Asahi Songwon Colors Limited ($532853)

Ladies and gentlemen, good day, and welcome to Asahi Songwon Colors Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Mehra from Til Advisors. Thank you, and over to you, Mr. Mehra.

Good morning, ladies and gentlemen. Welcome, everyone, and thank you for joining this Q2 and FY '26 earnings conference call of Asahi Songwon Colors Limited. The results and investor updates have already been emailed to you and are also available on the stock exchange. To take us through the results, we have with us from the management team, Mr. Gokul M Jaykrishna, Managing Director; Mr. Arjun G. Jaykrishna, Executive Director and Chief Executive Officer; Mr. Mitesh Patel, Executive Director; and Mr. [indiscernible], Company Secretary and Compliance Officer. We'll be starting the call with a brief overview of the quarter from Arjun, which will be followed by the Q&A session. Before we proceed ahead, I'd like to remind you all that anything having this call to collecting any outlook for the future, which can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that the company faces. These risks and uncertainties have been maintained in our annual reports. With that said, I'll now hand over the call to Arjun, over to you.

Thank you, Abhishek. Good morning, ladies and gentlemen. A very warm welcome to the Q4 and full year FY '26 Earnings Conference Call of Asahi Songwon Colors Limited. I would first like to thank each and everyone of you for joining us today. I will start the call with running through the financials followed by my remarks and then open the floor to any questions that you might have.

Arjun, can you hear me? I just need to make a quick 1-minute opening remark before Arjun starts.

Yes. Sure.

Good morning, ladies and gentlemen. This is Gokul M Jaykrishna, Managing Director of Asahi. It is a pleasure to have all of you on the call today. Before I hand it over and we get into the routine as Arjun takes you through the quarter and the coming quarter and the business review. I would just like to make a quick comment. As of the last Board meeting, I step down as the CEO of Asahi Songwon Colors Limited, and it's been an amazing journey of 8 years as CEO and 17 years as Managing Director. I continue to hold the position of the Managing Director and we'll continue to actively manage the business strategically and take it forward in terms of growth and future potential. However, the regular day-to-day CEO functioning of the company will now be looked after by my friend, Arjun Jaykrishna. He's been with the company now 7 years and as Executive Director for about 4 to 5 years, I'm very happy. Today is very proud and a meaningful day for me as I hand over the role of the CEO to Arjun. He, along with the new team and Mitesh Patel, the whole team is ready to lead the company into a brighter stronger and more growth-oriented future. It's been a remarkable journey. I think we've had a very decent quarter this quarter. Through the war, our team has executed the business remarkably well, managing the challenges and we stand at a position where the group can now grow forward going into the future. Over to you, Arjun.

So to get into the financials. On a consolidated basis, revenue from operations for Q4 FY '26 stood at INR 144 crores. This represents an increase of 19.4% over Q3 FY '26. The EBITDA for the quarter stood at INR 23 crores, up 122% sequentially and 30.2% on a year-on-year basis. The EBITDA margin as well expanded to 15.6% in Q4 FY '26 compared to 8.58% in Q3 FY '26, and 11.53% in Q4 FY '25, once again representing an expansion of 407 basis points year-on-year and 702 basis points sequentially. Profit before tax, excluding exceptional items, was INR 15 crores for the quarter, an increase of 64.2% over Q4 FY '25 and 467.29% over Q3 FY '26. Profit after tax for the quarter was INR 10.82 crores compared to INR 6.87 crores in Q4 FY '25 and INR 2.26 crores in Q3 FY '26, once again, a year-on-year increase of 57.46%. The interest cost declined to INR 3.30 crores in Q4, down 14.15% year-on-year, reflecting our ongoing debt reduction. Depriciation was INR 4.65 crores, broadly stable. Now getting into the full year figures. For the full year, FY '26, consolidated revenue from operations was INR 535.48 crores against INR 562.36 crores in FY '25, a decline of 4.78%, but the full year EBITDA, including other income stood at INR 56.53 crores as opposed to INR 60.21 crores in FY '25, again, a slight decline of 6.12%. And the EBITDA margin for the year was 10.43% compared to 10.63% in FY '25, a small compression of 21 basis points. Profit before tax for the full year was INR 25.56 crores against INR 24.98 crores in FY '25, marginal increase of 2.35%. And profit after tax was INR 17.78 crores, up 5.48% over FY '25. Now turning to operations. Q4 FY '26 was a strong quarter for our business, talking specifically for our blue pigment business, both revenues and profitability improved relative to the preceding quarter? The volume growth was modest and a meaningful portion of the improvement was driven by stronger realization supported by elevated raw material prices in an ongoing political -- geopolitical volatility. The operating environment continues to present challenges with raw material prices remaining elevated in global supply chains, having seen a lot of disruption. The company has been working on a range of internal operational efficiencies, as we have discussed previously that are expected to continue to contribute to a more durable improvement in the margin profile in the periods ahead. This, coupled with the strategy, the company used to mitigate the geopolitical uncertainty in these times has supported profitability during the quarter. The business remains positioned to accelerate volume growth as the broader demand environment recovers, hopefully, in the coming quarters and the year ahead. The strategy, everything we've been working on is on a strongly position us in the blue business to continue at a good level in the coming quarters and here as well. Talking now about the Azo pigment business, the company has continued to grow steadily in volumetric terms despite the challenging operating environment. Encouragingly, the Azo Pigments achieved EBITDA positivity for the full financial year FY '26. The business has also reached [indiscernible] breakeven during the year. This is important step with the financial progression of this segment. Through continued focus on revenue growth and focus on the operational efficiencies, the Azo business is expected to begin contributing meaningfully to consolidated profitability in the coming years. The API business has delivered consistent volume at growth of [indiscernible] 3 years. The steep decline in realization since acquisition has, however, limited the reflection of this growth in reported revenues and financial performance. Encouragingly, the 3-year price erosion cycle in the API business, this quarter. And hence, in Q4, FY '26 and improvement in selling prices was observed, which contributed to a better quarter. The company's backward integration investments here provided operational stability and supported margins through this period. On the regulatory front, as I have read before, progress is being made towards achieving our CEP certification. And we are confident that by the end of the current financial year, we would be able to get the certification, which will be a milestone that will support volume growth and access to more profitable export segments. The API segment also achieved EBITDA positivity for the full year FY '26. To summarize, Q4 FY '26 was the company's strongest of the financial year. And the full year results demonstrate resilience in a difficult operating environment. EBITDA positivity in both the Azo and EPI segments continued deleveraging of the balance sheet and maintenance of PAT growth as the principal outcomes of the year. The path ahead requires navigating a still uncertain global environment with geopolitical volatility, elevated raw material costs and competitive [indiscernible] remain live. But the structural investment made the last several years are expected to underpin the next phase of growth as conditions continue to normalize. With that, I will now open the floor for questions. We welcome your questions on any aspect of the business and the finance [indiscernible]. Thanks.

