India Glycols Limited (500201) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the India Glycols Limited Q3 and 9 Months FY '25 Conference Call hosted by Nuvama Wealth Research. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Pawan Bhatia from Nuvama Wealth Research. Thank you, and over to you, sir.

Good evening, everyone. Thank you for joining us on India Glycols Limited Q3 and 9 Month FY '25 Result Conference Call. I would like to thank the management for giving us this opportunity to host the call and congratulate them on a good set of numbers. We are joined on this call with India Glycols management represented by Mr. Rupark Sarswat, Chief Executive Officer, Mr. Anand Singhal, the Chief Financial Officer, Mr. Rajesh Marwaha, Head Sales and Marketing, BSPC, Mr. S.K. Shukla, Head, Liquor Business; and Mr. Ankur Jain, Head, Legal and Company Secretary. I would like to invite Mr. Rupark Sarswat to initiate this proceeding with his opening remarks, post which we will have a Q&A session. Thank you, and over to you, sir.

Yes. So a very good afternoon to everybody, and thank you for joining us for this call. We have several topics on the agenda to talk about today. And of course, we will talk about the business performance and the 9 month highlights as well as highlights for the quarter. But equally importantly, we will also talk about the initiation of the scheme, which proposes to restructure IGL into 3 demerged identities. So what I will do to start off is to give you a little bit of highlight in terms of the business, and we'll come to the details later on. And a very high-level view of the restructuring in terms of getting the gist of it. Then I will request my colleague, Mr. Anand Singhal, to take you through the details about the scheme, the demerger and how it's going to be implemented and the mechanisms that we will adopt to achieve that and so on. And then we will have some more commentary on various businesses. And after that, we will be happy to take your questions. So let me, as usual, start with how our performance has been. I recognize that what we shared with you are EBIT numbers. So in order to explain the business sometimes, especially because there is some declassification of businesses involved, I will be referring to EBITDA or margin numbers as well. That is just to make sure that I'm talking about and setting the right context. So as you know, from a business performance perspective, we've had a good set of numbers to report. So if you look at the 9 month performance, our net turnover at INR 2,905 crores is up 22.7%. Gross turnover is up 16.45%. Our EBITDA for the 9 months at INR 376 crores is up 19.9%, and we continue to clock decent margins of about 12.95%. Now various segments have driven this growth, particularly Bio Fuels has driven top line growth. Similarly, we've had excellent growth in Potable Spirits. And we've had some top line growth in Ennature Biopharma as well. And chemical business has been slow, but I will explain that because the core businesses where we sell chemicals has actually done reasonably well, and I will explain that later on. In short, we have seen excellent growth, as I said, in Bio Fuels and the capacities that we've added have served top line growth as well as bottom line growth, and we've contributed to the blending program, which is on track. So in the Potable Spirits space, as I said, excellent growth both in IMFL and country liquor. We will talk about it in somewhat more detail subsequently. We've had a slightly weak quarter for chemicals but for the operating business, if you exclude the JV and some business that we adjusted, we've actually had excellent margin growth. There has been strong sales growth in Ennature Biopharma. However, as we've spoken earlier, both for the Nicotine and Thiocolchicoside business, our margins have been under pressure. And we have been talking to you about new specialties. Of course, these kind of businesses have a gestation period. And I'm happy to state that whilst you do not see so much in numbers, and I will talk about the businesses going forward, we are quite happy with the progress that we've made in terms of projects. We are working with reputed companies. Many of our projects and products have been approved, and we are on track to generate significant commercial sales, not only in this year, but also for the years ahead. In addition to that, I think the joint venture performance has also been very good, where for the quarter itself, sales are up 12%, but the EBITDA for the joint venture is up 75%. Now this is similar, the EBITDA margins for the JV were up as well. One of the key reasons, of course, is lowering of the feedstock price differential for them. We generally -- they compare with [ Reliance Jio ]. And also, there has been a focus on improving the product mix as well as greater focus on exports. So that's a high-level commentary on the business. We will talk about segments going forward. But let me go back to the restructuring scheme that has been announced. As I said, Mr. Singhal will tell you more about the details of the scheme. But let me give you a macro view of what the proposed business structure is, what is the rationale behind it and so on. So essentially, what we are trying to do is to restructure these businesses into 3 separate companies for the time being within the IGL Group. And the whole idea behind this is to run these companies differently. They have different focuses to provide them much more focus and also to allow potential investments in different businesses because different investors tend to have a different focus for the investment. So in that sense, there is a potential to unlock value going forward. So that is at a high level in terms of what the business restructuring is about. So what you will see is right now, we report Bio-Based Specialties and Performance Chemicals, which is a business of -- if you look at the existing structure for FY '24, which is a top line of close to INR 1,626 crores. And then for FY '24, Bio-Fuels was close to INR 512 crores. IMFL at a gross level was INR 5,574 crores. And the net number for IMFL for FY 2024 would be lesser, but that's a gross number. Now the plan is to have a chemicals business, which focuses on green chemicals and specialty products, which includes glycols, Bio-Glycols, new specialties, industrial gases and so on. This on a like-to-like basis will be a slightly lower turnover because some of the products will go with what will be the Ennature Biopharma business. The second will be the IGL Spirits business, which will have spirits, of course, IMFL and country liquor, but it will also have the alcohol business or the Bio-Fuel business going with it. And the third one will be Ennature Biopharma, which will be Ennature as it is right now and also taking the Bio-Polymers business, which is a small business from chemicals and putting it into Ennature Biopharma. So we believe that this will allow us to run these businesses in a much more focused manner. They have slightly different priorities, different markets, different drivers and therefore, grow these businesses independently to create more value. I will pause now, and I will request Mr. Singhal to brief you on the details of the scheme.

