Apcotex Industries Limited (523694) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 and FY '22 Earnings Conference Call of Apcotex Industries Limited. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Anuj Sonpal, CEO of Valorem Advisors. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations for Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the second quarter of financial year 2022. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management of Apcotex Industries Limited participating with us in today's call. We have with us Mr. Abhiraj Choksey, Managing Director; Mr. Anand Kumashi, Company Secretary; and Mr. Sachin Karwa, Chief Financial Officer. Without any further delay, I request Mr. Sachin Karwa, to give his opening remarks. Thank you, and over to you, sir.

Thank you, Anuj. Good evening, and welcome, everyone, to this earnings conference call for the second quarter and half year of financial year '22. Along with me in today's earnings call, I have our Managing Director, Mr. Abhiraj Choksey; and Mr. Anand Kumashi, the Company Secretary. I hope you had an opportunity to review the financial statement and earnings presentations, which have been circulated and uploaded on the website and the stock exchanges. To brief you on the financial performance for the second quarter of financial year '22, we had a strong growth on all financial parameters. The revenue from operations grew by about 88.2% on a year-to-year basis to INR 243.4 crores. The operating EBITDA stood at INR 31.4 crore, with EBITDA margin reported at 12.9%, which is a decrease of 141 basis points year-on-year. The net profit stood at INR 22.2 crores and PAT margins stood at 9.12%, which is an increase of 15 basis points. For the half year of FY '22, the revenue from operations stood at INR 428.6 crore, which is an increase of 127% year-on-year, with operating EBITDA of INR 60.7 crore, which is a growth of more than 300% year-on-year and EBITDA margin of 14.16%, which is an increase of 665 basis points. The net profit stood at INR 44.1 crore, and PAT margins stood at 10.29%, which is an increase of 755 basis points. From the numbers, you can make out that during this quarter, we have been able to achieve the highest quarterly revenues due to strong volumes and increase in realizations. They have also registered highest quarterly export sales of INR 49 crore, contributing to 20% of the overall revenue. Our absolute EBITDA has been highest ever, but EBITDA margin was lower than Q1 due to increasing shipping rates for both import and exports, destruction in certain raw materials and also an increase in the cost of manufacturing for some products due to significant increase in coal and gas prices. In terms of volume, too, we have achieved the highest ever quarterly sales volume, including in exports. On CapEx front, major debottlenecking projects were completed between July and October of '21 to allow additional 10% to 15% growth. And brownfield expansion projects at Taloja and Valia have commenced. Investment in these 2 projects expected to be INR 180 crores to INR 190 crores over the next 4 quarters. Also, escalation in CapEx cost is expected on account of commodity price increase. On the NBR anti-dumping, an appeal has been filed in C stack for both. With this, I would like to open the call for question-and-answer session. Thank you.

Thank you very much, sir. [Operator Instructions] The first question is from the line of Ankit Kanodia from Smart Sync Services.

Congratulations for good set of numbers. First question is related to the EBITDA margin. So last time, we discussed as to 14% to 16% is something which we believe that we will be able to continue. And so, as you mentioned in our opening remarks and also in our presentation that it has been -- it has come down mostly due to this shipping rates and other raw material costs. So is it possible for any -- how much lag can we expect this can be passed on to our customers? Or we'll take the hit in the upcoming quarters as well?

Yes. Thank you, Ankit. Thanks for the question. So one thing that wasn't mentioned in the opening remarks is, we've also had an -- compared to Q2 of last year, for example, or even Q4 or Q1 or the previous 2 quarters, the cost of raw materials and therefore, also our prices of our goods, finished goods have increased dramatically. So the denominator, for example, if the revenue was only INR 200 crores against INR 243 crore you would have seen an EBITDA margin of 15% -16% again. So sometimes in our business, depending on the value of what's happening with the raw materials EBITDA margin is just one of the factors. The other factors are also EBITDA per tonne and then, of course, return on capital. And so we focus more on EBITDA per tonne because sometimes with oil and downstream petrochemicals being so volatile, just 1 year ago, the same oil price was half, now it's $85. So similarly, some of our raw materials are also really skyrocketed. So this has an impact in our kind of business, the denominator changes a lot. We are quite happy with our EBITDA margins. Yes, there have been definitely some pressure on it because of the shipping rates and energy prices. We've also had a one-time disruption issue in Q2, where one of our raw materials was suddenly not available and then we had to pick up from the local spot buying market at a much higher price, et cetera, but that's a one-time issue. So having said that, I think we're quite happy. And yes, EBITDA margins as a percentage may fall, but I think if you would just see the 2/3 of the growth in revenue has been because of overall prices -- realizable value is going up. 1/3 is because of volume. So we're quite actually satisfied with the numbers.

