I G Petrochemicals Limited (500199) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the I G Petrochemicals Limited Q1 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pramod Bhandari, CFO from I G Petrochemicals Limited. Thank you, and over to you, sir.

Thank you very much. Good afternoon, everybody. Hope everybody is doing well. On this call, we are joined by SGA, our Investor Relations adviser. I hope everyone had an opportunity to go through our financial results and investor presentation, which are actually uploaded on the stock exchange and on our company website. We will provide you a brief summary of recent industry changes, how IGPL is progressing. And post that, we can go through the operational and financial highlights. So in terms of the industry, as you know, that for last quarter demand pressure has been taking a point for the last quarter, which has tackled the growth momentum of many chemical manufacturers and end-user industry. Indices are holding back the mine to certain extent. Slow demand recovery in China and prolonged destocking continue across the globe, and the prices of all key chemicals, including the specialty chemicals were under pressure amid excessive supply. I would like to highlight that the demand and prices of Phthalic Anhydride were less affected as compared to the other specialty in the commodity chemicals. Phthalic Anhydride indices is timely served by a very few manufacturers in the global market and demand was marginally affected. Being the largest manufacturer in India and the second largest producer in the world, we wanted to highlight that the Phthalic Anhydride industry is an exclusive essential chemical, which is consumed by a wide spectrum of industry, where the demand is either stable or strong. Demand for Phthalic Anhydride has been firm from paying plasticizers, UPR. Over the last few years, we have witnessed a good demand from end users like CPC, pigments, specialty chemical, agrochemical. However, over the last few quarters, we have witnessed low volume pickup from these industries. Despite overcast conditions, our company has delivered a steady performance for the quarter gone by. I just wanted to give you a glimpse of the performance. IGPL is the largest producer of Phthalic in India. We manufacturer roughly like 222,000 metric ton per annum. We have 4 key products in our product portfolio, which is Phthalic Anhydride, we also produce the maleic anhydride, benzoic acid and DEP, which has been started around 1.5 year ago. We have all our manufacturing facilities [indiscernible] Taloja in Maharashtra. The plant is managed by a highly skilled workforce adhering to all the requirement protocols to meet high-quality standards. Coming to our operating performance, we have registered a quarterly revenue of INR 63 crores, and profitability stand at INR 36 crores. We have continued to maintain the business momentum despite uncertain external events and volatile pricing. On year-on-year basis, our performance are depleted due to 3 primary reasons. The first reason is the overall volume of the last quarter compared to the corresponding previous quarter was dropped by 10% due to the slowdown in some of the Specialty Chemical and Pigment segment. The second reason was the MAN, because as you are aware that the generally the MAN prices are 20% to 30% higher than the Phthalic prices. However, for the last quarter, it was 20% to 25% lower. That has actually impacted the profitability. And third, overall, the margin was between the INR 100 to INR 150 compared to average INR 200 for the last 3 to 4 years. We have seen some spread releasing in the last week, which we have seen some improvement at the end of July or starting from August. Price seems to be stable now and now recovering. For Q1 FY '24, the total revenue stands at INR 563 crores. The non-Phthalic product revenue contributed to around INR 44 crore, export contributed nearly 10% of the business, EBITDA stand at INR 67 crores, which is 11.8%, which is very similar to the last quarter. Profit after tax is INR 36 crores, a profit margin at INR 6.4 crores. As you are aware that the company's planned expansion of the Phthalic facility of 53,000 in our existing locations, Taloja, the brownfield expansion is estimated to cost around INR 350 crores and expected to complete by March 2024. Post PFI, our total capacity of Phthalic will be 275,000 tonne, which will add incremental revenue of around INR 500 crore. We wanted to expand our downstream derivative and plan to expand our footprint in the Indian export market, which will improve our overall operating leverage and boost our profitability. This expansion aim to diversify and increase the revenue pie of downstream products and other derivatives. As on date, the company has a very strong balance sheet with best-in-class working capital days, which is around 10 to 20 days. Post expansion, we are expecting a healthy cash flow in the business, which will further strengthen our company's position in the market. We believe that we have made a strong foundation for future by focusing on long-term growth. Overall, the demand for a few quarters will look slightly sluggish, but the company's foundation is strong enough to weather any volatility. With our additional capacity, we will be well-positioned to capitalize on the multiple prospects like growing domestic demand, import substitution. We will continue to add new product to our product basket, which will further add or help us to reach out the new clients and new industry. With this, I would like to conclude the presentation and open the floor for question and answers. Thank you.

