Uflex Limited (500148) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Uflex Limited Q3 and 9M FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [indiscernible]. Thank you, and over to you.

Thank you. Hello and good afternoon to everyone. On behalf of Arihant Capital Markets Limited, I thank you all for joining into Quarter 3 and 9 Months FY '26 Earnings Conference Call of Uflex Limited. Today from the management, we have Mr. Sumit Kumar, Executive Vice Pecan Finance; and Mr. Surajit Pal, Vice President, Head of Investor Relations. So without any delay, I will hand over the call to Mr. Surajit Pal, Vice President, Head of Investor Relations, for his opening remarks. Thank you, and over to you, sir.

Thank you, Ashvath. Good afternoon, everyone. Thank you for joining us today for Q3 and 9-month FY '26 Earnings Conference Call of Uflex Limited. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections or other estimates about future events. These estimates reflect management's current expectations about the future performance of the company. Please note that these estimates involve civil risk and uncertainties that could cause our actual results to differ materially from what is expressed or implied. I would now request Mr. Sumit Kumar, Executive VP, Finance, Uflex Group for his opening remarks, following which we will open the forum for question and answer session. Over to you, sir.

Hello. Good afternoon, everyone. Thank you so much for joining Uflex Q3 and 9 months FY '26 earnings call. I'm Sumit Kumar, I'm Executive Vice President, Finance. And in fact, I'll take this opportunity for those joining us for the first time to briefly introduce Uflex and our business operations for those who are joining us for the first time. Uflex Limited is in India's largest multinational flexible packaging and solutions company, uniquely integrated across the entire packaging value chain from raw materials to finished consumer ready packaging solutions. Our integrated ecosystem begins with the production of virgin PET chips and recycled PET chips, which form the backbone of our Bopek-based films. Our packaging [indiscernible] portfolio includes BOPET, BOPP, CPP, recycled PET films and a wide range of value-added specialty films, which includes Aloc, specialty films, high barrier films, et cetera. And these upstream capabilities are complemented by a strong intermediary products portfolio of high-performance inks, addive coatings holography solutions, pending cylinders and engineering equipment, enabling a full in-house capability, quality control and operational efficiencies. At the downstream end, we provide complete packaging solutions, including flexible laminates, pouches, tubes and aseptic liquid packaging cartons. We serve leading global brands across FMCG, across food and beverages, pharmaceutical, personal care and industrial sectors. This fully backward integrated model enhances supply chain reliability drives innovation to strengthen sustainability initiatives and positions Uflex as a comprehensive one-stop packaging partner globally. Now before I come to performance about the quarter, I would like to highlight that this was a challenging quarter in terms of the macro headwinds, which were -- there were 2 major macroeconomic events, which were the drivers under which we have done this quarter, a 9-month performance. and both coming from the [indiscernible] as well as internationally. So overall, for our international markets, we had the impact of the U.S. tariff-related uncertainty as a major driver, impacting performance. And at the same time, we were in the midst of a GST transition. And as a GST rationalization had an impact within India to a great extent. And despite such a challenging demand environment in certain segments, we remain focused on operational discipline, the mix improvement, cost optimization and long-term value creation. All of that is reflected in the numbers of the quarter, which are for the 9 months, we logged a revenue of INR 114 billion, INR 157 million, which was on a corresponding period of last year was up 0.8% year-on-year. We had reported EBITDA at a stable level of INR [ 13.51 billion, ] which is more or less in line with last year's EBITDA of 9 months for the same period. We had a normalized EBITDA which was at almost INR 13 billion, which was down 9.6% year-on-year and margin at 11.4%. We had PBT of 136 -- PBT, which was up 136% to INR 1.63 billion, which are supported by lower exceptional impact versus last year. And we had a major swing in the PAT at INR 1.21 billion versus loss of INR 263 million in the 9-month period of last year. Coming to the performance for the quarter 3, per se, we had revenue at INR [indiscernible] versus INR 3775 billion. which was 3.8% down on the corresponding quarter of last year, and that was largely on account of volume softness because of the factors mentioned below and also because of a lot of import-related pricing pressure in the market. we had a reported EBITDA, which rose 9.7% at INR 4,596 billion, and there was a margin expansion of 180 basis points on a quarter-on-quarter at 12.7%. During the quarter, we also had foreign exchange and derivative gains of INR 201 million, which were adjusted, resulting in a flat normalized EBITDA for the quarter. And hence, the normalized EBITDA was at INR 4.395 billion, which was up 12.8% on a sequential quarter basis and margin overall improved to 12.1%, which was a 200 basis point expansion on quarter-on-quarter. We had the profit before exceptional items increased 56% quarter-on-quarter to INR 643 million, and PAT stood at INR 361 million, which was up by 34% on a sequential quarter basis. and EPS was at INR 5.01 per share. I'd like to touch upon slightly on the aseptic packaging business. Our aseptic liquid packaging business delivered steady growth during the period with volumes increasing by 2.3% year-on-year to 1.8 billion PAT as against 1.76 billion PAT in corresponding quarter 3 of last year. And for the 9-month period, volumes grew 4.4% to INR 5.9 billion as against INR 5.7 billion in the 9 months of last year. reflecting strong execution and improved product mix. This reinforces the external growth potential of the aseptic packaging category as we see. And looking ahead, as we know, quarter 4 and quarter 1 is seasonally the strongest quarter for aseptic packaging business. So the current quarter and next quarter are expected to witness much better prospects, supported by category tailwinds and also pre-season loading. We expect this momentum to strengthen and anticipate a robust season and summer in FY '27. Assuming trade inventory liquidation and inclement weather conditions are now largely behind us. And we expect our [indiscernible] packaging business to have a total sales volume of close to about INR 8.5 billion in the next fiscal, subject to overall beverage industry [indiscernible]. Thank you. I'd now request if you have any questions, I'd love to take that.

