Balaji Amines Limited (530999) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Balaji Amines Limited Q4 FY '20 Earnings Conference Call hosted by Emkay Global Financial Services Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Sinha from Emkay Global. Thank you, and over to you, Mr. Sinha.

Thank you. Good evening, everyone. On behalf of Emkay Global Financial Services, I welcome you all to the Q4 FY '20 earnings conference call of Balaji Amines Limited. We have with us today Mr. Ram Reddy, Promoter and Managing Director of Balaji Amines. We request the management for their opening remarks, post which we will open the floor for Q&A. Over to you, sir.

Ladies and gentlemen, very good evening to all of you, and welcome to the conference call to discuss the financial performance of the Q4 and FY '20 of our company, Balaji Amines Limited. We are all going through truly unprecedented times, and I hope that all you and your families are safe and healthy. I hope you have got a chance to go through the press release and financial statements submitted to the stock exchange and uploaded on our website. Let me take you through the stand-alone financial and operational performance. Despite not operating at full capacity utilization in the latter half of the month of March due to lockdown, we recorded a total revenue of INR 238 crore in Q4 FY '20 as against INR 237 crore in the corresponding quarter of previous year. EBITDA came in at INR 56 crore in Q4 FY '20, which is up by 14.6% as compared to INR 49 crore in the same period last year, with EBITDA margin at 23.6% in the Q4 FY '20 as compared to 20.8% in the same period last year. Profit after tax was at INR 32 crore in the current quarter under review, up by 19.9% as against INR 27 crore in Q4 FY '19. PAT margin stood at 13.6% in Q4 FY '20 as against 11.4% in Q4 FY '19. On face value of INR 2 per share, diluted EPS for Q4 FY '20 stood at INR 9.98 per equity share as compared to INR 8.33 per equity share in Q4 FY '19. The top line growth in Q4 FY '20 is lower due to low raw material cost, which is passed on to the end customers. However, the EBITDA margins have improved primarily on account of market increase in volume uptake with improved price realizations largely across all products, increase in operating leverage and benign raw material prices. Coming to our stand-alone performance for the FY '20, revenue from operations in FY '20 stood at INR 929 crore as compared to INR 955 crore in FY '19. EBITDA for FY '20 was INR 190 crore as compared to INR 119 crore in FY '19. EBITDA margin for FY '20 was at 20.5%. PAT for FY '20 was INR 114 crore as compared to INR 118 crore in FY '19. Diluted EPS for financial year '20 stood at INR 35.11 per equity share of INR 2. I'm also pleased to inform that as on current date, we are a 0 debt company on stand-alone basis. Now let me just give you all quick update on the impact of COVID-19 on our business operations. In Q1 FY '21, the lockdown has resulted in lower capacity utilization of about 70%, primarily due to logistic issues, like delays in port clearances, limited availability of trucks and tankers for movement of raw materials and finished goods as well as unavailability of manpower. However, now we expect to swiftly ramp up our capacity utilization levels. Due to the lockdown, the operations of our subsidiary plant was shut down in the month of April and May. However, as we had sufficient finished inventory, our sales were not significantly impacted. The operations at our subsidiary plant have commenced from first week of June. We are largely ring-fenced from risk of reduction in demand as our product portfolio largely caters to the noncyclical and more defensive end-user segments like Pharmaceuticals, Agrochemicals, Home Care & Personal Care Markets, Animal Nutrition and Water Treatment Applications. We are likely to witness spillover in demand to forthcoming quarters for some certain end-user applications, like dyes, paints, coatings, textile, polymers and refinery. Due to COVID-19, we are likely to see improved demand for some of our products like NMP, DMA, DEA, Acetonitrile and DMF, which are likely -- which are key intermediates which go into the manufacturing of anti-retroviral drugs, which are being recommended for treating patients. I would also like to highlight here a draft notification was issued in May 2020 by the Ministry of Agriculture that has proposed to ban 20 pesticides, including Mancozeb, and our subsidiary manufacturers EDA which goes into production of Mancozeb. The revenue from Mancozeb for Indian agrochemical companies from domestic sales and export constitutes about INR 3,000 crore per annum. The agrochemical companies are likely to put up a tough resistance to the government's proposal as Mancozeb constitutes major part of their total revenue. Also, the chances of this proposed ban getting revoked is higher as the usage of expensive substitute pesticides will not be economically viable for farmers. We started manufacturing Acetonitrile from November '19 onwards and have gradually ramped up our production capacity to about 9 tons per day. In FY '21, we plan to scale up production significantly to about 18 to 20 tons per day. The margin delta of Acetonitrile continues to remain elevated on account of higher price realization due to supply constraints in global markets. Our production capacity for Dimethylformamide is 30,000 tons per annum, whereas the total demand in India is for 45,000 tons per annum. However, historically, we have been able to achieve capacity utilization of only 20% due to dumping by China. We have made an application to the Government of India for levying anti-dumping duties on DMF. Nevertheless, in recent months, we have witnessed better pricing of DMF. If the price realization remains steady, we anticipate gradual improvement in capacity utilization to 60% from around 30% in financial year '20, which was about 20% in financial year '19. As for our growth plans, we are undertaking CapEx of INR 150 crore to INR 170 crore for the Phase 1 of our greenfield project, where we will install capacity for manufacture of 16,500 tons of Ethyl Amines and 9,900 tons of Dimethyl Carbonate. The CapEx will be largely funded by internal accruals. Post the commencement of the Phase 1 project, which is now likely to happen at the end of this financial year, the company will have the largest installed capacity of Ethyl Amines in India at 22,500 tons per annum. The demand for Dimethyl Carbonate is about 8,000 tons in India, which is currently met fully by imports. We have got mega project status for this greenfield project. Volume uptake from Balaji Specialty Chemicals Private Limited, which is our subsidiary company, has gradually increased and witnessed the best performance in Q4 FY '20 despite the initiation of lockdown in later half of March 2020. In Q4 FY '20, Balaji Specialty recorded a revenue of INR 21 crore, up by more than 4x from INR 4 crore in Q3 FY '20. The subsidiary company also recorded operating profit of INR 92 lakhs in Q4 FY '20 as compared to loss of INR 2.5 crore in Q3 FY '20. For products from our subsidiary plant, we have procurement commitments from leading Indian agrochemical companies for their requirements in Q1 FY '21. Based on the supplies to agrochemical companies, we envisage to sign long-term contracts with them going forward. Agrochemical sector prospectus are likely to brighten on account of highest storage across reservoirs over last 5 years, coupled with the recent price hike in minimum support price of key Kharif crops and initial indications of normal monsoon expected in 2020. That's all from our side. Now we leave the floor open for question and answers.

