Xpro India (NSE:XPROINDIA) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Xpro India Limited Q2 and H1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict.

0:49 I now hand the conference over to Mr. Steve Husker, Managing Director from Xpro India Limited. Thank you, and over to you, sir. Thank you, Viti. Good morning, friends. I extend a very warm welcome to all participants to this Q2 and H1 financial year twenty twenty seven earnings call of Xpro India Limited. Many of us would have interacted in the past. Nonetheless, I introduce myself once again as C. Bhaskar, Managing Director of Xpro India Limited. Today on this call, I have with me Shri Girish Bell, our Managing Director, Designate and Chief Executive Officer Shri Vinay Kumar Agrawal, our President Finance and Chief Financial Officer Shri Himanshu Bakshi, our Group Technical Counsel Shri Kamal Sevda, our Company Secretary.

1:50 MUFG In Time, who many of you will remember as Orient Capital earlier, is our investment relations partner and is, as always, coordinating this session. We are continuing the practice commenced a few years ago of hosting this conference call for the benefit of our investor community and for keeping investors, analysts familiar and updated about our results and key developments at our units. As many of you have already had the opportunity to meet us on earlier calls at the AGM or in occasional investor needs, I shall not dwell on reintroducing our company.

2:43 I must add that we are transparent in our approach, but must state that all discussions here will be within boundaries, reasonably imposed by our strategic and competitive position and of course, legal requirements as may be applicable. As you are all aware, Xpro India Limited is a diversified, multilocational company primarily focused on polymer processing with extremely strong governance standards. The company is family led and is a professionally managed arm of one of India's largest and most reputed industrial houses, the Vedas. Xpro itself currently has manufacturing facilities at Greater Nevada in UP, Rajendaw in Maharashtra and Parjoura in West Bengal besides a subsidiary in The United Arab Emirates at Ras Al Khaima.

3:44 Our operating units have built up special skills and competencies in the specialized field of co extrusion with application in the manufacture of oriented films, multilayer plastic sheets and multilayer cast plastic films. Thermoforming supports downstream processing of sheets. Xpro specializes in advanced materials and is India's leading manufacturer of polypropylene dielectric capacitor films. These precision engineered ultrathin film range from the ultrathin range of two micron and up to 16 micron in thickness and form the core of capacitors used in EV inverters, solar systems, wind turbines and industrial drives.

4:35 We are also India's largest supplier of sheets and liners to the refrigerator industry. Driven by technical precision, quality and development strength besides customer qualification cycles and support, Xpro has faced well the global competition without tariff protection to become the premier supplier in this part of the world. Our results for the quarter and half year ended 09/30/2026 have already been uploaded on stock exchange portals, and you may have had the opportunity to also go through our press release and the presentation that we have uploaded to the exchange site and also on our own website.

5:25 With the new dielectric film line at Barjona operational, the company entered twenty six-twenty seven with materially expanded capacity and a stronger platform for volume and export growth. The new line has doubled our nameplate capacity in India to 8,000 metric tons of dielectric films a year. Commercial ramp up of the line is now underway and its full impact will be reflected commensurately as we go forward. With regard to dielectric capacitive films, as you are as most of you are aware, the company operates in a product and process space that is fundamentally different from BOPP for conventional uses.

6:13 Polypropylene dielectric film, mainly for capacitor applications, is a specification intensive and precision driven, and the industry is limited globally amongst a select number of producers. Building credible scale and reputation in this space requires technical capability and consistent product quality attributes that our BAYAK operations have developed systematically earning a strong standing among discerning clients while maintaining a first mover domestic producer advantage. Interestingly, the demand backdrop here is structural, not cyclical.

7:02 Electrification, renewable energy build out, grid modernization, data centers, electric mobility and traction systems all place a direct and growing premium on film durability and dielectric performance with long term capital development cycles that consistently reinforce end use demand. Our films go into capacitors used in EV inverters, solar and wind installations, grid equipment, railways and data centers. So all of these are good for us. Product development is directed deliberately at the highest value end, ultra thin, hazy and semi rough films for power capacitors, EV systems and railway applications.

7:51 These are also high entry barrier segments, which are technically demanding, relation driven and margin supported. During the quarter, we strengthened our position and our recorded market share in both segments of dielectric films that is plain films and easy films. Dielectric film exports nearly doubled over last year. New customers and applications are being onboarded for the new capacity, while management continues to focus on driving volume growth and enhancing margins, while pricing has to remain dynamic and flexible to retain market traction in a frequently volatile scenario even at the risk of vocational impact on margins.