Thank you, sir. So now the Board in its meeting on 4th February has largely approved 2 proposals. One is the merger of Kashipur Holding, which is a holding company for India Glycols and demerger of the business into 2 separate entity. One is the IGL Spirits, the other one is Ennature Biopharma. So presentation is already with everybody. So now everybody can see, but I will largely give you the brief on what is the proposal, although CEO Sir has already given, main, main things. So now for the new company, the India Glycols, which is the chemical business largely for 9 months, this company had a turnover of INR 1,079 crores with an EBITDA margin of 13.6%. The IGL Spirit, which is proposed to be the other company, which will be having the liquor business and the Bio-Fuel business is having 9 months turnover of INR 1,628 crores. This is on net basis with 14.4% EBITDA margin. The Ennature Biopharma, which has the biopharma means the herbal division plus the Bio-Polymer, which is a guar gum business, is having the turnover of INR 178 crores for the 9 months with having an EBITDA margin of 14.9%. So this is what the proposal for demerging these 3 companies. The merger of Kashipur Holding, a company with India Glycols is largely keeping in mind that the promoters will have the direct shareholding of IGL in their names. The benefits for the -- the main benefits, I will say, for the proposed scheme will be -- the demerger will enable independent growth for each businesses. Separating the business will reduce the risk of one business affecting the others, will create a potential to unlock value for the shareholders by drawing focused investors. Each business will have a clear focus, leading to improved management and resource allocation. So this is what we think that, that will be the main proposed benefits for the proposed scheme. And rest of the presentation is already with you. And I will pause here and we'll say -- we'll take up if any questions during our question and answer session.

So there are 2 things. Anand ji, would you like to brief on the financial results first, then I will give a little bit of sector commentary then we can take that.

Okay. So on the financial performance for the Q3 '25, in the current quarter from October to December '24, we have a gross revenue of INR 2,424 crores, INR 2,424 crores with a net revenue of INR 975 crores. If we compare this with the last quarter, same period last year, we have a growth of, say, about 8%. The EBITDA in these 9 months is INR 129 crores vis-a-vis INR 107 crores in the last year same quarter with -- showing an growth of 21%, while the PAT and PAT margin is INR 57 crores vis-a-vis INR 42 crores, showing about 37% growth. If we see the 9 months results, so in 9 months, the gross revenue is INR 6,850 crores, vis-a-vis INR 5,882 crores showing an growth of 17%. The net revenue is INR 2,905 crores vis-a-vis INR 2,368 crores, showing an growth of 23%. The EBITDA is INR 378 crores in the 9 months vis-a-vis INR 319 crores in the last year 9 month, showing an increase of 19% and PAT is INR 167 crores vis-a-vis INR 131 crores in the last year, showing an increase of 28%. So basically, if we will see the company has shown a very good results in all round growth and what I can say -- and good results, I will say.

