Black Rose Industries Limited (514183) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for attending this virtual meeting. It's my pleasure to welcome you on behalf of Black Rose Industries Limited and SKP Securities to this Q3 FY '24 financial results webinar. We have with us Mr. Ambarish Daga, Director, Joint CFO and IR Officer; and Mr. Bhavesh Shah, General Manager, Sales. This webinar is being recorded for compliance reasons. And during this discussion, there may be certain forward-looking statements. These must be viewed in conjunction with the risk that the company faces. We'll have the opening remarks and presentation by Mr. Daga, followed by Q&A session. Thank you, and over to you, Ambarish.

Thank you, Navin ji, and a very warm welcome to one and all, who has taken out their precious time to attend our webinar for the Q3 FY '24. We have now settled into the new year, and we see a lot of different happenings going around. I hope everyone is doing well and safe. Let's start off with the presentation. I may request Navin ji to just share the presentation. I hope the presentation is visible to everyone, then we can just go ahead.

Yes, Ambarish, we will go forward.

So the next slide is basically a short disclaimer. There might be certain forward-looking statements during the course of this presentation and the Q&A session and those must be read in conjunction with the risk that the company faces. Moving on, we start off with talking about our business presence of Black Rose. So we started with the chemical distribution business more than 2 decades ago. And we are distributors and the importers of specialty and performance chemicals, being distributors for a number of key principles which includes some of the largest chemical manufacturers spread across the globe from Japan, Germany, Thailand, et cetera. The chemical distribution business actually led to very strong relationships, which gave us the opportunity to venture into chemical manufacturing. When in 2013, we started the manufacturing of chemicals at our factory in Jhagadia in the state of Gujarat with the setup of South Asia's first acrylamide liquid manufacturing unit. The initial capacity for that was 10,000 metric tons, while the current capacity trends at 32,000 metric tons per annum, which includes 20,000 MTPA for merchant sales and the balance for our capital requirements. Next, we started the manufacture of the polyacrylamide liquids, which caters mainly to the ceramic binder industry in Morbi. It has an installed capacity of 40,000 metric tons per annum currently. The company also started manufacturing N-methylol acrylamide or NMA with a capacity of 2,000 metric tons. And we also started manufacturing acrylamide solids in 2022 with a capacity of 3,000 metric tons per annum. The polyacrylamide solid project is something where our R&D has been going on very strongly and it's now in the finalization stage. We'll talk more about it going forward. B.R. Chemicals Co., Ltd. is the 100% subsidiary for Black Rose, which is based in Japan and engaged in the local distribution and export of chemicals. Moving forward, we look at the snapshot of the financials. So first, talking about the revenue and profitability. We see on a consolidated basis, there is a substantial 12% growth in overall revenue from operations during this quarter. The EBITDA margin also has improved significantly, moving up to 13.7% overall for the current quarter. This is the fifth consecutive quarter in which we have been able to increase our EBITDA margins. And quarter-on-quarter compared to the previous quarter of the -- the same quarter of the previous financial year, it's almost a 6.5-fold increase in the EBITDA margin. The same is also reflected in the PAT margin. Moving on to the financials for the balance sheet. If we look, the company has a very strong balance sheet in terms of the finances. We have also been able to retire a lot of the current liabilities during the course of this quarter, which has resulted in a very, very healthy current ratio of over 8x. The total debt equity is almost negligible, reflecting the strong fund availability, which can be utilized for future projects and other requirements. Moving on to the stand-alone financials. If you could move to the next slide, please. Yes. Overall, we have seen, as I mentioned, the EBITDA percentage has gone for the fifth consecutive quarter after hitting a low in the Q3 of the previous financial year. This has been possible mainly because of very prudent inventory management and strong support from our principals in the distribution segment as well as higher realization overall in the manufacturing business, coupled with proactive and prudent raw material management. The overall increase in distribution volumes is also reflected in the higher profitability and revenue in the distribution segment. The exports for the distribution segment, however, declined on a quarter-to-quarter basis because of the slowdown in the U.S. oil and gas sector. Moving on to the next slide. If we look at the geographical and the revenue mix, overall, the distribution segment still continues to garner about 65% of the total revenue for the company. Also, if you look at the exports, as I mentioned in the earlier slide, because of the somewhat subdued demand from the U.S. oil and gas sector, the overall export has fallen to 27%. However, the exports for the manufacturing division was more or less flat compared to the previous quarter. For the next few slides, I will request Mr. Bhavesh to take you through the financials for distribution and manufacturing.

