Alkyl Amines Chemicals Limited (506767) Earnings Call Transcript & Summary

Good evening all. On behalf of HDFC Securities, I welcome everyone to Alkyl Amines conference call to discuss the results for the quarter ended September 2020. It is a pleasure of having with us top management team from Alkyl Amines, represented by Mr. Yogesh Kothari, Chairman and Managing Director; Mr. Kirat Patel, Executive Director; Mr. Chintamani Thatte, General Manager, Legal and Company Secretary; Mr. K.P. Rajagopalan, Corporate Adviser. And without further ado, I will now hand over the floor to the management for making the opening comments. Over to you, sir.

The conference are Kirat Patel, Mr. Chintamani and Mr. Rajagopalan. I welcome you all. I hope things are okay from the health point of view as the company, Alkyl Amines, has been doing quite well. And even though COVID-related issues came up in the month of April, we were able to sort of picked up our pace. We have various protocols, which sort of helped us in going through the whole process. Still, we are going through the same process having the proper protocol because the COVID has not gone away. So as far as we are concerned, since we are taking a lot of care, operations are quite and are normal. Fortunately, the marketing is also quite normal. And we hope it continues. We hope that the COVID issue ends soon. What I would do now is maybe give it to Mr. Kirat Patel, he can explain our performance of this year. And then later on, we can go for a question-and-answer session. Thank you.

Thank you, Yogesh Bhai. I will just briefly go through the numbers, which you probably are already aware of, as you must have seen them, which were declared yesterday. The half year ending September 30, we have been able to do quite well compared to the similar half year period last year in spite of the fact that the first half -- first quarter of this half year was a bit of a disappointment because of the April COVID situation where we were not able to run our plants and keep the supply chain going full steam. However, in the second half, we have been able to catch up with our lost opportunity, and we are doing at an optimum level now. Fortunately, the demand, and most of our demand is from the pharma sector, has been quite good. And even the other industrial applications are soon catching up, whether it is in automobile or in copper chemicals or in that chemicals or oil and gas, is slowly improving. So we look forward to second half, which would be, we hope, in terms of volumes and value at least back to normal. As you can see from the numbers, our profitability has been fairly good, and mainly on the basis of benign raw material prices and a little tightening of the market of end supply. So our finished good prices have also been fairly good for -- from our point of view. So given that, and yes, because of the COVID situation, there has been some degree of delay in the first quarter for our projects. But in the second quarter, we have been able to get all our projects back online with manpower and suppliers' workshops opening up steadily. So we hope to commission most of the projects with just a couple of months delay here and there. I think that is about the summary of the half year. Maybe now we can throw it open for questions. Thank you.

[Operator Instructions] The first question is from the line of Jason Soans from Monarch Networth.

My question is, just wanted an update on the CapEx of both the plants, which is your Acetonitrile plant as well as the amine derivatives plant. Just wanted an update on that. And when is it going to be commissioned? And also, just wanted to know in terms of this entire CapEx, how much of the CapEx will -- is in new value-added products? And what will be its application? Just some color on this. Is it going to be applicable in pharma only? Or is it going to have some other applications in other areas?

Yes. I think our CapEx from the Acetonitrile plant is coming up in Dahej, a new plant, I think it will come up in -- by the third quarter of 2021. And the other derivative plants, some of them are already been commissioned. And the CapEx for the Acetonitrile plant is around INR 170 crores to INR 180 crores. What was your other question?

Sir, I wanted to know this CapEx, how much of this CapEx will -- is in new value-added products?

Well, the...

Well, I'm talking about the amine derivatives plant basically. The entire CapEx, basically, how much of this will be new -- in new value-added products?

Yes. Kirat?

Yes. Both these CapEx's for the derivatives plants, the 3 CapEx's, which we have, are all in existing products at the moment. And when -- I'm not understood what you mean by value-added. But in the sense that if you mean that there are a derivative of the amine, yes. There are derivatives of methyl and isopropylamine. And both have been commissioned -- all 3 plants have been commissioned. A little bit of debottlenecking is going on in the methylamine derivative plant, which will be commissioned in the -- by the end of this month.

Okay. Okay. And my next question is, just wanted to know how much of Acetonitrile as a percentage of revenue, how much is Acetonitrile contribute? And any view, I mean -- understand that Acetonitrile pricings are currently elevated due to shortage globally. So just wanted your view on the sustainability of these prices.

