Balaji Amines Limited (530999) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Balaji Amines Limited Q3 FY '22 Earnings Conference Call hosted by PhillipCapital (India) Private 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 involves risks and uncertainties that are difficult to predict. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Apurva Shah from PhillipCapital (India) Private Limited. Thank you, and over to you.

Thank you, Stefan. On behalf of PhillipCapital (India) Private Limited, I welcome all of you to the Q3 FY '22 Earnings Conference Call of Balaji Amines Limited. We have with us today Mr. Ram Reddy, Promoter and Managing Director of Balaji Amines Limited. We request the management for the opening remarks, post which we will open the floor for Q&A. Thank you, and over to you, Ram, sir.

Thank you, Apurva. Ladies and gentlemen, a very good evening to all of you, and welcome to the conference call to discuss the financial performance of the Q3 FY '22 performance of the company, Balaji Amines Limited. I hope you have a 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 consolidated financial and operational performance. Despite sluggish demand for a few of our products as some clients would not procure the key [ starting ] raw material for some of our matching products and shutdown of 2 plants for debottlenecking, that is dimethylformamide and acetonitrile, we are pleased to have achieved decent quarterly results. We recorded 44% growth in total revenue, which stood at INR 556 crores in Q3 FY '22 as against INR 393 crores in the corresponding quarter of previous year. The total value stood at 27,500 metric tons for Q3 FY '22, down by 13.8% as against 31,993 metric tons in Q3 FY '21. And for Q3 [ FY '22 ], balance of basic comments stood at 6,460 MT, and amine derivatives balance stood at 9,912 MT. And that of specialty chemicals today 11,270 metric tons. Despite falling volume, the growth in revenue was on account of better product mix, which culminated a better price realization especially for the products of the subsidiary company. The EBITDA was up by 35%, which came in at INR 160 crores in Q3 FY '22 as compared to INR 118 crores in the same period last year, with EBITDA margin at 28.2% in Q3 FY '22 as compared to 30% in the same period last year. The falling operating margin was primarily due to lower operating leverage on account of deepen volume uptake. We expect operating margins to inch upward in coming quarters on back of moderation in prices of key raw materials, favorable product pricing and better product mix going ahead. Profit after tax recorded an increase of 29% at INR 102 crores in the current quarter under review as against INR 179 crores in Q3 FY '21. PAT margin stood at 17.9% in Q3 FY '22 as against to 20.1% in Q3 FY '21. Diluted EPS for Q3 FY '20 stood at INR 27.64 per equity share as compared to INR 23.1 per equity share in Q3 FY '21. Now coming to our consolidated performance for 9 months FY '22. Revenue from operations in 9 months FY '22 stood at INR 1,546 crores, up by 72% as compared to INR 900 crores in 9 months FY '21. EBITDA witnessed a growth of 78% from INR 247 crores in 9 months FY '21 to INR 438 crores in 9 months FY '22. Our EBITDA margin expanded by 92 basis points to 28.3% from 27.4% in 9 months FY '21. PAT for 9 months FY '22 witnessed a jump of 86% to INR 287 crores from INR 155 crores in 9 months FY '21. Diluted EPS for 9 months FY '22 stood at INR 80.15 per equity share as compared to [ INR 47 ] per equity share in 9 months FY '21. Total volume stood at 81,569 metric tons for 9 months FY '22 as against 77,510 metric tons in H1 FY '21. We recorded a jump of 5% for 9 months FY '22. Volumes of basic amines stood at 17,714. Amine derivative volume stood at 27,750 metric tons and [ methyl ] specialty chemicals stood at 36,090 metric tons. Our specialty -- our subsidiary company, Balaji Speciality Chemicals Private Limited, continued to witness substantial demand as well as robust price