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

Good day, 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 '25 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 the discussion, there may be certain forward-looking statements. These must be viewed in conjunction with the risks that the company faces. We will have the opening remarks and a presentation by Mr. Daga, followed by a Q&A session. Thank you, and over to you, Ambarish ji.

Thank you, Navin ji, and a very warm welcome to one and all who's taken out the time to join us for this webinar. While Navin ji just puts on the presentation. It's been exciting times last couple of weeks since Mr. Trump has taken over as the U.S. President. He's keeping us all engaged with his new policy decisions everyday. So on that note, let us start with the presentation. Yes. So as usual, we start off with the business presence of Black Rose. Black Rose started off with its chemical distribution business more than 2 decades ago. And we are in partnership with many leading chemical manufacturing companies, especially based out of Japan and also Germany, Thailand and other countries. This strong relationship with these principles helped us to venture into chemical manufacturing when we started South Asia's pioneering acrylamide manufacturing plant in 2013 in technical collaboration with Mitsui chemicals. The current capacity for the plant stands at 32,000 metric tons per annum out of which 20,000 are earmarked for merchant sales and the balance is for our captive consumption. Next, we started manufacturing polyacrylamide liquids with a capacity of 40,000 metric tons per annum. Further, we added the acrylamide solids with a capacity of 3,600 metric tons per annum, thus becoming the only global manufacturer of this product outside of China. And we also manufacture n-methylol acrylamide, NMA, with the current capacity being 2,000 metric tons per annum. Apart from this, the company subsidiary B.R. Chemicals Company was formed to develop closer relationships with the Japanese vendors as well as customers and to engage in the domestic trade in Japan. With the comprehensive review of the performance, the Board of directors of the subsidiary concluded that the primary objectives of the company was already fulfilled and even though it was adding to our profits and topline, the primary objective being fulfilled, it was decided by the board to close the operations of that company with effect from 30th January of this year. This has led to improved cash flow on a consolidated basis and also increase the profitability for the company as a whole. The other legacy businesses of our company bring less than 1% of the total revenue for the company. Moving on to the next slide, we talk about the profit and loss statements for the current quarter, the corresponding quarter of the previous financial year as well as the previous quarter. Overall, we see that the revenue from operations of the company has actually increased by about 48% from the corresponding quarter of the previous year. And there is a very minor dip in revenue from operations compared to the previous quarter. The EBITDA also has, on the other hand, has increased substantially from about 8% to about 10% in the quarter gone by, which is a healthy sign of the company's growth and strategic planning and execution. In terms of the PAT margins also, we see a healthy growth. Moving on to the snapshot of the balance sheet. So again, we see that the company continues to remain long-term debt-free. As far as the balances go. There is a buildup of inventory, which is strategically planned, keeping in mind the stock and sale, model that the company follows in order to continue as a reliable partner for the local distribution business. Overall, the company's debt equity ratio is still negligible. The return on capital employed is very healthy 19% for this quarter, and there will be return on equity as well. Now looking at the highlights of the stand-alone financials. First, I would like to talk about the distribution between -- the distribution business as well as the manufacturing business. Overall, the distribution business remains steady with the topline remaining in the same region. The operational margins, however, improved with better planning and better strategic decisions. There was a significant boost from the exports in the U.S. oil and gas sector having rebounded helped us with that. The newer binder version, which the company has introduced towards the end of the previous quarter, significantly boosted the sales of the binder in the current quarter and the outlook for that is also very positive going forward. The margin overall also improved in the manufacturing sector despite the raw material prices increasing. The company was able to get much better margins and realizations overall. Next, we move to the geographic distribution. So overall, the exports contributed 30% to the revenue during this quarter, up from 18% in the last quarter as the merchant exports increased, contributing handsomely to the overall business. The bifurcation between distribution and manufacturing continue to be around 2/3 for distribution as the distribution business continued to grow during the quarter. Next, I will hand over to Mr. Bhavesh to take you through the next couple of slides.