I think we don't give much information on Acetonitrile. We are currently going through a phase, which is helpful to us. One of the larger plants is closed internationally. And the demand for Acetonitrile has been quite steady. So that's why we are able to sell and deliver market, which we are not able to cater because of our own capacity being restricted. So now with the new plant, which will come up in next year, we would be able to fulfill that type of demand. We are not giving much details on Acetonitrile because it's something which we would rather keep it to ourselves.

Okay, sir. And my last question is just wanted to understand, I mean, this -- the government coming up with this new PLI benefits, how do you see it benefiting Alkyl Amines as a company?

It will help us because some of the new players will come up, taking advantage of this PLI, some new users of our amines and users -- as a manufacturer ourselves, directly, we may not get much advantage, but there would be new companies coming up who will be putting up investments, which would need some of our products. That's how it will help us.

The next question is from the line of Dhruv M from HDFC Asset Management.

Sir, is it possible to share the volume value split for the quarter?

No, we don't give information on various products and their values individually.

Okay. So I mean, in terms of percentage. So if your overall revenue is up 24%, how much of that will be for the quarter on a Y-o-Y basis? So how much would that be volume and...

See, product-wise, we won't be able to give. Overall where these products are sort of a specialty product, something like that. It can be given. That Kirat may be able to.

Okay. I will give you the overall value. Overall, we have almost caught up with last year's volume growth. Of course, the value growth is higher because the prices are this year higher than last year.

Okay.

So it's about 1% plus/minus, same as volume and value. But you must remember that, that includes the first quarter, which was about 10% down.

Okay. I was referring to 2H -- 2Q. So you -- this one.

2Q, okay. Yes, yes. So that's about 20% up, 2Q.

The volume. Volume.

H2 is about caught up with H2 of the previous year in volume terms. And values so you have.

Yes. Okay. Sorry, sir, just to clarify again, you mentioned volume in 2Q is up 20% on a Y-o-Y basis.

On Q2, yes.

Okay. So largely, the growth in revenue is driven by volumes, and it is not much of value. I mean, pricing is not the key factor. It is volume, which is driving growth.

It is a bit of both.

Okay. No I mean...

It's a bit of both because the first half was a little lower. So I think it's a bit of both volume and value -- more volume than value at the moment.

Yes. Because sir, if I do just the math, your revenues are up 24%. And if you say, volume is 20%. So largely...

Yes. So I gave you a wrong number. It's about 18% or something.

Okay. Got it. Yes, yes. Majority.

And there is a product mix issue also in this. So it's like-to-like becomes a little difficult to recognize.

Got it. And sir, you mentioned that the finished book pricing is also relatively steady. So is it primarily driven by demand, which is very strong? Or there are some supply chain bottlenecks also, which are still continuing and you're benefiting from that?

No. I think it's the demand. Our view is that it's a demand because, as Yogesh Bhai said, no, the PLI scheme and other initiatives of the government with whatever we are having troubles with China are probably playing a role in the pharma and the agro industry, all pushing more volumes. There's a lot of demand. Of course, the COVID situation and the health -- generally, the health sector is pushing quite a lot. And some of our products go into antivirals, which -- segment is at the moment going quite strong.

Okay. I was coming to that. So I just wanted to probably understand a bit more on the final end-use application in pharma. If you can share anything on that. I mean where in pharma does the application happen for some of our major products and where demand is pretty strong? Just to have an independent segment of where we can probably move for the next few years.

See, the products -- our products have various end-use applications. Many pharma end uses like anti-diabetes, like metformin, then -- I mean, drugs for blood pressure and all, various applications are there relatively moving forward. So we have -- practically most of the pharma companies in India would be our customers in a small way or a big way. So because a large number of users, which we have there. So I mean, it's a very vast area. To give you an example, we have more than 2 dozen end molecules, which use our amines. So -- and as Yogesh Bhai mentioned, metformin, the antibiotics like ampicillin and amoxicillin, the blood pressure medicine and all, all these are very important end users, and as I mentioned, antivirals. So it's a whole range from one end to the other, almost 25, 30 end molecules, which use our amines in the pharma sector alone.

Got it. And sir...

Therapeutic segments are covered.

Got it. My point also probably going a bit further here is that we have seen some strong demand growth through the last few quarters or probably a few years now. Part of this, I understand, pharma is a big segment for us. Now I mean, pharma has been doing quite well in India for quite some time. I was understanding -- I was trying to understand what is driving the delta in growth. So for example, how COVID is probably helping you in that growth? As you mentioned, antiviral as an application. So is it something more that you can probably share here?

