Balaji Amines Limited (530999) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Balaji Amines Limited Q4 and FY '21 Earnings Call hosted by Edelweiss Wealth Research. 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. Swarnabha Mukherjee from Edelweiss Wealth Research. Thank you, and over to you, sir.

Thank you. Good afternoon, all. On behalf of Edelweiss Wealth Research, I welcome you all to the Q4 and full year FY '21 earnings conference call of Balaji Amines Limited. We have with us today Mr. Ram Reddy, Promoter of Balaji Amines Limited. We request the management for opening remarks, post which we will open the floor for Q&A.

Thank you, Swarnabha. My name is Ram Reddy, Managing Director, Balaji Amines Limited. Ladies and gentlemen, a very good evening to all of you and welcome to the conference call to discuss the financial performance of the Q4 and FY '21 performance of our company, Balaji Amines Limited. We are all going through truly unprecedented times, and I hope that you and your families are safe and healthy. I hope you've got a chance to go through the press release and the financial statements submitted to the stock exchanges and uploaded on our website. First, kindly, let me take you through the stand-alone financial and operational performance. We recorded a 58% growth in total revenue, which stood at INR 377 crore in Q4 FY '21 as against INR 238 crore in the corresponding quarter of previous year. EBITDA was up by 103%, which came in at INR 114 crore in Q4 FY '21 as compared to INR 56 crore in the same period last year, with EBITDA margin at 30.3% in Q4 FY '21 as compared to 23.6% in the same period last year. The increase in EBITDA margin was primarily on account of improved demand and price realizations across most of the product portfolio, leading to much improved operating leverage. Profit after tax recorded an increase of 145% at INR 79 crore in the current quarter under review as against INR 32 crore in Q4 FY '20. PAT margin stood at 21% in Q4 FY '21 as against to 13.6% in Q4 FY '20. Diluted EPS for Q4 FY '21 stood at INR 24.45 per equity share as compared to INR 9.98 per equity share in Q4 FY '20. While the uptake could have been better, but it was adversely affected on account of pandemic-related disruptions of both inbound and outbound logistics support as well as lack of adequate surplus industrial oxygen resulted in lower than optimal production. Total volumes stood at 24,878 metric ton for Q4 FY '21, up by 12% as against 22,146 MT in Q4 FY '20. For Q4 FY '21, amines volumes stood at 4,529 metric tons, amines derivatives volumes stood at 9,852 metric tons, specialty chemicals volumes stood at 10,497 metric tons. Coming to our stand-alone performance for FY '21. Revenue from operations in FY '21 was up to 33% -- up 33% at INR 1,240 crore as compared to INR 929 crore in FY '20. EBITDA witnessed a growth of 78% from INR 190 crore in FY '20 to INR 339 crore in FY '21. Our EBITDA margin expanded by 686 basis points to 27.3% from 20.5% in FY '20. And PAT for FY '21 witnessed a jump of 104% to INR 232 crore from INR 114 crore in FY '20. Diluted EPS for FY '21 stood at INR 71.52 as against INR 35.11 per equity share in FY '20. Total volume stood at 94,687 metric ton for FY '21 as against 84,832 metric ton in FY '20. For FY '21, amines volumes stood at 18,728 metric tons, amines derivative volumes stood at 38,857 metric tons, specialty chemicals volumes stood at 37,102 metric tons. I would like to add that currently we are a 0 debt company on a stand-alone basis. Now coming to our consolidated performance for FY '21. Revenue from operations for FY '21 stood at INR 1,318 crore, up by 40% as compared to INR 941 crore in FY '20. EBITDA for FY '21 recorded a jump of 104% from INR 186 crore in FY '20 to INR 379 crore in FY '21. EBITDA margin for FY '21 was at 28.8% as against 19.8% in FY '20. PAT for FY '21 was up by 150% from INR 97 crore in FY '20 to INR 244 crore in FY '21. Diluted EPS for FY '21 stood at INR 73.52 as against INR 32.34 per equity share in FY '20. Our subsidiary company, Balaji Speciality Chemicals Private Limited, witnessed substantial ramp up in capacity utilization due to increase in demand for ethylenediamine, EDA. The company is currently manufacturing 1,300 to 1,500 tons per month, which will be further ramped up going forward once the supply of raw materials eases. We are also exporting few of our products manufactured by our subsidiary to China, which previously used to get dumped in India. With commencement of operations at our state-of-the-art new plant of ethylamines, which is part of the Phase 1 of our 90-acre greenfield project Unit IV at Solapur, the company has the largest installed capacity of ethylamines in India at 22,500 tons per annum. With the commencement of this plant, Balaji Amines is the largest manufacturer of methylamines, ethylamines and other chemicals in India. The new plant of ethylamines at Unit IV will lead to lower cost of production due to new technologies. Demand for ethylamines is growing between 10% to 15% per annum in India. In FY '22, we expect a decent revenue inflow from our new ethylamines plant. Presently, there is supply shortfall of about 9,000 tons of ethylamines in India, which is imported from outside. The supply gap is expected to increase to about 15,000 tons in the next 2 years. Our company will be well positioned to address this increase in market demand. The debottlenecking of our acetonitrile plant has been delayed on account of lack of skilled manpower due to pandemic-led restrictions. However, the construction of new plant for dimethyl carbonate is in Phase 1 of greenfield project Unit IV is undergoing as envisaged. And we hope to commence production of DMC by the end of FY '22. Until March 31, 2021, we have undertaken a total CapEx of INR 156 crore in Phase 1 of our greenfield project, and a further INR 69 crore would be invested in installing that DMC plant. In the fourth quarter of FY '21, the capacity utilization of our DMF plant was much improved at about 48%. However, from mid-April onwards, due to diversion of oxygen supplies, our DMF production was briefly disrupted. However, from today morning onwards, the production of DMF has restarted as supply of industrial oxygen has been restored. Methylamines is a key raw material and the base product for value-added derivatives required by pharmaceutical and agrochemical companies. We are currently the market leader in methylamines production in India, and 80% of our methylamines production is captively used for manufacturing value-added products. Pharmaceutical application segment and agrochemicals are expected to drive significant demand for methylamines in India as well as global markets. As announced earlier, to meet our increasing captive requirements, we plan to set up a separate plant for methylamines with a capacity of 40,000 to 50,000 tons per annum under Phase II expansion of greenfield projects under project Unit IV, for which the company has already received environmental clearances. We anticipate the commissioning of this plant by end of 2022. That's all from our side. We now leave the floor open for question and answer.