8:42 Capacity additions are sharpening the company's trajectory. The new dielectric film, as I just mentioned, was commissioned in March, meaningfully expanded domestic capacity while extending reach into premium performance critical variants, including ultra thin gauges when differentiation is sharpest. Coming to the new line. Production on the new line grew by 35% over the last quarter. Film from this line is already being supplied commercially to customers in India and overseas, and a number of other customers are going through the approval process.

9:30 Capacitor life steps of one thousand to two thousand hours are also going on at some customer end. These things take the routine time in our industry and how quickly approval turns into volumes will depend on some of these results. Until then, the operating costs, depreciation and finance costs of the new capacity continue to weigh on profitability. We continue to put a lot of effort into research and development. We have developed a new range of ultra thin films on the new line, and the 3.5 micron film has already been approved by some key customers. Our R and D team is also working on several other development projects, and we will share more on this as and when we go along.

10:25 I am also happy to say and share that Xpro this year has already received three awards from LCN, the Electronics Industries Association of India for excellence in quality, excellence in research and development and environment protection and sustainable development, all indicating a good recognition of the work being done by our teams in all areas. In the coax related businesses, coax wood shoots sheets and thermoform refrigerator liners are manufactured on multiple lines available with the coax division at Rajendrao and Greater Noida.

11:13 Our products are usually custom made to customer needs and based on various polymers, including ABS, polystyrene and polypropylene. Being an established supplier to most leading brands in the refrigerator sector, volumes are directly correlated to the consumer end market conditions. The Indian Refrigerator production grew about 8% in Q2 over last year, which is better than the 4% we saw in Q1. On the other hand, our sheet and liners volume grew by 26% in Q2 over last year, well ahead of the market with both Greater Noida and Rajendra units performing well, indicating clearly that we continue to gain market share.

12:07 Revenue growth came from higher volumes and also from higher selling prices as the steep increases in polymer costs were passed on. Cast films are facing competitive pressure and here our focus is on release films and new product development on one of the cast film lines, which we have substantially revamped. Now coming to the Q2 performance. Revenue from operations during the quarter was at INR176.69 crore against INR119.91 crores in the corresponding previous year, reflecting a growth of 47.4%.

12:56 Operating PBITP before other income and ForEx differences was at INR 16.4 crores against INR 10.68 crores, up 53%, actually higher than the revenue growth. EBT for the quarter was INR 12.79 crores, again INR 7.6 crores in the corresponding previous quarter. Profit after tax was INR 9.52 crores against INR 5.86 crores, reflecting an increase of 62%. In this quarter, dielectric films recorded revenue growth of 64% over the corresponding quarter last year, while the sheets and cast film business recorded growth of 41% over the corresponding quarter last year.

13:54 Coming to the first six months of the financial year or the half year performance, the company reaffirmed its operational resilience in the volatile business environment marked by supply chain worries, rising costs, geopolitical tensions, underscoring the efficacy of our operational strategies and the competitive trends. Aggregate production volume rose 14% to 19,218 tonnes from 16,795 tonnes. Net revenues were INR 351.11 crores, up 32.6% from the INR 264.81 crores in the corresponding previous period.

14:51 This comes from higher volumes in refrigerator sheets and liners and from selling price adjustments as polymer prices remain volatile. Total exports were higher at INR17.09 crores against INR9.39 crores. You will see that we are well on the track of exceeding a turnover of INR700 crores if this market sustains itself the way it is during the year, which would be a new high. Profitability improved overall, supported by higher revenues and a significantly lower ForEx impact, even as competitive pricing, input cost volatility and higher depreciation and finance costs continued to weigh.

15:44 PBGT before non operating ForEx differences was INR 36.7 crores against INR 30.27 crores in the previous corresponding period. The ForEx loss was INR 32 lakhs only, of which INR 78 lakhs resulted from unrealized were unrealized resulting from accounting standard requirements. This translated the overall to a PBT of INR26.51 crores against INR13.63 crores in the corresponding previous period. I must reiterate that there is no outstanding long term borrowing for existing operations.

16:35 However, we add from a financial perspective, particularly interest savings that would accrue in future years on and for supplier credit in the nature of ECD for financing the new line at Vaasura. We have already commenced repayments and a few installments have already been made. During the half year, repayment of noncurrent borrowings amounted to INR 6.65 crores. Total borrowings stood at INR 106.7 crores as on 09/30/2026 against INR 111.81 crores as of 03/31/2026, while the net debt to equity remained negligible with a return on equity of 5.3% and return on capital of 7.2 for the half year.