[Operator Instructions] The first question comes from the line of Rishabh from [indiscernible].

My first question is back on a Y-on-Y basis, while our revenues have declined or margins have shot up, implying that the entire profit improvement gains on margin rather than volume. Can you please confirm what proportion of EBITDA improvement was driven by price pass-through of allegated raw material costs and if dramatical sizes, does the margin improvement reverse with it?

Thank you for your question. So yes, exactly as you pointed out, I think for now the -- what we have -- the strategy we have taken is to be able as much of our raw material price increase is possible. And I think that was -- that was also possible due to our long-term relationships, both with suppliers as well as customers. And because of that, we saw the bottom line showing a better performance. As for the top line, I think, as we discussed in the commentary, the global uncertainty as well as the tough business clients continue to put pressure on that. So we try to maintain that without erosion in our bottom line, and I feel we have done a decent job at that. For the coming quarters and performance, I think, we continue to navigate a very volatile environment globally, but we are confident that we will be able to continue to perform at a strong level, especially in our blue business, and we will be able to use the similar strategy that we have added with the continuous improvement of additional season, hopefully, for the year, create a sustained good EBITDA performance.

Okay. You have mentioned about the internal operational efficiency programs that will strengthen the margin profile. Can you be a bit more specific about what these initiatives are? The quantum of the expected benefit and the time line over which they will be reflected in the reported margins.

Yes. So I think a large -- the impact we have made in our Blue business. Here, it's not just one project, it's several things that are going on which have already started having an effect as well. So I think as I have discussed in previous calls as well, this is a process that we have been doing for a while now, even when we talk about this quarter, I think it is partly due to the operational efficiencies, which will be certainly continuing in the coming quarters as well and partly due to our strategy to navigate the geopolitical issues. So it is difficult to [indiscernible] the difference is, and I would not be able to comment on the exact projects that are being done, but to answer your question relating to the first one as well, we are confident that we will be able to continue a strong EBITDA percentage performance in this year as well.

All right. My next question is on the API business. Now that Chhatral site has commenced commercial production of API intermediates, what is the current revenue and utilization level net Chhatral? And how does backward integration into intermediate translate into quantifiable cost or margin benefits at the API segment level. Can you please quantify it?

Yes. So for Chhatral, I think, as I mentioned, we have, over the last 3 years, had a strong performance going our volumes. However, it has been -- it has not been showing an effect in the numbers because of a very strong competitive market environment and very slightly weak demand proofs, we have not seen the numbers reflect the growth in volume we've observed. This growth in volume, a lot of it can be attributable to Chhatral, I think are 2 reasons. One, giving us that additional capacity and to the backward integration, which is very key in such a tough business market to even keep us at a position where we can afford in market, which is right grow our volumes. Chhatral plant, well, we are going at a utilization level around around 70%, which is good for the intermediate level. However, on the API front, the finished good utilization once again remains very low. It would be somewhere around 30%. And that is where we hope to improve our fixed asset turnover for the API business, and that is why we believe that there is a lot of scope there. As soon as we are able to execute that strategy, improve the fixed asset turnover and increase utilization plan, we should be looking at more consistent better numbers for the API business.

I would just like to add to this. So Mitesh can correct me on the factual numbers, if I'm wrong, but I think we have achieved in the ATLAS API, the general pharmaceutical business, a volume growth of about 18% CAGR over the last 3 years. This hasn't reflected in improved business or hasn't reflected in the top line due to the decline, as Arjun said correctly, the market was extremely competitive. And the prices of the APIs have been continuously dropping over the 36 months. And so the revenues haven't reflected this growth. However, this trend seems to have been arrested. And this quarter, we have seen improvement finally in the realization, which is starting to now show better results for the quarter as well. I would [indiscernible] not a guess that generally structurally the API business, if you cyclical rather than structural -- cyclically, it seems to have bottomed out. And over the next year to 2 years, we should see bottoming out and a gradual improvement in the pricing. With this, there should be better opportunities. And also, the question was very well asked about the utilization levels. As Arjun mentioned, the Chhatral utilization of the finished products is very low. This remains the challenge and actually the opportunity, and over the next year, that remains a strategic area which we could improve upon. If we improve there, there could be significant improvement in the overall value of the business. Mitesh, can you care on the growth numbers, if I have made any mistake.

Sir, it is exactly correct. 18% CAGR we achieved in the last 6 years.

So about the [indiscernible] is a company leading API molecules. Given the price erosion of recent deals and the repair being in the presentation, what is the current [indiscernible] price? And what was the price, the time of the Atlas acquisition? How much have the prices reversed from the boottom? And what proportion of API segment revenues currently contributed by the [indiscernible] versus other molecules.

Yes, this is a very normal molecule for us. And after [indiscernible] the growth that we have mentioned, the year is largely volume was driven again by preserving. That along with a few smaller molecules have increased business in succeed, but in terms of the financial growth and the large volume [indiscernible] remains a very strong were around around 60% to 70% of our business would be for [indiscernible]. In terms of pricing, I think it's difficult to exactly quantify because have different regain that are taken by different level of customers. And it depends on a business basis, which -- at which time -- which orders we have more of, and these are the different pharmaceutical grains that we make of [indiscernible]. For example, like we make a few days, CEP grade would be a new grid that will be launched which will have a higher margin profile, higher cost as opposed to the current IP USP grade that we do make. So I think in terms of exact quantification, it would be a little difficult to judge the exact price in the market. But for us, is, what would be the rough [indiscernible] guide a percentage decrease in price that we have seen observed over the last 3 years.

So since acquisition price has dropped by around 45%.

And how much has it revised as of now?

So currently from bottom, it has been increased by around 15%.

Right. Okay. My next question is on Azo capacity. Right now, it's at 2,400 tonnes per annum. You had indicated in the past that once utilization is 85%, capacity expansion would be triggered. Given the progress in utilization, what is the CapEx plan for Azo expansion? And if we go ahead with it, what would be the CapEx required and how will it be financed?

