Aarti Industries Limited (524208) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Aarti Industries Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Shiv Muttoo from CDR India. Thank you, and over to you.

Thank you, Red. Good evening, everyone. Thank you for joining us on Aarti Industries Q4 FY '21 Earnings Conference Call. We have with us today on this call Mr. Rajendra Gogri, Chairman and Managing Director of the company; Mr. Rashesh Gogri, Vice Chairman and Managing Director; and Mr. Chetan Gandhi, CFO. Before we begin the call, I would like to point out that some of the statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the results presentation shared with you. I would now like to invite Mr. Rajendra Gogri to talk about the performance of the company and his outlook on the business. We will then open the question for -- the forum for Q&A. Over to you, sir.

Thank you. Good evening, and a very warm welcome to all of you attending this call. I hope all of you and your families are in good health and keeping safe. As we speak, the country is passing through a difficult phase, and we hope to see the aggressive response instigated by the government improving the situation in the coming period. I trust that all of you have received the Q4 and financial year 2020/'21 results presentation that has been uploaded on stock exchange website earlier today. First, a review of our financial performance. In FY '21, we have delivered 8.7% growth in revenues. EBITDA has increased marginally to INR 982 crores, while profit after tax was lowered by 2.2% than the preceding year. In the context of the prevailing operating circumstances, during one of the most challenging phases we have witnessed so far, we believe this is an outstanding performance. After the initial impact of the pandemic resulting in the curtailment of industrial activity across the country, we have recouped back on the business in subsequent quarters. We have improved utilization of existing facilities, while also completing and operationalizing new project facilities. This has allowed us to almost match FY '20 profits in FY '21 despite an increase in operating costs and fixed expenses from newly commissioned plant that are now selling up to more optimal utilization level. Overall, as indicated previously, Q4 was another quarter for operating improvement, which is in line with our expectation and the outlook of stronger and progressive turnaround in the second half of the financial year. We sustained strong momentum on both operating and financial parameters during Q4 based on improving business visibility. During the quarter, we reported revenue of INR 1,347 crore, which was higher by 13.2% Y-o-Y. This was driven by strong demand visibility for most of the products recovering to normal pre COVID volume. Further, gross margins are also back to pre COVID levels as higher volumes have been recorded from regular market and established relationships. Also driving the business is a 75% contribution from value-added product, which is in line with our strategic direction. EBITDA expanded by 18.9% Y-o-Y to INR 260 crores in Q4. Profit after tax grew by 23.6% to INR 136 crore despite the higher operating cost base as well as on increase in fixed costs. Our specialty chemical business grew 14.1% in Q4 to INR 1,123 crores. As demand returned from established markets, EBIT margin expanded by 120 basis points to 18.7%. During the quarter, we undertook the annual maintenance shutdown at the acid division at Vapi and acid revamp linked maintenance shutdown at Jhagadia. These impacted volumes have resulted in higher costs by about INR 12 crores. Also, there was an additional cost attached to incremental depreciation and fixed cost due to commissioning of new units during Q4 FY '21, while the volume still for those will come in from FY '22 onwards. This represents a strong recovery in the second half of FY '21 backed by most product hitting pre COVID volumes. Now for the Q4 production updates. Production for nitrochlorobenzene was at 19,100 metric tonnes compared to 14,700 metric tonnes a year back. Similarly for hydrogenated products, we have achieved production of 1,935 tonnes per month compared to 2,315 tonnes per month last year. On the nitrotoluene front, the production of -- for Q4 was 2,935 metric tonne compared to 2,843 metric tonne in the same quarter last year. We expect to deliver steady performance improvements going forward as new facility delivers scale up in volumes. Our Pharma business grew by 8.7% Y-o-Y to INR 224 crore during Q4. Positive leverage from higher utilization of facility drove volume and resulted in EBIT margin expansion from 17.4% to 21.2%. Business visibility in Pharma is based on higher volumes from regulated markets, value-added products and new introduction of intermediates. Overall, the trend of volume expansion and structural marginal improvement is sustained. Revenue growth is expected to be maintained as additional capacity for API and intermediates are getting operationalized in the coming quarters. During Q4, there were some stoppages in Pharma operation that were linked to the implementation of sustainability-related initiatives. These had some impact on production and sales turnover during the quarter. Going forward, we have a strong pipeline of approval that will allow us to further strengthen our position in therapies such as antihypertensive, cardiovascular, oncology and corticosteroid, et cetera. Now I'd like to cover our capital expenditure initiative underlying long-term growth prospects. We have incurred CapEx of about INR 415 crore in the fourth quarter, bringing the aggregate investment for FY '21 to INR 1,300 crores. During -- as to FY '21, we operationalized a new chlorination unit in Jhagadia and Phase 2 unit in Dahej SEZ for agrochemical intermediates. At present, we have several other capital investment projects in pipeline. This includes: expansion of USFDA capacity currently underway at the API unit located at Tarapur and at the intermediate unit at Vapi; setup of production unit for the second long-term contract at Dahej SEZ, for third long-term contract at Jhagadia and the NCB expansion at Vapi; expansion cum asset upgradation for our acid unit at Vapi. Overall, we are undertaking several expansion, asset restoration and sustainability-related initiative across various locations. This will entail a CapEx during FY '22 and FY '23 of about INR 1,500 crores. Considering the global opportunities available, we are invested into setting up a state-of-art research and technology center in Navi Mumbai. This center was operationalized in March 2020 and has been driving the innovation for us to be able to cater to these opportunities. Over the last 2, 3 years, we have focused on enhancing our internal talent pool by onboarding experienced professionals at various business functions across the company and also creating a bench strength to cater to growth initiatives. Driven by R&D and innovation, the company is embarking into the journey of expanding its product portfolio, and we'll commence to implement growth projects over FY '22, FY '24, entailing CapEx of INR 3,000 crores to INR 3,500 crores. This include a range of products to be introduced in chlorotoluene value chain, other value-added products and specialty chemical products, additional custom manufacturing opportunity being explored, setting up of UMPPs, that is universal multipurpose product plants, expansion of existing pharma products and introduction of new pharma API and intermediate. This will lead to addition of new chemistries and value-added products with an objective to launch 40-plus products for chemicals and 50-plus products for pharma, driving growth beyond FY '25. Substantial part of the products chemistry being introduced for the first time in India. This will strengthen India's position as a key global supplier. This product will cater to wide range of end use applications such as pharmaceutical, agrochemical, polymer, pigment, rubber, chemical, et cetera, and serve an EBITDA margin of about 25% to 30%. We are also actively pursuing additional manufacturing outsourcing opportunities and strategic alliances. Coming back to the current year, to reward shareholders for their continued support, we have announced the issue of bonus shares in the ratio of 1:1 and a final dividend of INR 3 per share on a pre bonus basis. While on an ex bonus basis, it would be about INR -- would be INR 1.5 per share. Board has cleared -- further cleared a fund raise proposal of up to INR 1,500 crores to support and strengthen balance sheet. Driving forward on the strong momentum in the business, we are now well placed to be able to hit a high growth space in FY '22. We expect to be able to register top line and bottom line growth of about 25% to 35% in FY '22, excluding the onetime compensation for termination of contract accruing at the end of FY '22. We are on track to maintain our long-term growth momentum, as guided earlier. Based on these initiatives at the near-term horizon until FY '24, we expect 1.7 to 2x growth based on combined benefit of our initiative with stable margins and profits. In the longer-term horizon, until FY '27, we expect revenue to rise by 2.5 to 3.5x for FY '21 with the expansion in margins and strong leverage in profits. With the execution of our planned growth objective, we look forward to driving stronger value for all stakeholders associated with Aarti Industries. With that, I conclude my opening comments, and we will open the floor for the Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Rohit Nagraj from Sunidhi Securities.