[Operator Instructions] The first question is from the line of Pritesh Chheda from Lucky Investment Managers.

Congratulations for a good set of numbers. So my first question is DMF realization had shot up a lot in the market in the quarter gone by as there was some 3x to 4x rise. But when I see the Q-o-Q improvement in your EBITDA profitability, it hasn't flowed in. So any reason for it? Or any other product where the realization has actually gone down?

See, the raw material prices for acetonitrile has gone up. Actually, when we talked last year -- last quarter, the RM prices were somewhere INR 50 to INR 60, that is acetic acid. And the entire quarter 4, the price has rolled more than INR 80 to INR 110. So that has impacted it to some extent. And I don't know where from you got this DMF pricing. DMF pricings are around somewhere INR 150 to INR 160. Even today also, we are selling at INR 150, INR 160.

Okay. Okay. My second question is, sir, what should be good volume assumption for FY '22 considering the ethylamine plant now getting -- becoming operational and DMF capacity can be fully utilized? And now you have postponement of acetonitrile capacity ramp up. So what should be a good volume versus 95,000 ton that you have done in FY '21?

There should be at least 10% minimum, conservative basis, about 10,000 ton should be added without any problem.

Okay. We have 16,000 additional ethylamine, and we can -- can we fully utilize the DMF?

So see, in first year operations, we can't expect it. If goes well, yes, 16,000 can be added and to some extent DMF is also added. And that's what I'm telling you, conservative basis, we can take 10,000 to 12,000 tons volumes can be added. And because of this pandemic, as I said, in April, there were some disruption in the DMF for some period, maybe 15, 20 days. DMF could not operate because of the oxygen diversion to health care.

Okay. And sir, just one last question on the CapEx side. The CWIP of INR 173 crore now that we see, this would include the acetonitrile CWIP? And will it also include the ethylamines CWIP?

Yes.

And this methylamine capacity, which will get constructed, incrementally will come in CWIP, right?

Yes.

And methyl carbonate is a derivative of methylamine?

No, no.

