Tinna Rubber and Infrastructure Limited (530475) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Tinna Rubber and Infrastructure Limited Q3 FY '26 Earnings Conference Call hosted by Go India Advisors LLP. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors LLP. Thank you, and over to you, ma'am.

Thank you, Anushka. Good afternoon, everybody, and welcome to Tinna Rubber and Infrastructure Limited's earnings call to discuss the Q3 and 9-month FY '26 results. We have on the call Mr. Gaurav Sekhri, Joint Managing Director; Mr. Subodh Sharma, Chief Operating Officer; and Mr. Ravindra Chhabra, Chief Financial Officer. 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 business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Sana. Am I audible okay?

Yes, sir.

Thank you. Good afternoon, everyone. Thank you for joining us today on this call. Our financial results and earnings presentation are available on our website and on the stock exchanges. I believe you have had a chance to review the same. I will briefly take you through the strategic updates, post which my colleague, Subodh, our COO, will take over and give details about the operational and financial performance highlights for the quarter. I am pleased to share that Tinna has achieved strong EBITDA margins of 16% plus, both on quarterly and 9-month ending basis, reflecting our robust performance and continued operational efficiencies. Tinna Rubber continues to progress steadily towards Vision 2028, which is to achieve INR 1,000 crores of revenue by FY '28, enhancing our profitability by over 33% and with having a target EBITDA margin of 18% plus with ROCE exceeding 30%. Outlined below are the key strategic updates that support the company's progress towards achieving Vision '28. Am I audible? Sana, can you clarify?

Yes, sir, you are loud and clear.

Yes. I just got a strange beeping sound in between. Anyway, here is the -- here are the strategic updates. I'm happy to share that Tinna has received a 2-year work order from Indian Oil Corporation...

It seems the line for the management has been disconnected. Please stay connected till I rejoin the management. Thank you for waiting patiently. The management's line has been connected. Sir, you can proceed.

So I will continue. The -- We have received a 2-year work order from Indian Oil Corporation. The value of this is approximately INR 76 crores, which helps us meet our targets on the infra business for this year. On the CapEx front, the company has completed capital expenditure of approximately INR 79 crores during 9-month period of FY '26. In addition, a further CapEx of around INR 50 crores is planned to be incurred over the balance of FY '26 and in FY '27. Substantial progress has been made in the deployment of QIP proceeds with only about INR 45-odd lakh balance. On the cost reduction front, renewable energy capacity is being scaled up more than threefold from 1.23 megawatt to 4.48 megawatts with completion targeted by end of Q4 of FY '26. Renewable energy accounted for 24% of total power consumption in 9-month period and is targeted to rise to 32% by end of FY '26 and over 50% by FY '27 end, aligning us with our ESG goals. These initiatives are expected to deliver savings of approximately INR 4 crores in FY '26 with solar power already contributing INR 2 crores plus in the 9-month period. Tinna has also allocated INR 5 crores towards R&D expenditure in order to be future ready. Tinna has initiated a comprehensive life cycle assessment study to measure GHG emissions from tire recycling and conversion into recycled rubber materials. The report is expected to be completed by end of this financial year. A brief update on the various projects. I am pleased to inform, Varle plant is now operating at 80% capacity utilization, supported by strong post-monsoon demand from Infra and Consumer segments. The PCMB business has been slow to contribute and is at only around 4% contribution in the 9-month period of FY '26 and is operating currently at around 40% capacity utilization. We expect the capacity utilization to improve to approximately 45% by end of FY '26, and the division is targeting annual revenue contribution of almost 8% to 10% in the next financial year. The pyrolysis and rCB project is progressing as per plan. We expect trial runs to commence by the end of Q4 '26. Significant equipment upgrades and process enhancements have been undertaken to deliver best-in-class quality of rCB. The project is planned as a fully integrated operation spanning tire recycling through to powdered and pelletized rCB production. On TP Buildtech, I would like to share that the strategic growth initiatives are underway with introduction of 3 new construction chemical product lines, grout repair, mould release agents and accelerators. We expect all of these products to contribute substantially in the coming financial year. Also, the new plant commissioned in Kolkata, which is our third plant, is still in the stabilization phase, currently operating at a low 15% to 20% capacity utilization, but we expect this to improve over the next 2 to 3 quarters. On the international projects in Oman, the plant is operating at 80% capacity utilization up to 9-month period FY '26. It has achieved revenue of INR 25 crores and 40% of sales are within the GCC region, and we are targeting this to rise to 70% by Q4 or [ maybe ] Q1 of next year. A 20% reduction in ELT cost is also targeted in Q4 of '26, supporting margin and profitability improvement. In Saudi, a plot of 13,000 square meters has been allotted to us for setting up a 24,000 tonne per annum tire recycling facility [Audio Gap]

It seems like the line for the management has been disconnected. Please stay connected till I rejoin the management. [Audio Gap] Thank you for waiting patiently. The management's line has been connected again. Sir, you may proceed.

