Operator
Ladies and gentlemen, good day and welcome to the Q2 and H1FI27 conference call of NAC Packaging Limited. As a reminder, all participant lines will be in the lesson-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 zero on your touchstone phone. We are pleased to have with us the senior management team led by our chairman and managing director. Mr. Alpesh Tulsi Bhai Patel and our Chief Financial Officer, Dr. Ajay Kumar Dubey, who will share his perspective on the company's performance for the quarter and the key business developments during the period. Before we begin, I would like to remind everyone that certain statements made during this call may be forward-looking in nature. These statements are based on current expectations and are subject to risk and uncertainties that could cause actual results to differ materially from those expressed or implied. I now hand the conference over to management. Thank you, and over to you.
Financial Year 27 earnings call. On the call, I am joined by Dr. Rajay Kumar Dubey, our Chief Financial Officer, and Ad Factor PR, our Investor Relationship, In quarter to F520, two percentage, all on year-on-year basis. Talking about the industry, the first half of the year was a challenging period from an input cost perspective. The conflict in West Asia disrupted supplies and price of colipropylene, 50% within throughout the water. At the same time, disruption in the Red Sea increased the freight cost, which matters to us as an exporter to 75 countries. This factor exerted pressure on the industry, the pace of corresponding selling price revision. NAC was impacted by this industry-wide cost pressure. However, with our three decades of experience, long-standing relationship with our vendor and strong procurement ecosystem, we were able to mitigate the price rise. Talking about our EBITDA, it grew on absolute basis. However, the EBITDA margin was impacted in quarter to F527. About 45 to 50% of our customers are on conversion cost model where the back price moves with the polymer drive. But this price revision take effect and we have already revised prices with our customer and initiated cost pass-through and we expect this to reflect in our realization from quarter 3 F527 onwards subject to market condition stabilization. Despite this, we see immense growth in the industry. Our growth ahead lies in our competitive strengths. We have focused on three key pillars which are product innovation, integrated manufacturing facility, and our long-term customer relationship. We work closely with major companies in food, pet nutrition, fertilizer, and other 25 plus industries, and many of Our customers have grown with us. Packaging typically accounts for only about 1-2% of our customers' end product price. Yet, it is often the first physical touchpoint between a brand and its consumer and can influence the purchase decision, especially in the competitive category. Once supplier has proven its reliability and consistency, customers rarely risk a change. As a result, our customers' stickiness is very high. As on 30 September 2026, we served more than 2040 customers with 13,974 SKUs, up from 2,000 customers and 13,500 SKUs at the end of quarter one, financial year 25. Our export market contributed a significant part of our revenue during the half as of September 2026 and we sold to 75 countries across 6 continents up from 74 countries at the end of quarter 1 F527 and 71 countries in F526. Our export included US, Europe, Asia and Africa. Coming According to H1F527, our top-line growth was driven by significantly higher export volume, deeper wallet share with existing global SMCG, pet food, and agri customers, and addition of new international accounts. We saw sustained demand from our premium bag both domestically and in our export market. Importantly, we began fulfilling orders from new customers ahead of our next phase of capacity expansion. As a recent update, on 2nd October, 2026, we announced a new order and three-year contract renewal worth about 150 crore per year from an international customer, one of the largest private corporations in the world, from the pet food and animal nutrition packaging, including in the United States. This renewal underscores our reliability and our product quality at a global scale. Looking ahead to the rest of F527, our focus will be on profitable growth. Our priority is to restore our EBITDA margin as pricing adjustment flows through from quarter 3 F527, and then to improve it further by increasing the share of value-added products, controlling costs, leveraging our integrated setup. However, we are also scaling up the Siam NAC GV in Mexico towards breakeven and building our order hook more stronger. Now, I will hand over to Dr. Rajesh Dubey, our CFO, who will provide the detailed financial highlights for quarter 2 and H1 FY27. Thank you, sir.