Okay. Thank you, Anand ji. What we will do is we will very, very briefly touch upon segmental commentary, and then we can go to question and answers. So yes, I had mentioned to you about 9 months results, while I had skipped the quarterly results, which you have already seen though. So the net turnover at INR 975 crores is up 7.9%, but there's an excellent EBITDA growth for the quarter at 20.68% and a much better EBITDA margin of 13.3%. So if I look at the 9 month performance or the performance for different sectors, and I'm -- so for the chemicals business, for example, for the 9 months, we see a top line degrowth of 8%. And for the quarter, it is appearing 30% decline. However, I may like to add here that in some senses, it is -- it needs the right interpretation because we've had some declassification of products as we are preparing for the restructuring of the business, where some of the byproducts that [ DDGS ] were in the earlier quarters reported along with chemicals. So that makes you see a bit of a degrowth, which is not exactly representative for these numbers, and I will give you the commentary so that there is clarity. There is nothing wrong here. It is just a matter of interpretation. Similarly, our Bio-Fuels business at INR 770 crores for 9 months is up 135% for 9 months, and it is 79% up for the quarter. Our Potable Spirits business at INR 858 crores for 9 months is up 25% and at INR 325 crores, it is up 37%. And our Ennature Biopharma business at INR 169 crores for 9 months is up 14% and for the quarter, it is up 4%. So if you look at an EBITDA margin level, I know you -- what the numbers that you have are EBIT numbers, so I'm not going to repeat them because those you already have. The Chemicals business has seen a moderate decline of about 5%. Now again, this is for some of the readjustments that we spoke about. Bio-Fuels up 135%; Potable Spirits, excellent growth at 42%. Ennature Biopharma, the margins have declined, mainly even though the top line has increased is because of the cost pressures that we have spoken about. I spoke about the joint venture, another number that I will talk about. What has also happened that in some ways, some of the toughest signs that we faced are past. The price differential between crude-based ethylene oxide and bio-based ethylene oxide, which at one point in time had increased to in excess of 40%, which means bio-based ethylene oxide was more expensive, is now down to a much more manageable 15%, which has reflected in much better results for the joint venture and also much better margins and profitability in some of our Chemicals businesses, which were under pressure. So we continue to, as you know, import ethanol for a significant part of our chemicals business. It is because it is a much more lower cost option for us than procuring or even manufacturing ethanol using grain or molasses in-house. There are certain chemicals, which demand molasses-based ethanol. Those, of course, we supply on that basis. Now a very high-level commentary in terms of our sectors. So I mentioned to you about the Bio-Fuels program. Whilst you will be tracking this industry, I think the interesting thing is that from '19-'20, where the government targeted a 5% blending, they achieved 5% blending and in 2021, they targeted 10%, but achieved 8% blending. In '21-'22, they target 10%, achieved 10%. '22-'23 targeted 12%, achieved 12.1%. In '23-'24, achieved -- targeted 15%, achieved 4.6%; '24-'25, targeted 18%, achieved 18%. So I have read these numbers out for a specific reason. I remember having been with you in discussions earlier where you all asked questions about how is the blending program going, how much will get blended. And I kept on saying that while there will be ups and downs based on various factors, at a macro level, given the strategy for the blending program, which was based on increasing farm sector incomes, utilizing grain that we have, reducing Forex outflow, et cetera, this strategy is correct and which is also reflective that the blending program is on track. And it was, in that sense, a good decision for us to participate in that. So -- and we expect that the 20% target for next year would also, therefore be --would be on track. So amongst very few government-driven programs that you see for the last few years, every single year, more or less, except 2021 because of other reasons and then we caught up has been completely as per target. So that's a good thing. And we expect that further for -- we've done about INR 11.7 crores YTD in terms of liters, in terms of volume, INR 770 crores in terms of top line. We expect '24-'25 would be more or less in line, and we would more or less be doing possibly, hopefully, close to 15 crore liters of sales for Bio-Fuels. We do track several parameters that you several times asked questions for us. I think the government from time to time has been giving price increases based on cost increases. There are important factors, which is grain price and DDGS price, which are important from a margin perspective. The price, of course, is determined by the government. There is also some bit of positive news on this front that the government has released significant quantity of more FCI rice at a cheaper price into the market, which means that the grain price, which had gone up to INR 27, INR 28 is expected to be lower in the quarters to follow. And hopefully, of course, it is dependent on a few other factors, it will lead to improved margins for the business. So not only would be the FCI rice be cheaper, but I think as you introduce and put that in the market, the market factors drive other private players selling their rice also lower. We talked about the Chemicals business. If I take out what we sell to the joint venture, of course, there is a separate dynamics here. We are -- that's part of an agreement. And the benefit of what we do with the joint venture also comes to us in terms of, of course, profit sharing where we own 49% of the joint venture. But if you look at the core business and if I take out ethanol and some of the other categories, I would like to -- for a little bit of reassurance about this business that for the 9 months, for these businesses, which includes glycols, glycol ethers, glycols, new specialties, Bio-Polymers, gases and EO Sales, our top line is actually up 30% and our margin -- gross margin is actually up 58%. So I wanted to make this point because your obvious question about the numbers of chemicals is therefore addressed. Yes. So that is broadly the commentary from my side. And I would request Raju ji to give a little bit of commentary on Potable Spirits, particularly IMFL. I think it is important for us for 2 reasons. One is that one of the significant rationales for us is to provide the focus on the IMFL business. So we -- which you know is a very interesting business going forward. There's a lot of interest in the market. And I was just going through some of the number. So the business -- the Potable Spirits business in India, which is expected to be about $56 billion in 2025, is expected to grow at 7.2% going up to about $112 billion in 2034. And there are, of course, various factors driving this, right, from premiumization to even health and wellness, therefore, people investing in better spirits to change in demographics, digital, et cetera. And we've also had a partnership with Amrut, which is a good milestone that I'm sure Mr. Raju will like to talk about. And then we can take questions. Raju ji?