[Operator Instructions] We'll take the first question from the line of Nirav Jimudia from Anvil Research.

So first question is on the capacity utilization, what we have achieved in 1Q of FY '24. So if you can let us know what was the capacity utilization? Because you mentioned that we sold some 10% lesser volumes on a Q-on-Q basis. So if you can share the capacity utilization for.

So last quarter, there was capacity utilization of around 90% to 95% if we extend it. Of course, there was a shutdown for 6 days, unplanned shutdown, which was recovered in a period of 5 to 6 days. The capital utilization extended remain 90% to 91%. Having said that, because of the sluggish demand and despite of orders, there was a lower offtake because then the inventory has gone up and we are able to sell around 45,000 to 46,000 tonne.

Okay. So when we started the Q2, where you also mentioned that now we have seen some improvement in the spreads, so do we -- were we carrying some inventories or high-cost inventories of the last quarter or, let's say, the low cost inventory of the last quarter because at the fag-end of the quarter, the prices have fallen and now they are recovering, so.

Yes. So basically, the prices have fallen. That's why the customer softness was not a problem in the downstream industry in some of the segment. And second when the prices were falling, the customer decided to restock and wait and watch. Now prices have stabilized and earlier started recovering. So we have seen the good demand in the market. And the inventory, whatever we have at the start and the end of this quarter, 50% of that is already being sold in the market in the current quarter.

Got it. And sir, if you can share which of the user industries we are seeing in term of this improvement, which has happened because you mentioned that CPC and some of the other user industries were facing some sort of problem. So which of the pockets you are seeing where we've been able to liquidate our inventories and seen this higher utilization?

We have seen good demand in paint segments and the plasticizer. Paint and plasticizer are actually doing well. Of course, the segment was actually impacted from the last quarter. We have seen slightly uptick, but it is not up to mark to get up to, you can say, 100% utilization and there was a slower demand because all other downstream petrochemicals or specialty chemicals, that prices have gone down. So overall demand in that segment has impacted because of China started destocking their inventory across all the chemical segment. So that has impacted the overall pricing as well as the margin for the downstream industry.

All right. So sir, let's say, when the pigments was doing well 1 year before, out of our total volumes, what was the contribution of pigments then and now?

I mean the contribution almost remain the same, which is 8% to 10% because some of the quantity which we were selling it to the plasticizer now we have allocated to the paints, specialty chemical and pigments. In terms of the quantum, it is hardly 1% or 2% difference, but we were expecting 5% to 10% growth. That has not happened.

Got it. But once the pigment starts picking up, coupled with the growth in your paints, then probably we will see those volume catch-up also happening from the pigment side?

Volume catch-up will happen from pigment side and then volume catch-up will also happen in the specialty chemical segment, which actually has been sluggish in last quarter.

Got it. Sir, is it possible to share, let's say, segment-wise.

I'll not be able to give you full segment-wise, but generally, paint and plasticizer include around 30% to 35%. The pigment UPR PVC is around 10% to 15%, balance is other chemicals.

Got it. So that other chemicals, which forms majority part of our volumes, which is close to 50%, could see an improvement, which could support our volume?

I think actually, the other chemical is 25%, which includes the specialty chemical, agrochemical, UPR and other segments.

Sir, second question is on the conversion cost because when you break down your conversion cost, last year, we were at around INR 250 crores fixed plus variable. And if we then break it down between the variable and the fixed cost based on the details given in the Annual Report, it's like INR 100 crores of variable cost and INR 150 crores of fixed cost. So I just wanted to understand.