realization. We log sales volume of 3,088 metric ton in Q3 FY '22 at our subsidiary plant as against 3, 640 metric tons in the same quarter last year. We have recorded capacity utilization of about 52% in 9 months FY '22. And [indiscernible] for raw material request for the manufacturing production of the subsidiary plants continue to remain a major challenge in Q3 FY '22. However, from the month of January, the supply bottlenecks have eased, and we expect to operate the subsidiary plant at 70% to 80% capacity in the next fiscal year. Non-agrochemical clients constituted about 30% of the total sales of ethylenediamine in 9 months FY '22 from over 10% in earlier quarters. We have increased the share of exports from the subsidiary plant from 15% in H1 FY '22 to 18% in 9 months FY '22. And our endeavor is to increase it to about 25% to 30% going forward. We anticipate achieving annual turnover of about INR 475 crores to INR 500 crores in next fiscal year. And margins are expected to further strengthen at the subsidiary level as the production gets ramped up. The construction of new plants for dimethyl carbonate in Phase 1 of Greenfield Project Unit IV, is nearing completion and we hope to commence operations in of Q1 FY '23. Until 31st December 2021, we have undertaken a total CapEx of INR 236 crores in Phase 1 of Greenfield Project. The capacity of the plant would be about 10,000 to 12,000 tons per annum. The company would be the sole manufacturer of this product in India. And currently, the annual domestic demand stands at about 8,000 to 9,000 tons, which is completely met by imports. We are confident to achieve capacity utilization of 60% to 70% at our DMC plant in first year of operation itself. DMC and major applications in the manufacturing of polycarbonate, it is also used as a major solvent in the production of the lithium batteries, with the consumption of [indiscernible] growth in India backed by various government incentives. At the same time, we see encouraging scope for exporting DMC to outside markets also. The prices of DMF continue to remain healthy. And with the completion of the debottlenecking excise, the capacity utilization of this plant has increased substantially, the full impact of which is likely to be visible in Q4 FY '22 and next financial year. We expect the capacity utilization of DMF plant to increase from current about 34% in 9 months FY '22 to 70% to 80% in coming quarters. As disclosed earlier, we also plan to set up an additional plant of acetonitrile having capacity of 50 TPD by using a different technology, which will address the adverse impact of higher price of acetic acid and shall lead to healthy operating margin. This plant is expected to commence operations by end of FY '24. Upon smoother [indiscernible] 10:15 to the raw materials for matching products at our clients and in coming quarters, we expect to witness an increase in capacity utilization over the next fiscal year. Also next year, we expect substantial improvement in volume uptakes from improved capacity utilization at our ethylamine new plant, DMF and Acetonitrile plant as well as capacity additions on account of the new product dimethyl plant. Methylamine is the key raw material and the base product for value added derivatives required for pharmaceutical and agrochemical companies. We are currently the market leader in methylamine production in India, and 80% of our production methylamine production is captively used for manufacturing value-added products. Pharmaceutical application segment and Agro Chemicals are expected to drive significant demand for methylamine in India as well as global markets. As announced earlier, to meet our increasing capital requirements, we plan to set up a separate plant for methylamine with capacity of 40,000 to 50,000 tons per annum under Phase 2 expansion for Greenfield Project Unit IV for which the company has already received environmental clearance. That's all from my side. We now leave the floor open for question and answers.