COVID has definitely helped to some extent but not so much. A few of the products are going into some of these drugs, which are going for COVID-related medicines. But I mean, we are not dependent so much on that. And -- but it has helped us, definitely. And I think for the next few quarters, I don't think there will be any reduction in that.

The next question is from the line of Amandeep Singh from AMBIT Capital.

So firstly, on Acetonitrile, can you help us with current realization for the product and with capacity expansion by competition and yourself? How do you expect the realization to move? Also, if you're hearing of any capacity addition in Acetonitrile globally?

Let me tell you again that we don't give too much information on Acetonitrile, but all the capacities and all that have already been mentioned. What size plant we are putting up in Dahej, what capacity we have today, has already been mentioned. And to the best of our knowledge, Balaji Amines is one, which is putting up -- they've already started manufacturing Acetonitrile. But that capacity is quite low compared to ours. And Deepak Nitrite, of course, they have a company, which also makes Acetonitrile. So these 3 companies together will make Acetonitrile. Anybody can put up Acetonitrile plant. It's not that difficult. But people just don't do it because in the end, the type of product, the quality of the product is very -- one thing which we have been able to achieve after so many years of trial and errors. So it's not -- it's easy, but not that easy, let me put it this way.

Sure, sir. That's helpful. And sir, now with your competition also adding 40,000 to 50,000 tonnes capacity for methylamines, along with your Dahej expansion, can you help us understand how demand supply situation pan out and also consequently impact on realizations?

Well, methylamine, we ourselves are short of methylamines for some of our end users. So we ourselves consume a lot of it internally. Some of these products are being exported also. And the good part of methylamine is that many small scale producers also would be putting up plants, which would be needing methylamines in small capacity. But until -- I mean, since -- in the last few years, the availability was always an issue. And methylamine is one product, which is not so easily importable. So availability itself will drive growth for products based on methylamines. The capacities from methylamines will go on -- I mean, the capacity will go on coming. But in a year's time, 2 years' time, they get absorbed in. Our own capacity, we're expanding it, which will be coming on stream any time now. From our existing part in Dahej, we are expanding it by 50%. And our own Patalganga plant also, we use it when we need to use it. So that's why we are quite comfortable.

Sir, that was really helpful. And also regarding ethylamine. So even your competitors plant is expected to commence in 4Q FY '21 onwards. So can you understand how would be the demand supply situation for ethylamines?

The same situation happening in methylamines also because we have a very large part. We are in the process of designing a new plant also, which will take maybe another a year or 1.5 years before it is put on stream, but we will also be putting up a new plant. Our existing plant in Kurkumbh plus we have plant in Patalganga, which we make ethylamines also. So we are very comfortable from point of view of availability because we also consume a lot of it internally. So from both point of view, we need ethylamines to grow also.

Sure. Sir, that was really helpful. And sir, what's your outlook on ethyleneamine market? Do you intend to get into this segment in near future after your competitor entering this segment through subsidiary? Or do you feel that current capacity is more than sufficient to meet the demand for these products, including piperazine?

We were already, through our associate company Diamines earlier, we bought out of it last year. But we were making piperazine and some of the ethylamines, ethylene DA amines and other things. But then we decided to get out of it because there are very large players internationally. And the Indian market itself in some products is good, but this can be easily importable also. So we as -- I mean, as we're thinking it would be good, it won't fit into our sort of scheme of things.

Sure, sir. Got it. And sir, finally, will it be possible to give some sense on the trends here on along with your outlook on volume growth and long-term sustainable margins?

For what?

For overall company?

Overall. Yes, we have been showing good growth since the last few years. And I'm sure we will continue it for the next few years.

The next question is from the line of [ Shanti Patel ] from [ Shanti Patel ] Investments.

My question is, when all these projects are completed, what will be our expected turnover approximately? And what will be our market share in India? And what will be our PAT margin? All these are approximate figure.

Kirat?

Yes. So if all these projects, the ones which have mentioned earlier in Acetonitrile and just now what Yogesh Bhai mentioned about ethylamines, if they are all commissioned and used to their full capacity, we could add -- at today's prices, we could add something like INR 1,000 crores more to our turnover. But obviously, this is not going to happen overnight. It is going to take time, 3 to 4 years as we ramp up production. So an expectation of reaching from what we are near about INR 1,000 crores, INR 1,100 crores to INR 2,000 crores in 3 to 4 years is a good optimistic estimate, I would say. We have been growing at, as Yogesh Bhai said, regularly in the past 5, 10 years and to the extent of 10%, 15%. And we don't see any reason why that should not hold for the future. So that is as far as the top line is concerned. As far as margins are concerned, it's a much more difficult thing to predict. Yes, we have been steadily improving our margins as we go along, partially through cost control, partially through benefit of raw materials. And of course, volumes help. So I think the comment on the margins would be a little more difficult to make, but we are optimistic that we'll be able to retain these margins as we go forward or at least to go in somewhere near.