No. So what would be the capacity that you'll add in methyl carbonate and the CapEx there? And what is the CapEx for this methylamine 40,000 ton capacity?

See, that is too early to say about methylamine. But I can say the DMC is about INR 70 crores, INR 75 crores will go for this dimethyl carbonate. And we are -- generally, we were talking about this 10,000 tons, it may go between 10,000 to 15,000 tons when we work on a practical basis.

Okay. And methylamine, 40,000 ton capacity, when should it come in your opinion?

It should come in the end of 2022, it should start finishing. Maybe 2023, you can see the revenues from that.

So this year, you will construct...

Sorry to interrupt, sir. This is the conference operator. I would request you to rejoin the queue for follow-up questions.

Ma'am, just I'll finish the conversation and then in any case, I do not have a question. So you will construct this year and the capacity will be available in '23?

Yes. See, the construction may be finished by year or the end of the year.

Okay. And your spending is about INR 250 crores there, right?

Yes. We can give the exact figure in the coming quarters.

[Operator Instructions] The next question is from the line of Rajesh Kothari from AlfAccurate Advisors.

Congratulations for great set of numbers. Sir, my 2 questions are, first is, what is the total CapEx for FY '22 and FY '23, year wise?

See FY '22, only we left with DMC, majority about INR 70 crores, INR 75 crores. Some part of other, like methylamines what we are talking today, some part may be spent in this year. But that I will give you the figures, exact figures, in the coming quarter.

Okay. So broadly, DMC, INR 70 crores, INR 75 crores; and methylamine CapEx of INR 250 crores, something like that.

Exactly not at INR 250 crores, but we are going to spend maybe part of this thing in this current year.

Okay. Because you said that the plant will start by end of the year, the plant construction will be...

'23. It will be -- finishing will be '22, and the revenues will come in '23.

Correct. Correct. Correct. So it means that entire CapEx has to be spent in '22, right?

'22 and part '23 also.

Part, a very small group remaining. Okay. And my second question is, with your -- in terms of the backward integration and also in terms of the -- you mentioned about the technology and the change in cost. Can you just explain a little bit on that? How do you see the more value-added products, number one, at the overall company level? And in terms of the cost, what kind of reduction you are looking for?

See, while designing, we have designed some new technology we are using. This is only 7 days -- 7, 8 days past, I think, we have started the plant at this -- new plant of 50 tons per day. We will see. Definitely, there will be some cost advantage because it's the reason we spent more money on the new technology. So probably, by next quarter, you will see the exact figures what will be cost advantage. Definitely, there will be some edge over preexisting technology.

Okay. And my last question is on subsidiary. So how do you see the ramp-up over there over the next 12, 24 months?

12, 24, the visibility is a little difficult in the current scenario. But yes, what I can see in the next 2 quarters, definitely, it will ramp-up in very good position. Like today, we are talking about 1,300 to 1,500. It should go to more than 1,800 to 2,000 tons in the coming quarters per month.

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

Congratulations on a good set of numbers. So the first question is on the raw material side. So how are we foreseeing the raw material availability given that there have been issues in terms of the container availability, transportation costs are going up? And how has been the pricing? And whether we have been able to pass it on completely during the last quarter or is it still under progress?

See, overall, unlike last year, this year, the volatility is a little less. Last year, we used to see like, for example, methanol, we used to see the prices between INR 18 to INR 30, a big volatility. Current, we have seen only between INR 26 to INR 30. It is INR 4, INR 5 only, which can be passed easily to the customers. And second thing, since the products are in the short supply, all the products on the short supply, it is easy to pass on to the customers. We don't see any problem. And third thing, yes, there is some disruption in the logistics -- inbound logistics, and even in outgoing also, we are facing some problems for the -- specifically for the overseas logistics because all the shipping lines are not working on the schedule, so -- for which we are forced to plan a little more advanced unlike earlier years. So it will be advanced planning. We will be -- we should be on the track. Only 1 or 2 products like subsidiary, we were facing some problem and shortage of raw material for the last quarter and last month also. And this month onwards, probably, we will get -- everything is streamlined. The reason I'm telling you, then it will be ramping up more than 1,500 tons.