Great. So as you discussed last time also, so on EBITDA per tonne metric, we would be at a similar level like last quarter?

Yes, absolutely. A little bit lower, I would say, than last quarter because of the shipping and energy prices, and that's the lessons, frankly, we have learned. So far, the pass-through has been on raw material fronts because all these costs have not been significant factors for us. But now, obviously, given the learnings from the last quarter, the next time we negotiate some of our contracts, we will try and build that in as well, which wasn't done. So to answer your second question, yes, we will be able to pass this along, but this may take 3 to 6 months to pass along with some customers, with some customers, we will be able to do it almost immediately.

Great, great. And in terms of ApcoBuild, as far as last quarter, we have covered Maharashtra, Gujarat and Goa. So have you covered any other state or we are still?

No, we have -- yes, now we are adding Madhya Pradesh and within Gujarat and within Maharashtra, also, we have added further resources and moved to other markets in smaller towns in rural areas.

So is it fair to assume FY '23 could be some significant up in the revenue contribution in terms of ApcoBuild?

FY '22 itself, again, it will still remain a smaller part of Apcotex because overall, the company is growing also reasonably well. But in fact, this year itself, we were expecting more than 100% growth for that particular ApcoBuild set of products.

Great, great. Sir, one last question, if I may. Directionally, how do we see our business in terms of the demand? How are we positioned aspect capacity? And how do we see the competitive scenario in terms of -- specifically in terms of export market? Because now export is becoming a larger portion of our revenue. So it is almost about 20% for last 2 quarters.

Right. So the demand remains strong. All our customers are reporting strong growth and the requirements that they're indicating to the next quarter also are quite strong, whether it's in India or outside. As far as competition is concerned, look, nothing major has changed. It's the same competition that we had. And of course, there are a lot of things we've done internally as well. We've got -- we've improved market share by adding more customers within India. We've added more customers outside India, a few new applications, all that has resulted in reasonably good volume growth as well. So a few internal factors and a few external factors. So we remain quite optimistic for the next 3 to 6 months.

So what would be the biggest risk you would be watching right now, given everything looks really good at the moment?

Yes. Look, overall, everyone's been talking about a heated economy, heated markets, what's happening in China. So I think from a macro perspective, that seems to be from what we are all reading a big risk that we all have to watch out for and companies have to sort of tighten their belts and expect this, expect this coming at some point, maybe inflation. But that's why, as a company, we're quite conservative. We ensure that we have enough cash on the books. We're not overly leveraged, et cetera. The other thing, operationally, of course, shipping raw materials from China, all these remain challenges, and I think that will continue the way it looks for the next 6 months at least. And of course, we have taken some mitigation measures to try and succumb ventis, for example, easy thing to do is increase inventories in India, of course, that includes -- that will involve higher working capital in inventories, but that's something that I think all companies will have to do. The second is develop vendors outside of China, develop local vendors, if possible, wherever possible, in some cases, if not possible overnight, but we're working with some companies to see whether in a year or 2, Indian companies can develop certain raw materials that are today not available in India. So we're doing a lot of things for the long term.

Yes. And one last thing is related to our cash flow from operations, when you see compare it with last year, it has gone down significantly because of higher inventory and debtors. Is it a one-off thing? Or do you see this extending?

The higher inventory and debtor certainly played a part in this. I don't know if it'll be one-off, but if the growth continues, to some extent, the cash would be used for working capital for inventory and debtors, yes. But yes, to answer question, the increase in prices has resulted in this sudden need for extra working capital, which wasn't anticipated.

The next question is from the line of [ Manav Vijay from Deep Financials ].

