Fineotex Chemical Limited (FCL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Fineotex Chemicals Limited Q3 FY '24 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Aarti Jhunjhunwala from Fineotex Chemicals Limited. Thank you, and over to you, ma'am.

Thank you so much. Good morning, ladies and gentlemen. We are delighted to welcome you all to the Q3 FY 2024 Earnings Conference Call of Fineotex Chemicals Limited. We have uploaded the financial statements and the presentation on the stock exchange and our website. We trust you've had the opportunity to review them thoroughly. Fineotex is 1 of the leaders in India specialty chemicals sector. It is well recognized in both domestic and international textile markets. Our stedfast commitment to expanding our market propels us to continuously introduce new products exploring untapped regions and providing value-added services, including customized technical solutions. At FCL, we take time in our extensive range of products customized to meet the unique requirements of a diverse customer base. This commitment underscores our dedication to delivering excellence. During this quarter, we have acquired additional factory land premises of 7 acres at Additional Ambernath MIDC, Thane, Maharashtra for a total investment of approximately INR 35 crores, funded totally by internal accruals. This facility is situated near the existing Ambernath plant. This will help us cater to the growing demand in the existing specialty performance chemical product lines catering to textile, home care, cleaning, hygiene and drilling speciate chemicals. This strategic investment reinforces our commitment to meeting evolving customer needs. This new facility will be a fungible plant, enhancing our production capacity and enabling us to capitalize on future growth prospects in the expanding market. With a streamlined operational setup, we enhance our agility and responsiveness, better serving our customers and adapting quickly to changing market dynamics. We express our sincere gratitude for the continued support and active participation of our stakeholders as we collectively work towards a brighter and a more sustainable future together. I would request Arindamji to provide his insights into our operations. Thank you.

Thank you, Aartiji, and warm welcome to on and all. Fineotex Chemical is a well-diversified company with a wide range of product offerings. Our journey began with the production of specialty chemicals, tailored for the textile industry. Over the time, we have diversified into complementary products for sectors such as hygiene, oil and gas, et cetera. We are dedicated to providing customized solution to our customers and focus on adding value to their businesses. Our commitment to customer satisfaction is backed by the trust in our products and our strong brand reputations. During the quarter, we acquired additional factory land premises of 7 acres at Additional Ambernath MIDC, Thane, Maharastra, for a total investment of approximately INR 35 crores, funded by internal accruals. This facility is situated near the existing Ambernath plant of ours. This will help to cater the growing demand in the existing Specialty Performance Chemicals product line catering to textile, home care, cleaning, hygiene and drilling specialty chemicals. This strategic investment reinforces our commitment to meeting evolving customer needs. This new facility will be a fungible plant, enhancing our production capacity and alimenting us to capitalize on future growth prospects in the expanding markets. With a streamlined operation setup, we enhance our agility and responsiveness, better serving our customers with short lead time and adapting quickly to the changing market dynamics with higher volume. I now request Sanjayji to take us through the quarterly and 9-month financial performance of our company and other recent strategic development. Have a good day. Thank you.

Thank you, Arindamji, and good morning, everyone. I'm pleased to present the financial highlights of quarter 3 financial year '24 and 9 months financial year '24 and provide the insights into our strategic initiatives. On the financial front, during the quarter financial year '24, our operational revenue was INR 1,385 million. The growth in the revenue was due to the sales growth in volumes across segments and strong demand from the customers. The EBITDA increased to INR 404 million, up by 41.3% Y-o-Y with the margins at 29.1%. The PAT was at INR 329 million, up by 46.5% Y-o-Y basis, and its margins were at 23.8%. For the 9-year financial year, operation revenue increased to INR 4,160 million. Our EBITDA increased to INR 1,101 million, up by 37.8% Y-o-Y basis, and its margin was 26.5%. We recorded a PAT of INR 905 million, up by 42.5% with the -- excuse me, 42.5% basis margins at 21.8%. Our ROCE and ROE were at 35.2 percentage and 30.4%, respectively. Highlighting effective capital utilization. The expansion in our margins reflect our commitment to sustain growth and position us for the continued success with the headroom of revenue expansion. Moreover, yesterday on 16th Feb, our Board of Directors approved a strategic fundraising initiative aimed at enhancing shareholders' value and supporting our long-term vision. As part of our strategic initiatives, Fineotex is set to raise a total of INR 280 crores approximately through a combination of equity share issuance and share warrants, each price at INR 346 with a premium of INR 344 per share. The participation of a diverse group of non-promoter investors underscores confidence in our company's potential. We will seek the shareholders' approval for the above through the EGM, ensuring transparency and corporate governance. These funds will be instrumented in driving our strategic initiatives, enhancing product offerings and expansion of our market reach. They mark a pivotal phase in our journey towards sustained growth and value creation for our stakeholders. We are delighted to announce that the Board of Directors have approved an interim dividend of 60%, that is INR 1.20 per share at face value of INR 2 per share, which is a total dividend payout of INR 13.29 crores. Our robust financial results reaffirms our commitment to operational and financial efficiency with a steady fast focus on sustainable growth and maximizing shareholders well. Over the last few years, we have consistently strived to provide the best returns to all the stakeholders. As we move forward, we remain dedicated to strengthening our strategic partnership, seizing new opportunities to fortify our market position and drive long-term success. With this, we close our opening remarks, and we'll open the call for an interactive question-and-answer session. Thank you. Over to you, Niko.