Yes. So Gaurav Sekhri is here. I'll continue. In Saudi Arabia, a 13,000 square meter plot has been allotted for a 24,000 tonne per annum recycling facility. We expect the project to commence -- we expect to commence work on site from mid of FY '27. The project time line has been recalibrated to align with the ongoing expansion in Oman and South Africa with all requisite approvals in place. In regards to South Africa, the Phase 1 CapEx has been completed and operations have commenced for cutting, baling, shredding and exporting of process material for onward recycling in India. In Phase 2, which is full scale of recycling, we expect to take this work up in the coming financial year. As of now, the South Africa venture is losing money, but we are expecting to stabilize and we expect to beginning -- we expect to begin breaking even in our operations from Q2 of FY '27. With that, I would like to hand over to Subodh for his insights on operational and financial performance. Go ahead, Subodh.

Thank you, Gaurav ji. Good afternoon, everyone. Regarding our operational performance, tire crushing volumes have grown by 25% on quarter-on-quarter basis and 7% on 9-month basis, supported by post monsoon recovery in demand across infrastructure and consumer sector. Also, it is worth mentioning that exports continue to be the strong growth catalyst with the company targeting a robust 50% volume increase by end of Q4 FY '26. In 9 months of the financial year, the Industrial, Consumer and Steel segments recorded revenue growth, while the Infrastructure segment witnessed moderation primarily due to strategic shift towards value-added products. The Industrial segment recorded a strong 18% y-o-y revenue growth. Despite global economic headwinds, export volume increased by 20% on year-on-year basis. MRP, micronized rubber powder and reclaim rubber volumes grew by 21% and 7%, respectively, while the rubber conveyor and rubber molded goods industry remained stable. On the Infrastructure segment side, we recorded a modest revenue dip, reflecting a deliberate shift towards higher value-added products. This strategic focus supported strong volume growth with crumb rubber modifier volumes increasing by 80% on year-on-year and emulsion business growing by 15% on y-o-y basis. The Consumer segment, though, reported 10% revenue growth, but despite a marginal decline in volumes, reflecting the impact of price correction, demand outlook remains positive, supported by seasonal recovery following the extended monsoon and improving market liquidity with consumer sales continuing to remain a key focus area. On the Steel segment side, which remained stable with revenue increase by 2%, steel abrasive business steadily maintained, while revenue growth [ trailed ] volume growth due to volatility and the downward trend in the steel prices. Coming to 9 months financial performance, at a standalone level, revenue remained stable, while EBITDA and PAT margin expanded by 200 bps and 110 bps, respectively, to 16.8% and 9.6%, reinforcing Tinna's strong performance and sustained operational efficiency. At the consol level, EBITDA margin improved by 110 bps, while revenue and PAT remained stable due to the net impact of initial start-up cost and profits across associates, JVs and subsidiaries, which is expected to normalize in the coming quarters. Global Recycle, Oman contributed INR 35 lakhs at the PAT level, while Mbodla Investments, South Africa and Tinna Rubber, Arabia reported a combined loss of INR 1.46 crores. EPR credit amounting to INR 23.9 crores is included in 9 months FY '26 revenue as against the EPR revenue of INR 24.4 crores recorded in the same month's previous financial year. Coming to the ...

It seems like the line for the management has been disconnected. Please stay connected till I join the management back. [Audio Gap] Thank you for waiting patiently. The management's line has been connected. Sir, you can proceed.

Yes. So Subodh is back again. So coming to the quarterly financial performance. Consolidated revenue increased by 13% on Y-o-Y basis and 16% on a quarter-on-quarter basis, led by higher tire processing volumes. EBITDA and PAT grew strongly by 53% and 57% on Y-o-Y basis, respectively, with margin improving to 16.3% and 9.2%. Tinna Rubber is consistently advancing towards its Vision 2028, driven by disciplined capacity additions, focused capital deployment, global sourcing initiatives and enhanced business integration. With a diversified product mix, a strong international footprint and an experienced leadership team supported by continued stakeholder confidence, the company remains well placed to deliver sustainable long-term growth. I would now like to open the floor for question-and-answer. Thank you, and over to you, moderator.

