Atharva Poly-Plast Ltd (ATHARVA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Atharva Poly-Plast Limited H1 FY '27 conference call. We have with us, Mr. Anujit Darade - Managing Director, and Mr. Ashish Darade - Executive Director and CFO. 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 future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference call, please signal for an operator by pressing star and then zero on your touchtone telephones. I now hand the conference over to Mr. Anujit Darade - Managing Director, Atharva Poly-Plast Limited. Thank you, and over to you, sir.
Anujit Darade (Atharva Poly-Plast Limited): Yeah, thank you, Aparna. Hello, and good afternoon, everyone. I hope I am audible enough. To begin, I would like to express my sincere appreciation to all our stakeholders, our shareholders, customers, employees, and suppliers. Your continued trust and
Anujit Darade (Atharva Poly-Plast Limited): have enabled us to achieve a very important milestone in our journey, our listing on the BSE SME platform in July '26. We are grateful for your confidence in Atharva Poly-Plast. I will now take you through our performance for the first half of FY '27. Let me start by our company overview. Atharva Poly-Plast was incorporated in the year 2014 in Pune, Maharashtra and commenced manufacturing operations in 2015. Our promoter family brings over 35 years of experience in the polymer deep domain and thus helps us understand this business in a much better way. We are an engineering-led manufacturing company specializing in high-performance engineered polymer components. Our integrated capabilities extend well beyond the conventional injection molding and now include product co-design, design for manufacturability that is DFMs, mold flow analysis, mold designs, tooling project managements, moldings, secondary operations, assemblies, and even product testings. Now, these capabilities enable us to support customers across the complete product development and manufacturing lifecycle. We are currently serving three main business verticals. Our first and largest vertical is the premium office furniture business. We supply highly engineered plastic components used in premium seatings to leading global companies like Herman Miller, Steelcase, Haworth, Kokuyo, et cetera. These are critical seating components which includes back frames, seat bases, arm assemblies, star bases, headrests, et cetera. Which require deep polymer engineering know-how, ergonomic design knowledge, considerations, and the ability to consistently manufacture to a very tight dimensional tolerances. Our second vertical is the home appliances. Here, we manufacture components for refrigerator, air conditioners, hair dryers, and here we work with customers such as Godrej and Versuni, mainly. This vertical provides a stable volume base and contributes to the consistency of our operating cash flows. Our third and important vertical comprises of the engineering solutions and other applications. In this vertical, we work closely with customers on product development and project management, including the co-design and industrialization of their products. Localization projects or global projects, we support our customers and extend from the initial concept right up to engineering, tooling, and series productions. So at inception, our business was primarily focused on contract manufacturing, but over the years we have progressively evolved into a design and development-led manufacturing partner. Today, we engage with customers from concept to product development stages, leveraging our in-house design, engineering, and tooling capabilities. This evolution towards higher value chain, engineering-led programs have been an important contributor to the improvement in our margins as well. We operate on a 5.5-acre land parcel with approximately 40,000 square feet of built-up manufacturing setup. Our facility is equipped with 20 molding machines with clamping tonnages ranging from 100 to 1,000 ton. We manufacture a portfolio of more than 300 products across these verticals. Our quality management and operations systems are supported by ISO 9001, 14001, 45001, along with Sedex, Meta audits, and CII-GreenCo Gold recognitions. Our products and processes also meet applicable REACH and RoHS compliances which are a need of the hour for all global brands. We are recognized as a Steelcase premium supplier for Asia and MillerKnoll gold supplier in the year 2025. Now, coming to the H1 FY '27 performance update. During H1 FY '27, revenue from operations stood at 36.69 crores compared with 20.67 crores in H1 '26, representing a Y-o-Y growth of 77.5%.
