Operator: Ladies and gentlemen, good day and welcome to the Tinna Rubber and Infrastructure Limited Q2 and H1 FY 2027 earnings conference call hosted by Go India Advisors. 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 then zero on your touchtone phone. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am.
Sana Kapoor: Thank you, Rutuja. Good afternoon, everybody, and welcome to Tinna Rubber and Infrastructure Limited earnings call to discuss the Q2 and H1 FY 2027 results. We have on the call Mr. Gaurav Sekhri, Joint Managing Director, Mr. Subodh Kumar Sharma, Director and Chief Operating Officer, Mr. Abhay Kumar, Chief Financial Officer, and Mr. Rajarshi Datta, Business Development and Corporate Affairs. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Gaurav Sekhri to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Gaurav Sekhri: Thank you, Sana, and good afternoon, everyone. Sana, am I audible okay?
Sana Kapoor: Yes, sir. Loud and clear.
Gaurav Sekhri: Thank you. Welcome everyone to Tinna Rubber and Infrastructure Limited's Q2 and H1 FY27 earnings call. Our results and earnings presentation are available on our website and on the stock exchanges. I will cover the strategic updates, and then Subodh will take you through our operational and financial performance. H1 FY27 has been a landmark period with profitability at record levels on both standalone and consolidated basis. In Q2, consolidated revenue grew 31% and PAT grew 45% year on year, reflecting the strength of our business model. CARE Ratings also has upgraded our credit rating to CARE BBB, Stable for long-term facilities and CARE A3+ for short-term facilities. Our 3,500 ton per annum micronized rubber powder expansion is on track for commissioning in Q3 of FY27. It will take our total MRP capacity to 20,000 tons per annum, making us the world's largest producer of MRP.
Gaurav Sekhri: At our plant in Varale, the tire pyrolysis oil began commercial sales in Q2, and we expect it to stabilize by Q3. Recovered carbon black production starts in Q3, and we expect commercial sales to commence in Q4. Our polymer composites and masterbatch business more than tripled its revenue to INR 27 crore in H1. With 12,000 ton per annum capacity added at Kannur, its capacity is now 18,000 tons per annum, and we expect the PCMB business to contribute 8% to 10% of the FY27 revenue, which is as per the guidance given earlier this year. We have completed INR 45 crore of capex in H1 out of INR 100 crore planned across FY27 and FY28. I am pleased to inform that we have completed acquisition of 40 acres of land in Andhra Pradesh for an integrated rubber and plastics recycling complex.
Gaurav Sekhri: We plan to invest approximately INR 250 crore over three years at this facility, which will involve tire recycling, plastics recycling, pyrolysis and a recovered carbon black plant at this location. In our Q2 filings, we have informed our shareholders that our Panipat plant land may be acquired by Haryana Government. While our representation to the state government is pending against this acquisition, we wish to clarify that if this land is eventually acquired by the state government, our compensation due to us more than offsets the book value of this plant. Our Panipat facility is our oldest and smallest of the factories, where we only make crumb rubber and micronized rubber powder. All the plastics recycling facility in North India is not located at this premises.
Gaurav Sekhri: Therefore, to further clarify, and as already informed in our Q2 filings, the acquisition of Panipat land, if it was to happen, will not have any material negative impact on our operations. Internationally, our Oman plant ran at 90% utilization in H1, and its EBITDA margins improved to 11.5% from only 6.4% in FY26. In South Africa, phase I is complete and exports of semi-processed material has begun. The 9,000 ton per annum crumb line, which is part of our phase II at South Africa, is now under commissioning. This has got delayed by three to four months due to supply chain disruption and some of our equipment getting stuck in the Middle East and was not able to reach South Africa on time. In Saudi Arabia, a plot has been allotted for a 24,000 ton per annum tire recycling plant.
Gaurav Sekhri: We expect to begin construction in H2 of FY27, of course, subject to the geopolitical situation. We have also set up Tinna Rubber Chile SpA in Santiago to widen our end-of-life tire sourcing network. I am pleased to inform renewable energy met 40% of our power needs in H1 as our renewable capacity rose from 1.23 megawatt to 4.48 megawatt, and the solar power savings have touched approximately INR 2.37 crore. We remain focused on our Vision 2029, which is to achieve revenue of INR 1,000 crore, revenue CAGR above 25% and profitability CAGR above 33%, EBITDA margins above 18% and ROCE above 30%. Part of our vision is also to expand ourselves from eight to 10 locations. I am pleased to inform that we are making good progress on all of these fronts. With this, I hand over to Subodh.