Welcome, everybody. Good afternoon. Our financials for distribution, the main highlights are the distribution margins are up on a quarterly basis by at least -- by around 20%. It's been mainly due to a better material planning and a favorable product mix, also improved supply from more principals for certain key products with higher margins such as ethanolamines and isophthalic acid. Our top 5 products continue giving us 70% to 80% of the top line and 60% of the profits. The demand in U.S from the oil and gas sector was weak in the last quarter, but we expect the volume to pick up in the upcoming quarters. Next slide, please. For the financials now for the manufacturing division. Our manufacturing volumes, they remain flat for this Q-to-Q. The realization decreased in both domestic and international markets, but margins improved due to better and prudent raw material planning. For NMA, after giving samples, we have successfully obtained the approval and validation from our key customers domestically and also internationally. We expect substantial growth in the annual volumes in the upcoming quarters. And our margins also improved in the manufacturing sector due to our better raw material management.

Thank you, Bhavesh ji. I'll take it right from there. So next, we have the raw material and finished products price trend analysis like we have been sharing in the past as well. The acrylonitrile, which is our key raw material, was largely within range from $1,100 to $1,200 during the last quarter. However, due to the geographical mix of the manufacturing division revenue, the overall realization split somewhat from the previous quarter after initially increasing in the first month of the quarter. Next, we move on to the outlook for the distribution business. So the stable domestic demand, coupled with the increased supplies and strong support from the principals for products such as resorcinol, meta-cresol, acrylonitrile, we expect substantial increase in both the sales volume as well as the revenue for the upcoming -- during this current quarter. The distribution team is geared up fully to add new customers and to cater to new business segments, and they are focusing on improving our overall market reach to take best advantage of this stable demand and the support from the suppliers. And we expect the volumes to pick up substantially due to these factors. Also after a few months of -- a few quarters of subdued demand from the U.S., we expect things to pick up during the course of this quarter, which will also give impetus to our export volumes. Moving on to the acrylamide liquid and solid. So during the current quarter, we see that the raw material prices have become firm to stable compared to the previous quarter. This will add to our realization. At the same time, the export volumes have also picked up despite the logistics issues faced which can cause disruption, the Red Sea embargo. So we are hopeful that the overall volumes as well as revenue will increase substantially for our acrylamide business during this current quarter. The acrylamide powder business continues to be impacted by the dumping from China, which we are addressing by concentrating more and more on the export side for generating the revenue from the acrylamide powder business. Moving on next to the polyacrylamide liquids. The ceramic tile industry at Morbi has been impacted and continues to be impacted by higher energy costs and big dip in the export business for the Morbi tile, which has been impacted by up to 40% due to the international geopolitical issues and the logistics issues related to the Red Sea. This has resulted in subdued demand for our binder. However, as updated earlier, our R&D team has been working on the newer and more robust versions of the binder as well as we have also developed the polyacrylate-based dispersant, trials for which are already underway with some of our customers. And we hope that these developments will help us in providing a better product mix, product basket to our customers and improve our revenues as well as add to the profits. Further, for NMA, as Mr. Bhavesh also mentioned, we have now started commercial sales to one of the largest customers of NMA in India and that will help us in gaining more and more acceptance with other customers as well as increasing our overall revenue and profit substantially. Moving on to the outlook in terms of the ongoing and upcoming projects. As we mentioned, our R&D team has been fully focused over the last few quarters on the development of the polyacrylamide solids. A lot of the development on the software side of the project has already been completed as updated earlier. So we are hopeful that we will be completing the R&D activity very soon. And our timeline remains the same for releasing out of the product. Other than that, the discussions are in advanced stages for the specialty chemicals project, which we are also planning to initiate in our same Jhagadia site with collaboration from a Japanese principal. And also talks are underway for 2 of the toll manufacturing projects, which are, again, related to the acrylamide chemistry with our Europe -- some U.S. and European companies. Additionally, the company is also seeking to acquire a new land of about 20 acres with a view to utilize it for future projects and requirements. Finally, moving to the last slide. We have been presenting the manufacturing capacity and the CapEx chart for some time. It's basically indicative of the technology we have used to set up the various products in our manufacturing portfolio, the current installed capacity, the CapEx incurred till date as well as the possibility of adding further capacities in the same manufacturing site for these particular products. So that's about it from me. Thank you very much for your patient hearing. And now I will request Navin ji to take it forward.

[Operator Instructions] We have a question from [ Dhaval Shah ].

Can you hear me?

Yes, please go ahead.

So I have been a shareholder of the company since last 9 years. And most of the things what are happening have been read by me, heard by me over the period of time, say, 9 years, okay? I hope the team of Black Rose can also hear me.

Sorry, I missed the first part. If you could just repeat.

Okay. So I'm the shareholder of company since last 9 years, okay? And most of the things I have read during the last 9 years, whatever the growth and the development has been happening since last 9 years, okay? I continue to be a shareholder. And somehow things have worked out and certain things have not worked for the company. But since last couple of quarters, I am really concerned. I'll tell you my -- can you hear me, guys?