[Operator Instructions] First question is from the line of [ Rahul Hira from Rycus Asset Management ].

Sir, just wanted to understand sir, our depreciation and interest have doubled, have we capitalized some assets?

Can you repeat the question?

Sir, on the consolidated numbers our interest cost and depreciation numbers both have doubled, almost doubled.

Yes, because this -- the consolidated subsidiary also has come.

During this current year.

During this current year, subsidiary that Balaji Specialty Chemicals assets, new asset has added where the depreciation has increased and interest on the new asset creation, which was -- there was a loan on that.

Okay. Okay. So what would be the debt on the subsidiary, sir?

It is around INR 80 crores to INR 85 crores.

Okay. Okay. That is long-term debt, plus working capital is also there, right sir?

Yes.

Okay. Okay. And sir, what is your view on the hospitality side, sir?

INR 130 crores total because -- sorry, I missed -- we have taken recently another addition, total INR 130 crores is there on subsidiary, term loan, yes.

Okay. Okay. Got it, sir. And sir, any view on the hospital business. What kind of monthly losses you'll be having there right now?

Presently, last 3, 4 months, we are not operating. And the fixed cost, we are incurring around INR 20 lakhs, INR 22 lakhs per month.

Next question is from the line of Pritesh Chheda from Lucky Investment Managers.

Sir, if you could give some outlook on the volumes that you would be able to do in FY '21 on the stand-alone operations post the ramp-up in any other product lines. So whatever -- we did about 86,000 this year, what do you see in '21? And at what operating utilization does the Balaji Specialty looks like in FY '21?

See, I think, we are already operating this Balaji Amines in that 80%, 85%, only 15 days production we lost. And with current situation, really speaking, it is very difficult to predict any numbers. We don't know when it will happen, when will -- lockdown will start, when it will happen. Everything is uncertain. But if everything goes well, yes, there will be another 5,000 to 10,000 tons will add into the current volumes. As regards to Balaji Specialty Chemicals, I think we should do at least 30% to 40% capacity utilization in the current year.

Okay. And on the Balaji stand-alone side, when we look at the exit profitability in the quarter, it's a significant improvement and it's back to whatever 3, 4 years -- 3 years back when you used to record this kind of EBITDA per kg or per ton. Has the volatility in the prices -- volatility in RM prices that we had seen in the last 4, 5 quarters, both on ethanol ammonia, all of it is now subsided in the GP number, realization number and the gross profit number and EBITDA number, and these are sustainable in your opinion?

[Technical Difficulty] Sir, may I request you to repeat your question once again?

Sir, quarter 4 exit on the stand-alone operations have seen improvement in profitability in your base business, both on basis on GP per ton and EBITDA per ton. So we are back to what we used to report.

I think I've already mentioned in my prepared discussion. This is because of the increase in volume uptake with improved price realizations, largely across in all products. Almost all the products had increase in the price realization as well as volume uptake also.

Do you think these are going to sustain for some time because what we have seen in your company's operations EBITDA has moved between INR 20 and INR 24 a kg. So do you think this -- there is a tailwind kind of a situation?

If things will go like this, yes, I can say yes. If things will go -- but it will not go worse than not below 18% of EBITDA. If you see the past record, the most sustainable between 18% to 20%, 22%.

Okay. And my last question is, sir, what is the debt levels now that we have on stand-alone and consol? And what is the CapEx that we did on the greenfield plant this year? And what is lined up next year?

See stand-alone, it is 0 debt. Nothing is there. There's no term loan in the Balaji Amines. And on subsidiary, there is INR 130 crores is the term loan, which we just started repaying from this quarter onwards. And as regards to...