Hello, I'm Raju Vaziraney speaking. I am a liquor man throughout. I served as CEO and President of Radico Khaitan for 13 years. I was with Shaw Wallace for 11 years. So for whatever reason, I've stayed with liquor. Now I joined this organization just over 4 years ago. Once I joined, we realized that we have got hidden potential of our ENA quality. ENA is Extra Neutral Alcohol, as you know. And also, we co-pack for Bacardi, which is the third largest liquor company in the world. So perhaps that was the reason I was hired. And we felt that while we have made our mark in country liquor, we are leaders both in our -- both the home states of Uttar Pradesh as well as Uttarakhand, where our state-of-the-art distilleries are located. But the potential or we say the growth potential is in IMFL, particularly premium. Like our CEO rightly mentioned, premiumization story sells all over the world because India has captive consumption. And I don't have to go into demographic details, but the demographic dividend, as you say, is in favor of liquor because to put it in simple words, Australia is added every year in India as far as consumers are concerned to more than 20 million people -- consumers. So there is huge potential. And while the industry -- IMFL industry is growing at 7% to 8%, it also goes up to 8% to 9%. The premium industry is growing at more than 20%. So we -- the top management sat down and we said, while we have got traditional brands like Soulmate Blu, which is a millionaire brand, which has done more than 10 lakh cases last year. But we were a very shy company. We would not talk much about liquor because IMFL was still small. But then we felt the need to do premiumization of our brands. And as we say in marketing, we felt the need gap. The need gap in the consumer's mind was there in vodka particularly. So just to mention that the top MNCs do not have a vodka brand. Only Radico Khaitan, which is a prominent player and a leader brand has a successful vodka. So -- and there was always a room for a second player. So we -- what we did very cleverly is, if I may use that word, we got the best -- our Chairman always prophesizes quality consciousness and consumer consumables, we must give the best quality. Perhaps that is why IGL is so entrenched and over a period of time, our glycols business has done so well. So we went to Europe, and we got the best of best flavors from Germany. And that made the mark and our amazing vodka in the first year of launch 3 years ago made its presence felt and we got gold medal consecutively for 2 years in open competition. We have an annual event where all over the country people participate, industry participates and in a blind format, the jury judges the quality. And because of the excellent quality, our brand got noticed. Today, I take a lot of satisfaction in mentioning that Amazing Vodka and its flavors are among the top 3 vodka brands in wherever we have launched it, namely UP, which is our home state, Uttarakhand, Delhi and even Rajasthan and Chandigarh. So just within 3 years, largely because of the packaging and the quality. Then we quickly moved on to -- we felt the need that India being a tropical country, there was a good need of refreshing drink. As our CEO rightly mentioned, the taste and preferences have steadily changed. There was a time when hard whiskeys would sell like Peter Scot or Solan #1. But today, lighter whiskeys, young consumers want lighter, refreshing, easy-to-drink brands. So we made a beautiful brand called Zumba. Zumba was named by us. And Zumba, as you know, is a wellness program. It also talks about -- it also gives a hint of that you have to drink responsibly. So we created a citrus white rum. And the leader brand, you are aware, I don't have to mention. So I take satisfaction in mentioning that today, our Zumba [ Limon ] we call it, is the second -- is the challenger brand and the second largest in this segment. This segment is very small at the moment, but we will grow the category and our brand is doing very well. Zumba Limon in UP, Uttarakhand, Delhi. And now also, I take satisfaction in mentioning that we have been -- we have got approval in paramilitary also. So then we felt that when we have got such excellent quality in ENA as also packaging standards for the last over a decade with our Bacardi International, then why can't we also do inorganic growth and have double engine growth, if I may use that word. These days in election double engine is quite popular. Now, so what we -- I'm quite familiar with Amrut. And so we approached them, and we convinced them that while their bandwidth is -- as you know, Amrut is a wonderful company and Amrut single malts are world famous. So while they concentrate on malt whiskeys, they have got certain very valuable milliner case brands like Amrut's Maqintosh whisky, which is a 35-year-old company and Old Port Rum, which is the sixth largest brand in rum across category as per data available. So we said why not we not acquire, not acquire -- we partner with Amrut for on royalty basis and make it in Kashipur. And the moment I said Kashipur, they were more than happy to tie up. Just for your knowledge, gentlemen and ladies, there -- Amrut has, in 75 years history, never done a partnership. And this is the first time, and it is all because of the IGL Kashipur brand name. Because of the brilliant quality, the consumer sees the label when they see Bacardi being bottled right from Breezers to the top end Carta Blanca, where our Chairman and the Board has invested a lot of money, the consumer feels doubly satisfied that this is a quality product. So Amrut was more than happy to join us -- join with us. And on 7th July '24, we started the business. And I -- though it is early days, it is -- I can't make a statement that we have made our presence felt. But what we did was we got these brands in the premium segment. Premium when I say the MRP of -- in Delhi MRP of say INR 800 to INR 1,100. And we have got one more variant of Maqintosh, one is Maqintosh Black and one is Maqintosh White in order to cater to both the segments. So MRP is INR 1,100 for black and INR 850 for white. So the growth of premium segment is so fast because the income levels of the consumers are going up. The entry level has premium segment. People have -- youngsters make lots of software engineers, retail opening up has got so much money in the hands of the young consumers that the entry level is INR 800 plus. So we want to harness that potential. And though we have just rolled out about 3, 4 months back, and it is not fair for me to say that we are successful. But I'm sure we are at the right direction because with Amrut just to mention that the entire liquid is transferred from Amrut headquarters from a distillery in Bangalore to Kashipur. In other words, there is 100% quality consistency as far as Amrut's liquid is concerned and 100% packaging consistency as far as IGL is concerned. So it's a good -- very good mix between the 2 natural partnership. And I'm sure in the next quarters, you will see, if I may use the word because I'm basically a sales and marketing person, you will see a V2O. So vertical takeoff, which one has done in the past many a time, but I'm sure with the confidence that our Board has reposed in us, we have recruited certain very good professionals. And this is early days, but I'm sure in the years or quarters to come, IGL will be known for best quality premium brands.