Yes, Dhaval, you're loud and clear.

So I have -- I'm getting a feeling that the management, the Board has been extremely slow in getting things done. So let me give you some example. My dates or timeline may be a little bit here and there. So a couple of years ago, there was a polyacrylamide project. I mean, hard and soft. There was a plan to raise INR 60 crores.

Dhaval, request you to just time out for a second, please. I think so there is some connectivity issue with the management. Give me one second before it's fixed. Thank you.

Sure. No problem.

Yes. Sorry, there was some technical issue. I hope we are audible now.

Yes. Can you hear me, guys? Bhavesh and there is one more person, right, for the company, right?

Yes, Ambarish ji.

Yes, Dhaval, sorry we got logged out. If you could just re-ask your question, please?

Yes. So as I said, my name is Dhaval Shah, I am a shareholder since 9 years, okay? And I have seen or I have read, observed, read all the data, whatever has been told by the esteemed team of the Black Rose. Last few years, there is a feeling that things are moving extremely slow-paced like the toll management arrangement. I'm listening from last September, August or July, you cannot be impatient with somebody for toll management, understand how can the management take 6 months' time in discussion. I'm shocked and surprised. Then I continue to hear that in August, I continue to hear that in October, November, and I continue to hear in the February also. And I'm sure it will be continued in the month of July also -- June, July. So somewhere down the line as a shareholder, I personally feel the management is extremely poor in executing the orders or executing the things for business. They may be extremely competent people, okay? I don't doubt their competency. But to get things done on a timely basis, you cannot take months, quarters and years, like polyacrylamide R&D, AGM to Mr. Anup Jatia and he continues to do R&D till date. We are 5 years down the line. How can you continue to do an R&D for 5 years? I mean I don't understand. I mean -- and the implementation is extremely poor. Let me be very clear in front of you because everything is pretty slow. I mean, we are in a world where things move so fast. And here, there is a company of -- I don't know what is the reason. I just don't know the reason. Can you hear me?

I got your question.

Hear me out. So there was -- 2 quarters ago, there was a call, and they said you guys have some expansion plan and you plan to raise INR 100 crores. So there was a 6-month-old story. And then again, with this quarter result, you come up with another plan, which says there is a plan to acquire 20 acres of land. And in the previous one or before that, Mr. Jatia had said, we don't need place. We don't need extra place. We are very sufficient. We have sufficient place for expansion. So where are we lost? I mean, I, as a shareholder, I'm a smallest shareholder. So somewhere down the line in last 6 to 8 months, I'm telling you, Mr. Jatia said, I don't need place. I have a plan to raise INR 100 crores. I don't know what happens. Again, R&D continues. And in the press release, it says we are acquiring 20 acres for expansion. So somewhere down the line, there is inconsistency. Somewhere down the line, execution is a big issue. I don't doubt the competency. So I don't understand. And the same things you keep on continue to repeat. I'm actually getting bored by your data what you provide because it's virtually 95% same data you provide.

Dhaval, this is Navin Agarwal yes. If I can request you to be precise and crisp so that the management can answer and then we can take up the other participants also.

So the first query is the management is super slow in execution, okay? Things cannot be dragged for 6 to 9 months, okay, whether it's a toll contract, whether it's an R&D of polyacrylamide or other projects. I'm listening R&D of polyacrylamide since last 5 years. You continue to do R&D then you come up with something, you continue to do R&D. So you tell us that we will do R&D for 10 years. You tell the shareholders because we expect there is an R&D happening. There is a result. But apparently, we continue to hear that since last 5 years.

Okay. If I have to understand the question is that why is it taking so long? And if we can have some timelines. Is that your question, Dhaval?

That is one question. And the biggest question is execution. Poor execution. Navin, let me be very upfront to you. I am a lawyer by profession. I'm a Bombay-based lawyer. So I know how a documentation or an execution of a document or a contract happens. So from August, I'm hearing a toll management contract has been under negotiation and discussion. So I don't know what is it? And so this is the 6 month I am listening...

Sorry, I'm interrupting you. I have heard you out, now you must give me a chance to respond, Dhaval. I am requesting you, please give me a chance to respond. I've understood your concern.

Sure. Sure. I'm not yet done. I'm not yet done.

So your current queries, let them be answered, and then we'll take up the remaining also. Ambarish, please go ahead.

Yes. So Mr. Dhaval, first of all, thank you very much for being a long-term investor and believer in the company. Before I start responding to your concerns, which I would like to say that -- I think you mentioned you are a lawyer, right?

Yes.

