Kanpur Plastipack Limited (KANPRPLA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1 FY27 Earnings Conference Call of Kanpur Plastic Pact Ltd. Today, we have with us today Mr. Manoj Agarwal, Chairman, Co-Managing Director, and Mr. Shashank Agarwal, Deputy Managing Director. We will begin with opening remarks from the management followed by an interactive Q&A session. Please note that this discussion may include forward-looking statements, which should be viewed in conjunction with the risks and uncertainties that the company faces. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Agarwal, Chairman, Come Managing Director, for his opening remarks. Thank you, and over to you, sir.

Good evening, everyone, and welcome to Kanpur Pacific Park Limited's earning call for the first quarter of the financial year 26-27. Thank you all for joining us today and for your continued trust and confidence in the company. On behalf of Kanpur Plastic Park Limited, I extend a warm welcome to all of you, all investors, analysts, and stakeholders to our earnings conference call for the quarter ended 30th, June 26. The first quarter of Financial Year 27 marks a strong beginning to the financial year for Kanpur Plastic Park Limited. During the quarter, the company achieved two significant milestones. First, by reporting quarterly total income exceeding Rs. 200 crores for the first time. This reflects the resilience of our business models, the confidence of our customers, and the disciplined execution of our teams. Second key milestone during the quarter has been the successful operationalization of our joint venture with AC Goma Italy. Commercial production and sales of premium Tarslan yarn have commenced marking our entry into a new value-added product segment and strengthening our capabilities in technical textile applications. Through this partnership, we are bringing advanced technology and specialized product capabilities into India, particularly in premium polypropylene Tarslan yarns and high-performance applications. Beyond expanding our product portfolio, this collaboration strengthens our technological capabilities and positions as to serve evolving customer requirements more effectively. We have successfully obtained two internationally recognized certifications, global recycle standards called GRS, and ECOTEX, marking a significant milestone in our journey towards sustainable innovation, superior quality, and global competitiveness. These certifications are expected to strengthen our position in market, enhance customer confidence, and support value creation in the coming quarters. Based on the encouraging customer response, we are confident of scaling up sales from the Q2 of the current financial year. The global business environment continues to remain dynamic during the quarter, influenced by geopolitical developments, evolving tariff policies, Volatility on raw material prices elevated ocean freight costs and supply chain disruptions. Despite these external challenges, a diversified export presence, long-standing customer relationships, an agile business approach enabled us to deliver another quarter of healthy growth. Our focus during the quarter remained unchanged. We continued to execute a long-term strategy of strengthening the quality of our business, while creating new avenues of growth. Rather than purchasing growth purely through higher volumes, we remain committed to improving our product portfolio, expanding into value-added applications, and building capabilities that will support sustainable profitability over the long term. FIBC continues to remain the cornerstone of our business. Over the years, we have established enduring relationships with customers across international markets, enabling us to maintain a stable business despite changing market conditions. A deficit by consumer base across Europe, North America, South America, and other international markets continues to provide resilience and balance growth opportunities. Our continued participation in international trade fairs has strengthened our inquiry pipeline and helped us expand our reach into new markets. As informed earlier, the capacity expansion of FIPC to further add up to 6,000 metric tons per annum over the next five years is on track. Construction of a new building is progressing, wherein ground floor has been completed and production started. First and second floor of the building will be completed by the middle of September. While strengthening our core business, we are equally focused on creating the next phase of growth. Our investment in premium poly-popping yarns, technical textile solutions, and specialized applications reflect our vision of transforming Kanpu Prasipak into a diversified industrial packaging and technical textiles company. These initiatives are intending to expand our addressable market while improving product differentiation and enhancing value addition. One of the key strategic initiatives for the company continues to be our entry into the non-woven technical textile segment. Believe, this business offers significant long-term opportunities across sectors, including automotive interior geotextiles, artificial leather, carpets, and footwear, and other textile applications. With commercial production expected to commence during the current financial year, this business will gradually emerge as an important contributor to our future growth while complementing our existing packaging portfolio. The company remains on track to commission the non-owned private facility by the Q3 of 26-27. Our entry into this space also opens up opportunities and select B2C linked applications over time, which can further diversify our business model and create new growth. Drivers. Sustainability also remains central to the way we operate. We continue to strengthen our environmental, social, and governance practices to responsible manufacturing, energy efficiency initiatives, and continuous improvement in our operational process. Overall, the near-term market conditions must continue to witness periods of volatility. We remain confident in the strength of our business model, our diversified customer relationships, and the strategic investments we have made over the past few years. Our objective remains clear to build a stronger, more diversified, and future-ready organization capable of delivering sustainable growth and creating long-term value for all our stakeholders. With that, I would now like to invite a Deputy Managing Director, Mr. Shashank Agarwal, to take you through the operational and financial performance for the quarter in greater detail.

