# 1. Financial Performance ## A. Key Figures * Total Income: ₹135.2 Cr Q3 FY'26 (+2%) · ₹393 Cr 9M FY'26 (~flat) * Gross Profit: ₹666 Mn Q3 FY'26 (-5%) · ₹1,970 Mn 9M FY'26 * **Gross Margin:** 49% Q3 FY'26 * EBITDA: ₹112M Q3 FY'26 (-14%) · ₹335M 9M FY'26 (-8%) * **EBITDA Margin:** 9% 9M FY'26 (steady) * Adjusted PAT: ₹23 Mn Q3 FY'26 (-49%) · ₹60 Mn 9M FY'26 (+8%) * Gross Debt & Leverage: ₹180.2 Cr gross debt, 0.92x debt-to-equity ## B. Revenue Growth * **Resilient Top-Line:** Total income held steady despite macro headwinds and muted demand, signaling operational stability in challenging conditions. * **Domestic Strength:** Reclaim rubber segment posted **strong double-digit growth** domestically, driven by expansion in non-tyre applications and rising market share. * **Growth Outlook:** Revenue trajectory expected to follow volume trends, sustaining a **mid-teens growth path** in reclaim rubber. ## C. Gross Margins * **Margin Resilience:** Gross margins remained stable on improved product mix and disciplined pricing, despite raw material cost inflation. ## D. EBITDA & Profit Trends * **Margin Pressure:** EBITDA declined due to **volume drop in plastics**, **high base effect in key segments**, **sharp export margin compression from U.S. tariffs**, and **fixed costs from underutilized new plant capacity**. * **Cost Discipline:** Structural cost improvements—leaner staffing, energy efficiency, and technology adoption—drove a **256 bps reduction in other expenses**, partially offsetting headwinds. * **Profit Recovery Signal:** Adjusted PAT grew over 9M despite steep Q3 decline, with **tariff impacts now reversing** and margins expected to rebound. ## E. Balance Sheet & Leverage * **Leverage Elevated but Managed:** Debt-to-equity of **0.92x** reflects new project investments, though management views it as sustainable given improving cash flow outlook. * **Deleveraging Path:** Leverage expected to trend downward as tariff drag fades and operational performance recovers. --- # 2. Volume & Utilization ## A. Key Figures * **Reclaim Rubber Volumes:** **Stable** overall despite ~40% YoY export decline to North America * **Q3 Volumes:** **~40% YoY decline** in reclaim rubber and Custom Die Forms * **Utilization (Reclaim Rubber):** **87%** in Q3, expected to reach **60–65%** next quarter * **Plastics Utilization:** **~50% or below** across Engineering Plastics, CDF, and subsidiary * **Plastics Growth Outlook:** Utilization to improve to **75–80%**, volumes expected **mid-teens to high-teens growth** * **Pyrolysis Business:** Capacity utilization improving; steady growth now visible ## B. Reclaim Rubber Trends * **Resilient Core Volumes:** Overall stability maintained through **new business wins** and **Tyre Pyrolysis Oil contribution**, offsetting steep North American export declines. * **Near-Term Headwinds:** Q3 saw sharp volume drop, with recovery path dependent on **customer demand rebound** and **OE tire production recovery in North America**. * **Utilization Recovery Path:** Despite 6-month softness due to **tariff impacts**, reclaim rubber utilization is poised for gradual improvement, supported by **new technology adoption**. ## C. Plastics Segment Outlook * **Underutilized Capacity:** Engineering Plastics and CDF businesses operate near **50%**, while subsidiary lags below that threshold. * **Recovery Momentum Building:** Utilization expected to rise to **75–80%** on **normalized polyolefin pricing** and **strong demand for nylon and engineering plastics**. * **Growth Contribution:** Plastics segment to deliver **mid- to high-teens volume growth**, adding meaningful incremental scale. ## D. Pyrolysis Ramp-up * **Operational Stabilization Achieved:** Pyrolysis business has overcome initial challenges, with **sustained utilization gains** and visible revenue traction. --- # 3. Product & Segment Performance ## A. Key Figures * **Market Share:** **+200 bps** in reclaim rubber in India (Q2 FY'26) * Conversion Rate: 1.3x for reclaimed rubber vs. other products ## B. Reclaim