Subodh Kumar Sharma: Thank you, Gauravji, and good afternoon, everyone. Coming on our operational and the financial performance. In H1 FY27, tire crushing volumes grew 30% year-on-year to 86,000 tons. Production of MRP, micronized rubber powder, and reclaimed rubber rose by 19%, supported by steady demand from the tire industry. By segment, infrastructure revenue grew by 38% to INR 112 crore despite bitumen supply constraints. Industrial segment revenue grew 37% to INR 85 crore, which also includes export volume which has contributed 6% to our total revenue, and the export volume growth has been witnessed approx 15%. Consumer segment revenue rose to INR 21 crore from INR 19 crore on price correction with stable volumes. With steel, revenue rose to INR 57 crore from INR 53 crore, also on price correction with stable volumes. Infrastructure and industrial remain our main growth drivers. On a consol basis, Q2 revenue was INR
Subodh Kumar Sharma: 157 crore, up from INR 120 crore. EBITDA grew by 37% to INR 29 crore, and PAT grew by 45% to INR 17 crore. EBITDA margin stood at 18.8% against 18.0%, and PAT margin 10.9% against 9.8%. For H1, revenue grew by 25% to INR 313 crore, while EBITDA grew by 50% to INR 63 crore, and PAT grew by 60% to INR 38 crore. EBITDA margin stood at 20.4% and PAT margin stood at 12.2%. Profitability moderated from Q1 because of the startup cost, geopolitical uncertainties, and subsidiary performances. We expect these to normalize as operations scale up. Among subsidiaries, Oman reported PAT of INR 1.3 crore in H1. South Africa and Saudi Arabia combined together recorded a startup loss of around INR 94 lakh. TP Buildtech had revenue of INR 41 crore, and EBITDA stood at INR 4.7 crore, contributing INR 1 crore at the consol level.
Subodh Kumar Sharma: In the best case, it is targeting revenue of INR 100 crore by FY27 by raising utilization at Kolkata, expanding nationally, and growing its construction system business. It plans to launch next generation self-repair products by FY28. Our balance sheet also strengthened further. Debt fell to INR 111 crore from INR 121 crore at the end of FY26. Our interest coverage improved to 9.91 from 7.49, and net debt to equity at 0.32%. From FY23 to FY26, our revenue nearly doubled, EBITDA grew by 2.5 times and PAT grew by 2.4 times. For FY27, we are targeting revenue of around INR 700 crore, EBITDA of INR 126 crore, and PAT of INR 70 crore. With that, I open the floor for question and answers. Over to you, moderator. Thank you.
Operator: Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Ritesh Ashar from Shogun Capital. Please go ahead.
Vidish Asher: Good afternoon, sir. Am I audible?
Gaurav Sekhri: Yes, yes. Please go ahead.
Vidish Asher: Sir, firstly, congratulations on this quarter. We really appreciate the work you are doing in circular economy and appreciate your business. I have a couple of questions today on the business and this quarter, just give me a moment. First question is, sir, would like to know your EBITDA margins for this quarter have slightly come off from 18.5%, 19%, and this quarter is at around 16%. I have a couple of questions around this. Firstly, the PCMB mix has improved from, I think, 3% to 9%, which I think should contribute to better EBITDA margins. While I understand gross margins have not changed much. The possible factor I am thinking is the steel revenue, which your presentation says the prices have come down.
Vidish Asher: However, the prices of steel have been progressively increasing from, I think, $800 a ton in October 2025 to $1,300 a ton in September 2026. That is one question I have, sir. Second question is, when do we expect PCMB, the 32,500 tons to be live?
Gaurav Sekhri: Hi, Gaurav Sekhri here.
Vidish Asher: Yes.
Gaurav Sekhri: First, regarding EBITDA margins, we have always indicated EBITDA margins of about 18% is what we are aiming for, north of 18%, and we have delivered on that. The previous quarter, as a comparison, I think was a slight aberration. We had a much better quarter margin-wise previous quarter because of a variety of reasons, some benefit in raw material prices and inventory that we were carrying. Those kind of things can happen. But the guidance we have given, and I am pleased to say that we have met those targets, is that our business model shows our ability to deliver 18% plus, and we are delivering that. Our EBITDA margin even in Q2 is 18% plus. That is point number one. I think two, three causes which you mentioned, I just want to comment on that.
Gaurav Sekhri: Firstly, on the PCMB business, actually, that business operates at a lower EBITDA margin than our core business, and that is mostly because it is still a new business for us. We are less than a year in the PCMB business. It is still growing, still stabilizing, still a fair bit of money being spent on R&D. That is one point. Its contribution to our overall business will grow to about 8% to 10% this year. We strongly believe in that business and the niche we have found for ourselves to operate in. That has a lot of legs to it for growth. Does that answer everything that you had mentioned, or have I missed something?
Vidish Asher: No, would like to understand on the steel part. It is a small portion, I understand, but would like to understand how that will take place in the next few quarters or years to come.
Gaurav Sekhri: You are asking about the PCMB business, right?
Vidish Asher: No, the steel part.
Gaurav Sekhri: Steel.
Vidish Asher: The steel part.
Gaurav Sekhri: So steel, as you know, it is a by-product that we get when we recycle tires. And the value addition that we do to some part of it is also shaping up nicely. And it will be an important part of our business, but it will always be a case for us.
Gaurav Sekhri: Do value addition of a by-product of our core business of recycling of tires. Our core activity will remain rubber and tire recycling.
Vidish Asher: Right, sir. I will just push back in line. I have a couple more questions, but I will take them later.