Thank you, and good evening to everyone joining us today. As the chairman highlighted, we have begun FI27 on a very strong note, achieving several important milestones during the quarter. Before discussing the operational highlights, let me briefly take you through the financial performance of the quarter. For the first quarter, FI27, on a standalone basis, despite the global disturbances and supply chain disruptions, the company reported a total income of 207.49 crores. Reflecting a healthy growth of 13.86 year on year, EBITDA for the quarter stood at 22.19 crores, registering a strong growth of 58.98% year on year. EBITDA margin improved to 10.69% from 7.66% from the corresponding quarter of the previous year. PAT stood at 12.14 crores, representing an impressive growth of 112% year-on-year, while BASIC EPS increased to 4.96 compared to 3.01 in Q1 FI26. Our focus on improving product mix, operational efficiency, and discipline execution combined with the strength of our long-standing relationships. With our suppliers and distributors enabled us to navigate the crisis effectively and report a robust year-on-year growth in EBITDA and net profit. During the quarter, the company witnessed a significant improvement in realizations with an average selling price increasing by 31% in comparison to the previous quarter. However, the average raw material price increased by only 18% in comparison to the previous quarter. Thus, the increase in realizations significantly outpaced the increase in input costs. This favorable pricing environment coupled with our disciplined procurement strategy and improved product mix contributed to a stronger margin during this quarter. During FI 2526, the company generated a profit of 10.38 crores from trading activities, out of which 7.55 crores was recognized only in Q4. Driven by an exceptional market volatility and supply chain disruption. During Q1 FY27, the company reported a trading profit of 2.93 crores as compared to 1.25 crores in the corresponding quarter of the previous year. Our primary focus continues to remain on our core manufacturing business. However, given our deep understanding of the polymer market and import opportunities, We selectively capitalise opportunities arising from temporary market dislocations and price volatility. We will continue to evaluate such opportunities prudently, while maintaining a disciplined approach to inventory, procurement, and working capital management. Employee costs during the quarter increased by approximately 3.5 crores compared to the previous quarter. Primarily due to the annual salary division and the increase in minimum wages in line with the state government's revised wage policy. While this has an increased operating cost, the company continues to implement focus initiatives around mitigating this risk like cost optimization, operation efficiencies, productivity improvements, automation opportunities, and value-added products. We are confident that over the next 12 to 18 months, we should be in a position to mitigate this increased cost. On the debt side, the net debt on 30 June 26 stood at 132 crores, a long term of 34 crores, which was about 112 crores on 31 March 2026. Exports continue to be the backbone of our business and remain a significant contributor to overall revenues. During the quarter, Europe continued to be a largest export market, contributing to about 60% of exports, followed by South America about 20% and North America about 16%. Australia and Asia stood at about 4.5% and Africa at 0.5%. This diversified geographical presence helps us mitigate Regional demand fluctuations while ensuring a balanced and more resilient export portfolio. Coupled with long-standing customer relationships built over several decades, it enables us to maintain stable business momentum and deepen our engagement with existing customers across global markets. Even from a product portfolio perspective, our portfolio remains quite diversified. In Q1, FI27, we did 52% of FIBC, 20% of fabric, 