Thank you, Ambarish ji. Good afternoon, everybody. We talk about the financial distribution -- financials for the distribution sector which we do. The distribution business delivered a stable volume during the quarter with more than double exports and our key products also continued significantly to both the revenue and the profits. Our main highlight being doubling of merchant exports due to a rebound in the oil and gas industry. The volumes remain stable, but we are able to achieve a higher EBITDA margin in the last quarter. Our company's leadership in a distribution company -- in [indiscernible] business continues to be well positioned to take it forward. Our product Resorcinol, the sales fell in the quarter due to subsequent -- due to price cutting -- undercutting by the sole local producer. However, the volume is expected to increase in the current quarter with the demand coming back from key customers. The top 5 products of our distribution business contributed 93% of top line and 85% of the distribution profits. I come to the financials for the manufacturing division. The demand for manufacturing products also remained stable during the year. There was steady performance, but with improved margins our acrylamide liquid of main products. The margins have improved due to mainly 2 reasons due to strategic procurement of raw materials and efficient logistics management. We cold have better sales of AAM solid, acrylamide powder because of the rising ex-China prices. Because of the increase in prices in Chinese market, the import prices also went up, which helped us to cater to the solid market to the Indian customers. Our pan liquid market share were increasing with the introduction of the new robust ceramic binder it has been well accepted and expected to contribute more significantly in the next quarter. NMA, our domestic demand slightly declined, but that was due to the rollover of orders by our key customers, but however, we are adding new export customers for NMA, which is helping us enhance this business. And now I hand over to Ambarish ji for further presentation.

Thank you, Bhavesh ji. Going forward, this is the trend for our key raw material acrylonitrile. And we see that even though it started the quarter at around $1200. During the quarter, it has gradually increased. And as a matter of fact, in the current month, the prices have gone up by another $100 for the raw material. Similarly, we saw -- we were able to get increase in our realization for acrylamide during the quarter and especially towards the end of the quarter, as the export business again picked up. This augured well for us going forward. Now shifting on to the outlook for the current quarter. So first talking about the chemical distribution business. We expect the merchant sales volume to remain steady in light of the U.S. tariffs war going on for Chinese goods and China not willing to back down. We see the situation helping us in this. The demand from the oil and gas sector remains quite robust. In terms of the other distribution products locally, even though there is a supply constraint for one of the products, the rest, we are getting strong support, and we are expanding our market base as well as continuing to lead the market in most of our key products. Our focus of being a reliable source for all this specialty products continues to help us in our growth path. Overall, we expect the sales and profitability to remain stable during this quarter. Moving on to the outlook for the manufacturing side. First, we talked about acrylamide liquid as well as solid. So as I mentioned in one of the earlier slides, the raw material prices are rising further during this quarter. However, our strategic planning for raw material has always helped us in maintaining good spread in margins overall. The international logistic situation is improving and the freight rates are going down. This will help us substantially increase our export orders during this quarter and we expect this volume to keep going over for the next few quarters. The acrylamide solid or powder also as per the rising prices from China, we are able to compete in a fair pricing policy. And we also expect the exports from acrylamide solid to pick up during this quarter. So overall, there is substantial growth forecasted for this product during the current quarter. Next, we move on to the PAM liquid. So as we mentioned, our new binder product has been very well accepted by the market and it is actually outperforming the incumbent leader for this product. This augured very well for our growth prospects already in the previous month we have been able to increase our sales by more than 50% from the average sales of -- average monthly sales of the previous quarter. N-methylol acrylamide again the orders are steady, and we are able to maintain our leadership in the local market. The team is also focusing on bringing in new customers from the international market, which will help us in increasing our sales for this product. Finally, moving on to the last slide on the upcoming and ongoing projects. So in the previous webinar as well we had talked about concentration or focus on key manpower requirements. So we have appointed a president for innovation to head the entire R&D capabilities. This will help us in our R&D endeavors. The new R&D center also is going to be completed by the end of this quarter, which will help us further augment our R&D efforts. The polyacrylamide solid technology, which has been under the work for some time, is also expected to be completed by the end of the year. And we are hopeful that we will be able to take the next step forward on this in the upcoming quarters. The final application for the environment clearance for new brownfield specialty chemical project is also being completed within this week. So that is progressing quite smoothly. Finally, we have also finalized the land and the process of securing land near Dahej is also underway for creating the new land bank for future and upcoming products. That is all for me for the presentation. Back to you, Navin ji.