Sir, a couple of questions from my side. First of all, in last call, it was mentioned that you guys are running actually at almost at that chock-a-block capacity. So the INR 60 crores of addition that you have done in this quarter-on-quarter basis. So are you saying that 1/3 of this has come from the volume growth and 2/3 has come from the pricing?

No, I was comparing from Q2 of last year to Q2 of this year. It was not quarter-on-quarter comparison. If you compare quarter-on-quarter, I would say -- I mean, I could go back and check on the numbers. But yes, there has been volume growth to the extent of about…

Debottlenecking, is there -- was there in quarter 2, or it will come only in H2?

No, no, we had -- debottlenecking in quarter 2 also helped because some of -- so we had 4 or 5 projects going on for debottlenecking, all of which got completed between July and October, literally October meaning as late as last week. So some of the projects were completed in early July, which started immediately, we started sort of utilizing those. But I would say a large chunk of it, almost, I think, over the next 1 year, starting from November, we would see at least INR 80 crores to INR 85 crores -- INR 80 crores to INR 90 crores, I would say, additional volume because of these debottlenecking projects that we have done, starting from November onwards. But that started somewhat kicking in between July, August, September and even now October. So for the next 1 year, we can still expect the 10% to 15% growth from the current volumes.

Okay. And whatever price that you have of the raw material so as of now, it seems that those prices are still sustaining. So I would say, in H2, so can we assume that actually quarter 2 becomes a good base to work on plus whatever growth that you will have from your debottlenecking?

In terms of volumes, yes. In terms of value, hard to predict Manav. Frankly, it's -- prices are -- I mean, have gone up substantially over the last, let's say, 12 months. But that is, for example, if prices come down, then you could see our revenue coming down, although volumes may go up. So we expect volumes to keep going up.

Sure. Okay. My next question is actually on the CapEx side. So now you've increased this CapEx amount from, I believe, from INR 140 crores to INR 145 crores around now INR 180 crores to INR 190 crores. So last time, you had mentioned that apart from the expansion that you will have in Taloja and Valia, in Valia, you will have a second round of expansion where you will -- where you can increase the capacity by almost 50% by investing very small sum of money. So that phase still remains the way it was. So this is only because of the increase in raw material prices and everything, this cost has gone up?

Yes, not raw material, you mean like steel and cement and so on?

Correct.

And for the most part, what we were -- I mean, when we announced -- or the earlier costing we had done was back in January, February. And by the time we got our environmental permission to move in June to actually build the plant, which we have started building in Valia already, prices had sort of changed dramatically for steel, cement and other commodity used in construction. So therefore, this INR 180 crores that we had planned for earlier has gone to about INR 182 crores to INR 190 crores.

Okay. And the revenue projection from this of INR 500 crores put together from both the projects, Valia and Taloja, that number remains deviated as of now?

Yes. I mean, as current, frankly, that, again, that number was a few months ago. If you use the current prices, that number goes to INR 600 plus crores because just because overall, the price of our materials or our finished goods have also gone up.

Okay. My next question would be, so now since you have only started working on this -- your CapEx plan. So have you been also able to, let's say, fix as to how much amount you would be putting in from the internal approval? And how much you would be taking that? Because why I'm asking this question is that you are already sitting on close to INR 110 crores of cash. Plus in next 12 months, by the time you will finish this project, I believe that you will generate close to INR 100 crores to INR 110 crores, maybe close INR 100 crores to INR 110 crores in addition cash. So how much debt you intend to take for this expansion?

So I think overall, this INR 180 crores to INR 190 crores is for these 2 projects. In addition to that, we will have some more CapEx coming up, regular maintenance Capex, plus we are also investing in a zero liquid discharge plant in Valia. So all that put together would be somewhere between INR 220 crores to INR 230 crores over the next 12 to 15 months. And so we are planning to take about half as debt and the rest from internal accruals.

Okay. If I may ask one more question. Can I?

Yes, of course. But it will depend. So we have got a term loan sanction. We may not utilize everything, the cash inflow is quite strong. So we will see. So we have a flexible sort of term loan arrangements that we've made.