Yes. Fair enough. Understood. Sir, second question, in terms of the margin profile. So as I understand that we have amines and amine derivatives and specialty other chemicals. So generally, if you take amines as a base and margins of, let's say, 15%, what is the kind of incremental value addition that happens in derivatives and specialty chemicals? And I'm ignoring the current price increases, which have happened because of demand/supply mismatch. Under the normal circumstances, how does the margin profile for each of these 3 product segments would look like?

See, as I said earlier also, we have a basket of products. It's very difficult to say which product is at what percentage. But overall, I can say, the current 27%, I think, the EBITDA is there for the -- on overall year basis, 27.31% EBITDA is there. I think we should be sustainable, around 24% to 25% is easily sustainable for this margins.

The next question is from the line of Kunal from Vallum India Discovery Fund.

Sir, I wanted to understand regarding dimethylformamide. So is -- so until the methylamine plant and new capacity comes on stream, how much capacity can we go to maximum in terms of the utilization of this plant, dimethylformamide?

I think we should go to more than 75%, 20,000 tons -- 20,000, 22,000 tons, we should -- if everything goes well, availability of the oxygen, availability of the CPC, raw materials and availability of the markets.

Sorry to interrupt. Mr. Kunal, there is a slight disturbance coming from your line. So request you to speak a bit louder, sir, we can't hear you.

Yes, Kunal, it should be maybe 20,000, 22,000 tons per annum if everything goes well.

Understood, sir. And the second question, sir, is regarding this new ethylamine capacity. So are we going to sell the ethylamine directly in the market in terms of mono, diethyl? Are we going to sell all 3 of them in the market? Or are we going to turn them into derivatives and then sell the higher valuation products in the markets?

Majority of the ethylamines, we'll be selling in the market. There's no derivatives because existing capacity we're already using for the derivatives. Here, we did not add any derivatives.

Okay, okay. And sir, how much volume can we assume on an average basis right now based on the prices for ethylamine and derivatives, the whole basket? How much can we assume on an average basis?

If you see this new plant, Unit IV greenfield, 16,500 capacity goes well in full swing, we -- in the current pricing basis, we should be in a position to do about INR 300 crores to add to the top line.

Okay, sir. Okay. So you're talking about the 15,000 ton capacity?

Yes.

15,000 -- are you talking about the 23,000 ton capacity fully, including the existing capacity from the already using plant?

That is from additional capacity.

The next question is from the line of Sachin Kasera from Svan Investments.

Congratulations for a good set of numbers. Regarding the subsidiary, sir, can you give us some sense, you have mentioned that you're adding some new products there. So what is the potential there? And when you're talking of this improvement in volumes next 2 quarters, that is including these volumes? And will there be further improvement in the margin profile of the subsidiary this year?

See, subsidiary, we are not adding anything. We have sufficient capacity. We have more than 30,000, 35,000 tons capacity all products put together. Main product is EDA and then piperazine, then DETA, then AEEA. So all the products are moving, there's no problem. Yes, the margin, there's a possibility of this improving. If we get the sufficient raw material at reasonable prices, we should be in a position to improve margins.

Okay. And sir, on the DMF expansion, have you indicated any figure approximately how much we could spend? And also, now that oxygen is available, if you have no further issues as far as technical factors are concerned, can you operate at 75%, 80% utilization into the...

That's what I answered to earlier question. See, we can do total 30,000 ton capacity there. If everything goes well, we can operate at 20,000, 25,000, 22,000 tons per annum of DMF can be produced.

And what will be the cost of the 30,000 ton new expansion, sir?

It's too early because first methylamine will come, then it -- maybe after 2023, the new capacity we can talk.

Just one last small question on the LED, lighting business. So can you give us some update what is the status there?

Which one you said? Can you repeat?

The lighting business.

You're talking about Greentech. CFL lights, you were talking?

Yes. CFL, yes.

So that totally we have stopped. No operations are there. Only that property has been given on rent where we are getting some INR 9 lakh per month rent is coming, which will add into the margins.

But sir, this quarter also there is some loss of around INR 2 crores. So will this come down further? Will it become 0 from Q1, Q2? How do you see that?

There should not be any losses. The INR 2 crores only is the reason on account of stock really. We have very small stocks, probably another 2 -- INR 1 crore or INR 2 crores stock is there. So whenever we sell, if it is going lower price than the estimated, then that is adding into the losses. Future, we have only some INR 2 crores something...

INR 70 lakhs.

