Balaji Amines Limited (530999) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to Balaji Amines Limited Q2 FY '22 Earnings Conference 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. Anshul Verdia from Edelweiss Wealth Research. Thank you. And over to you, sir.

Thank you. Good afternoon. On behalf of Edelweiss Wealth Research, I welcome you all to the Q2 FY '22 earnings call of Balaji Amines Limited. We have with us today Mr. Ram Reddy, Promoter and the Managing Director of Balaji Amines Limited. We request him for his opening remarks, post which, we'll open the floor for Q&A. Thank you. And over to you, sir.

Thank you, Anshul. Ladies and gentlemen, a very good evening to all of you and welcome to the conference call to discuss the financial performance of the Q2 FY '22 performance of the company, Balaji Amines Limited. I hope you've got the 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. Despite multiple headwinds in form of decline in demand for certain products from pharma sector on account of unavailability of Chinese API KSM due to problems in logistics industry and significant spike in key raw material prices, we have been able to deliver a decent quarterly performance. We recorded 55% growth in total revenue, which stood at INR 439 crore in Q2 FY '22 as against INR 283 crore in the corresponding quarter of previous year. The growth in revenue was on account of higher volumes driven by the commissioning of additional ethylamines capacity of 16,500 MT in last quarter, improved capacity utilization and overall healthy demand across our product basket. EBITDA was up by 41%, which came in at INR 102 crore in Q2 FY '22 as compared to INR 70 crores in the same period last year with EBITDA margin at 23.2% in Q2 FY '22 as compared to 25.5% in the same period last year. The margins remained subdued due to significant increase in prices of key raw materials, which are now being passed on to end customers after a lag of 3 to 4 weeks. Profit after tax recorded an increase of 46% at INR 70 crore in the current quarter under review as against INR 48 crore in Q2 FY '21. PAT margin stood at 15.8% in Q2 FY '22 as against to 16.8% in Q2 FY '21. Diluted EPS for Q2 FY '22 stood at INR 21.48 per equity share as compared to INR 14.71 per equity share in Q2 FY '21. Total volume stood at 23,604 metric tons for Q2 FY '22, up by 2% and against 23.151 MT in Q2 FY '21. For Q2 FY '22, volume at basic amines stood at 5,861 MT; amines derivatives volume stood at 8,261 MT; and that of speciality chemical stood at 9,482 metric tons. Now coming to our stand-alone performance for H1 FY '22. Revenue from operations in Q1 FY '22 stood at INR 834 crore, up by 68% as compared to INR 496 crore in H1 FY '21. EBITDA witnessed a growth of 74% from INR 126 crore in H1 FY '21 to INR 219 crore in H1 FY '22. Our EBITDA margin expanded by 94 basis points to 26.3% from 25.3% in H1 FY '21. PAT for H1 FY '22 witnessed a jump of 84% to INR 151 crore from INR 82 crore in H1 FY '21. Diluted EPS for H1 FY '22 stood at INR 46.73 per equity share as compared to INR 25.41 per equity share in H1 FY '21. The total volume stood at 45,600 metric tons for H1 FY '22 as against 41,456 metric tons in H1 FY '21. For H1 FY '22, volumes of basic amines stood at [ 11,252 ] metric tons; amines derivatives volume stood at 17,848 metric tons and that of speciality chemicals stood at 16,498 metric tons. Now coming to your consolidated performance. Revenue from operations for Q2 FY '22 stood at INR 529 crores, up by 87% as compared to INR 283 crore in Q2 FY '21. Total volume stood at 28,691 metric tons for Q2 FY '22 as against 25,499 metric tons in Q2 FY '21. EBITDA for Q2 FY '22 recorded a jump of 80% from INR 74 crore in Q2 FY '21 to INR 134 crore in Q2 FY '22. EBITDA margin for Q2 FY '22 was at 25.4% as against 26.3% in Q2 FY '21. PAT for Q2 FY '22 was up by 99% from INR 44 crore in Q2 FY '21 to INR 88 crore in Q2 FY '22. Diluted EPS for Q2 FY '22 stood at INR 24.91 as against INR 14.12 per equity share in Q2 FY '21. Revenue from operations for H1 FY '22 stood at INR 981 crore, up by 93% as compared to INR 507 crore in H1 FY '21. EBITDA for H1 FY '22 was up by 116% at INR 217 crore as compared to INR 129 crore in H1 FY '21. EBITDA margin for H1 FY '22 was at 28.4%, up by 300 basis points as compared to 25.4% in H1 FY '21. PAT for H1 FY '22 witnessed an increase of 145% to INR 185 crore from INR 76 crore in HY -- H1 FY '21. Diluted EPS for H1 FY '22 stood at INR 52.51 as against INR 24.30 per equity share in H1 FY '21. Our subsidiary company, Balaji Speciality Chemicals Private Limited, continued to witness substantial demand as well as robust price realization. We logged sales volume of 4,750 metric tons in Q2 FY '22 at our subsidiary plant as against 2,348 metric tons in same quarter last year. We recorded a capacity utilization of about 67% in Q2 FY '22 as against 42% in Q1 FY '22. Accessibility for raw material is required for manufacturing products. Subsidiary plant continues to remain a major challenge. If the accessibility of raw material improves, we anticipate to quickly ramp up the production in subsequent quarters with strong underlying demand from end customers. Non-agrochemical clients constituted about 25% to 30% of total sales of ethylenediamine in H1 FY '22 from about 10% in earlier quarters. Our endeavor is to increase the share of exports from our subsidiary plant to about 25% to 30% going forward from about 15% in H1 FY '22. Here, I would also like to point out that the Board of Directors have provided the necessary authorization to identify and appoint various consultants to evaluate valuation and scheme of amalgamation of the subsidiary company with the parent entity. With commencement of operations at our state-of-art new plant of ethylamine, we now have the largest installed capacity of ethylamine in India at 22,500 tons per annum. The new plant of ethylamines at Unit IV has also led to lower cost of production due to new technology. With the commencement of this plant, Balaji Amines is the largest manufacturers of methylamines, ethylamine and other chemicals in India. The construction of new plants for dimethyl carbonate in Phase 1 of Greenfield Project Unit IV is undergoing as envisaged, and we hope to commence production of DMC by the end of half FY '22. Until 30th September 2021, we have undertaken a total CapEx of INR 220 crore in Phase I of our Greenfield Project and a further INR 230 crore would be invested. As disclosed in last quarter, we also plan to set up an additional plant of acetonitrile having capacity of 50 TPD by using a different technology with projected CapEx of about INR 70 to INR 80 crore at our 90-acre Greenfield Project Unit IV. This plant is expected to commence operations in FY '23. Methylamine is a key raw material and base product for value-added derivatives required by pharmaceutical and agrochemical companies. We are currently the market leader in methylamine production in India. And 80% of our methylamine production is captively used for manufacturing value-added products. Pharma 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 capacity of 40,000 to 50,000 tons per annum under Phase 2 expansion of Greenfield Project Unit IV for which the company has already issued environmental clearances. We anticipate the commissioning of this plant by the next coming 2 years. That's all from our side. We now leave the floor open for question and answers.