[Operator Instructions] We take the first question from the line of Khushal from Asian Broking.

Am I audible?

Yes, Khushal, go ahead.

Am I audible? Sir, my first question is, we have noticed that revenue per tire crushed has been falling, like revenue in our rubber mix for 1 metric ton of tire crushed, this percentage has been falling, like we have calculated this. So, is there any reason for this, sir?

No, nothing specific actually. Our -- both the tire mix, the type of tires we crush changes from time to time as well as our revenue mix also changes. So, I -- we don't really look at numbers like that. It's an interesting observation that you have made. But I don't draw any special inference to this, which has any impact to our business.

Am I audible? Okay. This basically depends on the quality of tires. So -- okay. Okay. Sir, my other question is, bitumen coming from Iran. So is this being impacted with the ongoing Iran-U.S. conflict?

Gaurav again. We do not participate in bitumen imports. That's point number one. So we don't tend to track how that impacts the business because we leave that aspect to [ road ] contractors and bitumen importers, that's a very specialized business. Our interest is limited to modifying that bitumen, either which is produced in petrochemical refineries or on site of contractors, whatever be their source of bitumen.

[Operator Instructions] We take the next question from the line of [ Devesh ] Jagat from YES Securities.

Sir, am I audible?

Yes, please go ahead.

Yes. So sir, can you throw some light on the life cycle study that you have initiated on the greenhouse gas emissions on the tires? And like, what are the expectations of cost savings from the study?

This is Subodh here. So this study has been assigned to determine the current level of greenhouse gas emission as we have -- accordingly have to align ourselves with the ESG goals going forward. So currently, we have assigned the project with QACA, wherein we shall be determining like pickup from my yard to processing and converting it into the crumb rubber or micronized rubber powder or reclaim rubber and making finished goods right up to my exit gate, right? So these numbers will help us further to decide our ongoing ESG goals for the next financial year. These are the requirements with most of the tire industry on the greenhouse gas emission coming out of the process and the product we are manufacturing. So this is nothing related to the cost side, but this is actually related to the ESG goals of the company.

Okay. Okay, sir. And my second question is regarding, are we exploring any global location for expansion like other than the ones that we are right now -- expanding right now? Also, like where do you expect your contribution of Oman in FY '26 and FY '27 in the top line?

Gaurav Sekhri again. We expect Oman to stabilize around annual revenues of approximately INR 30 crores to INR 36 crores, and its contribution will be about 5% in the overall business of Tinna Rubber. We expect Saudi to be similar when it becomes fully operational and online. And South Africa, at least for next year or so will serve the purpose of feeding into our recycling facilities from -- by originating tires from there. So that is the plan that I can share with you as of today.

Okay, sir. Got it. And my last question is regarding that you are expanding tire crushing capacity in India to 1.85 lakhs. So how is this progressing? And has the capacity increased to some extent in the current 9 months?

See, currently, we have capacity to recycle around 185,000 tonnes of tires. Going forward, like as we have outlined our Vision 2028, to increase from 7 locations -- currently, we are operating 7 -- to reach at 10 and to reach on the tire recycling capacity of 250,000. So that is in pipeline, and it is progressing in the right direction. So it is aligned with our 2028 vision.

[Operator Instructions] We take the next question from the line of Ashvath Rajan from Arihant Capital Markets Limited.

Sir, my question was specifically on the PCMB business. I see on our presentation, we have forecasted 1,000 metric tons for Q4 FY '26. I just wanted to understand what gives us this conviction? And based on 1,000 MT volume, what kind of revenues are we expecting for Q4?

Gaurav Sekhri here. See, we have been -- we started our PCMB business, I think, a little over 1 year ago. And it's a new space for us, but we see some complementarity between tire recycling as well as polymer composites, master batches. And that is why we took steps to get into this activity. We have started seeing some green shoots, some good response, repeat business from existing customers is good, which means our pricing, our quality is meeting expectations. And this has happened more so in the last one -- couple of months. Therefore, we feel confident that now to scale up should be -- compared to the last 1 year should be easier because we have greater degree of understanding and confidence on our products. So that is why we feel we should be able to get to 1,000 tonnes.