I will give you in the dollar term. The total cost was around $158 per tonne, okay. $73 was the conversion cost and balance was around $80 per tonne. So $73 and $85 is the breakup of conversion costs, $73 is the conversion cost and $85 is the other cost. So total cost is $158. It includes all fixed expenditure, variable expenditure, interest and all type of things which is debited in the P&L in Annual Report.

Got it, sir. Sir, I just want to understand from here, let's say, when we will commission this 53,000 tonnes of plant, it's at the same location. So probably our fixed costs won't go up in tandem with the --

Typically, today the conversion cost is $70 to $73, and the fixed cost, which include all other costs is around $80 to $85. So that cost will go down because there will be addition of around 20% of capacity. The net cost should ideally be around $70 to $75.

So $12 savings could come on the incremental volumes, which we will sell in the market.

Correct. So overall, you can say from $158, our cost would be around $150, $151, total cost, including conversion, fixed and variable.

[Operator Instructions] We take the next question from the line of Aditya Khetan from SMIFS Institutional.

Sir, first question is, in your opening remarks, you had mentioned that PAN demand was less affected as compared to other commodity chemicals. Is there any data point which you can quantify with this, because, sir, the prices of PAN have declined by 20%, 25% on quarter-on-quarter basis.

So demand of PAN almost remains same in domestic market. There was an import of around 30,000 tonnes to 31,000 tonnes and the balance is sold by the other players in domestic market. So overall demand, if you see in terms of the PAN, it has not been impacted in domestic market. Of course, China is able to sell the product at lower cost because across the board, they were destocking and then they are selling all the chemicals at marginal costs or slightly better than marginal cost. That has impacted the prices across the board. Now I think that destocking is over. We have seen a stabilization of PAN prices and actually improvement of [indiscernible].

But sir, anyway, China was not a dominant player in PAM business, I think South India was the dominant player.

I understand, but the last quarter, the highest import is happening from China and Taiwan, South Korea was number fourth. Negligible.

Okay. Because earlier sir, what I believe like -- so South Korea used to import around the -- of the total imports of India, around 55% to 60% was from South Korea. Now you're saying, sir, this figure has changed to how much?

Now South Korea is selling 3,000 to 4,000 tons hardly because one of the plant in South Korea has discontinued or stopped the operation. And balance, we are selling it. I think the first is China. And generally, this is the period, April, May, June, when China generally do the destocking of all their chemicals. So not only for Phthalic, across the board, they sell the chemicals, that has actually reduced the prices as well as margins for most of the specialty chemical and chemical companies. Now that destocking is over, we have seen the increment in the prices across all the chemicals.

Okay. And sir, the decline in PAN prices, like what we had witnessed over quarter-on-quarter basis, that was quite steep. So what makes you comfortable like now the prices have corrected and they have started to move up, but considering demand is still --

Prices had evolved down to around INR 90 to INR 92. Today, when we are talking, it is INR 100 to INR 102.

Okay. And similarly, sir, how would be the trend of our orthoxylene prices?

Ortho has remained in the same, between INR 85 to INR 90.

INR 85 to INR 90. Okay. And sir, any idea like so I think -- so July month also, the spread actually have contracted, like when we look on month-on-month basis. So do you think the --

So July is difficult month because of the 2 reasons. One, is the prices and second, when you are producing and you are holding the inventory and suddenly prices have gone up, then customer rather than buy will come into the wait and watch mode. Now since prices has started increasing, you see the surge in demand because all the guys who were able to do their destocking over their stocks, now they wanted to fill their stock and wanted to do consume the Phthalic required for their operation. So whatever is the deficit generally you have in the month of July, we have seen the improvement in August, and we believe that August-September we will see the improvement over July.

Okay. So there is a chance like on a quarter-on-quarter basis, spreads can move up considering August and September would be --

July was not, but let's hope, September for will be bad -- sorry, August-September will be improvement from July.

Okay. And sir, I believe, sir, for FY '24, we are -- so we would not be sitting on volume growth, considering if spreads also, they have been a concern. How you think in FY '24, any guidance on top line or EBITDA or we would be within --

I think as a company, we don't want to give any guidance in terms of the profitability because it's purely market determined. The profits, if you ask me, is not that much impacted from Phthalic because of the Maleic because typically, we are adding INR 120 crores to INR 130 crores of the revenue from Maleic, which directly is translated to EBITDA, which has reduced to now INR 60 crores per annum because the prices of the Maleic Anhydride has gone below INR 80 per kg, which generally if the Phthalic is INR 100 then Maleic INR 120. So now it is below it. You can understand that. That has also impacted the profitability overall.

