Finolex Industries Limited ($FINPIPE)

Ladies and gentlemen, good day, and welcome to the Finolex Industries Limited Q4 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Arun Baid from ICICI Securities Limited.

Thank you, [indiscernible] Good afternoon, ladies and gentlemen. On behalf of ICICI Securities, I welcome you all to the Q4 FY '26 concall of Finolex Industries. From the management side, we have Mr. Udipt Agarwal, Managing Director; and Mr. Chandan Verma, CFO. . Now I hand over the call to Mr. Udit for his opening remarks, post which we'll open the floor for Q&A. Over to you, Udit.

Thanks, Arun, and good afternoon, ladies and gentlemen. Welcome to Finolex Industries Earnings Call for quarter 4 and for the full financial year 2026. We are very pleased to have you here today with us. Just a reminder to everyone that during the course of this call, there might be certain forward-looking statements based on our current view. However, the actual results may differ. Coming back to our quarter 4 of FY '26 performance, we had a 12% growth on year-on-year on the revenue and the revenue for the quarter 4 stood at INR 1,314 crores as compared to the quarter 4 of FY '25 of INR 1172 crores. EBITDA, we had a significant improvement in nearly doubled -- nearly doubled to INR 332 crores from INR 171 crores the previous quarter -- previous year quarter. And as a result, there is a margin improvement of 25%. Profit before tax rose 65% to INR 334 crores from INR 203 crores in quarter 4 of FY '25. And corresponding with this EBIT jump also from INR 144 crores of Q4 FY '25 to INR 306 crores of Q4 FY '26. During the course of the quarter, the volume was broadly flat for us. And this quarter, our volume was 1,01770 tonnes versus 102253 tonnes of the quarter 4 FY '25. Moving on to the full year '25-'26 performance. We had a flat revenue of up INR 4,113 crores against FY '25 of INR 4,142 crores. The lower volume, which we had during the course of the year were offset by the better realizations. That's why we see the revenue broadly flat. As we discussed in quarter 4 and has an impact on the full year performance also our EBITDA was up 43% to INR 679 crores. Our EBIT grew 55% to INR 572 crores during the course of the year. The sales volumes for the full year stood at 332,736 metric tonnes against 304782 metric tonnes in the previous year. We continue to have a very strong balance sheet with a net free cash of about INR 2,563 crores. I want to come back to one of the topics, which is impacting all of us, which is the Middle East conflict and what does it mean for us? As we all know, since the start of the conflict, there has been a major macroeconomic changes around the world and particularly in the downstream of oil, which is the petrochemical industry and PVC markets. So disruptions which are also happening because large volume of oil flows through the Strait of Hormuz, and this creates the bottleneck for the across the value -- polymer value chain. And it's not only the PVC, all other polymer prices saw a significant increase during the course of the last couple of months. So while this led to higher prices, it means also a little better realizations for us. So this is near term positive for integrated producers like us but the supply uncertainty and cost inflation remains risk, yes, but which we continue to monitor very closely. Also on the demand supply side, if we talk about the PVC demand in India follows a very well-established seasonal pattern. Premonsoon typically, we see uptake in demand because of the agri demand going up ahead of the Kareef season. And then the moderation starts during the monsoon, okay? I think with this, I would like to conclude my opening remarks and would like to open the floor for question and answers. Thank you.

[Operator Instructions] The first question is from the line of Sneha from Nuvama.

Just couple of questions from my end. Firstly, what would be quantum of the inventory gain in this particular quarter?

Chandan do you want to take that?

So we have -- like the other PVC pipe producer we have also the inventory gain during the quarter -- during the month of April, March when the prices has gone high. It ranges amount roughly around to on an average INR 35 crores to INR 40 crores around.

Understood. My second question was related to your volume growth. What we were also hearing from the other plastic producers, there was a good amount of restocking, which took place because of which, of course, the volume was much higher. And of course, we have seen consolidation result come in from leaders as well. Why was our volume growth flattish for this particular quarter?