17:34 A dividend of INR 2 per equity share for the financial year 202,526 as approved by shareholders at the AGM of 07/20/2026, was paid on 07/28/2026. The paid up equity of the company paid up equity capital of the company stands at INR23.7 crores with a net worth of INR729.39 crores. The paid up equity capital remained unchanged during the half year. All the capital raised earlier through preferential issues and QIP has been or is being deployed for stated purposes with INR 64.29 crores held in bank deposits of the company and its subsidiary pending utilization.

18:30 Employments are also monitored independently as required. A quick update on the status of capacity addition. As already mentioned, the capacity at Barjora has been in commercial operation since end March twenty twenty six. The project in UAE is broadly on track. Geopolitical conditions in West Asia remain fluid with the ongoing regional conflict contributing to heightened uncertainty, elevated costs and intermittent disruptions to trade and transport with risks amplified whenever facilities persisted. However, all our key equipment is at site and has been installed.

19:20 In fact, we have already commenced commissioning of utility equipment, electricity, gas, water, all fundamental utilities are at site and all signals go on that front. I would also add that there has been no disturbance of any significance in the Elk Hill area where our site is located and project execution has not been hampered due to any local disturbances on account of the worldwide situation. Barring unforeseen circumstances, commercial operations are expected later during this financial year. Management, of course, continues to monitor geopolitical developments to take appropriate risk mitigation measures, bearing in mind also the safety of our suppliers and our staff.

20:21 The subsidiaries accounts mainly reflect pre operative expenses, capital advances and the use of foreign supplier credit for capital expenditure. In accordance with applicable accounting standards, the company recorded a total loss of the subsidiary company recorded a total loss of $81,730,000 during the half year, reflecting only guarantee, lease and other accumulated costs recognized as expenses for the project under implementation. We are already working on the market for the UAE line, which will be our third dielectric film line, and we are confident of placing its volumes.

21:10 Our exports were up 82% in the first half, and we have gained share both in India and in exports even in a soft market. Film from the new Bajora line is already going to customers in India and overseas, and we are now in the approval process with some of the leading global capacitor manufacturers. These relationships will also help us when the third line starts. Customers in advanced applications are also looking for qualified and reliable suppliers and our manufacturing unit our additional manufacturing unit will only help us serve them better.

21:58 With the demand we see coming from electrification, renewable energy, grid modernization and data centers and in addition to certain capital capacities in advanced markets aging, We are confident that this capacity will be will serve the growing demand across the globe. With this, I would like to open the floor to questions. And I will also request Girish and Vinay to be available to answer appropriate questions. Thank you. Thank you very much, sir. We will now begin the question and answer session. Participants are requested to use handsets while asking a question.

23:06 The first question is from the line of Dibarshi Dev from Ashley Holdings. So my question is, I would like to get a guidance of the sustainable EBITDA margin for the entire business when you start selling the value added products. And what could be the revenue per metric and realization EBITDA per metric and realization for export business, particularly in specialty symptoms. So I would like to know about that. Besides that, I would my second question would be, the virtual line two has already been commissioned and it has started its production. So when the revenue can be expected to get reflected in the top line from so that's my question.

24:01 Your particular question about the guidance for a long term EBITDA is probably outside the purview of this call. However, and you've also said about a sustainable EBITDA for the entire business. I assume you're looking at the business as we always suggest as separately for the dielectric film businesses, which is high EBITDA business and the co extruded sheets and films businesses, which is a low EBITDA business. So the guidance for the co extruded business is something which we have stated and we can happily continue to place on record, is in the 5% to 7% EBITDA range and it is expected to sustain in that range. We don't see a dramatic increase or a dramatic decrease based on current indicative trends.

24:50 That is one. Of course, you see slightly when price increases happen only on account of rate pass through of raw material prices, there is an apparent reduction in EBITDA while the value addition remains flat. But that is that's only an accounting indicator. Going into the capacitor businesses, you are absolutely right in that we are moving into the high value added films, which are thinner. Now I am refraining from giving a value add indicator or an EBITDA indicator here, excepting to say that in this segment, the EBITDA for the different types of films varies between something like on the lower side 35% and going up to something like 55% on the conventional thicknesses that we are working at.