Okay, sir. And how much does this translate to in terms of revenue for 1,000 metric tons?

Subodh here. So we expect the quarter 4 wherein we are estimating 1,000 crores of volume. So this comes out somewhere close to 75 to -- sorry, INR 7.5 crores to INR 10 crores in between basis on the product mix.

And I think to answer your question, next year, this could be around INR 50 crores to INR 60 crores in top line, right?

Which will be somewhere around 7% to 8% of our next year estimated top line business.

Okay. And based on that similar number, if you scroll it down, if you go further below, how much does this give on an EBIT level and on a PAT level, this specific segment?

See, the EBITDA profile of this business at this point of time is lower than our overall EBITDA profile of the company. But like I said, it is early days. I think it's -- I can only answer this question by saying one step at a time. And we have to steadily scale up and then we'll be in a better position to give you a guidance.

Okay, sir. Got it. And if I were to ask, what is the volume target for '27 as an entire year for PCMB?

Approximately 6,000 tonnes.

[Operator Instructions] We take the next question from the line of Kamal [ Jeswani ] from U First Capital.

I wanted to know that what is the reason for this margins coming down this quarter compared to last corresponding September '25 quarter? So I just wanted to know the reason for this? And out of the tires we are importing, how much is -- I mean, how much is imported tires and how much is domestic procurement? And how much do we have the license for importing?

So Kamal, firstly, our margins are up compared to previous quarter, not down. And second, we are majority processing imported tires in our facility. And I think in terms of what license is balance, et cetera, it is too specific and also, I think, sensitive to our business, and we don't want -- we will not share that information.

Okay. So majority is imported, you are saying, and domestic, we don't procure too much?

Like I said, majority of what we process is imported.

We take the next question from the line of [indiscernible] from Aditya Birla Money.

Hello, am I audible?

Yes, yes. Please go ahead.

I wanted to ask now, can you give us guidance on the performance of...

Sorry to interrupt, Ms. [indiscernible]. Ma'am, your voice is coming a bit muffled. Could you please fix that?

Yes. Now is it clear?

We still have challenge to hear you clearly, ma'am.

Okay. Sir, I'll fall back in the queue.

We take the next question from the line of Karan Gupta from ACMIIL.

Am I audible?

Yes, Karan, go ahead.

Yes. So my question is regarding the demand side of the Infrastructure segment. And what are the green shoots you are seeing on the Consumer segment?

Can you repeat again, please?

My question is regarding the demand side of infrastructure projects. What is the demand scenario now? As this is noticed in quarter 1, quarter 2, due to infrastructure -- I mean, the delay in the projects and also the monsoon side impacted our top line in quarter 1, quarter 2. Now ...

Karan, this is Subodh here.

Yes. So what's the infrastructure thing?

Yes. See...

And the second piece is the Consumer segment.

Yes. So I will try to answer your question. So in the Infrastructure segment side, as you know, this year, we have witnessed an extended monsoon. I think by mid of October, it was a rainy condition. So normally, our Consumer segment, which is all about wherein a lot of rubber granules are being used for the sport turfing and the playground surfaces, that business as well as the Infrastructure segment wherein road laying, et cetera, happens immediately after the monsoon, and it continue to happen in rest of the months. So only winter months are slightly impacted in the northern part of India. Otherwise, post monsoon, the work Infrastructure segment and Consumer segment, especially the sports turf and all, it picks up. So we are witnessing some growth there, and that's the reason in Q3, you can see the volumes are up if we compare over Q2.

Okay. And the infrastructure projects, that you said was delayed in quarter 2, quarter 1, now it's picking up...

Yes, yes. See, Infrastructure segment is -- the road construction business is actually the business with monsoon seasons typically 3 to 4 months, it's completely on halt. So the progress -- best progressing months are actually the February to July. But it picks up after the monsoon and then some effect of winter, that too only in the Northern India states. Otherwise, it's continue to happen from October until next July.

Okay. Okay. Yes. And second is on the guidance side. So FY '26 guidance, INR 600 crores you said in the last quarter is achievable right now or not? I think [ in the ] INR 520 crores on TTM basis if we see. So what's the guidance for FY '26? And then you've also mentioned last -- next 3 years of guidance [indiscernible] estimated something 25%, 20% growth. So what was -- what will be the lever in 20%, 25% growth? New capacity addition or it will be your new value-added products? That's it.

