Tinna rubber - recycling a rubbery growth path


About the company

Tinna Overseas Ltd. (formed in 1987), now renamed Tinna Rubber & Infrastructure Limited (TRIL), is involved in the business of bituminous products and specialises in bitumen modifiers of various types such as crumb rubber, polymer-modified bitumen and bitumen emulsions. The company also has a crumb rubber manufacturing facility in five of its existing plants. It has manufacturing facilities at Panipat, Kaalamb, Haldia, Chennai and Wada. However, due to the slowdown in the infrastructure industry in the past few years, it has diversified its product mix to reduce the dependence on the sector. Its current product profile includes ultra-fine tyre crumb, high tensile reclaim rubber, carbon steel shots, steep scrap, CRMB and bitumen emulsion.

NOTE: Kala-amb facility in Himachal was closed in past month and machinery + staff relocated to Panipat as rationalization and debottlenecking move.

Q3 FY23 con call transcript: https://www.bseindia.com/xml-data/corpfiling/AttachLive/a49d2e7a-aa45-4c82-a7e4-4e4fd3163ec6.pdf

Q3 FY23 investor presentation: https://www.bseindia.com/xml-data/corpfiling/AttachHis/55be877f-703e-4027-8b76-1961c152ecc1.pdf

Key drivers and their description


  1. Extensive experience of promoters – The promoters have been involved in the manufacturing of rubber-derived products for more than two decades and have gained a thorough knowledge of the market. Their long presence in the industry has helped the company understand the industry dynamics, while continuous focus on research and development has helped it establish strong relationships with key customers.

  2. Diversification of product and consumer mix – The company has diversified its product profile to include reclaim rubber, high grade crumb rubber, cut wire shots, etc. It has also added some highly reputed tyre companies in its customer profile and has received approvals for raw material supply to them. This has aided it in increasing the sales volume and in turn, its revenues. TRIL recorded an OI of ~Rs. 130.07 crore in FY2021 and ~Rs. 173.13 crore in 9M FY2022.

  3. Favourable demand prospects - With the traction in infrastructure sector and construction of expressways and highways, the demand prospects for TRIL remain healthy. Going forward, the healthy orders in hand, including an annual offtake agreement with IOCL, should lead to revenue growth for the company.


  1. Volatility in raw material prices affecting margins – TRIL’s profitability remains exposed to the fluctuations in raw material prices and foreign currency rates as a sizeable proportion of the raw material requirements is met mainly through imports. However, the company has been trying to mitigate the risk by reducing its dependence on imports and procuring raw material domestically. Further, the company has some pricing power which allows it to pass on some of the raw material price variability to its customers.

  2. Stretched working capital cycle exerting pressure on liquidity – The company has moderate-to-high working capital intensity, which impacts its liquidity as reflected in the almost full utilisation of its working capital limits. Hence, due to very low cushion in limits and limited cash balances, its overall liquidity profile also remains stretched. However, the working capital cycle has improved with NWC/OI of ~25% in FY2020 and ~22% FY2021 compared to ~39% in FY2018. TRIL had external term loans of ~Rs. 31.36 crores on its books as on March 31, 2021. The Indiabulls loan was taken over by SBI in December 21 at 4% less interest rate and has been repaid fully by SBI. Indiabulls has paid around Rs. 1.17 crore of the disputed interest back to the company. TRIL had paid the instalment of Indiabulls on December 10 on time and thereafter the SBI EMIs have been on time too. While a major repayment (Rs. 7.12 crore) is due in FY2022, the repayment burden is expected to reduce after FY2023.

Investment thesis:

Company growth seems to be hinging on road surface CRMB, they keep harping the point that this has longer life and better quality, not sure of the initial costs. Overall road (re-)surfacing market may show decent growth. Govt regulations may change to enforce higher usage.

Rubber recycling overall may ride also on environmental concerns, rules seem to be enforcing 100% recycling in phases. Tinna has just started a facility in the gulf for crushing tyres. They have a subsidiary in europe which was part of a bigger strategy but so far is limited to importing waste tyres. The company seems to be looking at more internationalization.