Good afternoon, everyone. I will now walk to our consolidated financial performance for quarter to financial year 27 and H1 financial year 27. After performance 2017, our consolidated revenue from operation was 294 crores, shared with the 193.26 crores in quarter-to-financial year 26, a year-on-year growth increase of 52.5%. This growth was given by the significantly higher export volume, deeper wallet share with the existing customers, new international accounts, and ramp-up of recently added capacity. EBITDA and margin, our EBITDA for quarter 2 financial year 27 was 49.77 crores compared with 38.30 crores in quarter 2 financial year 26, up 29.9%. The EBITDA margin was 16.35% against 19.25% a year ago. A decline of 285 basis points, this reflected industry-wise cost pressure, polymer price rose with the crude oil, and trade costs increased because of restriction in the Red Asia. Pricing adjustment with our customers followed up with a log of 1 or 2 quarters, and we expect margin to recover from quarter 3. About the PAC, profit after tax per quarter to Finanthia 27 was 25.02 crores versus 20.64 crores in quarter to Finanthia 26, up 21.2%. The PAC margin per quarter was 8.22% compared with 10.34%. The platform's pressure on EBITDA patch was affected by 2kJP in quarter 2. The quarter was 2.0. The performance of H1 financial year 20, 7 consolidated rate from operation was 569.11 crore, up 47.2% from 3.94 crore, 5%. The visa margin per half was 19.14% against 19.91% a year ago. ROE stood at 19.42%, with ROC at 28.76%. The moderation in ROE and ROC was expected to capital base, deployed toward the capital extension and growth initiative. PAYET profit after tax for H1 financial year 20. PAYET was 55.55 crores, 0.30 crores in H1 financial year 26, up 34.5%. The PAYET margin was 9.76% against 10.68% in H1 financial year 26. PAYET for half included a loss of 6.06 crores from the Siam Naik JV in Mexico. The JV is a scale-up phase and this loss flow direct into the consolidated fat with no matching revenue yet. As the JV reaches 3-1, this drug will reverse the support of our fat margin. Key ratios about our balance sheet is spent some further. Debt equity ratio improved to 0.26 times from 0.68 times a year ago, and our working capital cycle was 75 days, again 76 days in quarter to financial year 26. With this, I open per floor for a question and answer. Thank you.
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bhavna Israni from Ambitaset Management. Please go ahead.
Yes, madam. You are audible.
Yes, yes. So, good morning, sir. So, just wanted to know, okay, how much volume growth we have done in this quarter, and what is our current plant utilization?
So, basically, in last quarter, we have closed, and this quarter, we closed 11,252, which is 3% growth from the quarter. Basically, our plant is almost utilized 90-91% capacity.
Okay, so current utilization and how we are seeing the capacity build-up coming in because as we are running at 90-90% utilization, so how the volume growth is going to be in coming quarters?
Yes, we have added 5,040 metric ton quantity in month of August only and the plant is just starting to ramp up and we are expecting for almost a new capacity plant which is almost 2,500. So, we expect in quarter three financial years that would be better in terms of quantity.
Okay. And so coming to the raw material price inflation, so how much price hikes we have taken in Q2 and how much we are planning to take in Q3? As we said, there is a deferment in the price path on and there is a quarter lag in price path on. So how much we have taken and what we are expecting in Q3?
So, the price is continuously improving due to West Asia conflict. We are continuing under discussion with our customers. Almost 45 to 50% customers we have which we have the contract to pass on whatever the material price is. Some of the customers have already passed on the price. So, the raw material price, if I can say only the quarter to initial of the quarter and ending of the quarter, there is almost 26% raw material has been increased. But in our gross margin, there is an impact of the 7%. Rest, we have already discussed in the quarter three, majorly, and we are expecting a market would be stabilized and things would be in line.
And also I'm adding to that, see our product scenario is what like a today we can finalize the product, SK for the bag, and that design, cylinder, and process almost take one, one and a half months for the delivery. So when whatever orders we have in the last quarter, we deliver in this quarter, and this quarter price is gone up like a 25-30% immediately. So impact on that, our pricing buying.
Q1 FY27, Q2 FY27 is 11,252. What would be the same number last quarter, last year, same quarter, Q2 FY26?
We have, year 26 was 9,927, and we growth is almost 13 to 14 percent compared to last year quarter.
So, on the numbers basis, our gross profit per kg is declined by roughly 10 rupees, quarter on quarter, and the EBITDA level, EBITDA per kg is down by roughly 16 rupees per kg. KG is currently 36 rupees versus last quarter we were doing at 51, 52 rupees. Is it correct, sir?