[Operator Instructions] The first question is from the line of Amar Mourya from AlfAccurate Advisors.

Sir, a couple of things. You said that now this quarter, the volume degrowth was largely due to the capacity constraint, right?

Yes.

Okay. So from next quarter, you are saying the capacity will come, correct?

Yes.

Okay. So basically, that -- what was volume debottleneck which was there in this quarter -- I mean, volume constraint which was there in this quarter that should be addressed from the next quarter onwards?

Yes. See, there are 2 reasons. One reason, there were some of the plans [ offset ] our client end where they could not turn because of the -- their matching raw materials was stuck in China and other things. And second thing, like our acetonitrile plant and DMF plant was down for the debottlenecks almost 30 to 40 days, the plant was down. So that capacity also was a shortage in volumes, which will come because as the debottlenecking program is completed, from this quarter, you will see the proper volume growth.

Okay. Okay. And secondly, sir, about the subsidiaries, what you are guiding is something around INR 500 crores top line. Did I hear it correctly?

Yes, INR 475 crores to INR 500 crores. I think we've already done 9 months INR 326 crores.

Correct. Correct. So -- and what kind of margins are in that?

I think quarter ended, we have done something 39.84% in EBITDA margin. In 9 months is about 34.94%.

Correct. Correct. So like tentatively, what kind of the EBITDA margin around 25% plus EBITDA margin is possible for the next year also?

I think it should be minimum.

Minimum. Fair enough, sir. I will come back in queue.

[Operator Instructions] The next question is from the line of Pratik Chaudhary from Samarthya Capital.

Yes. Sir, on -- in the interview today, you alluded to the fact that you may be doing upwards of INR 2,000 crore turnover and maybe closer to INR 2,200 crores or INR 2,300 crores for the year. So that would call for a very significant incremental quarter-on-quarter uptick, which we probably haven't seen this significantly ever in the past in our history. So what is leading to such a significant scale-up coming into the quarter and the next year? And in your opinion, how far is it sustainable?

So it is because of the capacity utilization, just now, I said in the earlier question of my answer. See, without DMF full utilization and without full utilization of acetonitrile, the figures you've seen of the 9 months, that is INR 1,541 crores you have seen. We expect these 3 months we should do with all these additional capacities. So on the second thing for your question, there are prices have been increased unlike earlier years. That is also adding to the value growth. So definitely, you will see the INR 200 crores earlier. I used to say INR 1,800 crores something, but it should go to INR 2,000 plus crores we should end up by the 31st March for the top line.

Okay. And sir, second question on you mentioned that maybe after the Chinese are done with the Olympics over there, and maybe then you will be in a better position to disclose the new products or some -- you mentioned some -- there are 4 or 5 products which you might get into manufacturing. So are these.

We have many products in the pipeline in addition to what we declared. In addition to that, we have some of the products which we will disclose at appropriate time.

And these are all new products?

Yes, 1 or 2 new products are there and some old products also addition there. As I said right now in my opening remarks, like methylamine and DMF and acetonitrile. These are already there. In addition to that, we have 2, 3 products, other products which we are discussing actually. We have done the R&D already, but we just want to see the -- how the Chinese market will react after that, we'll take decision.

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

Yes. [indiscernible]

[Operator Instructions]

A little louder.

So sir, regarding acetonitrile, if you could just tell us what is the production that we did for the quarter and 9 months. And with this debottlenecking complete, what type of volumes we can look in financial year '23?

We have done hardly 6 to 7 months out of 9 months, I think we operated only 1 quarter and second quarter part and third quarter part. So that means it is almost 6 months we operated, 170 to 180 days at the rate of 9 tons of the production. But coming months, we now started and in this quarter, it will be operating properly, more than 10, 11 tons per day operating.

Okay. And regarding DMF also, you have mentioned that now you're expecting utilization to go up. So for the next year, what type of utilization we should look for DMF? And if you could give us some sense on the current pricing that is there with DMF?

Current pricing varies from INR 175 to INR 210. That depends upon the small customers, they're buying at INR 200 and INR 210 also. Import material people are selling at 210 to 205. And that our realization is about somewhere INR 170 to INR 180. And we are operating currently at -- we expect this quarter, we should operate in a minimum 70% capacity from this quarter. And even next year also, we should be in a position to operate 70% to 80%, if things go like this.

Sure. And lastly, sir, if you could tell us about the CapEx that we have done in the current financial year and what is your plan for the next financial in terms of capital expenditure.

I think that we have already given INR 236 crores we have already done. And maybe another INR 15 crores, INR 20 crores we'll be doing in this coming 1 or 2 months to complete this DMC commissioning. On the next year, as I said, we have all these plants are ready. We are just waiting for the -- honestly speaking, if this is for everybody, all the investors who are listening this, see, because of this Olympics, whether they have stopped the production of some of the products which are not coming to the country and prices have been increased because of natural gas or because of this Olympics or any other reason, we just wanted to understand. This clarity, we expect that we can know only after this Olympics, that is by end of this month. By March, we are going to take the major decisions like doubling the DMF capacity, methylamine capacity and the acetonitrile capacity. All these things will come in the next financial year will be very important and crucial from the CapEx point of view.

Sure. And lastly, sir, any update on the merger of the subsidiary? Last quarter, you had indicated that we are going ahead with that.