Okay. So Karan, just to answer your question, I think you missed our quarter 2 earnings call wherein we revised our guidelines for the revenue from FY '26. So the same we are maintaining in the FY '26, we have visibility of 8% to 9% of revenue growth over previous financial year. But as you know, there's -- a lot of CapEx has been done in the last couple of months to set up rCB and pyro plant to strengthen the PCMB business and some of our overseas operations. So this all are at the level -- like this all is going to contribute in the FY '27. So we expect consistently around 15% to 18%, maybe 20% growth year-on-year from here onwards.

Okay. Okay. And for '27, '28, the levers of growth, the guidance you've already given in the PPT.

Yes.

But the levers of growth?

The levers of growth is like the Varle we set up in the last 2, 3 years -- 2 years and now the PCMB business, now the rCB and pyrolysis business and top of that the Saudi Arabia expansion and the full fledged tire recycling operation in South Africa, these all are going to contribute in the next 3 years because all these CapEx are almost done, except the Saudi Arabia which will be ready by mid of the next financial year.

[Operator Instructions] We take the next question from the line of Deepesh from Maanya Finance.

Am I audible?

Yes, please go ahead.

Okay. I missed the early part of the call. I joined in late. So if there are any repeat questions, kindly excuse that. What are the trends of raw material prices in Q3 FY '26? Are they still high? And what is our percentage of import and domestic procurement of tire scrap in 9 months of FY '26?

So firstly, there is a fair bit of now stability in the price of raw materials. And even if there are some fluctuations in some kind of tires or in some origins because of the diversity that we have now in our business of being able to process multiple kinds of tires from different origins, we are able to control it reasonably well as of now. So the short answer is there is a fair bit of stability. And second, in terms of tires that we process, we continue to process majority of the tires which we import. And that's what we can share with you on this call.

Okay. And I missed on to the guidance which was given for FY '26 of top line and bottom line. What will be your guidance for FY '27? And are you confident that you will be able to achieve the -- your Vision 2028?

See, we have to go with the assumptions that the CapEx underway will give us the desired results. And with that assumption in place, I -- we are -- we continue to be confident that Vision '28 of INR 1,000 crores is possible. That's point number one. And we expect to finish this financial year FY '26 between INR 535 crores, INR 540 crores, which is in line with the revised guideline we were giving in Q2. And in the coming financial year, we are still locking down on our business plan and numbers, but with the assumption of our rCB pyrolysis plant commencing production, et cetera, I believe we will be very close to INR 700 crores or over INR 700 crores -- around INR 700 crores, FY '27.

Okay. And please let me know what is your current working capital days as of now after 9 months? And do you expect it to be the same going forward?

So we are operating at around 50 days currently, and we don't expect that to change going forward.

Sorry, I missed the number. How many days?

50, 50.

50, okay. Okay.

We take the next question from the line of Yash [ Porbe ] from [ Invent ] Research.

Yes. Am I audible?

Yes, yes. Please proceed.

Yes. So firstly, on the CapEx side, sir, are we on track? Like earlier, we had guided that by Q4, the trials will be completed? So are we on track? Have we received all the approvals? Or are we facing any challenges or any delays?

There are always some challenges in doing CapEx in a project, but nothing which we are unable to manage. It is proceeding quite well. And we expect to commence trials on the pyrolysis plant certainly within Q4 and the rCB plant in Q1 FY '27.

Okay. So sir, are we expecting any revenue in Q4 from the project?

Your question is, are you -- are we expecting any revenue...?

Yes.

And CapEx?

Yes. In Q4.

In Q4. Yes, I believe -- so towards the end of Q4, some small contribution could begin. But irrespective of that, our earning -- our revenue guidance of around INR 540 crores is -- we are confident of getting that number.

Nice. Sir, I just wanted to know like we have guided around 8% to 9% of the growth for whole year, but if we compare for 9 months, we have done only 3% growth. So in Q4, we would have to do nearly 20% of growth. So are we confident of achieving this growth in Q4?

Like I said, INR 540 crores revenue for FY '26 is within our reach, and I believe we'll deliver it.

Okay. And sir, lastly, one question on -- like, by when do we expect the South -- except from Oman, other international projects to contribute positively?

Oman has already begun contributing positively again. The -- We saw the turnaround in the business in November, further consolidating nicely in December. And we think January, we should see even better performance from Oman.

And sir, other international projects like [ Saudi ] (sic) [ South ] Africa and all?