So Sneha, as you know, over roughly around 65% to 70% volume comes from the agri sector. And this time, we have seen that the agri demand is not taking uplift during Q4. So on an overall basis, to the quarter-on-quarter volume has been flat, but we have seen a reduction in volume in agri and increase in volume in non-agri. Overall, the volume has remained flat, but the dragging has mainly happened on account of every volume not getting picked up because the farmers were quite they were also anticipating that the prices because of price volatility, we have -- we were anticipating will be softening the prices. On the anticipation, the volume has not picked up as it used to happen in the earlier quarter in the corresponding quarter of the last year.

[indiscernible] Every month picked up in the month of April and May, how are we seeing the trend? Any guidance that you would like to give. And lastly, wands the INR 50 crores EBITDA, I mean INR 50 crores inventory gain your EBITDA margin comes out significantly higher than what we have seen for the last 8, 9 quarters. How sustainable are these margins?

As you know, we are also backward into -- we have the aperitifs facilities of PVC resin manufacturing. So there is always a few cost advantage that we enjoy. So based on that, our procurement planning ML that we have in clash. So we have enjoyed sorting benefit, and that has given us the margin. Overall, the kind of market that we have seen during the current quarter is obviously sustain at a higher price, but we're going to be going forward is going to moderate to some extent. .

Guidance?

Guidance, more or less, you can say, lower -- double to low double-digit around.

Understood. And on the volume side, agri part, how has the [indiscernible]

We lost you in between. Volume front?

Sir, the other question was that have you seen pickup in the month of April and May with respect to agri volume? And any annual guidance with respect to volume growth?

April was a little subdued month, because the prices were pretty high in the month of March and prices started coming down. So really in a falling market, it has a straight impact on the demand. So April pretty subdued, but we see a little better May.

That's it. And any guidance for the annual for FY '27?

There's so many things going around, both on the supply side and also on the demand side, yes. But I would say, structurally, I would look at it as GDP, one of the indicators of our growth and which also is several constitutes to it. Agri is one of those construction industries and other and how the government spend on some of the growth drivers with government that, for example, extending the Jal Jeevan mission. And how that allocation happening during the course of the year will define what kind of a demand growth we can see.

The next question is from the line of Bharani from SJ Investment.

I'm just wondering in terms of the demand, how is it on the ground level? Because I understand that the Q4 was not so great because of the price hike. But in terms of, let's say, consolidate in the market, especially in the agri space, how has it been in terms of competition and other.

Sorry, I could not completely understand your question. Can you come again?

I was asking, sir, in terms of competition overall in the agri space right now. How has it been? And how is the customer demand sentiment besides the Q4 rapid price like is there any consolidation? And how is the overall market competitive purchase because some of our players are getting a little more aggressive on track. So just wondering what's happening on the ground.

No. The story is different for everybody because the ratio or their dependence on the agri market is -- everybody is different. We have been predominantly in the agri side, relatively stronger as compared to the nonagriside. And so the impact cannot exactly be like to like compared. But coming back to your question of what is going on the ground. As we said, the April was a subdued month in terms of the demand May looks to be slightly better yes. Also because of the agri demand, which has kind of come back a little bit ahead of the monsoons, yes. And a lot will depend on what happens to the monsoon. We already know that monsoon are kind of getting delayed this year, which was supposed to happen like nowadays, these days in Kerala, but got extended by another week or 10 days. So I hope that the in the month as we move forward in the month of June, if some part of the June there is continued demand.

Understood, sir. I was just wondering in terms of, let's say, players like is [indiscernible] have also been gaining the market share. I was wondering, has it been affecting us. Was it at the cost of us or at other players?

Jain Irrigation plays in the micro irrigation market. So there is not a complete direct like-to-like comparison for with us. So that's what I said in the beginning of my response to your question that everybody has a different positioning in the market and which market segment do they play.

One last question. I understand that you're still very concentrated on the agri space side. Is there any strategy in terms of meaningfully shifting away from agri to like other products we are still extremely highly regarded in age, but I'm pretty sure that the brands can also other segments. So what's the strategy for that?