[Operator Instructions] The first question is from of Tej Patel from Niveshaay.

Sir, I have a couple of questions. So the first one is like since we already have like 60% of our products coming from the finished chemicals, right? So how much portion can be -- can that further go up to? And are the current margins sustainable? This is question number one. Question number 2 is, sir, like we saw a significant uptick in the volume. However, the revenue didn't see any major uptick. So is the realization across the industry down, which has led to this drop? Or is it due to the change in the product mix? And the last question, sir, is when can we expect our average realizations to reach, let's say, INR 100 per kg and what will be the factors which will lead to this? That's all.

Well, thank you, Mr. Patel. Yes, that's all. Okay. I'll just try to reply to all your queries in the explanation, which I'm giving now. So basically, our capacities are fungible. The investments what we have been making in our capacities are for the textile specialty verticals or FMCG and oil and gas. These are fungible capacities. So with the same capacities, we have been able to utilize it, the same facilities, and we can produce the similar line of products for any of the verticals which we have been catering. Now regarding the realization, I think, as you can see, there has been at least a 26% in revenue increase and the volume increase has been like almost 40% Y-o-Y basis in the quarter 3. Now I would like to mention there has been a shift in the product mix. But also, there has been certain factors where there has been a softening in the raw material prices and some portion of that has been passed to the consumers. However, interestingly, as you can also notice, there has been an upscale in the EBITDA margin, and there has been a significant increase in the EBITDA as well. So all in all, this is the kind of business where we are. And whenever there is a price drop in the raw material prices, we need not have the same kind of reduction with our customers being our products are like very high entry/exit barrier performance chemicals. However, this is something which we do pass on to the customers after the second period of time. And then, however, that is reflecting in our increase in the EBITDA margins. So -- and the -- like you said, about the average product mix and the average valuation. So basically like there are also trends in their businesses. Let's say, there are certain trends now prevailing where there are lot of product mix have been changing. What is more important for us is the kind of EBITDA we are making. That is what differentiates our company being a specialty chemical producers with the other so-called chemical company. We are very much focused on the bottom lines and the EBITDA margins, and we are working with only highly specific Performance Chemicals, and EBITDA margins is very crucial focus which we have. So as and when there has been -- like also it is looking like now in the last couple of months, again, there has been an increase in the prices of the chemicals as we are totally aware of the global changes happening in the Red Sea issues, there has been shortage in the containers, the freight cost of the containers have gone up. And this is leading to, again, a little bit of a shortage delayed raw material incoming. And also in such situations, the companies generally have a higher inventory ratios also because it's -- the stock is -- it's not guaranteed about the kind of inventory has to increase because the kind of delays which is happening now also pumps up the sales and the businesses. This is the kind of -- we expect the product mix average realization to be going up in the coming times.

[Operator Instructions] Next question is from the line of Anupam Agarwal from Lucky Investments. Sorry to interrupt Mr. Agarwal, your line is not clear. My I request you to use your handset, please?

Great numbers, Sanjay sir. My first question is if you could give a breakup of your volume mix between the textile and the FMCG business for Q3 and 9 months?

Yes, the kind of, let's say, generally, we have like 60% of our volumes has been always in the FMCG sector in terms of the volumes. Even now, I can say almost -- we are almost to that level. And yes, so basically, you can consider that we have maybe almost 60% or, let's say, 58% is in the cleaning and hygiene businesses right now, and the rest is on the textile specialities and the drillings and the other ones.

For Q3 and 9 months? Or just the Q3?

No, I'm just talking about the Q3. Let's say, it's always 55% to 60% FMCG and cleaning and hygiene. So this is a similar kind of a quarter as per, let's say, about the -- let's compare with quarter 2 also in that sense. But if you talk about the quarter 3 2022 to '23, there has been a significant increase in the proportion of the cleaning, hygiene, FMCG businesses from that point of view.

Understood. And what has been the domestic and export mix in the similar Q3 and 9 months?

Basically, it's 75% is domestic and 25% is overseas.

Got it. My second question is on your CapEx. If you can give some more details as to how much capacity addition we are doing on the INR 35 crores CapEx in tonnage terms, what is the time line of us to commercialize the volumes from the new plant? Is there -- will that be also fungible in the similar ratio that we are doing in terms of volume? Or will that be slightly more dedicated towards higher-margin business?