[Operator Instructions] The first question is from the line of Satish Kumar from State [ KPL Industries Limited ]. Okay. We'll move to the next question from the line of Rohit Nagraj from Emkay Global.

Sir, the first question is in terms of the raw material sourcing. So we have seen the price increases as well as availability as an issue. How are we looking at it from the current quarter and next quarter perspective for methanol, ethanol as well as for ammonia?

Thank you, Nagraj. The methylamine, there's no problem. But the ethanol, we are covered for the next 2, 3, 4 months. I think there should not be any problem for the ethanol as it is imported from the U.S.A. and even domestic also, sugar season is expected to do very good. And on methanol, yes, there was a problem, but I think last 1 week, it started happening. If this continues probably in coming 2, 3 weeks, prices should come down to below INR 40 level, that is INR 36, INR 37, it should come down. And because it took a lot of time, we already started passing on these increases. So there should not be any problem. The coming quarter should be much better.

So from both the perspectives, from the availability as well as pricing perspective, is that a fair assumption?

Yes. Availability, there is no problem in -- if you pay the price you are getting. Only one parameter we are facing problem, that is for our subsidiary, the speciality. I think we expect that will ease off from the November onwards. Otherwise...

All right.

It has already increased. There's no problem. Everybody is increasing all over the world. We are traveling to the travel -- with the world. So there's no problem. Only thing is availability for only one raw material. We expect that it should ease off from the November onwards.

Right, sir. Sir, the second question is about the aliphatic amines and derivatives, which are being used as solvent. So are these solvent substitutable by any other solvent if the price increases or these solvents have a sticky demand and cannot be substitutable?