Yes. I mean we have been constantly pushing our trying to diversify our portfolio in terms of the market segments. So there's been slight improvement year-on-year. If we look at FY '25, 67% was agreed. And if we look at FY '26 we are at about 63%. So really, the non-agri segment share is also increasing in our portfolio. So yes, there is a gradual shift. And as we have been saying in the past, in the previous calls also, constant effort in this direction. And our goal is to have a much more balanced business coming from the 2 distinct market segments.

So let's say, what is the idea with the management on an exit for years? Is there any internally targeted metrics?

I would say more like ideal case for us would be more like 50-50 over the next 4 to 5 years?

Got it, sir. And one last question regarding the market. I understand that you're still market leader. So in terms of market share, has there been any sort of growth, especially with the market going down? Are you able to get market share gains over the last year or the year sort of would you give some guidance on that?

No, I don't think what we have been doing so far is trying to manage the market share and also looking at the margin growth. So our positioning is slightly different from what other players are doing in the market. And you see that clearly reflected in our numbers also. .

Could you explain the strategies that are going behind the margin growth, I understand you be more selective. So -- but in terms of how are we exactly growing the margins by maintaining our market, is it lesser credit terms or sales sizes to give some light on to that.

So it's basically a continuous process margin improvement. There are a lot of things and a lot of dynamics coming into picture how we are managing our margin. it's our procurement strategy, at what time you are facing market, at which point we are putting some schemes and discount in the market. And at what point in time which geography we are concentrating. The margin is not a result that we are seeing, is not a result of a single factor. It's a combination of various factors that we keep -- that we -- that are at our constant radar. So that's how we try to protect the margin presently and going forward also the [indiscernible].

I understand that. So it's a very dynamic factor, and we are doing -- we are very confident in just wondering for this specific year and the specific quarter what were the major contributing factors. I understand if it changes time to time depending on the market.

The results that you have seen basically, it's a result of whatever the factor that I have just described to you, it is a combination of all the factors. It is very difficult to pinpoint what is -- how the margins came on for a particular initiative. But yes, it's the combination of all the factors that you have seen.

Understood, sir. That's been very helpful. In terms of geographical....

The next question is from the line of Shravan Shah from Dolat Capital.

Congrats on good set of numbers. I have a couple of questions just can you share the agri you have said the 63%. So for fourth quarter, it comes around 62%. What was the CP share in the volume and fitting share for fourth quarter and possible for fourth quarter of last year and maybe the full year FY '25, '26, if you can say, both CPV is there and the fitting sell.

Thanks, Shravan, for the question. And I think Chandan has the numbers and he will share

So CPVC share on an overall portfolio, it comes out to be roughly around 7% to 8% during the current quarter. And last year, it was roughly around 6% to 7%. So we do oversand roughly around 6% to 7%. -- and currency is 7% to 8%. And on a year-on basis, year-on-year basis, this is the same 7% to 8% range on overall volume.

Okay. And fitting share sir.

Fitting share total business is roughly around 90:10 .

I didn't get.

That's what you wanted to understand, right?

Yes. So in the fourth quarter, the fitting was about 10%, sir.

Yes, fourth quarter is 9% and last year also it's 200%. On a yearly basis, overall year basis, full year, fitting share the year on overall volume is 11%, and last year, it was 10%.

Okay. Got it. Now, sir, first, I just wanted to again try to understand this EBITDA margin because this is the page or positive surprise that has come or whatever you try to answer, still not able to understand even if INR 35 crores, INR 40 crores, the inventory gain, if you adjust, it comes around 22% odd margin for fourth quarter. And how -- so first, though you said that we are backward integrated, but still able to understand furthermore. And now, let's say, in the Q1, given the April, we have seen the significant PVC prices as dropping down and May INR 4-odd again, it has bounced back. So how one can look at this margin? And so do we still -- we'll see a further kind of a 10%, 10% kind of volatility in the EBITDA margin going forward also? How on a yearly basis, can we see the full year FY '26 16.5%. Can we see 14% plus kind of a margin is doable on a sustainable or a 16% plus is doable.

