Indo Rama Synthetics (India) Ltd (INDORAMA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Indo Rama Synthetics India Limited Q2 H1 FY '27 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. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashok Yadav, Company Secretary and Compliance Officer, Indo Rama Synthetics India Limited. Thank you and over to you, sir.
Ashok Yadav (Indo Rama Synthetics India Limited): Thank you. Good afternoon, ladies and gentlemen. I welcome you all to our earnings conference call to discuss the company's Q2 and H1 FY '27 performance. Joining me today are Shri Om Prakash Lohiaji, Chairman and Managing Director, Mr. Vishal Lohia, Executive Director, and Mr. Umesh Kumar Agrawal, Chief Commercial and Financial Officer of the company. It is a pleasure to reconnect with all of you. We appreciate your continued interest in the company and thank you for taking the time to join us for this interaction. We look forward to continuing similar interactions through regular earnings calls and sharing updates on our performance, business priorities, and progress. Before we begin, please note that some statements made during today's call may be forward-looking and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied. Please refer to our investor presentation and other disclosures available on the company website for further details. With that, I now hand over the call to our Chairman and Managing Director, Shri Om Prakash Lohiaji, to share his opening remarks. Over to Chairman sir.
Om Prakash Lohia (Indo Rama Synthetics India Limited): Thank you, Ashok. Good afternoon, everyone, and a very warm welcome to the earning concall of Indo Rama Synthetics India Limited. I thank you all for joining us to discuss our performance for quarter two and half one, financial year '27. Let me begin with a brief introduction. We are part of Indorama Ventures, a Thailand-headquartered, global, sustainable chemical company with an integrated presence across the value chain. As one of the world's leading PET producer and recyclers, the group brings substantial scale, technical expertise, global process know-how, and established customer relationships across packaging, fibers, and specialty chemicals. Being part of this global platform provides Indo Rama Synthetics with access to technological capabilities, international best practices, technical collaboration, and global market insights, strengthening our competitive position and supporting our focus on operational excellence, product development, and sustainable long-term growth. Further, talking about Indo Rama Synthetics, we carry a legacy of 40 years with a diverse portfolio comprising polyester staple fiber, filament yarn, textured yarn, polyester chips, and bottle-grade PET resin. Through this portfolio, we serve a diversified B2B customer base including yarn spinners, non-woven manufacturers, fabric weavers and knitters, and preform bottle and packaging manufacturers. These customers convert our products into materials used across apparel, home furnishings, hygiene, automotive, industrial textiles, and packaging. Our customer reach spans 19 states and Union Territories in India and exports to 28 countries, contributing 5.59% of our total operating revenues. This presence across domestic and international markets allow us to serve multiple industries and reduce dependence on any single end-use segment. Supporting this customer base is our integrated manufacturing facility at Butibori, near Nagpur. We are one of the India's leading integrated polyester manufacturers,
Om Prakash Lohia (Indo Rama Synthetics India Limited): with capacity of 6.72 lakh tons per annum including 2.31 lakh tons of polyester staple fiber, 1.7 lakh tons of draw textured yarn and 2.28 lakh tons of bottle-grade PET resin. The facility is supported by 71.08 megawatt of back up captive power capacity and a sanction DISCOM load of 51 megawatt providing power supply flexibility for plant operation. Across our manufacturing process, we also draw our technology from partners including Chemtex, Oerlikon, Teijin, Toyobo, Zimmer etc. Over the years, we have continued to invest in our manufacturing capabilities and broaden our product portfolio. These investments have shaped our recent operational journey and laid the foundation for the next stage of growth. I now invite our Executive Director Vishal Lohia to take you through the journey, our operating progress and opportunities ahead. Over to you Vishal ji.
Vishal Lohia (Indo Rama Synthetics India Limited): Yeah. Thank you, thank you, Mr Chairman and good afternoon, everybody. Let me begin with our investment journey which provides the context for our current performance. FY '23 and FY '24 were periods of significant investment and operational transi- transition. We invested approximately 628 crores during this two years to expand our manufacturing capabilities and diversify our products portfolio. During 2023, we completed three important additions. In February, we increased polyester chip production capacity from 1743 to 1920 tons per day through debottlenecking. In June, we commenced commercial production of bottle grade PET resins with the capacity of 2.28 lakh tonnes per annum. Around the same time, our sub- our subsidiary commenced 39 additional DTY machines, textured machines, taking its total installed textured yarn capacity to 1 lakh 75, to 1.75 lakh tonnes per annum. While these investments strengthened our manufacturing base, the commissioning and stabilization period coincided with challenging market conditions coupled with QCO imposition then on PTA and MEG, along with end products PSF and POY. Subdued demand, pressure on realizations, competitive imports and geopolitical disruptions affected the business. Higher borrowings and finance costs also weighed in on profitability. Capacity utilization spread stood at 58% in FY '23 and declined to 55% in FY '24. In FY '25, we shifted our focus towards stabilizing these facilities and getting more from the expe- from the expanded asset base. We worked on production efficiency, cost control, and ramp-up of our PET resin and textured yarn capabilities. Growth CapEx in this year moderated to approximately 20 crores while utilization recovered to 58%. As the new facilities began contributing and market conditions improved, we returned to profitability. Building on this recovery, capacity utilization increased to 68% in FY '26 compared to 58% in FY '25 while growth CapEx moderated in this year to around 5 crores. Our priority was to improve output from the investments already made and strengthen operating