There, Nagraj, you see the predicament is not under -- on these solvents. Most of them are used as an intermediate and raw material for the -- many of the products. Yes, there are few solvents which are used by using the aliphatic amines like DMF, DMAC. So they have -- they are different to -- and every solvent has got different characters. So -- which it cannot replace totally. One cannot replace the other. Like DMF, if you take -- you see the last 3, 4 years, we have seen every year, there is a -- in India itself, there's a 10,000 tons growth every year. Three years back, we have seen 60,000, 70,000, 80,000 tons. This year, we have seen more than 95,000 to 100,000 tons. So every individual solvent has got its different importance and different [ characteristic ].

[Operator Instructions] The next question is from the line of Senthilkumar from Joindre Capital Services.

Hello.

Yes, Senthil. Go ahead.

Yes.

As there is no response, we'll move to the next question from the line of [ Tami Bandari ] from [ HEM ] Securities.

Hello?

Yes.

Sir, actually, I just got disconnected in between. Could you just repeat about the raw material shortage that you were facing that was basically on account of methanol and ammonia?

No. Methanol, ammonia, there is no shortage. And the prices have gone up. Now it just started softening, ammonia still at par only. Only methanol, I have seen last 1 week, it's softening. We expect -- I expect at least personally in next 2 or 3, 4 weeks, it should soften and come down to the level of INR 35 to INR 40. And the shortage is...

Now there's no supply disruption -- yes, I'm sorry.

No, no, no. And the only price was the problem in which we are in a position to pass on for a period of time. And the shortage only one product, which I said that is used by our subsidiary that is -- the product name is monoethanolamine, which you manufactured by using the ethylene oxide. I heard that ethylene oxide is in short supply all over the world. So that could be the main reason. It is in short supply. And we expect that from November onwards, it should be eased out.

Okay. Sir, just one more thing. Do we expect better margins going forward because now we are able to pass on the prices and also seeing softening in demand? So how -- what is your margin guidance in revenue guidance for the coming year?

[ Bandari ], we wish and we dream that we should be in a position to get more and more margin. But with the current situation, the volatility, we can only assume and we can only expect. We cannot guarantee what will happen in the coming weeks and the coming quarters because of the volatility in the market. But with the things going presently, it should be better.

[Operator Instructions] The next question is from the line of Nilesh Ghuge from HDFC Securities.

Sir, my just question on the DMF. DMF plant capacity is 30,000 metric tons per annum. Is my understanding correct?

Yes.

But sir, our press release is saying that we are expanding...

Nilesh, I'll answer you.

Yes.

See, we're getting -- we were not getting the proper prices and we were not -- we were fighting with the dumping from the other countries. About 3, 4 years back, there were some breakdown of [ solvent ] line. So we did not rectify it because it was not giving any significant top line or bottom line, and it went down to below 50, 55 tons. So that, we were -- the moment it has started improving, we have gone down to that whatever maximum extent, 50, 55 tons. Now with the last month, we've got some incident where it could be shut down. With that shutdown, we are adding that equipment one by one. With this current equipment, probably from the first week of November, that is maybe 8 -- 7, 8, 10, we are taking the target. We will be restarting that plant with a higher capacity instead of 50, it may go to 70 to 75 tons.

Okay. Okay. Okay. That's not -- I mean that was the confusion that we -- you mentioned you were...

Yes. Actually, even I told you in the last con call also, there was a oxygen shortage. People used to ask, why oxygen shortage. We were having oxygen in plant. But when the price was not good that time, that was -- there was a breakdown for the oxygen plant. Typically we do not rectify that. And when the prices have improved, then we started installing all the new things one by one, one by one. Now it looks very lucrative and attractive. But the reason we are doing probably we see 70 tons. I'm telling you in coming 1 or 2 months, you will see the 100 tons also in this plant regarding oxygen shortages.

Okay. And sir, my second question is on acetonitrile. So how the prices are and the margins are currently in third quarter of this financial year?

Actually, acetonitrile, it's not doing well yet. I don't know others -- what others are doing I will tell you. We used to talk about the margins and the prices when the price of the main raw material, acetic acid, was at INR 35, INR 40. This acetic acid went up to INR 120 in the last quarter. Of course, today, it has come down to INR 90 only. There's a reason it is a very thin margin. Sometimes, people are working on the losses also for this acetonitrile. Probably, we have to wait for the acetic acid to come down to the normal level. It's not to be [ particularly good ]. But if it should come down to somewhere INR 60, INR 65, then we will have the reasonable workable margins.

Okay.

Yes.

Is the prices of acetonitrile are around INR 250, INR 260?

People are asking if INR 260, INR 270 and raw material cost itself is coming to INR 250. That is what is happening presently.