25:51 As we move into thinner films, obviously, there would be increase in the EBITDA. Just to give you an indicator, since you had also asked the price idea, just take for example that the model price of film is around $4.70, Rs. $4.80 a kilo. If I were to take for example the 3.5 micron film that has our film which has been approved, let me give you this price indicator. I'm actually not free to indicate the exact price, but as a price indicator, it's a little over 600 per kilo. Now if one moves down towards say three micron as it would be the next level, it would be near INR900 a kilo. So you would see that the EBITDA margins would increase in that scale. And as I told you and mentioned earlier, our 3.5 micron film has already been approved commercially and is being supplied to some customers in India at this point.

27:01 Does that sort of answer your question? Yes. Yes, sir. Thank you for answering that. And in addition to that, I would like to know the working capital days like for these as you have entered into specialty firms, so the working capital days will be a bit higher or will it be same for coax and space by exhibition? Will it be same or for by exhibition is going to be a bit higher? So that's what I wanted to understand. We'll take that as typically same. Right? The difference is twofold. In the very, very specialized business, all sales are on LCs. While the credit may change, you are totally secured, right? In the refrigerator business, there could be some exposures on credit. However, they are all solid parties because you know the guys who make refrigerators are big guys.

27:54 The difference on the working day cycle today is a temporary disruption because of the global uncertainties on shipping. All producers are tending to stock more material, raw material, whenever they're able to lay their hands on it. So today you have an issue because of shipping. If normally, let's say, one month stock was I'm just taking a random number. If one month stock was enough, today, you will find that if I can buy and stock for three months, I would because we don't know what's going to happen to shipping over the next couple of weeks. And that is entirely driven by our moves and I think you people are all very aware of the shipping uncertainties prevailing today, not unique to our industry, but to every industry.

28:44 Okay. Got it. Got it. And last question would be what kind of turnover that you are expecting from the capital that you have put in, I mean, against the CapEx, what kind of unit sales you are expecting out of it? And another question is, there are two new players who are coming up in this capacitor films or so what is your take on it like? Is it going to how we are viewing that competition in near future? I got your question. Let me give you the answer to the turnover, and then I will request Girish to answer on the other players who are coming in. Turnover is depends on price, depends on product mix, which is a highly sensitive question.

29:30 However, just to give you an idea of what turnover we expect from that line, I think in the last call, Girish had stated specifically that we expect during the fourth quarter this year to be operating the new line at between 70% to 80% of inflated capacity. That should give you a fair indication of where we would be on that line. Girish, would you like to add on the competition? Yes, on competition, we have competition and some new competition has entered and is also expected to enter more. Yes, the market is growing. So there is a space for the people to come and play. And of course, we if you have noted in our remarks, we mentioned because this is a business where technical expertise, patience and skill, all those the combination of all matters, whosoever joins this business, of course, they have to have the patience to at least get into the long qualification cycles.

30:34 Okay. That's all from my end. If I have, I will join back in queue. Thank you. Moderator for the next question, please. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, Please limit your questions to two per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of from Nevsia Investment Advisors. Please go ahead. Yes. Hello. Am I audible? Yes, sir. Perfect. Thank you so much for the opportunity. Sir, I I I might have missed the number this was spoken in the introduction, but can you please help me with the value and volume mix for my X and co X this quarter and Q1 also, if that's possible? That will be helpful.

31:32 In any case, our annual report contains these numbers. And at this stage, we we... Even in our Sorry. Remarks Can you hear me? Yeah. Yes. Yes. So last year, our breakup of... Sir, I'm talking about Q1, Q2. I'm talking about Q1, Q2 of this year. I get it. FY 'twenty six, we know the numbers, but I'm talking about Q1 and Q2. Correct. So our last year numbers are there in annual report. And this year, the growth that what we have experienced recorded that we have already shared. So this is what the information we can share at this stage. Okay. But then let's say, if I wanted to understand the ramp up from the second line, what utilizations did we achieved on Q2? Because sir said, we have achieved some 35%, 40% of volume growth compared to last quarter on the new line.

32:33 But the question is there was hardly any number coming from Q2 or let's say production happened in sorry, in Q1 from the new line. I just wanted to understand the utilization of second line in Q2. So that would be it would be very helpful from our end to, you know, understand the mix. At least for Q2, if you could provide a mix between Coex and Yx. Let me explain to you. From a market perspective and a supply perspective, this... Ourselves look at it as the total capacity available with us. So your question can be directed towards understanding two things. One, what is the total market? In which case, you need to understand how is the market growing for the two lines combined because our customers, once approved, we supply them from either of the lines.

