That helps. And another question, just wanted to know about our goal for next two to three years. As you said that now, the cyclicality has moved away and the industry is improving now. And once you've mentioned that with our existing facilities, we can generate some 2,000 to 2,200 crores of revenue with our business segments. And just wanted to understand that which segments will drive these revenues and how will margins come up in next two conciliers as our product mix from value that products will increase a lot and also our existing capacities will get utilized.

Yeah, so you have answered the question in your question itself. So, this increase in the revenue will be driven by multiple factors. So, one is the price itself. Like I said, that we are expecting that the global prices to hold at a higher level than what we have seen in the last two, three years. So, that itself is going to lead to improvement in revenue. Other than that, capacity utilization is going to improve not only in films, but also in specialty polymers going forward, as well as RPET. Third, as the share of specialty products increase in our product mix, these specialty products are usually much higher priced than the commodity products. So, as the proportion increases, it will automatically lead to increase in the revenue because of the increase in the high price sales that we would be doing. The fourth factor which is playing out is that as we march towards operational excellence, we are able to run the plants more efficiently and are able to derive more tonnage out of the same asset class that we have. So, even that is going to lead to, you know, better production and better sales volume. And all of these put together are going to result in increasingly improved top line.

Okay. So, is it fair to assume that in the next two to three years, we can achieve that target of 2,000 to 2200 crores?

Yeah, I think we are steadily marching towards that, and we should definitely be hitting there in the next two to three years.

Okay. Thanks. I'll get back to the team.

Thank you. Participants, to ask a question, you may press star and 1 now. Your next question comes from the line of Saransh Gupta with Swan Investments. Please go ahead.

Thank you for the opportunity, sir. I hope I'm audible.

Yes, Saransh.

Yeah. Congratulations on a decent set of quarters. Sir, I had a few questions. First of all, I just wanted a ground reality on the China anti-involution policy that they have implemented. Like, have the imports declined, and is that leading, is that benefiting us in price bonds? Okay.

So, let me address this question. So, see, in general, what has happened is that the global price situation has improved simply because the trade flows are restricted right now, right? And what we are seeing is that this set of factors which are playing are going to sustain. So, multiple factors are leading to stability in the prices that we are seeing right now globally and also in India. In India specifically, if you see, there has been hardly any capacity addition in the last couple of years. The capacity addition, I would say, has lagged the demand growth. And we see this trend lasting for next two to three years. So, especially in the local market, we see the demand supply balance being strong. And similarly, in global market, we see enough opportunity for Indian manufacturers to place their volumes profitably.

Understood, sir. Sir, and what were the spreads last quarter?

So, spreads last quarter were in the range of 28 to 30. When I say spread, I mean VA, value add over raw material for 12 micron film.

Understood. So, for the base Bopet film for 12 micron, the price would be around 7 to 8 rupees for the last part.

No, I said 28 to 30 rupees

for 12 micron Corona commodity film.

And, sir, we charge a higher premium of around 20 to 25 rupees on the value added, right?

Yeah, so value-add products range from, you know, range from 25 rupees to much, much higher levels, because it's a mix. So, the more specialized the product, the more value-add we are able to get out of it.

So, there are offline quoted products which command higher premium, much higher than the normal value-added products.

Understood, sir. So, sir, with this China anti-involution policy, will it be fair to assume that these spreads can sustain for the year-end?

See, like I told you that we are very positive that for next six to eight quarters, the global and domestic supply-demand balance is going to hold. And I think that is going to give us some respite and is going to keep the margin steady.

So, I just wanted to understand, like, currently, our value-added contribution in this quarter was 29%, which has been highest since the implementation. So, what can the contribution be by the year-end? Is it going to be in the similar levels? Like, we are aiming for 50 to 60 in the next 2-3 years. So, but I just wanted to understand, like, with Expose being opened up for US as well. So, what can be the contribution by the year-end?

See, we are seeing up to 35% contribution of VAS product out of our own, up to the overall portfolio by the quarter end. I mean, in the exact quarter.

Understood, sir. So, just one more question. Like, in this quarter, our RPAT volumes declined sequentially. So, I just wanted to understand, like, what led to that decline?

See, this is a temporary, I would say, slowdown, because what you are seeing is external sales, and the external sales had to take a hit because the demand, internal demand for ARPET in our packaging films increased. But we see that this situation should change in this quarter, in September of this quarter, and this trend will be more visible in the quarter of October to December, wherein you will see a much larger RPET volumes being sold externally.