Thank you, Raju ji. As you can see from enthusiasm of Raju ji, we are very positive about [indiscernible] of course, he's very knowledgeable. And I think that being said, you have already seen the detailed presentation and the numbers. So we will now take questions from people who have assembled here.

[Operator instructions] The first question comes from the line of Balasubramanian with Arihant Capital.

Congratulations for a good set of numbers. Sir, my first question is regarding post the restructuring, more than 70% of business comes from IGL spread. Is there any plan to list that entity?

First of all, there is some nice music also coming.

Sir, maybe request you to mute your line, sir, after you ask your question.

So you see one step at a time. Right now, whilst there are all these options, which are on the cards and also talked about and the fact that we will look at opportunities to unlock value. Right now, the focus over the next period, I think the time frame of -- I don't know, Anand ji will say 12 months to 15 months. The idea is to get these separately working as independent P&Ls to get the focus in the businesses to drive growth. That is number one. Of course, these will be different companies. The options after that are obviously listing them and also looking at potentially partners, et cetera, are all there.

Just to add what CEO sir has told that all the companies will be listed because the demerger will happen through NCLT route, okay? And the demerger will be effective from 01/04/2026. So say, we will take about 12 to 15 months in getting all the formalities relating to demerger done, which includes the SEBI NOCs and of course, the lenders and other NOCs and the NCLT NOC, yes, approval, you can say. So this demerger will be effective from 1st April '26. And all the 3 companies will be listed on the stock exchange.

My second question regarding like imported. What's the price difference between imported ethanol and domestic ethanol. And we are using for imported ethanol for chemical business. Is there any quality difference between imported ethanol and domestic ethanol because in domestic ethanol, we are using for Bio-Fuels and distilleries.

Okay. Bala, we have talked about it before, but I will nevertheless respond. See, first of all, the imported ethanol, which is either imported from Brazil or U.S. is either grain-based or sugarcane based, and we can take both. This is industrial grade ethanol. Now you need to understand that for the purpose of blending and for the purpose of Potable Spirits, the ethanol that we import cannot be used. That is not allowed to be used. So therefore, first thing is that all the ethanol that we put into Bio-Fuels or in our Potable Spirits, depending upon the need is manufactured in-house, be it from grain or molasses. As far as chemicals are concerned, we can use both grain-based ethanol and molasses-based ethanol and grain-based ethanol from the U.S. interchangeably in our plants. So effectively, there is no quality difference. Of course, these ethanols may come from different sources. There may be traces of slice ingredients, which are different, which we may need to do some pretreatment to make sure that our catalyst systems work well, which we do. But as far as the decision of using them for our chemical products is concerned, from a quality perspective, there is no difference. Sometimes people depending upon their strategies on carbon footprint, et cetera, may prefer, for example, molasses-based ethanol. That is more from a sustainability carbon footprint perspective, but not from a quality perspective. From a quality perspective, we can use both these or multiple grades of these ethanol that I spoke about to deliver the same quality of product to customers, either domestically or internationally.

Got it, sir. Sir, my last question regarding Bio-Fuel side. Last 2 or 3 quarters back, we used to report more than 7% kind of margin. In this quarter, only 3.3%. Is there any specific reason for that?