Yeah, I am absolutely right. And that's, I resent the second quarter compared to the previous quarter. The price increments like a 25 to 13 percent immediately, immediate effect. And customer will give their price. We have a quarter, first quarter order is delivered into quarter second. Because our production timeline is the one, one and a half month.
Operator
Thank you. Next question is from the line of Hidan Shah from Seven Islands PMS. Please go ahead.
Yes, sir. Yeah, yeah, please, please. Go ahead.
Good morning, sir. Sir, I wanted to know the utilization of the pinch bottom machinery.
Yes, pinch bottom just recently, we added two machines on the part of one start, like every month we just started the two new pinch line. So we are 100%, it is 21% of the overall self-revenue. And also, in that case, we have to convert the customer. It will take like four to five months because the design back then there, they have to install their machine, filling machine.
Sir, can I know the percentage utilization of the total metric ton per annum that we have
So, like, see, all together we have 90-91% utilization, but, yes, you are saying exactly the pinch bottom number, conversion line, but, yes, it is not 100% utilization of the pinch bottom new machine, it is almost, say, approximately 60-65-70% only after the new machine adding. So, in the pinched bottom bag, we have a little bit space to increase our cells, convert cells from regular bags to pinched bottom bags. And yes, we are trying to achieve that area as much as possible into converting the regular bags into the pinched bottom bags. So, we have a space on that area. Our overall quantity growth is not that much, but our conversion growth is also available with the pinched bottom bags. And last two quarters, we are increasing that area.
The history of pinched water was 23 and 2 machine just was in last quarter, almost in March of 25. So that machine is under the ramp up now. So almost 60 to 70% is overall. And now that is increasing continuously, more sales of pinched water.
And also adding the pinched water mainly used into the rice industry. The rice industry market just come up now is better for our history. So, third quarter, we are expecting much more utilization of pinch bottom bags into the rice industry, and we will get the good order already.
Sir, can I know the metric ton per annum capacity of quarter two of pinch bottom?
Sir, one work machine covered like a 20, like 22 million bags per month. So, all together, currently, these can be, each quarter be at least 11,252 metric ton. So, capacity is major, sir.
Basically, there is the process for first we have tape line, then we have loose tape line, gravier. So, these are the basically till the eliminated fabric, there is the addition of the capacity. Now, this is the fourth stage where the final finish outcome is decided. So, either we finish pinch bottom diode or we finish TLWPP bag. So, that cannot be added to the capacity. But yes, two machine already installed in last quarter of fourth quarter of financial year 26. So that machine is under the ramp up. Once our production capacity will be increased because today we have already 91% capacity utilization. So once we have the capacity with the spare or the production of more fabric, then our pinch bottom would be more utilization.
Sir, I will give you just one simple example. Like you are producing the textile fabric and you are making the t-shirt or shirt. Whatever you could give the good benefit. So same way we are fabric production. After now we are capacity is almost full capacity. But we are trying to instead of shirt we are making the t-shirt because we get the good margin. So thing we are into the same phase like PRWPP we are average.
Okay, sir. And one last question. The new facilities will add around 30,000 to 32,000 metric ton per annum. So, can you give me a percentage of how much output will be from pinch bottom and how much will be from the normal PLWPB bank?
Sir, very honestly, that is right now, we have installed capacities of 42,000 metrics annually. Out of that, we have almost actually like 69-40,000 as capacity. After this expansion, our capacity reached into the 70,000, 69 to 72,000 in between. So out of that, there is a six, five pinch machine is already installed, and two new pinch machines will come up, because that pinch machine delivery is almost like one, one and a half year. So next day, October, our target per day, what will come up into the production. So almost in between, our existing two machines' capacity, we can fulfill, and then after, at that time, we're adding our food to new pinch machines. So, thereafter, it is almost 7 machines. So, almost 70,000 metric tons, we can achieve almost 20,000 to 25,000 altogether or 30,000. Install capacity is 32,000 out of 72,000 is a pinch bottom and we can try first level 25,000 to 30,000 to achieve that pinch bottom back later on 28.
Okay, okay, sir. Thank you.
Operator
Thank you. Participants who wishes to ask a question, please press star and 1. The next question is from the line of Amman Chawla from Ashfield Holdings. Please go ahead.
Good afternoon. Am I audible?
Yes, sir. Yes, Ammanji. Please.