[Operator Instructions] The first question comes from the line of Aman Kumar from AK Securities.

Sir, so far, so would we are doing very well as far as turnover is concerned. Sir, but could you please outline the company's road map for debt resuction? And are there any [indiscernible] or time line over the next 1, 2 years that the investors should be aware of?

Yes. So in fact, we see at the current leverage level, we see this trend seems to be plateauing at the current level. We must keep in mind at this stage that we are near commissioning stage for 3 of our large projects, which includes our INR 12 billion expansion, inr 12 billion tax expansion of aseptic liquid packaging facilities in Egypt. We are having almost 40,000 tonnes recycling plant at the near commissioning of Stage in India. And we have also woven polypropylene back, which is INR 80 billion back production capacity in Mexico. So we are almost at the end of this 3-alproject commissioning, and given that we largely feel that now on, it will be a leverage, it will be a function of improving EBITDA as a result of this project being operational. And significantly, it should reduce the leverage overall. We are not looking at this debt level in isolation. We look at the impact of the bearing on the leverage. So with the improving EBITDA and largely this CapEx cycle being at the meta we are we expect this leverage should be more or less should be peaked at the current level.

Sir, you have told that you will see in the debt level to this level. But again, you have announced a [indiscernible] Project. So every now and then you are announcing projects and keeping the debt level to the to a very high level. So whenever there is a downturn in the economy all over the world, I think the company will be in deep trouble if we don't look to control the debt. Because in the past, Mr. Bhatia used to say that this is that get -- we will not increase anymore. But again, we see that there is increase in the next quarter. So I think you have to ask our investors that this is the debt, the maximum debt the company will have and then how the management will repay this over a period of time.

Yes. So in fact, thank you for this point. And in fact, we take this point in the spirit of the guidance that the concern about this leverage is something which is very much, very much top of our clarity to -- and we look at it as an interplay of the debt level, the current [indiscernible] and the current CapEx. But at the same time, we see this improving more on account of this EBITDA improvement from here. So what I can say is that we see this leverage ratio, which is at the current level, more or less being at the beat. And so far as no reduction of that, it will be an interplay of overall repayment which, in fact, is during the year. And at the same time, EBITDA improvement will lead to this leveraging coming more under moderation is what I can say.

And sir,, which key markets are currently performing well for Uflex and where we are facing challenges? And what factors are driving the differences in performance across geographies?

Yes. So in fact, as you see that we have now current revenue mix of close to about 44% coming from -- within India. We have 56% of revenue now coming from overseas markets. We see that overseas Egypt and Mexico are the 2 largest setup outside India, definitely driving the growth. And while most of the market, not just in India, but as you know, the tariff we look at uncertainties have also resulted in our packaging films business, which contributes to almost 2/3 of the overall revenue also being impacted because of the U.S. related headwinds and also tariferated uncertainties, a lot of exports are reoriented to the non-U.S. market. And that meant that, to some extent, even the Europe or Middle East, North Africa market, which are the other major markets that we operate in, also impacted by this kind of supply gap mismatch, and also that resulted in some kind of pricing pressure on realization. Now we see the good part is that you see in the current quarter, that trend, in fact, is showing some signs of reversal. We -- as we all know, that now this penetrated thing is easing there's uncertainties, which will mean that this will be stabilizing going back to the normal supply chain operation. That will help us improve our performance in the major markets and also definitely in India, where we have seen already the prices improving, and there is a price recovery for pocket film currently at about 100 tonnes. Likewise, we have seen marked improvement in the PPP films. During the quarter -- as we started the quarter, these were the things which were actually weighing on negate as a whole. But we see by the end of the quarter and most particularly in the current quarter, those trends being reversed. So we are confident that, overall, we feel that this has been result in the current quarter and more pronounced basis in the next fiscal this seems to hold extremely good for us.