See, I'll let you know about the new plant, which we have acquired recently just a month back. As you know, there are a lot of permissions and approvals which we require for the commissioning of the chemical plants from the pollution and the government authorities this and that. So generally, the idea to go ahead with this plant expansion today was not envisaged in the current financial year or something like that. We're already targeting the things which kind of in 2026 and the kind of businesses, which are the kind of interest levels, which is coming overseas for joint venture tie-ups across specialty chemicals. Let me put it also like that India's specialty chemicals businesses is looking very strong right now because, let's say, most of the European and American companies, they do not want to depend on China for a lot of things. They all need to come to India from the Make In India concept also. At the same time, we are getting great projections from the customers and the industry is looking that it is going to be on an upscale very soon. So looking at all those things, we have set up this kind of a facility today envisaging what will happen after 2 years. Similarly, the existing Ambernath plant, which we had commissioned in the first COVID part, COVID 1 in August 2020, which we initiated by November 2021. So that time also when we had invested in the plant it was already we had a spare capacity of the Mahape plants. However, we had done that kind of investments in Ambernath in 2020 in COVID, which is the most unpredictable quarter. We had done it with a view that the demands will come in, and that's what we have seen that from a 40,000 tonnage. We have reached 104,000 tonnes. And today, we are almost at 67% of capacity utilizations almost broadly. And gradually, we have increased the capacities from 40,000 tonnes to 104,000 tonnes in the Ambernath facilities where it's already -- the production is going on. So looking at the kind of jump, which we have done, it was evident that if you are looking at a couple of years ahead, we will need something which is supporting the kind of demand which is looking at in the Specialty Chemicals sector. So that is one. Number two, the kind of capacities we can put there, it will be definitely fungible number one. See, our businesses are like specialty chemicals businesses where this -- the textile specialties, oil and gas, FMCG are produced in the same kind of, let's say, 95% of the capacities are fungible. Maybe a little bit here and there, it's required depends on the reactions of the product. Broadly, as you know, we are doing all the reactions like polymerization. We do homopolymer, copolymer, terpolymer of almost all the monomers. We do esterification, we do sulfonation, we do condensation reactions, we do phosphonation as well. And these are basically the chemistries, which have applications in all these verticals, let's say, not only that, let's say, our water treatment also, paper also and way on forward. So we have been focusing on increasing our capacities to cater to new avenues as well. So our business model has been in a way that we produce more products for the similar existing verticals where we are present. At the same time, wherever these product lines can be offered to the new businesses, let's say, water treatment is also something which we have been looking and we are beginning to work on that line. But again, the capacities are fungible. Similar kind of products have applications in these avenues. So this is what we have been focusing upon.

Understood. Any tonnage number that you want to call out, how much are we increasing on the new CapEx?

We do not have exact planning right now on that. And however, let's say, we still have to spare capacities in our existing Ambernath plant. There also we would be increasing some capacity and we are working upon how much capacities will be increasing in the new facilities very soon.

Optimum utilization for all our capacities is 80%, roughly?

Well, it also depends on certain factors. One is, like I said, we have more than 1,400 to 1,500 SKUs. Now what happens, all these products are not produced in the same time and not in the same kind of facilities in the sense certain products are produced in a shorter span of time and certain will take 1 day or 2 days and things like that. So sometimes, the facilities had to be adjusted, the volumes and all. Again, the point here would be that as this new Ambernath facility, which we have, which is ongoing for the last 2 years, this is the latest technology automized plant where we do not see the raw material also. In fact, everything is pumpable, everything is going in the reactor charged going to the storage type things like that. So the vessel sizes are massive and the storage capacities are huge. So that gives us a lot of operational efficiencies in our business. In fact, that has also helped us to increase and reduce our overheads and work towards more efficiencies as well. So that is also which we have been progressing upon. So I think, yes, speaking about 80% could be something which is definitely doable. The more and more we go to the bigger vessels and the bigger production capacities, this is what we have been always focusing upon.

My next question is on your fundraise that you commented, INR 280 crores at INR 345 is what I heard. Is that -- am I right?

It's INR 246.

INR 246?

Sorry, INR 346. INR 346.

INR 346. Okay. And just if I may ask, INR 35 crores is the CapEx. Why is the fundraise at INR 280 crores? Just trying to understand why such a large fundraise.

See, let me bring it in a way that, let's say, last 50 quarters, we have been listed when we came up with an IPO. I'm trying to answer not only this question, but I'm giving a generalized update to all the participants because I think this question might come up again. So rather I would take this opportunity to reply on that part as well now. So basically, we got listed in -- on 11th March 2011. In a maximum 3 months' time, we used the IPO proceeds to invest in our European manufacturing company in Malaysia called BioTex, which is a part of Fineotex now. And the same -- that was our first international maiden successful acquisition and the company has been fairly well in the last 12 years. In the last 12 years, as you can also see that our company has been always cash disciplined. It has been always, let's say, technically debt-free in a broader space. There have been a lot of discussions and things which we always look at certain opportunities where we can see a lot of synergies because the kind of confidence we have got in handling the first maiden international acquisitions, and the international companies are relatively a little bit more, in a way, let's say, the management bandwidth has to be more stronger in handling international thing. And I think we -- our management has proven that part, and we are geared up for the next league also. Now as such, this INR 35 crores of expansion has been done from internal accruals as such, there will be another INR 40 crores or INR 50 crores organic expansion, which we'll be doing in the coming times. That is also broadly, we can be -- it can be funded from the internal accruals and the cash flows which we have today. However, going forward, there are a lot of great opportunities which keeps coming to our table, which are very -- having a lot of scope and synergy also. So as such, we are very disciplined in deployment of cash. However, if there's certain good opportunities which comes to us at a great value and which is fitting in our strategic initiatives, which is either we produce the same kind either the target produces similar kind of products for new avenues or maybe additional product lines going to the same target. So we are very clear about what is the direction where we have went to and this kind of fund raise, there has been promoters participation also which we have done yesterday in the Board of Directors Meeting. So promoters are also coming forward to -- for the same as well as there are certain non-promoters also, we have shown great interest on that. So we want to have this kind of opportunity, the fund this thing so that whenever there is an opportunity, we can go ahead for that.