Thank you, Ambarish ji. Since we now open the floor for the Q&A session. Anyone wishing to ask a question request you to raise your hand and we'll take it up. We'll take the first question from Hussain Tambawala.

Yes, I just had a few questions. The investor notes indicate that the PAM Solids' R&D will be completed by year-end. I'm assuming you mean by the financial year-end and not the calendar year.

Thank you, Mr. Hussain. Yes, we mean by the financial year-end, the initial technology is expected to be completed and then there are further steps which need to be taken before thing is commercialized. So one part of the technology development is going to be completed by the year-end.

So what would be the remainder of the steps for this, is EC part of that?

We already have the EC. EC is not part of that. This is more about technology development. So like I also explained in the previous webinars, there is a soft side where the process is finalized and there's an equipment finalization. And once the late stages cross, then we go to piloting and then we go to the actual plant building. So we are moving sequentially step by step in this direction and things are going on quite smoothly. The R&D team with the new recruits as well as the consultants we have from overseas is helping us to fast-track this whole process. And the team is completely focused on developing this product as fast as we can.

But what would be the expected time line for commercialization?

So currently, we are expecting this to be commercialized towards the end of the upcoming financial year. And we'll keep you updated on the progress we make in at the end of every quarter.

Right. I have a few questions on acrylonitrile. So just if you could explain how much of this is procured locally because I do believe there are some -- there's some production happening locally now as well in India.

Okay. So currently, we had in July -- Reliance started their old plant for acrylonitrile. However, their plant has been shut more often than it has actually been online. So there is no local option as such, which is reliable source and also the capacity of Reliance is quite small compared to the Indian market size. So almost the entire requirement for the Indian market is still dependent on the imports. Most of the imports are also now only coming in from the rest of Asia, a few years ago into a lot of imports were coming in from the U.S. and other regions. However, for the last year or two most of the imports are coming in from Asia, far East.

So I mean with refining capacities under strain, I'm wondering whether this raw material supply is secure for the next however many years.

Sorry, I didn't get your question. Could you just repeat.

No, I meant, is this going to be a challenge in procuring this in the future?

So we don't see any challenge because as it is -- acrylonitrile is a product where there is overcapacity. If you look at the overall supply side. China has continued to open new sites, new manufacturing capacity, it is adding much more manufacturing capacity compared to the overall demand growth. The growth in demand is not really increasing in that sense. So we don't see any challenge in securing raw material going forward for the next foreseeable future.

So in terms of Chinese dumping, which is a global phenomenon, given the U.S. has stand on increasing duties, is the 10% duty so far? Is this enough of an equalizer in your opinion?

So actually, U.S. is quite self-sufficient in meeting most of its demand for acrylonitrile.

No, I'm sorry, I meant in terms of the acrylonitrile powder for oil [indiscernible].

Sorry, could you just rephrase your question.

I was asking in terms of the exports of our final products to the U.S. I mean, is enough for duty is in place so that we can compete.

So the duty will definitely help, and we see that as a big opportunity for not just our manufactured business, but also for our distribution business. So a lot of possibilities will open up, not just for us but for Indian chemical companies in general. But we'll have to see how it finally plays out. Currently, it's just been announced, so it is difficult to gauge the actual impact. But in the next couple of months, I think we'll have much more clarity on this, and I'll be in a better position to answer this question.

Right. My next question is on the state-run oil companies in India in general have given a lot of positive commentary on collaborating with global oil majors for enhanced oil recovery in India in their existing sites. But we have sort of said in the past that we are staying away from this sector in India. So I'm not quite sure if those comments need to be revised? Or what are your thoughts on this?