So this is the domestic scenario, what all does the international scenario as far as operating DPTs concerned? Do you think that the margin will improve like India overseas?

Yes. So I can talk about the way we see the market improving because if you talk about there's no U.S. market currently has a major imports of BOPP films. So U.S. itself is not a local producer of BOpP. And with the increased demand of the UP, it is being catered by different markets. We definitely see U.S. market as a major a prospect for the BOPP sales for industry, for ourselves a whole. Overall, we see that in Egypt and largely Mexico plant being benefited by this overall demand, which is showing signs of improvement.

Sir, could you say the expected commission on a stabilizer time line for aseptic packaging plant in Egypt, the recycling plant in Noida and WPP plant in Mexico?

Yes. So largely, it seems to be very much on goes. I think I can say that between the current and the next quarter, we should see these 3 projects being commissioned give and take a few months here and there. But I expect that between now and end of the first quarter, we should have all these 3 products up and running.

The next question comes from the line of Chirag Singhal from First Water Fund.

My first question is on Asepto. So what are the target volumes for FY '26? And if you can also help me with your targets for '27 and '28 .

So in fact, we see that in the current 9 months, the 9 months ended December '25, we had a total of INR 5.9 billion. as against INR 5.7 billion packs in the 9 months of last fiscal. Largely, we see that here, we should be having this total aseptic packaging business to be in the range of around INR 8.5 billion. Though we expect that this can be slightly better, but we are keeping our guidance to about INR 8.5 billion packs. And next year onwards, as we are almost -- we are commissioning stage of the similar capacity in Egypt and now with the full impact of the extra 5 billion pack expansion in India. With increased capital utilization and particularly, as I said, quarter 4 and quarter 1 being the peak season, we expect that to translate in better utilization of these capacities. So I can say without taking a number that it should show a significant improvement from the current year numbers of INR 5 billion packs or thereabout.

Is it possible to give a range at least for FY '27? Because you will have the India as well as Egypt up and running. So just trying to understand what kind of increase in volumes we should expect?

Yes. So in fact, we are very, very upbeat about the current quarter. We feel that by end of this quarter, we have been fairly in a good position to give a proper sense of the numbers to expect from fiscal I think that will be an appropriate time because now we have to first reach the stage of commissioning of the specific liquid packaging facility in Egypt. . And once we have that first year of course, will be a ramp up as utilization level, we have to calibrate as to what extent. Of course, it will be linked to the market demand and everything. But we see that both the facilities now adding together and also the improved demand should lead to a much more improved number in the next fiscal. At this is a rather wait for another quarter to give a specific number guidance for the next year.

Okay. And this Egypt plant, are you expecting the commissioning to happen in current quarter or in Q1?

So I meeting this between current and next quarter. We are just around a partner about something of that plant. I think it may be somewhere maybe within 90 days from now. So that can be either end of this quarter or somewhere in the first quarter. So I look rather put it over the next 90 days or so.

Okay. Next question is on specific locations capacity utilization. So if I quote Mexico, Hungary, Poland, there was a sharp dip in the capacity utilization during the quarter. So what were the key reasons? And what should we expect for the coming fiscal year?

Yes. So most of the places, I think this is not different from the overall theme, which impacted, to some extent, the packaging film production volume. And Europe, Poland, Hungary, as we talked about, were also to a great extent, impacted by the reorientation of the exports and a little bit of supply glut. And that meant that, to some extent, these production volumes were at -- and -- but at the same time, having said that, the trend seems to be reversing many places largely as a fallout of things happening in the U.S., thankfully, that should result into restoring of the normal utilization level for these markets as well. But overall, if you ask me to other question, it was impacted for the same factors that I mentioned earlier. Of U.S.-related for out also impacting the non-U.S. market verses, including EU.

And what are you guiding for like capacity utilization at these 3 locations for the coming fiscal?

So overall, we see it will be at the level where it was earlier, which is about 80% plus hydrate utilizaton is what we can expect from this. .

So Poland, which is showing at 56.7% in Q3 even that you are saying it should go to 80% to in the coming fiscal because the rest are not as low as Poland, but I'm just trying to get a confirmation.

Yes. So overall, in fact, we are saying that these 3 locations together looks like improved capsid utilization and also for [indiscernible] this more particularly for Poland, if I request Sumit to pitch in, he had a point to make a request in to that.