So Shravn just I just explained to another question 2 minutes back. So on a yearly basis, we have a target to maintain our EBITDA margin on a lower double digits. Roughly around that is our target.

Lower double digit means a significant gain. I just -- that's why trying to understand.

So you can say sub-15 number.

Okay. Sub 15 number. Okay. But it should be -- that originally we were till last time we were looking at 12% kind of a sustainable so now .

Sub 15 number with anywhere, it's very difficult to pin pinpoint at the whole dynamic environment. So we are trying to keep the -- maintain our margin sub 15 level EBITDA margin.

So we are talking on the EBITDA margin. So in Q1 itself also or can we see the similar or still the number could be much higher in the Q1 also? .

As Shravan as I told you, our is to see margin on the year-on-year basis, full year visit, we'll try to maintain, but let's see how the quarter progresses. As you know, April is some subdued month we have said everyone is aware. So let's see how May and June go, then we'll be able to comment upon. Yearly, basis, we have the target to sub-15 level roughly, somewhere around .

Okay. And on the volume growth front, so this year, hobviously, on a yearly basis, 4.4% degrowth. But on the fourth quarter, Q-o-Q soft jump is there. So you have mentioned that the April was subdued, May was better. So how one can look at on a yearly basis, the volume growth. But at the same time, wanted to understand in terms of what's our capacity and how we want to add because till last time we were saying 50,000, 80,000 kind of or 50,000, 80,000 tonne capacity on a yearly basis will keep on adding.

So soon our total capacity at this moment is 5,20,000. So we have a sufficient headroom to grow still. So current year and I think most probably next year also, we'll be able to -- we'll be sufficient to close with the current volume one. Number one, your second part of the question, how you're seeing your yearly target. So definitely we are seeing targeting a growth number of roughly around higher single digit to double -- lower double digit the growth we are targeting for the upcoming full year, not on the quarter-on-quarter, full year, we are targeting.

Got it. And then in terms of then the CapEx would be of 100, 200 kind of a number under cash because for last many, many times, we are saying that we will reward the shareholders, but timing is not clear. The board will decide to -- I'm still wondering when that time will come.

So yes, yes, you are right -- every year, we are going to incur the roughly around INR 100-odd crores every year. This is more on account of our maintenance Capex that we'll keep doing. We'll be debottlenecking position where we sit extruder get replaced with the higher capacity of Sote going forward in time. That process already, we have also explained in our earlier call, that process is already on. number one. So as you hear all the shareholders might be happy that last year also, we have declared a huge dividend of INR 3.60 per share and this time also INR 2.75 per share. Yes, we have the huge cash balance in hand but still even our yesterday's discussion with the Board still the decision regarding the remaining cash is yet to come, but we'll have to see, time will tell.

Okay. And any specific reason though the number is lower in terms of the finance cost for this quarter from third quarter INR 7.8 crores. Any specific reason? And and how, at the same time, the other income from INR 52-odd crores for 3 quarters, it was kind of a INR 55 crores, INR 58 crores, and it came to INR 36 crores. So is it just -- I wanted to know the reason? And how on this thing? .

Other income largely consists of mark-to-market gain on the investment portfolio that we're having. So you have seen March, there is a decline in market has gone for lower trajectory. So that's why the mark-to-market in game came down, number one. Number two, finance costs have gone up. So you see because of this geopolitical scenario, we have been planning to keep our inventory at the optimal level. So that is related into the optimum purchase of government of material, number one. and that has got converted to over the period in time in borrowings. So that is eating into a certain higher cost.

The next question is from the line of Pravin Shah from PL Capital.

Pravin Shah from PL Capital. My question is related to the capacity. So capacity of 5, 20,000 what you had said. And if there is no expansion, is there a constant capacity have become a constant for a volume growth? Because if I look at last quarter and the utilization rates were very high of some 70%, 80% of the utilization. So is that constant for the growth for you right now?