South Africa will take some time. South Africa, we continue to incur some loss, but it's a new complex market. It will take, I think, another few months to stabilize. It is my estimate, and I think we had mentioned that in our opening speech that we expect South Africa operations to begin breaking even from Q1 of FY '27.

We take the next question from the line of Manish, an individual investor. [Operator Instructions] We'll proceed with the next participant. We take the next question from the line of Puneet, an individual investor.

I am audible?

Yes, Puneet. Please go ahead.

Okay. So my question is, a lot of Indian tire manufacturers are announcing CapEx for the next few years, and we have an EPR policy also. So I want to hear your thoughts, how much upside impact that could cause in the next 3, 4 years for our company? And the second question is if you can [indiscernible], how the raw material impact is hurting us? Can you bring it down for us in terms of [indiscernible] tires at a lower price? These are my 2 questions.

So if I understood your question correctly, I think your first question was that tire companies are expanding capacity, how will that impact us, correct?

Yes, along with EPR policy.

So firstly, in regards to -- it is good news for us. If more tires are made in India, that means greater demand for our recycled rubber materials. As you know, we are approved with all, I would say, of the leading tire manufacturing companies in the country. So that is positive for us and will have positive impact on demand. In regards to EPR, I think the 2 things are not so connected. When we recycle more tires, we will generate more EPR. And if tire companies are producing more tires, they will need more EPR. So that's how this whole ecosystem is built.

Okay. I got it. [indiscernible] raw material...

I didn't hear you. Sorry?

Second question is on the raw materials. So our raw material cost is increasing. So what are your thoughts to bring it down in the coming years?

Our raw material costs are stable, especially since last 2 quarters. We have increased optionality on the types of end-of-life tires we process as well as on origins. So therefore, I don't expect any adverse impact on account of raw material to our gross margins.

Congratulations on the numbers.

Thank you.

We take the next question from the line of Khushal from Asian Broking.

Sir, sorry to repeat this question. But just wanted to know, these tires being imported South Africa -- from South Africa, they are probably high-quality tires, like SUV or truck tires, right? Like, just wanted to know.

We are importing various kinds of tires from various origins in -- and South Africa is no different. We are bringing in tires, which are passenger car radial as well as truck bus radial tires from South Africa.

We take the next question from the line of Ashvath Rajan from Arihant Capital Markets Limited.

So I have 2 questions since. We're already done with the CapEx in South Africa. I just wanted to understand the incremental CapEx of INR 50 crores. What would this be centered towards?

So the incremental CapEx of INR 50 crores, some of it will continue to go to just finish the existing works that are ongoing, especially at the Varle and Maharashtra site regarding rCB, pyro. We expect to spend approximately INR 20-odd crores in Saudi Arabia. And at least another INR 5 crores, I expect will be -- CapEx will be incurred in South Africa in the near future.

Okay. And my second question is what kind of annual costs are we expecting on a year-on-year basis? Because since now we are closer to source, like we are closer to the source of raw materials, what I mean in South Africa, Middle East, so what kind of annual savings are we expecting now?

See, savings come from overall scale and efficiency. There are various things at play. South Africa, while we are closer to the origin and we can process there, there is higher cost of processing with labor and power being more expensive there. So, it is very hard for us to tell you today specifically what savings will come from each such initiative. But certainly, scale will give us greater efficiency, both in logistic costs as well as efficiency in terms of spreading our fixed cost better.

Okay. And sir, just wanted to understand, since our final product is pellet, does this pellet come from, say, from South Africa back to India? Or do we export it from South Africa to other markets?

At the moment, I will clarify, we are only doing semi processing of tires in South Africa and the semi-processed material is coming to India for recycling. So that is the current setup.

[Operator Instructions] We take the next question from the line of [indiscernible] Aditya Birla Money.

Hello, am I audible?

Yes. Please go ahead.

Yes. I want to ask, can you give us your guidance on the performance of TP Buildtech and what top lines are we expecting from the same in FY '27 and FY '28?

Gaurav here. I think your question is specific to TP Buildtech, correct?

Yes.