So for the Azo business, Arjun highlight it correctly, we still continue to have the we will be triggering that expansion. What we've currently done there is because of the about the tough market environment, we did not want to incur the CapEx, so we have done small projects and efficiencies that have helped us bump up the capacity a little bit. But for a meaningful expansion and acquisition of a line, we would which would be much smaller to obviously initial investment because the civil structure and a lot of the investment has already been done. And that is why I think we've seen the ROC, ROE of the investment not yet yielding the results we would like. However, for this one, we would be expecting a much better expansion of much better ROC ROE for the investment because we will be investing somewhere around, I think, INR 10 crores to INR 15 crores, and this would help us boost the capacity by almost -- it would go to 1.5x. So the investment as opposed to what we get in return would be substantially better because of the earlier investment and strategy we have made to make the civil structure and several other parts of the factory already ready for this expansion.

All right. Last 2 questions from my end. One on the capital allocation front. Full year PAT was at INR 17.78 crores on the revenue of INR [indiscernible] crores implying a net margin of hardly 3.3%. For a company that has invested significantly in the new capacity across Azo and API over the past several years. Is this level of profitability that was anticipated at the time of those investments? What does the management consider to be a normalized PAT margin at a steady state?

So I can take this question. Clearly, on -- we have 3 -- let's break the business up into the 2 segments, segments and API is a pigment being blue and Azo. So first on the Azo ATC business and same answer applies to the [indiscernible] business of API as well. So on ATC and Atlas both when we made the investment, the expected profit margins were definitely not what you are seeing right now. Both the businesses are in early season. I mean, in business cycle terms, it's been about 3 to 4 years that we have been doing these businesses in real terms. So while we are improving marginally continuously, we are far from where we need to be, and the profit margins as well are half from where they should be. on -- for both answering on EBITDA for both the APC as well as the Atlas business, we would guide that management would like to target EBITDA margin of about 13% to 14% in -- about 13% of the Azo business. And eventually, if you get the API business right, 15% to 16% in the API business going forward. That you will see is a significant improvement from where we are right now. We are far from that, and we need to make serious strategic decisions as well as good business operational moves to reach this. However, we remain confident that the margins will eventually be achieved.

So my last question is for Arjun. Over the course of next few years with Arjun sir stepping in as the CEO, can we expect more addition in terms of growth? Is there a new vision in a question that is expected? And what are the plans to stay in the business to say INR 1,000 crores over the next few years?

Yes. So thanks for that question. I think -- to answer your question, I think what the company has guided over the last few years, we finished a large CapEx cycle a few years back. And over the last few years, it's been about consolidating and trying to utilize the investments we have made. So I think that while -- as you have described, we have not performed as required for our 2 subsidiaries, but as a group and financially, I think we have been able to execute a lot of strategic moves like our debt reduction plan and overall financial health of the group because of our relatively strong 2 years for a blue business. We have been able to execute those plans and get that to a level where we would like right now. Going forward, I think it will be key for the company to continue as you mentioned, to increase our growth, we have a very young team, and we've got a lot of freedom from a Managing Director to be able to position ourselves the way we want in terms of the growth plan over the next few years. And we will certainly be wanting to grow fast and grow strong. However, our first prerogative is to make sure that we are able to continue strong revenues for the next several years, and that's how we plan the business out. And then the focus will be on bottom line addition as well through everything that I mentioned, internal efficiencies as well as increasing the fixed asset turnover from both the subsidiaries. And then the reducing debt profile and strong financial performance of the overall group, we will certainly looking to grow and we will certainly have the goal of reaching INR 1,000 crores as a company within the next few years.

I had you for I will just quickly add 2 lines to this. On a macro level, the last -- since COVID, the whole period of last 3 to 4 years, has been extremely challenging now with the disruptions of the U.S., Iran war and oil disruptions and raw material disruption, generally, cyclically, we have seen one of the longest slow demand environment, the industry -- chemical industry is generally seen. This seems to be in the process of bottoming out. When it exactly bottoms out is anybody's guess, but already it is showing signs since the last few months. Secondly, we, as a group and as a company are very recently positioned because we have, over the last 4 years, completed our entire CapEx cycle, where our debt also rose to a peak debt of -- total peak debt of INR 220 crores. and EBITDA was low because of the really bad business environment and lower utilization and the CapEx that we had incurred. This seems to have turned and our basic EBITDA has been at a group level going up, and will probably likely continue and the debt is dropping faster than we had even internally estimated. Cash flows have been strong through all the verticals, all the 4 units. So I think it positions the company in a very good way over the next 3 years to strategize growth.

Mr. Arjun Jaykrishna, your voice is breaking. Let me reconnect your line. Ladies and gentlemen, please stay connected while the line of Arjun Jaykrishna connects. Ladies and gentlemen, the line of Arjun Jaykrishna is reconnected. Please go ahead. Mr. Jaykrishna, please go ahead.

Yes, I think we'll be in for the next question.

The next question comes from the line of Dhwanil Desai with Turtle Capital.

Congratulations for a very strong numbers. So I think of my questions, a lot of color has been plugged. Few very specific questions. So on the Blue business, our gross margin has improved significantly Q-o-Q from 29-odd percent to 34%, and you talked about business on the pigment side as well as on the RM side. So first of all, are there any inventory changes involved in this? And going forward, how do we look at gross margin in the blue business earlier and our state basis where being around 35-odd percent. And at some point, we also would take 37%, 38%. So how do we flow back to those kind of numbers that is on margin side of the business?

Yes. So thanks for the question, and thank you for your kind words on the result as well. So for the -- as you mentioned rightly, I think as briefly different, I think it is mixture of several factors of internal strategy, a little bit of the inventory addition as well as operational efficiencies, all put together that have driven the strong numbers. What we are doing and what we will do to continue this and as you mentioned, we have got higher numbers in the past as well. So how to make it a steady state. As I mentioned in my last answer, I think one of the key goals that we have going forward is to try and make a more steady performance, steady strong performance over the next year and several years ahead for the blue business, and there are several things going on from operational efficiencies as well as projects with customers where we hope to continue to strengthen our gross margins to levels we have seen before and maintain them. And we are confident that, of course, it is worrying a little bit due to several factors out of our control, but we will make sure that we do everything in our capacity internally as well as in terms of relationships with strong relationships that we continue to have with suppliers and customers to maintain those numbers. And we hope that we can have a steady performance at these higher numbers in the coming year.

And I think there was some kind of a demand slowdown because of the U.S. tariffs and the lower of set across geographies, are you seeing any revival in terms of demand of the geo side?