Understood. So just one last question, then I'll come back in the queue. Sir, with our elite project being operational in the calendar year 28, and by in the next two months, we'll have the land bias with ourselves. So, I just wanted to understand that there are other competitors as well who are getting into the same segment of textile to textile recycling, and they have already set up the capacity. So, will we be a bit late, or will there be a competition by the time we are ready with the capacity?

See, first of all, the market for this type of product is very large, and the demand is very high, so the space is there for many, many players. Number two, the technology is fundamentally different, and what we will be able to do is we will be able to process We have to process low-cost feedstock, which cannot be processed by our competitor technologies. And that is the differentiator for us and which is going to bring in the required economies and is going to create a much larger appeal for our customers. So, just to expand on this factor a little bit more, the competitor technologies usually look for textile waste which are close to 100% polyester. And there is a difficulty in processing when there is a blend along with polyester. And if you look at any practical textile waste, it is always a blend of polyester, whereas our technology can manage any kind of blend with any kind of color, pigment, dyes, and give out virgin-like quality. Also, the maturity of this technology is far, far higher than And our competing technologies in most cases, you know, Loop has been working on this technology for a long period of time, for more than 10 years. They have scaled up to a, you know, small-scale plant in Canada, where all the practical textile waste has been processed, all possible Combination has been checked, and not only by us as a joint venture partner, but also by these customers who are going ahead and giving large volume contracts to us one and a half years ahead of the planned commissioning. So, the majority definitely is at a different scale, and therefore, I would say the production confidence in terms of being able to process the waste and hitting the rated capacity is much higher in our case. And the economics are much more, I would say, we are more confident about economics in our case than the competing technologies.

And there is another point. We are targeting to park all our volumes coming out from the elite project outside of India. We are not sure or we are not aware of the marketing strategy of the competitor. But for us, the entire production is going to be exported.

Just to close it up, so it will be a good assumption that we will also have a better premium to the market at that moment when we are available with the rest of the day. Thank you, sir. I'll join back, Becky, and all the rest.

Thank you. The next question comes from the line of Raj Shah with Fitent AMC. Please go ahead.

Thank you for your opportunity. So, I wanted to understand from a 2-3 year view, how do you see the ARPET volumes and now we have that we have a 28,000 capacity, for the next 2-3 years, do we plan to reach optimum utilization of and revenues of close to 4% and what can be the margins at both ends?

See, I think, let me clarify about RPET. So, the major logic of investing in RPET for us was house consumption. However, we saw a demand for high-quality RPET in the market, which was not being fulfilled by many of the existing players. And therefore, we thought of utilizing that opportunity to make bottle-grade ARPET and, you know, other film and textile-grade ARPET. But that is, to be honest, more of a secondary objective for us. Our objective is to derive value with our in-house consumption. Having said that, I think the right measure of knowing how we are doing with respect to ARPET would be the value generated by ARPET Through external as well as internal utilization. External sales as well as internal utilization. So, let me tell you that, you know, giving you approximate numbers right now, we are producing any much larger volumes than what we were producing last year. And we are extremely confident that we will hit more than 100% of the rated capacity by the exit quarter of this financial year. So, a lot of it won't be visible in the financial statements because it would be used internally, but a large part will be observed in the external sales. But, like I said, the logic for us is the internal consumption as much as the external sales.

Understood. And on speciality, we saw margins up close to 12-13% on a year-on-year basis. So, I mean, these margins are estimable at these levels because the value added share is increasing? Or what could be the fully added kind of margins for extra 20%? Assuming, I mean, the price is clear at these levels.

Yeah, see, right now the share of WAP is at a much smaller scale because we have built a pipeline and this pipeline takes some time to mature. And therefore, the influence of mid-margin WAP is not too apparent. But you are right. As we go forward, we are going to see some moderation of the percentage margins, right? Because the mid margin is going to pull down the high specialty margins a little bit in percentage terms. But because of the improving operating leverage, we are going to see better financials in terms of EBITDA or EBIT. Because we are essentially just, you know, improving the capacity utilization and improving the operating leverage. But I think we should focus more on the absolute top-line growth as well as absolute EBITDA growth and EBIT growth.

Understood. And lastly, in terms of debt repayment, so what is the targeted debt repayment for this year? And for the elite also, would we require additional debt?

So, this year, the debt repayment target is around 100 crores. And as far as Elite is concerned, as you are aware that it's a separate project other than ASTAR. It's a joint venture between Loop Industries Canada and ASTAR. So, there is going to be additional debt which will be raised in the JV company, not in ASTAR balance sheet.