33:23 Your question could be directed to understanding is the new line performing at all. Now to answer that concern, I think we had earlier made a categorical statement that production on the new line was higher by so much during this quarter over the previous quarter. So as far as goes, the new line is producing well. Market has accepted the outputs of the new line better, especially in thinner film, which is what it is designed for. And as I told you, we've already supplied down till 3.5 micron from that line. Also, we ourselves have produced even down to three micron, which we have not yet sent out commercially into the market. So your two questions are one.

34:10 I I read your query as two queries. What is it if they I understand. But, sir, is it possible to provide a number? I mean, of course, directionally, you... I mean, everything is good. We just want it. Yeah. No. No. I understand. I am unable to see how a per line breakup because that would actually be on production convenience would be material. Okay. And, sir Tell you what happened. No. No. One second. In course of time, and and we have reasons for saying that. I mentioned that the new line quality or the new line output is good. Remember, it's a new line. Say, it will always look it will always produce shinier looking stuff for some time. I'm using the word shinier in English and not in any way connected to a film quality.

35:00 We do not want a situation where the markets tell us we want that product only from line a or line b. We would be supplying a product into a particular specification, reduced on the line of maximum convenience to the production team. No. Of course, sir. I get it. You you... For you, it's Like saying, if I walk if I walk into an UDP and I order a dosa, he makes it wherever he likes. I don't tell him make it on No. No. Of course, sir. I understand that. Or a. I understand that. So my question was more from the, you know, ramping up perspective because, you know, your approvals, you said, you know, let's say, a lot of customers have already approved. Right? So I'm assuming the second line would also, you know, let's say, moving towards the. Yeah.

35:49 Question is towards, is there ramping up happening, a. And b, is there a product quality acceptance? I'm telling you, yes, product quality is and taken well by the market. B, production on that line on Q2 was higher by 35% over the previous quarter. Okay. No problem. No problem, sir. Perfect. Got it. In terms of hello? Yeah. Yeah. Please. Yeah. In terms of your... Let's say the raw material prices have moved significantly in the past two quarters. Hardly. And and... Yeah. So the question was, you know, when I look at your gross margins when, let's say, the contribution is coming in from second line as well, my understanding is... I'm just trying to understand, were were we able to, let's say, pass on the full incremental cost that happened due to increase in raw material to our customers? Or do you think, let's say, we were, let's say, still not able to fully pass on the cost and which would might happen in, let's say, the upcoming quarters? Just wanted to understand on that part as well. That is a little complex query because raw material prices have gone up. Correspondingly, shipping has gone up. So the effective landed cost will have a double impact, The raw material, the petrol impact and the shipping impact, A. This is to some extent utilized by our stock holding

37:20 because of the fact that we follow a weighted average principle of raw material distribution, which is normal and required for this product. So yes, we have been getting some of our price increases. So I will not say that there are no price increases and no pass through. But the pass on has been, I will say, not full yet and the pass on effects will continue. The reason for that is after the first... The... When there was the first so called war impact starting from February, March, I'm using the word war loosely because I don't know if there are war or no war. So that first of increases, we went into increases.

38:07 And surprisingly, there was a steep fall in prices after that also, which you might have seen also happened to crude. Crude went up, crude come down. So the figures also yo yoing. So when that yo yoing impact happened, it's a little tougher to get the price increase before people say wait for the next dip. So we are taking a balance of these factors in going through the pricing the price increase. But yes, to answer your question, full utilization is fine and that is something we are constantly working on. So I mean, so if your question is, is there a hidden price increase possible, I will only say it's not hidden. It has to happen. Okay. Okay. Understood. Understood. And sir, how confident are we to start dry runs on the UAE line at the start of Jan?

39:01 Sorry. I missed your question. Right. How confident are we to, you know, start dry runs at the UA line? And and, you know, if you could help me understand the timeline as well, you know, by when you can probably pay, you know, by the start of Jan, we were probably planning to, you know, start dry runs. And I just wanted to... Yeah. I'll tell you. Already, certain pieces of equipment... Elements of equipment have been commissioned already processed, really, in the last seven, ten days. For example, boilers have been fired, killers are commissioned, some of the ancillary equipment utilities are one by one getting commissioned. The core issue is when do we commission, when do we start dry runs on the main equipment.

39:48 The main equipment is fully installed. We are waiting for the Germans to come back, meaning it's a different team. The team that did the installation had finished their work and gone. And now there's a team which does the checkup. The electricals are done, then the software is done. Then the... There's a checkup team which is due anytime soon, and they should do it. Got it. Which after that, we will start dry run. Dry runs will start section by section. As of today, do not see any significant delay in those dry runs happening. Having said that, I'll say, like anybody else, we are also waiting and watching. I think you must have read that flights into Dubai from by sale Lufthansa or Singapore Airlines or some airlines have been disrupted, etcetera.