Sure. So the current scenario, like I mentioned, is the entire -- this is, I believe, is about polyacrylamide that you're asking.

Yes.

So polyacrylamide solid, there are 2 segments in India, clearly. Oil and gas has majority of the requirement. That's about 1 lakh tons, however, that is for a single source right now, as you are aware. The rest of the market is about 10,000 metric tons per annum. And that is where our concentration is mainly because of 2 reasons. One is the initial capacity planned by us is only about 10,000 tons, which is quite a small capacity. And secondly, currently, there will be 1 buyer. Going forward, if the dynamics of the market change, we are very much open to renew. We are very proactive in our business strategies. So depending on the change in market situation, we will definitely look at that possibility as well.

And in terms of the Japanese brownfield collaboration, I mean I would like for you to elaborate on that a little bit in terms of what we are planning there.

So in all such collaborations, basically, there are secrecy agreements, which barred us from mentioning too much detail. So what I can say is it also stems from our distribution business and our relationships created over the years from the distribution business. And currently, like I mentioned, the EC application, the final application is being submitted, so going forward, we'll be able to give much more information to you as things process. Right now, it is under the environment clearance stage.

We'll take the next question from Dhawal Shah.

I would just like to continue to what my colleague told just a few minutes ago. One is the new EC application for the Jhagadia plant expansion. Second is the land proposed to be acquired for Dahej for another expansion for the same chemical or few other JVs with Japanese or whosoever it is okay. So I would like that the company being a public limited company, listed company, I understand the confidentiality clause between you and your partners in Japan. However, okay, the shareholders should at least know what chemical, what partner, okay? I don't think so the confidentiality clause prohibits, okay, from what chemical you are doing, who is the JV partner. It cannot be so secretive, right, to telling us as a share. I'm a shareholder, okay? So I would like to know, one, what kind of JV is proposed, what kind of specialty chemical at Jhagadia and Dahej is proposed and who is the joint venture partner? Because you are a public limited company. If there is a material information, okay? I understand the confidentiality clause, but you are supposed to disclose. I mean what is harming telling us who is your JV partner and what chemical you are planning? Because the moment you file your EC application, the whole world will know except us. Please clarify on this.

Al right, Mr. Dhawal. I will take one part of the question first. Regarding the land at Dahej and the existing brownfield project. So as we mentioned earlier as well, the land that we are buying in Dahej is not earmarked for any finalized upcoming projects. They're being bought specifically to create a land bank in the company so that going forward, whenever any new project is worked on. Land being one of the key criteria of having any project in place that does not become an impediment or something which delays the entire process.

Understood.

So that is regarding the land at Dahej. It has no ordination with any of the upcoming projects which are already finalized or in the pipeline in that sense. Now regarding your second question about why further details are not being disclosed right now.

Informed to us.

So 2 things. One is when it comes to what you mentioned about the EC application and other -- the world knowing. So the EC application, once it is approved, that is the right time to disclose the name of the product or the class of the product, and you would also come to know a lot more details. The agreements are there in place with certain precondition set, which currently doesn't allow us to elaborate too much about the actual name of the partner, collaborating with us or the actual definition of the product. So that is why we have given the product segment in our briefing. So unfortunately, I won't be able to elaborate at this stage, but we are hopeful that very soon we will cross that bridge where we are able to disclose much more information publicly as well as to you as a valued shareholder of our company.

Okay. Okay. Now I would just like to ask a follow-on question. I remember 3, 4, 5 quarters ago, probably 3 or 4, 5 quarters ago. You guys had indicated that the company proposed toll manufacturing for some U.S. companies, 1 European and 1 U.S. company. So we have not heard any update since last 3, 4 quarters. Because what I remember or what I recollect, please correct it, you guys had applied for something or you were in a process of applying EC. So can you just share your thoughts -- what is your status update for that?