The guidance is for 25% topline cagr for next 5 years, with limited short-term capex, justifying debottlenecking and streamlining as enough for next 1-2 years. For bit longer term they are looking at both acquisition and greenfield options.

They are the pioneers and leader in a fragmented and competitive market, though some of their (fine ground rubber) products seem to be not matched by others in the market.


It maybe that the regulations do not suit the company. Waste imports may be banned or duties may be unfavorable. Tyre companies may take a bigger role in recycling themselves if forced by rules. Market is fragmented and margins may stay low due to this. Rubber commodity cycle may turn unfavorable to support valuation, though company may be positioned to enjoy fairly stable margins despite such cycles. Infra growth and road laying may not last for much longer at current growth rates. Oil price decline may not suit CRMB usage.

Disclosure: much of the content is taken from ICRA credit rating report of march 2022 which upgraded it from Default rating for details see point 2 in “Challenges” above. I own this company at average buy price of 380 after waiting for some months. I am not SEBI registered analyst/advisor, and this is not a stock recommendation.


Highlights of Q3 Concall

  1. Our Wada location is qualified for IATF certification
    which will strengthen our position with tire companies as this certification is a need from the
    respectable suppliers.
    Our Gummidipoondi location is already IATF certified.

  2. a joint study was commissioned
    along with IIT Tirupati and final report was received during this quarter which has highlighted
    that carbon emission saving through use of Crumb Rubber Modified Bitumen over virgin
    binder. In absolute value use of recycled rubber in bitumen brings down carbon emission by 750
    times and this will give us the edge to promote more and more crumb rubber usage for the
    road construction application.

  3. we have commissioned two centralized plant one at
    Panipat and the other at Gummidipoondi for sales of bitumen and modified bitumen. This will make
    our products more accessible to our end users as we see large projects in the road sector in
    South India is coming towards completion. So,
    we want to be ready for that business .

  4. Our forth
    devulcunizer which is the key footprint used for making reclaim rubber has now been
    commissioned in Gummidipoondi so that has doubled our reclaim rubber manufacturing
    capacity in Gummidipoondi from 300 tons to 600 tons per month.

  5. We have shifted our reclaim rubber plant from Panipat facility to our
    Wada facility. So, going forward we will have a reclaim rubber manufacturing consolidated in
    two of our locations one is Wada and the second is at Gummidipoondi.

  6. we have acquired a tire
    recycling business in Oman and our intention is to setup crumbing facility over there. Initially tire crushing capacity will be 6000 MTPA . Going forward tire crushing capacity can be enhanced to 15000-20000 MTPA.

  7. Our bankers have upgraded the rating for our company
    and have granted a reduction in rate of interest by 200 basis points. So, this will help us in
    saving cost and better profitability. our absolute debt which was
    at 69 crores on 31st of March 22 is now down to 63 crores as of 31st December.

  8. our tire crushing
    this year will cross about 70,000 tons versus it being around 50,000 tons last year. This financial year till dec 22 we have crushed 53,000 tons of tire . Currently our crushing capacity utilisation reached to 90 percent.

  9. We have seen our raw material prices go up by about 4% points actually when I say 4% you
    have to interpret it in the form that our cost of raw material was 13% now it is 17% so that is
    quite high and now we are seeing already some correction again in the raw material prices. So,
    we are hoping to see that benefit in our EBITDA margins.

  10. Prior to two years where we have seen volatility in our
    revenue and profitability.That was the phase when our multiple customer base between the
    road sector and non-road sector had not stabilized is achieved now. Therefore,
    going forward I feel we have better visibility, better ability to adjust to any down cycle in a
    particular sector. So, we feel more confident now of our revenue projections and
    our profitability.

  11. Now we are dealing with road sector
    customers in multiple ways, one being through the refineries second
    being through mobile blending units where we set a plant at their sites and the third now the
    centralized bitumen and modified bitumen plant that we have commissioned in Panipat as well
    as Gummidipoondi.