Understood. My next question is if you can call out or give us a sense of how the demand situation is in domestic market and export market. You mentioned there has been some inventory stocking that is happening because of the Red Sea issues. What is demand like compared to, let's say, earlier this year and now in December or January, what -- if you can give some sense there?

I need to give you -- just update on what's happening and what we feel is happening and going to happen. The freight cost has gone up. Freight cost, most of the rental prices will shoot up, also not for us, even for the commodity chemicals. At the same time, there will be a lot of inventory increase by all the companies, distributors, we also for the topic, like we will also need to -- we have started stocking up a lot of raw materials as well because things have got a little bit undependable, let's say. And at the same time, interestingly, what is happening, most of -- some of our competitors or coproducers in Europe and Turkey, their goods are stuck and their customers are not happy about that, and we are getting certain opportunities in Bangladesh and Vietnam also to cater to those markets and start spreading our products from India which had lesser problems than for the freight routes are much similar here. So this is a kind of opportunity which we are trying to capitalize upon as such. And kind of demand, I can say, yes, there has been a pickup. See, textile is a very wavy market. Let me talk about textile first. Textile [Foreign Language], it's always like you say COVID 1, the 2020 first quarter was one of the -- like say, everything was stopped, but if you see the quarter 3 and quarter 4 most of the companies or maybe all of the textile companies had shown great results in comparison to the earlier things in spite of 6 months of closure, almost 6 months of closure. So textile market is always a wavy demand. It's not -- because there is a big gestation period from the time the cotton is grown and from the time the fabrics or the garments are sold in Walmarts of the world. So there is a big gestation period when the cotton price goes up, these big brands stop buying it and stop placing orders. So there is a problem in the spinning, weaving processors, where we sell to and then the exporters and way on. But now this can happen only up to the point when the pipeline -- the goods are there in the pipeline. Now what has happened is the cotton price has gone down from INR 120,000 to almost INR 55,000 or something like that today. So the prices have gone down and also the material is in the pipeline has reduced. There is a good demand coming from U.S.A. also in a couple of months. At the same time, there's a price increase also, which has happened significantly. The containers from India to Houston, which was $1,500 before is almost now $4,500, which is significant from the price because the price of the chemicals are not so high that this can be absorbed, and this is the sea freight I'm talking about. In spite of this increase, the delay has happened because the routes have changed now. So all in all, what is looking now, this can be a good inflection point, I can say that in the coming quarters and things, a lot of chemical prices might go up because of these kinds of uncertainty we're just prevailing now. So the demands are going up. And not only from stocking point of view, but asset consumption point of view also globally. From domestic point of view, definitely, the time from January will have to be better than 2024 broadly will be much better than 2023 for the textile specialties also.

Got it. Got it. I have some more, I'll get back in the queue.

The next question is from the line of Karan Kamdar from DRChoksey Finserv Private Limited.

Very great number. So one thing I'd like to know is when are we planning to expand our current capacity at Ambernath plan that we have some extra capacity, right? So we do plan to install additional machinery there?

Okay. So as you can see from November '21 until today, let's say, almost 25 months, we have increased the capacity from 40,000 tonnes to 104,000 tonnes all in these facilities itself. And as you might have seen also in the plant there has been a special area also always add on more capacities and all the structuring and everything has been always kept ready. At this increased capacity is not going to be time taking for us. It will not take more than 2 quarters, by and large. So that is something which is very doable. We are working upon that, and maybe we can always add another 10,000 tonnes of capacity or 10,000 tonnes to 15,000 tonnes capacity in the same facility as well. And at the same time, the new facility also, we are working aggressively on that. We will be coming up with our final numbers on the plan of the increased capacity very soon.

Understood. Can you guide us on to -- what kind of volumes you've done in absolute numbers this quarter?

So let's say, the volumes broadly, this has been almost a 40% increase Y-o-Y basis. Last year, it was -- quarter 3 was 12,000 tonnes broadly. Today, it is almost 17,000 tonnes. I mean a little less than that, but yes, more or less.

The next question is from the line of Aditya Agrawal from Ambit GPC.

So my first question is on the realization. So at the consol level for the last 3 quarters, June, September and December, realization at the consol level is roughly about INR 82 per kg. And you have mentioned that going forward, we expect realizations to go up. So for now, can you say that this current realization, which you have seen is kind of a base on whatever the base effect that is kind of behind us?