And sir, but in the current scenario, let's say, there is a moment of not much improvement in the margin but still, we are going ahead with the expansion. Is my understanding correct?

That will be different. That's a different technology.

Okay. Okay.

So comfortability and other things will be more better than the current situation. If not, like you see here, we are all seeing the -- earlier, we have seen huge margins in the acetonitrile. That's the reason why everybody's surprised why we want hope, right? So I am expecting -- I'm not talking about the huge margins. My next plant of acetonitrile, which is I'm talking about 50 tons per day, will be normal like other products with a new technology. With respect to any raw material prices and all those things, all these [ exercises, as we explained, ] we have done, Mr. Nilesh. So let's see, once we start, then you will understand. And again, [ fast forward ] after the plant also, we have began very compacted design. So if you happen to visit next year, definitely, it will be -- we can see the plant, how we will do. And that time, we will have all the details in hand.

Okay. Okay. Sure. And sir, when you are saying technology, the new root of acetonitrile manufacturing, so the technology, I believe, it is indigenously developed or you have taken a license from outsider?

We are taking from somebody.

Okay. Okay. And the raw material -- and what about the raw material? Raw material is domestically available or you had to source it from...

No. It's domestic available -- available domestically.

[Operator Instructions] The next question is from the line of Anshul Verdia from Edelweiss.

Sir, a couple of questions on EBIT per ton. So if we see in this quarter, we -- the EBIT per ton has declined substantially in the sense of price compared to quarter-on-quarter, but the subsidiary EBIT per ton has come very -- is very strong. So just wanted to get an understanding how you see this EBIT per ton going into 3Q. We are already 1 month into the -- this quarter. And what would be the possible driver for this improvement in EBIT per ton? That's from my side.

See, for the subsidiary, as I said, all the products which are produced in the subsidiary currently in the short supply all over the world. And we are getting the good demand. Only the minus point in that, we are not getting the raw material sufficient required for that. Otherwise, it would have run more than 18%, 80% capacity today. What we are talking this quarter, only 60%, 67% was operating. And if you take the average of the 6 months, I think it's somewhere 50%, 55% only. But going forward, we expect it should go more than 60%, 70% capacity once the raw material is available. This is one thing. Second thing, in the parent company, the Balaji Amines, there was a problem I told you because it is with everybody, not only Balaji, all the companies are facing the -- number one, the volatility in the raw material prices was very fast. That has taken -- taking some time to ease. If somebody wants to buy a month or 2 months covering of their raw material, they are thinking price, the card which they buy cover for the 2 months, which tomorrow, if the raw material goes on, what will happen? This is everybody is thinking today. So this may continue until we get some comfortable stability in the availability and pricing of the raw materials. Anyway, as I said, that we're already in a position to pass on the -- whatever the short-term volatility prices, ups and downs. We could convince the customers and we will pass on. And we expect coming months because this month, entire month, the DMF could not run. Once we get this additional capacity, probably we will cover this loss of DMF in the coming 2 months. And overall, next 3 months, it should be better on what we are seeing even in a margin point of view and the top line point of view also.

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

So I had a couple of questions. One is like the inflation pressure, it's quite broad-based and it's not just raw material cost. And I'm sure that even our CapEx budget would also be getting impacted because of, for example, a surge in steel prices, [ chemical ] prices and so on. So I wanted to check, I mean is there any rethinking on the timing of CapEx projects? Or do you think that demand is so strong that we should complete project as soon as possible?

Thank you, Mr. Sahu. And you rightly catch the capital goods overrun by the -- any industry in the country today facing this problem. But for us, what happened for the DMC, we have already ordered all the equipment. There was only a problem because of the lockdown logistics, it could not reach the site in time for the -- up to DMC. And even for the [indiscernible], which you are talking next year, part of the equipment is already -- we have cleared the hurdles, and it will not have any impact. Yes, you are right. For the next expansions when we talk about the -- after 2 years, like new methylamines, new DMF, those may impact on the overall cost of the total project. That -- anyway, in the coming years, we will hear what will be the new CapEx, yes.

Right. And, sir...

Not for the Balaji, it's for everybody. So we're not worried. We are good going with everybody.

Yes. Yes. I totally understand that, sir. So segment, sir, again, I understand that near-term margin pressure is there. And again, this is true for the whole industry. My question is a little long term and more from sustainability of margin range. So for example, like 2 years back, I mean before COVID, I think for us, the range which we were working on were probably 18% to 20% or 18% to 22%. Now probably on a periodic basis, you have mentioned I think the range for us has changed to 24% to 26%. So I wanted to understand that like in the last 2 years or 3 years, sir, like what has changed for us that we are more comfortable with this range?