So you are correct. Last 3 quarters, we have not really spoken about the toll manufacturing process. The quarter before that, when we had last spoken, we have mentioned that 2 toll manufacturing agreements which we are working on. And we had also explained the entire process of the toll manufacturing where first, there is a proposal which comes in, then a study of the feasibility, the capability of the company to carry out that particular toll manufacturing arrangement. And -- that also takes substantial time. So while the toll manufacturing arrangement is being worked on, it has not progressed as fast as we had thought. So it is taking a little bit of time for us to finalize or concretize anything. So once there is any substantial new update available, we will definitely get back to you on that, but it is currently being discussed, and we are looking at the feasibility and other things in order to give an update. Just one final point on that. There is no EC currently already filed for that.

Understood. Understood. Okay. So things are just at a very nascent stage probably.

I will not say nascent stage, they are progressing, but they are not still at a stage where we can give you further updates.

Understood. So I have another commercial question, okay. It's a very peculiar question. I don't know whether this is a correct forum because I have not been able to attend the AGM. So I am also a shareholder of other chemicals -- specialty chemical companies, okay? So just a thought, okay? It's a positive thought. The net profit margin of Black Rose are very poor vis-a-vis comparing to the other chemical manufacturing companies. So if there is an x company which has a manufacturing or probably a net profit margin at 20%. So why is it that we are unable to make that 10% or 15% benchmark in terms of net profit margin, because we do have x amount or y amount of sales, but the net profit margin are like just surviving 5% or 6%. So can you highlight or can you share something on this that why are we not able to get that kind of margins, what other specialty manufacturing companies are able to do it because we are a very, very small capital based company of INR 5 crore and INR 10 lakhs or INR 20 lakhs of paid-up capital, okay? But still, we are like earning only 5%, 6% of the net profit margin. Can you please share your thoughts on this?

Sure. So I'll just mention 2 things on this net profit margin. While you point out the net profit margin, we, as a company, have always strive to increase our sales volume, grow our sales volume effectively as well as maximize our profits for our shareholders and other stakeholders. Having said that, our company -- if you look at is still also having 75% of its business coming in from the distribution segment and many of these large companies have 2 differentiating factors, I would say. One is that their contribution from distribution if they are into that in the first place is lower. And secondly, the scale of operations is much higher compared to what we are at. Like you also mentioned. So -- in the future, we are projecting that as the manufacturing activity picks up and we are able to bring all these projects which are in the pipeline into the commercial stage. Our contribution from the manufacturing, which enjoys a much healthier margin will actually go up substantially, and then we will reach that comparable stage where we are also able to give a much higher net profit margins for the company.

We'll take the next question from [indiscernible].

My first question was regarding the NMA. So on one of our documents we mentioned that we are looking forward to expand our export footprint for NMA. So I wanted to understand what are the progress we are making with respect to NMA exports, like what are the target markets, what we win in the pie and how are we doing on that front?

Thank you, [indiscernible], for the question. So I'll answer your question in 2 parts. One is we have developed technology for NMA in-house. And NMA is typically very difficult and unstable product. And so there is very little exports for NMA. However, our product is quite robust in that sense. And we are able to have a much more stable product which can be exported. Having said that, I would not like to disclose any market locations, but we are trying our best to increase our footprint in the export market. The export market is much larger than the Indian market for sure and we are also getting success in introducing our products into the international market. Going forward, the sales team as a whole is focused fully on increasing our export footprint for all our manufactured products and we see NMA also following the same pattern of getting in more and more revenue from exports. We already have a very significant share of the Indian local market. So the main growth in NMA is going to come from the export market.

Okay, sir. And my other question was regarding this BIS registration policies. So just wanted to understand the impact that you think it might have on our company.

Okay. So you are talking about BIS for products, which we deal in or general BIS applicability. If you could just clarify that, that will help me answer the question.

I would be more interested in our products sir.