Actually, I would like to little bit correct you, the average realization for this quarter has gone down and due to the product mix and also the correction in the price of raw materials and some of it which we have passed to the customer, retaining certain potion of the EBITDA, which has reflected in the increase of EBITDA also. So earlier, it was INR 90, INR 90 plus something like that and which has dropped to almost INR 83 like you rightly also said for the quarter. So yes, that's about it. And so I mean, what was it? Like could you repeat your point on that?

Yes. So INR 82, which I mentioned, so that has kind of stabilized for the last few quarters, right? So June quarter, September and December. So going forward, as you expect to, this could be the base and then from here on at least you will not see further correction in the realization, right? I mean that's a fair assumption?

So I can -- yes, I think you are right in that. I can tell you this is the lowest average realization price that the company has ever experienced in the last 10 years or maybe at least for the last 5 years as I 100% recall. So this has been the lowest place where we are today. So I don't think it has to be lower. And especially with the new Red Sea issues and the freight components going up and things like that, it shouldn't go down now.

The next question is from the line of Parikshit Kabra from Pkeday Advisors LLP. Mr. Parikshit, may we request you to unmute your line from your side, please?

Congratulations on a great set of numbers. I hope I can -- I am audible now?

Yes.

All right. Great. So I just first wanted to understand that you obviously have seen volume growth in both your textile as well as the FMCG, the cleaning -- the domain. So what is the driver in each of them. For example, in textile, are you adding new customers or your existing customers are asking for more and more chemicals? And if it's a mixture of the 2, what would -- how would you divide the growth between the 2 drivers?