Rubber Business * **Integrated Ecosystem Taking Shape:** Diversified portfolio and new initiatives underpin a fully integrated tyre recycling strategy spanning pyrolysis, RCB, and crumb rubber. * **Domestic Strength Driving Growth:** Reclaim rubber revenues rose on strong local demand and **200 bps market share gain**, while pyrolysis and crumb rubber sales gained traction in cement and steel end markets. * **Strategic Repositioning Underway:** Operating model review focuses on optimizing feedstock sourcing and targeting high-spec applications in **automotive, electrical, and appliances** to improve returns. ## C. Pyrolysis & rCB Progress * **Non-Reclaim Revenues Held Steady** despite softness in recycled polypropylene, pressured by falling virgin PP prices and **surge in low-cost Chinese imports**. * **Strategic Partnerships Advancing:** Secured approvals from major brand owners and initiated collaboration with a **global compounder**, supporting future rCB market access. ## D. CRMB & Specialty Products * **CRMB Gaining Traction but Margin-Challenged:** Achieved approvals with key road and bitumen players, though current input costs limit profitability. * **Shift to Higher-Margin Verticals Accelerating:** Increased focus on automotive, electrical, and appliances to drive long-term margin improvement and demand stability. --- # 4. Cost & Margin Drivers ## A. Key Figures * **Raw Material Cost Inflation:** **45%** YoY increase in key grade input costs | **35%** price pass-through achieved ## B. Raw Material Inflation * **Structural Sourcing Shift:** GRP advancing import channels for waste tyres to reduce reliance on constrained domestic supply and secure a more margin-accretive position in the CRMB value chain. * **Margin Pressure & Mitigation:** Margins impacted by sharp raw material inflation, though partial price pass-through and sourcing diversification helped temper cost headwinds. ## C. Cost Reduction Impact * **Margin Expansion Catalyst:** Full cost reduction benefits now realized in reclaim rubber business, driving declining operating costs and paving way for significant gross margin expansion. * **Pricing Trajectory:** Full price pass-through expected from current quarter onward, supporting margin recovery. --- # 5. Capital Allocation & Projects ## A. Key Figures * **Capex (FY24–Q3 FY26):** **₹76 Cr** pyrolysis & carbon black * **Capex (FY27):** **₹80 Cr** pyrolysis & rCB · **₹12–15 Cr** reclaim rubber * **Solar PPA Investment:** **₹3 Cr** (11–12% effective share) * **Annual Solar Savings:** **₹3–4 Cr** * **New Capacity:** **+45,000 TPA** effective net capacity post-expansion ## B. Capex Deployment * **Above-Plan Investment:** Capex to exceed initial estimates due to **25% increase in project volume**, reflecting improved cost economics and higher capacity deployment. * **Reclaim Rubber Expansion:** Line 2 capex initiated at Solapur; commissioning expected by **May–June**, with full investment to be deployed by then. * **Asset Efficiency:** Pyrolysis and rCB projects expected to generate asset turns of **~2**, while reclaim rubber investments align with current return benchmarks. * **Strategic Review:** Polyolefin recycling subsidiary under strategic evaluation, including potential capital reduction or onboarding of strategic investors. ## C. Solar & Energy Projects * **Solar PPA Execution:** Agreement signed with BECIS Solar; project debt-financed with company holding **26% equity in SPV**, enabling low-capital access to renewable power. * **Near-Term Impact:** Gujarat solar project to be commissioned by **July**, with P&L benefits starting **August**, subject to seasonality. ## D. Future Capacity Additions * **Pyrolysis Timeline Slippage:** Technology stabilization delayed; operations now expected to begin **Q3 FY26**, with commercial production in **H2 FY27** following commissioning by **August 2026**. * **Regulatory Pending:** Pyrolysis plant registration awaited in current quarter, a key milestone for full-scale operations. * **High-Growth