Okay. Fair enough. Now you guys are also sitting on a decent amount of, I would say, investments, both in terms of MF, equity and debt and also direct equity. Have you booked any profits on those investments in the last 6 months considering the way markets are moving?

Yes. Few have been booked. I don't have the exact numbers with me, but I would say a large amount still remains unrealized out of -- as we said, about INR 100 crores of investments that we have in our books, I would -- I don't know exactly, but at least 25%, 30% would be unrealized. I'm not sure exactly.

Sure. My last question would be on actually on this NBR. So now considering all the factors that are out there in terms of raw material prices, than the supply side issues, than the logistics. I believe you had mentioned in last quarter that the NBR was not positive at the EBITDA level. How are the situation in this quarter?

So the NBR situation has improved, of course, compared to, let's say, 2 years ago, when we filed the anti-dumping cases. But it still remains a concern because there are times when prices or margins are very low and times and margins are a little better. But overall, I'd say we have done a lot of things in the last year or 2 to reduce our costs, improve efficiencies, done some more work on it. And as of now, we're quite comfortable with the NBR business. But I don't want to talk too much about it because it's still -- we filed an appeal, and it's still in the court. So if you don't mind, I don't want to reveal too much right now on this con call.

That's okay. My last question would actually be on this only. So the appeal that you have filed so, what generally is the success rates, I would say, at the CESTAT, because like the case -- in case of Supreme Court, when you file a review petition, the success rate is almost zero. So what -- so if you can -- I mean, let's say share?

This is not a review petition. This is not at all a review petition. Because the anti-dumping actually levied on both cases for us, one against Korea and one against 2 other countries. It was that it was not notified but by another ministry of the government. And we are just asking for fair representation, not just only us, by the way, there are a dozen other companies that have filed the same CESTAT appeal. And so we are working together to do this. This is kind of unprecedented. So it's never been done before. So I don't have a question to -- a specific number that what is the probability, I don't know. I know it's not -- I mean, I don't think it'll be zero. Otherwise, so many companies would not sort of file the appeal.

The next question is from the line of Rupesh Tatiya from Intelsense Capital.

Congratulations for the good set of numbers. Yes. My question to you now is, when I look at the business structurally now, you are able to export now 70% and you're giving a very good outlook and growth in very strong losing demand then dumping was renewed in December, it's been 3 quarters, and we're able to compete margins have held up pretty well. So can you -- maybe throw more color on this business transformation? How sustainable it is and will our competitive position continue to improve going forward, in our chosen products, maybe there are some products where we cannot bid between our chosen products? Our quantitative position will keep improving. So can you just give some color?

Yes. Absolutely. So one of the few things in the last year or 2 that happened is besides, of course, increasing volumes and increasing -- and working on a better product and customer mix. We've also made our plants extremely flexible. Luckily, the company has now 7 or 8 good legs to stand on different industries. Of course, 80% are in India. So we are still very much India focused. But over the next 2 to 3 years, we expect geographic diversity also to kick in and maybe 35% to 40% of our sales would be export at that point. So we feel quite confident that going forward as well, given that with our growth and as we are growing and in the chemical business, what does happen is every tonne or every kg that you sell more, the percentage growth in bottom line is disproportionately higher than the percentage growth in top line. So we expect that to continue since we are expanding in the same facilities, our fixed costs are, of course, much better controlled. And we want to do that to growing in the same markets therein where we are in today, we've added the glove industry recently. And we're looking at a few other products, but that would come in after a couple of years. So we'll see. So we feel quite confident.

So a few follow-ups. So one, I mean, in terms of specifically competitiveness, can you give more color? That we have done some R&D improved processes. I just figured out some way to run plant really through the full, or you have found some product we can get 5%, 10% more realization and then the rest into migration. How has our competitiveness -- maybe do you think use some examples?

So as I said, one of the things we've done is made our assets more flexible. Earlier what used to happen is that we had certain reactors for certain products. And so for example, only supplying to the paper industry, only supplying to the tire industry. Now in case, let's say, 1 industry is not going through a great period, 4 or 5 months. We're able to very quickly, and that's a competitive advantage. I don't think many companies around the world can do that, is very quickly utilize the same asset to make something else. And in addition to that, of course, there are a lot of things we've done on the R&D side as well, whether it's cost reduction of costs, improving products to have certain products that are approved at certain customers and no other competitors approved in. So that's an ongoing sort of challenge, and that's an ongoing thing that we do. But of course, we don't reveal a lot of that because we believe that's a proprietary sort of competitive advantage, and we don't want to talk too much about that.

