Century Enka Limited , a leading manufacturer of synthetic yarn and cord fabrics, reported a significant decline in its financial performance for the first quarter of fiscal year 2026. The company faced headwinds from weak demand, increased Chinese imports, and raw material price volatility.

Financial Performance

Century Enka's operating revenue for Q1 FY26 stood at ₹402.00 crores, marking a 24% year-on-year decline. The company's EBITDA dropped by 52% to ₹20.00 crores, with margins contracting to 4.96%. Profit after tax decreased by 37% to ₹15.00 crores, resulting in a PAT margin of 3.84%.

Segment-wise Performance

Tyre Cord Fabrics

• Revenue declined by 35% year-on-year to ₹181.00 crores
• Impacted by lower demand from the tyre industry and higher imports from China
• Particularly affected segments: 2-wheeler and commercial vehicles

Filament Yarn

• Revenue decreased by 15% year-on-year to ₹193.00 crores
• Production affected by a fire at the Bharuch plant in February 2025
• Full operations resumed in June 2025

Volume and Raw Material Trends

• Total volume fell by 17% to 17,072 metric tons
• Caprolactam prices declined to record lows, creating margin pressure
• Use of renewable energy at Bharuch plant helped control power costs

Management Outlook

Century Enka's management expects:

• Demand improvement in Q2 following inventory adjustments by tyre manufacturers
• Better second-half performance supported by festive season demand and favorable monsoon impact on farm income
• Normal EBITDA margin targets of 6-8%
• New capacity to contribute ₹100.00-120.00 crores at full utilization

Industry Challenges and Company Initiatives

During the earnings call, Century Enka's management highlighted several challenges and initiatives:

1. Geopolitical and Trade Tensions: The company faces indirect exposure through its customers' exports to the US and other countries.

2. Chinese Imports: The company is engaging with government bodies through industry associations to:

   • Initiate Quality Control Order (QCO) process
   • Consider implementing minimum import prices on Tyre Cord Fabrics

3. Capacity Expansion: Despite current challenges, the company is expanding into polyester tyre cord to cater to the growing passenger car tyre segment.

4. Efficiency Improvements: Focus on improving efficiency of old equipment to stay competitive.

5. Value-added Products: In the Filament Yarn segment, the company is emphasizing value-added products to improve margins.

Century Enka remains cautiously optimistic about demand improvement in the coming quarters, particularly due to the festive season and positive impact of favorable monsoon on farm income. However, the company acknowledges the volatility in the global market and continues to monitor geopolitical challenges that may impact its business indirectly through its customers' export markets.

Century Enka Limited , a leading producer of Nylon Filament Yarn (NFY) and Nylon Tyre Cord Fabric (NTCF) in India, has reported a significant decline in its financial performance for the first quarter. The company faced headwinds from multiple fronts, including weak demand from the tyre industry and increased competition from Chinese imports.

Financial Performance

Century Enka's revenue for Q1 stood at INR 4,015.00 million, marking a substantial 24% year-over-year decline from INR 5,280.00 million in the same quarter of the previous year. The company's profitability also took a hit, with EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) falling to INR 199.00 million, resulting in an EBITDA margin of 4.96%, down from 7.78% in the previous year. Net profit decreased by 36.6% to INR 154.00 million.

Key Performance Indicators

Operational Challenges

The company's performance was impacted by several factors:

1. Weak Tyre Industry Demand: Lower demand from tyre industries significantly affected the company's Tyre Cord Fabric (Reinforcement) segment.

2. Chinese Imports: Higher imports from China put pressure on both volumes and prices.

3. Automotive Sector Slowdown: The automobile industry, particularly two-wheelers and commercial vehicles, experienced subdued demand.

4. Filament Yarn Production Disruption: A fire at the Bharuch plant impacted filament yarn sales. The plant resumed full operations in June.

5. Raw Material Cost Pressure: Caprolactam prices dropped to record lows, putting pressure on margins.

Segment Performance

• Reinforcement Yarn: Revenue declined to INR 1,811.00 million from INR 2,789.00 million in the same quarter of the previous year.
• Other Products: Revenue decreased to INR 1,927.00 million from INR 2,233.00 million year-over-year.

Future Outlook

Despite the challenging quarter, Century Enka remains cautiously optimistic about the future:

• The company expects NTCF demand may improve in Q2 after inventory adjustments at tyre producers.
• Better demand is anticipated in H2 due to the festive season and favorable monsoon impact on farm income.
• Century Enka continues to focus on value-added products to improve margins.
• The company is leveraging renewable energy at its Bharuch plant to control power costs.

Century Enka maintains a strong market position with a 23% domestic market share in NFY and a 25% share in NTCF. The company operates two state-of-the-art manufacturing facilities in Pune, Maharashtra, and Bharuch, Gujarat, with a combined capacity of approximately 92,000 MTPA.

About Century Enka Limited

Established in 1965, Century Enka Limited has grown to become one of the largest producers of Nylon Filament Yarn and Nylon Tyre Cord Fabric in India. The company's product range includes high-quality nylon yarns for various applications and customized nylon tyre cord fabric for reinforcement of tyres used in motorcycles, scooters, light commercial vehicles, and heavy commercial vehicles.