And it will not be consolidated with ASTAR because it's a 50-50 JV.

Correct, correct, understood, understood. Anyway, X of the JV, there is no major CAPEX for FY23.

Sorry, can you repeat the question?

X of the JV, there is no major CAPEX for FY23 in the standalone and quality.

No, no, no. So, apart from our sustenance and maintenance CAPEX, we are not cutting any major CAPEX.

Okay, thank you so much.

Thank you. The next question comes from the line of Charchit Malu with Genuity Capital. Please go ahead.

Hi, sir. Thanks a lot for the opportunity. Sir, can you give me the split of other income, like the 10 crores?

So the other income basically comprises of our income from our investments, and as you know that we have got a total cash available with us in plus of 200 crores. That is number one. Second, the other income also comprises of the favorable gains on the foreign exchange, which we have got, which was a negative in the last quarter.

Okay. And just if you can give the guidance for FY27 and FY28 that is revenue bid and pack?

Can you repeat the question? I'm sorry, the line is a little disturbed.

Can you give the guidance for FY27 and FY28 of revenue bid and pack?

I think what we can say is that we are looking at sustainable growth in revenues and our profitability. But at this point in time, we would just hold back from giving very firm guidance on the specific revenue and EBITDA numbers.

Chachit, does that answer all your questions?

Yeah, yeah.

Thank you. We remind all the participants, if you wish to register for a question, you may press star and then one. The next question comes from the line of Saakit Kapoor with Kapoor Company. Please go ahead.

First, coming to the other income part, Sahrabi, you mentioned this is out of the tragedy operation. Can you elaborate more, since we are also on a net of, how do this income got generated, and what is the forex exchange benefit included into it?

Yes, so the other income, Saketji, if you remember, in the last quarter, there was a pressure on the other income in terms of negative foreign exchange loss, as well as we also had some negative return on our mutual fund investments in the last quarter. And in this quarter, we have a positive return on the investments as well as a favorable gain on a foreign exchange, because of which the other income is looking on a higher side. But again, this is a one-time gain. On a sustainable basis, you are not going to see this high number on a quarter-on-quarter basis.

Can you give the spread of sustain? How much was the foreign exchange contribution and the treasury? And since we are having debt, what is our book size currency for a mutual fund we have invested into?

The total book size for mutual funds is around 60 crores, and the total FD that we have right now is more than 160 crores. Okay, and what is the clause? Yeah, I will explain. If you remember, Sakeh ji, we have already raised money for the purpose of equity contribution in our joint venture, right? So there was a share warrant which the company has raised, and we have already got the money in our bank account. And so the primary driver for our other income is mainly because of the interest on that piece.

Okay. Do you have the split, sir? How much was from the Treasury and the interest, the FD interest? I mean, I just wanted 9.8 per split between Forex, Treasury, and Forex and the Treasury part.

Yeah. So if you want, I can give you an overall split. So on Treasury, it was around 3 crores. And interest on FD and other investments is around 3.5 crores. And then there is other income, the foreign exchange gain is around 1 CR, and then there is a balance of other income.

Okay. We are saying that we have 100 crore repayment for this year, so what is the current net debt number and what will be the closing balance for the year?

Yes, so our gross debt is 720 crores, which is going to come down by 100 crores. By the end of the year, we will have a gross debt of 620 crores. And the current cash in cash balance, which we have right now is 235 crores.

Okay, so net rate number, we can keep this 230 will be remaining or?

No, so part of this, so as I told you, 140 crores out of this is for the JV. So as and when we invest in the JV, this liquidity will go away. So around 100 crores is what is the sustainable liquidity that we will have.

Thank you.

Yeah, so Sakitji, what I had said was that there has been very few capacity additions, and the capacity additions have lagged the demand growth. So what I mean is demand growth has been more than the capacity additions. So two lines have come up in last one and a half years, but the growth has been far more than the capacity that they brought on streams. We are expecting another two to three lines coming up in next one and a half, two years. But again, if you look net-net, the supply-demand balance is going to only tighten because there is a very strong Bofet demand growth happening in India, and we are seeing some green shoots in Europe also, mainly because of the plastic waste management rules in India, which is leading to the brand switching over from other substrate to Bopet to meet their sustainability targets. And a similar trend has, very early to say, but we are seeing some green shoots of something similar happening in Europe as well. So that is why, you know, the demand growth in India at least is at a much higher level than the capacity addition.

Do you have the number of, for the entire industry, what is the installed capacity for Bofet and the current utilization level for the industry?