Working capital.

Working capital also, as of now, we are not utilizing as per -- as on 31st, we were utilizing some INR 90 crores, INR 95 crores. But as on today, we are not utilizing anything. The reason being the expansion, the greenfield was a little delayed. The money earmarked for that was not utilized fully because of the delay in that. That has come into the system. So the reason, as on today, I can say, there is no working capital, 0 working capital. So -- and even CapEx, we have spent around INR 70 crores, INR 77 crores as on today and we are expecting to complete another INR 70 crores, INR 75 crores in the current financial year, which will be sufficient for the first phase expansion where I was discussing about Ethyl Amines and Dimethyl Carbonate.

Sir, including working capital, if you could give the loan because what I see in the press release that you have sent out the results, it seems to be INR 260 crore loan that we have on the book on stand-alone and consol also looks -- seems to be a similar amount. Is that correct?

See, INR 130 crores is on the Balaji Specialty, which you can say is that is right for the consolidated. And you are right, see INR 100 crores is the working capital in the Balaji Amines, INR 130 crores is the term loan in the Balaji Amines and there is -- INR 22 crores to INR 25 crores is the working capital in the subsidiary. All put together it comes to INR 260 crores -- INR 250 crores to INR 260 crores. You are right.

Consol, right?

Yes.

Okay. Okay. And what is the cash on the other hand because I see a line item of INR 47 crore as investment?

Yes, yes, yes. That's what I'm telling you. As on today, we have almost INR 100 crores which we are talking outstanding as on 31st March. Today, it has become 0. That is the cash, which we have to invest in this forthcoming CapEx.

Next question is from the line of [ Nilesh Goel from HDFC Securities ].

Sir, my question is on Balaji Specialty. In our last interaction, you mentioned that there are some operational challenges and because of that our utilization rate was less than 10% a quarter back. So what is currently the operational utilization rate?

There were never technical problems. I don't know where from you got this message. Actually at that time we -- user industry, what -- in the contract obligation for the imports because this being an alternate for the import, people were all signed for the import contracts. That was the first quarter when we have started the production. But as of now, no. They started taking from us. So we are supplying regularly to all the users in the country, most of the users in the country. So there's no technical problem we have faced.

Okay. Sir, so the contract with the supply -- the customers have been signed from you side, you mentioned that it will be signed.

We have taken some commitments for the fiscal year which is closed on 31st March 2020. Those commitments we have fulfilled. And now they have given one quarter, they have given the orders, which we are completing, current quarter. Probably now they will get the confidence. Maybe we will discuss about the long-term contracts.

In this current situation, how much revenue do you expect from Balaji Specialty in FY '21? You mentioned utilization will be 30%, right?

Nilesh, it's very difficult to say. Because of this COVID, we are unable to say any figure. As of now, we are doing well.

Okay. And sir, just one bookkeeping question. The percentage revenue share between amine derivative and specialty, can you share that number?

See, you should send a mail individually.

Next question is from the line of Jatin Damania from Kotak Securities.

Sir, congrats on decent set of numbers. Sir, majority of my questions answered. Just wanted to carry forward on the subsidiary front because last quarter you had initiated that you'll be probably signing a contract and now you're saying that probably it will still take time. So for this first quarter commitment in terms of volume, are we selling on the spot price or it will be on the contract price?

We have signed -- first -- last year, whatever we have signed at certain price some quantity same price we carry forward for the current year also. So probably, we will be discussing for the next quarter onwards for the new price.

Okay. And sir, what -- I mean, can you guide us in terms of the volume that you have signed up for the Q1? I mean what is the volume you did in the last year? And what is the volume that you have signed up for Q1? Is that possible?

This is -- we signed a onetime quantity of some 2,000 tons, which we are going to close by this quarter for the user.

Next question is from Swarnabha Mukherjee from Edelweiss Brokering Limited.

Congratulations for good set of numbers. Sir, my first question is on the volumes front, sir. So I see in the stand-alone business, the volumes for the Specialty Chemicals have gone up as compared to last quarter. So any particular product which is driving this volume growth or is it all around kind of...

All around.

Okay. So not particularly related to Acetonitrile ramp up or...

Our products ramp up is accelerated by something -- being a new product.

Okay. Okay. And sir, so the base amines volumes were slightly lower as compared to last quarter. Any particular reason for that?

I don't think base amines. You -- where from you got that?

I mean the amines numbers?

See I just want to clarify one thing. We being a very integrated plant, sometimes amines are consumed inside only to produce some of the intermediates, some of the base products, like if I'm making NMP more then I'm using monoethylamine. I'm making more DRC I'm using BMA. Then you will see less of sales of these Amines outside. This is how it happens.

Okay. Okay. Got it. Got it. Got it. And sir, greenfield project, the mega project, now what would be the expected commissioning period?

By end of this year, financial year.

So Q4 '21?

Yes.

Okay. Okay. And sir, on the Acetonitrile side, so I just wanted to understand that is there a possibility of overseas demand also in this product? And how is basically the supply/demand in the domestic market now playing out with your facilities also coming and existing capacities are also there in the market, how the overall scene is looking?