Okay. So I'd like to mention there has been both the factors which are leading to the growth. Number one, we keep adding more geographies. As such, we have been participating in at least 5 international exhibitions every year, at least 4, 5 exhibitions domestically as well. This increases have reach to the customers for sure, and there are a lot many more customers which are being added on. Also, like I have been mentioning in most of our con calls, like all the customers, each of them require 25 different functional chemicals broadly and we are, let's say, not present in more than 5 or 8, let's say, on a highest level. So there is always a scope to have more wallet share, and that is also which we have been doing by providing more packages and product lines that has been our great USP and adding on more and more product lines, more partnership with Eurodye, Belgium's and for the anti-microbial from Australia as well. So we are adding more and more product lines and segments, which can help us to get more wallet share as well as biotech specialty chemicals, which are the high-end technical textile driven businesses. That is also contributing to a lot of product lines and things which we have got attracting the customers and exciting them. So all in all, our focus has been to give a great services. See, I'll tell you one thing. We not only produce Specialty Performance Chemicals, we provide a great technical solutions and sustainable products that is driving the -- this part is driving it. Let's say, our competitors are, let's say, the European giants, now what happens with them, they have a high cost of operations, number one. At the same time, they are too slow in their, let's say, I would not put it in the services or something, but overall, they are a little bit less flexible and there is a lot of long chain of hierarchies and things like that and things are getting controlled from Europe and things like all these things. So what happens is our team, we have 36 technical high-end technical technologists, who visit the customers pan-India, we have an office in Bangladesh also where we have Bangladeshi people also working and giving services, technical services. See textile [Foreign Language] psychology [Foreign Language] I'll just tell you. Textile is all about -- it's like they need a grocer. They all in, day in day out, they have a lot of technical issues because their customers keep asking them for a higher up things, the Walmarts will have a Walmart target, these will be giving a better and higher targets like more fastness, more observancy or whatever is the technical topic. Now what happens, they need people like us who can sit with them, work with them and give them the guidance that this is the kind of thing. Importantly, we are on the solution businesses. Our products are not a COA-driven business. [Foreign Language] products, it's not like a soda ash or a caustic where everybody's quality will be the same. We are here like a homeopathy solution provider, where our products -- in fact, we do not have a COA kind of marketing only. Yes, technically, we do have COA when the materials are going out, but the customers are least bothered about it. They don't care whether your product is 10% active or 40% active or whatever it is. The idea is very clear for them that they need to use the product and get the performance. That's it. They do not care [Foreign Language], it's something like that, it's a homeopathy solution. Now what happens in textiles, we have been focusing on finishing. Now finishing is, let's say, more than, I would say, more than 60% of our business is in textiles. Now finishing is the stage, which is the final finish given to the fabric before it is sold to the malls and shops. Any consumer who is going to buy a garment or any cloth, is checking the finish of the fabric and the color. So finish [Foreign Language] once you are getting into those kinds of businesses where we are, customers do not change. Raymonds [Foreign Language] in Vapi and all these Chhindwaras, they hardly ever change their finishes. Let's say, for that matter, Raymonds is our customer from 2007. Our products are running smoothly even today, the same kind of products plus we keep adding on. So the story is here because these costs are very insignificant. All the 25 different functional chemicals from pretreatment, dyeing, printing, finishing only contribute 3% cost to the user. Like every chemical is costing 25 chemicals. What I'm trying to say this is insignificant cost for the customer, number one. Number two, if something goes wrong in the product mix, let's say, there is a hole in the pretreatment due to the peroxide having a reaction and the iron content in the water is there. And because of this there's a hole because our product was not stable, example, that is -- it's irreversible loss. People cannot -- I mean, the customers cannot get back to fabric. Similarly, if there is a silicon softness spot coming on the fabric, it cannot be removed. There is a lot of -- you have to sell it in the cutting kind of thing. It cannot be removed by any mechanical or anything like that. So let's say, Raymonds [Foreign Language] suit starts with INR 20,000 range, the cost for them is INR 3,000. So they need 3% cost is like INR 100 per suit dividend by 25 chemicals, every chemical is costing INR 4 per suit. So if you -- if any customer is giving 25% discount also [Foreign Language] per 20,000, nobody takes the risk. So it is like changing the salt of the food. Now I will tell you our journey actually. I mean, I'm just trying to give a broader perspective to the participants if some people have not heard us before. The idea is like we have been backdoor suppliers to all the European textile chemical producers since many, many decades. After 2001 and '05, let's say, that was the time when textile got more and more competitive, and they realize they are not able to pay extraordinary pricing to the European companies. And then we decided to let not be the back door to these companies, rather be they are co-producers and in the front with the brand and the things like that. So after -- that is the way the company was coming in the front with the dealers. And today, we are supplying to almost -- and let me also mention very important. Textile is a very customized solutions. Cotton and the chemical [Foreign Language], polyester [Foreign Language] acrylic, wool, nylon, everything is different. Even in cotton, it depends on the kind of machines and processes one is doing. If it's an exhaust process or if it's a continuous machine. Again, in continuous, which kind of machine it is, its Brückner, Menzel or Dhall machine or whatever it is. So again, you have to customize our product accordingly. Vardhman is using -- like Vardhman is one of our prestigious customers, and we are supplying to all their 9 plants, all for pan-India. So the product which suppose Vardhman tells is the best product of Fineotex, which we go to Balotra, the Balotra customer just say this is the worst product because of water hardness is 2,000 PPM in Balotra. So the product has to be adjusted and fine-tuned to suit the water of Balotra. So here is the catch, the catch is, it's not a paracetamol business where we are that everybody, boys, girls, male, big, senior, junior, anyone can pop in and have it and everything is same. Also, we had differentiated on the product aspects of it because we are the early movers in sustainability. Now this is a very important thing. After the BioTex after we stepped into BioTex in 2011, they were the leaders of sustainability, they have been talking about TDS reduction, EOD, BOD, CODs and all the things. Now for the last 4 years, you can see every textile promoter, whether it is Trident, Guptaji or Goenkaji from Welspun in all their posts and speeches on LinkedIn, social medias, you'll see only sustainability flaring up because this is the only way that companies can flourish now and grow worldwide, not only for them. So we have done a lot of things, and we are early movers in that. Now also, we have done a lot of product audits, a lot of product certifications. Our plants are BlueSign certified and BlueSign is one of the most stringent audit, I think in India [Foreign Language]. So these are the kinds of branding aspects and that is the kind of -- and also our USPs that we go to the customers' customers and convince them on our finish and then they tell their suppliers who are our customers to use Fineotex packages. Now these are the kinds of USPs, which we have been working upon, that is the focus area. So I think, I mean, geographies increased, wallet share increase and the kind of services we are giving to the customers, that is something which is the major reasons that they are depending on us. So we are like the grocer for the textile specialties, let's say. So we need to have the entire range. So we have Eurodye, CTC from Belgium, which is the Unilever plant. They had acquired the business of also Stephenson in U.K., which was a wool specialty chemical company just before the COVID they had acquired it. So we get that package also. Now we make products for them in India. We supply to pan-Asia, pan-India. We are trying to do -- also trying to put a point to them that they need to shift their entire focus to India and Make In India at least for the point of view of being more closer to the customers and raw material because the raw materials and customers are broadly in India now, I mean, in Asia. So there are a lot of strategies which play. It's not about one strategy. It's not only geography, it's not about only wallet share, it's not only about the exhibitions or factory audits. So it's a totality things and everything which we have been doing has fallen in place and going right. Unless we are early movers in sustainability where we are be able to delight the customers. What I mean by sustainability is we do not work like -- we do not offer our, let's say, not -- I mean just given analogy, like Parle biscuit [Foreign Language] Tiger biscuit promote [Foreign Language]. We don't work like that. We work on the totality. Let's say, when we go to the customer we say [Foreign Language] utility cost [Foreign Language] will reduce your time, temperature, which will reduce your labor cost, which will reduce -- increase your production capacities and efficiencies and broad lift BOD, COD and all in one concept instead of using 2 chemicals, we will give you one, instead of 3 we'll give you all in 1 type of product. Now what happens technically, we increase the chemical cost, honestly. However, if you come check on the totality basis, we are able to reduce the utility costs. Now that is called sustainability. On virtual paper, it looks higher. But if you take an overall picture of that, it is much better and not even better. In fact, they have been -- they have to use it going forward because of the kind of norms which are getting more stricter worldwide and, of course, in India also, one needs to get into the ZDHC things and 0 discharge, colorless discharge for the textiles. So in fact, we were -- we have been invited by ECO PASSPORT, Hohenstein, which is a Swiss company, given the ZDHC degradations. We had, in fact, the lead speakers also even Arindamji, Aarti and all are always attending on the panel speakers as well. So we have been trying to inculcate the importance of this. We are the early movers in that, and we are going -- and that's the same thing which is happening in detergents and FMCG now. Now in detergent powder, let's say, a powder recipes are generally like 20%, 30% soda ash, 20%, 30% sold and there is Lapsa 10%, 12%, and then there is certain products which we have been offering and things like that. But now soda ash is like soda ash, STPP in the world, it has always been reduced and getting to a max cap by the government. These are government initiatives because the soda ash [Foreign Language] soda ash, [Foreign Language] there is a big carbon footprint issues going on. So that is one. Lapsa has been -- has to be reduced by all of us. So most of the detergent company [Foreign Language] 12% Lapsa now everything has to fall below 8% and 9% eventually. P&G has announced that 2026 will get more sustainable, we'll remove Lapsa in our product only. Now if they remove Lapsa in their product, there has to be certain performance additives, which has to be added to give the cleaning to the fabric in the washing machines or wherever it is. Now we are there, along with us, our competitors are like Dow, there is BSF and SNF and things like that. And we have been able to provide such solutions to detergent companies. It's a $50 billion market, even 10% of this detergent market, which is $5 billion. Even if this gets sustainable in the next 10 years, it's a big market coming up for us. So we are working on that for the last 2, 3 years, and we have got great success on that actually. So I think that there are a lot of ways to get the sustainability drive, and that's the focus which we have. We have quite a little bit, I can say, early movers than all these things. I mean I just want to -- like you asked me about how do you Mr. Ari, I think you asked about the kind of increase in wallet share and geographies. But I try to give to all the participants in this kind of an answer so that most of your understandings are more clear.