INR 70 lakhs, sorry. It is only INR 70 lakhs we're left now. So there will not be any losses. INR 70 lakhs we'll be selling in the coming quarters, so it will be 0.

The next question is from the line of Swarnabha Mukherjee from Edelweiss Wealth Research.

Congratulations on a great set of numbers, sir. Sir, my first question is on the EBITDA margin at a blended level. So you had guided about a 24%, 25% sustainable margin. So I just wanted to understand, sir, with this new ethylamine capacity that has come up and given that this is a base amine product and not a derivative. So in terms of maybe margin profile, it might be slightly on the lower side. Is that understanding of mine correct? Or is it also generating margins at the company level right now?

See, today, if you see the total year, it is 27.31%. If you see my last quarter's answers, I used to say only 22%. Today, I'm talking 24%, 25%, because of this new capacity addition, plants operating at higher capacities, all these things are being considered while saying this 24% to 25%.

Okay, sir. Okay. So this could be the blended margin going forward. Sir, would you be able to -- would you kindly throw some light on how the prices are for base ethylamines and methylamines? I mean I think it is [ derivative ] right now. So what would be generally the normal range and where it is now?

See, last 1 year, we have seen the prices between INR 250 to INR 275. Even if it goes down because of the new capacities or because of the availability, it may come down to somewhere INR 225 to something. But considering all these things, I have given these figures.

The next question is from the line of Punit Mittal from Global Core Capital.

Congratulations for a really good set of numbers. All your hard work has been now fortifying, so congratulations. Sir, one is the -- first one is a clarification. Your trade payables, if I look at your cash flow statements, your trade payables are listed under the cash flow from investing rather than cash flow from operations -- rather financing -- rather than cash flow from operations. Can you explain us why it's not listed under cash from operations?

Can you repeat the question, please?

Your trade payables is listed under cash flow from financing rather than cash flow from invest -- from operations. Normally, the trade payables should be under CFO. So this undermines the real cash flow from operations that you have. So I want to understand why...

We'll get back to you. You can send me your mail ID. I will give the detailed answer for this. I do not have in handy. But I will definitely send back to you. And I'm noting you. You just send me your mail ID. Okay?

I will. I will. The second question is does any of the chemicals that we manufacture goes directly or indirectly into the manufacturer of COVID vaccines or the PCR tests?

Yes. Because I have also seen. If you see the ingredient of the Covishield, Covaxin, Sputnik, in all the 3, you will see there's a content of EDTA, acetic acid, something is there. That EDTA is produced out of EDA, which is the product of subsidiary. So there may be small content is going, but it is going.

Okay. Great. The last question is that your EDA production, you mentioned that there is some constraint on the raw material supplies. Can you tell us what raw materials are these that you are having a supply issue?

See, that is monoethanolamine. We are importing from the 4, 5 countries, different, different countries. What has happened in last 4, 5 months, there was short supply of EO in the world market, ethylene oxide. Monoethanolamine is produced out of EO and ammonia. So there was short supply. That's the reason it has happened. And there was one big capacity was down due to some accident in -- from the Malaysia. So that is coming in the line in this month. Probably in the June, it is coming in the line. So from this month onwards, everything should be in the line. You send your mail ID, okay?

I will -- I have your e-mail ID, so I'll send a mail to you, sir.

The next question is from the line of Anubhav Sahu from MC Research.

So a couple of questions, sir. One is regarding Balaji Speciality, wherein we have ramped up our production for ethylenediamine, which is now more than 40%. So my question -- you, I think, briefly please discuss about the raw material challenges on this one. I had a question more on the, whether the production -- with the production which we have for ethylenediamine, is it mainly for domestic consumption right now or some part is also going to export market?

It's going to export also. See, presently it is in short supply all over the world. Since it has demand -- more demand in the country, we have -- last quarter, we have sent a lot of exports, a lot of quantities we have shipped out of the country. But this month, we are just taking care of the domestic customers, and we have earmarked some quantities to export market also.

Okay. Okay. And regarding our other products from the subsidiary, what is the status of piperazine and DETA right now?

Both are in short supply. Both are doing very well.

So could you update on the volume front, I mean, how much we are able to produce right now?