Gaurav Sekhri: Okay, thanks.
Vidish Asher: Thank you.
Operator: Thank you. Ladies and gentlemen, to ask a question, please press star and one. Participants, you may please press star and one to ask a question now. Next question is from the line of Nikunj Bhanushali from Wallfort PMS. Please go ahead.
Nikunj Bhanushali: Hi. Thank you for the opportunity. Sir, on the capacity front in India tire crushing business, we have mentioned that our capacity would be rising to about 235,000 tons. Can you just help me? Where are we increasing this capacity and what is the timeline? How are we moving on that timeline?
Subodh Kumar Sharma: Hi, Nikunj. So both the side. Like I covered in my statement, we are almost utilizing around 85% to 90% capacity, whatever, the currently installed at across India. That is the reason we are now expanding further and we have finalized this 40-acre land parcel in the state of Andhra Pradesh. That is basically to increase our tire recycling capacity, which will further the downstream product like MRP, reclaimed rubber, plastic recycling, TPO. Everything will be combined at one common, fully integrated complex. That is where we shall be working on that. In addition to that, globally, we are also expanding our operations in Saudi Arabia, which will add close to 24,000 tons of tire recycling capacity. That is how we have planned the roadmap for the next three years.
Nikunj Bhanushali: Right. We have mentioned it by FY27 end. So that is what my question was that our capacity should increase to 235,000 by FY27 end. Saudi Arabia, we have just started, the construction should go on, and other places also, the plant is yet to develop. So how are we adding capacity in the current year is what my question is.
Subodh Kumar Sharma: Yeah. So FY27 estimated what you are reading, 235,000. Yes. We are in the mid of starting our construction activities in Saudi Arabia, which we have added to this one, and that is slightly disturbed because of this West Asia conflict. That is in pipeline, but the further expansion in India will happen in the completely new greenfield project.
Nikunj Bhanushali: Okay. Yeah, that is it from my side. Yep.
Operator: Thank you. Participants, you may please press star and one to ask a question. Ladies and gentlemen, to ask a question, please press star and one. The next question is from the line of Ashray Sheth from Ventura Securities. Please go ahead.
Ashray Sheth: Good afternoon, sir. Congratulations for a wonderful set of results this quarter. We have been performing consistently over past few quarters, and so I wanted to understand what are we doing differently that we can maintain a reasonably stable margin? While we see a comparison with other peers in recycling space, they have taken a hit on the margins due to the geopolitics. So wanted to understand that how are we managing sourcing and basically, our outlook is changed on the sourcing side of things, and how are we managing things on that side?
Gaurav Sekhri: Hi. Thank you for your question. Gaurav here. We cannot comment on our competitors. As far as our business is concerned, we have consistently communicated that we have built a unique business model with some differentiated aspects to our business. Diversity of geography, the diversity of raw material base, the diversity of customer base. These are the pillars which differentiate us from our competition, and which enable us to operate at the margin that we are operating. That is the key to our business. There is no other company in the country which is operating on a pan-India basis. There is no other Indian business also which has gone outside India the way we have gone.
Gaurav Sekhri: Our diversity of running various kinds of feedstock and catering to various verticals, that is what sets us apart, and we have communicated this over the last four years as our strength, and we will continue to build on this strength. I hope this answers your question.
Ashray Sheth: Yes, sir. It does. Secondly, I wanted to ask about the progress that is made upon the reclaimed rubber usage in road surfaces. Is there any approval process that we need to show the durability of roads with reclaimed rubber? Any test that we need to perform or any regulatory approval process required?
Gaurav Sekhri: Firstly, to clarify, reclaimed rubber does not go in road construction. It is crumb rubber, which is converted into a crumb rubber modifier, and that is the additive to bitumen for road construction. That is point one. In regards to your question on approvals and consents, rubberized asphalt and crumb rubber modified bitumen is now more than two-decade road concept in India, and various tests and validations have already happened. Hundreds and thousands of lane kilometers of roads have been made, which stand as a testament to the effectiveness of this product. It is already mentioned in the IRC guidelines on where and how it has to be used. It is not really needing any more validations or certifications. All that data is already there.
Ashray Sheth: Okay. Got it, sir. The new plant that we have acquired, can you give us a basic outline of the product mix, or is that still not confirmed yet?
Gaurav Sekhri: We have acquired land, not a plant. That land has been acquired in Andhra Pradesh, and it is to build a new greenfield facility. Our plan is to undertake tire recycling, both for manufacturing of crumb rubber and derived products, as well as for the tire pyrolysis and our recovered carbon black plant. It will also house our PCMB business, which is the polymer composites and masterbatches. Within this 40 acres, we will also set up a facility for our construction chemicals business because we are not yet present in the south, and the intention is to also take the TP Buildtech business in south and on this location.
Ashray Sheth: Okay, sir. Fair enough. Got it. Thank you for answering my questions, and good luck for the future.
Gaurav Sekhri: You are welcome. Thank you.
Operator: Thank you. Ladies and gentlemen, you may ask question by pressing star and one now. Participants, you may please press star and one to ask a question. The next question is from the line of Dheeraj Ram from 361 Capital. Please go ahead.