I'm not sure about you know about -- whether you have any experience of -- or understanding of how these Japanese principals and manufacturers work. You must understand, as we've always maintained, we have these relationships with the Japanese manufacturing companies, and there is a certain way in which they work. There are certain principles and systems which needs to be followed. Number two, you must always understand that R&D is something which can take years and years to finalize. So that is not something where a definite timeline can be defined. It's a creation. You can appreciate, it's something you need to create. Now creating a product in itself is not the only criteria which an R&D team looks at. These products which we are trying to create, you must understand our performance chemicals and it is very important to reach the most efficient way of creating this product, that is the recipe. And also for us to be competitive, it needs to be manufactured in a certain way, which is most efficient in terms of the cost. So these things do take time. We have been giving some timelines from quarter to quarter because we feel it is important for our shareholders who have supported us and stayed with us. They should always be updated. So these timelines, as I mentioned, cannot be very definitive in nature. That is one point. Now the next point you raised was in terms of execution. So I would want you to just let me know exactly what execution you are talking about. In terms of -- is it in terms of the regular business or in terms of R&D, in terms of...

So I'll give a classic example...

Let me complete. You can come back. Next, you talked about raising funds. So we have never ever told that we would like to raise funds as of now. We have mentioned that once the technology and the processes are finalized, we will look at the options of raising funds whenever the opportune time comes. Next, you also mentioned about toll manufacturing projects and signing some contracts. So we have never mentioned that we are in discussion to sign any contracts for toll manufacturing. These things take a lot of time in doing the feasibility study, et cetera. So while I understand that you feel a lot of time has passed, but due to developments which have certain secrecy attached to it, it is not fair on us to divulge any great information. I can assure you that a lot of progress has happened in all of these. Last webinar, if you would have heard regarding the poly solid also, I mentioned in detail that there are two aspects to the polyacrylamide solid. One is the software side, which is like the development of the product in terms of the process, and we had completed that part, as I mentioned last time. And the second part, which is the hardware side, which is basically the technology and you know the other aspects of manufacturing, that is something that we are currently working on. So I hope that will give you a little bit of clarity on the various points you raised. Now you can just follow up with what queries you have.

Yes. So I will just respond to what you said. So in the result of July, August, you can check the records with yourself. There was a mention that you plan to raise INR 100 crores of fund, okay, which is fine. If you don't need funds, you don't need to raise fund. You don't need to dilute yourself. There is no problem, okay? But there was a mention that there's an expansion plan and INR 100 crores to be raised. That is number one. Number two, I'm talking -- just a common sense that when you inform a shareholder, okay, in the month of July, August, that we are in a discussion with a toll management contract or a toll contract for either polyacrylamide or acrylamide from July with one European company and an American company. Here, there is no Japanese company involved, okay? I don't know what kind of arrangement you have with the Japanese for the licensing or to be whatever toll you plan, it's a subcontracting type of business. So I mean in my experience, from July, August till date, you continue to maintain the stand that you continue to be in negotiations. So I'm quite surprised whether they are lagging, the American and the European company are lagging, whether you guys are -- I don't know how things work. But no negotiation can last for 6 months or 8 months. You can check out your details. You can check your records for INR 100 crores of expansion for the toll management and for the [Technical Difficulty] expansion. Because I distinctly remember in the July, August, Mr. Jatia said, we don't need land. Fair enough, no problem. We have sufficient land to do it. And again, in this result, you said you were looking to expand. So in 6 months' time, while everything is in progress. I understand you have a plan, you have a mega plan with whomever or whosoever it is, okay? It doesn't matter.

Dhaval, I got your questions, let me respond to you. You asked three questions this time around. One is you mentioned again regarding the INR 100 crores. So we have mentioned that this polyacrylamide solid plan will require an investment between INR 60 crores to INR 100 crores, depending on the technology we choose for implementation, whether it is all based out of domestic technology or we had some things related to imports. So once we finalize that, that time when the implementation starts, we will require between INR 60 crores to INR 100 crores, like you rightly mentioned. But the way that capital is going to be raised will be chosen at the appropriate time when the actual investment is required. We still maintain that.

Understood. Then why do you mention it in the midst of everything if you don't need the capital?

Mr. Dhaval, let's not have a...

One second, Ambarish. Dhaval, may I please request you to be very specific because we have a time-bound webinar and there are other participants. What we can do is you can join the queue once all are done or we can -- I can help arrange you one-on-one call with the management so that all the queries can be asked. Right now, let's keep it specific because there's a long list of participants waiting to ask. You can finish the current question and then...

Okay. Fine. I think, I understand. Sure. I think you guys have answered me reasonably.

Dhaval, in case something is left unanswered, please let me know, and I'll connect you with the management. We take the next question from [ Imran Khan ].