Yes. This is on account of the past few plays -- not all the plants. It's not that something magic has happened. Earlier, 2 years back, the plants were running at 70%, 60%, some plant was at 50%. But from the recent days, it has -- all the plants started working more than 70%, 80%. So that is the main reason we are comfortable that -- even today also, I can tell you, again, with the current situation, with the current scenario, we are -- I can tell you comfortably the sustainable EBITDA margins will be 24% to 26%. Maybe 24.5% and up till 35% or even 36% also.

Great. Nice, turnover, sir. And sir, there's one more periodic concern, which we always see in terms of challenges on the supply side. So when -- particularly when it is China supply issue or supply chain issue in general, so we have this challenge of the matching ingredient in the agrochem industry which you -- you have been mentioning that, okay. I mean this is something which we -- of course, we don't have a control over it because we don't produce those matching ingredients. But from your experience, I just wanted to understand that as -- because of various Make in India initiatives for the last few couple of years. Is that scenario -- that factor has -- so for you that factor is reduced for us? I mean, how do you see beyond this?

For us, we do not have any dependence on the China, any raw material. Only there was one raw material. We just recently started that, too. We used to supply some things to them, then we are supposed to buy the raw material from them. That was the only reason. Otherwise, we never depending on the majority parameters from the China. But you are right, indirectly, it was impacting because of the matching raw materials to my customer end. But as you rightly said, under Atmanirbhar Bharat, many people, they started looking at opportunities to develop these intermediates, which are even the lessons to the people to start their own manufacturing. Maybe in the coming -- not immediately, but coming 1 or 2 years, we will definitely see total change in this dependability. Most of the people they are talking, they don't mind going for the step more. I suppose, if we are buying one raw material from China, which you will process in a step or 2 steps and you get your end product. If you are developing, you may have to go 3 to 4 steps. Say, 1 or 2 steps more also, people are not minding we're doing that. But it's a long-term strategy. So that -- people have already started working. We have seen some of the people who are working. And definitely, you will see. Even in some of our raw materials also, we are expecting that India will develop, which we are buying presently from outside [ of India ] that product called [indiscernible]. We are hearing somebody is going to produce in the country. So all these things definitely will happen in the coming years.

[Operator Instructions] The next question is from the line of Anurag Patil from Roha Asset Managers.

Sir, this new CapEx of methylamines and DMF, what can the approximate CapEx numbers?

It's too early my dear, Anurag. And part up and just the earlier question you might have heard because the current situation, steel prices, the [ Morpholine plant ], which we planned last year -- which we bought last year, if you want to replicate the same thing, is exactly double cost today. So we -- it is too early to talk about those things. Maybe things will come to be normal by the time we start this actual -- starting this DMA and DMF. So this is better we'll talk next year once we finish this first phase on the second project and the second phase -- one product that is acetonitrile, then only these 2 things will come.

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

My first question is in relation to your stand-alone volume growth, which is only about 2% Y-o-Y during the quarter. So can you please help me understand which are the key products wherein you might have seen moderation in demand or even decline in demand?

It's very difficult to tell you the exact product. If I can tell you with a certain vision that -- which -- how much we have done, what we have done. If you can write a mail, I can tell you. Overall, yes, there is only 2% growth we have seen because of the reasons I was explaining in the earlier question. But definitely in the coming quarters, we will overcome because 1 or 2 products, there were logistics issues. There was raw materials. Some of the products offtake were not taken place because the matching raw material we're not getting. One example I'll tell you. There's a product called metformin, you are aware, which is the antidiabetic for which there are main 2 ingredients. One is the dimethyl hydrochloride, which we are producing and we are largest in the world for this product. And second key raw material for that product is DCDA, dicyandiamide, which is people are facing a lot of problems. People used to buy it -- pre-COVID days to buy it to $1,200, $1,300 per ton. Today, they are getting it more than $5,000 per ton. And that, too, availability is not certain. So because they are navigating the DCDA, my methyl is not moving. This is how it is happened the last quarter. So like that, many products are there which the matching raw materials are not getting. And now the things have started improving, maybe you will see the coming quarters, we should expect -- should go to the near to normal.

Sure. So sir, what would be your guidance for the volume growth for the whole year?

Full year, as I said, it should be 10% to 12% as a whole -- this thing.