And sir, what will be our market share in respect of various products at that time? Approximate?

Yes. So what happens is it varies. For example, methylamine with our commissioning of the expansion right now. In fact, in November, we have -- just now we have increased our capacity by 50%. As earlier announced, it was supposed to happen in September. But because of this COVID situation, it has got delayed by 1.5 months. So we are now maybe about 50% of the market share of methylamine. While in ethylamine, we may be a dominant player covering 70% or so, 70%, 80% of the market share. Some other products, we maybe, again 50%. So it varies. But there are a few products where we are, for example, Acetonitrile, we may be about 40% of the domestic market. So it varies. But I would say, on an average, you would look at about a 50% of the market would be ours, if you look at the basket. Of course, between Balaji and us, we do not have the same portfolio. We make some products, which we don't make. We make some products, which he doesn't make. So it's not a like-to-like kind of situation. And there are some products which we are almost 100% market share because we are the only people making it. Isopropyl, ethyl hexyl, these products and some derivatives, which we are the only people in the country making it. So it varies.

What about the debt situation.

Overall, you can say, yes, as a thumb rule, you can say about 50%, 60% of the market share is us.

Correct. That is a dominant position. And secondly, what about our debt situation, will be?

Our debt today is about INR 60 crores, which is basically ECBs. INR 30 crores is about -- is due this year for repayment, and INR 30 crores next year. We are already cash positive, as you can see from our cash and cash equivalent balance in the balance sheet. And we are net debt positive.

So effectively, after 2 years, probably, it will become 0.

It is already 0 because the INR 60 crores -- and we have more than equivalent cash and cash equivalent in the...

Cash and equivalent, right? That's all, sir. And secondly, only one request. This year, we were not send a physical copy of annual report. My request is please send next year.

It depends on what the -- SEBI and stock exchange at this time had told companies not to do it because of the COVID situation. Of course, at that time the printers were also down. Nobody was printing also.

That I agree with you. But otherwise, I have received from some other companies. So SEBI has given an option.

Yes. Next year, we'll be back to normal. Hopefully, the situation will improve. We are all hoping that we go back to our normal ways of operating.

The next question is from the line of Umang Shah from AMSEC.

Sir, what would be the capacity utilization at various plants? Sir, I have some questions.

I would say average around 70% to 80%.

Sir, and any product in which we are running out of capacity?

Well, some products may be coming to 90% level, but it's not so bad.

Okay. Sure, sir. And sir, I just wanted to ask this question on how do you figure out how much to forward integrate as regards to your own products. Like your competitor took a -- the competitor took a decision of going into DMF from DMAHCL, but you did not do that. So what was the rationale for that?

Sir, DMF is made from carbon monoxide, which is made from -- in India, they are making it from coal. And then you are getting into an environment type of situation, which, personally, I was not so very keen to go up of that. So that's why we have kept away from, but it's a good product range. Lots of product based on carbon monoxide, possibly. But that's about it.

The next question is from the line of Ravi Srikant from Muthoot Family Office.

Just wanted some sort of -- so on your presentation -- in your presentation, you mentioned that you had around 100-plus product. So how many of these would be, I mean, in amine derivatives and how many would be in specialty chemical? And a slightly related question. So globally, I mean, how many different types of amine derivatives manufactured, I mean, in terms of the number? And so do we manufacture in India as well?

Okay. Let me just give you a little background. Your first question is how many different types of amines are there. There are a huge number of amines, and they are largely classified into 3 categories, 4 categories. First one being, of course, we are an aliphatic amine, which is by the manner of alcohol plus ammonia making the aliphatic amine. Then there are the ethyleneamine that somebody mentioned earlier, which Diamenes and now Balaji Speciality are making, which is made from EDC and ammonia. There are ranges in each of these, like in aliphatic amine, there is methyl, ethyl, isopropyl, butyl. Similarly, in ethyleneamine there is EDA, DETA, TETA and so on. Then there is the third range, which is the alkanolamine, which is made from ethylene oxide and ammonia -- and propylene oxide and ammonia. So that's another range. So these are the 3 broad major ranges of -- and then there are what I call specialty amine. And then there are fatty amines, which is the fifth range. So there's a whole range of amines. Now if you talk about the derivatives, the derivatives are in probably thousands because the end use of these amines for every different end use, for example, aliphatic amine is, well, must be having at least 200 to 250 end use. And in India, we have not exploited all of it because it's not possible for so many plants to come up.