Dheeraj Ram: Hi, sir. Thank you for taking my question. Sir, could you please let me know how much is the EPR income?
Operator: I am sorry to interrupt you, Mr. Ram. Can you please speak a bit louder?
Dheeraj Ram: Sure. Can you hear me now?
Gaurav Sekhri: Yes.
Operator: Yes.
Dheeraj Ram: Sir, can you let me know how much is the EPR income generated during Q2?
Gaurav Sekhri: INR 4.6 odd crores.
Dheeraj Ram: Okay. Could you help me with the last quarter's number, sir, if you don't mind?
Gaurav Sekhri: INR 6.7. Approximately INR 6.7 crores.
Dheeraj Ram: Got it. My second question is, this Saudi land of 24,000 tons, which is expected to start construction by the end of this calendar year, are we on track or do we see any slight delay in this?
Gaurav Sekhri: See, the Saudi land is around 13,000 square meters, and it is for setting up of a plant of 24,000 tons capacity. We are good to go, actually. We are just waiting for the situation there to stabilize to some extent. Like I said, the land is already allotted. We know who the contractors will be. We have not yet made any advances or released any payments. We thought it prudent to wait and see for things to settle, and that is what we are doing. We are waiting and watching. We have at least one person permanently based there now to give us first-hand information of what is happening on the ground. But we are yet to release any advances or work orders for the construction of the facility simply because of wanting to wait and understand the local situation a bit better.
Dheeraj Ram: Understood. On this Panipat plant, where the state government of Haryana wants to acquire, if that is going to happen, then where do we plan to shift this machinery? If you can help us understand how long it will take.
Gaurav Sekhri: Sure. Panipat facility, as I mentioned in my opening comments, is our oldest facility. It was set up way back in mid-2000s. All the equipment and the plant, et cetera, is fully depreciated. It is our smallest facility where we are only making crumb rubber and MRP. We do not do reclaim there. We do not do any other activity. Also, the entire plastics business, which is a recycling business based in North India, is not on this premise. It is at different locations. We do not expect any major disruption to our work. It is a very small plant. I think within three to four months, we can move it, shift it, and continue with our operations.
Gaurav Sekhri: But like I said, we are continuing to represent to the state government on this topic because it's a running factory, and the land they have expressed need to take also for industrial purposes. So in our view, it actually does not make any sense why you would take a running factory employing people for industrial purposes. If it was for some general public infrastructure, we can understand. So we are confident that we can convince them. If not, then like I said, it's a very small factory, less than 2 acres. We can move it very quickly.
Dheeraj Ram: Understood. Got it. And just last question, how do you see this recovered carbon black scaling up? I know, I guess in the last con call, you have told about PCMB and RCB contributing to 7% to 10% of top line. Does this still hold, or if you can please correct me on this number.
Gaurav Sekhri: On the PCMB business, we are very bullish on it. I think we are applying our historical knowledge of thermoplastic rubber compound, et cetera, that we have within our group into leveraging, in this business as well as our knowledge of recycling of tires. There is some benefit of those learnings also which we can apply to this business. We think this has tremendous opportunity and growth. There are various mandates now in place on mandatory use of recycled plastics that is giving a tailwind to this business. And we intend to, already as expressed, we will take it to South India, to the new facility we required. So it's clearly going to be a very important part of what we do. And I'm confident that we will achieve our target of it being about 8% to 10% of our total business in FY27.
Dheeraj Ram: Understood. And just last question, if I may. It's a nascent stage, I understand, but this Andhra Pradesh facility, what is the expected asset turns that we are looking at?
Gaurav Sekhri: Sorry, which facility are you asking for?
Dheeraj Ram: The Andhra Pradesh facility that is about to come up. I know it's early stage, but if you can guide us on the asset turns and broad-based numbers.
Gaurav Sekhri: It will be exactly in line with our current ratios. Because whatever we are doing already, this is just doing more of that. So it will be capex to sales ratio is about 3x.
Dheeraj Ram: Okay, understood. Thank you. Thank you, sir.
Operator: Thank you. The next question is from the line of Mihir Vora from Equirus Securities. Please go ahead.
Mihir Vora: Yeah, hi. Thank you for taking my question, and congrats on the good set of numbers, sir. Just one clarification question here. Broadly, what I understand is in terms of our raw material which we source from outside, freight is a very important part of it. Currently if we see the freight prices have been moving, like the move has been very steep. How does the price mechanism work here? Are we able to pass on the prices to the end customers, or is there some kind of a lag here? Can you just explain, throw some color onto the pricing mechanism here with the customer?
Gaurav Sekhri: Sure. I think we have, as a company, done quite well in passing on the extra cost to our customers. For customers, this has become even more compelling. Use of recycled rubber materials has become even more compelling than it was because just as we are facing the brunt of high energy prices of natural rubber, synthetic rubber have also shot up. So, tire companies or any rubber industry is finding even more merit to use recycled rubber products. That is just the reality of things at the moment. Yes, we have had higher costs and more erratic logistics over the last four to five months.