No. So capacity is not a constraint for the growth. As Mr. Chandan Verma mentioned in the response to one of the earlier questions is that there is a constant CapEx planning of INR 125 to INR 100 crores crore, INR 200 crores, which we have been always saying. So this is also -- this year also, we would be also spending substantial amount into the capacity augmentation. As we mentioned, we're changing the lines from a lower capacity to the higher capacity. That also leads to the capacity expansion. I mean having additional capacity available for production. So certainly, capacity availability is not a constraint for growth.

Okay. Second question is related to the inventory because answering to the earlier question as well, you highlighted that the inventory number has increased. So is that -- I assume that because there is a lot of volatility in the previous years in prices, we had created inventory of our RM for a future use?

Yes. So also, you need to -- it's a regular activity. So with the regular activity where whenever you find opportunity time -- so a opportunity time to procure the inventory at the suitable prices, then definitely trying to hold up this event take that inventory in our stock. So that is the strategy that we have been following and that is how you see the inventory level at a particular markent. Currently on is also the result of that strategy that we are following.

And because there is a lot of volatility from the March onwards, we have seen in the previous resin prices. So at what level, like those inventories has been built up in also I just wanted to understand on that because if that is on the higher side, then we will then after there is a good correction in the prices also. So how you are comfortably built up your inventory actually?

Just to say, we have -- we are patiently keeping much. We understand that PVC market is too dynamic, and we will be holding higher inventory and there is going to be a dent on the future period. So keeping all the dynamics in mind, we have the sufficient control over the inventory number that we are having. So I don't want to quote any number regarding how we are seeing the impact on the subsequent quarter. But yes, we are mindful of the thing that PVC prices can grow for any direct direction. So keeping that risk in mind, we have the -- we continue optimal level.

Okay. Another on the demand side because also you had mentioned and in the past, we had seen that the PVC resin prices always impacted the agri demand in the past. And still, if I look at some prices of PVC resin is at an elevated level of nearly around INR 87 to INR 85 to INR 87 per. So how in the May actually, you so the demand is coming back even after the higher prices. Is that still quite a softer or it's come back strongly because the prices from INR 115 now is down. So can you give some color? Because from last year, INR 70, INR65, INR 70, now we are at a very high level of pricing. So how the agri demand is actually stepping up?

Yes. So 2 parts of it, which you touched it is rightly yes. I mean -- so yes, if you compare it to the last year, the absolute value seems to be high. But if you compare it to the high of March, it is significantly lower. I think it is 25.7% lower . Okay? So that is one of the factors when farmers of the agri demand is being considered. The other is that this is the season time, okay? So the inherent demand, which is there is independent of the pricing. That is also there, okay? So combination of both these 2 factors.

And sir, booking question, sir. How is the BCM PCV spread for a quarter. And at this point, how is the PVC resin prices or the spread previously resin spread right now, not the quarter 4, but right now?

So Q4, PVC spread [indiscernible] Q4 -- averag. I'm talking and also PVC prices on a international market, it was average around 793. And currently, currently, we have seen a previously spread around 543 and prices somewhere around $900 plus in terms of international market, late this price.

Okay. And VCM, sir, PVC, we see .

PVC VCM spread is currently is $108. Currently, it is $108. And last Q4 average is somewhere around $179. $179, $180.

The next question is from the line of PujanSha from Molecule Ventures.

Yes.Sir, my question. So first of all, I just want to get [indiscernible] regulation.

Sorry to interrupt you, but your voice is not very clear. Can you come closer to the mouth piece, mic, please.

Am I clear now sir.

Better, better. .

Okay. Sir, one question pertains to the government regulation. So we -- as the industry previously, we have been struggling for 1.5 years and considering the demand scenario. And we also industry also filed the ADD but it implement. While I just want to understand, if we file the ADD again, do they keep -- do they understand the impact which has happened in the March that might declined AVD purpose because at that point of time, prices were at a high prices compared to the historical average. So can you give a sense, is that a possible way we should get an ADV or we might go for a shorter-term purposes like MIP, which might be helpful for a 6 months duration.