So TP Buildtech, we expect moderate growth in this financial year. In TP Buildtech, as of now, we are at a revenue of INR 56 crores versus INR 61 crores last year. So we are a bit behind. We expect to finish the year at par or maybe slightly higher than previous year. We are expecting a good Q4. In regards to future, we have done some good work and in this financial year, in terms of laying the foundation for growth for the next 2 to 3 years, one of them being, we now have a plant in eastern part of India, near Calcutta to make the concrete admixtures. Earlier, historically, we only had 2 facilities, one in North India and one in West India. So this initiative in East will certainly help with growth in the coming financial year. That is one. And second, we have hired a new team and set up a new line of construction systems products such as accelerators and grout repairs. We are now beginning to sample our product with customers, get some approvals and [ accreditions ](sic) [ accreditations ]. We are very confident that we will see impact of that also in the coming financial year.

And just one another question is that, how is the order pipeline looking for -- in Q4 FY '26 and FY '27?

Ma'am, just speak a little bit more clearly. I'm having a little challenge understanding all the words that you're saying.

All right. I'm asking that, how is the order pipeline looking for Q4 FY '26 and FY '27?

Sure. Okay. So that is looking good. I think one of the reasons why we also had lower margins in current financial year is because our own product mix basis, because of the pipeline that we had changed, we sold less of the higher grade and more of the lower-grade materials. But looking at the pipeline, we are -- it's looking good. We have a good set of customers, lots of them with whom we have now worked for almost a decade, and they further have good projects. So as of now, it is looking good.

Sure. Okay. And one more question is that, you mentioned that you have kept aside INR 5 crores for R&D. So, are you looking for any new verticals other than rubber recycling?

Ma'am, we are -- we see opportunity for finding adjacencies within our existing business, within the scope of recycling tires and new applications of rubber as well as the polymer composites business and the masterbatch business. So, this money is earmarked for finding new applications and adjacencies to our existing business. We are not, at the moment, considering getting into construction, demolition waste or battery recycling or something which is completely unconnected.

[Operator Instructions] We take the next question from the line of Vatsal Shah from Knightstone Capital Management.

So, I wanted to know the current cash balance available with the company and the debt repayment plans for the next 2 years?

So our current cash balance is approximately INR 5 crores. And what's the second part of your question?

The debt repayment plan for the next 2 years?

We -- how much of our debt repayment, maybe [indiscernible], you can help me with that?

INR 10 crores per year.

Approximately INR 10 crores a year.

INR 10 crores. Okay. And the second question would be that, like we are looking to extend our capacity to 235,000 tonnes. So that includes everything, right, the rCB plant, the PCMB plant and every vertical we are going into?

Yes. I mean, we -- everything begins with tire recycling, the capacity of recycle and then those are all downstream processing options, either one can go into making reclaim rubber, crumb -- micronized rubber, et cetera, or one can go into pyrolysis and rCB. So we are just adding more and more optionality to our business. But everything begins with recycling of tires. So that is where we expect in the near future, our capacities to be around 235,000, 250,000 tonnes.

Got it. And the -- like the EBITDA margins are similar across verticals, right? Like, there must be some difference, but like, it is comparable, around 18% or so?

Around 16% as of now. We desire to go to 18%. And of course, work is being done in that direction.

We take the next question from the line of Raghav Bansal from PDNL Capital.

My first question is, how does the reduction in GST on tires in India affect the tire recycling ecosystem?

It has no major impact on us, frankly.

Maybe some demand will increase, and we are benefit only, because due to lower GST, there will be more demand and then more demand for their raw material and more demand for our finished product.

Right. So it will not affect the replacement, or it will not bring a new trend of too much replacement in the existing tires?

Even if that happens, that only supports our business. But I don't expect it to move the needle in any substantial way.

Okay sir. And second question, how has the recent infrastructure policies in the budget affected the ecosystem for us in any way?

I think government's focus and spend on infrastructure has remained there for the last 5 years. Every year in the budget also, they announce something new, some mega projects. This year, there are 7 new freight corridors that have been announced and [ expressways ], et cetera. So, all of that supports the need for infrastructure in the country, and we are aligned with that.

So there is no specific mandatory requirement for a minimum amount of tires or percentage of rubber to be used within roads as a policy? Is it?

The old mandate and guidelines remain in force, which is for high-traffic roads, government continues to recommend use of modified bitumen.

We take the next question from the line of Manish, an individual investor.

Sir, am I audible?

Yes, Manish. Please proceed.

I have 2 queries. My first query is, if I check your investor presentation, the Q3 FY '26 EBITDA margin has decreased from the last quarter. Last quarter, we were at 18.5% and this quarter, we are at 16.3%. So what's the reason behind it? And the same goes with PAT. PAT has reduced from 10.6% to 9.6%.