Potential:** Pyrolysis and rCB business poised for significant revenue ramp-up upon full capex deployment and stabilization, leveraging expanded capacity. --- # 6. Regulatory & EPR Benefits ## A. Key Figures * EPR Accruals: ₹4.54 Cr (quarter) · ₹13.56 Cr (9 months) ## B. EPR Credit Generation * **Robust EPR Monetization:** Smooth regulatory approvals and verification enable seamless credit generation and realization, with no current operational or compliance bottlenecks. * **Domestic Sourcing Compliance:** EPR credits derived exclusively from **domestically sourced raw materials**, aligning with regulatory mandates and reinforcing local value addition. * **Conservative Valuation Approach:** Current accruals based on **floor price of ₹52 per credit**, indicating prudent financial reporting without speculative pricing assumptions. * **High-Value Conversion Leverage:** Pyrolysis oil and char deliver **8x EPR credit weightage** versus 1x for crumb rubber, creating significant upside potential upon full operationalization. * **Pending Approvals Cap Realization:** Pyrolysis unit income remains **under-reported pending PCB approval**, suggesting future earnings uplift once regulatory clearance is obtained. ## C. Auto EPR Norms * **Structural Demand Catalyst:** Upcoming auto EPR norms from FY'28 expected to drive **sustained demand**, especially for plastic compounding, supported by European export compliance needs. ## D. Tariff & Trade Updates * **Export Tailwinds from India-EU FTA:** Anticipated zero-duty access to EU bolsters competitiveness of Indian tyre makers, enhancing demand for **reclaim rubber** from both domestic and export-oriented producers. --- # 7. Risks & Market Challenges ## A. Key Figures * **B. S. Tariff Rate:** **18%** (reduced from potential 50%) * **Recycled PP Prices:** **4–5% down QoQ** · **30–35% lower YoY** * **U.S. Reclaim Rubber Export Share:** **7%** (down from 12% YoY) ## B. Tariff & Export Risks * **Tariff Relief Fuels Export Recovery:** Significant de-escalation in U.S. trade barriers supports resumption of commercial talks and improved export realizations from current quarter. * **Export Market Divergence:** North American replacement demand provided stability, but OEM weakness—especially in truck/bus segments—remained a drag, while Europe showed persistent softness. * **Competitiveness Regaining Foothold:** Lower tariffs expected to restore utilization of full reclaim rubber capacity, reversing prior loss of U.S. market share. ## C. Virgin-Recycled Price Spread * **Demand Suppressed by Narrowing Spreads:** Sluggish recycled polyolefin demand due to compressed economics, with customers meeting only compliance-mandated recycled content levels. * **Cyclical Headwinds, Structural Opportunity:** Despite current pricing challenges, India’s low baseline recycled penetration underscores long-term runway; capital deployment remains on hold pending margin recovery. ## D. Project Execution Delays * **Expansion Phases Prudently Deferred:** Next-stage scaling, including pyrolysis and RCB facility commissioning, delayed to ensure process stability amid technology optimization efforts. * **Execution Challenges Navigated:** Despite external headwinds from tariffs and project delays, foundational progress achieved in resolving early-stage operational hurdles. --- # 8. Guidance & Outlook ## A. Key Figures * **Capacity Addition:** **45,000 tons** (Pyrolysis and rCB segment) ## B. Volume Growth Forecast * **Mid-Teens Volume Growth Expected:** Reclaim rubber business poised for strong volume expansion in FY '27, supported by recovery in North American demand and new technology adoption. * **Policy Tailwinds Bolster Outlook:** Government initiatives and brand owner collaborations provide favorable momentum for execution in coming quarters. ## C. Revenue Uplift from New Capacity * **Major Revenue Upside Ahead:** Green Energy segment (Pyrolysis and rCB) set to deliver substantial revenue uplift from expanded capacity, marking a turning point for sustainability-led growth.