Gaurav Sekhri: But the very high energy prices, very high natural material prices such as natural rubber, et cetera, have also assisted us where our customers continue to see a lot of merit in using more of our products and paying our desired price.
Mihir Vora: Okay, got it, sir. First half has been very strong in terms of margins. Also, you have managed well. Second half expectation also continues to be the same, or are we seeing some kind of inflations due to which the H2 can be on a lighter side relative to H1 in terms of margins?
Gaurav Sekhri: See, we have consistently maintained and delivered EBITDA margins of 18%. I see that to be achievable as a guidance. Irrespective of what is happening on these external circumstances and factors, I feel we should be able to maintain 18% plus. 50 bps, 100 bps up or down can always happen. That is hard to predict.
Mihir Vora: Sure. Lastly, on your Chile investment, what would be the total amount of investment going there, and what is our rationale behind going into those markets?
Gaurav Sekhri: Please allow us to come back to you with more details on that over the next few months. We see a compelling opportunity. We are confident that we will do something very interesting there. I would like to give you more details of that over the next few months once we have a better handle on it.
Mihir Vora: Sure. Okay. Thank you.
Operator: Thank you. The next question is from the line of Krish Jain from Mafasset Managers. Please go ahead.
Krish Jain: Yeah. Hi, I hope I am audible. First of all, congratulations on a good Q2 and H1, and I hope this performance continues. Just wanted some clarity on the capacity. If I am not wrong, the FY26 India capacity was 185,000 tons per annum, and you plan on increasing this to 235. And just correct me if I am wrong here, but right now even in H2, after H2, the capacity is still 185. Just wanted to get a breakup of this extra 50,000 tons per annum as to where you are planning to increase this and what kind of products are you adding. Or is it rather say that you are adding capacity in which products?
Subodh Kumar Sharma: So, hi, this is Subodh here. See, the total capacity we have given a guidance of 250,000 tons by FY27. But the India capacity is currently at around 185,000 tons and Oman additional 15,000 tons make it to total 200,000 tons of installed capacity. Going forward, we have in mid of setting up our plant in Saudi Arabia, which will be having close to 24,000 tons, plus some debottlenecking and the new fresh investment what we are planning for the Andhra. This all will take us to the plant capacity in the coming years.
Krish Jain: Sure. But that's for the coming years, and Andhra capacity additions will start maybe a bit later, maybe from
Subodh Kumar Sharma: Yeah
Krish Jain: FY28 or 29. But if I refer to page 11 of your PPT, the India capacity, what you're expecting is 235. So the extra 50,000 tons per annum, just wanted to get an understanding what kind of capacity are you adding, just in the short term, this coming six months. Even excluding the Saudi capacity of 24,000, that's still another 26,000 tons per annum. If you could give a breakup of that, please.
Gaurav Sekhri: Yeah. Hi, Gaurav here. I think the clarity that we can give you on this today is that we have done some debottlenecking at our existing plants to add maybe 10,000 tons or 15,000 tons of capacity. I don't think we are getting to 235 without setting up a new plant. We were counting on Saudi to have happened till now, but that is delayed for obvious reasons. South Africa, I believe, will touch about 10,000 tons recyclings in this financial year itself. So that is an addition to the overall capacity. But Saudi is delayed. We should have already been building Saudi had these troubles in Middle East not happened since February of this year.
Gaurav Sekhri: I think what we are now doing is since most of our land is fully exhausted and built in West and South and North India, that is why this new premises of 40 acres that we bought, which is much, much larger than any of our facilities. Our single largest facility right now is in 15 acres of land, whereas we are now taking 40 acres to build capacity here. So that is where the work will begin, and we expect to begin and break ground as early as November.
Krish Jain: Yeah. Sure. That answers my question. Another question I had regarding the future CapEx after FY27. You have planned for INR 250 crores from Andhra Pradesh and another INR 100 crores, sorry, INR 50 crores, if I am not wrong. So that is INR 300 crores. Just wanted to get an understanding of how it will be funded, whether it will be through debt or you are raising money or it will be through internal accruals.
Subodh Kumar Sharma: Sure. So, Andhra, the INR 250 crores we have, it is going to be over 3 years. So we have sufficient time, I think, to decide on the fundraise or how the CapEx will be funded. And we have all options open. Fortunately, we have a very strong balance sheet. So we are comfortable to explore various options and we will decide over the next 6 months to 1 year.
Krish Jain: Okay. Just the final question from my side. You mentioned that even TP Buildtech facilities are included in this INR 250 crore CapEx, since it will not exactly reflect in our balance sheet. I just wanted to get an understanding how much is the split for Tinna Rubber and TP Buildtech in this INR 250 crores.
Subodh Kumar Sharma: I am sorry, there was a little audio disturbance. Fine. Can you repeat your question?
Krish Jain: As I was saying, since TP Buildtech is an associate, the capex made in TP Buildtech won't reflect in our balance sheet in Tinna Rubber. I just wanted to get the split of the INR 250 crore Andhra Pradesh plant. How much is the capex for Tinna Rubber and how much is the capex for TP Buildtech?