They are looking -- see that Board is looking for the alternates how to do valuation, and they're already working on it may be coming 1 or 2 years, it should happen.

You're saying 1 to 2 years or 1 to 2 quarters, sir?

No, 1 to 2. See, this year is already completed. They are looking for the options whether they can do any because if the capacity goes full, they may look further expansion also in that, then they can merge it. In that Board, they are discussing. We'll come back to you at an appropriate time, okay.

Yes, sir. But just a suggestion, this is something that has been pending for long, and it's a big [ hovering ] on the stock also. So my request and suggestion.

We are on track. We told that after finishing the onto balance sheets we'll be doing appropriate action whatever required for that. So it is not completed. Now this is the first balance sheet coming up, right.

And sir, what happens to the loan that we had given of INR 77 crores to Balaji Specialty now they become very profitable, they'll be returning that amount to us? How would it go?

They are paying both. Even banks also you see the total debt, it is almost INR 15 crores to INR 20 crores, we have paid that. And we are paying regularly.

[Operator Instructions] The next question is from the line of Jaiveer Shekhawat from Ambit Capital.

Mr. Reddy, my first question, if I remember, in the 2Q FY '22 earnings call, you had mentioned that you had started passing on the higher RM prices to the customers given your transition period of about 3 to 4 weeks was over. But if you see the stand-alone business gross margin or EBITDA margin, I mean, these have come largely flat quarter-on-quarter even in 3Q as well. So what explains that?

See, because we have passed down some of the raw materials and the new -- some of the new problems in the new raw material, like earlier, we were talking about the methanol and ethanol. And today, we are talking about ammonia. As ammonia has increased every week it has increased, today, some INR 40,000, which has come to INR 80,000 per ton. That is one major issue. Second reason for the decline in the margin, we could not utilize some of the plants because of the debottlenecking program has taken, which were very profitable products. So that is also another reason. So you will see in the coming quarters or you will be seeing in spite of 30, 40 days the plants were down, we are in a position to give at least these numbers. But definitely, in the coming quarter, you will see the overall annual results you will see much better.

Sir, if I may understand because I understand the prices for methanol as well as acetic acid, they are started softening. But ammonia, as you said, has actually increased. So what is coupling that increase in prices?

The increase, because they are talking everywhere, because of the gas shortage, it is a global trend for this product. We expect after this March winter in some of the places, they are using the gases for the other heaters and all, but they hear from the supplier. Probably from the next 1 month, it should be softening. And this release what they have given the government of India in yesterday's budget, like in methanol and acetic acid, that should compensate to some extent in the -- where this ammonia prices increase.

Sir, also, we know that alkyl currently has a similar ethylamines capacity as you are talking about 22,000 tons per annum. But now they are ramping it by another about 30,000 tons per annum. So do you believe there is actually a lot of demand in the market to absorb it? And could that actually lead to any pressure on realization because there could be an oversupply as well?

That I do not know what alkyl is doing, but what I can say is we -- whatever we have done, the expansion of 50 tons per day, we are in the right track. We are already ramped up to 100% capacity. And we have some advantages. As I said earlier, our technology is totally different. We have some of the plus point for this. So definitely, we'll have not only see why you talk about the countries the capacity increase, the more inventory is there. Then the companies can go outside the country also. It's a [ world ] product, right?

Sure, sure. I will join back in the queue.

The next question is from the line of Nitin Damania from Kotak Securities.

Sir, just continue with the earlier participant questions on the ethylamines. Now sir, can you give us what is the demand supply dynamics in the domestic market as per the ethylamine is concerned because of the new capacity is coming in, there can be huge supply that can probably come up in the market?

That I do not know. See, they have started with some expansion. They might have seen next 5, 10 years growth focus they might have seen. But what we have done, we have seen for the next 1 year, we should be in a position to run at 100% capacity.

If you are looking at from the current perspective, what is the demand supply as of now, industry demand supply?