We produce 5 to 6 tons per day, both -- around between 5 to 6 tons DETA, diethylenetriamine, and piperazine. And otherwise, some 2 to 3 tons is AEEA and some 300 to 400 kg of AEP. Except AEP, all the products are moving. There is no stock. Only few, maybe 5 to 10 days stock must be there. So everything is moving day to day.

Okay. Okay. And sir, my last question is on the export front. If you could share what is the share of export for last quarter? And any guidance you have on the export front? How much that share can change in time to come?

See, there was a challenging in the logistics during the last 6 months, the biggest challenge in the shipping lines. But still, we have done about INR 185 crores entire year. I'm talking about the Balaji Amines.

Hello?

Sir, give me a minute. Sir, the line for the management is disconnected. Kindly stay on line till I reconnect. Ladies and gentlemen, the line for the management is reconnected. Thank you, and over to you, sir. Hello, sir, Mr. Reddy?

Yes.

Yes, sir. Sir, we are in the main call, sir. We have Mr. Abhinav Sahu (sic) [ Anubhav Sahu ] in the question queue.

Sir, so you were updating us on the export front, that how much is the share...

Yes. The shipping logistics, world trade logistics have improved, then definitely, there will be 5% to 7% improvement, will be there in the coming years.

The next question is from the line of Dhruv from HDFC Mutual Fund.

Sir, 2 questions. First was on the ethylamines. So the capacities, I was reading your press. So you say that imports are about 10,000-odd tons in India. Our capacity expansion is about 16,000 odd. And if I'm not wrong, I was reading a few industry reports, a few of your competitors are also expanding the ethyl capacity. Sir, do you see a risk of oversupply? Or is there a potential to export this surplus?

No, I don't see because what we have seen, there is about 700 to 800 tons minimum that the -- importing in the country, that is number one. And number two, you have some of the export orders in there also. Number three, these capacities are created looking into the next 5-year demand. So there is a demand of 5% to 10% -- minimum 10% demand is coming in for this product. Over a period of time, in fact, it will be, say, next 5, 6 years, it will be occupied and it will be, again, the demand for the new capacity additions.

Sorry to interrupt, Mr. Reddy. Sir, I would request you to speak a bit louder, sir.

I got that. Sir, just to further this, I understand over a period of time, the demand will grow given agro and pharma is growing in India. If I'm not wrong, this goes into those sticky products. But in the interim, could it create some pressure in the market? And -- but -- I was just trying to understand, is this easily exportable? I believe methyls are not. So I just wanted to confirm that.

Yes, yes, we are exporting actually. Now also we are exporting some small quantities. Few containers we are exporting. And second thing, Mr. Dhruv, what I want to say is any new molecule, now I'm talking last 15 days to 3 to 4 weeks, I am hearing a lot of new molecules talking there for the treatment for the COVID, all these molecules are involved with ethylamines. So a lot of new molecules are coming. Definitely, there will be demand. And in the coming 4, 5 years, this will be -- all the capacity will be utilized, and there is a demand for new capacity creation.

Okay. Got it. Sir, you mentioned new molecules for COVID, is it?

Yes. There's a product from -- I do not have the name in hand, but Cipla has declared 1 product. And for that product also, triethylamine is used.

Got it. Got it. Sir, the second question was, I was looking at the volume number that you have published and from the annual basis and even on the quarterly basis, if I look at the amines division, amines volumes, they are broadly flattish or marginal growth, but the growth is primarily coming from the specialty and the derivatives, and more so from the specialty segment on a Y-o-Y and even on quarterly. So if you can throw some light, what's driving this? What are the key products there? And anything that...

See, if you carefully watch our earlier, [ this thing ], most of our amines, methyl or ethyl, so far, 80% of these amines are used captively. That's the reason we will see sale of ethylamine or methylamine sales growth is flat because which is going for the all derivates, intermediates using the methyl and ethyl and speciality chemicals. So now I think with this new capacity of ethylamines, 16,500, you will see the growth in sales of ethylamines from here onwards.

The next question is from the line of Kishan Gupta from CD Equisearch.

Hello?

Yes, Mr. Gupta.

Just want to understand, like pandemic aside, how much do you think is your business scalable from your current revenues of some INR 1,300 crores?

See, I think I've already answered. Basing on this current expansion on place, in the current financial year, it should be more than INR 1,400 crores to INR 1,450 crores, conservative basis.