Okay. And therefore, this 35% to 30% exports aspiration. So this will be higher-margin business than domestic or it will be similar or lower? Do you have some sayings on that?

Well, we hope it would be a little higher-margin business. It's on the medical glove industry, which, as you know, has even pre COVID was growing in double digits. There are only 5 or 6 suppliers around the world for this nitrile latex product, and we have developed it over the last 2 years. Now we're selling reasonably large quantities from our current plant. And the plant in Valia is largely catered for nitrile latex. The expansion in Taloja that we're doing is a multipurpose latex plant, which we can make both nitrile and other products as well, our current latex products. So we do expect that, obviously, the margins as of today are at least good, and we hope that would continue into next year even after -- even if the COVID if it is behind us, largely behind us.

And with some of these export expected growth, do you see some of the volume getting converted of some of this growth coming from a committed volume contract with a committed margin from a customer, so do you see our relationship with customers getting stronger to that kind of level over next 2 to 5 years?

That would be our endeavor, of course, with some of the large customers. We are already doing that with some customers in India, and 1 or 2 customers abroad as well. In fact, more than 1 or handful of customers abroad as well. And we would at least want even our new plant at least 50%, 60% of our sales will be exactly what you mentioned, contract sales with past to sort of pricing and reasonably good fixed margins.

Okay. And then, sir, one on data basic pressure. Can you give volumes even in Q2 portal? And if you can split them also?

I'm sorry, as a policy, we don't give volume numbers.

Then capacity utilization, roughly what utilization we have had as there is?

Yes, capacity to utilization, we are at almost at least in Q2, we are at almost full capacity utilization, both in Taloja and Valia.

This is with debottlenecking capacity or without debottlenecking capacity?

As I said that debottlenecking capacity is come on stream slowly, slowly over the last 4 months. So some of it will actually hit in Q3 and Q4, Q3 onwards, I would say. All the debottlenecking projects are now complete as of October sort of current DFSO. So yes, even with the debottlenecking projects, whatever we could do, we are running at close to 100% capacity utilization. There are still some products where we are not completely able to make the plant absolutely flexible. So, I would say, 95% - 97% capacity utilization is what we're working at.

So then, this till the brownfield CapEx counts online or stream, product mix and maybe some more debottlenecking, these are the 2 top line growth in there?

Yes. For the next 1 year. We expect the brownfield projects to be on stream by within sort of a year from today.

Okay. Then the last question is for the brownfield Capex, do you see any risk that could delay in significant quarter here and, but no significant delay of?

I mean, of course, look, unless like something like a third wave was very strong third wave or something happened and supplies from our vendors is delayed, that would be the only reason. Otherwise, we've already gone and placed all our sort of long lead item orders. We have started construction in Valia, in fact, done a pretty good job in the last 2-3 months. Taloja construction is likely to start in Diwali in about 10 to 15 days. So we don't see any reason for sort of major disruption now, barring COVID or something that comes out of less field.

Okay. And then, sir, any new products or being some in the next 2, 3 years?

See right now I think we are also internally working on many products. But in the next 2 years, I would say the growth engine is both these expansion projects that we are doing for nitrile latex as well as for our current product. And after that, we'll wait and see how the NBR business plays out over the next 6 to 8 months and take a call on doubling our NBR capacity. So our work is quite cut out for the next 2 years. After that, there are some opportunities that we are looking at, some internal products that we're working on, which would provide the next sort of phase of growth for Apcotex. In addition, of course, we are always, with our current product range, there is always new applications within each product range. Just to give you an example, we're in construction. We're supply for waterproofing. Now suddenly, there's a demand for products in technical textiles and geotextiles. Now it's a related field within construction because they're used for construction projects. But within that, it's a different application. So that kind of R&D is always happening for new sub applications within the broad industry of, let's say, construction or carpet or textile or paper.