See, I told you, if you recall my earlier on con calls, I used to say that there is 700 tons to 800 tons import coming every month to the country which we would like to target. But for some quantities we should go outside the country. The exact thing what we have done, if you see this quarter and last quarter import data is almost to nil. The last month, I've seen only 32 tons imported. Last Q4 only 70, 80 tons. Normally, it used to come almost to 700 to 900 tons every month. So this is whatever is happening. And in addition to this, if you see the export data, some products from our market of this triethylamine is going outside also.

And sir, in terms of the -- you said that ammonia prices increased substantially from 40 to 80. And even Russia has probably taken an action of banning ammonia. So what inventory do we have in terms of ammonia? And is it that we are sufficient enough for the quarter to see?

My dear friend, ammonia cannot be stored more than 1 week. Maximum 1 week inventory will be there. But we have the tie-ups with domestic manufacturers who has given the assurance at least 1 to 2 months assurance is there. We should travel with this situation. If you pay price more, you will get and you should be position to talk on your price to your end user.

And the last question is on the subsidiary loss and [ unit ] loss margin in about INR 475 crores, INR 500 crores of the revenue with almost 25% of EBITDA margin next quarter. What is the road map for going ahead because probably 75%, 80% you might achieve in FY '23 and after are we looking at any expansion in subsidiary?

We have the plan, which is separately discussed during the Board meeting like some of the derivatives, if situation demand second plant of the similar are some of the derivatives of the [indiscernible]. We have a lot of things in the pipeline.

[Operator Instructions] The next question is from the line of Reena Shah from Elara Capital.

Can you hear me?

Go ahead.

Sir, I just wanted to understand more on DMC. You said that it is more used for manufacturing product component in lithium batteries. So basically, this is kind of a B2B product. Am I correct?

No, no. Yes, it is used in the pharmaceutical also. It's various applications are there. I just given the broader listing. But presently, country without battery, without polycarbonate, without the battery country has already importing 8,000 tons as on today for various pharmaceutical applications and all other things. So what I have seen because the recent inquiries from the various battery manufacturers, we expect definitely there will be very good growth because we never expected that this path to the battery manufacturers will come in India.

Okay. So what could be the potential market size today? I do understand that market size is around 8,000 to 10,000 tons. But what could be the potential market size that you are looking into India or over the globe?

See, as on today 8,000 to 9,000 tons is already there in the country, and we cover survey with my existing network outside the country also. We have around 8,000 to 10,000 tons for various parts of the world we have. So definitely, there is a good demand for this. And here, we are expecting to -- I'm selling 10,000 to 12,000. But with some debottlenecking, it may go up to 15,000 also. And second thing, in the same plant, we are getting 2 products. One is the dimethyl carbonate, and second is propylene glycol. Actually, I missed to say these -- both put together will come almost 25,000 to 30,000 tons and which should generate a moderate price around INR 200 crores of top line, if everything goes well.

Okay. And sir, what could be the margin target for these kind of products like would it be on the higher side or.

It's very difficult. I wish, I love to get more than existing margins, but it's not in our hand. We launch only we can be in a position to tell where we are allowed by the market.

Okay. Okay. Okay. Got it. And sir, this quarter, I have seen that your amine products volumes has been on a higher side. So when you said that you have a realization benefit because of better product mix, I just wanted to understand how -- because I think amines is the one who are [indiscernible] relatively as compared to if you go to amine derivatives and this thing where we have seen a volume dip. So how.

I will tell you. I think I answered earlier also. Now also I want to clarify once again. Since amine, since we have more than 60%, 70% in-house consumption, right? Then there is a consumption more, you will see the more value addition in the intermediates and basing on the amines you will see more value to that, and let [indiscernible] in the amines sometimes If I use less market for this intermediates, which are basing on the amine, so at that time, you will see more of outgoing amine sales. So it's very difficult to say and these are all sometimes driven by the season also. Like other reason if you supply more of the methylamine to the average season, that time, we will see only growth of the methylamine and you will not -- you will see less in the intermediate. This is how it works in our specific company, right.

Yes. One last question, if I may, this subsidiary that you were -- trying to consolidate, your consolidated volumes, I believe from this quarter only, you have started giving a consolidated volumes breakup of the segment-wise. So my understanding is the additional volumes which have been coming, it is some specialty chemicals only. Is my understanding correct on this?