Sir, is it a complexity issue or I mean, it's a demand issue that we don't have all of them in India?

I think it's demand, mainly demand.

If there's small demand, then it's better to import the material.

Okay. And in terms of complexity, sort of which sort of group or subgroup, I mean, would be the most complicated in terms of manufacturing?

That is a difficult question to answer.

No, no. Yogesh, I think it would be the aliphatic amine should be the more difficult.

No, no.

But you can't say. Really, you can't say.

Then it is the volumes and the -- what type of margins are there and all.

Sir, I had volume question. Sir, on the...

Mr. Srikant, may we request you to please join the queue again as there are participants waiting for their turn. The next question is from the line of Nirav Jimudia from Anvil Research.

Sir, I have one question and a follow-up question to that. So the question is related to the opening remarks, which you mentioned that you are -- you have already debottlenecked our methylamine capacity. So what I want to understand from you is whenever we do the debottlenecking exercise is probably a CapEx lower than our initial CapEx because we already have the first phase of CapEx already incurred. So with this sort of debottlenecking, best process innovation through our R&D also helps us in terms of reducing our per tonne consumption of finished goods, or let's say, per tonne consumption of power cost, et cetera?

Yes, that is exactly what we do in our R&D. We have a separate division for process control, which is just doing that day by day and night. Wherever there is a possibility of saving either the raw materials or the energy, this group's aim is to bring it down. And then we take the advice of our senior people who have already been -- have worked in the plant or have a lot of experience in chemical engineering. And we try to come up with a better solution. So over a period of time, this has really helped us and brought down our costs. That's why we are so competitive also on the international level because our plants are as competitive as anyone, anywhere in the world.

Correct, correct. So sir, is it safe to assume that for the methylamines expansion what we have undertaken, there also all those cost savings would be permanent to us and probably would help us in further aiding the margin on a -- for a product category are some?

Yes, yes. Of course. Methylamine, overall now, since we'll be producing more from practically the same plant with additional -- only some equipment. There will be a lot of savings, both -- mainly from the point-of-sale energy. So this is definitely going to bring down the cost to some extent.

Correct. And sir, second question is on the opening remarks, you also mentioned about one of the sectors, which was not doing well, like rubber chemicals and foundry. So I just wanted to understand, like, if we compare with respect to the pre-COVID levels, has the volume started to show a growth? Or it is still catching up to that pre-COVID level?

It is -- slight improvement is taking place. When automobiles or the foundry chemicals because they go for -- in the automobile engines and other things. So there is an improvement there.

The next question is from the line of Rohit Sinha from Emkay Global.

Just one question on -- in Acetonitrile as you mentioned that the demand is subsiding for some time. So obviously, pharma is one major growth driver for us, but which are the other sectors, which are actually showing some traction or where we are seeing some growth opportunities?

Only as far as Acetonitrile is concerned?

Yes, yes, for Acetonitrile.

Generally, we are not finding much of any traction just now.

So it is only from the pharma side or you know...

All the areas are doing well.

Okay. Okay. So I mean, demand across your exposed industries, right?

Yes. Across all segments. All segments.

Okay. And secondly, in methyl and methylamines, how is basically consumption growth broadly shaping? I mean, at what regular interval we will see a regular addition of capacities in both the segments?

See, what is happening is in, especially in ethylamines, a lot of imports are coming into India from Europe and China. And that shows that there is definitely a demand, which is there in India, maybe because of the price or because of not availability of the product at the right time. So as it is, we are also putting up a new plant shortly. Balaji Amine also is -- plant shortly. So that will be taken care of. Only thing we have to be very competitive. That's what we are doing now. And methylamines, of course, hardly any import status.

Okay. So broadly, I mean, within a 2-year time frame, we'll be at the operating level for both these segments?

Yes. 2 to 3 years, definitely, yes.

Okay. Okay. And lastly, sir, would it be possible to share -- revenue share in pharma, agro and other segment maybe for H1, if not for Q2?

No, I don't think we can share this information.

