Apcotex targets April 2027 NBR start, Rs 155 crore outflow

Apcotex is targeting April 2027 to commission its Valia nitrile butadiene rubber, or NBR, project, with Rs 155 crore of cash outflow still planned from its Rs 220 crore programme. It had spent Rs 65 crore by the Q2 FY27 call, and management expects utilisation to build towards full capacity over two to three years.

When will Apcotex commission the Valia NBR project?

Apcotex expects the Valia NBR project to be commissioned in April 2027, and management said it remained on track for that target during the Q2 FY27 earnings call. The stated date provides a specific operational milestone after management had previously referred to the project coming on stream early in the next financial year.

The April 2027 target applies to NBR rather than every project at Valia. Management said the programme includes the NBR facility and an SBR latex plant, with SBR referring to styrene-butadiene rubber latex. The SBR plant may enter operations in a subsequent quarter, while NBR is specifically scheduled for April 2027. Apcotex did not disclose production capacity for either facility.

Apcotex initially referred to Rs 210 crore of capital-expenditure projects at Valia as largely on track, while its later funding response cited a Rs 220 crore programme. The detailed spending disclosure used the Rs 220 crore figure, including Rs 65 crore already spent and Rs 155 crore remaining. Management did not explain the Rs 10 crore difference between the two references.

How much cash does Apcotex still need for Valia?

Apcotex expects Rs 155 crore of further cash outflow for the Rs 220 crore Valia programme after spending about Rs 65 crore. Finance executive Vivek Thakur said the remaining sum would be outflowed by the next year, until project completion and sometime thereafter, without providing a quarter-by-quarter payment schedule.

The funding timetable matters because Apcotex remained net cash positive as of September 30, 2026, while working-capital requirements were elevated. Management attributed the increase in working capital to higher input costs, which raised inventory values and receivables. The call did not disclose the cash balance, debt level or the funding mix for the remaining Rs 155 crore.

Apcotex’s first-half FY27 financial results provide context for the planned expenditure but do not establish a separate financing commitment. Operating revenue was Rs 1,025 crore, while operating earnings before interest, tax, depreciation and amortisation, or EBITDA, reached Rs 175 crore and profit after tax was Rs 114 crore. EBITDA rose 121% year on year and profit after tax increased 156%.

How quickly will Apcotex use new NBR capacity?

Apcotex expects the new NBR facility’s utilisation to ramp up over two to three years before reaching full capacity. Management said it hoped the ramp-up could occur earlier, but described two to three years as its working expectation. Commissioning in April 2027 would therefore mark the start of a gradual utilisation build rather than immediate full operation.

The NBR expansion targets applications including automotive products, industrial products and liquefied petroleum gas, or LPG, hoses. Management said it sees good long-term growth in India over four to five years for these end uses, while not offering a specific view for the next six to 12 months. It said the capacity addition was intended to capture this longer-term demand opportunity.

Management said it was assessing project returns under different market conditions. It acknowledged imported-material concerns and said anti-dumping action had not worked out, although higher ocean freight rates had provided some support. Apcotex said it was working to ensure that the NBR project delivers a good return on capital with or without dumping or elevated freight rates, but gave no revenue, margin, return or break-even projection.

Current NBR conditions provide limited segment-level context because Apcotex does not disclose sales volumes by segment for proprietary reasons. For the first half of FY27, management said NBR margins were probably slightly higher than synthetic-latex margins, although both were described as good. It did not disclose NBR revenue, volume, capacity utilisation or profitability separately.

What does the Valia schedule mean for Apcotex’s current operations?

Apcotex is executing the Valia programme while managing higher raw-material costs, inventory movements and logistics disruption in FY27. In Q2 FY27, revenue rose 48% year on year to Rs 499 crore, helped by a 7% increase in sales volumes, while EBITDA increased 44% to Rs 58 crore. EBITDA margin, however, was 11.69%, compared with 12.06% in the corresponding quarter a year earlier.

Management attributed part of the quarterly margin movement to inventory losses of about 1.5% after prices fell in July and August before rising again. It also cited higher freight costs arising from geopolitical supply-chain disruption. Apcotex said it monitors volumes, EBITDA per tonne and return on capital employed, or ROCE, alongside percentage EBITDA margins.

The expansion is being pursued while demand trends differ across existing businesses. Management said nitrile latex was running close to full capacity, but it had not approved a further nitrile-latex expansion because it wanted to see a couple more quarters of consistent margins. In synthetic latex, construction and paper performed well over the preceding six to 12 months, while carpets lagged because of exposure to Middle East, North African and western markets.

Conclusion

Valia is a staged capacity addition rather than an immediate full-utilisation project: Apcotex sees long-term NBR demand in automotive, industrial-rubber and LPG-hose applications over four to five years, while full utilisation is expected over two to three years. Management also said the project should generate a good return on capital whether or not ocean freight remains elevated and despite the absence of anti-dumping relief.

The next disclosed milestones are the Rs 155 crore cash outflow through completion and sometime thereafter, the April 2027 NBR commissioning target, and the later expected start of the SBR latex plant. Management also said it expects to decide on a separate nitrile-latex expansion in the next couple of quarters after assessing whether recent margin improvement is sustained.