No. So first of all, thank you so much for the long detailed explanation. But if I could just push you a little bit to ask specifically. Can you -- is it possible for you to quantify the split between adding new geographies and hence, new customers versus increasing share of wallet with existing customers, with 40% volume growth in textile business, how would you split it between the two?

I will say it's adding customers and also getting wallet shares equally. So no doubt about it.

Okay. So 50-50?

Yes, yes.

Okay. And could you tell me how that is happening for detergents as well? Because if I recall correctly, Ghadi was our biggest customer in the detergent space, since you have grown 40% of volume, is it just that Ghadi grown has that much? Or is it they have added more customers?

See, when I'm talking about volume growth, I'm talking about the totality. So if I want to give you growth of textiles has also been 40% in the year-on-year basis, number one. Number two, let's say, oil and gas, let's say -- I mean, let's talk about oil and gas for a moment. If you talk about oil and gas, most of the biggest companies is Oil India, ONGC or [Foreign Language] Reliance and this and that, okay? So obviously, companies in oil and gas segment, we have major customers has to be oil and gas or ONGC, I mean there is no debate about it. So this is not distributed fragmented markets like textile. Textile [Foreign Language], our top 10 customers will not contribute more than 30% of our business. Our top 10 products will not contribute more than 20% of our business because we are well spread. We have pretreatment, dyeing, finishing, printing solutions. We have like more than 1,500 SKUs, 1,400, 1,500 SKUs. So what I'm trying to say, textile is a fragmented market and detergents in oil and gas are not too fragmented, let me put it like that or -- and let's talk about FMCG and things, if you talk about the biggest names, let's say it is Patanjali, we are in Patanjali. It's -- I mean, there are regional heads also. I, in fact tell you, okay, in the top, it is Unilever and P&G okay? We are also going forward with them. It's on the last stage of things and many things are happening and shaping up. So that is a protocol. It takes 2 years. See the gestation period, let's say, put it for Patanjali, Patanjali today is almost INR 40,000 crores, INR 50,000 crores market company from the point of the product distribution of dant manjan, aloe veras and et cetera. Now for them to replace a chemical, which they have been using since 10 years from BSF and that is not an important area for them in the detergent. Detergent itself, it is not an important for Patanjali for that matter. [Foreign Language], which can affect their entire brand value because these days social media and anything goes here and there, there are a lot of people who blow it up. So the idea is that they take a very long gestation period. It's very, very high entry/exit barriers. Because they are in the FMCG sector, it's not a B2B, let's say, [Foreign Language] but it doesn't affect the Raymonds brand in the market, let's say, the products are stopped there. Let's say, a situation where Patanjali's products have been defective when it goes to the stores and it's called back. Just imagine the kind of blow up will be done by the other biggest multinational marketing guys. So one has to be very careful. It doesn't happen in a day, things takes time, and that is the best thing because the higher the entry barrier is, the higher the exit barrier is. So this is a kind of -- we just need a perseverance. We are on the right track. And I think that we are in the right thing because our competitors are also ironically, BSF and Dow do not have a plant in India. They need 3 months projection, 3 months of stock, supplying by dealers, supplying to all these companies, whereas we are supplying in tanker loads within 4 days. So that is also adding sustainability. Like when we are supplying tanker loads, it doesn't -- there is no plastic wastage and things like that. So there's been a lot of advantages. We are trying to capitalize on these things. We exactly know our strengths. And going forward, I think the -- this will be a good further growth on these aspects.