See you can find that for an annual this thing on our website. And I think they will be updating it for the March '20 numbers. So -- but it doesn't vary too much. It's about 50% pharma, about 10%, 15% agro. And the others are following 3% to 5%.

The next question is from the line of Jason Soans from Monarch Networth.

Sir, you had mentioned that you have not entered a certain segment where -- earlier in the call as the competitor scenario is pretty high. And this chemistry is easily importable. I didn't catch the name of the segment. Could you please mention it again?

It was ethyleneamine. I think the question was related to ethyleneamine. And the question was why we did not feel -- we were already in it and why we got out of that business while Balaji made the decision of getting these.

Right, right. Okay. And you earlier asked is your capacity, which is coming up, both the plants, Amine derivative and Acetonitrile. I asked you how much percentage of this CapEx is new value-add. What I meant is you have your amines, which are your methylamines, ethylamines. That's a basic chemistry. What I meant is by value-add is you have a -- hello?

Yes, carry on.

Yes. What I meant by that is Acetonitrile or Aldega or morpholine. These are specialty chemicals, which are forward integrated. It's forward up the value chain. So just wanted to know in terms of that, in terms of contribution, what would the new capacity...

Okay. I think what you mean by value-added is what we call derivatives.

Right, right. Yes. The forward integrated products.

Yes, yes. So where we use the amine add-on another molecule and then add some value into the chain, right?

Right, right, right. That's what I meant. Yes.

Okay. So that's, as we have said earlier, our derivatives business is about 25% to 30%, about -- amines is about 50%, and specialty is about 25%, 30%, so it's in that ranges.

Okay. So it's in that range. Okay. And just one final thing. Just wanted to understand, your gross margin expansion has been very healthy. And that's basically -- if I compare H1, it's -- you've almost saved 10% on gross margins only, which has led to the 10% jump in EBITDA as well. So just wanted to know what is driving this gross margin expansion.

I think what has happened is also the raw material prices have been quite helpful, and some of the products have given us better values. That's the reason.

The next question is from the line of Karan Khanna from AMBIT Capital.

Congratulations on spectacular set of results. Sir, my only question was pertaining to your long-term sustainable margins. I think few quarters back in the earnings call, you mentioned that your sustainable margin are at the range of 18% to 21%. But clearly, I think if you look at the results over the last quarter -- last year, 1.5 years, your margins are higher each quarter. So from that perspective, given the efficiencies and given the product portfolio and the capability that you have built, can you help us understand what possibly would be the sustainable margin once, say, the Acetonitrile prices got revert in FY '19 and once the benign raw material prices were again start to suppose -- they were to start picking up, et cetera?

Sorry, can you go through the question again? Okay. I understood what Karan's questions. Karan, I think as I said earlier into somebody else's question earlier that our confidence level of volumes is much higher to the extent that we can say yes, 10% to 15% growth rate is something we can easily expect, even higher if we can push further. The margins where we are very reluctant to comment on because that depends on so many things on the raw material prices, on how competition behaves, on the demand structure. So as you can see, we were wrong in predictions earlier, and we could be wrong predicting it forward. So I would be very reluctant to tell you, yes, we can sustain this margin. I would say I would be cautiously optimistic that we can sustain this, but it's a very tough call.

With this -- as a follow-up to this is say the Acetonitrile prices rose to around INR 100, INR 110 what they were in FY '19. What could be the delta to your margins because of that? If you could help us understand that.

Sorry, you're saying that there was a time when the prices were about INR 100, INR 110, about 2 years ago, I think 1.5 to 2 years ago. And now they are in the region of INR 250. So what is the question?

So if the prices were to revert to INR 100, INR 110, what impact could that have on your EBITDA margin going forward?

That depends on what happens to the raw material prices also. The raw material prices have also shifted around. So it's a bit tricky question. I can't answer it straightforward.

The next question is from the line of Aakash Manghani from BOI AXA Mutual Fund.

I had 2 similar question as the earlier participant. I think you already answered that. So what remains is, if you could talk about some margin band for each of your segments. I understand the toughest would be the specialty segment, which is Acetonitrile, but -- or the other 2, which is amines, 50% of business derivatives, 25%. Could you give some range that you operate in and would more or less operate in the next 1 or 2 years?

Margins are not something, which we have in hand. In the sense, we can't control them. It is also depends on what rate the materials come into India also, China, Europe and all. And then we have to compete at those prices, otherwise the customers will not buy from us. So they go on varying all the time. But generally, the margins could be, I think, anywhere from 15%, 20% in -- maybe more also in some cases.