See, I briefly touched upon it that there are multiple factors which impact the margins that we make on Bio-Fuels and the margins do go up and down. Now there are 3 factors, and we monitor all of them closely. One factor is the price. Now the price for various sources of ethanol, which goes into Bio-Fuel blending, whether it is molasses, C-heavy molasses, B-heavy molasses, damaged food grain, FCI-based rice, et cetera, or corn-based is fixed by the government, and it is based on the feedstock. The second parameter which affect the margin is the price of grain. So price of grain, if you remember, at one point in time when we started this business in '23, '24 was even hovering around INR 19 to INR 20. Then as there was increased demand and also some slowdown by the government in terms of allowing FCI rice to be used, the prices of grain in the market had gone up. So if you look at August '24, September '24, July '24, it saw reasonably high prices of grain, which were hovering around INR 27 to INR 28. The other factor, which also affects the margin is the price of DDGS, which is the protein which comes out. And the higher the price, the better the margin on ethanol because that's a byproduct which gets sold. So the reason you saw somewhat lower margin possibly is because grain prices were higher, DDGS prices had dipped. And as I had also mentioned, going forward, the government has announced release of more FCI for grain-based ethanol. There is abundant stock with the government. And we expect that the grain prices will come down, and this will positively impact the margins on Bio-Fuels.

[Operator Instructions] The next question comes from the line of Rohit Nagraj from B&K Securities.

Congrats on good set of numbers. And again, congratulations for the demerger scheme. It seems interesting. So first question is again on the demerger scheme. In terms of the individual 3 segments, how is the working capital for them? What could be the debt structure as of now based on the long-term debt sitting across individual businesses? And lastly, in terms of ongoing projects, what are the individual projects which are going across all the 3 segments?

Rohit, regarding the working capital allocation to each company and the term loan allocation, we are talking to the term lenders, mainly the State Bank of India, who is the leader in our consortium banking. Although we have more or less finalized depending upon the NWC for the working capital and term loan for the projects for which we have taken. But we have yet to get the confirmation from SBI. We are in process. That will take some time. We will come back to you on this once it is finalized. Regarding the project completion, more or less all the projects, whatever we have undertaken is complete, except one green distillery, which is we are installing in Gorakhpur. And hopefully, that will also be completed by March '25. So then all the projects, whatever we have undertaken will be completed before the demerger.

Sure, sure. That is helpful. Sir, second question, again, from the managing all the 3-business perspective, how would the group structure evolve? Rupark sir will be a group CEO and there will be individual CEOs across the business. The question I'm asking is primarily because if we were to have individual CEOs to head the businesses, we may have to groom someone from our own organization or may have to hire over the next maybe 12, 15 months by the time the scheme is culminated. So just a broader perspective on this.

So Rohit, thank you. First of all, thank you for making me feel a little insecure about my job. That was on a lighter note. Well, look, it is too early to state what exactly would be the structure, but let me put it in terms of principles. The principle of demerger to start with, is to continue to run the businesses under one umbrella, but differently as in separately from a strategic perspective, but not unduly increasing the cost base, okay? So that is what you will continue to see in the near future. Depending upon how it pans out, of course, there will be need for individual resources, how those individual resources will be structured, built in from the organization, got from the outside is something which is work in progress. So it is very difficult for me to immediately tell you how that will span out. But as I mentioned, for the time, there will be several resources, which will be common like it happens in many group companies. Otherwise, we'll end up increasing costs quite a lot. So there will be corporate resources, which will be common, and there will be a mechanism to allocate these costs going forward. And after the companies are separately formed, the way they start growing, the way they have the individual projects, I think there would be an ongoing dynamic way of looking at resourcing them.

Sure. That is helpful. Just one last clarification. As of today, we are a green chemistry company given that all the 3 segments are having based on bio or ethanol. Once the businesses are separated, will the chemical business may transform into a combination of green plus synthetic chemistry? Or will it continue to remain on the green chemistry lines?

Okay. So look, we believe that sustainable chemistry is a significant strength of ours. But it is not the only box that we would like to operate in. Not to say that we will -- for example, when we talk about specialties or performance chemicals, we would not limit ourselves to saying that unless it is completely green, we will not do that. No. We will look at those areas as well. But we would like to leverage our green strength, our green feedstocks to make our specialty chemicals green, greener and even more green. To give you an example, we are looking at bio-based Amine. So we would be perhaps hopefully, the first company to make bio-based Amine using ethylene oxide and ammonia. But subsequently, we may start to use ammonia, which comes from green hydrogen. So therefore, that is also completely circular or of a much lower carbon footprint. So that journey will continue. Rohit, in short, the answer is we will continue to look at opportunities to grow based on our strength. One of our key strengths is sustainable chemistry, but our key strength also are process development, product development, application development and forming strong relationships with some customers in the B2B space to whom we can add significant value.

The next question comes from the line of Saket Kapoor from Kapoor & Company.

Congratulations, firstly, to the entire team for setting the time line and meeting the time line in giving investors the update and the proposals for demerger. We hope for a smooth transition. Sir, not many questions. Only, sir, a couple of data points. Firstly, sir, the pain point in our vertical has been the Ennature Biopharma. And that has been on a slide for the last 3 quarters in a row. So if you could spare a few minutes and explain. Although I firstly also congratulate the team for giving a very descriptive investor presentation, so questions are answered there very well. But if more color, broader note could be given on the Ennature Biopharma going ahead.