Overall scenario, we are too small people in the quantity point of view to talk about the overall world market. But yes, I can say whatever we are producing...

Sir, in terms of domestic market, I was asking.

Whatever we have produced we have sold totally. And out of this total sale, we have sold around 100, 150 tons outside country also. We sold to Europe. There is a market in the outside country also.

Next question is from the line of Kunal Mehta from Vallum Capital.

Sir, my first question is, wanted to understand, sir, in Q1, did we see any impact on volumes, especially on the pharma and agrochemical side because customers

You are talking about the current year?

Yes, sir, Q1, first quarter, sir, this coming quarter, sir, till June.

Including this current month you are talking, including today, right?

Yes, yes.

Yes, there was little -- in April, there was some 70%, 70%. In May, it was 80%. And now June, it has become normal.

Okay. Okay. Sir, barring certain 10% up and down in...

No other volume.

There was no other major volume impact which Q1 will see?

No.

Okay. Okay. Okay. So we are as close to as normal as we would like to be. Okay. And sir, second question I have is on, sir, when you -- on Balaji Specialty, sir, when you sit with your customers, sir, what are the apprehensions which they are having? Because they have given us some business, so -- they've definitely given us some business and we are expecting to have more business once we complete this set of orders. So sir, what is your reaction, firstly, on this draft order? You mentioned that we're going -- we're also going to fight aggressively, but what is stopping them from giving us a meaningful quantity in terms of orders?

Nothing. They are taking whatever these 2 months we have given -- I told you in my first discussion. In spite of there is no -- there was no production in April and May, but we could sell. April, May, we could sell some quantities, which was having year ending stocks. And now June also, we are continuously running the plant and we are selling the product. Almost 600 to 700 tons every month we are going out.

Understood. Sir, because when we say that at least 30% to 40% utilization, we are actually talking about 7,000, 8,000 or 9,000 tons of EDA from them. So we are still -- this is -- is it that much -- I'm not asking for any sort of guidance because I know that given our past experience even we are not right now certain about what we have, but at least now the challenges from the other competitive players like BOE and BASF at least there, that is reduced, would you say that?

Yes. When I'm in a position to supply continuously past 3 months means you can understand that, yes, we could make some space with the customers.

Okay. Okay, sir. And sir, the next question I have is on the greenfield plant. Sir, greenfield plants will start in Q4 and major revenue beginning we would see in Q1 FY '22, right, sir?

Yes.

Okay. Okay. And sir, you also mentioned in the opening remarks that there are certain products which can benefit because they are intermediates used in pharmaceuticals and you mentioned NMP, NEP and DMAC. Sir, can you just mention what is the demand that you're seeing there?

See now we are talking about some of the products you have seen in last 3, 4 days, which are used for the COVID, in which Acetonitrile is used, DMF is used. Unlike anti-HIV earlier, people were using for the COVID as an alternate. In anti-HIV, NMP and DMA goes. And again, Acetonitrile goes in one stage and DMF goes in one stage as a solvent. And in one stage -- in one of the product Tri-Ethyl Amine goes as a catalyst.

Okay. Sir, so in such -- can you...

Sir, sorry to interrupt you. May I request you to come back in the question queue for a follow-up question. [Operator Instructions] Next question is from the line of Amar Mourya from Alpha Credit Advisors.

Congratulations for a very good set of numbers. Sir, just wanted a little bit of clarification on the capacity expansion. You indicated that by the Q4, our Ethyl Amines capacity will be 60,000 or what?

16,500, I said. 50 tons per day capacity.

Okay. So then how much would be the total capacity for Ethyl Amines?

See current 9,000 and 16,000, it goes to somewhere 20,000 to 24,000 tons.

Okay. 20,000 to 24,000 tons. And secondly, along with that, we will improve -- expand our DMAC capacity, right?

No, not DMAC. DMC, Dimethyl Carbonate, we are coming up with a new product, which is, again, first time in the country. This greenfield first phase, we are talking about these 2 products. One is Ethyl Amines with 50 tons per day and other one is DMC, Dimethyl Carbonate, which is 30 tons per day.

And what would be the, sir, average price of this DMAC, Dimethyl Carbonate?

Around INR 150.

Next question is from the line of Nirav Jain from Anvil Shares and Stock Broking.

Sir, I had 2 questions. One is on the DMA HCL since it is also finding applications in metformin and other pharma grades. So just wanted your view on any improvement in the pricing of DMA HCL? And how is our capacity utilization there? I believe we have 25,000 tons capacity, right?

Yes, 22,000 to 23,000 tons capacity we have. We are fully utilizing as of now. Last 3, 4 -- - 3 months, if you see and the prices also -- there is improvement in the prices.

Okay. So can you quantify, sir, what were the prices in Q3 and how it has been now currently?

I don't have handy, but current prices are around INR 80 -- INR 75 to INR 80.

Okay, okay. And sir, second was on Piprazine. So since it is a byproduct from EDA, so I think the proportion of Piprazine what we get from EDA is 8% to 10%, roughly, from our EDA. So if you can just throw some light on the demand of Piprazine in the international market, domestic market and how has been the scenario currently? That would be helpful, sir.