The next question is from the line of Nikhil from Perpetual Investment Advisors.

Congrats on a good set of numbers. So my first question is a follow-up on your earlier comment on focus on EBITDA per tonne. So while I understand that this -- you may be doing this to maintain stability and high eligibility for your profitability. And if this works in a rising product price scenario, how do you manage this on the contrary?

Same, exactly the same. We focus on EBITDA per tonne. And if -- even if, let's say, from INR 240 crores to if it was -- instead INR 243 crore, if our revenue had been INR 100 crores, we would still aim for the similar EBITDA per tonne. So you would not see the EBITDA number flinching. We would still be around INR 30 crores EBITDA. So then you would, of course, ask me, why margins are 30%? And so that can happen from time to time. And going forward, for example, oil prices fall drastically, then that could happen. This percentage margin is just one parameter that we should look at -- to me and to our business, the more important parameter is EBITDA per tonne or gross contribution per tonne. And of course, finally, return on capital, which is the most important thing eventually. They have to -- we have to balance all these things out, not to mention competition. That -- we would love to increase prices, but we have to do it strategically and after giving it a lot of thought.

So I was actually asking from that point wherein a declining pricing scenario, it is more or less related to the supply demand imbalance being more on the side of supply. So I sort of asked that maybe the EBITDA per tonne decline in that scenario?

It may be marginally, maybe, maybe. But overall, as I said, we try and peg a number that we want for EBITDA per tonne and to achieve the right returns for our shareholders and on the assets that we have. And then we, of course, try and keep a watch on the EBITDA percentage margin, of course. But more importantly, EBITDA per tonne.

Fair enough. So also related on ApcoBuild, let's say, 5 years down the line, do you see this division contributing significantly to the business?

Well, we hope so. Of course, it will depend on how big Apcotex is as a whole and how big we can grow it. But in terms of growth, of course, it's still a small part of our business. But I do hope that it will become a significant part. That's why we're working on it. We have a separate team, completely separate from Apcotex that is working on this product. And we are focusing on our strengths. We are not trying to compete with some of the large construction chemical players. We know what our strengths are, strength are in polymers. We have built our brand around polymers and waterproofing, and we will continue to do that going forward.

Okay. Can you sort of give a guidance on maybe how much percentage of the business do you see coming from this? Again, I know that it's very difficult to say that, but yes.

No, I mean, of course, our endeavor is we wouldn't -- if we can't get it to about 10%, 15%, that ideally, we would love to do that. And that's what we're working towards, but it will take some time.

Okay. And so the 2 large grounds in projects that you're working on now, do they both come -- I mean, commercialized at the same time? Or does the Taloja project happening earlier than Valia?

No, we expect the Valia project to happen a little earlier than Taloja. The Taloja, we haven't started construction yet, we'll start construction this month, in the month of November. So -- but it will be in Q2 of next year. Both will come on stream by Q2 of next year.

Okay. So can we expect on the profitability front, at least the business to be continuing at the same rate, at least at given the current volumes?

Sorry, just to clarify, I meant, Q2 of next financial year, yes, not Q2 of next calendar year. So I'm talking about the sort of August, September time period. Yes, our profitability, as I said in our business, there are times when sudden crash happens and there is a quarter-on-quarter that's bad. So there will be some kind of volatility quarter-on-quarter. But if you look at a longer period, 1 year or 2 years and so on, given all that we have done over the last one year, given that now in over 4 quarters, we have a sustainable margin, sustainable EBITDA, which have been, of course, much better than the previous 2 years. And we believe that will continue and hopefully even do better than that.

Sure. And just one last question, again, it comes to the first question that I asked. So we never get advantage of the rising or declining pricing environment in the raw material that we are always focused on targeting a particular EBITDA per tonne?

Sometimes we do, but as I said, we're focused on targeting a particular EBITDA per tonne. Sometimes we can take advantage of that. So there will be some quarters when you have a little higher EBITDA per tonne than your target. In some quarters in a declining sort of price trend, you may have a lower EBITDA per tonne. Therefore, you have to look at the average over a period of a few quarters. That could happen.