40:44 Those disruptions are something we can't predict. But otherwise, we are moving on track or pretty close to track. So January is the month, right, when we... We'll probably start with the dry runs. Sorry, boss? January would be the month when would we... When where... When we will be starting with the dry runs. Right? Maybe some elements we start in December. Okay. Super. See, dry run, you don't have to be commissioning a 100% of equipment. Got it. Example... I'll... I'm I'm taking examples not relevant, not stating dates on it. Say, for example, if the wider engineer comes in tomorrow, we start dry runs on the winding... Wider tomorrow.

41:31 If the... Because there are specialists for each of these segments. So depending on which segment the guy comes in first, we will start. And they are independent of each other because dry runs happen not in the operating sequence, but equipment by equipment. Got it. Got it. Superb. Sir, last question from my end, then I will join queue. Sir. If you have follow-up questions, please rejoin. Just last question just last question if possible, please. I will then rejoin. Sir, you know, you know, there's a good demand for in India as well. But what I understand is, you know, since we were capacity constrained earlier, we're probably not able to meet, let's say, a decent chunk of the market. But let's say, the second line coming in, well, which could probably, you know, take some road from line one, just wanted to get your views on, you know, how how fast and, you know, can we capture this digital markets and, you know, are are there incremental buyers and demand for his defense? Just wanted to get your view on this. Let me give you a non quantitative answer, then I'll request Girish to answer.

42:34 But we are already from these lines, don't ask me new line, old line, because that's not We have already substantially increased our sales in the Asia segment to India, replacing I think import substantially. I mean, as that market goes, that market is say 1,800 to 2,000 tons per year. So out of that, I think we started doing a good bit already. Even in the last quarter, we have done. Girish may like if he thinks it's noncompetitive, he may share that number. I think your question is right. We are focused on easy film and easy films form an integral part of our are on track, and I think we are gaining market share as we had planned.

43:31 Okay. Okay. No problem. Superb, sir. Thank you so much. I'll rejoin. Thank you. A reminder to all the participants to please ask two questions per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of from Ionic Wealth. Please go ahead. Yeah. Hello, sir. Good morning, sir. Thanks for the opportunity, sir. Sir, you know, I just wanted to ask you on raw materials front. In q one calendar year twenty six, the PP resin prices shot up. And in q two, it was it was down by 20%. And, sir, a commentary from Boris said that they expect it to increase again. So, sir, how are we navigating this? Like, should we be stocking up our RM?

44:23 Our our RM prices are contract based, and how does this impact our realization? Is our entire raw material from Buruj only? See, I think you the indication which what you are mentioning here is given by Buruj on various grades that they manufacture. We also buy from them and our grades what we buy are specialty grades. Yes, PP prices have got up. In between, they started to come they were indication of coming down. And again, as far as coming up again. So this question was partly answered in the previous set of questions. In this year, we yes, we have taken few price increase.

45:08 And given if the raw materials remain the way it is behaving, of course, there will be more price increase that probably we'll have to take. All right, sir. Sir, another question, which I wanted to ask was, sir, basically in the sub-three micron film, where the demand is coming from? And any ongoing discussion for sub-three micron films as well? I can say only the guess that there are ongoing developments on product and market, both are happening as a continuous activity. All right, sir. And just one question from my end, sir.

45:54 So that basically, who do we give our base wins to, like, example, we are giving it to metalizing players. So, sir, why don't we do metalizing ourselves? Like, it's a high margin business plus, you know, it's a forward integration step. Right? So, sir, are we planning to have metalizing in, you know, in our future units as well? Or what's the scenario over there? I think what we are doing is part of our strategy, what we are working on. And whatever we have said in the past, that... All those strategy and direction remains consistent, and I don't wish to comment anything further on this particular topic. The next question is from the line of Vishal Prasad from Raj Mahal Capital. And you for attending the call, half yearly call, Vakverji.

46:54 So we have always... And you always mentioned that we are a transparent company within the boundaries of our competitive position, and I appreciate that. But when I see lacking is a more open communication on the starting struggles and when we see us reasonably improving our margins. We used to be a company delivering 15% margin probably three years back. And then we are getting into these new lines. So if you could talk about when we can expect the margins to improve and see a significant jump. It is not a commitment from your side, but what you see today will be really helpful for us to understand where the business is going.