See in domestic market itself there's is a demand of 8,000 to 10,000 tons for Piprazine. So our capacity is about 8 to 10 tons if we produce regularly also so -- which comes to some 4,000 to 5,000 tons maximum. So I don't think that we need to go outside also, presently it is sold at INR 375 to -- between INR 350 to INR 400.

Okay. Okay. And sir, how about the raw material prices Mono Ethyl Amines because I think for EDA, we will be using that raw monomethylamine. So is there any cost benefit there in terms of the availability of raw materials because of -- because Piprazine prices have been one way moving up. So any benefit on the raw material side also what we are getting currently or...

I cannot say benefits are there because up and down it happens every time. So present price is something $800.

Okay. Last question from my side is, sir, on our other raw materials like acetic acid, ammonia, methanol. Sir, some of the talks currently what we've been seeing daily on newspapers is like some of these products are getting imported from China and probably some sort of duties can be imposed on some of these commodity chemicals. So...

We have not -- we never imported any major raw material from the China. There was on and off we used to take the BDO, 1,4-Butanediol, but that also, we got many alternates. We are taking from the Taiwan, Saudi Arabia. And now from Europe also, we started buying.

Next question is from the line of Kishan Gupta from CD Equisearch Pvt Ltd.

Sir, can you tell me what is the volume growth expected for the stand-alone entity this year?

I think I already answered. But see, we -- whatever we have done maybe with the current volumes, we may add 5,000 to 10,000 tons if everything goes well. And as I said, it is very difficult to say proper figures because of the uncertainty in the current situation of this COVID. We do not know how long it will run. If the cases improves. If one case comes into one place, then there's a possibility of, again, lockdown comes into force. So that's the reason it's very difficult to give the correct figures.

You talked about this 30%, 40% Balaji Specialty capacity utilization for the year. So what is the current revenue potential total of this subsidiary?

INR 150 crores in the last year. Current year, I think we are doing some INR 10 crores to INR 12 crores per month. So in the current...

For Balaji Specialty you are saying?

Yes, current situation, it can improve also and something goes wrong, again, it may go down also.

INR 10 crores to INR 12 crores you're doing per month, right?

Yes.

Okay. And one thing about what sort of commitments, capital commitments you are making to Balaji Specialty because, I think, you already have a INR 46 crore loan to them.

Yes. See, this is for the initial stage we have taken because initially we were not operating fully. Now started operating. We don't have any obligations to take any commitment as of now. Everything is completed. All the investments have been fully completed. Now only the operation where we have the working capital limits are there.

No, sir, INR 46 crore, can it go up also, your commitment to the subsidiary?

It may be. If things will not go properly, then probably to pay the installments for the initial stages. That's all.

And how much is the annual repayment for Balaji specialty long-term debt?

18% -- INR 18 crores per year.

INR 18 crores per year would be repaid?

Yes. If everything goes well, I don't think we need anything in the coming quarter. The reason I told earlier calls also -- again, I just want to inform you and everybody whoever is listening, see, here, this Balaji Specialty also has got the status of Mega Project where we are eligible to get back all the GST paid on account of the sales -- SGST, that is almost 50% of the GST. If I -- suppose if I do the INR 100 crores, there will be INR 18 crores of the GST, out of which INR 10 crores will be coming back as a benefit for the Mega Project. So definitely, if I'm not getting major profits also, even simple sales also will give some leverage to pay back the installments.

And what about this...

Sir, sorry, interrupt you. I request you to come back in the question queue for the follow-up question. [Operator Instructions] Next question is from the line of Anand Bhavnani from Unifi Capital.

I have 2 questions.

Mr. Bhavnani, sorry to interrupt you. You are not audible. May I request you to speak a little louder?

Yes. So -- is it better now?

Yes.

Yes.

Yes. So I have 2 questions. The first question was on that -- several products on which we are awaiting duties. So I think DMS, DMAC and mostly -- and I guess 3 of our products are awaiting duty, is that correct?

No. DMF, yes, we are waiting. DMAC is already there. It is in force.

Okay. And Morpholine it's not there?

Morpholine, we enjoyed almost 6 years. Now it is not there. It is self-sufficient. We don't need now the antidumping support.

Okay. And sir, when can DMA be expected?

Which one?

What's the time line for us to expect the next antidumping duty for...

It's very difficult, my dear. We are working with the government. So I can't say anything. As and when they give, we have done all the paperwork whatever they wanted, we have given all the information. We are just waiting. It can be tomorrow also, it can be after a year also.

And sir, the CapEx that we have taken within the stand-alone and the subsidiary, so the Acetonitrile in the subsidiary. All these things, sir, are we getting the right yield and right quality? And are we able to produce all the grades that you want to, for example in the case of Acetonitrile.

Yes. As of -- whatever we have done, we are in a position to sell in the market.

Okay. In that sense, now the only challenge remains marketing and the demand from the market space. From our end, production and commissioning...

No further issues.

Next question is from the line of Sachin Kasera from Svan Investments and Trading.

My question was on Acetonitrile and DMF. Can you just help us, what was the production in FY '20 from these 2 products?