So my question is on your manufacturing business. Is it possible that you can provide the capacity utilization for solid and NMA?

Okay. Thank you, Mr. Imran for the question. First of all, before I give any indication on the utilization, let me tell you that as a company, we do not really look at capacity utilization as one of the many benchmarks.

No, sir, I know that. I know that because I think you have a large capacity, and I have heard this before. That is the reason I'm only asking for solids and the NMA part, not the other parts of the business.

Okay. Let me just reply, let me attempt to reply. See, as I mentioned, we look mostly at the maximizing our sales and revenue because you must appreciate that these capacities for NMA and acrylamide solid have come at a very, very low CapEx. The NMA barely less than INR 1 crore and the acrylamide solid capacity setup cost us less than INR 5 crores. So we really don't look too much at these capacity utilizations, as I mentioned. And since our calls are also attended and listened to by our competitors across the globe and in India, it's not appropriate to give any specific numbers to the capacities.

I completely understand that, sir. So maybe let me put it another way. So this quarter, INR 20 crores of manufacturing sales. Can you at least give an indication, let's say, where demand comes back, everything is normal for you, exports going well, what kind of revenues you can generate through this manufacturing business quarterly or yearly maybe, again, assuming things go back to normal 2, 3 years? How one should look at it?

See, basically, the total revenue from the manufacturing business is basically determined by the capacity utilization and the prevailing market prices. So all I can mention is that the four products that we manufacture currently, looking at the current market prices, maybe at full utilization, we can generate a revenue of between INR 300 crores to INR 400 crores out of these four products which we currently manufacture.

So that is on the capacity, fully utilizing the capacity. I am not necessarily saying that you will have to or you have to give me a number at full capacity utilization. But I'm asking from your experience, your understanding of the business 2, 3 years down the line, everything is good, demand is good, back to normal. In that scenario, what would be your best guesstimate?

Again, Mr. Imran, I have to slightly repeat only what I just mentioned that it's very difficult to gauge the market price. Like, for example, if you look at the acrylamide prices, for instance, the price has fallen by about 40% over the last 1 year. So it's extremely difficult to put a number to it. It's something which keeps evolving. We only focus, as I mentioned, on maximizing both our revenue as well as our profits in whatever the market scenario. And I can also assure you that we are absolutely very competitive in terms of our costing as well as our pricing. So we are able to compete with all companies across the globe when it comes to a fair pricing policy.

We have a question from [ Sundar Jain ].

Can you hear me?

Yes, Sundar, please go ahead.

Sir, my first question is, is it possible to share the volume growth for third quarter as well as for the 9 months of this current financial year?

Well, Mr. Sundar, can you let me know what volume growth in terms of...

Last year, sir.

In terms of distribution business, manufacturing...

No, no. Only manufacturing.

So in terms of volume, I think we have more or less flattish overall in the manufacturing. Quarter-to-quarter, there has been variation but overall, yes, in the manufacturing, we are flattish to a little bit on the higher side.

So that is for both this quarter as well as for 9 months?

For the 9 months I'm talking about. We are on the higher side compared to the previous year -- previous financial year. We will be able to beat the previous year's figures by the end of this year.

Okay. And for the quarter, we are flattish. That is what you're saying.

Yes. For the current quarter, we are flattish in some of the products. So I cannot really give you the details.

No, no, I don't want the detail. See, why I'm asking is as and when the prices start stabilizing and moving up, just wanted to find out if the volumes are increasing, so that would add to the increase in revenues. From that perspective, I was asking. Fair enough, sir. My second question is, sir, we make this polyacrylamide liquid, which is mainly used for the binders in the tiles manufacturing and you have also mentioned that in order to increase the utilization and to get more market share, so we are planning and doing a lot of R&D for the new grades to be used in the same segment. Now the question is, you know the Morbi plant, you had mentioned some 80% or 85% of tiles -- requirement of Indian tiles are manufactured there. So my question is, somehow they're going through the downturn since almost a year or so for some reasons or the other. So our utilization or the revenues from this product has not been to the extent what it was planned or whatever it may be. So my question to you is, is it possible to make from the current facilities, polyacrylamide liquid, which can be used for any other application? You had already mentioned that textile one, it is still under R&D process. So I'm not asking for the textile. Is there -- we have the technology to make polyacrylamide liquid that could be used for any other applications?

Thank you, Mr. Sundar. That's a very valid and good question. So as you rightly mentioned, the Morbi tile industry has been going through some difficult times over the last 1 year. So as you mentioned, our team is -- apart from making a more robust binder and making this dispersant, the polyacrylamide-based dispersant, our team is also looking at increasing the application-wise different grades, introducing different grades for other applications for the polyacrylamide liquids. And in fact, just to add one of these toll manufacturing projects that we are discussing also falls under this category. So we are actively looking at increasing our product portfolio for the polyacrylamide liquids to ensure much more diversified basket of products and higher utilization of capacities.