Congrats on the EcoVadis medal for sustainability as well as ISO 20000 -- 27000 (sic) [ 26000 ] for R&D. Sir, my first question is in terms of the investments that we have done on the sustainability and EHS side. So I understand over the last 5, 6 years, we have invested close to about 300-plus kind of money on this. So how do you expect that this will -- this has helped us in the last few years? And how will it help us in terms of our future growth?

Yes, I think that's a very good question. I think chemical industry -- one of the key factor for India to grow in this will be on focus on safety, health and environment, SHE. And our -- strong focus by Aarti Industries in the last few years actually is one of the key reasons for getting these 3 contract -- long-term contracts, which we could get at -- we could demonstrate that our infrastructure as well as our practices are meeting the customers' requirements. And that definitely gives you a higher volume share as well as some places higher margins because of this sustainability of -- related automation or zero liquid discharge and effort to minimize the exposure.

Understood. Sir, the second question is in terms of the next leg of CapEx, which is almost close to about INR 5,000 crores. So what provides us visibility from our investment perspective? Now earlier, we had the visibility that we have these long-term contracts based on which the CapEx program was planned. Now what is the underlying based on which we believe that we will be going ahead with such a massive expansion plan?

Yes. Generally, I think we have been guiding that selection of products are based on 3 factors. One is there is an import substitution. Secondly is where there is a global growth. And third, where we are in China Plus One strategy, we can be the only first or second Indian source. So based on that, we have selected the product lines. As mentioned in my speech that a lot of them are going to be the first time Made in India and some of the chemistries. Like chlorotoluene is -- there is no chlorotoluene manufacturing in India itself. And even the first chemistries like ammoxidation and photochlorination of OCT/PCT is not done in India. And similarly, a lot of other specialty chemicals we will be the only one from India to manufacture. So that gives us a very strong visibility. And we have a very strong customer base in India as well as across the board in various end use sectors, like the agrochemical or engineering polymer or dyes and pigment. So that gives us a very good confidence about the volumes.

Next question is from the line of Ritesh Gupta from Kotak Securities.

I just was curious that on a couple of products we have seen a volume decline on a Y-o-Y basis. What is the reason for that?

No. As I mentioned that we had taken a shutdown in Jhagadia during this quarter. So PDA and NT, those products are made in Jhagadia facilities, which has resulted in the reduction in volumes.

Understood, sir. And sir, just on the long-term CapEx side, I mean what is it that you incrementally see? So I know that you alluded to the China Plus One and all that. But let's say, for example, even in last 2, 3 years, we have invested a lot of money. And since the last quarter, we have been aggressively investing as well. But honestly, the earnings for the last few years has been pretty flattish. I understand there are cyclical reasons that we've seen. But what gives you the confidence that, let's say, in terms of realization and in terms of the IRR, et cetera, things may continue to remain or probably will improve from here on and it can support the kind of, let's say, ForEx growth that you're targeting over the next 6, 7 years?

Yes. No, this FY '21, the -- I think COVID was a major impact, which led to a decrease in volumes and also supply of the material to a nonregular market at lower margins. Going forward, we expect that the demand has now reached pre COVID levels. And whichever new capacities, we should be able to increase our volume substantially. So current year, we are guiding 25% to 35% top line and similar volume growth in specialty chemical and also pharma also nearing that level. And subsequent 2 years also with further commercialization of NCB and all, so that will -- that 1.7x guidance was -- we had 1.72x by FY '24 -- will be based on our -- most of the existing product lines.

Got it. Got it. And just on the CapEx beyond '24, I mean, what are the new things that you're targeting? I mean is it like the application areas which are completely new for you or if these are largely the downstream derivatives of what you're already doing? How you're looking at things, let's say, beyond '24? I mean what are the key target areas there?

Yes. One is an introduction of a new value chain, chlorotoluene. So chlorotoluene, then there are host of downstream chemistry going into that. That is photochlorination, ammoxidation, hydrogenation, bromination, Balz-Schiemann reaction, AHF fluorination, so host of chemistry in that entire value chain. And for our normal nitrochlorobenzene, dichlorobenzene and nitrotoluene, also the downstream to those are being added with newer chemistries. So will be first time also introducing propylation in India. That is also like a 100% import at present and also as an export potential. So our new value chain and our existing business lines have more and more value-added products. And somewhere it will be even a custom manufacturing kind of a product where the raw materials can be supplied by the customers or we take it from some party and then add the values. So that is an overall scenario. And on the end-use side, your one question was on the end-use side, right? So this end-use of this will be in the same side, agrochemical, pharmaceutical, polymers, dyes, pigment, rubber chemicals. So the customer base is going to be very, very similar. So that's a very big advantage. That gives us a very good volume visibility from a market point of view. It will be very similar customers where this product will be sold.

Got it, sir. Just last one, if we can squeeze in. I mean on the take or pay contract that you had and where the customers kind of too unfortunately canceled the order, I mean you've written almost -- you've got the money back. So I mean why there is almost -- I mean, whatever that renewals that was supposed to be received in full. So have you received the entire amount? Or is there something which is there which we need to know?

No, actually, this is for -- last year, that's what we have written almost missed. The payment, we have already raised the invoice. We'll be getting the payment in the next 2 days, so for the first year money. And substantial portion is going to come in FY '22 for those compensation. FY '21 invoice has been raised, and we should be getting the final installment payment sorted in.

The next question is from the line of Naushad Chaudhary from Systematix Shares.

A couple of questions, sir. First, I wanted to understand on our chloro nitrotoluene project. If I recollect it correctly, we started the construction of this project in FY '20, and it was expected to complete in mid of FY '22. So what is the status of this project? And how much CapEx have we deployed so far in this? And when can we expect this project to be operational?

Yes. The first phase will get commissioned in first half of FY '22. And the second phase actually has been delayed because of certain equipment-related issues. So that will be commissioned in FY '23 for nitrochlorobenzene expansion, yes.