DMF, as we said, because as and when there's a dumping, we were utilizing only 20% capacity. Now the prices have improved, we expect that we should go more than 30% utilization of the capacity. Our capacity is about 30,000 tons for the DMF. And Acetonitrile, as I said, we just streamlined from the last November and slowly we achieved -- as on today, we are producing 9 tons per day.

Yes. But sir, it will be really helpful if you could share the full year number in terms of trend, it would be really helpful.

If you can -- I don't have the limits that separate each product, handy. If you can send a mail, we would love to give all the figures.

Sure. And secondly, sir, on this DMF, you mentioned that the prices have now improved while we have already put in an application for dumping, but despite that the price already improved. So what are the current prices? And what is the breakeven for us today in DMF?

See, current price for the DMF is rolling at between INR 75 to INR 80. And earlier, when we prepared this application, the price was at INR 60 -- INR 55 to INR 60 where we were doing cost-to-cost. Beyond INR 70, it is viable for us.

Okay. And sir, one question on overall volumes. Will you be able to quantify what was the loss of volumes in Q4 and Q1 because of the lockdown for March quarter and June quarter?

See, only 10 days we lost the production. We lost, I can say, INR 30 crores, INR 35 crores of turnover we lost in last year for this 10 days even though we could operate plant at 70% level. Sales, there were hurdles because of the logistic issues. And after April onwards there was no much issues. We were operating at 70%. Sales also we were doing 70% to 80%. And now June and onwards, it is a normal position. Nothing is a hurdle.

So similar like INR 30 crores, INR 35 crores in June quarter also impact is there because of COVID, sir, you think?

No, not that much. At times, see, initial stages when the Janta Curfew -- between Janta Curfew to lockdown that was the initial stage. To take and make the arrangements, to take the permissions and all, it took some time. And from 1st April onwards, it is operating at 70%, nothing wrong.

Sure. Sir, just one question on Balaji Specialty. You mentioned that the government has right now put Mancozeb in the ban list and obviously there's a very strong case for not to happen. But in a worst-case scenario, if that were to happen, we'll have to write a follower in specialty or is there something alternately that we can think of?

No, no. There are other uses also. There is about almost 8,000 to 10,000 tons is used in the polymer industry and oilfields, which we are already selling. I do not think it is possible because these type of orders coming past 10 years we have seen. Every 3 years, it happens and this agrochemical industry is fighting because it is -- practically it is not viable for a country like India because these products, which they are talking about 20 products, if they ban then total agriculture has to stop.

[Technical Difficulty] We have the line for the management connected back to the call. So the next question is from the line of Ashwin Reddy from Samatva Investments.

Congrats on a very good set of numbers. I had few questions. Firstly, sir, on the profitability front, can you just give your qualitative comments because you mentioned the pricing for the entire basket of products have been fairly healthy. And even for DMF it has moved up. So what are the factors which are causing this? And is it sustainable is what I wanted to know.

See, as of now -- as I said earlier, as of now, there's a reason -- one reason is the take-up -- volumes take-up and proper price realization and proper capacity utilization. These are the 3 reasons where the margins have improved across all the products, almost all the products. So if everything goes well like this, definitely it is sustainable. And as I have given earlier guidance that the most non-sustainable is, it will not go below 18% of the EBITDA.

Right, right. But is it not -- it is not because of any, say, current fall in supply from China or things like that, right? Or is it...

That are -- for years together we have seen -- nothing is that, only 1 or 2 products where we are already fighting. And now as you rightly said, the DMF, we used to get the threat from the China. I don't know what happened in China and other places also. The price has improved, which they are also maintaining more than INR 70, INR 75, which is helping us.

Okay. Understood. Understood. And secondly, sir, on Mancozeb, you mentioned because I understand at least for exports, some of these pesticides are now not being banned, right? So the number you gave of INR 3,000 crores for Mancozeb, is it only for the domestic market? Or is it domestic plus exports?

So actually, India is the leader for the Mancozeb supplies for the total world market. So it is for the including exports we are talking about, whatever produced in total in the country is more than INR 3,000 crores. And presently, as you rightly said, the government has already withdrawn ban on the exports. It is -- they said that we can produce and export. Present people are fighting for the domestic this thing. That will also, I think it should ease out.

Okay. Understood. Understood. And finally, sir, on the overall export market for U.K. and Europe and elsewhere, what is the feedback that you're hearing in terms of the demand and all? And are you able to export now without hassles or what is the export scenario for you, for your company?

As of now, it's good. It's totally positive especially when the people are talking something negative about the China. So if anything goes wrong with China, definitely alternate -- people look at India as alternate. So that sort of inquiries we are getting and we are getting good response in the international markets for all the products.

Next question is from the line of Manish Bohra from Param Capital.

Sir, basically, what has been the pricing trend of Acetonitrile? Correct me if I'm wrong, like the price of Acetonitrile in November was around INR 230 per kg and in March it was around on INR 280, INR 290 per kg. So currently, what is the price?

That depends upon the usage of customers. Somebody is there...

Sir, sorry to interrupt you. Manish, may I request you to mute your line from your side, please?

Yes, yes.

Sir, go ahead.

Can I go ahead?

Yes, sir.