Right. And also on the raw material prices, I mean, you mentioned about -- in between about the methanol as well. So any sense on where does acetic acid stands currently?

Yes, acetic acid is currently about INR 90. People are talking INR 90 something plus or minus INR 1. And methanol, really, that was very volatile. The other day, it was INR 40, and then INR 47, then again, INR 42 like that. But overall, I could see -- even today also, I was covering from 2,000 to 3,000 tons at much better price that is INR 39. It is really the last 4 weeks is the better price, I can say. And I'm expecting things have started softening, at least methanol point of view.

Right. And can...

China was talking about the coal also. Coal, should come down, they were talking yesterday in China. So if that happens, then definitely, we will see everything is normal.

Mr. Reddy, in relation to the sale, is there a possibility that we can do a backward integration or just acquire another producer of these key raw materials? Is there a possibility for that?

Which raw material you're talking?

I mean all the raw materials wherein you are facing a shortage or where the prices are going up?

Some raw materials, people are saying they will come up. We are discussing with 2, 3 people. Every month, we are coming up to 2 -- 1 or 2 new people -- all people coming out with the new product with DCDA expansions. So definitely, in coming years, I'm telling these, these are all very big, good projects. We cannot say immediately, but definitely, you will see in coming 1 or 2 years, a lot of new things will happen in the raw material point of view, which we are depending on the outside country. We should see that domestic producers will come out.

Right. Sir, finally, in terms of your realizations for DMF and ethylamine, can you state where they were for the quarter and where do they stand currently?

See, ethylamine has -- actually, prices have come down because of the demand. The year what happened, of course, last one -- entire quarter, we worked without remdesivir. There was a huge requirement going for the remdesivir. Those days when the remdesivir was at peak, the ethylamine prices went up to INR 400, INR 500 also. Now slowly, it has -- came to a normal level that is INR 150 to INR 160 is the current rule price of the ethylamines. And what is the other product you were asking?

For the DMF.

DMF, yes. DMF. I don't know. I'm still trying to understand from the outset. In India, there is a growth. We have seen almost 90,000 to 100,000 tons of the -- the requirement is there. And they are very small in that. Even if you run it at 100% capacity also, our current capacity is only 30,000 tons. But prices are more very favorably. Today's price is almost INR 180 to INR 200, which used to be once upon time, INR 60, INR 70. If this continues another 1 or 2 months, you should see that something is -- we should think that in spite of all those things, we should feel that it is a sustainable price.

The next question is from the line of Senthilkumar from Joindre Capital Services.

I have 2 questions around financials. First one, on consolidated cash flow statement, DETA has increased from INR 5 crores to INR 10 crores. So what is the reason for that, sir? No, we the company who have a dominant presence in the industry where the demand for the products is robust, what could be the reason for the increase in DETA? That was the first of 2 question.

Okay.

Then my -- let me complete the second question also, sir. My second question is on the other expenses there, which has increased about 71 percentage on Y-o-Y basis in Q2 FY '22, can you please throw some light on this, too, sir?

I think there's -- because of the fuel prices have gone up, one of the largest concern. If you see the fuel and the logistics costs have gone up. So that is the main thing for the...

On the other expenses, am I right?

And the credit receivables, I think there's not much bigger change. You see, if you see the 31/3/21 year ended, 47 to 34. And now, it is [ 32 ] to [ 33 ]. It's not change. It's only [ 4,000 ] to [ 5,000 ] right?

No, sir. It was actually increased from INR 5.8 crores to INR 101 crores. The first half of F '21 consolidated basis.

Something wrong. We will definitely come back to you. If you can send your mail I'll give you in detail. I don't think some understanding is around. It should not like that. We will definitely come back to you, Mr. Senthil. You can just send me a mail.

The next question is from the line of Kishan Gupta from CD Research Private Limited.

So basically, we want to understand like what sort of resistance, if any, are you facing from your clients as you go about passing higher raw material prices?

Initially, it's a human mentality. People will say, no, no, no. But maybe if it's 4 to 6 -- 3 to 4 weeks, then they are accepting. See, majority of these products going for the life-saving drugs. More than 60%, 70% is going to life-saving drugs. That is not going to stop, right? So when they're ready to buy. Initially, we faced some problem to say that they are not in a position to compete. But once the entire world is traveling with the same track, so then they are supposed to accept. Everybody should come to a realistic understanding.

And how has changed like this resistance? Is it the same what it used to be pre-COVID now? Or there is some...

No, there's not much change. Only, it's a matter of weeks -- week, plus, minus. Earlier we used to convince them in 3 weeks. Now it might have taken 3.5 to 4 weeks, like that. That's all.