Subodh Kumar Sharma: This INR 250 crore is exclusively Tinna Rubber.
Krish Jain: That's all from my side. Wishing you all the best for the future.
Subodh Kumar Sharma: Thank you.
Operator: Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we would request to please limit your question to two per participant. The next question is from the line of Shreya Jain from 3E Capital Services. Please go ahead.
Shreyans Jain: Hello, am I audible?
Operator: Yes, you are. Please go ahead.
Shreyans Jain: Yeah. Thank you for the opportunity and congratulations to the team for delivering good set of numbers. Couple of questions, sir. In your annual report investor presentation, you have constantly mentioned that recovered carbon black would be one of the fastest growing products, and there are other players in India as well that are expanding in this product. So could you please throw some light on this product and margin profile for the same?
Gaurav Sekhri: Hi. The recovered carbon black is a very interesting material, which is basically substituting use of virgin carbon black. It has tremendous opportunities, whether it is in the tire industry or other alternate industries. Therefore, because of the diversity of applications, it is an exciting product to get into. We expect the overall tire pyrolysis and the RCB business to operate at similar margin profile as our core business, which is around 18% EBITDA.
Shreyans Jain: Great to hear that, sir. One last question. What could be the revenue potential of PCMB business at peak utilization?
Gaurav Sekhri: PCMB business, it is very dynamic. For me to give you a number, it will be too premature. We had given an outlook early this year that our top line from the PCMB business will be approximately INR 70 crores, and we believe we will get very close to that in this financial year. Next year, we will expand this business to do about INR 125 crores at least. That is what we are working towards.
Shreyans Jain: Okay, sir. Thank you and all the best for the future.
Gaurav Sekhri: Thank you.
Operator: Thank you. Next question is from the line of Vinit Pokharna from Equity Capital. Please go ahead.
Vinit Pokharna: Am I audible, sir?
Gaurav Sekhri: Yes, please go ahead.
Vinit Pokharna: Sir, could you help us understand that Tinna's current average procurement cost per ton of domestic as well as imported end-of-the-life tires, including the landed cost breakup of imports?
Gaurav Sekhri: See, we-
Vinit Pokharna: And how the company manages Oh, sorry. Yeah.
Gaurav Sekhri: Yeah. No, we do not get into this kind of detail on open calls. We consider it sensitive to our business. Yeah.
Vinit Pokharna: No, got it. Also, could you help us understand the margin for the TPO, recovered carbon black, and reclaim, if you can?
Gaurav Sekhri: As answered earlier, the EBITDA margin profile of the pyrolysis, which is the TPO and the RCB business, will be along the lines of about 18% as our current businesses.
Vinit Pokharna: Okay. But still, boss, product-wise guidance you cannot throw us in, like category-wise?
Gaurav Sekhri: Product-wise, it is hard to give you because both are the end products from the same process.
Vinit Pokharna: Okay. Got it. Thank you.
Operator: Thank you. Participants are requested to please limit your question to 2 per participant. The next question is from the line of Javed Ansari from MM Capital. Please go ahead.
Jawed Ansari: Hello. Good afternoon. Thank you for taking my question. My question is on recovered carbon black. Could you please elaborate on the key issues affecting sales and customer acceptance? Because as per my knowledge, there is less demand on the supply side of RCB. Is it primary inconsistency with input tire quality or feedstock, like finished product parameters such as contain moistures and ash content also. Can you please elaborate this?
Gaurav Sekhri: RCB, there are various parameters to the regenerated carbon black, and every type and spec of RCB will have a certain application. The highest and the most purest form of RCB will be used by the tire industry. But depending on application, there are different spec RCB applications for other kind of products.
Subodh Kumar Sharma: Maybe I also would like to add here, Javed.
Jawed Ansari: Okay.
Subodh Kumar Sharma: For the tire industry, it always remains a sustainable raw material which will partially replace the virgin carbon black. But there are many applications in the plastic, in the non-tire segment like rubber mat industry, like the masterbatch industry, et cetera, wherein RCB can go. Conveyor belting industry, wherein RCB can go in a very good quantum without compromising on the end results.
Jawed Ansari: Okay.
Subodh Kumar Sharma: Yeah.
Jawed Ansari: Okay, that is from my side.
Operator: Thank you. Next question is from the line of Aryan Doshi from Divitiae Investments. Please go ahead.
Aaryan Doshi: Yeah. Can you hear me?
Gaurav Sekhri: Yes. Go ahead please.
Aaryan Doshi: So congratulations on great set of results. My question was on H1 FY27. The tires processed rose 28%, right? To about 92,000 tons. But the revenue excluding the PCMB was only 18%. So revenue per ton fell about 8%, right? About INR 33,000 to INR 30,000. My question was why did it fall and is a price drop or a product mix change?
Gaurav Sekhri: I believe what you are referring to is because of the product mix change, which in our case, because we cater to so many sectors and different kind of product categories, it can happen.