  12. Our top line for this financial year will be plus minus around
    310 crores and on the EBITDA margin side last year we were at 16.5% this year our 9 month
    EBITDA is 13.2% I am expecting this financial year we will close at the current levels of around
    13.5% EBITDA and we are hoping to get back to our last year EBITDA levels in the next financial

  13. Currently contribution of road sector in our top line is 30% which means 70% is non-road and within that 70% of non-roads tire
    industry is half of it and the non tire industry is the other half.

  14. We are in the midst of finalizing our plans for the next financial year and what I can share
    with you is that we feel confident that the company should be able to grow at around 25% in
    the coming financial year also.

  15. There was variety of reasons we did drop to 11 odd percent EBITDA margin in this quarter, but
    I expect that to be fixed in Q4. we are at 13% EBITDA margin YTD right now. Our expectation is to get back to 15% in
    the coming financial year with this growth.

  16. The investment in TP Buildtech I will reiterate is
    basically a joint venture between Tinna Rubber group and Ultra high networth individual Mr.
    Mayank Singhal owns the other 50% in TP Buildtech. This company since 6 last years has made
    good progress in establishing itself in the construction materials space. We see a very strong
    connect of this business with the road sector business of Tinna Rubber that is why we continue
    to support it and continue to invest in it. TP Buildtech has a tie up with very large Japanese
    polymer manufacturer called Nippon Shokubai where import this polymer from Japan and then
    converted into a concrete admixture and the customer base is very similar to that as the road
    contractors customers of Tinna Rubber. TP Buildtech has grown approximately 36% in FY23
    versus FY22. We strongly believe in the business model of this company and therefore we will
    continue to invest in it. We see an excellent opportunity in grooming this business into a full
    fledged one stop shop kind of company for construction materials. So, I hope this throws some
    light on the interest that we have in TP Buildtech. TP Buildtech sales this financial year is for
    the first 9 months is 42 crores versus 30 crores in the last financial year for 9 months. So, 36%
    growth as I mentioned.

  17. It is a fair point so let me clarify TP Buildtech even though it has shown good growth in this
    financial year has suffered some losses in the past. However, I am pleased to tell you that as of
    December FY23 TP Buildtech is now net positive, it is making money. So, we believe the era of
    losses is now behind us and we have a bright future to look ahead.

  18. Some investments that we have in
    BGK Infratech etcetera those investments we also consider not core to our business. They have
    been done historically and we are trying our best to get out of these investments without any
    negative impact to Tinna Rubber balance sheet.

  19. On opportunity size I will mention two companies which immediately come to my mind in this space one is liberty
    recycling from USA which probably recycles half a million tons of tires annually and the other
    example Genan out of Europe which is similar in size maybe just a little bit smaller than liberty.
    So, we are this year we will be at around 70,000 tons of tire crushing in a country like India
    which is producing 2 million tons of waste tires annually. So, that is the scale and opportunity
    that India is presenting to us and we wish to be ready to recycle such large volumes, but the
    two nearest example would be Liberty Tire from USA and Genan from Europe.

Disclosure:- invested.


Some more points to add by summarizing my learning from latest concall and investor presentation:

  1. Revenues are split into Road products such as CRMB which are 30% and rest 70% is non-road. Non-road is split equally between tyre and non-tyre such as rubber mats, tiles, conveyors, many such rubber products.

  2. Tyre crushing capacity utilization rate is 90% this fiscal, reclaim or de-vulcanization is only 60% full. It seems they claim that road products are being better managed now.

  3. 50% tyres are imported, fall in shipping rates helps here.

  4. Tyre recycling policy has been cleared but yet not officially notified, may take a few months and it appears kicks in phases starting with tyre makers being responsible to ensure end-of-life management of 25% of their output initially, and this increases every 2-3 years by 25% to 50%, then 75% and finally 100% at the end of a decade or so.