Will it be right to say that most of your growth which has come last year has been due to the pandemic?

No, I will only say that it is because of the capacity utilizations, and we are in a position to utilize higher capacities at 90%, 95% capacity utilized. There's a reason we will see all this growth. So for example, we will see the DMF. All the years we are talking about the DMFs, which was operating at 20%, 25%, 30%. Last quarter, you see 48% to 49%. Within coming months also, I'm expecting it should go more than 60% to 70% capacity utilizations.

So was it not because of the strong pharma demand and that is -- that was somehow related to the COVID?

Yes, yes. Pharma demand, we can say, but we cannot say pandemic. It is because of the pharma, there are lot of new companies are coming up, a lot of new molecules are coming up. If you understand properly about the amines use, any new molecule coming up, any new molecule, at least 1 or 2 products from our basket will be going for that. So that is the strength of the company.

Okay. And you talked about this, your largest capacities in methylamines and ethylamines. So what sort of competitive advantage it is giving you compared to other players?

See the new plant of ethylamines, which we just commenced a few days back, we used some new technology. [Technical Difficulty]

Give me a minute. Yes sir, you may go ahead with the question.

Yes, Mr. Gupta?

So about this competitive advantage you were talking about?

See, I was talking about the new technology we used for the ethylamine. We just started. Probably you will see in the next quarter what is the advantage we have, what is the cost impact on the new technology, what is the cost advantage, all these things you will come to understand when you do the work in capital at least a month. So when you run the full capacity, definitely there will be advantage of the raw material utilization and the overheads utilization, all these things are coming in. So the reason we will see the last few quarters, we are seeing the margin popping.

And what was this technology? From where...

Mr. Gupta, I would request you to rejoin the queue for follow-up questions.

Just a related question. So for this technology, so...

No, I'm sorry. I cannot tell you.

Is it indigenously developed or...

It is -- maybe -- whatever maybe, it is a little difficult to...

Okay. Not a problem. Not a problem.

The next question is from the line of Ashwin Reddy from Samatva Investments.

Congratulations for very strong set of numbers. I just wanted to get some more clarity on the margin guidance, given that historically you've been guiding for 18% to 22% kind of a margin guidance.

Can you speak a little loudly?

So historically, we've been giving a margin guidance of around 18% to 22%, that has been the range. Now when we're giving a guidance of around 25% to 26%, I just wanted to understand the drivers behind this range? Is it because of the latest pricing that you expect to continue? Or what is the reason for giving a higher...

I was referring about EBITDA, Mr. Ashwin. See, we are currently at 27.31% EBITDA, which will be sustainable. Around 24% to 25% of the EBITDA are sustainable with our guidance.

Correct. Correct. So is it only for this year? Or is it like a new normal for the company versus the past?

It will be normal. See, all the years, I used to say, earlier year, if you see my answers, I used to say 20%, 22% was sustainable. Because of the higher capacity utilization, because of the debottleneckings and many things that happened, on fine tuning of the technologies, all these things, with confidently, I'm in a position to tell today that 24% to 25% is a sustainable than the earlier 20%, 22%.

Okay. No, it's a great move then. And on the exports front, I am aware -- I mean you had mentioned about the container issue and the lack of -- and the logistical challenges which you face. So these issues aside, has there been any increase in inquiries or anything that you can talk about in terms of exports?

Yes. We have orders in pipeline, which are -- most of the orders not been catered in time, which has been known fact for every customer all over the world. So we expect in the coming months -- we are seeing a little improvement in the logistics. So if that goes, as I said, it should be between 5% to 7% increase must be there in the coming quarters.

Okay. And if -- but 2, 3 years down the line, in terms of exports as a contribution to overall sales, what would be a rough number that we can look at, sir? What is -- or how do you see it panning out in 2, 3 years, the export opportunity?

See, what I'm telling you, I think we have done 17% of the total sales, 16% -- 17% to 18%. We had a -- be in a target, we should do 30%, is our target.

In what time frame? I mean in the next 2, 3 years?

Total sales, we should reach -- our target is to reach 30% of the total revenue should be from the outside countries. And this, I'm expecting to reach slowly in the -- not in this year. Maybe in the coming 1 or 2 years, we should touch this 30% of the total revenue.

Understood, sir. And the margins here are the same as domestic?