How much capital have we deployed in Phase 1, sir?

Yes, currently in around, I think, INR 60 crores to INR 70 crores has been spent.

Okay. If I correctly -- if I recall it correctly, it was expected to have around INR 400 crores to INR 800 crores of CapEx in overall this project? Isn't INR 60 crores to INR 70 crores is very small against the proposed CapEx amount?

No, then there is some confusion. I was talking about nitrochlorobenzene, which was a total INR 150 crores. Whereas you are referring to chlorobenzenes, so that main chlorination plant has been commissioned. The hydrogenation portion was commissioned in FY '21. And this first contract, which is also part of that chlorobenzene chain, has been also commissioned in FY '22 -- FY '21, sorry.

I'm referring to chloro nitrotoluene, for which we had a proposed capacity of 42,000 one and for 2 chloro nitrotoluene, for which we had proposed capacity of 64,000 tonnes, which was expected at Dahej GIDC with a total CapEx of around INR 800 crores to INR 1,000 crores.

Yes. So that is -- basically, that project has already mentioned, that was part of the long-term contract that has been commissioned in Dahej. And precursor to that, the chlorination plant at Jhagadia also has been commissioned.

Okay. Second clarification, sir, on the tax paid part as per cash flow statement. In this financial year, we have paid around INR 96 crore of tax versus as per P&L was INR 163 crore of tax. So the huge difference between these 2, so if you can give clarity on this part, sir.

Chetan?

Sir, P&L doesn't have a tax of INR 156 crore. I would request you to reconfigure the number.

For the full year I'm talking about.

Yes, Yes. I'm talking about the full year number.

Sorry, INR 130 crores.

Sorry?

So for the full year, we have INR 130 crores in P&L, but in cash, we have around INR 96 crore only. So there's a gap of INR 30 crores to INR 35 crores, I guess.

No, no. So the only -- the thing is that you have to consider there's a deferred tax of around INR 23-odd crores, and there is a MAT credit also available. So that's the gap. So major chunk is the deferred tax of INR 24 crores.

Okay. Lastly, I missed on the volume part. Can you repeat the PDA and nitrotoluene volume for this quarter?

Yes. The PDA volumes were roughly around 970 tonnes a month and nitrotoluene was -- for the quarter, it was 2,935 tonne.

Next question is from the line of Surya Patra from PhillipCapital.

So in fact, the guidance what you have provided -- long-term guidance here, I think, it really looks interesting, and it is -- having seen a kind of a 11%, 12% kind of a growth CAGR over last 5-year period, now we are guiding about 30% kind of CAGR on the revenue side and similar on the earnings side also. So this is really -- looks very strong. But can you just give some more clarity about whether the growth momentum would be largely back ended? Or if you can just provide some more color to this. What would drive this and how would that be achieved? Because even one more aspect that I see, when you were saying that revenue growth is a 30% CAGR, and you are talking about the margins could be in the range of 25% to 30%, so then from the current level of '21, '22, so I think the growth can be -- the earning growth can be really 40%-plus CAGR, kind of 40%, 45% or beyond. So what is the kind of gap that I'm finding in terms of earning growth CAGR, if you can clarify things.

Yes. FY '27, we have said about 2.5 to 3.5x on sales and 3 to 4x on EBIT and PAT level because new products will have a higher EBITDA margin. So EBIT and PAT growth will be higher than the turnover. Then as far as the volumes is concerned, we see a lot of import substitution as well as demand from India. And some of the products there has good growth on engineering polymers and substitute. So these are the key volume levers. Like there are expansion of some of the customers between India agrichemical and all. They are expanding. And on the back of that, we'll be -- our volumes also will be increasing.

Okay. No, I was largely mainly referring to the FY '24 growth guidance. So kind of a 2, 2x both on the revenue front as well as earning front that we are talking. So...

We are even -- current year, there is that one-time this shortfall fees there, where there is no turnover. Yes. So now the turnover is added, so that's why there's a little bit mismatch is coming.

Okay. Okay. And now on the dicamba front sir, see that facility was there ready. So whether we have started seeing any kind of incremental business out of it. If I recall, possibly, we are the most integrated player for that dicamba intermediate. And with the business now remaining as it is, with the kind of reversal of the U.S. court order, so did you see any kind of incremental business? Or are you getting ready to have any incremental business out of that, sir?

Yes. Actually, overall, dicamba's situation is improving as compared to the last year. And we say that our -- these new plants, the volumes will start getting ramped up over the next 2, 3 years. And we'll be able to supply this product to other customers.

Okay. So is it the validation thing which is taking time? Or what is it, sir, for this? Customer validation is...

No, global demand which was impacted. And so right now, whatever is our inventory in pipeline, yes, is getting consumed. So -- but now so general feedback currently is that come next year onwards, dicamba overall demand will increase and correspondingly we'll be able to supply the incoming.

Okay. Just last question, sir, from my side. So in your long-term growth triggers that you have mentioned, you are setting up dedicated toll manufacturing plants for customers and also indicated about high-growth sectors that you are now adding. So if you can just clarify on these 2 factors. Means whether you are considering -- means whether you have -- in your CapEx plan, you have already factored any kind of incremental supply projects apart from the already known project? Or in the new growth area, if you can just elaborate a bit.

Yes. In chemical segment, we never had this, what we call, UMPP kind of plant, where you can add any chemistry and product can be introduced fast. So first time now, we'll be having those UMPP type facility, which will be designed to take different products with different chemistry. And so this will help us for our regular multi-customer product also and also for contract manufacturing on one-on-one. That the entire commercialization cycle will become much faster once we are with the UMPP on ground. They will be used for multi-customer as well as for single customer tolling. This will be a very good plus point going forward in the next few years. You have this activity where you can commercialize things much faster.

Okay. This is trigger beyond FY '23, '24 like that?

Yes. Yes. Yes. See, there is lot of effort there but, currently, we don't have plants available.

Correct. Multi-purpose plant is not there.

Yes. Once we have this couple of these UMPP plants on the ground, then we'll be able to capitalize because the customer want material from us because we are totally backward integrated. And customer wants supply chain independent of China. And so there -- appetite from us is the customer wants a product of $60, $70 also. So once we have this kind of facility, that will really drive the growth in second half of this decade.

Next question is from the line of [ Manish Jain from Gold Mill One ].

Yes. Congratulations on very aggressive plans for the next 5, 6 years. My first question is on the world is moving towards carbon neutrality. So what are the decarbonization plans that you are building in your business? And of the INR 5,000 crores CapEx that you're talking about, is there any allocation to decarbonization?