Okay. One last question. Sorry to add this. So you acquired Omnova Solutions, in 2016, again, the product line is sort of value-added than your existing at then, the existing product portfolio. Now you've gotten into nitrile latex, which again is value added. So can we expect the next few products in the next couple of years, which you are already working on, be much more value additive?

Yes. Look, we -- as a strategy, obviously, we don't want to go down a path where there are a lot of players. We look at things that are hard to do. And we want to do them extremely well, if not the best-in-class in the world, at least have a really high-quality product, which is in the top 2 or 3. The second is it has to be less competition intensity. So we would not get into a lower value-add product range, which is anyone can make. So just to give you an example, for example, NBR, we are the only manufacturers in India. Nitrile latex, we are the only manufacturers in India. All our other products, styrene butadiene latex, vinyl pyridine latex, we have maybe one competitor in India. So and even from a global point of view, all these products have very few players worldwide. And since a lot of them except NBR, of course, 50% water, it's more of a regional business around this part of the world. So we continue to look for products like this and develop products like this and that's what we're focusing on in R&D as well.

The next question is from the line of Karan from Asian Market Securities.

Sir, I just wanted to understand how is our revenue mix shipping up? So a year back, we were at 50-50 from takes and trump from synthetic and above. So has it changed drastically? Or how do you guide in for next 2 years?

So latex is a little bit more now than earlier because most of our growth in the -- there has been growth in rubber as well, but a larger part of our growth over the last year has been in latex, a debottlenecking exercise taken have been on the latex side. And of course, with the new investments that are coming up in both plants are also latex investments. So obviously, latex will become a larger part of the portfolio for some time. But then again, when we double our NBR business, again, that percentage will change. So over the next 2 years, we expect latex to be a higher percentage of our business more even as high as 70% -75%. And then once we double NBR, then that may come down. So that's the sort of set jump depending on our expansion plan.

Right. That was helpful. And sir, now it's quite some time we are awaiting some CapEx on the NBR. So is it early to do with the anti-dumping duty or something else?

No, no, it's nothing to do with the anti-dumping duty because we do believe that to be competitive and our plant price is quite small for NBR compared to global standards. By doubling it, we would become an average size plant, not even the largest. And so we are committed to doubling our NBR capacity. It was just a question of how many projects we wanted to take on at the same time. And since we already have 2 projects at both our plants, we thought we would sort of be a little bit conservative and prudent and take it one step at a time. But we're committed to increasing our NBR capacity as well.

Right. So any concrete plans will be shared in the upcoming call?

Not in the upcoming call, but perhaps sometime in 2022, maybe in about 6 months or so, 6 to 9 months, we'll share some plans. The plans are ready, frankly. We are ready with it, we have the technology, we have the entire costing done. We'll have to redo the costing depending on the CapEx cost at that time. But we remain committed. We do believe in the long term, it's a good business. It's not as high growth of business as nitrile latex or as XSB Latex in some of the products we're in. Globally, but some of the reason is EVs, the EV impact, et cetera. But we remain committed and we're going to do it at some point or the other. We'll take a final call of course in 6 to 9 months. So I'll let you know.

Right. Great data. And just also recently, we've acquired a smaller company with a 8% market share in NBR. So like is it integrated in selling up? And how do we plan to take it sizable in terms of profitability value? Historically we've seen.

We acquired this company 5 years ago, which included the NBR business.

No, the recently 8% market share in the market last quarter, you mentioned we've acquired a small industry, small company in the domestic market?

No, no acquisition in the last quarter. Sorry, if there was some misunderstanding.

Okay. Some announcement on shut down each NBR operation in the domestic market, and we were in to the?

No, not in the domestic market. There is some announcement that one of our global competitors has made that they may not be in the NBR business from next year. That -- I did not announce, I don't know, not at least on this call. So that may result in, obviously, one next competitor in the Indian market. Since NBR is a largely is a domestic playground exporting currently.

The next question is from the line of Ankit Kanodia from Smart Sync Services.

Sir, my question is related to the -- when we look at the export market, can we name a few competitors, some formidable competitors where -- with whom we are competing at the moment?