Again, great question. I think as you pointed out rightly, I think what we had observed because of the U.S. tariffs was not only a slowdown in U.S. As you said, it was a global effect because even countries where we would be supplying our product, which would do a value add and send it to the U.S., those were also subject to tariff because the make was India. So we had seen a ripple effect of that for not only a U.S. business, which was obviously affected but other country exports as well. We have seen a revival in that. So our U.S. business, once the tariff has been reduced again, it is, again, started to improve. I think coupled with the global uncertainty, I think the demand profile has not nearly gotten back to where we would expect it and where it used to be, but we have certainly seen a revival from the higher tariff days, and we are hopeful that as the overall demand environment increases and improves, we will be well positioned to get our American and business to America back to our routine levels, which we have already seen starting to happen.

Second question on the Azo business. I think one of the levers that we were actually working on the asset side was on the export market extracting some of the larger customers in Europe and U.S. So any updates on that? I remember that approvals have slowed down because of the U.S. tariff in the U.S. market. But how are we positioned on the export market for a Azo? And is there a meaningful scale up partial in the export market on Azo business?

So absolutely, the export market continues to remain something we are focused to getting for ATC because that will help us drive the bottom line to be stronger. Here, in the U.S. business, obviously war affected a lot. For our Azo, even for our blue, because that is a place where China generally in the very -- so while we have seen a complete stoppage from customers in inclination to, we approved them, I made a visit to the U.S. as well when I got the opportunity to meet several prospective customers. And this was just earlier 2 weeks back. And we've had positive discussions. And because of the tariff going on, once again, I have been able to open up some discussions, and we are hopeful that we will be able to restart them and have some meaningful growth over the next few quarters in the testing process. Obviously, it will once again take time for us to execute this because of the stopping because of the tariffs. But the good part is that we are, again, in those discussions and the customers are inclined in wanting to test and wanting to include us in their supplier pool because, once again, of the geopolitical uncertainty and tariffs that hit us, it could hit other countries where they import from as well. So they are keen, and hopefully, we will be able to execute over the next year some of this business. This is for the U.S. For Europe, as well, I think, generally, Europe has had a structural slowdown in demand. But there, we continue to work on different avenues and there are opportunities we are following up on, where we hope once again that we will be able to execute and get some business flowing in the coming year as well. And at the same time, for the Azo, India continues to remain a focus for us. I think it has been a market where we have achieved volume-wide and good growth for a new company and new entrants into Azo, and create a name for us for several of the products that we make in Azo, and we hope to continue that and pushing their volume while we get the export business started and in line. And this has been seen in the numbers as well. As [indiscernible], we have been slow because of the market environment, but we have steadily increased performance over the past [indiscernible] and this has been largely due to our efforts to [indiscernible] but also strongly in India, and we will continue to use that as India remains a very strong demand market. There are ups and downs, obviously, but overall, the demand in India continues to remain strong, and we hope to leverage that are not with export.

Quick addition to this comment. So basically, again, if you look at 3 to 5 macro future of the company, strategically, we will continue to believe that the markets you refer to, U.S. and Europe and M&C customers that we have generally great relationships with and who are the largest customers of the Azos as well globally will be our key targets going forward. The key challenge is going to be China. The last 2 years have been more difficult because due to the -- once Trump came to power, and the tariff was in China, China kind of eased off and the internal Chinese environment management things eased off and the competition was stronger than expected. However, directionally, we continue to believe over the next 3 to 5 years, there could be any time of opportunity, a big opportunity where China and U.S. have a major disruption in relation and this could present opportunity for India in the Azo business to suddenly leapfrog and grow. We have to be patient and wait for this opportunity. Having said that, even structurally China will continue as it tries to fight the U.S. in global leadership and dominance, get difficult for Azo manufacturers to consistently manufacture in China over the next 5 years. So the opportunity is there, we have to be patient.

And last question on the API side. So since if you can talk about the sort of diversification beyond. I think we had 3 products, how is the new product as coming out? What are we doing on the R&D side to kind of dates from the [indiscernible] side? And on the [indiscernible], you talked about 15% increase from the bottom in prices largely across the chemical surprises have increased on inflation. Do we see this sustainable? Or if the war kind of comes to an end and the inside normalizes, do we see it going back to earlier levels and hence, we're going back to that 6%, 7%, 8% EBITDA margin.

So for the -- I think for the -- to answer your first question, I think the new products, we continue to work on the R&D side to explore different options, different projects and see what is best suited for the company. I think we have been able to execute a few products that we have successfully developed in the R&D taken in the plant and now commercialize as well like etoricoxib, for example. Apart from that, I think, as you mentioned, and as I said as well, pregabalin was and is our dominant product and continues to drive our volumes. And we are happy about this. This is a product where we see there is a good future where we are positioned very well with good relationships with the customers that we already cater to. And strong future outlook with the possible CEP approval, hopefully, by the end of the year as well. So we are happy with the growth of pregabalin and [indiscernible] backward integration, the sustainability of the growth for pregabalin, but there are other products as well -- which were already part of our profile like [indiscernible] and others where have also seen meaningful growth in the current volume, and we will -- we are strategically seeing what we can do with [indiscernible] market further. And be able to have them as meaningful contributor financially with large enough volumes as well. So I think there in terms of new products and in terms of current product barring pregabalin, we are working on them, and we are looking to grow those volumes as well. And in terms of that, I think we are confident that -- it takes time, but we are working towards that, and we will hopefully be able to leverage and use growth of pregabalin as well as the others to get better efficiencies and fill up our plant in the Chhatral side, which will help drive margins and help the overall financial performance of Atlas.

And on the pricing side, how do you...

I'll quickly answer the second half of your question. So normally, what happens when the raw material prices have bottomed out, the cyclical kind of the sudden rise in prices due to the RM prices going up, may have contributed to some improved margins. This -- even if raw material prices were to drop, the basic cyclical trend of demand, that seemed to have bottomed out. So to long and short of that answer is that we should hope that these margins remain kind of sustainable. And we internally are also able to do enough on operations as well as say, for example, on the API thing, something -- strategically something where we can get new products or new customers through a good strategic move to unlock the utilization levels of the new plant. So yes, the target would be that the EBITDA margins would not drop back to the original numbers that you referred.

Next question comes from the line of Rahul Jain with [indiscernible].

Congratulations on a very good set of numbers, and Gokul bhai, we have a [indiscernible], we will be always there. So all the best to you and best wishes to Arjun to take this to the next level going so much under your guidance always. My question, sir, sir, -- so this is after almost 3, 4 quarters, we have seen the post turnaround in the pigment business. And also with regard to API, what we have said is we have registered highest quarterly revenue till date. So individually, each businesses, you have spoken a lot about in terms of the demand scenario and geopolitical situation. So my first question is going ahead in the near term, so next 3, 4 quarters, do we see this momentum in terms of revenue can continue to -- can continue for segments maybe it continues for blue and also, you can see some improvement on Azo. And also on the API side, we have always done good volume growth, but the pricing was an issue to us. So again, next 3, 4 quarters, how do we look at API revenue growth, considering the 6 products which are there in our kit and also for the 6 products that we are working upon. Hello. Hello. Hello.