Yes. Actually, now we have decided at all our project site, we'll have a proper solar energy also. And we already have cogeneration plants. So steam generation also will have more cogeneration plants. And also sourcing power from green energy, so there will be another area on this carbon footprint point of view. So our effort will be everywhere for decreasing the energy consumption and water consumption. And our threshold for even capital investment for energy-saving devices we have kept lower than a normal CapEx. So both on power sourcing and solar energy as well as cogeneration, this will be the 3 main things. And also in our operations wherever we are able to recover energy, that will be the strategy.

So do you have any fixed plans or time lines by when you expect to become carbon neutral?

Actually, here a lot of thing will happen with our customer collaboration, what is in -- because we go in -- we are N minus 1, N minus 2 to a lot of global customers. So a lot of the strategy will combine with their strategy in that sense, where we can use more of a natural gas compared to coal as an energy source in that sense. But we -- as we are intermediate player, we cannot become carbon neutral in that sense.

Sure. And my last question was on asset turnover. Given that the CapEx that we are incurring, what's the common thumb rule exit turnover incrementally that we can assume on the CapEx being incurred over the next 3 years?

Yes. We are looking at CapEx -- turnover to CapEx in the range of 1 to 1.5 for these value-added products. That will be the range, if you take a middle of around 1.25 kind of a thing. All that generally depends on the value addition, so that's why this range comes. But we are going to have more value-added products in our expansion, so asset turnover will be a little less.

Excellent. And congrats once again on phenomenal execution and consistent growth opportunities in your business.

Next question is from the line of Chetan Thacker from ASK Investment Managers.

Sir, just 2 questions. One was on the guidance. Just wanted to understand, so the guidance, we should not build in the shortfall fee that has come in the base? Or it's on top of that shortfall fee but excluding the shortfall fee for FY '22?

No, this will be based on -- including shortfall fee.

Okay. And so even for FY '22, but your guidance does not include the balance settlement that will happen, right? That is a fair understanding in the guidance.

Yes. That is for the future period, so that is not included. Whatever is pertaining to FY '22 is included.

Okay. Okay. Understood. And sir, second was I just missed the volume on hydrogenation and NCB. If you could share that number, please.

NCB was 19,100, and hydrogenation was 1,935 per month.

Next question is from the line of Arun Prasath from Spark Capital.

Yes. Sir, again, one clarification on the guidance. So what you are saying is by FY '24 the turnover over the FY '21, the growth could be around 2x. So basically, the INR 5,000 crores turnover could become 10,000 -- sorry, can become INR 10,000 crores. And the incremental CapEx, that is including the CV, which is currently at INR 1,500 crores and another INR 1,500 crores CapEx that you are proposing for '22 and '23. So the incremental CapEx is around INR 3,000 crores and incremental turnover is INR 5,000 crores. So are we saying that incremental asset turnover is going to be 1.6x? Is it what -- is it the calculations?

No, basically, by FY '24, we'll be around INR 9,000 crores to INR 10,000 crores on a sales basis. And that will be compared to whatever has been capitalized in the FY '21, '20 also and future also, next 2 years. So that will be reflecting the turnover of that. And so on FY '24 to FY '27, that growth will be from the turnover expansion of INR 3,000 crores to INR 3,500 crores and some more capacity utilization of the earlier CapEx in that calculation.

Specifically between '21 and '24, the INR 5,000 crores increase is only coming from the INR 3,000 crore incremental CapEx, sir? Or is it something else?

The incremental CapEx is going to be executed between FY '22 to FY '24, next 3 years. So the turnover from that will actually start coming in mainly from FY '25 onwards.

Okay. So basically, this incremental revenue from '21 to '24, that will be derived over existing assets?

Yes, existing whatever has been capitalized now and what will be further capitalized in the next 2 years. That will be driving this turnover growth from FY '21 to FY '24. Whereas additional INR 3,000 crore to INR 3,500 crore, what we are saying, which will be for the newer products. That will drive the turnover from -- mainly from FY '25 onwards.

Okay. Because this turns out to be a little bit in higher asset terms because as you generally -- as it generally happens, more high value-added products usually results in high margins but at a lower turnover. This -- when you are about to increase your high-value products, this turnover from the incremental capitalization -- I just want to get it right that this is the right number.

Just I will explain. FY '24 to '27, if you see, our turnover guidance is less than the EBIT and PAT guidance is more if you take from '24 to '27 as a base. That is where the asset turnover will be less.

Okay. All right, sir. So my second question is on the -- recently, we see that the composition of the high-value products has been decreasing in the last 2 quarters. Is there any specific reason related to demand? You are seeing more and more PDCBs and the base products getting exported, less of the hydrogenation products and ammonolysis product. Is there any reason specifically? Is it an aberration or just still the demand does not come back from the export markets?

This year -- quarter, we had this shutdown in Jhagadia, where is actually the value-added products are made, chloroanilines and PDA. So that was the reason. But in general, the value-added product will -- share will continue to grow.

The next question is from the line of Nilesh Ghuge from HDFC Securities.

Sir, my question is on your photochlorination.

Mr. Nilesh, may I request you to speak a bit louder? Your voice is a bit low.

Sure. Sir, my question is on your photochlorination. You mentioned that -- I mean, definitely, you have competency in photochlorination and then ammonization, hydrolysis and another chemistry. Then definitely, you will make the derivatives from this photochlorination. So I need to understand what is the market size globally for those derivatives and the photochlorination chemicals currently? And at what growth rate the demand is growing for these products?

Yes. Actually, they are mainly going in pharma and agro. Even your pattern has ammoxidation. And then basically, ultimately, a lot of them end up in the chlorinated compounds going into agro and pharma. There's just quite a bit growing demand.

And sir, what is the current market size?

Individual product-wise will be difficult to have that number. Overall chlorotoluene, we are looking at INR 1,500 crores to INR 2,000 crores in the entire value chain.

Okay. And that will be achieved -- that will be your target between this FY '25 to '27, right? Is my understanding correct?

Yes. Yes.

Next question is from the line of Rohan Gupta from Edelweiss.

Sir, first question is on our investment, the CapEx which we have already done in last couple of years, almost INR 2,500 crores plus has been spent. But we have seen that definitely our EBITDA has been flattish in last 3 years. Generally, we see, sir, gestation period ranges from almost 18 months to 24 months in most of the company. But in our case, it seems a bit longer. Is there any particular reason for that and why we have seen that this CapEx getting converted into EBITDA or revenue has taken longer than the industry EBITDA?

Yes. The last year, this FY '21 was impacted by the COVID. That was one of the reasons. And for this year onwards, that's why this year onwards we'll see a sizable volume growth. We are guiding almost 30% this year. And next 3 years, almost we'll see some another 30%, 40% volume growth.

Sir, aiming for 50% to 60% of the industry which we cater to agro and pharma has been phenomenally valuable in the current year. So that kind of growth number is also not getting reflected in the current year numbers and the overall performance has been muted. Just wanted to understand a little bit more. Is that something that some of the projects have just got completed and have taken longer time in completion, and the impact in '22 numbers can be much sharper than what we are projecting?