Okay. Fair enough, sir. Sir, my next question is with this our acrylamide solid due to dumping from Chinese companies, so we are not able to do good sales in the domestic market. So majority of the sales of this product is coming from the export market, which were in the European market and all, where we have got the REACH certification and the sales have been growing very steadily. Now there are two contradictory things that has been mentioned, one in the press release and now the other one in the presentation. Now it says that in the press release, you have mentioned that due to company's extensive and growing market presence, the export volumes are expected to remain strong despite the disruptions in international logistics and higher sea freight due to recent geopolitical events. So that means -- this is mentioned in the press release, this gives an understanding that the current Red Sea crisis or whatsoever will not be affecting the export of acrylamide solid. But in the presentation, you are saying it is going to affect some markets. So if you could clarify what we have to take.

So Mr. Sundar, what we basically want to convey with these statements is, although there will be some disruptions in certain markets for the acrylamide solid, however, despite these global headwinds and these challenges, our overall export for acrylamide solid is expected to increase during this quarter because we are reaching newer customers, we are getting our acceptance for the product. So basically, we are looking at expanding because our current quantity also is on the lower side. So there is a lot of scope for additional penetration and sales.

So you mean to say with increase in logistic cost to prevail for some more time due to this Red Sea crisis, you're confident of increasing the sales of acrylamide solid maybe due to approaching more customers or maybe the existing customers buying more quantity. Is that understanding is correct?

So that is one part. Also, Mr. Sundar, you must realize that when we talk about exports, the major portion of our exports actually comes from the acrylamide liquid, which is not going to be impacted so much in terms of the logistics issues. So overall, you will see a big jump in the acrylamide exports when you consider both acrylamide liquid and solid put together.

Sir, liquid anyway, you don't export because logistic...

Sorry. We do export acrylamide liquid. That, in fact, forms the bulk of our manufacturing export. So solid is something we started recently. So overall, volumes to acrylamide solid export is much, much lower compared to the acrylamide liquid.

Sir, if you remember in the last one, it was given understanding that it doesn't make logistically economical to export this liquid, acrylamide liquid because it is in the liquid form, right?

Sundar, that was the polyacrylamide liquid. Last time, we had clarified to the same query that it was polyacrylamide liquid, which we don't export. It is not...

But for the acrylamide liquid, it makes sense even now to export also.

Absolutely. That understanding is correct.

We take the next question from [ Vijaya Saradhi Reddy ].

This is Saradhi from [indiscernible]. Can you guys hear me?

Yes, loud and clear, please go ahead.

Just a quick question. We don't see Mr. Anup Jatia in the calls nowadays. And a few quarters back, I think he has designated himself as non-executive and non-independent and recently, he has become non-executive chairman. Is he still active with the company? Or how do we look at it?

So Mr. Jatia is no longer in the executive position as you rightly mentioned. So he is not looking at the day-to-day affairs as such. However, he is still available to provide us with the necessary support as and when you know the -- as part of the Board of Directors and as the Non-Executive Chairman now. So we do get his support and guidance as and when required.

Was there a press release around it or I'm not sure if we have missed it out? Because the company is still very small. So I don't understand. Was there any personal reasons for him to move out or anything else happening?

As you know, the company has a very professional setup and this is a private matter, which I feel I would not like to comment on right now.

Hello, Mr. Saradhi. This is Anup Jatia here on line.

Hi, Anup. Mr. Jatia would like to say...

We didn't see you there so...

Yes, yes. No, no. I'm here online. I'm joining from overseas where I am now. But yes, maybe I can ask you some -- you can ask me anything that you want.

No, no. So we don't see you in the calls nowadays, and you have become non-executive non-chairman. So our concern was the company is still very small. And promoters leaving at that early stage, it's probably quite risky. But I wanted to hear from you, like what was the reason for you to move out? I don't know if you have moved out completely, but just want to get a comfort feel that the company is in the right hands? Or is there any plans to change the ownership or promoters of the company?