47:45 You're asking about my reading of your question is, you're asking about when the scale up of the new line is expected to happen given the because that scale up is happening in a high margin business of ours. So we have indicated in the last quarter that we should be operating at about 80% utilization level in the last quarter of this year. So we are still maintaining the same guidance. No, that's what you mentioned earlier in the call today as well. So my question is not on sales, but it is on margins. When we can see significant improvement in the margins? Is it last quarter of this year? Or is it next year? If you can comment on that because if you see the margin, it has decreased by 1%, but it has decreased from last quarter as well. It is at 8%, 9%. And when we talk about significant improvement, we probably are looking at 25% consolidated margin probably one or two years down the line.

48:46 So there is a journey there. And if you could communicate on when we can see the changes, like when we can reach 15% or 14%, that can show us a path. We actually, you will appreciate not like to comment on a very specific number when it will be achieved. However, as an indication, let me tell you, and this is something we have said earlier, I think, a, as far as Q2 goes, we had even in the last call said that Q2 performance, even as per our own strategic work, would be the same as Q1, which is more or less where it was. However, there's another statement that we have made often, and I think I would have said it, I had not even myself, is that there are two directions on which we have to move and which we are moving on these new capacities.

49:35 One is a volume ramp up and one is a value ramp up. They are independent of each other, but both need to happen before we realize the full value. So step one is volume ramp up. In the global turmoil that's happening with shipping, etcetera, volume ramp up is our first target. So when volume ramp up happens and which as Girish Ji just said, we should be operating at a particular level by the fourth quarter, you would see impact one stage one, which will be some impact coming from just sheer volume growth. It will move it will translate further as and when the value ramp up happens, which is also happening simultaneously.

50:20 So both effects are happening. Value ramp up takes a little longer because there is a major acceptance issue, development issue, which is going into it. So those stand as it is, and I'm not saying these are forty year journeys. These are few quarter journeys that take place for the value enhancement. That said, I can tell you two things. The new line is also EBITDA positive in the last month as of stage one. In the last time, I had said that the Marshant line or the new Bajora line had itself given us a total loss of something like INR 7 crores in the first quarter.

51:09 That has itself moved due to its own performance, improved by something like INR 3 crores. So you can see even these small trends are moving. And as I mentioned in the last month, that line was EBITDA positive. So the direction is absolutely what we said it is. I'm only refraining from giving an indicator that in Q4, two zero so much, we will make this EBITDA. We are not trying to say that. Think as a headline, I think we have indicated what our position is. Right. So second question is the nameplate capacity of the new line that we have put in, so it is 4,000 MT. And so is there a thickness that we consider while calculating the capacity? Because we have given a range from 16 microns down to less than two microns.

52:03 Thus total output go down significantly as we move from thick to thin films since thin films weigh much less per unit area. I've understood your question. Let me answer it. I'm I'm not cutting your question, but since I got the gist, thought we'll save some time for somebody else's question also. You see, it's like this. This line is designed as a two to five micron line. Okay? So that will answer your first question. And as capacity is based on a line designed for two to five micron. Having said that, let me go on to also say, I agree with your point that when you go thinner and thinner, there's a steep fall in capacity. However, if you were to produce two micron on a nine micron line, there will be a particular level of output fall. When you produce two micron on a two to five micron line, that percentage of production fall would be far lesser.

53:04 Okay. And sir, last question, you had mentioned that we are looking at nine point four and nine point five. So are we still positive and probably we can hear something in next one year? We are not yet positive. We are doing our internal work on it. Yes, some of our internal work has been tempered a little bit by the global crisis right now. Okay. So can the yes, go ahead. Well, it's like this. I think reasonably you will agree now on the flippant side, not on a formal side, either this Middle East situation has to resolve itself or the world would go in a different way because you'll get no oils from anywhere.

53:50 So we are expecting that one way or the other, there would be a resolution. So when is it the order I'm sorry to interrupt you, sir. If you have follow-up questions. Hang on. And I... That's we still can't imagine a world without electricity, which is our primary driver. So whenever we order, it will take three years for the machines to come or it will take less time this time? I can tell you that packaging businesses have been down and where packaging businesses go down, equipment suppliers can speeden up a little bit. But yes, I doubt you would I mean, a line can come in see, we will save time on designing.

54:39 We will save time on some of the basics of understanding your specs that you want. So that actually saves the year ish. But yes, I'm sure manufacturing commissioning will still take two years. It cannot be less than two years today. And do we need to avail equity for that? Unless some miracle happens and there's some line available somewhere. I mean, all some inorganic, organic, we are open to any kind of growth. Yes. So do we need to raise equity for the next CapEx or we are okay? Sorry, I couldn't hear you. It's a little muffled. So do we need to raise equity for new lines or we'll be able to manage it internally? We do not anticipating raising equity for the system itself. There could be supposing we do it in a subsidiary, supposing we do it in a subsidiary, surely we would need to fund the subsidiary.