Yes. It basically will -- again, depending on how the ramp-up and everything takes place in this year. So basically we are looking at around 25% to 35%. That is our current estimate for FY '22.

And the similar number should be for FY '23 as well because the money has already been spent on the CapEx, right?

Yes. So basically, from FY '20 to FY '24, we are looking at 1.7 to 2. So that will be the kind of thing which will happen within the -- over 3 years, this will almost doubling in 3 years.

And sir, just one on the extension of the previous participant question only. Sir, I mean you have given in your presentation that you look at improving EBITDA margin to almost 25% to 30%, which is given between '22 to '24, most are beyond '24 and '27. So this margin expansion, sir, which you're talking about is only possible after '24, not in a current scenario where we are having EBITDA margin of 22% right now will increase to 300 to 400 basis points in the next 3 years, or there will be no expansion in margin, sir?

Yes. No, that growth will happen in more of from '24 to '27 because that -- they are much more value added. Chlorotoluene will not be selling, virtually nothing, no OCT/PCT will be sold. Whereas here, we sell a lot of PNCB and PDCB. This is substantially value added. And also further downstream products on nitrochlorobenzene, chlorobenzene, we are adding more value-added products. So this jump of EBITDA as a percentage will more happen in that '24 to '27 period.

Okay. Okay. And sir, just last question, sir. Sir, on the BR and the money which was supposed to come, just to reiterate and brushing it up. You mentioned, sir, that $5 million, $20 million will come in FY '22, and balance $80 million will come at the end of FY '22. So that contract and the cash flows remain intact for FY '22. And we should be expecting by end of FY '22, we'll get another $80 million or any changes there?

No, no, that is maintaining.

So by end of FY '22, I mean, this year, we will get $80 million again, right?

Yes. Yes, but that has not been taken into the guidance.

Yes, yes. That's sure, sir. And just sir, only the last thing, sir. Any changes -- or any further development on the product or intermediate which you were making for the dicamba? Any further plan on that, that where you plan to go ahead? What you plan to do with this existing plant?

No, we'll be able to market that product. That's what I think, previously, I think in one of the questions I had discussed. And that plant also, we expect to reach maybe 70%, 80% capacity by FY '24.

FY '22?

'24.

'24. So -- okay. So this revenue guidance includes that plant utilization also, right?

Yes. Yes.

Next question is from the line of Amar Mourya from AlfAccurate Advisors.

A couple of things, sir. Number one, the capitalization which we've done in this year is around 100 -- around INR 1,100 crores. So can you tell us what would be the capitalization? Where this CapEx will be capitalized?

Yes. INR 450 crores is for that Dahej SEZ. Then chlorination plant at Jhagadia will be around INR 250 crores. And then we also purchased some land at Gujarat and in Pharmaceutical segment also and R&D centers. So there will be another around maybe INR 150 crores. And another will be maintenance CapEx and some further specialty chemicals. So that will be the broad bifurcation.

Okay. And sir, this INR 1,200 crores of WIP which we've seen here, this is basically -- what would be the breakup of this?

Yes. So I will take this question now. The breakup of that would be products which are -- which are under execution, the expansion of nitrochlorobenzene capacity, the scale-up on -- or expansion on the USFDA pharma facility, the capacity which is coming up for the second and third long-term contract. So these are the major ones. There has been a phase -- first phase of acid expansion and revamp -- acid division expansion and revamp. So that is also another. So these are the major ones.

So nitrochlorotoluene -- nitrochlorobenzene or toluene?

Benzene, benzene.

Okay. So NCB capacity, if I'm not wrong, it is already increased, right? We already increased the NCB capacity in third quarter.

There were 2 phases. The NCB capacity 3 years back we announced it, from 57,000 to 75,000 tonnes. We are back -- we started the journey of announcing it or expanding it further from 75,000 to 1,08,000 tonnes. So that particular expansion from 75,000 to 1,08,000 is done now..

Okay. So that will happen in '22?

First phase will happen in '22. As Mr. Gogri said sometime back in the call that the commitment have been delayed. So part of it might just be going into next year.

Sir, just for clarification. You said NCB will expand from 75,000 to 1,08,000. And chlorination, we are expanding from 1,10,000 to 1,75,000, right? So that also plans -- that is also the part of the CapEx?

That is completed. It is already commissioned and operationalized in FY '21.

Okay. So that is operationalized. NCB got delayed, and that will happen in '22 partially and '23 partially, right?

No, no. So NCB are anyways scheduled for FY '22, yes.

Okay. And these 2 -- the 2 projects of the 2 nitrotoluene and 4 nitrotoluene, what would be the CapEx of that would be considering in this INR 1,200 crores?

There is no 2 nitrotoluene, 4 nitrotoluene.

6 chloro 2 nitrotoluene and 2 chloro 4 nitrotoluene, these were the 2 CapEx, right?

No, no, no, I don't know. From where that name is coming I don't know.

So the toluene CapEx, sir, the expansion in toluene...

That chlorotoluene will come up. But yes, as a part of the future strategy, it may -- I'm not sure whether this will have that names or not.

So this INR 1,200 crores includes only benzene, USFDA, the long-term second and third contract, right?

Yes.

Yes. And some other specialty intermediate revamp and expansion.

And sir, the second and third long-term contract, when the plant will be commissioned for that?

The second one will happen this -- we are targeting to complete in first half. But depending on the COVID, it might go into Q3. And the third contract will be in the second half of this year, FY '21.

Okay. Okay. And sir, lastly, on the CapEx. We indicated that we've already done INR 1,500 crores of CapEx in financial year '21 -- around INR 1,300 crores. And we intend to do INR 1,500 crores kind of a CapEx in financial year '22 to '23, correct?

Yes, yes.

And then remaining going further expansion at INR 5,000 crores. So out of that around INR 1,700 crores kind of the CapEx will be also done in '24, correct?

So that is a separate INR 3,000 crores to INR 3,500 crores which will happen over this 3-year period. That will be for the newer product range.

Okay. So meaning the INR 9,000 crore or INR 10,000 crore target of revenue which we are targeting is largely based on the current gross block of INR 3,500 crores plus the WIP of INR 1,200 crores and the CapEx of around INR 1,500 crores, which we are going to do by financial year '23. Is that a fair assumption?

Yes. Yes. Yes.

So then basically, your targeting is around something around 1.4 to 1.6 kind of a figure of turnover ratio. That is the math, right?

Yes. I think that number might -- I think you have done that calculation. That method is correct, yes.

Perfect, sir. Perfect. And then the INR 5,000 crore additional which we are targeting is largely in what kind of chemistries then?