  5. Growth is expected from all product segments, some more some less, average claim is still 25% cagr. Rationalization among various plants and Gummidipoondi scale-up will be enough for a year or so. On look out for future acquistion or greenfield. Oman plant is quite tiny yet in scale of things, starts in Q1 FY24.

Disc: invested


Recently, Nitin Gadkari ji, Minister of Road transport and Highways of govt. of India,
in an interview to CNBC -TV18 told that in ‘Dholera -Ahemdabad Expressway’ 15% of rubberised powder ( crumb rubber) from waste tire will be used in bitumen for road construction. Gadkari ji also told that the Govt. will continue to promote these type of recycling industry.

Link of that interview:-

TIme 9:58 onwards


Tinna does look a bit over-priced, not an exciting momentum play, at least not in current market. The run up has been enough for some time now to be spent in sideways moves. It has a fairer value perhaps closer to 350 mark if the good news/results does not pick up at a more rapid pace. I’m personally not a longer term player but the story looks to at least provide a decent level of conviction. Big triggers will be ELT (end-of-life tyre) recycling policy and the policy regarding road-surfacing using CRMB.

Disc: invested


Appreciate your views.
I am invested in tinna rubber from last sixteen months when it was trading at 125 levels. I was posting my research on Tinna Rubber in SMALL CAP HUNTER thread and in Gujarat reclaim rubber (GRP ltd) thread as there was no separate thread for tinna Rubber. You can read my earlier post on Tinna Rubber through my profile. For better discussion negative views on Tinna Rubber cordially invited here.


Here I will try to analyse the sharp decline in the EBITDA margin of Tinna Rubber in Q3.

Earlier, management were guiding 18 to 20% kind of EBITDA margin on sales. Then they reduced it to 16- 18, again 14 to 16 and in Q3 actually it decline to 11%. Although management has achieved the top line growth what they guided earlier but they failed meet the projection on EBITDA margin .So, what was the reason for such decline in a EBITDA margin?

I think some part of such decline was because of depreciating rupee , increase in the price of raw material and increase in Ocean freight as company imports majority of raw material from Europe, middle East and Australia . This is also explained by the management.
The other possible reason I want to highlight, which is not explained by the management, is decline in the prices of steel.

There is nothing to do with the prices of steel while purchasing waste tire as well as on cost of crushing these tire but after crushing it affects significantly on sales figures and profitability.

Two things left after crushing the waste tire, one part is rubber and the other is scrap steel wire. Further the rubber part is converted into value added products like micronized rubber powder/reclaimed rubber for Tyre/Rubber sector and CRM (crumb rubber modifier for bitumen) for road construction sector.

The portion of scrap Steel left after crushing constitutes approximately 1/4th of the total volume crushed as disclosed in investors presentation. Further some parts of that scrap is converted into cut wire shots etc and balance is sold for melting for steel sector. So, sales figures these steel products/scrap is directly correlated with the prices of steel. Higher steel prices means higher realisation per ton and vice versa.

We can see the fluctuations in net realisation per ton of steel products/scrap in my working on annual average basis:-

Here we can correlate it with the price chart of steel :-

Here we can see the sharp decline in steel prices from may 22 when govt. Imposed duty on export of steel till nov. 22 . After withdrawal of duty on export of steel on Nov 22 prices of steel is moving up again.

We can further correlate it with the quarterly EBITDA margin of Tinna Rubber’s financials :-

This fall in the steel prices coincided with the fall in the prices of natural rubber along with rise in the raw material prices, slowdown in tyre manufacturing sector, some delay in road construction sector hit the margin of Tinna Rubber. Positive things is that even after these headwinds Tinna’s sales is growing and it is showing net profit. From nov 22 lows, both the prices of natural rubber and prices of steel increased by 15-20%. So,EBITDA Margin of Tinna Rubber should increase due to these advancements in Q4.


Tinna Rubber and its waste tyre recycling business will be featured on ‘The Discovery Channel’ as part of the ‘Build India’ series, highlighting the infrastructure revolution in India. This episode will be broadcast at 7:10PM on March 2, 2023.