On the EBITDA, it is largely because of EPR. We had some EPR credits which we accounted for in the previous quarter, in one go, because there was some lag in the reflection of those credits at the EPR portal of the government. So our policy is only when the EPR credits start showing on the portal, we start accounting for them in our books. So that caused a little -- showing higher EBITDA margin than what we actually achieved in previous quarter. And this quarter, it is only accounted for 1 quarter, which is this quarter, of Q3.

Okay. And I have 2 more queries. If I can ask, I don't know. The first question is, we can see the auto sales increasing a lot, right, from the last quarter. So if we have more auto sales, we might have more tires. So, will the raw material price be reduced? Will it reduce a bit going forward?

No, I would not draw that conclusion. You said higher auto sales, right?

Yes, higher auto sales. Say, we have 2-wheelers, 4-wheelers, [indiscernible] vehicle, passenger vehicle, everything.

So that is good for us. So more vehicles on the road means more tires are being put to use, which means more...

So the raw material price will decrease, right?

No, I wouldn't jump to that conclusion also. But what I would say is that we can certainly conclude that there is more business for everyone to do.

And sir, my last...

Yes, Manish, Subodh here. So if you see a couple of quarters back, the tire industry was bleeding. And with the reduction in GST and some of these measures, the tire industry has started improving on their sales side.

Yes, sir.

That's the reason even the all tire industry sales are improving every quarter now.

Yes, yes. Agree, agree, agree. Sir, and my third query is, sorry to be specific, when we started the year, we guided for 20% revenue. Last quarter, we guided for 12% to 15%, not 8%. And this quarter, we are guiding for 8%. So, don't you think we should have a conservative guidance, not to be -- not to over guide something?

No, I think there is some gap, Manish. In the quarter 2 earnings call itself, we gave the visibility of 7% to 8% growth over the previous year's revenue.

Sir, I have the recording -- call recording and the -- I mean, the transcript with me. It shows that 12% to 15%. That's the reason I ask.

Manish, Gaurav here. We give a guidance to the best of our ability to what is realistic. We have been giving that for the last many years. In most cases, we are within 5% of our guidance. This year, we are within 7%, 8% of our guidance. So it is a guidance at the end of the day. And I think when you also listen to that and then quarter-on-quarter, we are also updating you, I think that is where you need to consider all the facts and then draw your own conclusions.

Yes. I agree, sir. I just wanted that should we be more conservative in giving the guidance? Just to be on the safer side.

I believe the way we are giving our guidance is accurate and to the best of our ability. I don't see us making any change to that.

We take the next question from the line of Kamal [ Jeswani ] from U First Capital.

A couple of questions. Firstly, with this pyrolytical oil plant starting, what is -- can we expect some margin improvement once this starts?

See, we expect the pyrolysis rCB business margin profile to be very similar to the material cycling business that we do. So, it will be similar. I think overall efficiencies for the company will come because of scale and other logistic benefits, et cetera.

Okay. And regarding TP Buildtech, I think we are holding some 49% stake -- [ 49. ] some...?

Correct, sir. Correct, sir.

Are we expecting it to cross 50%, 51% to make it a subsidiary once -- [indiscernible] subsidiary, I mean...

We are -- we haven't -- we are not considering that as of now, I think, will be the most accurate way to answer your question.

Okay. And I think I missed the answer you must have mentioned, I guess. We are currently at 15% capacity utilization. And how much are we expecting scale up in the capacity utilization this year end and next year?

I think your question is to the TP Buildtech new plant, right?

Yes, yes. Correct. Yes.

I think that we are already factoring in to go to about 35%, 40% utilization in about 6 months. And then, of course, we'll continue to make efforts to make it even better. But in the near future, that is where I'm seeing the utilization.

We take the next question from the line of Karan Gupta from ACMIIL.

[indiscernible] Can you share the segment wise margins in broader terms?

We don't share this data, Karan, segment wise margin.

Okay. Okay. Okay. But if you can share comparatively segment wise, which segment is higher or which is lower, something like that?

The margin profile of infra and industrial is comparable and the margins in the Consumer segment are slightly lower.

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you, everyone, for organizing the call today to the organizers. And of course, my gratitude to all the people who participated and have shown interest in our company. I wish you very good evening and a happy, healthy year ahead. Thank you.

Thank you. On behalf of Go India Advisors LLP, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.