But if I can just push you for a specific number on the FMCG space, have we added -- as of now, the growth has come because of additional...

There are more than 100 customers. We have more than 100 customers in that space. Okay. And -- or maybe I think it's 120 by now because there are a lot many players and the regional guys also. And the regional guys products, I'll tell you when you go to the villages, you will not much find Unilever. Okay. And that market is not popular for our city life. And in fact, that products are much better than the city life. Because in cities, what we are doing, generally, we are washing clothes daily, we are in the air conditions, we're traveling by most of the facilities, but you talked about the villager, he's not washing the clothes daily, number one. And he's always in the open where there is sand, dust and everything and the water is very hard. So the efficiency of the product and the need of solutions are more in regional markets rather than the multinational European brands supplying to the cities mainly. So this is the answer, which I could give you. I think this is more important answer than what you are looking for, the kind of explanation broadly, which I have shared with you now because the psyche of the market is something which is not evident from the numbers or the earnings presentations and things, which can be only done in this kind of con calls.

[Operator Instructions] The next question is from the line of Rikin Shah from Omkara Capital. Rikin Shah, your line has been muted. May we request you to unmute it from your side please. No, sir, you're not audible. Sir, may I request you to use your handset. Sir may I request you to rejoin the queue, sir, your are not audible, sir. Sanjay sir, maybe we move to the next participant.

Yes, please.

The next question is from the line of Raj from KC Family Office.

Sanjayji, I just had this one question that because we expect the realization to go up, right, in the near term because of the geopolitical issues, do you think 29% EBITDA margin that we've achieved this quarter? Or is this -- there can be some upside risk here in the near term because the demand is very good, your realization will go up. So I would expect that we can have maybe another 100 basis points or at least to the positive direction of the EBITDA margin in the next 3, 4, 5 quarters. What's your sense on that?

So talking about the EBITDA margins in the last at least 8 con calls, which we had on earnings, every time I have been mentioning about this that the things are looking much better also because the new plant, which is already on the gear, full gear now almost. So it's a -- the kind of operational efficiencies we are getting is also helping us to reduce our cost. At the same time, there is a lot of product mix changing on the consumer preferences have been changing. People are asking more sustainable solutions or even detergents, for oil and gas also, we are able to crack a great kind of businesses coming up very soon and also in textile. So the kind of things which are falling in place is helping us to end to more specialty, high-end specialty chemicals. So the more and more we focus and the more and more these kinds of demands come up, I think it should be around what we have been doing in the last quarter, quarter 2 and quarter 3, like something like that, broadly speaking. But yes, definitely, these things do help us a lot. This kind of product mix, which helps us. Going forward, I think it is likely that the similar kind of product orders will go up. Average realization prices will also go up. So the absolute number, EBITDA will surely be more going in the right directions because once you average realization price goes up, so everything EBITDA values also go up. So I think that would be a right statement to make.

EBITDA might go up. But in terms of the percentage, that might go down because you might have to maybe increase RM cost as well. So in percentage terms, it might go down, but the absolute EBITDA could go up. Is that what you're saying? Sorry, if I understand that correctly?

If you talk a very, very short term, it's different things. Generally, when we do business with detergents and textiles, we do not have fixed price. It's not a tender business where we are locked for one year, okay? So generally, what happens is we generally have, let's say, 2 months of stock broadly and the orders are also more or less conformed for the next 2 months, 3 months and dispatches are on their requirements and things like that. So it doesn't extend to a lot of this thing. So even if whenever the raw material prices goes up, we have enough of room and time to convince the customers for the increase. And then we can always pass it on ahead. So generally, this is what happened in our routine business.

The next question is from the line of Aditya Agrawal from AMBIT GPC.

Sir, just one question. So in terms of -- so given your current order book, what kind of a volume growth rate you could probably drive for, let's say, FY '24 and next couple of years?

See, as we understand, in the last 10 quarters, there has been always a growth of at least 35% or 30% or maybe highest is also 50% basis also. And this is evident from the kind of response and interest coming from the customers, the growing demand and also the kind of new products, new geographies, new customers, we have been getting. So I think -- in fact, not only that, rather than I can say in the last 12 years of being listed last 50 quarters, you will always the -- I mean the last 12 years CAGR for the company is more than 28% on a 12 years basis. I'm not considering the last 3 years, which has been more -- much, much more than from the normal averages. So let me put it like that, that the times are good. And I mean, there are a lot of opportunities coming in to Make In India grow the business further, we are trying to get as much as opportunities we can. Organically, also, the kind of demand of the customers looks to be increasing now. The customers are looking at a better times now from 2022, it's already picked up a little bit. And I think this will go ahead now. So I think if you see the last few growth rates, I think, similar can be done in the coming years, coming quarters and years.

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Sanjay Tibrewala for closing comments.

Thank you very much participants. And I hope we could give you an insight of things which are not easily available from the con -- I mean, from the earnings presentation, et cetera. If you have any kind of further questions, please get in touch with our Investor Relations or our company, and we'll be more than happy to guide and update you with more accurate information. And great have a nice weekend ahead, and thank you very much for being there.

Thank you. On behalf of Fineotex Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.