I think on the AGD front, we all know, I mean, what happened. So -- and this is also -- there is a cooling period in between the 2 investigations, it needs to be there. Okay. So that's on it ADD I don't think right now there is a case for ADD per se. But this is, again, very much one view of looking at it. The other topic which we talked about other kind of protections which can be given to the industry. Certainly, MIB is where to however short term, it might be. . You also do the government policy government announced a 90-day period of new import duty on PVC resin starting April till 30th of June. So that is also giving rightfully so also to the sort of medium and small enterprises. And this is -- I'm talking about all polymers, not only for PVC. PVC is also among that. We know how is the structure of our pipe producing -- pipe-producing -- pipe producers here in India. And so that has impacted the large players like us, and that's how we also saw a certain drop in the prices of PVC in the month of April. So broadband policy certainly has an impact on what happens on the business side. So -- but I think on a short-term basis, MIP could be a good option if industry decides to move forward. And I think that is a separate topic, which CPMA, the petrochemicals manufacturers association is temporarily pursuing. [indiscernible] as a leading pipe producer, and that means our position as far as all these matters are concerned.

Got it, sir. And secondly, our revenue concentration is a bit on the higher side on the equity demand -- and this year, we have been expecting that there is 8% less than full compared to the previous year. So how we have been planning to tackle that? Do you see some kind of degrowth in agri, which can offset in non-agri space? And how do we are planning to get strategies for this year to get our double-digit growth?

So as we have been telling, see, there is a forecast of lower monsoon also that you just said and also see the prices of the demand agri is always monsoon dependent. But we -- as we have said in an earlier question, since our thrust is to put more and more impact is on our non-agri sector. So there will be partly whatever the projection that we are going to have in the upcoming quarter is going to be any loss, if you are going to incur in a. we will compensate in the non-agri space.

The next question is from the line of Vipul Kumar from Sumangal Investment.

So you said this VCM delta was $170 in last quarter. And right now, it is $108. Have I understood it correctly?

Yes. .

So half of your capacity is VCM based. So this quarter, there would be a substantial pressure on profitability. Is that understanding correct?

Yes. To some extent, you are correct. But yes, the delta is currently, you are seeing the impact of current pricing. But yes, we are trying to -- we are -- our discussion is already on to have the proper VCM at optimum prices. So that we are also trying to have the inventory.

No, no. But whatever your are getting at a market price, but if the spread is lower, actually, your profitability will be affected, no. And half of your capacity is VCM based [indiscernible]

So to appreciate the point that you are seeing, the number you are seeing is a point in time. Let's see how the number goes over the pro period and over the quarter. So we have seen the $179 average came down $108. but at a certain point in time at the beginning of the quarter, it was also at $180 or $190 level of the last quarter.

So average will be higher than is what you are trying to say, sir? .

Yes. Okay.

Okay, okay. And why we are not seeing any substantial growth in volume contribution of CPVC and fittings because they have become stagnant over last certain years?

No. But you'll have to see our fitting in our in share in overall basis has gone up on a yearly basis. So last year, our fitting share in our total volume was 10%, it is a little up by 11 plus-plus percent during the current year. So this is on an overall basis. And if you see the growth of fitting alone, the growth of fitting somewhere around 9% to 10%. So that is our focus is there in the fitting.

Okay. So fitting will continue to grow at 9% to 10%. Is that understanding correct? .

Yes. Yes..

Same applies to CPVC also? .

CPVC, in fact, you see, though we have the lower base of the CTBC, but CPVC are growing at a higher pace. It's roughly around 15%, 18% of -- sorry 8% to 9%.

No, no, would you repeat it is confusing.

So, we have a CPVC, we have a lower volume, lower by. So our growth of rating is higher again in CPVC fitting,our growth is higher and overall CTC portfolio is growing around 8% to 9%. CPVC portfolio as only -- what you -- I think I have are your question. .

Yes, sure. Yes, sir. And any plan to return the cash to the shareholders, sir? .

So I have just replied to this question. So this question is things will come from the Board and still the board couldn't give a guidance how to utilize this cash. So let's wait for the time. So whatever the dividend that we have given, that is definitely out of the current approval. But yes, the commodity cash we have, the Board will give certain guidance. .