This question earlier, we had answered in one of the earlier calls that, see, it's not steady, the margin. And it varies quarter-to-quarter because of the product mix. And sometimes some products are doing better. Sometimes some products are doing worse. So the numbers that Yogesh Bhai said about 20% and all are an average, which comes out. But there could be products, which are 15%, some which are 25%, some which are 40%, but the weighted average comes down to about 20%, but it may not even be the same product of the previous quarter. So there is no guarantee that the aliphatic amines will have a bigger margin than the derivatives or the other way around. It changes.

The next question is from the line of Rohit Nagraj from Sunidhi Securities.

The first question is in terms of the raw material availability. So how it has been over the last few months in terms of the reported raw material? And what do we expect in your future?

Availability is not been an issue for the time frame. And prices may -- the likelihood of that they're going up because of overall demands increasing in China and other places. But at the same time, then the size of the products also may go up which is the...

Okay. Sir, the second question is in terms of CapEx, and we have missed out in earlier calls. So what is the CapEx for both these private projects individually? You've already told that the peak potential would be close to about INR 1,000 crores. So just wanted to know what is the asset turnover for these 2 projects.

There are 2 major projects, which we have mentioned just now. One is the Acetonitrile, which is under implementation. And the other is the aliphatic plants, aliphatic amine plant, which is under design. Both of these are in the region of INR 150 crores to INR 200 crores. So this year, we are hoping to spend -- because there are other small, smaller projects in derivatives and infrastructure and other things. So this year, we will probably spend about INR 150 crores. Next year, probably INR 200 crores. And the year after it was a bit difficult to say what we spent 2 years from now. But the immediate, this year and the next year looks a little clearer.

Right. So the methyl and isopropylamine plant that has already been commissioned, and what would be the CapEx for that then?

The methylamine was a debottlenecking exercise, which was a very small CapEx, less than INR 10 crores. And that brought up the capacity from 30,000 to 45,000 plant. Because we had already invested a lot of the capital expenditure when we commissioned the plant 2, 2.5 years ago.

Right. And the one you said next year is currently at drawing board stage, INR 150 crores to INR 200 crores, the next expansion project?

Yes. That's on drawing board.

The next question is from the line of Dhruv Muchhal from HDFC.

Yes. Sir, a lot of questions are answered. Just one clarification. You mentioned that at the current run rate, your revenues could double. So you had about INR 1,000 crores, so about -- in FY '20. So that's about INR 1,000 crores additional. But if I just do a blend -- blended total of the capacity -- total capacities that you would have, the methylamines expansion and the Acetonitrile expansion, the total capacity would increase by about 48% or 50-odd percent, but your revenues are doubling. So I was trying to understand what's driving this.

No. What I was telling you was that doubling was when everything reaches its peak capacity. And as we mentioned, our capacity today is also only 80%, 85% in size.

Okay, okay. But still...

When you look at everything going, and we will be investing in other debottlenecking exercises over the time. So I mean, I would say that 3 to 4 years from now, if we are INR 2,000 crores, I would not be surprised.

So the prices of the products are different.

Okay. I understand. Probably the mix is the thing. The mix is...

Yes, the mix is the thing. Right.

Okay. Okay. Got it. Got it. And sir, you mentioned about the capacity, which is in the drawing board. Can you probably highlight where are you investing? Is it methyl, ethyl or where are we adding capacity?

This will be ethylamines.

Okay. Ethylamines. And if you can highlight the capacity that you're adding.

Kirat?

Yes. At the moment, I think we are still working on that, but it will be certainly larger than the capacities which we have today, which are, as you know, about 25,000 tonnes per annum between the 2 plants.

And sorry, there's some announcement happening in our office. Sorry for that. Sir, the expansion probably will happen in, say, the time line should be about 2 years or 3 years? How would you look at the expansion?

Mid -- early '22, '23.

Okay. FY -- you mean financial year, right?

FY '22, say, about 18 months from now, 18 to 20 months from now.

The next question is from the line of Abhishek Verma from Fidelity International.

Sir, just wanted to understand from a product portfolio perspective, so which are the products where we have the market leadership or where you are the only sole producer?

Well, ethylamines, we are market leaders. Acetonitrile, we are market leaders. DMAHCL, also, we may be fairly -- maybe #1 or maybe 2. There are a few products, which are derivatives. For example, diethylhydroxylamine and all which are -- we are among 2 or 3 players in the world. And nobody makes that in India. For example, isopropylamine, we are the only people who are making it. Ethylhexyl, I mean, we are the only people making it. So there are a number of products like that, smaller one, of course. Some are big, like in Acetonitrile, but where we are the market leader, as in.