Aaryan Doshi: Understood. And the second question on the geopolitical situation, crude is above $114 and the freight costs are also high. What has happened to your waste tire cost, per ton in Q2 against Q1? And how much of the tires do you import, and can you pass any increase on the customer?
Gaurav Sekhri: Well, we use a prudent mix of domestic and imported tires. That is one. Second, we have multiple origins, from where we source tires. So it has, I think, assisted us. This diversity has helped us to manage our costs better. And, what was your last question?
Aaryan Doshi: Yeah, my last question was, how much tires do you import, or can you pass any increase on to the customers?
Gaurav Sekhri: Yeah. We have been able to. We have taken some price increases in the last few months, and customers have accepted it and given to us. We are operating at optimal capacity utilization. We are also carrying very low inventory. So that is a sign in itself that we have successfully been able to pass on the price increase to our customers.
Aaryan Doshi: Perfect. One last question on the pyrolysis. I am sorry if it was asked before, but pyrolysis oil started in Q2, right? In July, you targeted 7% to 10% of FY27 revenue coming from this business. That is up to INR 70 crores. My question was, what was pyrolysis oil revenue in Q2, and which tire companies have approved your recovered carbon black? Two questions on this.
Gaurav Sekhri: I do not have the specific number offhand. I can email it to you. If you write to our IR and get in touch with us, we can send you that information.
Aaryan Doshi: Okay. Is the 7% to 10% target-
Operator: Mr. Akshay, I am very sorry to interrupt.
Aaryan Doshi: Yeah.
Operator: May we request you to please rejoin the queue.
Aaryan Doshi: Yeah, it is okay.
Operator: added another participant.
Aaryan Doshi: Yeah, okay.
Operator: Thank you. Next question is from the line of Narendra from Equinova. Please go ahead.
Narendra Khuthia: Hi. Hello.
Gaurav Sekhri: Yes, Narendra, please go ahead.
Narendra Khuthia: Yeah. Thanks for the opportunity and congratulations on a great set of numbers. Following up on one of the previous participant's question regarding the pyrolysis feedstock. As per my reading, imported feedstock in pyrolysis is banned. Is my reading correct or has there been a change in policy?
Gaurav Sekhri: No, you are right. As of today, for pyrolysis business, imported feedstock is not permitted.
Narendra Khuthia: Okay. We have the relevant domestic procurement, right?
Gaurav Sekhri: That is correct.
Narendra Khuthia: Okay. Sir, the pyrolysis segment, are we planning to add more capacity to this or we are happy with where we are right now?
Gaurav Sekhri: We will add
Narendra Khuthia: Specifically the pyrolysis segment.
Gaurav Sekhri: We will add a pyrolysis and RCB plant in our new land that we have acquired in Andhra Pradesh.
Narendra Khuthia: Okay. So sir, what is the current capacity and what would be the capacity over there, if you could throw some light?
Gaurav Sekhri: New capacities, it is too early to tell you what size we will add, but our current pyrolysis plant and further downstream products is 100 tons per day.
Narendra Khuthia: Okay. Thank you so much, sir. All the best.
Gaurav Sekhri: You are welcome.
Operator: Thank you. The next question is from the line of Sumit, an individual investor. Please go ahead.
[Shareholder] (Private Investor): Yeah. Hello sir, am I unmuted?
Gaurav Sekhri: Yes, Sumit, please go ahead.
[Shareholder] (Private Investor): Sir, this is regarding the pricing difference between the recovered carbon black versus the carbon black being sold by companies like PCBL. What's the difference? Is there any benefit for the individual tire manufacturers?
Subodh Kumar Sharma: Hi, Sumit. The name you have just mentioned about PCBL. PCBL is among the largest virgin carbon black manufacturer. Recovered carbon black is basically derived out of the end-of-life tires, which is a sustainable raw material, which is a part of the sustainability goal of these tire companies. Not only tire companies, now there are many applications wherein the regenerated carbon black can partially or a great amount of the percentage in certain application can be adopted. Parallely, it also extends the cost saving to the user.
[Shareholder] (Private Investor): Yeah, right. So, is there any pricing difference? I want to ask regarding that.
Subodh Kumar Sharma: There is. See, virgin carbon black pricing is completely driven by the crude oil pricing, whereas this being a sustainable raw material is having quite stable pricing, not that much of fluctuation. And it is at least 30% to 35% cheaper than the virgin carbon black as of now.
[Shareholder] (Private Investor): Okay, sir. Wonderful. Thank you.
Operator: Thank you. Participants, to ask a question, please press star and one. Next question is from the line of Ashwini Nagar, an individual investor. Please go ahead.
Ashwini Nagar: Yeah, good evening. First of all, let me congratulate the management. I have been following your investor presentations for the last many quarters, and the transparency and clarity with which you present is really worth congratulating. I have two questions. One is, if I got your guidance right, you have said you will do INR 700 crore this year, EBITDA INR 120 crore and PAT INR 70 crore, and you have already done INR 361 crore and INR 36 crore. That is one question. Second is, how much of seasonality is there in your business? The right way to compare your result is to see quarter on quarter or year on year.