So one final request to Mr. Chhabria, if you can convey our requests. It has been long since he has attended any call. And this question is asked every time. So at least for one call, if we can attend, it will be really helpful. Please convey our request to Mr. Chhabria.

Yes, definitely, we'll convey your message.

The next question is from the line of Anurag from Anand Rathi.

So I just -- the first question is what proportion of VCM quantities sold from some Middle East ease? And whether a PVC resin production is likely to get impacted in FY '27 as the geopolitical issue poses for the next, say, 3 to 6 months?

Yes. middle stressing the large supplier to we have for this year -- so that has been -- there has been an impact. -- at the same time, we come in to the next part of your question, will we see an impact for the full year. . As you might already know that during the monsoon period, our Jet is not operational. So we do not run the VCM line during those periods. So in any case, it remains closed -- so for that period, 4 to 5 months period, we are not impacted because of this because structurally, we cannot bring in any sale into our facilities. Our efforts are on to shift our supply chains, yes, from Middle East to the other parts, particularly looking at Far East and Northeast Asia where VCM is available. And the good thing is, is that if we are not able to get competitively VM, the PVC is available in Northeast Asia and also in U.S. okay? And it's really the 50% of the total imports India come from China, and the rest of it comes from other parts of world into India. So there is already established PVC supply chain. So we don't see any impact on the PVC availability for the course of the year.

Okay. And sir, second question is, the Finolex average EBITDA margin has been in the range of 17.5% over the past 10 years. And since our share of non-agri tape is also going to gradually go up -- so this is going to enhance the margin profile of the company. Then, sir, why are you guiding a conservative EBITDA margin at a 15% level for FY '27 .

So we don't want to give any [indiscernible] at this moment because of the geopolitical scenario, the future is always see uncertainty. So that's why we are giving a conservative margin and we try to deliver at a higher margin at the quarter year-end. .

Yes. And this number is over long term, what you mentioned. And we are talking about a relatively shorter period of time, which would be greatly impacted by the volatility in the market. So that's why a conservative estimate. But you are right. I mean we have been around that range, 15% to 17% over time.

Yes sir. But we have closed 17% in FY '26, which was a difficult year.

It was a difficult year, but if you look at the full year, the quarter 4 was the major game changer. If you look at the first 9 months of the quarter, sorry, first 9 months of the year, and then the -- it's a different picture. It's the quarter 4, which has really changed. .

And sir, the last question would be, what is the reason that all other listed plastic pipe companies are looking forward to geographically expand the manufacturing footprint and expand the product portfolio but we are pursuing a different strategy and delivering weak volume growth compared to them. So don't you think that we should revaluate the capital allocation policy so that we can at least maintain our market share in the pipe segment going forward.

See, there are 2 parts of it. One is the cost to the customer. As long as that is competitive customers will continue to buy -- and with the increased better transport infrastructure available in the country, the distances are becoming shorter and shorter, I should say, the impact of the distant is becoming less and less. Earlier, if you [indiscernible] 5 years back, 7 years back, it would take probably 5 days from Ratnagiri to go to the material to the east of India now it reaches there on third day. So that strategic advantage of being a local, it's really diminishing. That's the reason. I think we think that if we are able to serve our customers all over India from our parent production base, we would be able to also manage our cost better and also serve the customers when the reasonable amount of time in terms of.

But sir, our existing strategy seems to be not working. So why are we not thinking of changing it. You need to see.

There are 2 things that you have to keep in mind, like even if you go another capacity at some other locations. It will be difficult to cater all the product in ice on the renal location, number one. Then the balance is here we need to source from the other location where we have the presence. So definitely, again, it is going to create hindrances. -- number one. Number two, as you know, we are currently largely agri focused segment. And nonagri,we are going to increase our share over in time. So as the product portfolio of non-agri will go and if you'll find a suitable opportunity, then definitely we will look for the other geography at this moment. I think currently, and particularly, the volume decline in the agri you have seen. Basically, you see agri has always a homogeneous growth trajectory. If it is good always in tender with how the monsoon scenario works in the country, right? So if there will be healthy monsoon we'll see a sub jump in the agri demand again. So see, this is something where no 1 has any control over that. So that's how we are seeing our business. And if you find our opportunity over the period in time, so then we have look for the -- then we'll definitely relook our strategy to for the decentralizing.