12% of small bags, 8% of multifilament yarns, and others contributed about 8%. Even within these product categories, these products are for different applications and different industries, which further enhances our diversification attempt. From an end-user perspective, our revenues, sorry, as the chairman highlighted, a premium polypropylene Tesla and yarn business has made an encouraging start with a successful commercialization in Q1, FY27. We remain very positive for the sales to start boosting from Q2, FY27. which is supported by customer responses, internationally recognized certifications that have been obtained, and brand owner approvals that have already been obtained. Through our joint venture with Asagoma, we are introducing advanced manufacturing capabilities, specialized products, and addressing a growing customer requirement for extremely high-performance industrial application and luxury application, which is completely recyclable. Non-government technical textile project also progresses well during the quarter. Construction and installation activities are progressing as planned. We expect revenues to start coming in Q3 to 26-27. Once operational, this facility will enable us to address a significantly larger market opportunity across automotive interiors, geotextiles, artificial leathers, carpets, filtration, and several other industrial applications. This business represents an important pillar of a long-term diversification strategy in products and industry applications. On the manufacturing front, we continue to invest in automation, process optimization, infrastructure enhancement across our facilities. Our capacity expansion initiatives also continue to progress in line with our long-term growth. At Valex Ventures, certain customer supplies were strategically delayed and scheduled after the first fortnight of July to align with the implementation of free trade agreement with the UK, therefore enhancing our commercial competitiveness. Coupled with structural changes undertaken in Valix, We are optimistic about improved operation and financial performance in FY27. On the raw material front, polymer prices, which witnessed significant volatility during March to May 26 due to geopolitical developments, have largely stabilized, providing improved visibility for procurement planning. However, the... There needs to be a caution on the logistics environment that is now playing with the ocean freight, increasing substantially from about $2,000 to about $5,000 in the last two months. We are continuously closely monitoring the foreign exchange movements and other global trade developments. Despite these external challenges, our disciplined procurement strategies, strong supplier relationship, diversified customer base, proactive engagement with customers continue to support operational stability. Demand visibility continues to be about four weeks, reflecting the current procurement pattern of customers that they do not want to procure at extremely high prices. Cautious procurement approach also helps in stabilizing demand in the latter part of the year. Building on the strong momentum established in Q1, we remain optimistic about opportunities ahead. Demand across our core export markets remain stable. Investment in technical textiles, premium value-added products, and manufacturing capabilities are well-positioned to capitalize on the emerging opportunities. We will continue to focus on operations excellence, customer-centric approach, innovation in product development, and disciplined financial allocation. Backed by progressive commercialization of our strategic growth, subject to prevailing market conditions, we should deliver a strong performance in FY26-27. With that, we conclude our opening remarks. Thank you once again for joining us today. We should be very happy to take questions now.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is assembled. The first question is from the line of Shubhi Gupta from Trinitra Asset Managers. Please proceed.