Yes. sir, we can hear you. Yes, yes, please go ahead.

So they don't match our section with regards to both sales growth in the pigment segment, [indiscernible], and Azo, also API segment in the next 3, 4 quarters?

Yes. Yes. So the -- you're referring to the next 3, 4 quarters in terms of what we see the growth potential? Is that the question?

Yes.

So in the pigment section, the EPC business of Azo, the utilization levels are currently hovering around 65%, and there is opportunity to take this utilization levels forward to about 75% to 85% before we are required to push a small CapEx to increase capacity. We see both of these events happening in the coming 3 to 4 quarters, where we are able to reach to 75%, 85% range. As soon as we hit that range, we would like to do a little expansion with a small CapEx of about INR 10 crores to INR 15 crores, which would probably be financed through internal accruals, and increase our capacity, as Arjun earlier referred, the CapEx will only be related to plant and machinery because the general civil and the building is all the land building and the infrastructure is in place. So we should see some momentum in terms of growth However, the word of caution there is, this is a slow development as I referred to the earlier answer as well, that basically, the environment for the Azos, particularly with the Chinese competition strong. So we have to be a little patient to be able to customers in the export markets that we desire to get. On the Atlas, the API side, Also, we have to work on the strategic way to acquire new customers and markets and also get new products. This is a long drawn process. We are looking internally, I can't comment too much, but basically, we are looking at some strategic moves there that could unlock potential over the next 2 years to improve our finished product utilization in Chhatral. We have a top class facility in Chhatral for finished APIs, and this should hold ,in a good step going forward.

And with regards to the margins, again, is there any element of inventory gain in the margins, which are reported for the quarter 4?

Yes. So Arjun, are you back? Can you get this? I think Arjun not...

I'm back. I think it got cut. So I missed the last question, but I just heard the current question. So I think as I said, I mean, I think it is for a further quarter, it is a mix of several things -- all 3 things that have played their part, the consistent effort over the last several quarters of the improved efficiencies has obviously had an effect and that will be sustainable, then the strategy to mitigate the geopolitical issues, which are ranging from the supply chain getting raw material to dealing with customers, to logistics, all of that obviously has been a challenge for everyone. And I believe we have done a good job there, which is why we have seen a good performance and partly inventory, but that is not like a substantial factor or anything. It is a mix of all of this that has got in the result this quarter. And as we have guided for the blue, we are confident that over the next -- so we will again be able to sustainably put up a good performance barring -- even despite geopolitical or other other things because of internal efficiencies and other things they are doing internally to try and make earnings more sustainable there.

We are saying the quarter 4 EBIT margins in each of this segment segment and API segment, -- are this sustainable in the coming quarters?

So it is difficult to exactly pinpoint. So I'll go business-wise. So I think, as we mentioned, both the subsidiaries, they have become EBITDA positive or cash positive as well for the API business, we believe that the price reversal, hopefully, this continues to remain sustainable. And then in terms of business volume, I think we are confident in the API to sustain the growth we have seen over the past 3 years. And with a good price rebound in customer price rebound that is sustainable. For the Azo, I think the slow and steady progress, which we will continue to make and hopefully keep making slow inroads to the performance, which we have done quarter-on-quarter now for more than the last 4 quarters. So that should sustainably continue there as well. And for the blue, obviously, there are several things. And one thing which I mentioned as well, we are wanting to focus on for not 1 quarter but for the next several years, is to make earnings sustainable, both revenue and bottom line, and we are doing -- planning a strategy of doing what we can to ensure that it is sustainable over the long term.

Quickly adding to this. So basically, if we look forward to the next quarter, on the EBITDA, all 3 segments should be able to maintain quite easily even under the current circumstances of disruption globally, the margins that we have seen in Q4. So Q1 should be able to easily maintain those in terms of our performance. We should try and actually better that. Then going forward from there on, of course, that would be the end of some of the things that we are doing internally helps us make it sustainable for a longer period of time. However, you can imagine that it's very difficult in this business to predict far into the future, very minutely on the EBITDA. But the structural trend seems to be a one-off improvement.

One last larger question, sir, in terms of the industry, we have been seeing the talk about China, removing date on certain chemicals/agrochemicals. And also in the -- some of the con calls for this quarter, which they have heard. Some of the management at intake, yes, there has been a price increase by China and certain products where China wise to increase prices now, but in last 2, 3 weeks, the price is Chinese people have also started increasing prices. I mean, it looks like this increase in the prices will be sustainable. Your thoughts will be quite helpful, sir. 2yes.

So generally, we are seeing this trend. Mitesh, can you take this question, please? On the internal tariffs that have -- or the benefit that the Chinese government has removed from some of the manufacturers and the sustainability of the increase in price.

Sir, I have not heard the question properly. Can you please repeat?

So Mitesh bhai, I was saying what we have heard in some of the con calls of agrochemicals, chemical/API companies. that there was -- Chinese companies have not increased prices initial even after the war began. But in last 2, 3 weeks, there is a change in that behavior. And the Chinese company has started increasing prices across many products. And their view is this increase is not like -- this increase is something which we continue to sustain. So I just wanted to understand thoughts of people -- on the same.

So question [indiscernible] also directed to -- in relation to what the government in China has removed in terms of some of the subsidy that they were giving. And is this also partially the cause for the increase in prices recently and the festive.

So basically due to 3 reasons, China has increased the price One, as mentioned by Gokul, sir, that the Chinese government reduced the export incentive and rebate. Second part is due to the ocean rate because of geopolitical issue, Ocean trade is almost double from the China. And third part is due to crude -- basic raw material price has been increased. So in general, Chinese has increased around 30% to 40% of their price because of all 3 reasons.

So this is -- looking like the benefits going and also the Chinese currency strengthening has been significant. So that is become a bit of an advantage. So it should hopefully remain that way, and we should get a better opportunity to make inroads into these markets and competition.

Next question comes from the line of Rudraksh Raheja iThought Financial Consulting.

Sir, you have talked about realization improvement across all the segments, which has helped us in getting these results, could you talk about the commentary like what has been the trend in the last 2 months across the segments.

So you mean the commentary on what we have observed over the last few months for all 3 businesses, is it? The realization?

Yes, Realization, yes. Has that trend continued or the prices have stabilized? Is there further appreciation along that.