The total capacity should be around 1.35 million tons, and the operating rate is well in around, you know, let's say 85% or so, because a lot of it is also exported out of India. And right now, the way trade flows are lined up, Indian manufacturers are going to see enough opportunity to keep sustained levels of profitable exports.

Now, sir, coming to the specialty polymer part, you, I correct me here, sir, you mentioned that our revenue guidance is 20 to 25 percent for this year, or you are committing on the margin part? No, so the 20 percent, sorry, sorry, go ahead, Saketji. Yeah.

So, Saketji, what we were saying was that we are seeing a 20% CAGR over the next three to five years. We are not saying it for this year, mainly because we are seeing some demand pressure on one of our high-speciality products. But having looked at the other pipeline products that we have and the way market is set up, we are extremely confident that we should be gaining the lost demand in terms of sales of other products by the exit quarter of this year. And then going forward, we should be hitting 20% plus CAGR.

So, sir, just to understand further, on a top line of 180 crore for the last financial year, we did 32, 33 crore for the first quarter, and then you are saying that there is some demand issue going ahead. So, what is in the likelihood, this is going to be a flat year then for the specialty parliament with normalized margins going ahead or because these margins are also, I think, because of some product mixed advantage that we got these extra nominal margins of 40% and above. So, if you would just explain to us, where are we heading?

Right, right, sure. So see, what we are seeing is that we are going to be at least at a flat or, you know, get a single digit growth in this financial year. Because a lot of our pipeline is going to mature in the second half of the year, especially towards the last quarter. So we will see improvement in top line as we go through the year, especially as we go into deep into the second half of the year. But going into the next financial year, we are going to see good CAGR revenue growth and profitability growth. And like I mentioned that our focus is on improving the operating leverage here. So while you might see some normalization in EBIT percentage, EBITDA percentage, but absolute number of EBITDA and EBIT should start growing significantly starting from next financial year.

Okay, so just to model it, last year's margins, specialty polymers, we will be able to match those numbers or we can expect some growth there, right?

Yeah, so it would be, either we will be, yeah, so what we are seeing is that we should be able to match and probably clock some single digit growth by the time we finish the year. Yes, because VAP products have larger volume, though the margin might be lower, but volumes are larger.

Right, sir.

Sorry to interrupt, Sakit, sir. We request you to return.

Yes, sir.

Thank you. Your next question comes from the line of Amit Kumar with Determined Investment.

Please go ahead.

Yes, thank you so much, sir. Can you hear me?

My first question is, you know, with respect to raw materials sourcing, two parts to it. One is that, you know, how are you looking at the availability, you know, scenario right now? And second sort of related question is that, you know, a few projects on, you know, PTA, MEG, energy sort of coming in India as well, Yale, IOC, you know, RIL, you know, a few projects in the pipeline. Slightly delayed, what I need to understand, but, you know, something is, you know, coming, some capacity is coming in India itself, you know, this year. So, have you tied up with, you know, any of this, any of these players, any of this capacity, just to sort of localize your, you know, raw material in future and, you know, maybe a little bit, you know, protection from the kind of volatility that we have seen in the past?

So, we have long-term contracts, and we are sourcing all our requirements of PT and MEG locally. So, we have long-term contracts with the suppliers of PT and MEG, which ensures that we generally don't run short of the requirement that we have. As far as the new capacities are concerned, nothing is going to be up and running before December of this year. And the annual contracts that we have, they are January to December. So we are already in discussion with Gail, which is likely to start by the end of this calendar. And the Indian oil will take some more time to start. Reliance is still some time away. On the MEG, there is no new capacity coming up, but all our requirement is getting met from the existing supplies, because polyester film is not a large consumer of PT and MEG, unlike the pet resin or yarn. So we have our raw material tied up, which is getting reflected in the operations of the first quarter, where we did not lose any production because of the availability issues.

All right. So, my second question is just if you can sort of, you know, give us an update on the PWM, you know, waste management rules. What is the, you know, current sort of situation? And so our sort of understanding is that, you know, although the government has sort of implemented those rules, but it's not clear, you know, whether there is, you know, complete, you know, acceptability of those rules, you know, at the industry level. And I mean, there is a little bit of flexibility which is available on, you know, how much of RPEC you need to sort of use now and, you know, how much you can sort of do and you can sort of catch up later or, you know, stuff like that. So, can you just sort of explain what is the current sort of status of the implementation of the rules, basically, in terms of what is there on paper and, you know, what is the situation on the ground, right?