So Saket, thank you, and you are anyway quite aware of our business each time and are well prepared. And so you also ask difficult questions. Anyway, so look, we have spoken about it for some time. So the strategy has been, first of all, to continue to maintain market share in this dynamic market, which we have done quite well, as you can see. So our top line has been growing. And our market share, particularly in the domestic market has actually increased. Now there have been various factors, which have been policy changes in the international market and competition, which has put pressure on margins. However, we are confident that the business longer term is the right business to be in, but needs the right strategy, which we are following. And the right strategy is this. I think the first thing is to penetrate the developed markets. So we are working on several fronts over there. For example, it needs several regulatory approvals in those countries, which we have been working on. It needs improving our standards and certifications and compliances in-house. So we are -- for example, we are working on upgrading our Nutra facility to U.S. FDA audit compliance and the audit has been completed. As and when that gets certified, we'll be in a better position to market our products into the developed markets. So that's one part of the strategy. The second part of the strategy is innovation to look at delivery formats, which are much better. As you know, these products like curcumin or nicotine or Thiocolchicoside can be converted into various delivery formats with the pharma companies or the food companies value for their therapeutic benefits. So that is the other thing. And the third pillar of growing this business, which is also the right strategy, which is also somewhat more time consuming, is to push for branded nutraceuticals, which, therefore, establish ourselves as a brand in 2 ways, either through our products or follow what we sometimes loosely link to the Intel Inside model, where our brand is a co-brand to important brands within India or abroad. So whilst I completely recognize where you're coming from and expressing your concern about the pressure on profitability, there are -- there is a silver lining. Our top line has been growing. We are working on the right strategy to improve our standard compliance certifications within India to get regulatory approvals or approvals by customers abroad to focus on branded nutraceuticals and innovation. So that's what I have to say about the business.

Right, sir. Actually, it is heartening, sir, that the revenue is growing, but it is further disheartening that even on improved top line, the profitability has halved from the last 9 months. That was the key reason. But you very well explained what steps we can take to improve the same. Sir, coming to the presentation part, I think so we should also try to [ encalculate ] the debt position, the net debt position and the movement of debt also in one of the slides so that that covers -- that is the missing piece according to me in our presentation. So Anand ji, if you could just give me the net debt number as on 31st December and the current maturities [Foreign Language]?

I will just tell you, although whatever you have suggested that we will take up. Generally, in quarterly basis, we have a repayment of about INR 60 crores. So on a yearly basis, we have an INR 240 crores repayment on the term loan. And right now, the company is having an outstanding term loan of about INR 1,200 crores, okay? This is the position. This time, you can see that finance cost has gone up. That is only because of that the project has been completed and the finance cost has been charged to the interest because earlier till the project was not complete -- had not been completed, that was capitalized. And the interest rate has slightly firm up because of the overall increase in the interest rate by the banks. We are fighting, but let's see how we can reduce the cost.

And lastly, if I may, if the time permits. Sir, firstly, on the ENA dynamics, if you could just throw some more color how the pricing on ENA dynamics have been? And again, sir, for the valuation aspect for which Raju sir was elaborating about the IMFL part of the story. So we are clubbing the government regulated business of grain-based ethanol and the liquor part. So does that judge better for getting the right valuation going ahead since other liquor companies may or may not be having this under their portfolio. So weren't the margins looking -- will in the near future look subdued and get diluted because of these 2 business getting clubbed? This is the overall restructuring, which we are doing. That was my query.

So Saket, look, these decisions, there are 2 things. One is margin percentage, the other is absolute margin. So -- and when you -- on one hand, you may look at margin percentage, but there are certain synergies as well. So if you have an alcohol business, you have the option of manufacturing your own alcohol, be it molasses-based, be it grain-based, control your own quality, and you may sell it to others as well. So in that sense, it brings synergy in terms of backward integration. It brings synergy in terms of better control on quality. It brings synergy in terms of being able to leverage your ethanol business and get scale by supplying to Bio-Fuel as well as Potable Spirits or maybe even selling to other. Now your question is that what happens to percentage margin? Well, percentage margin is one factor, but the overall profitability and resilience of the business also improves. So there could be various ways of looking at it. And there are also ways of how the hardware and the plants can be segregated or how they cannot be segregated, what's the best possible fit. So far, in the wisdom of people who sat together, this seemed like the most optimal way going forward.

Right, sir. And for ENA dynamics, sir, you can give some more color, how is the price.

Gentlemen, I just wanted to highlight one point.

Please, sir.

Can you hear me?

Yes, sir, I can very well...