So I'll give you for the quick overall thing. I think their prices are not really -- the escalation of prices, obviously, initially was a lot more, but there is no stability or certainty in the prices or the business environment at the moment. I think the geopolitical issues will continue to remain uncertain and the uncertainty globally has led to continued volatile environment. As I mentioned earlier, Mitesh will briefly mention right now as well. I think it is ranging from absolute staffing from the artificial for any of the 3 businesses to operating, energy as well as logistics able to execute on. So I think everything is still quite uncertain and quite volatile. But this is one of the few things we have executed well as a company right from last quarter to the last few months as well. And we are confident of continuing this performance in Q1, where we are able to mitigate the global uncertainties as best we can to put our company in the best position to be able to have the best realizations considering the current global situation.

Understood. Sir, on the blue segment, what was the capacity utilization in the last quarter?

So we have discussed the capacity utilization for -- the other 2. For the blue, I think this evolving thing, there's also different products and different -- so it's difficult to exactly quantify the capacity utilization. I think, blue generally, we operate pretty high utilization level as opposed to the 2 subsidiaries where, as I mentioned, fix asset turnover is something that we need to improve on, and it will be a conscious effort where we can see business. For the blue, I think we are operating at high utilization levels already. But there, the internal efficiency projects and only will continue to incrementally give us that additional boost in capacity and because of the consistent long-term performance there, I feel that incremental boost will also help and that adds to the overall commentary that we have given in the blue where we see a consistent, steady, better performance over the next few years irrespective of global climate and environment. So we have been able to execute this performance in not only the geopolitical uncertainty, but also a generally slow demand climate. And we are confident that we will continue good utilization levels in the coming year as well.

Understood. Sir, you have spoken about internal efficiencies. If I look at last quarter itself, the power and fuel cost for the blue segment specifically has been exceptionally lower. It's not even 5%, which has never been the trend. Could you share more details? And if this kind of cost savings is sustainable going forward?

Just quickly, Arjun and Mitesh, I think there is one element of a onetime thing that has impacted this number. So with that in mind, you should answer this question. Good question.

I think that's a very important question. And as our Managing Director said, I think we have seen a onetime effect here, which is something to do with the renewable projects. It is amount that we received -- rightfully received through -- from the government. And this is obviously -- this is not going to be sustainable to this level. However, part of what you mentioned, part of our is obviously a lot of our efforts do also surround power and fuel over and above the production and other things and the power and fuel saving, which we have generally seen -- not this quarter, but generally, we have seen despite higher utilization, not an increase in the power [indiscernible] that is due to several different projects that we have executed in the past. And we hope that we'll continue to work on those projects and incrementally reduce. With this particular number that you mentioned, that is because of one-off thing. So this will not be sustainable every quarter.

However, we should be better off in terms of percentage of power and fuel going forward as compared to the past.

Sir, could you share this one-off cost benefit that we received in last quarter on the quantum of that?

So basically, it was, as I mentioned, it was basically to do with the billing charges that is incurred on [indiscernible]. And we were able to get for which was pending to be gotten for 2 years and one short payment after a discussion and being able to use the the renewable loss correctly. So I think the government was very clear about the laws and they were -- this was for a few companies in the area and they were kind enough to be able to give the rebate to everyone in our area. So it is something that we have seen for this 1 quarter. And as the MD mentioned, I think while the 5% is only for this quarter, incrementally, we will look to reduce. And average percentage for partnering fuel, I can say will continue to go down from our earlier levels.

Got it. So on Azo revenue side, how much was the revenues for the full year? And what kind of PBT losses did we incur in the Azo segment for full year?

[indiscernible] with the line of.

Yes, I am on the line. Azo revenue for 2 years, INR 78 crores and PBT negative INR 2.4 crores.

Understood. And sir, should we expect this to break even next year?

Yes, we should definitely expect that. And I think as I have guided as well, for us internally, while we have been through, it has been a steady positive performance, and we are hopeful and confident that achieves.

Yes. I think, sir, we lost Mr. Gokul -- Arjun sir, he was answering.

No, the line is connected.

Mr. Jaykrishna, please go ahead. I couldn't hear the question. After Nupur finish, if I miss, I think it got disconnected for a second. What was the question?

Yes, sir, I was asking that would we be able to break even next year on the PBT level?

Yes. I thought I was speaking about maybe mostly able to get connected. So yes, we are confident of this. And as I mentioned earlier as well, we have been slow, but we have been steady in growth positively for the last 4 quarters, and we continue the performance this year, and we will -- we are confident that what plans we have in place, we'll be able to execute what you mentioned. We should -- we'll be able to do that.

Understood, sir. Sir, a few questions on the API segment. I think in a few of our previous calls, we have spoken about hiring a business development or marketing team. Any details that you could share on what's happening there?

I'll take this question. So as of right now, our general team at the API section is doing quite well. However, on a strategic level, we need to see a good bit of move and improvement here. There is some discussions that we are doing, which over the next quarter or so, we will put into action because we have stability, what we require is dynamism and there are some serious knowledge about the API industry, customers and products. And yes, we would be seeing some addition at a senior level which could help us take the company forward in a meaningful way to unlock the new API plant capacity, et cetera.

Got it, sir. Got it.

As of today, there has been more additions in any position at last. There is likely to be.

Understood, sir. Sir, last question on repair segment only. Last quarter has been exceptionally well for us. We related around INR 30 crores in revenues. And EBIT contribution at around 10%. So if this pricing sustains, can we sustain this level of quarterly rate and profitability for next year?

Yes. So I think you summed up perfectly, I think as we have guided, I think in terms of volume growth, we have done well and it has not been reflected because of the pricing. So yes, if the pricing does sustained, we are confident of landing a strong performance in the U.K. business and the volume that we have built up, we are confident of maintaining those as well and continue to work on them as we do the new projects for like the CEP, et cetera. So if the price sustained, we are certainly confident of continued good performance for API.

Next question comes from the line of Madhur Rathi with Counter Cyclical Investment.

I wanted to understand regarding this new business. So how should we look at it from the next 1 or 2 year perspective because I think previously the industry here, we use to lease to 40% plus gross margin levels. And you have been speaking about internal efficiency as well as I think for a partial quarter. So how should I look at the gross margin of this business going forward.