Hello, sir. Sir, I wanted to ask that you were witnessing some raw material volatility because of West Asia conflict. So, I wanted to understand how is that progressing for us?

So, there are two parts to it. One is the conflict itself that created a disruption because it was unexpected. So, there was a high level of an expectation in March when this happened. Now, even while the crisis continues to be there, the market has understood the crisis and the supply chains and the governments are taking action what are required to be taken now. So, there is more stability. That kind of extreme volatility is not there. So, it was moving plus minus 25% at that time. Now, it is moving plus minus 10%. That is the difference. There was also a significant difference that in March, there was also a government order which prohibited petrochemical companies to make petrochemicals alone, and rather they had to prioritize LPG production. That also has been relaxed now.

So, is that something that we can pass over to our customers?

So, in our business, mostly, whatever the raw material increase and decrease is either ways, we are able to pass it on to the customers. There could be a lag of two weeks or one month or one quarter, depending on the market situation, but it always gets passed on.

Okay, sir, my second question is this B2C segment, you know, B2C linked premium applications that we are transitioning towards. So, what is the marginal differential for this line of segment? What can we expect?

So, we are talking, so in B2C, there are two parts. One is the SACAN and the other is the non-violent technical textile. So, I will first cover the SACAN part. So, SACAN, we are expecting a revenue of about 10 crore rupees this year. Uh, which should be at an EBITDA level 20-25%, which is significantly higher than what we are doing. Uh, I have been repeatedly saying that it is very hard to do the first 10, and then it's going to get easier to do the next 90, and then from there, the sky is the limit. But we are looking at 20 to 25% kind of EBITDA. On the non-woven technical textiles, we are looking at the mid-level double-digit kind of EBITDA on B2C in non-woven.

So what is the total EBITDA margin that we are looking for?

For the entire company?

Yeah.

I would not be able to give a very exact guidance on it at the moment, but we should be able to continue the levels that we are at.

Okay, sir. Thank you. Thank you. The next question is from the line of Saket Kapoor from Kapoor N. Co. Please proceed.

Yeah. Namaskar, Sasanji. Namaskar, Prabhupada. Thank you for this opportunity. Just in continuation to the earlier participants, if you could just explain to us, sir, for the Afghan part of the story, what would be the peak revenue on the current installed capacity or the JV which we have done, and when will we be anticipating? How much will be 10 crore in terms of capacity applying?

10 crores is about, so we can reach maximum volume of about 30 crores with the current capacity.

Okay, and once we reach that optimum number, then only we can look forward for how are we going to enhance the performance?

The moment we reach 50 to 60% of the capacity, we will be installing more capacity. Because the cost of adding capacity is not very high. It's not a very high capix kind of thing.

Thank you. And now coming to the FIVC part of the story, sir, I think in your opening remark, you did mention that our realizations have gone up. So if you could just give that understanding, how are the current realizations being, and if our cost structure, the gap between the increment increase in the revenue and the cost is less, we have got the higher of the two, Then why are the margins not expanded for the quarter? If you could just explain what factor did. It did not allow us to enhance the margin.

So the EBITDA margin expanded, right? So EBITDA from manufacturing was at 12.6%. When we see manufacturing, manufacturing, yes, it has expanded. So that is number one. Number two, it could have expanded more. But we can see that there is an increased employee cost of about micro rupees a quarter. Which has led due to the annual salary division and the increase in minimum wages with the state government.

So my point was that you mentioned that.

Yeah, just there's an additional point. The third point is that there was also a decrease in the total manufactured volume in FIBC due to the supply chain disruption and little labor disruptions also were there. Yes, please.

I will come to that part also, but you mentioned in your opening remarks that 31% was the value realization that has gone up, whereas the cost of RM is 18%. So, is that understanding correct in the remarks which you made just now, that there was 12% that could be on a hold with 12% incremental margin? Is that understanding correct or how should we, yeah?

No, average selling price increased by 31%, that's correct, and the average raw material price went up by 18%, that's correct.

Okay, so the gap, the entire gap will be, that is what the understanding should be.

Otherwise, one time, just say, significant part of it is the employee cost, right, which is about 1.5%. SAE freight also has marginally gone up during this period. There are certain one-time fixed costs which were also there, which was related to the disruption during this period. We also participated in a couple of international exhibitions during this period. So everything put together in terms of variable cost on an ongoing basis, I am not very concerned apart from the labor cost that's grown up. There is no significant increase in the energy costs. A little bit of packing costs was also increased during this period. Then a little bit of oil because oil is also a consumable in our item. That was also increased. There were also electricity disruptions during this period. So a combination of all these things put together.

Okay, so put to rest all these factors, we are now one-third into the second quarter. So can you explain to us which factors are behind us and which are still continuing to linger on?