Okay. And sir, these volumes of 45,000 to 46,000 tonnes, this will rebound next quarter, so to the normalized range of 51,000 tonnes.

Yes. Around 49,000, 50,000, 51,000. This is the range. So I will not say 70,000 tonnes. Generally it's between 16,000 to 17,000 is the range.

We take the next question from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, last quarter, your guidance, our margins in steady sales would be around $150 to $200 per tonne. So what kind of timeline do you see based on the experience and on the market situation right now that when can we achieve this on our book?

Last quarter margins were actually between $150 to $200. Right now, it was moving at $100 to $150. We are seeing some improvement. But apart from the Phthalic margin, it is the Maleic prices which need to improve because the guys were making [indiscernible] making cash losses. So for us, the only to privilege is that whatever we are producing, we are selling is translated to EBITDA because hardly any cost for the Maleic. The overall profitability will improve when we see the improvement in the Maleic prices because that account is going to account for around INR 120 crores to INR 130 crores per year. That will be the big proportion. And second is the overall improvement in the Phthalic prices. And third, we have achieved around optimum capacity or you can say around 7,500 to 8,000 tonnes in the DEP. That is priced better than the Phthalic Anhydride. So that is also adding to our margin overall.

Okay. And sir, could you give me some kind of timeline on when we can see margins going to steady state again?

So there is no timeline, which I can give because it's all demand-supply in the overall market. But since I'm seeing that demand continue to remain robust in domestic market. So overall, the global market also, demand is recovering. So I believe probably in the next 1 or 2 quarters, there will be end and there will be a stabilization in the pricing and the margin for all the chemicals including Phthalic.

And sir, the quality control effect that the government had initiated to protect that. So are you seeing some kind of positive impact from that? And could you just explain how like -- is China, we know that China is cost competitive. So can you just highlight on the China issue little bit more?

So China was the biggest seller to domestic market for the last quarter. Government has introduced the quality standard to check that all the Phthalic which is being importing into India is complying with the norms setup by the government. So there are some places where they are doing Phthalic, not in other places where the quality is not up to standard. So that will not be able to come to India now. So that is one. Now all the Phthalic imported in India will be up to the quality standard set up by the government.

Okay. Sir, so will this help the domestic industry? And are you seeing some kind of positive impact from this policy by the government?

There will be certainly positive impact, but it's too early to judge that because they have just implemented in June, and we are just talking about the June quarter. You need to wait for 1 or 2 quarters to see the real impact.

Okay, sure. That would work. Sir, my next question is you are moving into biogas and ethanol production, which is an even more commoditized product. And so what kind of IRR are you expecting from the sale?

Right now, we are evaluating the project. This is not correct for me to discuss about the commercial part. Once we finalize the project and planning to implement, then it will be the right time to discuss about it.

And my final question would be we highlighted on [indiscernible] into some of the chemical specialty derivatives. So could you just highlight on that? And what kind of --

So that is under process. I think that is under process. And very soon, we will give at good deals because we are waiting the approval from the government, environmental approval. Once the approval is received, then we will be able to disclose the permit domain.

We take the next question from the line of Yogesh Bhatia from Sequent Investments.

I'm slightly new to this company. So I wanted to understand that Phthalic and Maleic Anhydride, these chemicals, what are the few factors that you think are probably the reason that the realizations have probably bottomed out for us or if that's not the case?

The reason is very simple because the Phthalic is very generalized essential commodity, if you look at all chemical companies, which is around all 180, around 170 to 140 companies use this. So this is required in all chemicals, with paint, plasticizer, pigment, PVCs, agro-chemicals, specialty chemical, UPR, you name the chemical, you name the company, I think most of the companies in chemical industry are our customers. So a chemical, which is widely used across all spectrum of chemistry and India is being seen as the next growth engine for the speciality and downstream chemicals. So there is no reason that the growth will not happen. All chemical companies in India are growing in the downstream in the specialty chemical, agrochemical in all sites. And they all need because it is basically a raw material intermediary for most of the chemistry.