Yes. So I think, as you said, in the past, I think the business landscape was a little bit different, both in terms of the demand profile, which was relatively stronger and in terms of the competitiveness and supplier profile. I think while we have seen both the things change in terms of addition of competition as well as a sustained period, as MD mentioned, probably one of the longest low or depression sustained periods in terms of demand in the chemical industry, in general, also in pigment that has been seen for since our company started probably, yet we have been able to use everything in terms of the company, suppliers, customers, quality, all of that to be able to continue to be a leader in this space. And now what we are planning to do, as I mentioned, something we have executed in the past, the goal is to be able to have sustainable margins at a good level. So we have had one-off performances, but it has been up and down. So despite challenging circumstances, we got this result, I hope that this is sustainable, and we will make sure that we do everything in our power to have at the current margin levels, have performance over the next few years. And we have a clear strategy in place for the blue where we are confident that over the next -- it's difficult to call 1 or 2 quarters. But this quarter, obviously, we hope to continue the good performance because of our strategy of the global uncertainty, mitigation but over the years we will -- 2 years and we will continue to have strong and hopefully steadier performance of bottom line as well as our revenue profile.

So the value in the coming 3 years. So have the capacity closure? Or how -- because what I understand is this is a [indiscernible] many people come in during the plan [indiscernible] are phasing also have there any capacity closures in the schedule?

I have a -- so in the earlier call 6 months back also, I had probably addressed this question there, we have seen some capacity closures because the market was cyclically very bad and only the strong companies were able to perform, and there was an advantage for Asahi, and we did quite well in that environment. that environment generally has not changed. So the the coming future doesn't look like even if the market improves, there is any chance of any capacity addition. That is the first thing. And the consolidation fees, which is going on, still continues because not everybody is doing well. However, the opportunity for organized businesses in this segment who do very well is good. And we are, at Asahi, taking advantage of that and should continue to perform well because India clearly dominates the global market as far as blues are concerned, and this is not likely to change.

Got it.

Also quickly last comment, the basic nature of pigments, they find applications across various industries in paints, plastics, and we are a rubber including now even in textiles marginally. But -- so it's a buried end application. And there is no substitution or [indiscernible] impact. So 10 years or 15 years from now, the blue and Azo pigment will be used the same way. The products are -- they are not like in other industries such as API, there is no obsolency, there's no competition structurally to these products by any other products to replace them.

Right. Sir, what more in need of our revenue comes from like the commodity products, the CPG crude grew? And what percentage of this comes from the value-added segments in our indiction as a potent age of our revenue.

Arjun?

So I think in this, we generally don't we refrain from giving the exact rates between the 2. I think more in a very pivotal part of our strategy and operation. And I think even the crude, I think, while considered a commodity that is something that we have a very specific quality and a very specific way that product and -- we believe that, that as well is a key value add for us, the crude and the pigment, I think both would be substantial contributors and they will be in the coming future. But I request if it's okay, we do not share the exact breakup just for a business reason.

Right. Sir, so 1 quarter, sir, when we say that we are -- there are multiple projects going on with export customers. These are pigment-related projects. Is that a fair understanding? And as these projects scale up, can we expect the segment portion of revenue? I don't know on the numbers, but directionally, the pigment share should grow and that should flow out to our margins. Is that a fair understanding?

Yes. So I think the projects that we are doing would be for all the products that we make. And the key point here is that we are only looking for and doing projects where we see a value addition. So to answer whatever projects we do, we have -- whatever we are working on, whatever we hope to execute in the coming few years will add to the margin profile for sure. because here, as opposed to the other businesses, as we mentioned, we are operating a good utilization levels. And hence we will here be looking to have addition to bottom line through projects and continue to hopefully maintain the top line to strong levels that we have historically also seen in the past.

Got it. And these will be pigment-related projects only?

Yes. I mean, it's -- yes, we make several pigments and others to do with the different ones with different people.

Got it. Sir, just final 2 questions from [indiscernible] Sir,where do we see the business? So if the realization sustained where should we see the business maybe for FY '27, what kind of revenue and margins, can we undertake we expect to deliver? And sir, and one portion because what was the inventory gain on our stand-alone and consolidated business for the whole year in Q4 FY '28?

So I think question, I think the for that, actually, I remember the inventory on -- because you asked both, I don't recall the first one.

Sir, I wanted to understand what kind of outlook do we have for this year the prices are changed and what kind of margins can we expect to maintain here?

So I think we would look to on a sustainable, as you mentioned, I think we now recorded for next year and 2 years is what you're asking for. I think we should look to maintain the current margins that we have. And in terms of CapEx, as our MD mentioned, we don't plan to make any CapEx. I think it's internal projects that we look to work on to slightly boost our capacities and the projects with customers where we look to, the top line obviously will move a little bit with the pricing, but we should expect to have the margins consistently at the level we have shown right now. So being able to [indiscernible] your maintain and have this strong margin profile for the blue business.

Got it. Sir, on the inventory gain part?

So on the inventory, I think we've already answered it earlier. The margin contribution of inventory gain is there, but it is marginal. There is also operational efficiencies. There is also an increase in prices of finished goods that we have been able to pass on to the customers. So inventory gain number is very difficult to decode, but basically, there has been some contribution of inventory gains because we were sitting on simply good inventory as well at the beginning of the quarter and before the war, that has resulted in some partial benefit coming into this quarter. However, that has already been absorbed. But even after that absorption, we feel that coming quarter, we should be easily able to maintain the performance if not slightly better that we have presented in this quarter.

Next question comes from the line of Dhawan Shah with [indiscernible] Advisors.

So I'm new to this company, so part of my ignorance. My question is on the standalone business first. For this year, I think we did roughly INR 360-odd crores kind of the revenue. So you mentioned in the earlier question that I think this business is operating at 60-odd percent utilization. Is that correct? And you are targeting roughly 75% utilization by this year-end?

No, this is not -- you're asking for the blue stand-alone business?

Correct.

Yes, yes. We are not at 60%. We are much higher. We are nearly at 5% over there.

I think what you are mentioning in numbers for the EPC value business.

Correct.

And that is in line with what we said. For the grapes, we are at those levels and we hope to incrementally increase to what you mentioned by more than that by the end of this year.

Understood. Understood. And for the standalone business, given that we are already running at 80%, 85%. So do you handle any room for the volume growth improvement, right? That could be on the pricing growth.

Yes. So I think we have guided that for this business, the key for us obviously pricing will impact the overall investment to be able to, over the next 2 years, give a more sustained performance and to be able to unlock the bottom line with things we are working on.

So just to throw a little more light on this question. So since it is at about 80%, as you rightly said, there doesn't seem to be any obvious big opportunity to improve volumes there. This is correct. This has been guided over the last couple of years and management view on the capacity and volume growth of the Blue business is clear that we are not looking to do on the Blue business, any CapExes to increase capacity. This is clear. Having said that, the reason I intervene is that you may see better efficiencies and operational improvements result in improvements in some volumes here as well. That is what earlier Arjun referred to a couple of times the operational efficiencies on the stand-alone side is also coming from debottlenecking opportunities that could result in improved and sustainable volumes also.