Yes. Chirag, you must be have that this is seasonally pretty diminutive at in Europe, particularly in Eastern Europe, so plus holiday season. So every year, similar kind of things happens, but this time, along with the seasonal fallacy, we also have the impact of this extra supply from the kind of sales we have received, which was actually destined for EVs, but because of this uncertainty, that has actually flooded the European market as well as North Africa and Middle East. That is one of the reasons. And other reason is that when this kind of opportunity are seen by the market players, particularly the warehouse guys or the wholesaler guys, they were also holding less because they were expecting price will come down. So as a result of it, they are not buying very big quantity. They are not giving big commitment. Now once these various multiple countries are making deals weekly is. And more or less these uncrate are tapered off and everybody is getting back to normalization. These things we already are observing in the reflection of a realization both in India and export market. And that's why [indiscernible] that you might be seeing a much greater improved quarter 4.

Okay. Got it. Just one last question on the PET resin plants -- both the plants that we have. What was the capacity utilization in [indiscernible], and again, the same -- what are you going for in FY '27?

Yes. So Egypt plant operated at about 45%, 46% capital utilization in quarter and for the month, about 57.8%. In fact, this was on back of the commissioning of the edit plant in the quarter 4 of last year. So in very first year and 9 months of operations, we have seen a utilization close to about 60% in commissioning last year. And India plant, pulp plant for bed ships, in fact, had the overall 9 months abstinent for the quarter, again, for the same reason, it was slightly less compared to previous year at 68%.

And should we -- is it fair to assume full capacity utilization in the coming year?

Yes. So in the coming year, in fact, we'll see, number one, the subs utilization is steadily improving. And from a 9-month utilization of 58%, 60%, we should see Egypt and utilization in the range of close to about 80%, and for Panipat plant, we expect this to be further improving from the current level of 79% to a part of 85%, 90%. .

Understood.

To what Sumit's commentary is that we have also technically improved our sales in Panipat into more into PG grade jets. So what it means is that even if we stay at the similar kind of utilization, our realization will be much better. Our margin profile will be much better in Panipat. So we are not focusing on, say, 75%, 80% for the initial 2 years is pretty good utilization level. So if you cross 80%, then you were thinking of 90%, you were thinking of putting up a new plant, which is not required actually at this point of time because given that government's initial phases of implementing big ships and recycle breakups and all these things. So situation, what has tumbled out is we are focusing more value addition. And if government implementation more and more expanding across the industry. There will be more demand for value-added BG product or go to great chips product, where we are focusing more on that. So going forward, you can say that we are technically going to increase our capacity utilization, but quality value utilization.

The next question comes from the line of Kaushik Poddar from KB Capital Markets Limited.

So what is the kind of margins you are looking at, right? You're at EBITDA margin of 12%. What is the kind of margin you are looking at for this quarter as well as for the next year?

So overall, if you see, in fact, we are still not we are at 11.5% higher margin for the 9 months. We definitely see that margin while it has shown on a sequential quarter basis, it has seen an expansion of 200 basis points over the previous quarter. which is currently at for 9 months, it's about 11.5%. We see it in the range of about 12% or so for the year as a whole. And moving forward, as the product mix improves, as we are able to realize price realization is better for our packaging film for value-added films that should show a consistent and steady improvement. But as for this fiscal, we expect this reason of it of us.

Can we expect a better margin next year?

Yes. That's exactly what, in fact, we have -- we see it unfolding, because as a result of I said that improved product mix, we see a more of no cost visualization and also better price realization from our OCs in Indian market. All this translating into a better EBITDA margins improving from 12% further upwards. And this is what we can see the trend as an expectation in the next fiscal -- FY '27.

Yes. See, another thing, the 3 plants that are coming into operation this quarter and next quarter. I think the prediction given was that these 3 plants will give an incremental turnover INR 2,000 crores with a margin for these 3 plants at 20%. Are you sticking to that?

Yes. So I think just to place it as the right perspective, these 3 plans once commissioned. The numbers which are what we are discussing is in context of the full capital utilization of these 3 plants. And as we expect, and it's very much expected at this duplication will be a ramp up over a period of time. So say, for the next fiscal, if we are having 60%, 70% utilization, we and accordingly calibrate the numbers, but we expect on a full cutoutilizion, yes, these numbers do hold good and we should get an incremental dividend account of these 3 projects contribution of close to INR 2,000 crores, INR 2,500 crores with the margin, which is not 20% between -- we can expect a high teens margin.

The next question comes from the line of Saket Kapoor from Kapoor & Co.

I hope I'm audible?

Yes, you are.