Yes, yes. See, this time, we are giving the last quarter also we have given. But this quarter, it is more visible because of specialty and even more strength to the parent company. That's the reason you are talking about that. Actually, we have given last quarter also.

Last quarter you have given consolidated numbers, but breakup in volumes is given for standalone numbers. So that is why I just wanted to understand.

Right. You're right.

Yes. So this extra volume is coming from special chemicals, right?

[Operator Instructions]

This just a completion, just completion of 1 word.

Can you repeat? There is some disturbance.

Sir, the [ decisions between ] standalone and consolidated volume numbers is just for specialty chemicals. Is my understanding correct?

Yes. You're right.

The next question is from the line of Vishal [ Baraia ] from Max Life Insurance.

My question is on the polycarbonate versus PVDF and PTX kind of use for the lithium-ion battery. So could you elaborate a bit, which would be better and which of the ones, photopolymers or carbonate based polymers would see higher demand from the lithium-ion battery?

See, we also knew these 2 names I also heard when I was talking to the lithium battery. They said that with -- along with other solutions, they mix 30% of this solution in the solvent, which they [ premix ] for the battery solvent. And it is used by everybody. Every battery manufacturers, they will be requiring DMC what I had. And along with this, I think of NMP, N-Methyl-2-Pyrrolidone, which is our product is also used for the battery manufacturing.

The next question is from the line of Rohit Nagraj from Emkay Global.

Am I audible? Am I audible now?

Yes, yes. Go ahead.

Sir, my first question is in terms of industry dynamics, now you've mentioned that, I mean, last couple of years, we have done expansion. We've had a fairly good volume growth. We are expecting that our commission capacities probably will be running at optimal utilization in the next foreseeable future. So what has changed in terms of the dynamics, domestic part or exports part, wherein we are so confident in terms of scaling up the volumes and then going in for the next leg of expansion?

This is basing on the outgo of the products and the market demand as we got to 10% to 15% rate. Growth rate is there for all the amines. And the most important thing is during the last 1 year, it's a pandemic situation, we -- some of the new doors have been opened for Indian companies. Like where China was giving, when China stopped the -- as an alternate, India could get some chance and where sometimes we have given 100% to those customers. Even if China comes back taking U-turn, the people who bought for these last 2, 3 quarters, they should keep the Indian companies as a second supplier, if not 100%, at least 20% to 30% as there's a new gate open for all. This is one thing. Second thing, the government of India under the PLI scheme and Atmanirbhar Bharat schemes, a lot of pharma, APA companies, agro companies were put up their papers. If we take at least 50% of the papers put up companies [indiscernible], so there will be tremendous growth in the API intermediate and agrochemical intermediates, which for years together they're depending on the China and other countries. Those things, if happens in the country so definitely, we will have good opportunity. These are all the reasons why everybody is taking the opportunity for the expansions.

Right, sir. Sir, just a clarification on this, apart from China, globally, are there any major suppliers who are looking for expansion or probably they don't have any plans for expansion and which gives us a better opportunity?

No. See, its expansions are everywhere it is happening. But I'm not talking about only India. If China is not giving around the world, India is getting opportunity around the world, not only in India. So that is the reason, there is every possibility for all chemical companies in the country, specifically specialty chemical and intermediate companies will get a good opportunity. But during this period, which they are going to [ ease away ], take up China to some extent.

Right, right. Got it, sir. Sir, second question was in terms of our capabilities from the R&D front, can we go into, say, some specialized amounts which are for third, fourth derivatives because already we have established ourselves in terms of the basic and one forward derivative. So is it a possibility from our R&D and capability perspective?

We have many of the products already delivered from our R&D only and even in the future also we are looking. But our main focus will be import substitute. We just check whatever is the coming to the country for years together, those things we are doing the -- putting all our efforts to develop in-house and putting up the plants. So this is how we see, if you could see our track record. In future also, you will see such products only.

The next question is from the line of Vivek Gautam from GS Investments.