So I have already spoken about what is behind us in terms of the disruption geopolitical, but we never know what happens again. So we are not... Taking a position or any kind of call on how the oil would be, how the geopolitical situation would be. We are trying to risk our purchases against our sales. We are seeing wherever there is an opportunity. There are two challenges that could come up in the remaining part of the year. One is freight, which I mentioned that $2,000 freight has become $5,000. So this could disrupt demand significantly because people might not end up buying so much in case the freight is so high. That is one part of the problem. The second part of the problem is we might have to share a little bit of this cost, which might damage the margin.

Now, for the FIDC part, then I will join the queue. You have mentioned about our target of capacity addition of 6,000 in five years. And for Q1, our contribution was 52%. So, as per our business plan, what would be the addition for the current year and how will this ratio be? And then, sir, in your presentation, which is very well and very exhausting also, so congratulations for maintaining this. Slide number 17, if you could explain to us that on a Q-on-Q basis also and year-on-year basis also, our FIDC in the product mix has gone down. So, you did explain to the disruption, but what should now things be looking like, if you could just explain these two parts. First is on the incremental, increment on the FIVC capacity, what are we expecting this year, and what explains this Q on Q and year on year decline, and how should this shape up for the Q. Yeah.

So I think don't know questions, Aki Disha mein hai, that, uh, what is going to happen to FIPC, which is the cash cover of the company and the main focus of the company? So, we are committed to reaching 5000 tons per quarter. That is the target for next Q1. But Q1 FY28, that is the there. So, directionally, we are in that direction. From time to time, there have been procurement challenges in terms of raw material, there have been demand challenges from the market, there have been manpower challenges in terms of the manpower availability. This has caused our pace to be a little slow, but I think most of it is behind us now, and we should be tending towards that direction. So as a, I do not want to give a very product mix percentage because this is all. Dependent on the selling price, whether freight is included, not included, what is the percentage of freight, what is the percentage of raw material, but directionally where we want to move is 5,000 tons of water by next FI 2728.

Right. And can you give the utilization number for this quarter for FI 23?

So Q1, we were only at 3,000 tons. Q4, we had done 3,500 tons. Q3, we were at 3,800 tons. So there is also C2 because of the, based on the number of working days and number of holidays that are there.

So, sir, seasonally, how is Q2, and also, sir, since we have a four month, four weeks, sorry, for the visibility, this 3,000 should be the base for the year, then?

3,000 is a very... Let's say a damaged number because it is much lower than even last year's number that was 3,500 tons. So this is mainly due to the disruption in the polymer and the labor disruption that was there. But going forward, yes, it will only build from here.

It's a follow-up. I'm coming in with you. Thank you for the opening remark and very detailed introduction. Thanks.

Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Chaitrika, an individual investor. Please proceed.

Hi, good evening, sir, and thank you for the opportunity. Sir, I have a few questions. My first question is, what is the management's long-term revenue aspiration, like if we go to sea for the next three to five years, what is it, and what are the key milestones?

So, thank you for the question, and thank you for a forward-looking question.

So, with the current projects in hand and the installed capacity, we can touch 1,000 crores. So I would, so I would say 2728 is when we would target 900, 950, and then 2728 with 1000, 1050.

2029.

But this is with the installed capacity and the current trading turnover that is being there, and the current polymer pricing. Now, if there is a change in the polymer pricing, if there is any change in the trading, it might come up or it might go down. Adding to this, Next year, we should also be in a position to better decide on how we should utilize the money that is there in the balance sheet for further capacity expansion and the direction of the capacity expansion.

And so, next question is, are you seeing any changes in customer procurement behavior due to geopolitical tension?

Yeah, so there are two types of behaviors that are very evident. One is that who is trying to build a longer-term inventory where they feel the geopolitical risk might escalate. So, they are trying to build more inventory. But majority of the market... Sees this as a situation to decrease their inventory because the prices and the freight have gone up. So there are two distinct behaviors.

Okay, answer my last question is, are there any initiatives to improve our EBITDA margins beyond the current level?

Yeah, I briefly mentioned that cost optimization, productivity efficiency, automation, digitalization, all these are ongoing at the moment, and this has caught speed with the increased labor costs and increased minimum wages.