I understand that the volume offtake is there, which is also visible in this quarter also and your costs are fixed, right, and profitability can only increase if realizations go up. So is there a logic that China destocking is towards the fag-end or things like that?

They generally do in April, May, June. That is their general phenomenon happening in last 10 years. Every time there will be destocking the trade base. So the margin is the industrial. So now we have seen the uptick in the margin for the Phthalic Anhydride. For the Maleic, it is yet to be improved. Believe me, the profitability could have been more than INR 12 crores higher in the last quarter if the Maleic prices were historically at the same level, which is 20% above the Phthalic prices. But right now, they are 25% below the Phthalic prices. Our profitability could have been INR 50 crores plus for the quarter, last quarter. But the Maleic price, which ideally has to be INR 120 to INR 130 if Phthalic is INR 100, it is right now at INR 78. That has impacted the overall profitability.

We take the next question from the line of Nirav Jimudia from Anvil Research.

So sir, when we say that we incur catalyst cost on -- for one of the catalysts generally take a shutdown in a year and we incur those expenses, where does it actually fit into? So does it form a part of our repairs and expenditure or are they clubbed under any other heads?

They club as a part of the other expenditure, and when you incur expenditure for the catalyst, since the catalyst is used for 3 years to 3.5 years, it is spread over the period of 3 years.

Okay. So let's say, if the cost is INR 30 crores, INR 10 crores gets debited in the P&L over the next 3 years.

Correct.

Got it. And sir, second question is, you mentioned that like last quarter, the gross margins were in the range of $150 to $200, which in Q1 had fallen between $100 to $150. And there were some lesser volumes also being sold in Q1. Despite of that, our profitability has been resilient. So they have not fallen dramatically in between the quarters. So if you can just explain that. And out of that --

Yes. The reason is, for the first 2 months, April, May were good for the Phthalic as well as Maleic. In June, we have seen the downfall of Phthalic, Maleic margin, that is number one. And number second, so that's why if the June would have been same, the profitability would have been more than INR 50 crores. And June was really, really, very hard in terms of the overall decline in prices. Number second, the Maleic prices have gone down drastically. Like I mentioned, typically when Phthalic is INR 100, the Maleic is INR 120 to INR 125. Right now, it is INR 75. So it's the other way around. That has impacted the profitability of gross margin by at least, say, INR 10 crores to INR 15 crores. And third is some contribution has come from the DEP. We are now able to achieve around 650 to 700 tonnes per month of the DEP, which we are selling around 10% to 20% higher than the Phthalic prices. So that has also given a flip to the overall profitability. So that's why in spite of the lower margin, you see the last quarter and this quarter, profitability remains same in spite of lower sales.

Got it. So let's say, sir, when we were in the month of June, let's say, considering our monthly production in the range of 14,000 to 15,000 tonnes, what was the closing inventory of the lower prices, which we were carrying, which we liquidated probably in Q2? That's number one. And second question to this is out of let's say INR 42 crores of non-Phthalic revenue, which we have done in Q1 of FY '21, what was the breakup between Maleic, benzoic acid as well as our DEP?

So let me answer your second question first. The Maleic was INR 15 crores and then balance INR 24 crore was the DEP and the Benzoic acids. And when you're talking about inventory generally, we don't carry much inventory because whatever is the process, and we have advanced order, we are able to sell it out. This time, it happened when the order was booked, price was fixed, but the customer was not ready to offtake. That has created a slightly higher inventory. Typically, we maintained 3,000 to 4,000 tonnes. And this quarter, it was 8,000 to 9,000 tonnes. But now it will go down again because there is a good demand surge in the month of July and August. So inventory was just higher by 2,000 to 3,000 tonnes, and now it is being recaptured and then sales is going as usual.

Got it. So that would give us some extra margins probably in Q2, plus the utilization levels also improving?