Understood. Understood.

But then of the [indiscernible] improvement to the business, would be higher because at 80%, if we improve from 80% to 85% or 85% to 90%, the incremental 5% obviously, is coming at very, very little marginal cost.

Understood. And if I look at the stand-alone operational cost, the other costs, excluding the employee and power fuel, so we are doing roughly annual -- annualized run rate is around INR 45-odd crores of the other costs in the standalone business over the revenue of INR 350 crores, right? So it is roughly around 13%, 14-odd percent of the revenue. So is there any room of implement over there where we can save some cost by doing some operational efficiency or cutting down the cost.

Yes. I think I think as mentioned, the different heads that obviously, until all the calls, we are working on all of them. And this is something that we have actually done the last few quarters, and we will continue to do. And overall, we are confident to be able to, from a year level, drive down the cost on most hedge and here as well, we should hope to see a improvement in the coming year.

Understood. And how much pricing growth have you seen in the standalone business in the last 2 months?

Mitesh bhai, can you just give a rough [indiscernible].

I will quickly give an idea on the pricing side. the stand-alone Blue business pricing is normally done on a quarterly basis, and our customers are mostly MNCs who have been there with us since over 15 years, all the 3 major MNCs that are our customers. So there is -- in this quarter, the benefits of the pricing have not fully been seen because the quarterly pricing was already locked in. And so we will probably likely see some benefit of that coming and falling over into the next coming quarter.

And how much pricing growth we can see in the next quarter?

So it is very difficult to put a percentage number on it because it depends on customer to customer, contract to contract, also there are various products. But generally, across the product basket of pigments as well as crude, there has been a substantial increase in price because of the downward pressure of raw materials and also the lack of availability of some of the raw materials. So a lot of our competitors generally in the business have found it difficult to even procure the raw material. So that has been a challenge, and that has driven up prices. So generally, prices across all product segments in the pigments business has gone up. And on [indiscernible] fully gone up. So I would probably say percentage-wise Mitesh, maybe you can put a percentage.

[indiscernible] Percentage -- would you say about an yes. Okay. 10% you're saying 20%.

Okay. Okay. So based on the price increase and let's say, if that price -- that maintains in the end of the year. So you can really do INR 400-odd crores kind of revenue in the stand-alone business. with 13%, 14% EBITDA margin. So maybe INR 50 crores, INR 55 crores absolute EBITDA in this can business, is it achievable in FY '27?

Yes, that is the peak potential or that is the potential of the blue business, yes. Correct.

That is achievable in FY '27 itself, right?

Yes, that would be -- yes, that would be our goal. That would be our goal. Arjun, you can comment on it if you have anything to say.

No, exactly. I think it's already been discussed. This would be our goal and where we are looking for consistency in the volume then continuous steady bottom line. So this would be our goal to be able to achieve that for this year and going forward.

Okay. Okay. And now for the subsidiaries for a Atlas, I think we are doing roughly INR 150-odd crores kind of the revenue, right? And the gross margin is roughly the same, 34%, 35% gross margin?

It ranges between 30% to 35% since the business is still growing and gradually utilization levels are increasing, we are also finding new customers, and endeavoring to go to the export market. Unlike the blue business, we don't have penetration into the MNC market yet in a meaningful way. So this margin range is between 30% to 35%. Right now, it is at the lower end of 30%, and we look to go towards the higher end of the 35% band. Anything you want to add, Arjun or Mitesh, you can add.

No, that's right.

Understood. And at the current capacity at full utilization, how much peak revenues you can do from the Atlas business? And you already mentioned that you can do breakeven this year in terms of the PBT. So in terms of EBITDA, if you can help us to understand what kind of EBITDA you are expecting from Atlas in '27 and '28.

So I think as opposed to both the pigment businesses in [indiscernible], it is difficult to guide the maximum, what the company or the plant can achieve or the delta between products, the pricing between products, the volumes are very, very different. And hence, it's like in the blue, we can give you a more definitive answer like we did or what we are looking to hope to achieve here. Is it very different than the nature that allow to give the exact number of what the plant can achieve because pricing of products is -- even the product [indiscernible] very different. Like there are several products which we are making, which are much, much smaller in volume, obviously, but a few products which would be maybe 10x the price of pregabalin. The price delta is very different and hence, total what the plant can achieve and what the company can achieve in terms of turn on EBITDA that is something that is determined all those factors and has the ceiling at Atlas is very high. This is why we have gone into this business, and this is why, hopefully, with a positive price of pregabalin, coupled with the new products that we have in new business in going to -- we will be able to show good performance. And as you mentioned, I think we [indiscernible] the is -- and for EBITDA, once again, it will be highly dependent on the price and if we are able to see a continuous steadiness and improvement in price like we saw this quarter, we should be able to execute the numbers we did in this quarter, but it is dependent on the price, and we will continue to do what we can in terms of the volumes to be able to take it factor out of our and continue to give a form for [indiscernible].

And if the plant is operating at what relation right now, this INR 150-odd crores is from 30%, 40% utilization or at what level we are operating?

The API part of Chhatral operating at a low level of around 30% of the intermediates. We have done a good job of executing that and becoming pretty much self-reliant for such a large product, and that is why we've been able to survive and grow by 18% in such -- despite such a lot of price pressure. So intermediate is around 60% and finished product would be around 30%, et cetera.

Understood. And how much fixed overheads are we doing in these 2 subsidiaries?

Mitesh bhai, can I request will take this question.

Currently, at Chhatral, our utilization is lower. So the fixed cost is a bit higher. But when we -- our utilization will increase, then in terms of fixed cost in percentage terms will decrease. So basically, in short answer of your question, we can achieve both facility, Chhatral and Atlas, we can achieve INR 252 crores to INR 80 crores turnover at peak without doing any CapEx? And our -- and we can achieve 15% to 16% of EBITDA margins -- so in next 2 to 3 years, we will acheive this.

Okay. So consol EBITDA would be INR 100 crores, that is a peak. That is what we are expecting right stand-alone INR 50 crores, INR 55 crores peak and subsidiaries are also around INR 50 crores peak?

Yes, yes. Yes, exactly.

Ladies and gentlemen, that was the last question for today. We have reached the end of question-and-answer session. I now hand the conference over to Arjun Jaykrishna Jakarta, for closing comments.

Thank you so much. I think, as I mentioned at the start, thank you for everyone to take the time out to join the conference call today. And thank you for all your questions and your time. We look forward to speaking with you again at the end of Q1 FY '27. Thank you.

On behalf of Asahi Songwon Colors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.