Okay, thank you for the opportunity, sir. Thanks a lot.

Thank you. The next question is from the line of Yash Parker, an individual investor. Please proceed.

Hi, sir. Am I audible? Firstly, sir, congratulations on good set of numbers. And so, what tangible benefits have the UK acquisition and Italian JV delivered so far in terms of customer additions, pricing improvement, or the pipeline? And when should investors start seeing measurable financial results?

So, uh, second, uh, the Italian Roan Venture, uh, the. Since the beginning, we've been saying that it is a high gestation, low capex, high-valued product because it has product research involved in it. There is approvals from brand owners. There is a certification process that is there. So all that has happened now. So now the sampling is happening. So we would see significant commercialization in Q3 and Q4, and once that is successful, I would be in a better position to give guidance on this by Q4, but directionally, it will move from a journey of 10 crores to 25 crores to 50 crores to 100 crores. That would be the year-wise target going forward. The speed of it and the success of it would be very clear by Q4. The GRS, Global Recycling System, the GRS, and the OECOTEX certification that we have received. Are extremely strong levers among the brand owners. They're extremely, they're as excited as we are to get this done. Regarding Balix. with timid bottom lines, and we are continuously trying to Operating structure of the company so that it is able to pivot into significant increase in revenue and bottom line. Till now, it has not given any significant tangible benefit. The only tangible benefits that are there are that it is able to create brand awareness within end users. We have been able to build design solutions within users which will affect the lifetime value of the customer that will go up. Obviously, whatever turnover is coming from Valix, it's a manufactured, manufacturing-transferred turnover, so that profit is also already there in the operations of Kanpur Plastic Work.

Okay. So, second question is, like, more than 60% of the energy is now sourced from renewable power. So, can you quantify the annual cost saving that has already been realized then? And how much additional savings are expected once we are at full capacity, like, at nearly full operational thing?

It is already a full operational thing, so we are only doing 60% and we only plan to do 60% at the moment. We are in discussions for battery energy storage systems, but I think that is still a couple of years away, because the cost of acquiring the system is so high that today it is not making sense. What we are able to save annually is about close to 3 to 5 crore rupees a year is what we are able to save annually.

Okay. So, and regarding the FIBC expansion, so the new one, we will add around 6,000 million metric tons over the five years. So, based on the current demand, how quickly do we expect this capacity to reach around 20-80% utilization?

So 6,000 tons is over the next five years, out of which one year has gone. So we are saying that we will add 1,200 tons every year. So it will take four to five years to achieve that required output. But that is not only because of the demand, but it is also because of the workforce that has to be trained.

Right. And so, our revenue grew 14%, whereas EBITDA grew nearly 57-odd percentage. So, does this indicate that we are, like, prioritizing profitable orders over the volume chain?

We have to see it from a macroeconomic point of view also. There has been extreme volatility in raw material. There has been an extreme opportunity in the market. So, obviously, the aim is to maximize profit. There is no fun in doing sales without profit. That is obviously the aim. But has it happened only because of that? I wouldn't say yes.

Okay. And, sir, we are currently doing multiple expansion projects. What is the minimum IRR or ROC huddle rate that the management puts before, like, approving these investments?

So, in non-woven, we were expecting between 15% to 20% IRR and a rose of above 20%. The other... SACAN is far higher, ROS and IRR, because there the capital investment is extremely low, but there is far more investment in brand building certifications and efforts.

And so, as our business ramps up, should working capital remain at current levels or do you expect inventory and receivabilities to increase?

So, for the FIBC business and the Rafia business, it would remain at similar levels. For whatever turnover the non-moven business would add, we would continue to add 30 to 40 days of working capital.

Okay. So, last question from my end. So, the trading revenue has increased meaningfully. Is this a strategic business that the company wants to scale or is it like largely opportunistic?