Sorry to interrupt, sir. I would request you to rejoin the queue for follow-up questions. [Operator Instructions] The next question is from the line of [ Rajeev Rupani ], an individual investor.

Congratulations, Mr. Reddy, on a good set of numbers. Sir, I have a question on ACN. Now this process of debottlenecking, by when does it happen? And by when do we expect to ramp up to 18 to 20 tons?

I think, finally, this quarter we should complete.

Okay. And a follow-up question -- and sir, one more question. Earlier, you had talked about the product called THF. So any update on that?

See that I spoke to you if this doesn't work, we should go for the THF because we have -- the plant present at ACN can be produced THF also. Now ACN itself is busy. So that is the reason we are not doing any trial. Maybe in the coming future if we go for a new plant, if we go for any new capacities, at that time we may look for that.

Okay. And what are the current prices for ACN?

Sorry to interrupt, Mr. Rupani. Sir, I would request you to rejoin the queue, sir. We have other participants.

INR 275.

The next question is from the line of Sachin Kasera from Svan Investments.

Just 2 small things. One, your presentation mentions that after Phase 1, the revenue will go up by 50%. So is my understanding correct that this ethylamine and DMC will add approximately INR 600 crore to your revenues at full capacity utilization?

With the current prices, it should go INR 400-plus crores on that -- it should go around INR 500 crores -- INR 400 crores to INR 500 crores, and we might have given -- assuming if DMF also will go up another 20%, 25% capacity increase, which is currently 48%, which we are talking today, if everything goes well, should grow more than 75%.

Okay. And sir, second question is on subsidiary. You had indicated in the past that once the subsidiary starts to stabilize, we may look positively in terms of merging that company with the parent company.

Yes. Definitely. That will be done at an appropriate time.

With the performance, any thoughts on that?

Maybe. Maybe in the coming quarter, perhaps maybe coming year, we will be -- we'll work out and in the coming period, we will be doing it.

The next question is from the line of Abhay Mal Lodha from Sanmati Consultants.

Congratulation for the good set of numbers. Sir, I have 2 questions. One, when we can expect the acetonitrile capacity to be enhanced from 9 ton per day to 18 ton per day?

I don't think it is 18 tons. Yes, maybe 15, 16 tons. This quarter, we are expecting. See, we were trying all these days. Because the market was not allowing and now what has happened, for doing this debottlenecking, we are just struggling for the skilled manpower. Because of the pandemic, people are not willing to travel. So probably during this quarter, we will finish this. And maybe in the next quarter, we should see higher capacities.

Okay, sir. What is the capacity utilization of our Balaji Speciality?

Now we are doing 40%.

The next question is from the line of Amar Mourya from AlfAccurate.

Hello?

Mr. Amar, go ahead.

Yes. Sir, 1 question. What is the capacity utilization of this newly expanded 1,600 metric ton of ethyl? How much capacity utilization we should consider for the next year?

It should reach minimum 60% to 70%, I think, Mr. Amar, minimum, conservative basis. If everything goes well, like market allows to do it, there's no barriers to go, even 80%, 90% also. But on conservative basis, I'm expecting we should do minimum 70% -- 70%, 75%.

Okay. Okay. So sir, if I see this, then, I think we can easily do more than 15%, 16% kind of a volume growth, right, next year?

Yes.

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

Thank you, all. Now, what I want to say is that growth in end-user industries such as pharmaceutical, agrochemical, paints and coating, personal care and home care is driving the demand of amines over the past 3 years. And this trend is going to get further inputs over the forthcoming years. Hello?

Thank you, sir. Thank you. And we have...

Can you hear? Can you hear? I have not finished.

Okay, sir.

Hello?

Yes, sir, you may go ahead, sir.

Yes. Over the forthcoming years, as the dependability on Indian pharma, agrochemicals and specialty chemical industries increases on account of China Plus One business strategy being adopted by western companies. Given the consumable nature of demand and the oligopolistic nature of the amines industry, there is a strong correlation between revenue growth of aliphatic amines and that of end-user industries. Thus, we are continuously striving to increase as well as diversify our product portfolio. We are very focused on next level of growth and upscale for Balaji Amines over the next 5 years. And I'm once again thankful to all the investors and stakeholders for showing the confidence on the company. And thank you. Thank you once again.

Thank you. On behalf of Edelweiss Wealth Research, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.