No, no, not at all. Just to clarify, of course, as you know, the promoter still own 75% of the shares, and the promoters are fully confident in the existing team. What happens is if by continuing to remain in an executive position, the existing team there, including Ambarish and Bhavesh and our -- the KMPs at the company do not really get an opportunity to grow and to expand their own strength as well. So the idea is basically to give them, to have the reins now into the next-generation team and for me to move out so that they can have the ability to excel and the ability to grow the company as well. But as Ambarish also mentioned, as a member of the team -- as a member of the Board, sorry, I am very much there to provide them the guidance and the support. So that is definitely the situation even now. So I don't think as -- of course, as shareholders, I am also -- through the company that I am now at, I'm also the -- how to say, personally, not, but the company is, of course, the shareholder of -- the promoters are still the shareholders of the company. There is no change in promoters. There is no intention to change the promoters. None of that is on the cards. Everything is, in fact -- I have, in fact, seen better growth within the organization after my leaving from there. So in fact, my understanding is a little bit different maybe from a lot of people, but I feel that the growth is getting even better at the company. And I feel there is a very good scope ahead for the company under this management.

Okay. So yes, because there was no press release, so we were slightly concerned.

No, there was -- I believe, there was a release when I was redesignated as the...

Yes, there was a release when you were redesignated, but we get the impression that you are actually moving out of everyday operations or not overseeing the overall strategy. Do you still give the strategic inputs into the company and oversee the business development side of it or you're completely...

Yes. So we just had -- of course, we just had our Board meeting last week on the 31st. So even at that time, we have a lot of discussions on the future strategy and on the future planning for the company. So we are actually quite hopeful for the -- especially the new projects which are being discussed, the new agreements, not -- there are no agreements being discussed but the new businesses which are being discussed, these are quite interesting for the company. So yes, I mean, we are all very much in tune with what's going on and what -- where we have to take this company going forward. Yes. So I do not want that people feel that it's been -- that the company is being left to a team of people who do not know what's going on and how to run the company. If I thought that, I would have never decided to make the change. So you have to understand 75% is still with the promoters. And if the promoters felt that this is going to cause any problems, the promoters would not have taken such a decision. So it's -- I guess it's maybe a little early for everyone to notice, especially because the chemical markets have been a little bit slow. Nevertheless, I think if you give it a little bit, maybe another quarter, 2 quarters, as you start seeing, I think, a lot of changes. It's just a timing issue as far as I can see.

We have a couple of questions on the Q&A board. Ambarish, may I take that?

Yes, please.

[Operator Instructions] Can you quantify your outlook for volume increase in our manufacturing and distribution business for the coming quarter and for FY '25? A rough direction outlook would also be appreciated.

Sorry, Navin, I didn't get the question.

The outlook for increase in volumes for the manufacturing and distribution business for the remaining quarters in the current financial year and for FY '25.

Right. So overall, we had this one last quarter, which is currently in progress for this financial year. And we are looking at about -- between 20% to 30% jump in our overall volumes. Of course, it would be difficult to put any revenue figure to it. Regarding FY '25, overall, we see the market improving further and the demand coming back. But it will be difficult to give any quantities or any specific revenue figures for the entire year. Like we've been doing, we'll keep coming back in all these quarterly webinars and spelling out our projections during that.

I hope the query was answered. Another one is from [ Yajat Shah ]. Just wanted to get the outlook for the distribution business since it makes up for the majority of our revenues for now. With global traction in ethanolamines and water waste treatment chemicals, what is the outlook going forward? Do we have any plans to expand more into this segment due to the higher demand and profitability? Three questions. I'll just repeat them slowly. First one was on the outlook of the distribution business.

Yes. Okay. So let me answer the outlook on distribution. So I briefly also mentioned the outlook for distribution during the course of the presentation. Basically, the demand that we see in the current quarter is quite stable, and we have very strong backing from our principals for certain key products during this quarter, such as the resorcinol, meta-cresol, ethanolamines, et cetera. So this should add substantial volumes and revenue to our distribution business during this current quarter. The export side also, the U.S. oil and gas sector decline has reversed as we can see during this quarter. So overall, I see substantial growth in the distribution segment during this quarter.

Part two of the question was, with global traction in ethanolamines, and water waste treatment chemicals, what is the outlook going forward?

So ethanolamines has been a very significant product in our distribution portfolio. And even in the last quarter, we have seen substantial growth in our ethanolamines volumes. We are very hopeful that with good support from our principals, we will continue to grow this particular product going forward as well. So the outlook for ethanolamines is quite promising going forward.

And third and last part of the question, do we have any plans to expand more into this segment due to the higher demand and profitability?

So our team is fully geared up in adding new markets and new customers for each of our product segments, including ethanolamines. Profitability is something which is difficult to predict. It depends totally on the market conditions. So we strive to maximize the profits for each and every product, and ethanolamines is no exception to that.

Thank you, Ambarish. [ Yajat ], I hope your questions are answered. We will take the last two questions as we are running out of time. [Operator Instructions]. Sundar, please go ahead. Sundar Jain, please unmute yourself and...

Sorry, sorry, I forgot to unmute. Can you hear me now?

Yes, I can.