See, you are right. The price is rolling between INR 250 to INR 280, depends upon the customer. If it is a bigger customer, bigger volume, price will lower. If a smaller customer and smaller volumes, the price will be higher.

Basically, currently, the prices are hovering around INR 250 to INR 280, you mean?

Correct.

And sir, who would be our competitor, like domestic competitor in this Morpholine or DMF, Acetonitrile?

; DMF, Morpholine, we have not seen anybody producing in the country, RPM was producing in small quantity. But Acetonitrile, there are the other players -- other 2 players are there. They must be producing also.

Sir, who would be them? Can you name them?

I think Alkyl Amines is one and the other is Deepak Novo, are the 2 producers. Now you don't ask what price they are selling, right?

No, no. I just wanted to know like we are the largest producer, like having the largest capacity installed or basically...

I don't know what they are doing, how much they are doing. I know that they are also producing, but I don't know capacities and prices.

Okay. Sir, do you feel the prices would be sustainable of Acetonitrile because currently we are hearing from the auto sector like the demand is ramping up like when the lockdown has been lifted Europe market is showing good demand. Also in India, rural and semi-urban areas there is a good demand. So like going forward in the next 2, 3 months, do you see the prices to cool down a little bit from current levels?

Maybe -- we are hearing this for the past 1, 2 years, which is stopping everybody to reinvesting the money because this is very volatile. It never stayed at a higher price like this. If it -- it's very difficult to say.

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

Sir, first question is on this, you mentioned that you were seeing some pent-up demand coming from some sectors like paint segments and dyes and all. You mentioned that June you have already become -- you have seen the normalized operations. Do you see that the demand is still very high and that all these traders and some companies who are using this product there, they want to fill the channel in terms of anticipation of any further lockdown? And if that's so, then how you are expected to meet this increased demand? I mean can we ramp-up the utilization level further?

See, specifically, there is a demand -- continuous demand in the -- even in the lockdown period also in the essential products like where API and pharma industry and then next comes the agro. Both -- we are doing major chunk of our product goes in the APA, almost 50% to 60% goes into the APA, pharma industry. So there is no lockdown impact fully on them. Maybe a little logistics and all other things. Otherwise, all the API and the pharma industries, they are operating very much at normal level. So we don't see any change in their demand. It's a normal demand which we are meeting.

Okay. I heard because you said that from some of the industry you are seeing pent-up demand, especially like dyes, cement, textiles...

Because these were not operating during the lockdown period. Now the lockdown is opened, so those things will start up. That is our intention to say. Otherwise, other industries already normally running for us.

Okay. So as far as we are concerned, 50% to 60% goes for pharma, APA, so any of those that are operating?

Yes.

Okay. Sir, second, on the specialty chemicals subsidiary, which we have. So you mentioned that last year, I think, we did some INR 60 crores revenue, right? You mentioned some INR 130 crores or INR 140 crores. So...

INR 50 crores, INR 55 crores. I think INR 50 crores, INR 51 crores we have done.

Okay. And currently, utilization per month is roughly run rate of INR 10 crore to INR 12 crore. That you are mentioning that for full year, you are expecting 40% utilization for this...

30% to 40%. That depends upon the situation because in the current COVID situation you can't say with a thumb rule that this will run like this, we don't know what will happen.

Sir, if you just quantify, I mean, in the previous question also, the full utilization, what was the revenue potential of the specialty chemical with the margin?

See if full utilization goes, we can make minimum 25,000 to 30,000 tons. The price, even if you take lower price, INR 120, INR 110 also, you can just calculate. It goes to more than INR 200 crores to INR 250 crores.

And with the margins of 20% safely assuming.

Initially, it's very difficult to say. I can't say what will be the margin. That depends upon the...

No, at INR 110, the average realization, then what will be the...

Again, I am telling you, my dear, the raw material prices and these prices and usual industry situation. That depends upon all these things. Let's see on the real figures in the coming quarters.

Next question is from the line of Ronil Dalal from AMBIT Investment.

Sir, I think most of my questions have been answered, but I just had 1 or 2 pending, please. So Acetonitrile, at what price would you say we would be shifting to THF? Like not now, of course, the prices are very good right now. But in the future, what price or around what price range would you say it would be good to shift to THF?

Again, Mr. Ronil, your question related, it is related to the raw material prices. Suppose if I say this is the raw material -- the current raw material prices, it should be somewhere INR 150. If it is below INR 150, I would love to go for the alternate product.

Right, right. Okay. Next question is that the Ethyl Amines CapEx which you were going to do, is it only been delayed on account of COVID or -- so actually, I think maybe 16,500 tons, you were going to do a CapEx fall. And maybe in domestic industry, the entire industry demand is around 20,000 tons. Is that correct?

Yes, domestic and as well outside also.

Right. So most of that...

India...

Sorry, you were saying something?

India is importing presently almost 700 to 800 tons per month.

Okay. Okay. And so you would -- so the 20,000 tons you're saying it's met from domestic. And additional to that is 700, 800 tons is imported every month, is that correct?

Yes. See, Mr. Ronil, this total capacity creation is meant for the next 10 years. It's not like capacity will be utilized today itself and sold tomorrow itself. See, we have calculated for the next 5 years growth. There is a 10% to 15% growth every year. All those things are considered for the coming 7 to 10 years.