Yes. Sir, as you mentioned that there were external factors that led to lower utilization for the flame segment and especially domestically. So in terms of the exit what should be the prime segment utilization levels that we may expect? Or if as an entity, including aspetic as well as plan packaging, everything, why should we land for Q4, which is seasonally also a better quarter?

Yes. So when we talk about quarter 4, we'll have to basically look at it more -- I'd like to give a more nuanced response to that coming from different segments. So for packaging films, we start with some packaging tons as we see this for the quarter of softer demand, this was a quarter of pricing pressure. Definitely, that all translated into a little bit, I would say, resilient but not robust performance for the quarter. And having said that, for quarter 4 for packaging films, as such, we expect that the word that the change is behind us and which is very much reflected in the current signals that we're getting from the market. As you are aware, the prices have firmed up. In fact, it has held up and now building up at the level of 110 or thereabout for [indiscernible] likewise for BOPP. And if you see in the quarter performance, we also had definitely a marked improvement in our flexible packaging business contributing to the overall revenues. So while overall numbers stayed on, but at the same time, within that, if you actually little bit analyze, you will find the packaging business, has already started showing signs of improvement from the successful GST transition. And also, we expect that a lot of destocking, which is over will result into a much better prospects for flexible packaging business. And aseptic business, you rightly said that quarter 4 definitely is typically 1 of the better quarters. Quarter 1 being the best in quarter 2 also is very good. So all that for the different segments, I think will look good, looks promising for us for quarter 4 overall as the performance. And on the back of this behind us, we expect these numbers to be much, much better for quarter 4 as a whole. And definitely, as we talked about the 3 projects we are commissioning. I think the full impact of that or at least the substantial impact of that will be also seen in the -- so here on, in fact, I'm very confident that we see starting quarter 4 improved trajectory, which will be more particular about rather than chasing a number.

Right, sir. So you mentioned about prices for the flimolding. And so can you give some color on how the trends are shaping up for the commonize plan for both OpEx as well as BOPP for the month of February? Or what was January,February trend?

So in fact, if you see, it has gone on the way low of almost like INR 90 per KG. We are talking about Babil which with a steady increase and also as part of the conscious strategy to some extent has resulted and import the pricing pressure from import of those films now subsided. A combination of these things, the prices have been steady, have held up and now reached a level of close to about 100 on the packet side. Likewise, on -- likewise on BOPP, if you see the prices are for the different grade, which is [indiscernible]. So you see the prices of NTT largely the segment that we operate in is the prices of INR 120, INR 121 per kg now, which was -- which has again improved significantly from the previous month.

And has the RM also moved in that practice and put in place of our margins? Or these are all demand-led and Rene the converting margins are higher?

So RM, it's actually an interesting aspect that we need to understand that RM was also to a great extent also to do it to some extent as we gather from China. And as RM was, in fact, weighed down by a lot of imports from China and because of Chinese producers more chasing volume than the price, but we understand of late, there has been a conscious shift or at least direction from Chinese government to rather first more on holding the price and not changing the volume. And with that, we expect that off lift, the trend has been -- prices have been more consistent. And moving on I think it should be more tracking iron prices rather than being moving in different directions. So largely, the prices uptrend and all will also be -- will be underscored by the same trend being followed in the raw material price.

Sir, last point, come again. I missed you.

So I was telling that raw material prices, in fact, have now shown some kind of steady trend -- and to some extent, it was also to do with what we gather from the landscape is that there is a direction in China also about focusing not on changing the volume, not on increasing the volume, but focusing more on price realization, which has meant that there is no undue pressure on the raw material prices, which are also reflected in the firm prices for the packaging films. Largely, we feel that this trend, which like tracks the raw material prices to continue, and that's where we feel that there will be some kind of steady trajectory for both the raw material as well as for the end packaging is.

Right, sir. And now coming to the debt part. As the first participant [indiscernible] mentioned about the debt being at the higher levels, I think. So just a casing point, sir, what are our going ahead for the next financial year. I think so peak debt is our gross is INR 8,000 crores net debt. So what is our first year current maturities for the coming in year.

Yes. So in fact, let me talk about the debt profile. This is actually important also to understand that, number one, the -- it has to be also seen that, we see an improvement in the debt profile in the sense that cost of. We see it may be a little premature for me to give a specific, but we are working on a plan where we see cost of funds is steadily going down. And as we are significantly done with these 3 projects CapEx plan. So we feel that a combination of 3 factors: which is like the 3 projects, major CapEx cycle being over. Number two, the translation or result of this into a positive improvement in EBITDA. And number three, the cost of funds is expected to come down further based on certain plans that we are working on. We see the debt profile. And moving forward, it will give you a lot more comfort to all of you.