Yes. I mean, look, in the export market, we have different products. And for each product, we have different competitors. I mean, you can go to top 2, 3 competitors. So I would just refer to, not to name competitors. And you can easily Google it, this is easily on the web you can Google the top SB latex manufacturers in the world or in Europe and Asia. And then in -- for nitrile latex, the same thing, there's not very many. So we will be able to find the name.

Yes. So if I -- if my understanding is correct, so our competitiveness would largely be based on low-cost compared to them, right?

Not really, not really. Of course, costing has a big path to it, but competitiveness is also having the right product for the right customer. That's one of the things we have done much better than our competitors is actually finding customized products for our customers. Number two, providing the right technical service and the right service, which a lot of our competitors don't do, especially in the Indian market. And of course, no question about it. And having it at a cost that is extremely competitive. And I think as we grow the cost or overall cost per tonne keeps becoming lower because the fixed cost in this kind of business don't grow as fast as long as we're able to grow faster than the fixed costs per tonne going down.

Right. So sir, can you give some ballpark figure as to what is the differential between the cost, your cost and your foreign competitors cost, any ballpark difference number.

I don't have that -- I mean, we do benchmark from time to time. But as I said, again, our business is not one -- it's not one product. We have 4 or 5 different product ranges for each of them, we compete with somebody different. So it's hard for me to give you one number.

Okay. And sir, can you just elaborate more on the technical services, which you provide apart from the product, what kind of services?

Yes. So for example, I mean, when -- we are basically taking monomers, manufacturing polymers and then going to -- so for example, a customer rummer who will do auto components. I'm just giving you an example, we are supplying our polymer to him, but -- or to them and also going and making sure that it runs well and it's running at their factory at the lowest possible cost because the other raw materials that go in as well. We've developed in separate teams for each of our industry segments, whether it's rummer, whether it's glove, whether it's paper, construction, and we really understand the application when and how best to do it in their environment. That's the kind of technical service that we provide. And I think customers appreciate that. We have a very high level of customer engagement on the technical front. Otherwise, it's just talking about pricing and highly commoditizing.

So these services are on time -- at the time of sale or also after sales?

At the time of sale, of course, at the time of sale, we have to, because to get approvals, we have to be there. But even after that, our technical service teams, whenever they have a problem, troubleshooting, we have a full fledged technical services lab, different labs set up for all of these applications. A lot of our customers don't have the equipment we do, especially some of the smaller ones. So they send their samples for us to test here in our lab, and then we give them feedback on how to improve their product for their customers. So that's what I mean by technical service.

The next question is from the line of Amit Chordia from World Foods, LLP.

I wanted to ask you the investment that we have of INR 110 crores and INR 120 crores with us. Why don't we use them as a buyback of our own shares?

Well, for ups of reasons. One is that we were holding on to these investments for 2 reasons. One is, of course, this CapEx cycle that has come out, that happens every 2, 3 years. Second reason is that always inorganic growth opportunities, we're looking for to have some kind of watches. However, small or big is always good. And the third is that in our kind of business, we are quite a volatile raw material sort of business and having a little cash on the books always helps. And we have seen in the past, I mean, as early as -- sorry, late as last year, when COVID hit us and that is for all companies, I would say many companies. But having that little cash in the books is the kind of financial prudent that we have always followed. So these are the 3 reasons why we have kept cash on the books. I don't think it's a significant amount of cash. I mean, of course, it seems like INR 100 crores is a significant amount of cash. But in terms of if you see for the CapEx that we're doing and potential acquisitions that we could have, at least having some amount to put down is good.

Okay. Great. Sir, any potential acquisition in organic you are looking at right now or in pipeline?

Look, we're always exploring. We would only do it if it makes strategic sense. Having said that, even if we were -- I would not be at liberty to sort of reveal anything we're working on till its concrete.

Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for the closing comments. Over to you, sir.

I'd like to thank everyone for participating and coming in again. I would like to wish everyone a very happy Diwali and Happy New Year, and of course, a safe new year. Let's hope that the COVID is sort of on the -- towards the end, and we don't have any third and fourth waves over the next year. So everyone, please stay safe and look forward to interacting with all of you in Q3. Thank you.

Thank you very much, members of the management. Ladies and gentlemen, on behalf of Apcotex Industries Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.