Yeah, sure. See, we need to differentiate on two aspects of the question that you are asking. One is the usage of ARPET in the laminates due to PWMR, and second is what the brands are doing to be better prepared for stricter enforcement of this PWMR. So, the recycled content in the films, you are right that the enforcement is yet to be done, but we work with leading brands who are not going to be non-compliant with these rules, whether the government is strict with the enforcement or not, and this is where the major pull for the recycled pet-based film is coming from. Also, all brands, big and small, are gradually switching, not gradually, but rather rapidly switching from other substrate to polyester film substrate so that they can keep the laminates ready. And in case there is a tighter scrutiny from the government and the compliance is enforced even more strictly, they can rapidly switch to ARPET content-based films, right? So, this is leading to increase in Bopet film demand much beyond what the usual growth that we used to see. So, I hope I was able to give you a perspective on the question that you asked.

Yes, very much. So, thank you so much.

All right.

Thank you. The next question comes from the line of B. Surindra, an individual investor. Please go ahead.

Hello, good evening. Thank you for my taking question. Sir, my question is on RPEC capacity. Sir, what is our rated capacity?

Our rated capacity should be somewhere in the range of 28,000 tons.

So, sir, what is the timeline to achieve that?

So, see, like I explained that we are already running at a very high throughput. It is not very apparent in the financial reports because a lot of it is being used internally as a raw material for our films, right? So, but we should be going beyond the capacity utilization by the exit quarter of the financial year. So, we should be producing more than the rated capacity. That's what we are seeing.

Sir, one more question is that, is there any backward integration for our Terlingala plants?

So, right now, you can call the recycle packed extruder which we have put there as a backward integration, but if you mean, you know, if we have a CP unit, then we don't have anything We are not being localized there, but we are feeding Hyderabad from our in-house capacities of raw materials in Khatima. So that way, to that extent, majority of Hyderabad's raw material requirements are catered in-house.

Okay. One more question on our specialized polymer. Any new invention of this?

So, yes, I think this year also we filed a few patents on new products. So, invention is a way of life for us in the specialty polymer. The challenge is on the gestation period, which is very, very high for such novel inventions. But we continue to invest very heavily in R&D, and we continue to see a lot of patent-worthy invention, and many trade secrets which we don't patent because we don't want the competitors to know about those inventions. But innovation is quite evident in this business.

Sir, one last question. So, we have, this is regarding even sun control, since then paint protection, which is now very coming in the market. Is there a plan to manufacture or something like that?

So, we are looking at various products, and from time to time, we take those decisions. And right now, we don't have any news on this front for you.

Thank you very much, sir.

Thank you. The next question comes from the line of Sakit Kapoor. Please go ahead.

Because we are making in-house, we are able to capture the margins which we would have typically paid to an external supplier. So, to that extent, the margin is credited internally. It is also, most of the times, and majority of the times, cheaper than the virgin raw material. So, that also gets accrued.

Sir, what is the arbitrage from purchasing your raw material or chips from outside and using the R-PED internally?

Sir, we would like to avoid answering specific numbers.

No issue, sir.

Correct, sir.

I got your point. It won't be a competition for the competition. Sir, for spread, you mentioned that our commodity frame has made 28 to 30 rupees for quarter one. So, currently, what is the outlook on the spread, sir? Any color you can share?

Sir, it is similar. It is holding and we are seeing resilience in this kind of VAs. in the in our commodity firm.

Okay, and the utilization, I'll just add, okay, you can only then again, only got two, yeah, yeah, two more questions are there for us.

I really apologize, Saket, sir, but we would be able to take this as an option due to time. That's correct.

Sir, eight points. Thank you.

That was my question, which I was asking at that time.

Yeah, so quarter two from a capacity utilization is looking better than the previous quarter. From Q1. Yeah, from Q1, and you want to answer the second question.

Yeah, Sakhi ji, so in terms of rating, the review is already in progress, and we expect that the rating review will be completed by the end of this month.

And coming to the succession and ownership, both are two different things. Both are two different things. We already managed professionally, and what he has transferred to his son is that their internal family matter.

Thank you. Thank you, and all the best to the team, sir.

Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Vaibhav Jha for closing comments. Over to you, sir.

I would like to thank all our stakeholders, partners, and team members for their continued support, and thank you all for participating in this call. We are pleased with the strong start to FY27, and we are quite optimistic that we will do well during the year and see even better performance during succeeding quarters. For further queries, please reach out to our IR partners at Factor. Thank you. Thank you.

Thank you.

Thank you, all the members of the management. On behalf of Esther Industries, that concludes this conference. Thank you, everyone, for joining us and even our disconnected lines. Thank you.