So can you give me the current majority part? And then, sir, small point, even with the rationalization of cost for the finance cost is going to rise since you will be capitalizing projects in the 2 quarters. So the absolute number will go up.

Yes. But at the same time, given the repayment cycles, it's a kind of kind of offset each other. As you rightly said, in the capitalization with the CapEx spend part. So that -- the debt part will not be showing an increase on that account. At the same time, that is actually pointed out by you that it will reflect in that being expensed out, which will definitely being slightly higher interest cost per day. . But what I was alluding to was the cost of funds. So cost of funds, we expect that to come down based on the plans that we have working on.

What is the current blended cost of funds, sir? My last 2 questions.

Yes. So current landed cost of funds will be about 7%, 6.9% to 7% that is cost of funds.

Okay. And can you give the numbers for the current maturity for next year?

It will be close to about INR 1,450 crores to INR 1,500 crores. The CPLTD, the current maturity over next 1 year.

[Operator Instructions] The next question comes from the line of Krisha from [ Gro ] Capital.

And then last earning call, top line growth guidance to at 5% and EBITDA to be in the range of INR 1,800 crores to INR 1,815 crores. So are we confident of achieving the same? Can you provide some guidance range for EBITDA margins?

Yes. So in fact, EBITDA margin, I said that for the FY '26 fiscal, we expect it to be in the range translating to an EBITDA which largely should hold the guidance given earlier of INR 1,800 crores to INR 150 crores for the year. So we are confident with this improved performance in quarter 4, which we are expecting, and we are witnessing to some extent. We feel that, that guidance holds good in terms of EBITDA expected numbers for FY '26.

[Operator Instructions] The next follow-up question comes from the line of Aman Kumar from AK Securities.

My question is that yes, stinging planting it we are expecting our capital, we have already expanded our capacity in India. Since [indiscernible] export was happening to the market where Egypt [indiscernible], so do you think that sales export market will now be clear by Egypt plant. So how we will say from this Indian plant? So okay, we can fully utilize the capacity here?

Yes. So largely, if you see, right now, at 8.5 -- expected 8.5 billion packs of capacity -- a number of packs for the fiscal, it's largely being catered to by the plant in India, which is a [indiscernible]. Of course, you know at 7 billion, we expanded by another INR 5 billion tax to 12 billion past here. And given the demand, which is from overseas, which is largely expected to be catered from the plant in Egypt. . Why we chose Egypt was also because you will realize that Egypt generally is geography stable tariff resume, very stable trade relations with most of the major markets, including U.S. and EU. So Egypt for us was a strategic decision to set up the expansion of stability. From there, we see that as a gateway getting to many markets, which are not to the fullest extent of our get from here. So we see that this will be very complementary to each other rather than being in any kind of conflict in terms of market.

Sir, because 40% of our production, the capacity when it was INR 7 billion. The 40% was exported. Now our capacity is 12 billion pack, and the export market will be taken care by Egypt. So do you confident that we will be able to sell 12 billion pack in [indiscernible]?

Yes. So I think this is where, to some extent, this is also -- we are actually relying on 2 things. Number one, we expect an exponential growth in industry segment per se, for liquid packaging. And on top of that, in India, we are already the market leader, and we expect to consolidate further the position of #2 to the leader, that will mean that there is a lot of upside in terms of market demand within India, which, of course, will be cat and that has been the reason for us to strategically invest in expansion of the capacity. Had we not been confident of the domestic market demand, we would have first added the overseas facility to more look at the spot market. We see the India market and also the larger global market being of great prospects for our liquid packaging business and helps both the things of the same capacity looks like we are confident of that being leveraged in the position to cater to the increasing market share and holding the margins to a great extent. And that's what we expect from our liquid packaging business on a whole.

Sir, what is the reason for deep in the chemical business in this quarter?

So overall, in fact, chemical business -- yes, it was actually a combination of the change in the product mix. And also something to do all derivatives and value-added products, largely reflecting the broader trend in the underlying industry segment, which were also impacted but we feel just like no other segment, there's also stabilizing, and we expect a better performance from the chemicals segment as well.

Sir, one more question that we have invested a lot of money in this commodity film business. whether it is operator [indiscernible] CTT. So instead of putting money in commodities from a while we are not invested in value-added film where the CapEx is quite low, but the margin are quite high.