Anujit Darade (Atharva Poly-Plast Limited): percent. Compared with H2 FY '26, EBITDA grew from 3.88 crores to 7.45 crores, while profit after tax increased from 1.75 crores to 4.38 crores. EBITDA margin improved from 11.5% in H2 to 20.3% in H1 FY '27, broadly in line with the full year '26 margin of 20.7%. I know there will be a question in everybody's mind that though the revenue registered a strong YoY growth, margins were lower than seen in FY '26. So, H1 of FY '26. This was primarily attributed to a higher raw material input cost, which was approximately 75% of the revenue. During this period, the volatility in the crude oil markets also translated a substantial increase in the polymer pricing. But our customer contracts provide corresponding raw material price adjustments, and accordingly, these increases were recovered through price revisions in the subsequent months. So, these are not margins lost, but just a lag in the recovery. The revenue mix for first H1 FY '27 comprised 53.4% from premium office furniture, 26.9% from home appliances, and 19.7% from engineering solutions and other applications. Our performance over the longer term reflects the sustained improvement in profitability. EBITDA margins increased from 10.5% in the year '23 to 20.7% in FY '26, while profit after tax grew from 0.71 crores to 6.47 crores over the same period. Our balance sheet has also strengthened following the IPO. Net worth increased from 19.58 crores in the March '26 to 46.06 crores in September '26. During this period, the total borrowings have also reduced by 53%, bringing our debt to equity ratio to 0.1 times. Now, I would like to explain the strategic priorities and the next phase of growth for Atharva Poly-Plast. Going forward, our growth strategy is centered on three key opportunities that we have in front of us. The first opportunity is increasing the revenue per share by development of high-value products. These are mainly functional, critical components in the premium seatings, which are still imported by our customers. Building on our established position in the premium chair component category, we would target expanding our product offerings into this adjacent category, which we believe represents a significant growth opportunity for us. The second opportunity is in the engineering services and localization. Global OEMs are increasingly evaluating India as a manufacturing and sourcing base. We support these customers through product industrialization process, like I said, right from concept development, soft tooling to series production tooling. Successful localization programs can create long-term manufacturing opportunities and incremental volumes for us. And the third opportunity that we are working on is the co-design and collaborative product development where the customer also becomes part of our journey and co-invests with us in the development of their products. We believe our existing infrastructure provides a sound platform to support the next phase of our growth. Our plant is currently operating at approximately 67% capacity utilization, providing a headroom to accommodate additional businesses. In addition, our land holding offers significant scope for future capacity expansions as well. To conclude, Atharva Poly-Plast has built a strong foundation through longstanding customer relationships, which is a which is our main strength,
Moderator: Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may please enter star followed by 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may enter star and 2. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. To ask questions, please enter star and 1. The first question is from the line of Jiten Parmar from Aurum Edge. Please go ahead.
Jiten Parmar (Aurum Edge): Hi, good morning. Can you hear me?
Moderator: Yes sir, please proceed.
Jiten Parmar (Aurum Edge): Okay. So, you have talked about, I mean the top line growth was fantastic and then you talked a little bit about the margin contraction. And you did mention that, you know, you have pass-through clause and all that. But is I want to understand whether, you know, is there additional billing of already material shipped or that is gone and in subsequent orders we will get the the price increase, if you can throw some light. I mean is there any revenue of already invoiced material which is still, the differential still to get from the customer or is it only for the future?
Anujit Darade (Atharva Poly-Plast Limited): Yeah sure. Thank you, sir, for the question. I I'm very sure that this will be a question in a lot of other minds as well. I would like to throw some light on this. So what happens is the recent increase in the crude prices of a approximately 20% has resulted in a polymer price rise of almost 22%. Now what our pass-through mechanism contracts we have with our customers. Sir I'm I'm getting a lot of you know disturbances from from the line. Can you please mute so Thank you, sir. Thank you. So what pass-through mechanisms we have put in place with the customer agreements is that they provide 100% raw material price increase. However, the adjustment is linked to previous month's average pricing. So, just to make you understand, if we have a polymer price increase in the month of September, my customer will take the average in a month's price of September and give me that pricing in the next month. It's resulted in a one month lag. So now as the polymer rises have already occurred in the month of September, higher costs were reflected in the H1, while the corresponding customer recovery fell in October. So, my prices have gone up in the off in the month of October and we have already billed those components at higher pricing in the month of October itself. Which is to the tune of I would say almost close to 1.45 crores, which was adjusted or billed in the month of October. And our experiences that this price adjustments becomes very normal over the course of year. Because they, you know, subsequently even out when the pricing changes or stabilizes or goes down in the subsequent months. I hope I I I was able to make you understand or if you have some other questions, I would I would tell you in detail after so.
Jiten Parmar (Aurum Edge): No no. Got it. Thank you so much. So, my next question is on, you know, we are at a capacity utilization of let's say 67%. What is the peak capacity utilization we can go to? Because it's not like, you know, it's not like, you know, other I mean, lot of companies think we can never go to 100%. What is this what is our companies, you know, basically peak capacity utilization levels, I mean. So if you can throw some light on that.
Anujit Darade (Atharva Poly-Plast Limited): Yeah. So, what we what we target is an operational efficiency of 88%, sir. So, up to 88% we don't see any hurdles scaling our capacities up to 88% from 67%. Yes, you are very right in saying that we cannot go up to 100% utilization because we we also have you know changeovers happening in in the factories. There are a lot of other components which needs to be accommodated for other customers as well. So, we calculate an efficiency of 88%.
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