Sure. So see, currently, BIS is there for one of our key raw materials also acrylonitrile, but it has not been implemented. We have got an extension of 1 year already. The main idea behind this BIS is basically to discourage Chinese imports into India. It is actually a double-edged sword, if I can say, because a lot of these BIS regulations are coming in for products which are raw materials for other chemical producing companies in India and not so much on the finished products. So for us, I don't see any major impact in most of our distribution business, I don't see BIS having any major role. The only product is, like I mentioned, acrylonitrile, which also currently, there are not enough producers in India. Reliance is the only one and that too is a very, very small capacity and really not being operational most of the time. So I don't see any big challenge related to BIS. It, in fact, might open us, open the door for us for some additional manufacturing possibilities in future.

Okay, sir. And my last question will be regarding -- in one of the -- in our latest annual report, we mentioned that we are expecting good volume growth for this particular year going forward. So I wanted to understand, according to you, what are the key drivers for that? And based on Trump and his policies and the uncertainty that it's creating, are we still on track with that guidance? Or what is the status as of now?

Sure. So, so far during this year, I believe we are already very close to having crossed our volume for the previous year. So we are very much in line to have a substantial growth in volume as well as in total revenue for this current financial year. So we are progressing well as per our guidance. Also, our aim is to maximize our volumes and revenue for both our business segments, whether it is manufacturing or distribution with a focus primarily on exports, which we believe will help us significantly. Regarding Trump's policy that will have an impact where we will get opportunities to export into the U.S. But even more so, this Europe Plus One policy, which was introduced sometime last year that is also helping us in increasing our market presence, even though currently, it is quite small compared to the total potential. But we are actually making good progress in adding new geographies and new customers to our entire business through our efforts. During the course of this year, logistics again has been an issue, which has -- had it not been for the logistics logjams and the freight rates being extremely high, I believe we would have done much better than what we have already done. So with that easing during the course of this quarter and expected to ease out in the next upcoming quarters, we expect the volumes to pick up even more.

All right. Sir, last question, if I could squeeze in would be what is our status with regards to our current CapEx plan, like the 10,000 tons capacity expansion that we're doing and other CapEx that we have planned. So as on date, what is the status and any change in guidance with respect to that.

So at present, there is no major change. It's the same as what we have spoken in the previous webinars. Just for your reference, I just repeat those, the projection for the new land as well as the upcoming specialty chemicals project is between -- anywhere between INR 20 crores to INR 40 crores. And the projection for the PAM solid, once it kicks off, is between INR 60 crores to INR 100 crores. So those are the 2 CapEx which we have identified as of now.

We'll take a follow-up question from Hussain Tambawala.

I would like to know how we intend to fund these new projects.

So again, Mr. Hussain, I would like to give reference to the previous responses. The company does have its own resources. It is also having in the sense of retained earnings. And we are open to all options whether it is debt or additional equity. We will look at the options at the appropriate time, and then we will take a call on how to fund this. Currently, we will not finalize the particular method, which we want to follow.

With respect to BR Chemicals, are there any pending transactions? Or is that a subsidiary completely bound up? Are there any costs to be incurred over there?

So as we mentioned, the business operations have been bound up, and there are no other cost. The company has enough funds to take care of its requirements.

And in the investor presentation, there is an unallocated revenue of INR 86 lakhs and a subsequent operating loss of about INR 1 crore. What is that number exactly?

That's basically the things which are not part of the manufacturing in the distribution segments. It's like our other income and other expenses category, which is not allocatable directly to those 2 divisions.

Right. But some more details on what exactly that substantial loss.

It's not a substantial loss. It is basically certain expenses. For example, if we conduct an annual general meeting, there will be some expenses related to that. It's not about the loss, it is only about unallocated expenses. So those are not attributable directly to any particular group of segment.

Dhawal, do you have any follow-up questions?

Yes, yes. I have one follow-up question. The proposed expansion at Jhagadia, okay? And there is a likelihood of EC -- I mean, the environmental clearance application likely to be filed in this week, maybe today or it is done. So what kind of growth we are looking for that specific product, I don't have any detail of the product, but are we looking for something which we're going to grow our company by 25%, 50%, 100%, what kind of specialty -- I don't know the details of the product. But what are we trying to achieve? Is it going to be like a 10% growth, 50% growth in next 2, 3, 4 years? What are we looking at?