And now with this COVID risk now subsiding, what sort of pricing power do you think you have now with your pharmaceutical clients?

See, there are a -- Mr. Gupta, there are a few raw material. I'll tell you one example since you asked this detailed question. There was one raw material we used to buy at $800 to $900 per ton. Today, we are betting -- buying at $5,000. But still, people are buying the same quantities not only in India. Even outside country also from the -- we are getting much better acceptance from outside the country because they are in a position to easy and understanding that this is right. This material has gone up. So there's no alternative, so we should budget. This is how it is happening. So like that, acceptance is coming up. There's no problem. It's a matter of who buys the drugs.

And it is across products. You talked about a specific product. So you have sufficient pricing power in most of your products. This is what you mean to say?

Yes. In some of the products, because we're only a handful of manufacturers in the world market. If you have more than 20, 30 manufacturers, so one or the other company will be having some old inventory or something hardly not having the orders like others or even when they are in the same process. That time, you will face the problem in the price matching from one manufacturer to others manufacturers and the competitors. But when you have only a few manufacturers who are going by hand to hand in the market versus their manufacturing versus to be -- sales turnout. So in such situation, definitely, it is easy, understandable for the world. What you're talking about the power. When you have only a few manufacturers, definitely, you will have less competition. You will have the power of the price. That's what we have in some of the products.

And how profitable it is now for you people to grow exports when ocean freights are skyrocketing?

Yes. Some of the -- we started giving an FOB basis. We just started separating the price of the product to make them to understand that we are not taking this price. Logistics are eating away the thing. Other people have already started understanding and now they are talking. And sometimes, we are talking, this is my price. The price will be added at the time of shipping on actual basis. This is how we are dealing presently.

So have you been able to move to more of FOB contracts now for exports?

Yes, yes. Most of the -- at least half of the teams are turning to FOB. Even if we are talking of the FOBC because normally the prices [Foreign Language] customer or supplier. Nowadays, people are talking that FOB [Foreign Language]. Sometimes I will say it. I'm getting one opportunity. There's a space in the vessel and he's charging this much. Are you willing to convert into CAF? So people are saying, yes, to do it. This is how it is happening.

We talked about...

[ And you have to remember ] contract is contract. You must read all those things. But now people have understood that -- this, that they will not get the materials.

You talked about this 24% to 26% sustainable margins, EBITDA. So is it stand-alone or consolidated?

It's consolidated.

Consolidated 24% to 26%.

26%.

The next question is from the line of [ Tanvi Menari ] from HEM Securities.

Just one question. In the methylamine capacity, the CapEx plan that we have for the Phase 2. Earlier, we had a guidance that is to be commissioned by FY '22, which has now been shifted to FY '23, whereas you said that you have no change in your CapEx plans. So how do we understand that?

As I said, if you see in my earlier listing, methylamine was not on the front range. And even now also, I'm telling you, Ms. Tanvi, we do a lot of plants. If something comes very special product, something is developed, then definitely, that can come to the front end and this can go back to the back bench. So this...

[Technical Difficulty] We have lost the line for the management. Please hold while we reconnect. We have the management reconnected. Sir, you may proceed, please.

Yes. Are you there? Can you hear me?

Yes, yes, yes.

Yes. See, as I said, that -- like earlier also, I said methylamine was not on the priority because methylamine will be done when we take position for the DMF. That is more dependent on the. So DMF, we are presently trying to make this existing plant 100% utilization. That is 30,000 tons. The moment we finish, then probably we will plan up both DMF and methylamines. As I said, we have -- not only this have many products in the pipeline, which we are not disclosing because of the commercial point of view -- kind of secret point of view. If something comes very attractive, definitely, it can change priority also.

Okay. And just one question more. So you said that I believe we'll be seeing a volume ramp-up of approximately 10% to 11% on a stand-alone basis for the full year. So how do you see in terms of the revenue for -- we don't see much growth if we only expect a volume growth of only 10% to 11% for the full year going forward?

I've already given you. We expect this financial year on a consolidated basis. Consolidated, we should end up at INR 1,800 crores total revenue. INR 1,800 crores to INR 1,850 crores, we can end up, which I was given earlier also. And we are on the right track. We will be doing definitely.

The next question is from the line of Rohit Nagraj. [Operator Instructions] Rohit Nagraj from MK Global.

So you mentioned that monoethylamine was in short supply. So is there any domestic producer? Or is it completely imported?