Okay. And sir, what reason do you see that your competition hasn't been able to -- I mean, they have missed the bus in terms of putting up timely capacities in Acetonitrile. I mean, you have been -- you have taken the lead in that. So -- and earlier you said that not that difficult for a player to set up an Acetonitrile capacity. So I just want to understand that your perspective of it.

This is difficult to tell because how can we know about their mindset. It is something they mind -- they decided not to go for it.

We don't know what troubles they had here. Very difficult to...

No, no. It's not a question of trouble. It's a question of having the right ideas.

Yes, it seems like they have missed the bus completely.

The next question is from the line of Ravi Srikant from Muthoot Family Office.

Sir, I just had one question on sort of raw material imports because when I saw -- went through your annual reports, I think around 4 year the sort of raw material imports went up from I think INR 20 crores to INR 30 crores to INR 80 crores to INR 100 crores. So I mean whether any change in the sourcing strategy because of which this went up?

Sorry, I didn't catch the question. What is the question again? Can you repeat?

Yes. In your annual report, actually, you have given the sort of raw material imports every year. So this figure was around INR 20 crores to INR 30 crores till around FY '16, but from FY '17 onwards, this is around INR 80 crores to INR 100 crores. So...

Okay, okay. So this is basically ethyl alcohol, which earlier we used to buy locally. But since the government has been very aggressive about using it for fuel, it is more viable for us to import the ethyl alcohol rather than to buy it locally. So the imports of ethyl alcohol has gone up, but that is not to say that the other parts of our raw materials are not imported. They are not directly imported like methanol, ammonia. There are consolidators who import these things in large quantities and then distribute it in India because India is short of all these products, whether it's isopropanol, methanol, ammonia, even coal, we are importing it. But it's coming through distributors. And so it has show up on our balance sheet.

Okay, sir. And if I may just squeeze in one more question. So of the total sort of global amine industry size that you had mentioned of around $4 billion that's roughly INR 30,000 crores. So only around INR 2,000 crores, INR 3,000 crores is from what I gathered in India. So I mean, so which all countries have the other big sort of producers only barring China? I mean non-China, how much would we be the component?

America and Europe are the big players. They were, in fact, the original, the big. Then China and India have come in much later. China is much bigger now, much bigger, of course.

Any percentage-wise numbers, I mean, how much would America and Europe be?

They go on changing all the time.

Okay sir.

But I think it would be right to say that they are not growing as fast as, say, India and China. That is expected because the GDP growth rates at the level of development there is lower than emerging markets.

The next question is from the line of Vihang Subramanian from Samsung Asset Management.

Most have been answered. Just one thing, when I look at the business from FY '19 to '21, is there any product other than Acetonitrile where realizations have changed in a dramatic way?

Sorry, sorry, come back.

Is there any product other than Acetonitrile where realizations have moved meaningfully?

Let me put it this way that we are on the lookout always for new products. There are some in the pipeline. So once they come out, we will let you know.

No, no. Sir, I'm actually asking you the realization of the products that have been moved.

He is asking for existing products. For existing products, we don't have anything like Acetonitrile.

Okay. So all the other products, the price has broadly been the same, is it, over the last 2 years?

No, no, no.

No, no, no. That's not what Yogesh Bhai said.

The more or less, they have been the same, there are a few products, which have given us higher prices. These are specialty products, the tonnages would be low. That's it.

Got it. And sir, in that other derivatives and other specialty chemicals that you make, in that, like how has been, like, the growth? Has it been, like, north of, like, say, 25%?

Yes. In some of them, yes.

Okay. And sir, just to probably ask again on one of the questions was the previous participant had asked. If like, say, the raw material and pricing -- raw material prices and Acetonitrile goes back to what it was in FY '19, then would it be safe to say that you would be, like, in the 24% to 27% margins?

Not less than that if prices...

No, no, no. He's talking about overall for the company.

Yes, yes. Overall for the company.

Okay. You can hazard a guess. I mean it's difficult thing to say.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

So thank you, Nilesh and HDFC for giving us this opportunity to present our company in front of the investors. We have not been able to answer all the questions because some of them we did not want to answer, but thank you in any case. And wish you all a happy Diwali. Stay safe. Yes, thank you. Thank you.

Thank you. On behalf of HDFC Securities, that call... [Audio Gap]