Sir, in the various calls, you have mentioned that to increase the CapEx of the various manufacturing products, this can be done at a very low CapEx. So that's why you don't concentrate much on the capacity utilization. Just I want to know, is this advantage is only for our company or it is there for our Chinese competitors also?

So basically, there are different technologies which different companies use. Ours is a very, very robust technology, where the incremental cost of adding capacity, the plant is designed in such a way right at the outset that the additional CapEx required for increasing the capacities is very, very small. So that is one of the key. Even when we were at the beginning of the Q&A session, when we were talking about why our R&D takes time because our idea is to design the whole plant in a fashion where we don't have to then spend too much capital on increased capacity once the initial capacities are utilized to the right extent.

So these Chinese companies also have this advantage or we are not aware of that?

I would not be in a position to give a firm yes or no reply. But what I can say is what I just mentioned that our technology is very robust, and it is very easy to add extra capacity at a very small incremental cost.

Okay. Fine, sir. And a small clarification regarding this 20-acre land is for R&D purpose you're buying? Or is it for any of this toll manufacturing or the specialty chemical project you wanted?

Thank you for asking this. This is also something which Mr. -- we had received this question earlier. So this 20-acre land is being bought for future projects, which we are not talking about as of now. As we had mentioned even earlier and during this presentation, these current projects, which we are discussing about the toll manufacturing, the specialty chemicals and the polyacrylamide solid, these can already be set up in our existing place in Jhagadia. There is no additional place required for these projects, which are currently under discussion or in the pipeline. This additional land, we are taking only for future projects. As you know, we have such strong relationships with our principals and that provides us with a lot of opportunities to look at setting manufacturing units for different products. So we want to be -- we don't want land which going forward might be difficult to acquire to be one of the impediments towards setting up another manufacturing possibility or to expand further.

Sir, that is agreed, but it is not for even R&D also because R&D also you were looking for land somewhere near Mumbai, right?

Yes. So R&D, we are looking at setting up a new R&D facility in and around Mumbai. That's -- it is not for R&D purposes. Yes.

Since there are no further questions, I'd like to hand over the webinar back to Ambarish for his closing remarks. Okay. Just 1 sec, Mr. Jatia I would like to add something. Anup ji, please go ahead.

Just wanted to -- since Mr. Dhaval Shah mentioned some of the statements which I had made earlier when I was still on the executive board. I just wanted to clarify -- I think Ambarish has clarified some of the things already. But yes, the land that we had spoken to earlier when I had said that there is no land required to be purchased. That is basically because there was a question regarding whether we have enough space to continue with the projects which we were discussing. So I said, yes, there was no need for any additional land for the current expansions that we were discussing because we have sufficient land at the current site. I think Ambarish just clarified now regarding the additional land, which is being procured that, that is basically for future projects and not for the existing projects, which has already been discussed. And also, Mr. Shah mentioned about saying that I had said that we require to raise INR 100 crores. But my request would be to Mr. Shah to go back and look at some of the earlier statements and the video calls. But the company has never said that they intend to raise INR 100 crores. We have always mentioned the cost of a project, and we have always mentioned that the method of funding the projects are yet to be discussed. We have never said we are interested in raising funds. There are a lot of companies, banks, et cetera, who keep coming to the company, wanting to give funds during my time as well. But we have never asked anybody to provide us with funds as such, even at that time. Then, also I think Ambarish can maybe clarify some more about these toll agreements about how much time they generally take. So that will be good if Ambarish could just maybe touch upon some of that and maybe about the current discussions that we are having also. So Ambarish, if you want to just touch upon some of these things then please do so.

Yes, sure. Thank you. So regarding these toll agreements, if I may, a little bit elaborate on how this basically works. Typically, the toll agreement starts first with an intent to cooperate and for two sites to come together to look at the possibility of entering into a toll manufacturing setup. Then there are technical discussions generally to understand whether the company who is supposed to set up the toll manufacturing unit is well equipped technically and in terms of the facility availability. Then you have the detailed engineering discussion, the feasibility study and only then the certifications for environmental clearance, et cetera. So the procedurals stage starts only after all of this happens. So basically, the whole process can take anywhere between 2 to 2.5 years going by this elaborate process. So that's why you must be seeing this same headline in our webinars, in the statement that the discussions are on. But you must appreciate that this is something which takes time. It cannot happen overnight. It's not like a distribution business where it's just a purchase/sale of products. So maybe with these inputs, I am able to address some of this -- answer the query related to the toll manufacturing and why it is taking a lot of time.

Thank you, Ambarish. On this note, I'd like to thank Mr. Daga and Mr. Shah and Mr. Jatia for taking time out to interact with the investors. We look forward to hosting you again for the next quarterly webinar. Thank you, and have a lovely day.

Thank you.