The next question is from the line of Mehul Shah from Nayan Gala Securities Limited.

Sir, what is the utilization capital utilization for FY '25 and FY '26?

So currently, FY '26, we have the utilization 67% and last year, though, since our -- we have added a few capacity this year, Q1 of the current year. So last year, we had a higher utilization of 71%. .

Sorry, sir?

So last year, we have ended with our capacity of 40,000. So based on that, our utilization was 71%. Current year, we have the capacity of 520,000. So based on that, our utilization.

The next question is from the line of Praneet from Investment. The next question is from the line of Shravan Shah from Dolat Capital.

Sir, broadly, if I have to look at the price difference and maybe ultimately the margin difference between the agri non-agri for us. How one can look at?

Shravan this number definitely margin, there is a gap in the agri and non-gelatin and margin growth, but we do not disclose in the public.

Now the point is I'm not asking a specific number, what's the price difference or the margin difference. But the range will be decently higher related on the margin front.

[indiscernible]

Yes. No. So the point is that given the significant even the previous participant was also trying because for last many times, we are not able to distribute the cash. So there are 2, 3 ways because this agri is always depend on the monsoon. We -- nobody knows how this will pan out after 3, 5, 7 years. So if you want to have build a brand, so obviously, we need to have a higher share than the non-agri that even we are trying. But the pace is on the lower side. So how is as a company, given that we have the cash why can't we have a team, maybe different manufacturing setup at 2, 3 places because with this INR 2,600 crores kind of a case, we can definitely add at 2, 3 places easily. So -- and then keep on increasing both in the CPVC and the fittings, even fitting capacity is also very last for also there. So these are the ways in terms of the project level also, we can keep on increasing our share. So that becomes also it is kind of a recurring kind of a demand for us and also at a higher margin, higher realization, we can have a better brand. So that's the way to understand.

Yes, Shravan. Thanks for the multipronged approach and the discussion which you want to get into. First is our penetration in the market yes. So -- as you know, historically, Agri is predominantly for us the West and South. But not agree, we are expanding rapidly into other regions as well, okay? So we have the required number of salespeople, which we need in other parts as well. As you know, that -- this is also, which you touched upon in your question is also the project business yes. So there is a life cycle to that. And so we have to live with that. So that's the structure. -- that you need to get the product specified and as the construction progresses, the demand starts flowing, yes. . And most of our business is through channel. And so It'd be hard to say for which project, how much have been supplied. But yes, this is 1 of the non-agri, 1 of the the area where we see that we have to balance our portfolio, and this is what we also mentioned in the beginning of the call, we are looking at over time for a balanced portfolio between agri and non-Agri. Some of the topics which you touched upon having a diversified or multi locational manufacturing footprint. I think we touched upon that earlier, Mr. Chandan Verma may be able to give a very elobarate explanation to that, why we adopt a particular strategy. And -- but yes, the opportunity is greater in non-agri. And that's where our focus also has been.

Yes. But just the pace of effort and the outcome or the results is yet to be seen. So that's what the investor wants. And given the kind of cash we have, so that's only request potation feedback, whatever

Thank you. Ladies and gentlemen, we take this as a last question. I now hand the conference over to the management for the closing comments. .

Thank you all who participated in our call. I must say that the questions which were asked were you are very, very patient. And I must say they are very well researched also, okay? And we'll continue to put in our best efforts as a company to meet the expectations of the shareholders and the investors. I hope to see you next time for our quarter 1 FY '27 conference call. Thank you. Thank you for your continued interest in Finolex Industries

Thank you to all the participants and showing your continuous interest and believe in the that Finolex is having. We are delighted to see your questions and insights recouping in the investors call, and we will keep to your expectation to the extent as possible. Thank you so much to all of you.

Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.