performance. This progress has continued in FY '27 with further improvements in profitability, including in Q2. PET resin and value added texture yarn are contributing alongside our established polyester products. Better utilization, operating efficiencies and cost discipline have supported this performance, reflecting the progress made in stabilizing operations and improving our product mix. Alongside this operational progress, we remain mindful of the external environment. Geopolitical uncertainties, particularly in West Asia, continues to pose risk to energy and petrochemical supply chains. Disruptions around key shipping routes, including Strait of Hormuz, is affecting raw material availability, freight and insurance costs. Movements in crude oil prices, PTA and MEG costs and exchange rates also require close attent- attention. We continue to manage procurement and inventories carefully with a focus on serving our customers reliably. Beyond domestic demand, the India-UK Trade Agreement, which came into force in July 20
Vishal Lohia (Indo Rama Synthetics India Limited): this creates opportunity for our downstream textile customers. Looking ahead, implementation of the India-EU FTA and progress towards a bilateral trade agreement with the US could further improve export opportunities, subject to final terms and approvals. Over time, better access to these markets could support demand across the textile value chains, including for polyester fiber and yarn. On the raw material side, investment in domestic PTA capacity is another positive development. Indian Oil 1.2 million ton per annum project at Paradip and GAIL 1.25 million ton per annum facility at Mangalore could broaden domestic sourcing options as become as production becomes available and stabilizes. This could reduce exposure to import related shipping disruptions and lead times. While the benefits will depend on supply reliability and competitive pricing, a stronger domestic raw material base would support the industry long-term competitiveness in enhancing domestic and export markets. Against this background, our next investment is focused on specialty products. Our board has approved approximately ₹200 crores of additional investment across the company and its wholly owned subsidiary Indo Rama Ventures Yarns Private Limited. This is a fresh investment separate from the investments done earlier. The projects will expand into specialty filament and specialty fiber production at Butibori in the same complex complementing the existing portfolio. Commercial product Commercial operations are expected within calendar year 27. With funding through con combination of term loans and and and internal accruals. Based on the current estimates, we expect around 15% growth in top-line because of this investment and a 20% growth in EBITDA because of this because of this investment with the payback of less than 2 years, subject to execution, ramp-up and market conditions. Our focus going forward is clear, to improve utilization of existing facilities, maintain costs and reduce cost and financial discipline and execute the specialty expansion in a timely manner. Coming to our financial performance, the progress I have outlined is reflected in our Q2 results. Total income grew 10% year-on-year. EBITDA increased by 46.4% and profit after tax rose by 201.8%. For H1 FY27, profitability improved despite lower total income due to supply chain issues alongside stronger operating cash flow and reduced net debt. Now, Umesh ji will take you through the financial performance in greater details. I would like to thank our customers, employees, suppliers, lenders, shareholders for their continued support. With this, I now hand over the the the mic to Umesh ji. Thank you very much.
Umesh Kumar Agrawal (Indo Rama Synthetics India Limited): Thank you, Vishal sir. Good afternoon, everyone. I will take you through our consolidated financial performance for Q2 and H1 FY27. Let me begin with Q2. Total income income increased 10% year-on-year to ₹1,344 crore compared with ₹1,222 crore in Q2 FY26. EBITDA increased 46.4% to ₹117.7 crore compared with ₹80.4 crore in the corresponding quarter last year. EBITDA margin expanded by 220 basis points to 8.8% from 6.6%, supported by improved product contribution and continued attention to operating efficiency and costs. Finance costs declined to ₹29 crore from ₹33.6 crore. Profit after tax increased 201.8% to ₹74.1 crore compared with ₹24.6 crore in Q2 FY26. PAT margin improved to 5.5% from 2%. Moving to our H1 performance, total income stood at ₹2,284 crore compared with ₹2,531 crore in H1 FY26, a decline of 9.7% due to supply chain issues mainly. Despite lower total income, EBITDA increased 24.9% to ₹225.7 crore compared with ₹180 point
Umesh Kumar Agrawal (Indo Rama Synthetics India Limited): EBITDA margin expanded by 280 basis points to 9.9% from 7.1%. Finance cost reduced to ₹58.4 crore from ₹62.6 crore. Profit after tax increased 78.3% to ₹137.8 crore compared with ₹77.3 crore in H1 FY '26. PAT margin improved to 6% from 3.1%. Cash generation was another important feature of our H1 performance. Net cash from operating activities stood at ₹328.5 crore compared with approximately ₹92 crore in H1 FY '26. Our balance sheet also strengthened during H1. Net debt declined to approximately ₹832 crore as of September 30 compared with ₹1,113 crore at the end of FY '26, a reduction of 25.5%, while debt-to-equity improved to 1.31x from 2.18x. Returns also improved. On a trailing 12-month basis, return on equity stood at 38.2% compared with 33.85% at the end of FY '26, while return on capital employed increased to 27% from 20.34%. As the Chairman had outlined, the proposed ₹200 crore facility expansion is an additional planned investment. Alongside executing this project, our financial priorities remain disciplined: working capital management, healthy cash generation, and careful management of borrowings. Overall, Q2 delivered growth in total income and a stronger increase in earnings. For H1, we improved profitability despite lower total income while generating stronger operating cash flows and reducing leverages. That is all from my end. We will now be happy to take over your questions. Moderator, please open the floor for the question-and-answer session.
Moderator: Thank you. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Moderator: as the participants have joined. Over to you, sir.
Om Prakash Lohia (Indo Rama Synthetics India Limited): Yeah. Thank you, Jason, and good evening, everybody. I would like to
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