Utilization, I think it will remain same, 90% to 91%, which is 16,000 to 16,500 is the average we are producing every month.

[Operator Instructions] We take the next question from the line of Aditya Khetan from SMIFS Institutional.

Sir, to the earlier participant, you mentioned that INR 10 crores to INR 15 crore impact on gross profit was because of the Maleic Anhydride price decline? [indiscernible] cycle, and if you have seen how long this cycle has lasted if ever, historically, you have seen such phenomena?

Historically, if you look at last 10 years or 20 years, probably 1 or 2 times in last 20 years, it has seemed that the Maleic prices have gone down below Phthalic. It has rarely happened in last 20 years. Probably this time, and I remember somewhere in 2001-'02 or say '97, '98 it happened. So basically, the Phthalic prices, Maleic prices are always higher than Phthalic because it costs more to produce this. But this time, it is not only the Maleic prices below, but they are below by 20% to 25% with a huge gap. So that is going to impact all the Maleic producers. Because right now, anybody who is using the Butane route of producing the Maleic, they will be making the operating loss.

So typically, this would be a monthly kind of a thing, right? It should last for some months, and again, the prices rebound.

Probably 1 or 2 quarters, it has to, because all the downstream product, which is produced from Maleic, which is like VDO, PBAT, THF, all other products, they all are impacted. So ultimately, the price has to go up. There is no second thought on that. But question is when. Probably 1 or 2 quarters more to go.

We take the next question from the line of Keshav Garg from Counter Cyclical PMS.

Sir, I'm trying to understand that in your investor presentation, one I G biofuel you have mentioned where -- sir, so is this our CSR division or what kind of higher we are expecting from constrained biogas?

So right now, it's not CSR division. This is the new complete floating or acquired by IGPL, which is a 100% subsidiary of ICT. We are planning to evaluate various green chemicals under this, which include ethanol, its derivatives, [CBG]. And once we finalize our plan, we will come back to you, post our board approval and then discuss about the what product or plant we are going to implement in that company. But essentially, that company is for all green chemistry.

Sir, so the basic thing is only yesterday in newspaper, it had come that parliamentary panel had pulled up oil ministry that oil marketing PSUs are not interested in investing in a compressed biogas because it is unviable. So government companies are wary of getting into this, but somehow, we have floated one company, acquired one company, but still plans are not finalized, but company has been floated.

Company has been floated, not for CBG only. That's why I'm saying it is the green chemistry. We are working on 3 areas simultaneously on green chemistry, and we wanted a separate company for green chemistry, which is different from I G, which is working on getting into the chemistry of fossil fuel base. The green chemistry will be not based on the fossil fuel, number one. Number two, the article which you have read is talking about the CBG, which is converted from the right stock and one more product. There are 6 or 5 methods to manufacture the CBG. So I'm not commenting right now which method we are looking at. There are multiple ways to do it to CBG. The newspaper article was referring to a particular way, which is not viable, which is true. But there are other ways, which is the net air graph, you can go to CBG, which is in Thailand. There are other ways, raise the stock, can go to CBG, and then there is a bio-waste of cow, you can go to CBG. So we are right now evaluating various ways how you can get into CBG. Why CBG, because we believe that it is a future. In terms of the CBG will be finally blended with the CNG, 20% government may come out with the policy. Like ethanol, it will be. So right now, we are evaluating. We have not finalized any plan. We are evaluating. Once we finalize any plan, I think that will be the right time to discuss about that.

As far as ethanol is concerned, sir, sugar companies getting into ethanol makes sense. But for our company, and sir, every Tom, Dick and Harry is getting into ethanol. There will soon be overcapacity, whereas CNG penetration is increasing, EV penetration is increasing. After 10 years, there will be no takers for this. So please --

So let me clarify you. We are evaluating not only for the purpose of ethanol. We are looking at the downstream chemistry of ethanol. Right now, all the players are either the politicians or the farmer. They are into that business. We are a chemical company. We are always looking at the chemistry side of the product. So if at all we are getting into ethanol, we are not getting into for the purpose of ethanol. Ethanol is just a start point. We will be looking at the downstream chemistry of ethanol.