Yes. So actually, in fact, if you see, that's exactly whatever mean by improved product mix in the sense that, on one hand, we have the base layer as the base packaging so, but most of the places, including Egypt, in Hungary and other places, we have also invested and added the capacity of, as I talked about, metalizedand ultra-high barrier film and those are now forming an increasing share of the overall packaging sales segment because on 1 hand, this does not mean that incremental CapEx for the same proportion. And also, it helps in terms of the better realization -- and most of the evolved markets, in fact, there is a great demand for these high barrier metalized, value-added specialized cells. And that's where the segment has no things have stabilized in the U.S. Other places, we expect that now this investment as a strategic focus on the high value-added film segment will hold good for us.

The next question comes from the line of Kaushik Poddar from KB Capital Markets Private Limited.

And we are going to start another year in another ways. And do you see any change on the APR front as far as your company is concerned?

In fact, is very close to our heart. It is very strategic investment from our side, and we feel that this government is equally committed to this thing, translating into what we believe should be something which should be of excellent no prospect for us. And if you see the general guidelines about the EPR mix for rigid, flexible as well as normal multimaterial flexible plastic where there were guidelines about 30% to 10% or 5% of this recycling material. Government has only pushed it out to some extent. . And largely, it has meant that what was expected to happen by this fiscal is only going to pan out play out in the coming years. There have been the window available for the next 3 years to make up for what was not implemented now. and that also shows in our view that shows the commitment of government of the has order. And we feel that this will mean that sooner or later, as more and more manufacturers adopted, it will it will help our strategic investment in this and should hold good for your company.

Then, do you see, as a result, your margins also coming up?

Yes. Overall, in fact, we see as just no actual implementation of this happens, that will largely track test utilization. And we being one of the best entrenched players in the recycling capacity will be the early beneficiary and should be able to get them fit of our significant strategic investment in that as it starts getting implemented, resulting in the numbers of this renewable mix. .

[Operator Instructions] The next question comes from the line of Saket Kapoor from Kapoor & Co.

Sir, as you mentioned that the current insulin of INR 150 crores, INR 1,500 crores, sir, is that number correct for the next year?

Yes.

So we should be -- yes, so for the next year, should we expect that debt to decline by that number itself or on an absolute number, because net debt to EBITDA would be a miss number with the contribution from the new projects still we are just contemplating and planning for the next year. So on an absolute number basis, Will this number will be reduced the opening -- the closing number for December?

So as I said that in isolation, looking at the net debt number, I will not give the right perspective. in the sense that we see this EBITDA performance for the next fiscal to improve, in making this leverage ratio, net debt-to-EBITDA ratio, which, in our opinion, has peaked at the current level to improve. Now with the repayment or current portion of the long-term debt element over next 12 months of INR 14 crores, INR 1,500 crores, and there is a remaining CapEx of close to about INR 25 crores largely, it should spread off. We don't expect any significant addition in the debt. But at the same time, improvement in the leverage profile based on the improved EBITDA is what I can say, not necessarily reflecting in the reduced debt number, but we can see improvement in the leverage ratio.

The 12 days which you mentioned right now will be a trend for the next financial year in this year?

So some part of this, as we talked about these projects, which are related to see the full completion of commissioning. We have Yes. We have about 36 million. We have about -- close to about INR 350 crores of CapEx spend will be -- which is remaining after the quarter 3 for our Egypt aseptic plant we will have for remaining CapEx of close to about INR 100 crores, INR 120 crores for the recycling plant at Noida. And we will have -- the next 1 will be the BOPP Talwar plant expenditure. So all put together, that is a residual CapEx, which based on the current plan of the CapEx seems incurred to a significant level over the course of next 1 year. So given the repayment of this and remaining CapEx environment of so much, I think largely it will kind of offset each other. Holding the debt level, I don't say that it will come down in the immediate year. But this has been seen in the context of improved EBITDA and renting in a leverage ratio being better is what we can expect.

That point is well taken. Now just to conclude, so we are operating in various geographies. So in the net debt number, if we could provide us next time in the presentation with geography-wise working capital debt as well as long-term debt, so that will survive some understanding of where the debt is currently being held. That would give us a much more clear picture about the same. And sir -- hello?

Yes, yes.

So that bifurcation would surprise a lot of our queries, where the debt line? -- and then we can contemplate about the currency transmission and other issues also, the risk part there itself. That is different of volume. But my request is that ifone1 can look forward a presentation of that geography-wise, segment, so that will surprise the issue, sir. And then we are operating in all across the globe. So what kind of systems, IT systems, SAP are in place where we get real-time position of all the plants that are operating across the globe? Or do we need to accumulate data post the quarter end? And how do we reconcile things, sir?