So basically, as we mentioned, it's a speciality chemical product and the annual total turnover, which we have planned for is 5,000 metric tons per annum, it is also there in the release. The overall revenue growth is very difficult to project right now because there's a product mix involved over here. It's not going to be probably a single product. So it is very difficult to give any kind of an estimate, but it will definitely add significantly to the overall revenue of the company.

Yes. So I hope there are better profit margins as I'm putting finger cross.

So, Mr. Dhawal as a general policy or general framework, we would be entering into manufacturing arrangement only when there are better margins compared to the distribution business. Otherwise, it would not make any sense for us manufacturing.

I would like to reply to that. So it is probably 7, 8 years ago, okay? When I used to physically attend the AGM and at that time, it was told acrylamide, polyacrylamide can have a margin of net profit of 10%, 15%. So I don't know whether we have been able to achieve that 10%, 15% of net profit margin. This was categorically informed in the AGM in 2016, '17, '18, said that polyacrylamide can have that -- we can generate that kind of margins, which I have not seen in the last few years. That's the reason -- my previous question was on net profit margins.

So Mr. Dhawal, I don't know how you are able to take out the net profit margin on this.

No, no, no, no, no. I'm sorry, just to no, no. So a question was asked in, say, 6, 8 years ago in the AGM. Yes. So the question is -- that time, it may have been projected 10%, 15% margin. But right now, you know what margins we are growing at, okay? I'm talking of net profit margin, okay? So see, I'll tell you something. I'll tell you something. Okay. I travel everywhere in the world, okay? So there is a difference in a manufacturing margin and there is a difference in a trading margin. So I'll just give you an example, Walmart, okay? Walmart has say, $700 billion sale and the net profit margins are, say, 4%, okay? So they make $30 billion as profit, which is a trading margin. They are not a manufacturer. Vis-a-vis Apple, they have a $350 billion sale, but the profit margin are close to 20%, okay? So it's a benchmark. I mean, I'm not comparing with Black Rose. But I'm saying a trading margin and the manufacturing margins vary substantially, okay? So I'm unable to understand that why we are not able to make that kind of margin, probably due to the costs involved, expansion involved, buying of land involved, whatever it can be, okay? So that's my issue. I'm unable to understand why we can't make net profits. That's the question.

So it's basically, you were just substantiating the question you had asked previously about net profit margin, and there are 2, 3 aspects to it. One is, even from our breakup which we provide for the EBITDA, you will be able to see that the margins are much higher in manufacturing. Even when there is a lower capacity utilization, we are very much profitable, and our margins are quite good compared to the distribution business.

Yes, that's correct.

Yes. Number two, what happens is as the scale of operations grow, the manufacturing margin keeps on increasing. You are very well read and you travel the world. So you would also understand that as the scale of operation will grow, as the size of the company grows, as the segment-wide distribution pattern changes between the distribution business and the manufacturing business. You will see much healthier net profit margins overall for the company. And once these new products come online, what we are talking about the manufacturing team, then obviously the figures will change substantially.

Okay. That's nice. That's good to hear. Okay. Thank you very much. Thank you.

Thank you.

[Operator Instructions] As there are no further questions, I'd like to hand over the webinar to Ambarish ji for the closing remarks. Ambarish ji, please.

Thank you, Navin ji. And thank you to one and all, who took the time out to attend the webinar, I hope we've been able to address some of your queries. And we look forward to seeing you at the end of the next quarter, which is also going to be end of the financial year. So, yes, stay safe and stay well.

Friends, anyone with a follow-up to, please feel free to write to us, and we'll take it to the management. On behalf of SKP Securities and all of us, thank you very much, Ambarish ji and Bhavesh for taking time out to interact with investors, and we look forward to hosting you again in the next quarter. Thank you very much, and have a wonderful day. Bye-bye.

Thank you.

Thank you, everyone.