Yeah, I mean, I covered it last time as well, and I covered it in my opening note as well, that it is completely opportunity driven. There is absolutely no focus of the company to do it. But if there will be an opportunity, we will be there to take use of that opportunity.

Okay, sir. That answers my question. Thank you so much for the opportunity.

Thank you. The next question is from the line of Diyaz Jain from Sapphire Capital. Please proceed.

Hi, sir. Am I audible?

Yes, you're welcome.

So, what is our target revenue mix in like two to three years?

I already covered that in the second or the third question.

Okay, so can you share the realizations that we have currently, and if you are going to sustain them, any idea?

Realizations are based on the input raw material cost and the freight. So, yes, they should be sustained at the moment because the raw material cost is sustained at the moment. So, I mean, they remain in line with the raw material cost normally.

Can you also provide the revenue expectations from the premium PPR?

It should be about 10 crore rupees this year, unless I can.

And further for the coming years, any expectations or targets?

I've already shared that, but we will continue to grow. The ultimate aim is to reach 100 crores in the next four years on SACAM.

Okay, so thank you so much.

Thank you. The next question is from the line of Muskaan Patel from JK Investments. Please proceed.

Hello? I need to ask, since the export has continued to remain diversified, is there a direct impact because of geopolitical tension going on currently?

Yes, the impact is there on pricing and freight, but we do not have any significant exposure in West Asia or Middle East.

Okay. Thank you.

Thank you. The next question is from the line of Taaket Kapoor, from Kapoor & Co. Please proceed.

Yes, sir. Just a couple of data points pertaining to the TNL. For this quarter, we have seen an impairment loss of only to the tune of 25 lakh rupees.

So, I'll ask my CFO points to this. I'll ask my CFO points to this.

Yes, sir.

So, there is some supply that the company has made to the government of India for FCI. So, basically, to have a prudent policy, we have made a provision of 25 lakhs from that business. Although, there is no certainty that this money will not come, but yeah, for the prudent business, we have taken up this decision.

Because it's a tender government supply. Normally, there are some shortages or quality complaints that come in.

What is the total value of the contract, sir?

15 crores.

15 crores. And this is the prudent 25 lakh rupees is what we have.

Yeah, that is historically what we have seen is around that.

And in continuation, Shifu Dhab, our debt number, Iqbar, what is the debt number we have and what should be the, how will, are we going to exit the current year in terms of the long term debt?

At present, we have a 34 crore rupees of long term debt at present in our book and by the year end, it will be near about 74 crore rupees because the 40 crore new term loan we will take from here for the new project that we have making.

And our working capital requirement of what are current chains there, and what will be...

And let me complete with your previous question. There will be some repayment of near about 5 to 7 crore rupees in this year. So the closing number in this year will be near about 67 to 68 crore rupees. Aap please, at the next question, push the gie.

Sir, what is the working capital now, and what do you think about it?

So, working capital presently, we are taking is near about 90 crore rupees, and as our sales will grow, so it will be near about, we will add 5 to 10 crore rupees by the end of this year, I think. Utilization will be like this.

Shashangi, you mentioned about the certification part of it. So, that is about the recycling part of the story or what kind of differentiation are we currently seeing with the decision you have mentioned?

GRS is Global Recycling System. So, the certification is for using 100% post-consumer recycled polymer to make the textile high-performance yarn. That is GRS. And OECOTEX is a textile certification that talks about the toxicity of chemicals and minerals in the product. So it proves that there is no toxicity in that product.

I mean, sir, these are, these will have, I mean, in the state where we operate, our business is very valuable, and it is then support for companies to get these kind of, I mean, your competitors are also there in the, I mean, having this kind of certification, or we are, these are, we are the, the outlier here. We are an outlier. Thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Ankur Srivastav, company secretary for closing comments. Over to you, sir.

On behalf of Kanpur Plastic Pack Limited, I thank you all the investor, analyst, and stakeholders for joining and spending your time and joining the conference call for the quarter in September, June 26. Thank you so much.

Thank you. On behalf of Kanpur Plastic Pack Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.