Actually, even we can produce that. I can tell you the key of this product. It's a very simple reaction, ammonia and ethylene oxide. In our country, the problem is ethylene oxide. We are depending totally one big brother that is Reliance. So because it is not available, we are depending on the outside country. Earlier, people -- 1 or 2 people used to produce this mono ethanolamine. It's very low margin and a simple reaction product. Only the raw materials are very important, for this product, ethylene oxide and ammonia. Ammonia is available. Ethylene oxide availability is not there because the capacity was limited with the freight. In fact, everybody is waiting for somebody should come out with this product. So there's a reason we are buying -- and you cannot import the EO, ethylene oxide, being a dangerous goods. So that's the reason we are depending on the 4, 5 countries -- 5, 6 countries. We use capacities that are available for this. But it's like a commodity product like methanol. So there's a company called -- SABIC is there. There's -- Dow-Sadara is there. PETRONAS is there. GC Glycol is there. So all these companies, even in U.S. is there. The U.S.A. So 5, 6 countries are there. Only thing is presently in world market, there's a shortage for ethylene oxide is number one. Number two, logistics also is restricting them to free movement.

The next question is from the line of Shanti Patel from Shanti Patel Investment.

Yes. Just simple question. Any of our product is -- has got an antidumping duties from the government of India?

Yes. Presently, there is one product which is diethylenetriamine there, which is having the antidumping. And second product is choline chloride. I think recently, they put up duties. It's not we. But Jubilant has applied and the government has given the antidumping for that territory. So these are the 2 products.

But how long it will continue? I mean, what is the deadline given by the government? Or are you thinking of more...

Normally, government will give for the 5 years. Any product, when you apply, you will get the antidumping 5 years. But in case when somebody comes with a petition request asking the review situation. Improve this, please remove like that. There's a possibility that fight again and remove premature also even before 5 years also.

Okay. And there are products which are under the antidumping duty...

Mr. Patel, I'm sorry to interrupt. Can you please join the queue? The next question is from the line of Hardik from Brick Capital.

Yes. Just one question. The other expense so high this quarter compared to last year and last quarter also.

Yes, I say it because of the fuel cost to be one of the major reason. Fuel cost has gone.

And will we be able to pass it in the coming quarters?

Yes, it's already started. We started passing them. Otherwise, you see -- we can see there are lots many increases: raw materials, fuel costs, power. Everything is increased. But still, we maintained to some extent the margins and all. That means we already started passing on these expenses to the customers. You will see in the coming months passing on 100% increase to customers.

The next question is from the line of Nikhil from Galaxy International.

I just wanted to ask one question. So how is the competitive intensity from China right now? So given that earlier we were importing a lot of products from China, so how is the situation now? And what is your outlook on, let's say, the situation 1 to 2 years down the line? Will it increase, decrease or remain the same?

See, we are not facing any problem presently that there were only 2, 3 products who used to face the problem. One, the DMF used to be. Rather, they don't have the material percentage. Some of these big, big plants, they have closed. I don't know what was the reason. Second thing, ethylamine used to come. They totally stopped coming into the country. And third, there was 1 product. EDA used to come. That is we started exporting to China now, that product. There are duties for us. In fact, we are exporting to China. There's 1 product called morpholine. We used to ask for the antidumping against China. Now we started exporting this product. So this quickly, as you rightly asked, we don't know how many days it will go like this. If situation goes like this, we can say that these products may not come at least in the 1 year to the country. If it is on the account of capacities because they may not having excess capacity to dump in India. Or they may not be having those dynamics of the costing competitiveness with India. So that could be the reason. So this is the situation. Definitely, we will have -- the next 1 year, we'll actually see these products coming into India.

That was the last question that we could take in this session. And I now hand the conference over to the management for closing comments.

Thank you. Thank you very much. First of all, I would like to wish you all in advance very Happy Diwali and a prosperous New Year. Thank you for taking your time and participating in our conference call. The overall outlook for Indian pharmaceutical companies and agro chemicals is expected to continue to improve on account of impetus given to China plus one policy by companies in Western economies. Pharma and agrochemicals construed substantial majority of our end-user clients for aliphatic amine as well as the specialty chemicals that we manufacture. Given this strong correlation between the demand for our products and that of demand for the products from our end-user industries, we foresee a robust growth potential for our company in years ahead. At the same time, we are also continuously striving to increase as well as diversify our product portfolio to address more segments of our end-user markets. And I thank you once again for all the investors, stakeholders who's showing the conference on our company. Thank you, once again.

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