Congratulations on -- again on yet another solid quarter, sir. Sir, just wanted to have some information on your background being civil engineer and from the [indiscernible] class. And CapEx seems to be your forte, and you are doing a lot of CapEx on time. And is it -- has that become a sort of a boast for our company in terms that we are able to do constant CapEx, making import substitute products and before time. So what is helping us because I believe you are civil engineering background and other also civil engineers, so how come sir, so much of expertise in chemical engineering almost better than the UDCP professionals working in other sectors and other companies, sir?

I cannot comment on that. But yes, we have the proper plans we have. Once we take out any product from the R&D., then we do the pilot plant, then we will go for the commercial. This is how we execute the projects. And most of the times, we have even project also we will do on our own. We do not have any implementing agency. That makes a lot of difference. So far, whatever we do at all the plants, these are built by our own team by hiring the people, hiring small contractors. There is no project implementing agency involved in our company for the -- so far. That is one thing. Second thing, we have the experienced team within and even the contracts that were working with us for years together. So if there's any plant, once we decided, we've not taken more than 8 to 11 months to come out of the production.

Exactly. How big is your R&D, sir? And how much is the focus on the R&D that seems to be quite a big boast for our company?

We have some -- they're not big team. We have a reasonably sized team. We have a few doctorates and few [ B.Sc, M.sc ] people working on it. And we are all completely unfocused. Suppose, if I give one product, everybody could work on that one product. And other teams will be working optionally doing the fine-tuning of the existing plants also. We are not sticking only for the new projects. The R&D team is helping us to reduce the production cost, fine-tuning of the existing clients, where we can reduce the cost of the production, all those things, our team is working.

[Operator Instructions] The next question is from the line of Shanti Patel from Shanti Patel Investment Advisors.

My question is, if everything goes in our favor and after this China, to that [ mild curve ] gets over, and if we can get our own plants can commission, there is a good demand for the product, what will be the incremental revenue and the impact on profit will be there in the next year?

See, next year, we are expecting with this addition of DMC and existing plants, which are under -- after debottlenecking, which are on the stream now, so we should expect minimum INR 2,500 crores revenue. And we should be able to maintain 25% to 26% EBITDA margins. This is the consecutive basis I'm telling you.

Next question is from the line of Amar Maurya from AlfaAccurate Advisors.

Sir, just wanted to understand what kind of volume growth we should expect in a stand-alone business for the next year.

Around 10% to 15% without adding any new capacity. Since we are adding a new capacity and work in full capacity, you will see another 15,000 tons minimum from the DMC, which will add in the next year's total volume.

Correct. Correct. So basically, you are saying stand-alone without adding any capacity, minimum 15% growth and plus I should add another 70% utilization of the DMC?

No, normal course, you take it 10%. And you add another 10,000 to 15,000 tons.

Okay. Okay. So I believe, sir, this year closing, you will do more than around more than 1 lakh kind of a volume, right?

We should be in a position, if everything goes well.

Okay. Perfect. Perfect. And about the realization?

See that -- again, that depends. So far till date we have seen this quarter, it's in the track only, only 1 month left, 1 month left, we'll see how it will happen. If it goes to things like this, definitely will be doing plus only. Whatever we have done this quarter, it should be plus to the existing quarters.

The next question is from the line of Dhaval Shah from Svan Investments.

Sir, on the -- referring on the presentation, Slide #44, you mentioned about the CapEx phase and the guidance for FY '23 and [ healthy ] brownfield expansion. Can you give a little bit of brief explaining the entire the journey which you mentioned about the existing capacity in the brownfield and greenfield will lead to the future growth? So how should we foresee the capacity is getting added and the [ zenith ] of total capacity over years?

I said, like in the greenfield projects, and this Unit IV call, where we call it greenfield, you have seen one DMC adding from the 1 April onwards we will see. It is adding the product coming out in the market. After that, as I said just now, we just -- we have 4 projects ready along with all the detail and engineering everything is ready. And we have done some of the overhead utility also we've completed like storages and all those things we've already completed already. Now we are waiting for the Chinese reaction. Expansion will be done. Anyway expansion we've done. Which product will sit in front seat, which product will sit in back seat, that will be the only question which -- we will take a decision by March. Then we will see the next con call, you will see the definite which project is coming up and how many months and what is the amount. All these things you will hear in next con call.