Yes. It's not INR 5,000 crores. It will be INR 3,500 crores because INR 1,500 crores is counted in this one. So that chemistry basically will be -- one is a base chlorination, then ammoxidation, photochlorination and AHF fluorination. There is a Balz-Schiemann reaction and Sandmeyer reaction, bromination. There's a host of new chemistries which we'll be getting into.

Next question is from the line of Atul Bhole from DSP Investment Managers.

Yes. Sir, my question is about the fund raise which you have announced. So have you decided the kind of funds -- I mean the instrument you will use for the fund raise?

Not yet.

Okay. So it may not be 100% equity or -- so it can be a partial of equity and debt or debt only?

Yes. That's -- resolution right now is first. Then we'll be studying what should be the combination and what should be the instrument.

Next question is from the line of Aditya Khetan from East India Securities.

Sir, my first question, sir, in this quarter, so both the specialty chemicals and the pharmaceutical business has taken a shutdown. So what could be the increase in the fixed cost which has been taken in this quarter cumulatively?

Chemical about INR 12 crores were the expenses because of that. And pharma, maybe another INR 2 crores, INR 3 crores.

Okay. So INR 15 crore increase in the fixed cost. Okay. Sir, my second question, as this has been already asked by an earlier participant, sir, the $20 million cash flow has been received or your -- so yet to receive that money?

No, $15 million has been received.

Okay. $15 million has been received as cash flow.

For the whole year.

Okay. Okay. And sir, the third question, again, so on the CapEx side. So this INR 5,000 crore CapEx, so INR 1,500 crores we are targeting from the raising of funds. Almost INR 2,000 crores would be from the cash flow which the company is generating and remaining would be from the debt. So is this a fair math?

Yes. There will be some debt element also. And we will be getting the shortfall -- this fee also. So part of that will be there.

Okay. Okay. And just one last question from my side, sir. On the pharma business, so sequentially, there has been a dip in the margins by 259 basis points. So what is the reason for this?

No. In the current quarter, we had this shutdown, which resulted in -- and also, it depends on the product mix that ultimately comes out every quarter. So this quarter, we had a few products which were having less margin that came out in the production because we will have a multipurpose plant, yes. But I think...

Is this because of less demand or something? Or what could be the reason for it?

Yes. See, we are operating a facility where we manufacture 48 products, APIs, then almost another 50 intermediates. So we manufacture close to 100 product. Depending on the demand of the products and time to time we have to maintain the position of each and every products. So quarter-to-quarter, there could be such variations, which can result in INR 5 crores to INR 7 crores up and down in EBIT number.

Okay. Okay. And just one more question, sir. Any call has been taken on the pharmaceutical demerger part?

I think the committee is examining. We have formed a committee which is examining all the options, and they will take a call in due course of time.

Next question is from the line of Bobby Jayaram from Falcon Investments.

You forecast for revenue quite far ahead and the spend for profit. But for revenues, you need the RM prices, right? You need to forecast the oil prices, too. And for profits, you need to know the prices of your intermediates. So how are you so confident of those then that far out?

You rightly mentioned on oil. So that will be a constant raw material prices generally. With the revenue guidance, if there's a change in the crude prices, which increases benzene or toluene prices or decreases the prices, that will impact the top line. But our basic business model is a raw material cost pass-through model, so it doesn't impact the absolute EBITDA. It is that top line might change, if benzene is INR 50 or INR 150. EBITDA doesn't change much. It is the top line which changes. So this is when we are giving the top line guidance, it is based on the raw material prices, which are -- oil more or less remains same. So EBITDA guidance, which will be more or less maintained, but the top line can all depend on oil price or sulfur prices.

So you're basing the top line guidance to today's oil prices?

So that will be based on the current prices for benzene.

Okay. So current oil price -- if the oil price is decreased by half, it will go down?

Yes. Linked to that, depending on our benzene consumption and toluene consumption. So whatever will be the impact, that corresponding impact will come.

Okay. The more important, your EBITDA numbers, a lot of the price of today has been very much influenced by China and the pandemic issues. But going far out '24, '25, '27, all those factors would pretty much stabilize. So how do you know what the prices would be for the intermediates?

So that is basically what happened. We have taken what are the prices in a normal circumstances and some inflation increase in that, so that has been taken into it.

So you have based minimum -- conservative basis, right?

Yes, yes, yes. Sometimes in a lot of time, you get a onetime increase. But in overall, our guidance, that has been removed. And that is based on in under normal market circumstances what are the typical margins, that has been taken.

The next question is from the line of Harsh Bhatia from Emkay Global.

Yes. I just had a couple of bookkeeping questions. Firstly, on the other noncurrent liabilities over the year, FY '21, it has decreased from INR 550 crores to INR 220 crores approx. So as I understand it, the last part of this is towards advances from customers which have long-term contracts. If you could throw some light as to what pertains to this INR 220 crores on the balance sheet, that would be really helpful.

Yes. So it's basically right in terms of reflecting that it is -- a larger part of that is related to the advance coming from the long-term contracts. Now as we are moving towards the commercialization phase, there is a plan in which the advances will get adjusted. So a certain component of the noncurrent liabilities representative -- existed over a period of beyond 12 months is now coming into within 12 months. And this has moved from noncurrent liabilities to current liability. So that is getting movement within 12 months and beyond 12 months.

Right. So this is all related to the 3 contracts in place or at least the other 2 contracts that are remaining, right?

So this is related to the first and the second contract. In first contract, we've got -- already have some advance, which will be existed against a fee. And also on the second contract, there's an advance.

Okay. And lastly, on the noncontrolling interest, it has reduced significantly. Any commentary on that front?

So we had one [indiscernible] where we have 60.2% stake over the last fortnight of March. That take things to 50%. So some of our subsidiary became a joint ownership entity. So that was a change related to that.

Next question is from the line of Nitin Tiwari from Yes Securities.

So the new product lines, the high-value products that we are talking about, so the actual revenue over 2024 and '27, so which basically industries and markets would be targeted? What would therefore be the strategy, if you could like throw some light on that?

Yes. So basically, it will be in pharmaceutical, agrochemical and dyes segment, polymers, rubber chemicals, very widely used products, end use markets.

Right. So I was just trying to...

50% to 60% will be in pharma and agro combined. And 40% to 50% will be more on your discretionary. So that will be a broad composition.

Right. No, I was just trying to understand more from the functionality perspective that what would make these products high value-add as compared to the current line of products that you already have? And what's the change in [indiscernible]? What solutions are they going to provide?

The value addition in the sense a number of chemistry steps will be add. So that creates a value addition. So if we have a 2-step process versus the 4-step, then value-added then becomes higher. So your raw material costs and the sales price difference goes on increasing as we have more and more steps. So we start with benzene, which is less than $1. Then if we make products with $5, $6, $10, $20, $30. And now we are looking at $70, $80 also. So that's the value addition we count. So when we become $80, then you expect that your raw material costs will not be more than 30%, 40% in that product.