Gaurav Sekhri: Hello, Mr. Nagar. Firstly, thank you for your kind comments. We appreciate it very much. In regards to your question one, we are maintaining our top-line guidance of around INR 700 crore. We are confident we will achieve it. We are more or less halfway there. In regards to the EBITDA and PAT also, we are on target. We always aspire to maintain EBITDA margins at 18% plus. We hope to have at least a 10% PAT conversion. So we are on target on that. Regarding seasonality, one part of our business is impacted during Q2 usually, because monsoons tend to impact the infra business, and because road construction and those kinds of works tends to slow down during Q2. So there is some impact. Usually, some impact again on the same business happens in Q4 when it is excessively cold. Otherwise, all our other verticals are not so impacted.
Gaurav Sekhri: I think you can look at us as a business quarter on quarter surely, and even in terms of just growth year on year is a good parameter. We look at our business also on that basis.
Ashwini Nagar: Well, thank you and all the best for your future.
Gaurav Sekhri: Thank you.
Operator: Thank you. The next question is from the line of Sidhesh Ashar from Shogun Capital. Please go ahead.
Vidish Asher: Sir, last two questions from my end. One is on the CapEx. As you mentioned in the presentation, INR 250 crore are to be invested in Andhra Pradesh for further capacity expansion. Just to revalidate, your Vision 2029 is INR 1,000 crore revenue. This obviously excludes what we are going to spend in Andhra Pradesh, right?
Gaurav Sekhri: No, not necessarily. We expect to start work on Andhra as early as next month. We will break ground. While we will not complete this CapEx cycle of 250 within the next one to two years, certainly, as the different modules get commissioned and they start, they will begin contributing. So I am fully expecting Andhra to give an important contribution to Vision 2029.
Vidish Asher: Sir, thank you for that. How much would we have to spend in order to get the additional? Say this year we are going to be at INR 700 crores, which is FY27, and we are spending another INR 50 crores apart from the INR 250 in Andhra Pradesh. I would like to understand if Andhra would be fully invested and to be fully yielding revenue, what is the revenue potential then of Tinna?
Gaurav Sekhri: See, I do expect that we will incur a CapEx of about INR 100 crores in Andhra within 2027 and 2028. That INR 100 crores of CapEx usually in our case, asset to sales ratio is 3x, 2.5 to 3x. So that is another INR 250 to 300 crores contribution to our top line. I hope that answers your question.
Vidish Asher: Sir, actually, I am not sure because we also have Saudi coming up. We have, I think Saudi and South Africa both coming up. I think they will also be contributing to the revenues. We are spending, I think, about INR 5,000 crores there as well. If you were to take 2.5, 3 times, that should also add another INR 300 crores of revenues. That is why I wanted to understand, sir. For 2029, how much more are we spending in order to get the INR 1,000 crores of top line?
Gaurav Sekhri: For us, the asset to sales ratio is about 2.5 to 3 times.
Vidish Asher: Right.
Gaurav Sekhri: As we have mentioned, I think you have also taken note that we have another INR 50 odd crore which is going to be spent imminently. We will end up spending at least INR 100 crore, I think, in Andhra within FY27/FY28 as well. All combined to get to INR 1,000 crore by FY29 is very much in our reach. Oman, we will not do any more capex. We are done. That plant is running nicely, optimally. We do not intend to invest any more money in Oman, but Saudi Arabia will take an investment of about INR 25 odd crore.
Vidish Asher: What I think is possible would be FY29 would be a little over INR 1,000 crore, not just baseline INR 1,000 crore, is what we are saying, right?
Gaurav Sekhri: Yes, absolutely. But you see, when you are looking one, two years ahead, to be 5% or 10% plus or minus is always possible. We would rather be conservative than give you, we will be INR 1,200 crore and then deliver INR 1,000 crore. You know what I mean?
Vidish Asher: Absolutely. Sir, one final question from my end. Sir, this quarter we have had some higher other expenses as well as employees. Just want to understand what is the change quarter on quarter. I understand you said there were some startup costs in the new ventures, but employees, if you could get a sense.
Gaurav Sekhri: See, our expenses are always front-ended to get the organization future ready, et cetera. I think we are growing at a clip of about 20% to 30% annually. One has to gear up and get ready for some of these projects little in advance. That is point number one. We have been hiring some great talents to help us get there, and that will temporarily show maybe some higher costs. Aside from that, in Q2, we also provided for a performance bonus in the company. That could also be showing a higher number, if to be part of that.
Vidish Asher: Okay, sir. Got it. Wish you luck for your vision, and I hope it comes true, sir. Good luck.
Gaurav Sekhri: Thank you. Thank you so much.
Operator: Thank you. Ladies and gentlemen, as that was the last question for today, I now hand the conference over to management for closing comments.
Gaurav Sekhri: Thank you everyone for joining us today. For any further information, please contact our investor relations team at Go India Advisors. Thank you all for your continued support. Wish you a wonderful day. Thank you.
Operator: Thank you. Ladies and gentlemen, on behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