So sorry to interrupt, but you're mentioning about 50% revenue growth for '23. And just to the previous participant, we were mentioning around 10%, 15%, 10% kind of volume growth, and we had another.

I will tell you this is considering with the existing plant 10% to 15%. An addition 35% which will come from the DMC, dimethyl carbonate, which will transfer the 70%, 80% capacity dimethyl carbonate and the [ propylene glycol ]. So 25,000 of 35%, If you add this, then it will come to 50% only, 45% to 50%.

[Operator Instructions] The next question is from the line of Rajiv Rupani, an individual investor.

Sir, firstly, congratulations on attaining INR 100 crore profit for the first time in one quarter. The company has come a long way, and it has rewarded shareholders handsomely. Sir, my first question is regarding [ PHS ] when are we planning to start that? Any update?

See, we are already working on this, which is entered in the market and I have certain commitments. We don't want to withdraw from the market, and we do not have any separate plan for that, as I said earlier. Maybe the moment we start this next expansion, we are talking about the new plant, new technology, that time, we may think up this market situation, everything will improve even if it is like this also. Probably existing plants may go for the [ PHS ].

Okay. And then my next question was on DMA HCL. We had approvals for 17,500 tons in addition to our existing 22,000 tons. So what's the update on that?

We have not taken up, this is the reason so-called matching key raw material is only that only. It was badly affected the metformin. If a metformin aligned with a dimethylamine hydrochloride, they needed another product called [indiscernible], which is almost 98% is from China. So people are not getting that material. And even if they are getting also, they are getting very high price. Like people used to get at INR 1,100, INR 1,200. And today, they are buying it $4,000, $3,000, $4,000 per ton. So that's the reason we also just kept on hold. Without the current plant, we want to run 100% capacity like 20,000, 22,000 tons per year. We are presently operating 20,000 -- 2,000 tons per month operation is going on. So definitely, the moment the DCD situation improves, when metformin people comes out, then definitely, we'll have this additional capacity.

[Operator Instructions] The next question is from the line of Jaiveer Shekhawat from Ambit Capital.

Mr. Reddy, I just wanted to understand, I see your 2Q FY '22 numbers as well your other expenses were up almost about 40 percentage. So an addition of about, say, INR 20 crores, and these are largely stable on a quarter-on-quarter basis, I mean, at INR 95 crores. So what has led to that jump in 2Q? And how much of that was due to the increase in the foreign fuel expenses amid the rising coal prices?

Yes, power and coal expenses have actually increased a lot. Earlier, we used to get the coal somewhere INR 8,000 to INR 9,000. Today, we are paying more than INR 10,000 to INR 11,000 per ton we are paying.

And sir, I understand that the prices have actually increased further and because they have almost doubled. So how have you been able to keep the other expenses intact?

Also it has gone up. In between, it went up to INR 15,000. And again, it has come down to INR 9,000. Again, then again last week it has increased to INR 11,000, INR 12,000. So that is the main problem.

Sir, if you allow me 1 more question, so that's on the diamines and chemicals. So they are also expanding their existing production capacity to manufacture certain pharma intermediates and specialty chemicals. And we know that they've also received an EC for that. So I mean how do you see that development? And could that lead to more supply in any of your products?

I will see positive impact whatever they have shown, they're all required our product. Like the derivatives, [indiscernible] which we have to sell to them.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Thank you. Thank you for taking out time and participating in our conference call. The overall outlook of our Indian pharmaceutical companies and agrochemical is expected to continue to improve on account of input as being given to China Plus One policy by company's investment economies. Pharma and agrochemical constitute a substantial majority of our end user clients for aliphatic amines as well as the specialty chemicals that we manufacture. Given the strong correlation between the demand for our products and backup demand for the products from our end user industry, we foresee a robust growth potential for our company in years ahead. At the same time, we are also continuously trying to increase as well as diversify our product portfolio to address more segments of our end user markets. And thank you once again to all our stakeholders, shareholders, the investor showing confidence in our company. And thank you once again.

Thank you very much, sir. Ladies and gentlemen, on behalf of PhillipCapital, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.