Okay. Okay. Sure. And the other question I had is on Balaji Specialty. So in case Mancozeb even possibly it would not get banned now, but somewhere down the line maybe in a year's time or 1.5 years, I mean the trend seems to be to move away from it. But -- so in that case, if that happens, what would you see in, say -- in Balaji Specialty, how would you see things pan out over there, like...

See, as I said, the total imports into the country other than Mancozeb, there is about 6,000 to 8,000 tons in the other market, which is the polymer market. So there, we can look and outside country also we have started looking. For your information, this month, I think we sold 100 tons to China also. On the subsidiary, we exported to China. So there are opportunity outside the country also. We have reached registration for this particular product. We can export to Europe also, which we are doing, Europe, U.S.A. and China.

Right, right. And in India, there would just be one competitor?

Sir, sorry to interrupt you.

That was all -- that was the last question. Only one competitor there in India?

Nobody is there in India for making the EDA from the original route. We are only the original route. Other people are just doing the distillation.

And Piprazine?

That's what I'm telling you, Piprazine and entire product -- set of products originates -- originally manufactured, we are the only people. Other manufacturers, there may be one unit which they are doing the -- bringing the mixer and they are separating. They are not producing.

Next question is from the line of Rohit Nagraj from Sunidhi Securities and Finance.

Sir, in FY '20, what was the contribution from different segments, like API plus pharma, Agro and the other ones?

This figure, I don't have, handy. If you can send me a mail, we would love to give all the details. Okay?

Sure. Yes. Yes, sir, no problem. Sir, how about the exports in FY '20? What was the contribution from exports?

Export, we are doing 18% to 20% exports are there out of total turnover.

Okay. Okay. And what are the current methanol prices? And given that at least for the foreseeable future, the methanol prices are going to be relatively muted. Do you think that there could be some opportunities which may arise because of the lower RM prices from our product basket perspective?

Yes, current, it is lower price only, but we are getting this advantage in spite of Iran is not there. But still, we are getting the better -- stable prices for the methanol from the other alternate sources.

And what would be the price, sir?

Presently some INR 17 is there.

Okay. And if the price continues to stay for the next couple of quarters at this level, would there be any kind of increase in demand for certain of our products?

Maybe you are right. Some of the products which might have closed because of the cost reason, so those things may restart again for those products where the demand may increase. Not only in India outside also, the demand will increase.

Next question is from the line of [indiscernible].

Sir, congratulations on good set of numbers. Sir, just a couple of questions. Sir, I believe when we spoke in Q3 you were guiding for our Acetonitrile incremental utilization to reach to about 50% in FY '21. So that will be more or less 4,500 metric tons of volumes we could do. So is that -- are we on track for that, sir, because currently, as you said, that we are at 20%, 25% utilization.

I think you've not heard in my preamble speech, I just said. Originally -- presently, we are doing 9 tons -- we reached to continuously 9 tons per day. And this year, we are trying to increase this between 18 to 20 tons per day. We will try because of the demand, you can say, and other things, we are unable to stop the plant, we are unable to revamp that.

Okay, okay. Sir, post-November, our utilization has been on the upper trend only. Is that a fair understanding?

Initially, we were doing -- started with 6 tons, 7 tons, 8 tons, even we went up to 12 tons also, but it is stable at 9 tons per day.

9 tons. And then our capacity is 25 tons per day broadly?

We need to add something in the plant, some of the equipments, debottlenecking needs to be done in the plant.

So currently, sir, what is the capacity, sir? Per day, how much we can do as of now?

9 tons we are doing presently as it is.

So that is the optimum currently?

Yes.

Okay. Okay. And sir, and then one more on the overall, sir, in terms of the demand side, currently, sir, a lot of demand is coming from the pharma and the agro chem side, right, and major of our end users in the segment is towards that? So I believe, sir, I mean, because last 2, 3 years, sir, there was -- we saw a kind of a flattish volume growth for our overall numbers. So I mean for next, sir, 1, 2 years, I know it's pretty early as of now, but if you could just help us, sir, in terms of demand and what is your view that in terms of volume, can we do 8%, 10% is a fair understanding as of now?

Yes, we are also believing like you only. We are thinking like you. There's the reason I'm talking that we should increase between 18 tons to 20 tons per day from the current 9 tons.

Okay. Okay. No, no, sir, I was talking about the overall demand for the company side.

Overall only, I'm just talking. If this price continuously sustains like this, so definitely we may think of increasing the capacity.

Ladies and gentlemen, due to time constraint that was the last question for today. I'll now hand the conference over to Mr. D. Ram Reddy for closing comments.

Thank you very much to all our well-wishers. Over the years at Balaji Amines, we have systematically made investments in more specialized products by capitalizing on technological innovation to drive organic growth. Much of the organic growth had come from our focus on specialty derivatives of existing products. We are continuously striving to better our product portfolio to compete effectively and efficiently in the end markets in financial year 2021. We expect significant contribution to flow in from the subsidiary company. We are very focused on next level of growth and upscale Balaji Amines for the next 3, 4 years. Thank you very much. Thank you all.

Thank you very much. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.