Yeah, so my question was that the major impact which came on EBITDA margin was majorly driven by gross margin impact. So I wanted to understand that we have a revenue bifurcation of 50%, which is coming from contract revenues, and approximately 50% from non-contract revenues. And in the non-contract revenues, we are able to manage it through the inventory days which we hold. And the contracted revenues, we can adjust it based on the price of the bag. So I wanted to understand why did we have such a significant impact even after that in this quarter?
Yes, sir. Sir, I fully understand your question. Simple. Sir, our, first of all, 50% contractual and customers definitely here, but all the customers not given the order in the same time. So, it is as per their consumption, they are buying like as per their season, like they are into the free grain and pulses, they can now season will start, and the fertilizer already season is over. So, that kind of cycle is over there. So, it is almost 45 to 50% is contractual, but if it is not at all, order will come same time as everyone, first thing. Secondly, the ramp-up of the price, like a private initiative effect. So, it is, we convince the customers and then they are convincing. They are not at all denying because everyone knows that global pricing goes up. So, everyone has to bear the cost and deliver into the quarter too. So, my investing...
Operator
Sir, please go ahead. We are unable to hear you, sir.
Operator
Yes, we can hear you now. Yes, please go ahead.
Okay, okay, okay, okay. So, sir, second one, reason is, sir, I think I repeat the first one because maybe voice is not clear or some disconnection. So, first reason is our process time is like a one, one and a half month. Our 50% customer is on contract basis, but they are not continue business. It is a season-wise business. So now, our first quarter order delivered into the second quarter. So maybe that our sell system is as per the order date, we can finalize the price, not delivery time. So our sell become into the second quarter, we can get the price from the second quarter. But at the time of the second quarter, there is a price is like a 25 to 30% increment, global political issue and global crude price issue. So, that impact on us. And yes, you are right. You are absolutely right. This is an increment of the 7% of our growth margin because of this majorly this area.
Right. So, again, basically, the 50% of the contracted revenues which we have, what is the timeline in which we are able to pass on costs to these customers? And again, to the other non-contracted revenue customers, what is the timeline? Because we are holding enough inventory to manage the rise in raw material costs.
Sir, first I will cover with the contractual. Sir, contractually, there is a two system, monthly price revision and quarterly price revision. Like our biggest customer is a revision of the quarterly price. Like first quarter, whatever the rate is, that price comes into the second quarter order, and second quarter price, average price come into the third quarter. So they are increasing like quarter to quarter. So our major customer into quarter to quarter, and the smaller customer, it is based on the monthly, like this month they can give you the order, like, so their pricing based on the next, last month quarter price, last month price, not quarter, last month price. So, it is impacted on this month's order price, and it will be delivered after one and one and a half months. So, altogether, you can see it is like almost three, two, three, and three and a half months for the one-month price contractual, and the quarterly, it is impact on four and four and a half months quarterly price impacted. So, this is our business scenario, or not even my company, even almost all the companies into the plastic, this kind of happens into the contractual business. Now, non-contractual business, it is based on the order-to-order only. Like, whenever they require the inquiry to us, we can get the inquiry, we can quote the pricing, and we can approve the pricing. And then, at that time, it will be the start of the production, and it will take the one, one-and-a-half month for the production. Then, it will be going to the delivery. So, this is both the scenario for the pricing and impact on us.
I understand. So my second question was that we are now adding significant capacity. So what is the demand visibility for us? Where do we expect the demand to come from? And also that we are now focusing more on pinch bottom bags. But based on our DRHD figures and estimates, the market size of French bottom bags is limited. So, how are we going to manage the same?