Next question is from the line of Roshan Nair from Equentis Wealth.

So going forward, what will be the revenue mix you will be envisaging between pharmaceuticals and spec chem?

I think around 75-25 range, 75% to 80% on specialty and 25 -- around 25% on pharma.

Okay. And what would be the immediate projects that will -- you will be taking up on CapEx plan? So the current phase is over now? Which will be the immediate projects that you will be taking now?

Yes. This chlorotoluene related product chemistries, then this universal -- UMPP kind of a plant and pharmaceutical related EMPT. This will be the expansion also which we will look at.

Okay. And so, from the specialized product portfolio, so what was the contribution that you are envisaging going forward? Can you give some rough idea on that?

Can you repeat the question?

From the specialized product portfolio, since you are undertaking any downstream projects, so what will be the guidance going forward? I mean in what direction will it contribute to EBITDA? Can you provide...

Yes. What we say -- about 25% to 30% EBITDA margin will be there for that. Some places, it can be 40%, 50% also. It depends. Broadly, overall as a market, we are looking at 25% to 30%.

Next question is from the line of Bharat Shah from ASK Investment Managers.

Chetan, I'm a bit confused. If you can just clarify. Maybe I couldn't hear it properly. In terms of business, we are seeing some roughly INR 5,000 crore for turnover for fiscal '21. We should probably be about double that number in fiscal '24. And by fiscal '27, we should be about 3 to 3.5x that number, so about INR 15,000 crore to INR 18,000 crore. And EBITDA margin, compared to about 21%-odd that we have clocked for the last year, in this 6-year period, should range 25% to 30%. Have I understood this correctly?

No, the 25% to 30% is for the newer products.

Okay. And therefore, the overall margin because of that will get lifted up?

Yes. Yes. Yes.

And turnover doubling in the 3 years and then roughly adding another INR 5,000 crores to INR 8,000 crores in the next 3 years further?

Yes.

Next question is from the line of [ Rohit Jain from Tara Capital ].

Can you hear me?

Yes, we can, sir.

Yes. Just 2 questions. One is a clarification question. So over FY '22, FY '23, that CapEx is going to be INR 1,500 crores for each of the years? Or is it going to be INR 1,500 crores combined?

That is as regards the existing product portfolio, what we have. It's only INR 1,500 crores combined.

Okay. Fair enough. And second, I'm sorry to belabor that point, and it's a continuation of what one of the earlier participants said. In a dynamic world where so many variables are out of our control, does it make sense to sort of a project that far out, I mean, from FY '27 to -- FY '24 to '27 based on investments that are going to happen in the future? How much of it is in our control? How much of it is out of our control? I mean what I fear is because of change in variables, are we not sort of putting ourselves under too much of a spotlight by projecting confidence so far out?

No. Basically, you see in the chemical, there are only China and India, which are -- there are 2 players. And there are -- obviously, there is appetite on China Plus One. And a lot of these products we will be the only player in India. So from market size, we are fairly confident on that side. And then we have also analyzed the downstream product, how the demand is growing and what is that situation and customer appetite also. So then we have given a range. It's like on profitability it is 3 to 4x, and turnover is 2.5 to 3.5. So it is a -- it's not a very, very narrow range. I think it's a very reasonable range of things which we feel that we should be able to hit.

No. I mean I'm tell you where I am coming from. Let's say, we haven't had a full-blown recession over the last many years. I mean COVID was a very sharp spike and then an equally sharp spike up. And we supply a lot of our products to cyclical industries. Let us assume that if we have a 2, 3-year recession over the next 7, 8 years, it's not outside the realm of possibility. So then all these projections sort of become moot. So I'm just struggling. I mean, how do we -- being a supplier to cyclical industries, how do we have visibility that far out?

Yes. Basically around 60% will be noneconomic, nondiscretionary. It will be in agro and pharma. If you take pharma, both the segment combined will be more than 60%, which is not related to discretionary so will not be related to any recession-related cycle. So agrochemical has its own cycle. So sometimes, in 1 year or 2, it can be going up and down. And that also -- agrochemical also, we are not restricted to one geography. Nor are we restricted to one kind of herbicides, fungicides. We have herbicides, fungicides, insecticides going into different geography, different crops, so very quite well spread out market on the agrochemical side also. So that -- the recessionary part, it's not like we are in only in auto exposure. Then suddenly, everything gets kind of a collapse situation. We have a very widespread end use exposure. So that's why I think broadly this range we should be able to hit. That's what we think.

Next question is from the line of Vikas from Spark Capital.

It's Vishnu from Spark Capital, sir. Sir, on your incremental investment, this INR 2,500 crores to INR 3,000 crores, if you could broadly break it down under, say, subcategories because I see that you have written on chlorotoluene value chain, that UMPP. If you could just broadly bifurcate under each category how much would we be spending. And also, if it is possible, how much of this incremental CapEx is going towards import substitution or an export opportunity, if you could give some breakup on that.

Basically, there will be -- 3 kind of manufacturing plants will be put. Certain plant will be totally dedicated, like chlorination. OCT/PCT becomes a totally dedicated plant. Then photochlorination, ammoxidation which are called single chemistry, multi campaign based plant.

If you could say a little bit CapEx number also against each of these...

Yes. First let me explain. There are 3 kind of plants. So one is dedicated, and second is a single chemistry, multiproduct. So that single chemistry, multiproduct, that can be a chlorotoluene product also being chain also and even nitrochlorobenzene or chlorobenzene chain also can be used there. And third is a UMPP plant, multi -- where the chemistry as well as the product can be different. It becomes difficult to allocate the assets and how much asset will go into -- so it will not be a dedicated entire. The range of chlorotoluene will be in a particular dedicated asset, and other products will be in other dedicated assets. So if we have AHF fluorination process, this should be called process blocks. The process blocks will have a product coming from various value chain. It can be nitrochlorobenzene, chlorobenzene, nitrotoluene and chlorotoluene. We will have 4 value chain. So it cannot be directly linked to a particular value chain and then asset one on one. And regarding the import substitution and exports, substantial portion of our business will come in that 2 buckets.

I mean, if you could split that, sir, I mean, import substitution, how much would that be and export opportunities? Let's say if 100 as a pie, 50-50 or 70-30 in broad...

Yes. It will be more or less on equal.

Okay. Got it, sir. And just if we see that the last 9 months profitability and excluding the 1k because we had a very bad quarter because of COVID, we see that if you strip the $5 million that we get on a run rate, the overall EBITDA margin is slightly weaker compared to the last year as well. And especially given that next year onwards, we won't have this INR 150 crore run rate going up, so what should we be seeing as a near term margin will look -- materially inch up the other products or rather the profitability inch up in '23 to kind of maintain our run rate? If you could just explain on this, sir.