Yes. So I think there were 2 parts to your question. One was related to debt profile. And you were specifically looking at the split of long-term and working capital and also to get some sense of India and overseas. So in fact, we're probably kind of having an inkling of this. And from our side, if you actually see Slide #24 of the presentation shared there is already a profile a split given of long-term debt and working capital. So long-term debt is about 7% of the total debt and working capital in short term is 26%. Likewise, within the long-term debt, there is a split given of domestic and overseas. The domestic 40% and overseas at about 60%. And largely, you will also see this also bringing out a very clear pointer that 60% of the overseas business is in line with our major growth plans, which are from overseas. So this debt is aligned to our CapEx investment, major growth plans, and that lag is being reflected in the split between domestic and overseas business overseas that at 40%, 60%. Coming to the second point, which you made about the IT system, ERP implementation. As a policy, in fact, in all locations, we follow the uniform ERP or that is already minted across all locations, all entities. So there's nothing like quarter end screen for the numbers and trying to pull at those numbers based on a parallel excess kind of [indiscernible]. So that is very much part of the ERP implementation, which is -- has been done across all the entities across all these [indiscernible].

So then, sir, what should investors read into the always declaration of results on the penultimate day of the sector requirement? Every quarter, either our results are declared on 10, 11 or 12, that is the ultimate day remains -- or 14. So why is that -- in fact, since we are on the call of Uflex will discuss only the other. In fact, the industry itself, the entire concept for the flame industry every results for the film packaging team industries are at the fag end, either on 10 to 14 is other numbers. So we will be speaking to our companies on their platform, but I would like to know from the Uflex team that what remains pending that we need to come up with results only on the ultimate day?

Yes. So number one, first of all, let me assure you that this is not because of anything bending as such. This is not something to do if it is related to the ERP [indiscernible] implementation, as I told, that is something which is already in place. It is not something results in any hold back or delay in terms of getting the data. So we take your point that in ultimate day or a day before and all, maybe something that can be appointed and can be a suggestion for us to look at. And having said that, I think about the industry players, I should not be commenting on that. But maybe to some extent, we deem the industry leader to some extent, this may also be somewhere closer to there's no major industry players not see that result. But I take your point, I think this is a suggestion is welcome suggestion. And it is not for any kind of constraints or anything. It is largely something that we can talk about. I will refrain from talk to you about other players in this, who have more or less a rightly said, announced around the same time. So that part, I will not comment. But I take your suggestion as a welcome addition to see if we can actually push it a bit ahead.

Yes, sir, just look at the bottleneck and get them that sorted out. So this will help our investor community. And so we are -- we take the benchmark. So the other end will also follow through. That is what my understanding was. And lastly, sir, one more request if we could also have on our conference call, our Vice Chairman, CEO, Mr. [indiscernible] to spare time with the investing community since we think there is no representation from the promoter, although this is not to undermine or Sajid or Pandey Ji significance or credibility, but it is just a humble suggestion from minority shareholders that there should be some representation in one form or the other, either on a half-yearly basis or on an annual basis. Wherein we hear from the promoter who are also partnered with us in this entire profile. I think all other are professional people, including you, [indiscernible] and Panday Ji, who are conducting and answering to us during the call. So that's again a humble producing that could be deliberated on the merit of it and look forward.

Most definitely. I think that is a solution which is definitely worth checking home. And as you rightly said that -- I mean, end of the day, in our own humble was we try our best to do justice to this presentation. But I understand there is a difference always in terms of a strategic vision in the road map ahead hearing it from the promoters does have a different impact, at least in terms of wishing. So this point is well taken. We will definitely take it to the promoters to get it.

Sir, only to add to that vision and everything is being informed by them to you and you are deliberating and extending to us. Am I correct on that front, sir?

No, that point, I will say that is -- the [indiscernible] is all humility, I'd say that's something which basically leads more understanding. It is not something that we hear and we are in actually, the management responsibility, it is something which is on behalf of Uflex, whether you hear from [indiscernible] or from us, it will be the same as coming from...

I got your point.

Hearing a vigil ahead. Of course, there can be substituted to the promoters, the funded. That point is taken.

Yes, with all humility, I made my submission, sir, not to pin in on assets. And we are truly satisfied with the way the costs are conducted. 70% of the gen updates are songs no questions on that, but we would definitely want to have our promoter retention on the call going here, and that's all from my side. And all the best to the team for the coming ensuing quarters.

Thank you. We need your wish. Thanks a lot.

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to management for closing remarks.

Thank you for joining us today. We appreciate your time, questions and continued support. The transcript of this call will be made available shortly on our website at www.uflexlimited.com. We value this platform as it enables us to engage meaningfully with our investors and stakeholders and look forward to keeping you updated on our progress in the coming quarters. Wish you all those present here. Thank you.

Wonderful experience interacting with you and welcome your questions, addition, later insights and look forward to engaging with you again. Thank you so much.

Thank you. On behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.