Sir, first of all, I will explain about the demand. Sir, demand, we have two types of vision. Like we are exporting more than 72 countries. So we increase the countries plus existing customers. Even like I will say the one example, dog food industry is now in India. It is like increasing in double digits. So dog food industry, we have a very good presence in all over the world as well as India. So that industry growth, that is also our growth. Compared to our customers, like we have a dual customers and many like pedigrees also we are supplying to them. So this is a good customer we have. So that grows into disease in India. So we are also growing. So same way, there is a, we have a 27 different kind of industries, rice, grain and pulses, fertilizers, cement, seeds. So many like tire tubes, we have new application also we are developing. So, geographically, we are also increasing our capacity and marketing strength, as well as the industry's growth in the particular segment. That is also impact on us. And third thing, most important, we are developing a few industries into our product. Like those who are using the jute bag, is it migrate to the PP woven bag, WPL? And then after we shifted to them into the PL WPP, like printed laminated woven bag. And the pinch bottom bag is the more, the PLWPP bags, we directly target that customer, those who are utilized already POPP bags, they are converting into the PLWPP plus pinch bottom bag. So pinch bottom bag, there is 80%, those who are already into this second category product, they are moving into the third category. And our second category is like our total revenue contribution, like 71, 72% is our total volume, it is on PLWPP. So we have a very large number of customers, and they are migrating into that product to the pinch bottom back because there is a lot of advantage of this product. So they may convert into, and our team is also converting that kind of customer into the pinch bottom back. So, the demand, we have a lot of area, we have to hard work, definitely, yes, it is not easy to say, yes, we will get the, but we will challenge, accept talent, and this product, PLWPP, is like on the 2004, our company is the first company who developed this bag. So, at that time, scenario is more difficult than today, because at that time, the one-back cost is 10 rupees, and we're selling at 14 or 15 rupees back. But now, very well accepted, this scenario, 40-50 percent base increment, at that time, customers will be happy to give them more money. Now, this is much more better than that scenario, because they are already using like 20, 22 rupees, 24 rupees back, PLWPP, and their back shifted into the 28, 30, 32 rupees. So, percentage rise, it's not much more impact on that area, as well as, and after the pinch bottom back, the overall costing of that material versus packaging cost, it is less than 1 or 2%. So, that's how we are also getting a good benefit of this product. And one more, I already many times mentioned seven reasons, customers will want to join us. They are not moving to the other supplier. That is the biggest chance of the product. So that's how we are thinking and that's how we are planning to expand our capacity. Sorry, sorry, sorry. I want to add one more thing. I mean that Europe, Europe and USA, already paper have a very much struggle. You can check online everywhere. Where paper, right now, paper, our pricing as well as the availability is very, very bad level. So the paper block bottom bags or paper paper bags are now already converted into our product, PLWPP bags. It is a paper to PLWPP. Even paper, our pinch bottom bag, like a 30-year bag product. Paper pinch bottom bag is 30-year bag old product. So their paper are directly migrate from the paper pinch to our PLW pinch bottom bag. Yes. So, this is also one more factor for our demand and pinch more turn back demand.
Please, ma'am. All right.
Operator
Thank you very much. Mr. Saula, may we request you to please rejoin the queue. We have participants waiting for the turn. Thank you. The next question is from the Lionel Satesh from SBI. Please go ahead.
Thank you for the opportunity and good afternoon, sir. Good afternoon. Sir, I have few questions. One, first is that, sorry, I missed your opening remarks. What was the Q2 volumes then, overall?
Sir, Q2 volumes, just having let you know that Q1 volume 10,940, it is an increase by 3%, 11,252%.
And why, sir, how much growth? Why, why, how much growth have you reported? 52.52%.
Yes, volume growth is 52%. In sales, revenue growth, 52.2% YY. EBITDA margin growth is 29.92%.
Sir, volume growth, only I am asking volume growth on a YY basis.
1-3%. So, the major chunk of price hike which is driving the revenue growth this quarter, right? Okay. So, sir, this gross margin dip, what we have witnessed, you said like you're going to take a price hike and that is going to mitigate the gross margin dip. Are we on track that our gross margin, whatever we are reporting in the previous quarters, will do that level with this kind of price hike? Or it will flow to the Q4 also. I mean, you have to take the further price hike, and the gross margin will normalize in Q4.
Sir, Q3, you see, always Q3 and Q4 is better for always in the company, in terms of the quantity as well as the margin as well. But there is one chunk is like we have a limitation of our quantity because we are almost 89 to 91% we are utilizing, and it is a dependent on the market as well. But, yes, we are very much confident about our migration of the PLWPP bags to pinch bottom bag because we have a spare capacity. Yes, overall, we don't have a capacity, but internally, we can move into the PLWPP to PLW plus pinch bottom bag. So, that is we are expecting, and that is the biggest market is a rise, and rice business season will start right now, already started. So, this month is also a good month, and next month onward, it is a good season for the rice industry. And our majority cells domestically into the rice as well. So, there is a good pinch bottom back consumption in the rice industry. So, we are very good expected like the quarter 1 like kind of thing into the quarter 3 and quarter 4.