Sure. Sir, I'm just trying to understand one thing. Before embarking on any CapEx, what is the IRR that you --

Minimum 15%. If any project has less than 15% IRR, it's strict no from the board.

Okay, that is very reassuring.

It's 100%. By the way, we have rejected 2 proposal, including a JV in last 6 months, because the IRR was less than 15%.

Okay, sir. That is good to know. And sir, just one last thing. Are we seeing any improvement in the PA prices? And what is the outlook going forward? Do you think that our performance has bottomed out or is the trend continuing?

I think we have seen improvement in the pay prices because when the price is stabilized, OX prices is going up, we have seen the PA prices touching to around INR 94, INR 95 in the month of July. Now it is hovering around INR 100 to INR 102. We have seen whenever there is a decline, I'm just talking about the last 20 years. Whenever there is a decline in the prices of the OX, everybody in the end consumer industry getting into wait and watch mode, because they wanted it to stabilize. So they started doing the destocking of their inventory. Once the price is stabilized and slightly going up, you will see the sudden surge in the demand of all the downstream industries. So that is what we are witnessing today. So July was one when we have seen the bottoming out. Now we have seen 8% to 10% improvement in last 10 days.

[Operator Instructions] We take the next question from the line of Mr. Aditya Khetan from SMIFS.

Sir, I had a question on to the DEP side. Sir, you stated that we are running at 700 tonnes per month. So that seems we are operating at full utilization levels for DEP. So recently you also had a plan to expand this capacity from 8,400 tonnes to around 14,000 tonnes, 15,000 tonnes, that too with minimal CapEx. So that is on the pipeline right now?

That we will look at post commissioning of PA5.

But sir, this so you can do a very minimal CapEx, right. I believe you had also mentioned in your planned visit also it's INR 2 crores to INR 2.5 crores.

I understand it. Your question is not of CapEx. Right now, the entire concentration is to operationalize the PA5, which is 53,000 tonnes. Then all the equipment of the PA5, which is lying at the site will be segregated and built up in PA5, then we will look at this [indiscernible].

Okay. And sir, this PA5, which we are building. So generally, what we know the I G has some 7% to 8% additional yield for making PAN from orthoxylene. So this new PA5 does it come with so with better yields or with lower cost? Is there anything new or it will be different?

It's not ideal everybody buying the similar equipment, similar technology, everybody have same type of res.

Business will not improve.

Yes, it will remain the same.

Sir, on to the technological tie-up, so we had it from Germany. I think our competitors are not having that. So that does not -- any comments?

I will not like to comment what they have because I have no idea about that. But if you are buying a particular technology because we are using the technology for last 3 to 4 decades, and we have that experience of operating the similar equipment. So we are sure that we will be able to get a similar type of yield on our products.

Okay. Sir, just the last question, sir, on to the capacity addition. So any idea like how much our competitor in India and globally, they are adding capacity?

So I think apart from India, hardly any capacities coming up, except 1 or 2 plants may come up in China because they are looking at integration of Phthalic and Maleic and other things. But in Europe and America, I don't find any even news also to set up any plant. Suffice, the demand of Phthalic is growing continuously.

So what would be the quantum of this, China? Like any capacity figure, if you can say.

I am not sure about, but I think between 50,000 tonne to 100,000 tonne.

And sir, in India, so [indiscernible], any idea like how much they are looking to add for the next 2 years?

I think you need to ask them. They don't share the information with us.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Pramod Bhandari for closing comments. Thank you, and over to you, sir.

Thank you very much for joining us today on the earning call. The only comment I need to make is when we are in a chemical or especially chemical commodity chemical company, patience is the key, India is a great growth story. There is a good consumption of all type of chemicals and the chemistry is happening in India. Today, India is around 3% to 4% of overall chemical consumption in the world, which is growing very well compared to China, 2008 China was similar, but China today comprises around 37% to 38% of the global chemical manufacturing. So Indian story for the chemical has just started. It's a long way to go. Thank you very much. If you have any query, please contact our Investor Relation adviser, SGA, or directly send a mail to me. Thank you very much. Bye.

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