55:40 Subjuggery may raise, but then we would be investing in the subsidiary. We do not today see a capital raise. And subsidiary will remain at the same shareholding pattern that is there today? Sorry, sir. I somehow your line is a little muffled. Could you just repeat that? But subsidiary will remain at the same shareholding that is there today or we need to dilute more and send it to our partners? I'll tell you something. If we capitalize it some more, then surely we will the co investor today will come in with a similar number. So we do not see a dilution. But who can tell about the future? Maybe five years down the line we decide to list it. I mean anything is possible.

56:28 So I'm not commenting on the anything is possible situation. Today, do not see diluting and bringing in another investor into that unit. I think that is all. Thank you so much. Thank you. Thank you so much. Thank you. A request to all the participants. Please ask two questions. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Anand Kumar from Dairia Investments. Am I audible, sir? Yes, you are. First of all, welcome. I hope you will be much more lenient than all these years in answering our queries.

57:19 So,, you've... I would like to ask my question in Hindi. So exports double quarter on quarter indicate q 480% capacity up on. So, sir, 80% capacity 900 tons around. 950 tons, 900 tons export domestic share when you are confident that you'll reach 80%, I assume that orders in hand So as a breakup, maybe understanding XPRO 900 tons domestic The majority of that volume will be going into domestic market.

58:18 This is what I can state to your question. Anyone else there would like to give the next percentage? Convenience. The ultra thin of volumes naturally come over compared to the overall volume over the next until it is fully absorbed.

59:21 It's it's... I'll tell you something. Ultra thin is picking up for many applications. No. So many applications data center, this nonconventional energy, EV. So share and they are looking at India as a very potential market. So whose competition up whose price they compete Chinese competitors because and they have clearly stated India to be a very big market for them.

1:00:41 You need to understand, since we are looking at export, we are exporting so as the Chinese. So we are competing them in any case today. And we are on strong footing to at least we can compete them in India and abroad. In JDL, capacity additions that you see in China happening, sir? Because JDL has put up one line and they have said that they'll come up in another two lines. Any update on that you have? The market is growing and many people are expanding capacity. So I am not fully updated on what is JDL's status today, whatever my status is three months ago. Yes, few people have added capacity and if the market growth is there, a few people will keep on adding capacity.

1:01:27 So as such, this business lies on the ability to execute and give a product which works. So we are on standing well against our European competitors and Chinese competitors, and we will be able to compete with them. And sir, can we take for the rest of the year the model price of around INR $4.80 crores and INR 500 Sorry. I I did not get your question properly. Model prices $4.80 k, $4.70 k. Q four We don't want to go so specific into Q4 guidance at this stage.

1:02:14 But yes, I think in the previous questions, if you have followed, yes, there is a raw material increase coming through and there will be next price increases also. So but the world is highly volatile. We don't want to comment specifically on Q4 prices. Sir, you will again take information price So So I do not want to comment on a price level for that reason also. Due to interest of time, that was the last question for today. I now hand the conference over to the management for closing remarks.

1:03:14 Thank you very much, Vini, and thank you all the friends who joined the call. I think some of you we have met for the first time. Many of you we are meeting again. We are happy to meet you in any case at any time. I am sure many of you have some more questions, and we would be happy to meet with you and discuss them as and when the opportunity arises. Needless to say, within the restrictions of what can be put into the public domain. Despite the volatile business environment prevailing, we are confident of the direction in which we are moving. Our strategic plan remains unchanged compared to anything we would have discussed over the last few years.

1:04:02 Our expanded capacity, broader product range and our strong customer relationships position us well for long term growth in the sectors that we are operating in. Most important at Xpro, we are committed to delivering a superior quality product with exceptional service, exceeding customer expectations to maintain the leadership in our chosen segments. I would once again like to welcome Girish Behl. I think he has been introduced to all of you. And next quarter's call, he will be running as MD. We'll all be available to guide him to whatever guidance you would like to seek. Having said that, we would if you have any further queries, please contact the company's secretary or investor relations partners or any of us for further clarification.

1:05:00 Most important, I would like to wish each one of you and your families a very, very happy Diwali, and please convey our festive greetings to all your near and dear. Thank you. Thank you, sir. On behalf of Xpro India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.