Okay. So, the Q3 will see a significant recovery in the gross margin. Whatever we have lost in Q2, we will recover in Q3, right? Definitely.
We wish to better than that, but there is a single 1% depends on the market because the crude oil and the global scenario is, you know, see what happened originally, the price, like I will give you the polymer example, like 92 rupees before the war. Then it will be the reach up to the 135, 140 rupees after war. After that, it is, again, it is a reach up to the 145, 143. Like, then, after it is reducing like 120, 125, and it is a jump like 160 rupees. So, what happens? It is up, down, up, down, up, down. But still, our companies have a very good relation with the customers. In this, in our 30 years, we never seen like this. In these 30 years, this is the highest price of the polymer price, but still we are into the good phase, good stage, and definitely in the further quarter, we have a very good expectation. But there is a 1% I will tell you, it depends on the market, but yes, 99%, we cover this everything.
Sir, in your comment, you mentioned like in the October, you have received a good order of about 150 crore from some international clients. So, how much it is scalable, sir? It is a kind of, or this is a kind of a one-off order?
See, this is our existing customer, and in this scenario, it is based on the USA, you know very well, and in that difficult time, that is, terrible time, they are continuously buying with us. In that time, they extend our contract up to just one year. But then after, they still realize they search everywhere and globally, and they can increase our contract into three years, next three years. So this is a 150 crores every month order, every year order. It is a one-year minimum. It is a minimum 150 crores. And they are already adding their product, their countries and everyone. We are serving only eight to nine countries, and they are working almost more than 100 countries. So, we are on getting the good volume, and these contracts covered, like, this is the 150. This contract is bottom of the 150 crores, and this is not one year, this is a three years contract. And also, they can add more country and more variables into our varieties into our product portfolio. And we are also on that, because that company is also more than this, they are using the paperback. And their paperback also already, they are trying to shift it to our portfolio. So we have a very good expectation from them.
Operator
So, sir, what is your estimate? Sorry, sir. Mr. Hitesh, may we request you to please rejoin the queue?
Please, last question. No problem, ma'am. Please, I can answer that. Please, please, sir. Yeah, quick, yeah.
Operator
Sir, the participant already left the queue.
Operator
Please. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we would request you to please limit your question to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Prakash Kapadia from Entrust. Please go ahead.
Yeah. Thanks for the opportunity.
Yes, for the opportunity. Yeah.
Thank you. Sir, we've seen operating cash flow decrease in H1 from 39 crores to 22 crores. I see three items, a bit of inventory increase, which is understandable due to price increases. But receivables have increased and there has been a huge tax impact. So, is this seasonal, one time due to war? Should this normalize or generally H1, you know, it bunches up and by, you know, H2 that normalizes, as you said, you know, H2 is generally better for us. So, that was my first question. And secondly, you mentioned about, you know, the Mexico JV, you know, hitting us at a consolidated level. So, you know, when do we achieve break-even because production has started and asset turns and margins would be similar in Mexico. And next year, what would be our capacity by next October? Those were my questions. Thank you.
Thank you, sir. So, in operating revenue, basically in cash flow, There is an increase of inventory due to continuous increasing of scale-up of the sale. So, almost 26.9 crores we have increased in the operating cash flow. And for data side, that is also continuous sale increasing of export sale is increasing almost significantly compared to previous quarters. So, the receivable cycle of this export is larger compared to domestic. So, 55 crores investment is already increased in the operating cash flow. So, these are majorly two factors which is compared to the last quarter or compared to the previous year of quarter to operating cash flow is going to down.
And there was some tax element also, right? Income tax is also increased. That is also affecting.
What was the reason being profitability? Profibility is increasing. Our tax rate is still 22%, which is new regime, and including surcharge and everything, effective tax rate is 25%. So, tax impact is similarly the same, and there is some deferred tax is also included recently. The IPO expense around, we have already given the report, 28 crores. So, that has been eliminated from the security premium, and that is also around the deferred tax consideration. So, all together, that is the impact only, deferred tax as well as current tax, both. So, this is the net of impact which is showing in cash flow.
Understood. And on the Mexico JVN capacity?