Yes. Basically, it's '23 and '24, the volumes of other products will come up. So that will drive -- you are right. The shortfall fee will not be there in the next 2 year -- in FY '23. But the volume from other products could compensate that. And this contract 2 and 3 will have a full entire year under operation.

So one of the contracts, if I'm not wrong, is actually a low margin because it's a full cash upfront. It could also probably drag a little bit.

On -- going on an absolute percentage. But we are generally looking at an absolute EBITDA level. As a percentage, maybe that can be a dip.

Okay. So what should be the rough margin -- the EBITDA margin that we should work with, sir? So we closed probably around 22%. Any rough guidance on this at least in the near term next 2 years?

Yes. That's why FY '24, virtually, we have said it's more or less same. Turnover and EBITDA growth will become more or less similar. So current margin will -- in FY '21 should sustain in FY '24 also. That's what we'll see.

Next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance.

Sir, just one clarification. So if I look at...

Sorry to interrupt, Mr. Pandya, but we are not able to hear you. Your voice is very faint.

Okay. Okay. Okay. Is it proper now?

Yes, much better, sir.

Okay. So if I look at the current gross block -- capitalized gross block, that must be around INR 5,000 crores, and we are at INR 5,000 crore of sales. Now over the next 2 years, you are talking about CapEx of INR 1,500 crores, plus I'm assuming this INR 1,300 crore of work in progress getting capitalized. So for incremental INR 5,000 crore of sales over next 3 years, we only need INR 2,700, crores, INR 2,800 crore of CapEx, which is almost 1.8, 1.9x asset turn. If this is true, then can you explain how it will happen? Or correct me if I'm wrong in my understanding.

There will be always a ramp-up of the asset, which is already capitalized. So that ramp also takes place. So it can be that next 2 year -- going to be capitalized in the next 2 years, is going to be reflecting in the third year turnover. So also whatever is capitalized also will reflect into the turnover.

Next question is from the line of Ankit Gor from Systematix Shares.

Sir, my question with regards to what sort of risk you envisage while giving this guidance for '24 and '27? And pertain to that, what events can make you lower your guidance in future? That's my first question, sir.

Generally, the current Chinese currency depreciated against Indian currency. That will be one of the key which can impact your EBITDA margin. And that will be always a risk which will remain because we are mainly competing with China in that sense. Other than that, we are quite well spread in our end use, our -- we don't have any customer concentration and geography also. So then a number of products are also very large. Facilities are also located at very different locations. So significantly, one kind of event impacting your profitability by 25%, 30%, I don't see that kind of thing -- risk.

Okay. And to manage this considerable guidance, what sort of management bandwidth we currently have? And how are we thinking about it going ahead to manage the scale which you are guiding at, second line of management for [indiscernible].

Yes. Yes. Yes. Actually, that was also in one of my -- this part of my speech that last 2, 3 years, a lot of human talent side we have strengthened by recruiting senior-level professionals from outside companies. So we have got Chief Manufacturing Officer. We have a Chief -- CHRO, Chief Scientific Officer, Chief Project Procurement Officer and Chief IT Officer also we have taken. So we have strengthened human talent across various functions in last 2, 3 years as we have visualized where there is a tremendous growth opportunity. So we'll have to strengthen not only R&D but also on manufacturing and projects in information technology, for digitalization and all. And strategy also, business development also, we've got IIM, IIT graduates who are part of the team.

Right. And sir, just the departmental head -- are these guys are coming -- are from the reputed MNCs or if you can give that background as well. Just wanted to understand their remuneration and how our employee costs will be in [indiscernible]. I'm just trying to understand their background, not from a remuneration perspective, but more from a background perspective.

Yes. So we have people from Syngenta and people from Aditya Birla and Vedanta and from Reliance and from Reliance and from Deepak Nitrite, then from PI, SRF, UPL, so across companies we have. From Reliance to Aditya Birla on one side, then Indian company, PI, SRF, UPL and Syngenta.

Right. And lastly, sir, from my side, just any time line to fund raise? And will this be utilized, whatever fund we will raise, this will be utilized to achieve FY '24 target or '27 target?

So basically, this -- overall, we are going to spend this INR 4,500 crore to INR 5,000 crore CapEx. So money will be used for general combined purposes. It will not be specifically linked to a particular project as such. And getting time line and all, we have not yet finalized. We have just passed the resolution. Now we'll work out the time frame.

Next question is a follow-up from the line of Aditya Khetan from East India Securities.

Sir, first question is what would be the maintenance CapEx for the full year FY '21 on a CapEx of INR 1,300 crore?

That would be about INR 200 crores to INR 250 crores.

INR 200 crores to INR 250 crores. And sir, second question is on the interest cost side. Sir, do we have any figure for the full year mark-to-market gain? What we have got in FY '21, when I look at on a Y-o-Y basis, the number has declined quite sharply. Is there any mark-to-market gain which we have received for the full year FY '21?

Yes. In the range of around INR 6 crores to INR 7 crores.

INR 6 crores to INR 7 crores. But still, sir, the number is showing a quite amount of difference.

We have looked at the general [ implicates ] also falling off significantly on a year-on-year basis.

Okay. Okay. Sir, third question is on the NCB business, sir, do we have any sort of number? So what would -- so what is the import substitution side in the NCB business now? Because there is one more company, Bodal Chemicals. They are also entering into the NCB business by setting up a 55,000 tonnes per annum capacity. So now the -- so that capacity will come by next year. But -- so I just wanted to know what would be the import substitution size of this. And we are also expanding into this segment only. So what is the outlook? And what would be the sizes, if there is any idea on this side?

Yes, nitrochlorobenzene is -- para nitro chloro benzene is currently imported. And now because the para aminophenol -- government has introduced PLI scheme. So we see the substantial expansions coming have been on downstream products. This will increase the PNCB demand in India. And regarding ONCB, we will be expanding our downstream capacity to manage ONCB.

Okay. And regarding the Bodal Chemical expansion, any outlook, sir? Like how are you looking to compete with them? Or what would be the commentary? Can you give us some idea on that part?

Yes. As I mentioned, there is a lot of para aminophenol investment will come up in India. So that will increase PNCB demand substantially. And there are a lot of other downstream products like para [ anacyline ] also is not made in India. So that also -- capacity is going to come. So -- but downstream import substitution also is going to take place, which will increase the demand of PNCB.

Ladies and gentlemen, we will take that as the last question. I now hand the conference over to Mr. Rajendra Gogri for closing remarks. Over to you, sir.

Yes. It has been a pleasure interacting with you over the call. We thank you for taking time out and engaging with us today. We value your continued interest and support. If you have any further questions and would like to know more about the company, kindly reach our Investor Relations desk. Thank you.

Thank you very much, members of management. Ladies and gentlemen, on behalf of Aarti Industries, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.