Yeah, sir, Mexico is a greenfield project and this is the second quarter. So, yes, definitely we are trying our best to achieve as much as early possible. But last quarter, it is significantly better than the quarter one. So, it is a little bit of a good shine from the quarter two. And quarter three, we are expecting like we are almost achieved the break-even point. See, in our provisional week, quarter four is our targeted to achieve this win-win situation. But not as we committed, but yes, quarter three, we are expecting to the good level of this achievement. And yes, for the margin perspective, there is only pinch bottom back and the very less percentage of the PLWPP back. So pinch bottom back, already we have a very good margin on that area as well. So, hope the best, and we are also expecting to quarter three is a better result from the Mexico. Yes, it is installed capacity is like a 400 ton metric ton. Out of that, every month, we had last quarter average selling all costs like 80 ton nearby. And this quarter, we are expecting 100, 120 metric ton. And almost 120 metric ton is the nearby the breakeven of this quantity. So, we are expecting this next quarter will be the wind-wind situation.
Understood. Understood. Thank you. I'll come back if I have more questions.
Yeah, yeah. Please, please, sir. Please, sir. Please. Thank you.
Operator
Thank you. The next question is from the line of Sandeep Shabra from Raushi Investments. Please go ahead.
My questions have already been answered. Just one thing, now that I have the opportunity, all the margin that has been lost will be recovered or only from third quarter there will be an improvement?
Well, sir, it is very difficult to achieve that all the losses in the one quarter, but the third quarter will be the win-win situation and more than that, we are expecting little bit loss also covered. So, but it is a very small quantity. We are producing like a 3,500 metric ton, 3,000 ton in India, and this is already installed. Capacity is already 400 metric ton per month. So, we are expecting a good margin on it, but yes, first and second quarter from the greenfield project, it is impact on you, the reason behind, there is a long process, long machinery waiting, so that is impact on interest costs and all these things, but yes, third quarter is definitely comes with the loss recovery of the very small portion, not much more, as we expected.
Okay, and on capacity, you said 5,040. Sorry, you were saying something?
500 metric, 400 metric ton installed capacity. Out of that, we are currently utilized 80-90 metric ton, 70-80-90 metric ton, and our break even almost 120-130 metric ton is our one break even. And the current month, also, we are almost actually 120 metric ton sales from the Mexico.
No, I'm talking about the India part. Between now and October 2027, any capacity will get added or everything will happen only in October now, in 2020? No, sir.
Two things. Sir, we just added one plant before, like two months back, and it is already into the ramp of that plant. It is a rented plant, and it is come up with the new capacity in next one or two months. So, it will give a little bit cushion, and also, we are very much forcing our expansion level. Already, we are in good phase of the expansion level. So, we are trying our level best to achieve that expansion and production capacity before October. But currently, we are saying October is our deadline for the expansion capacity, October 27th. But yes, in between, we have a little bit space for that quantity. Okay.
So, as we move forward, see, last year, you had only three pinch bottom machines. The remaining two came only in, let's say, end of March, 2026. So, logically, the margin in these years, I mean, in fiscal 27, should be higher than the margin of 26. This quarter, due to the sharp increase in, yeah, because I'm talking about pinched bottom only. This year, because of the, this quarter, because of the sharp increase in your, you know, the raw material price, there was a problem. But if you can achieve complete pass-through, as you are saying that you have achieved complete pass-through in fiscal, I'm sorry, in third quarter, then third quarter margin should logically be much higher Sir, you are perfectly
okay, and that is the best example, like you can compare it to quarter one, quarter two, previous year to this year. Quarter one to quarter one, it is almost 45 to 50 percent increment. This quarter is almost compared to that is like a 20, 10, 28 percent. Already is there, and third quarter is also like we are on the third quarter. Yes, come on. Last year, previous year quarter to this quarter, we are definitely in the good phase because of the pinch bottom and already we get the good advantages and it is reflected on our quarter one and quarter two compared to previous years. It is already reflected.
Yes. All right. And all the best.
Operator
Thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Avijit Mitra from Aini's Alpha Investment Management. Please go ahead.
Yeah, thanks for taking my question. So, just to understand margins a bit better. So, for example, if the raw material prices moves up by, you know, 10 rupees, 100 to 110, right? You can try to pass that 10 rupees to your customer. That's the best that you can do. So, you increase your product prices by 10 rupees. Thank you.
Yes, Abhij, thank you. Sure, first of all, like always, we are getting this support from the customer. There is no doubt about last 30 years. But this year, what happened, quarter one and quarter two, it is a jump like a 30%. I've already given you an example. Like once price is 92, then 125, 143, then again 120, and then it shoot up to 160. So, this second, first quarter to second quarter, 120 to 160, it is a jump like a 25%. And definitely customer support like 120 to first rate, it is like 130. So, we close the order. Then 130 to 145. Again, that is 120, delivery is on, at that time, 145. The second order delivery is a 120, 130 price. It should be on the 160 price range of, at that time, we deliver. So right now it is on peak and the peak time also we get the good order and everything. But yes, it will be the production time almost one and a half month. So from that it is not reflected our conversion into our profit. But yes, later on it will be the good thing comes on this area.
Yeah, I mean, the reason I'm asking is that, you know, I mean, as a company, and I'm sure your customers are also observing, you know, your pricing, benchmarking, whatever is the increase in raw match prices, you pass that on, and then the incremental delta you get through value addition. But to sort of expect percentage margins to come back to where they are means that you have to charge customers on the price increase as well, which is not logical, right?
On that, I will very honestly tell you, many times I already explained that at the increased time, we can try to the percentage, and decreased time, we can try to the per kg. But everyone knows this is a very difficult scenario for the crude price and everyone. But still, our customers are very cooperative. They definitely, we ask for the percentage amount of incremental, but definitely, yes, per kg, we will get it. Yes, some areas, maybe I want to increase like a 5%, but we can get the 3% or 4%. Maybe possibility, like I can increment like a 25 rupees per kg, but they may be negotiating like a 20 to 20 rupees, maybe possibility. But it is a very late area, and we are also controlled because this is a normal price. Like, I will give you the petrol diesel example. So that is the price increment, that means increment. So in this scenario, in this kind of industries, plastic business everywhere, price increment, that means increment. Yes, that percentage, how we can achieve it, it depends on the customer and our relationship. But yes, you are absolutely right, it is not 100% we can get it. But we are trying our level best to average out with the good number.
Understood, understood, understood. And for you, I mean, what kind of, I mean, can you go back to your Q1 absolute EBITDA per ton, say over the next two quarters, EBITDA per kg, whatever.
Like it is a per kg is a 55 rupees, and this quarter is like a 46, 47 rupees, approximately I am telling you. Fifty-four and this year, forty-five. Fifty-four and forty-five, ten rupees decrease. Fifty-four can be achieved in the next two quarters, you feel, as in you can get back. Sir, almost, I explained to you, pinch bottom quantity increment, and definitely, we want to more than that, but yeah, we are trying to nearby that, definitely. That is the only one person depends on the market. But other than that, we are very much comfortable because now season time is already started and it is already impact on our business as well. So we have quite confidence on that, Liam.
In the terms of yearly, yearly, whatever we propose, yearly is almost, we can achieve it. There is a doubt on the yearly achievement. Yes, yes. This quarter is a significant little bit down, but yearly, our target is we are on the track compared to whatever the process is already showing. Thanks, thanks.
Thanks. I wish you all the best. That's awesome. Thank you, sir.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for the day. I now hand the conference over to management for closing comments.
To conclude, H1F527 was a half of strong growth of NAC packaging as a listed company, even as industry-wide cost, pressure, rate on our margin in Q2. During the half, we stayed focused on the right thing, adding value in our products, expanding capacity efficiently, and maintaining operational excellence. Our integrated capabilities and customer partnership continued to be of key advantages. Looking ahead to Q3 and Q4, we expect volume growth to continue, supported by the ramp-up of contracted orders, including the renewed international contract and higher wallet share from existing clients. We also expect margin to recover from Q3 F527 onwards as pricing adjustments flow through. We will remain cautious on the cost and capital deployment. The new Gujarat plan remains a key milestone, and its timely completion and utilization will be primary focus through 2027. Finally, I extend my gratitude to our shareholders, customers, suppliers, bankers, and employees. Your support is what empowers us to achieve these goals. We look forward to updating you again next quarter. Thank you.
Operator
Thank you. Ladies and gentlemen, on behalf of Snack Packaging Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you, everyone.