We are in a unique position in spite of making the largest -- if I may say, largest ENA producer or among the largest ENA producers in the country. We have 100 -- almost 100% captive consumption. As our CEO rightly said, there are 3 benefits for IMFL, particularly because I specialize in IMFL and liquor. One is consistency of supply. Our ENA, just for your knowledge, goes to Bacardi in Nanjangud, which is in Karnataka. Karnataka is abundant on ENA, but they only buy our ENA from Kashipur, transported there because of the brilliant quality, number one. Number 2, our captive consumption is increasing so much, particularly for IMFL and country liquor that we naturally get the benefit because it's from one tank to the bottling line. So a lot of headache of transportation, freight, GST, interstate movement expenses are all avoided. And third is best servicing because as our CEO said, consistency of supply. So we are in a unique position. [Foreign Language].

[Foreign Language].

[Foreign Language]. Can you repeat?

[Foreign Language]. Whether the prices have moved up as per the demand supply or how our ENA price currently quarter-on-quarter or year-on-year comparison can be given?

Saket, I would like to add over here is that the ENA business is looking pretty promising right now. And since in the new tax regime, when it has moved to the state to decide the taxation, the opportunities are opening up in the immediate and medium future. Also, we are looking at export markets. But you see that our own consumption of ENA in the country liquor and IMFL segment is increasing, and we are becoming a strong player within the state. So obviously, the net sale in the state of IMFL and CL is being taken up as a larger share of IGL. So the rest of the sales left in the distillery market, though right now available, but as our share increases, will slightly be impacted because of our own consumption. But then there are other alternatives like we are supplying in the pharmaceutical segment as well as in the perfumery and deodorant segment. Plus, we are looking at certain export markets in the Middle East and in the East Africa region. So pricing right now is pretty good. It's moved up a bit. But over a longer-term period, we will have to look at what is the final tax structure and how the margins work out over the next few months.

The next question comes from the line of Rohan Patel from Turtle Capital. Please go ahead.

Thank you for the opportunity. My question is regarding our Potable Spirit business. Like what we have understood is like we are the largest player in Potable Spirit in Uttar Pradesh and Uttarakhand leading the spot in that. But the second largest player and other new players that are coming, they are making the margins as high as we do. Like even the second largest player isn't making that margin. They are in somewhere near single EBITDA. Last year, they were in negative EBITDA, and they are guiding for lower double-digit EBITDA next year, and we seem to be making very high level of EBIT margins. So can you explain us the difference in our margin profile and theres? Maybe you can explain yours, like why do we have such a high margin?

See, I think we have a decent margin. And we have -- I'm sure there may be players who are playing in more niche volumes or niche markets. So we have a combination of a business, which is the country liquor business as well as an IMFL business. Now that gives us some resilience in the sense that the country liquor business is more steady, both in terms of volume as well as in terms of margin as well as in terms of assured feedstock, for example, molasses. And we believe that some of the things that Raju ji spoke about, I spoke about the fact that we have in-house ENA helps us reduce our cost, help us reduce our supply chain costs. We have our plants which are integrated. I told you that we make a lot of ethanol. So therefore, our scale is much higher, which means our utility costs are lower. Raju ji mentioned about the fact that there is a tank. We don't need to take it in trucks to another place. We can just pipe it and use it. And then, of course, there is also -- having said about cost, when you are in the consumer market, it is also about pricing. And the pricing is about positioning, pricing is about strategy. Pricing is about delivering a perceived value by the consumer. So there's a set of these factors. I'm -- it is good to hear your observation that we are making healthy margins. We would actually like to improve them.

That's fine. Seeing that coming to your 2024 numbers, like Potable Spirit was near to INR 950 crores. Out of that, how much would be country liquor?

Yes. So the country liquor ballpark, you're talking about last year?

Maybe last year and as well as this year, ballpark, if you can share the percentage in percentage terms? What would be the...

I will let you know ballpark. Can you give me a second?

Yes, sure.

In terms of top line?

Yes, top line.

See, our top -- in terms of top line, roughly 60% of our business is country liquor. Roughly. I don't -- maybe Anand ji, you can get into more details with Anand ji, but you wanted a ballpark so that's how it is.

Yes, yes. We can fairly assuming like 50%, 60% would be your country liquor out of old Potable Spirits. So is country liquor with the same margin profile as overall Potable liquor, maybe IMFL might be having higher margins.

IMFL, look, IMFL also has higher cost of marketing costs, packaging costs and so on. For us, it has been kind of similar. I don't have the exact numbers with me in terms of country liquor and Potable Spirits. But yes, they are kind of similar. They are trying -- some brands in IMFL make higher margins, but we also need to incur that we are a relatively newer business, and we are also investing in our -- improving our channels, et cetera. Raju ji?

[indiscernible] See, the good point about country liquor, particularly in Uttarakhand is if you go into details, and it is in public domain, we are -- we have a very good market share. Out of 8 bottles sold country liquor in Uttarakhand, 7 to 8 bottles are of IGL. So that shows our dominant position, if I may use that word. And it was all properly done. We are the only company which has got Tetra Pak machine and which is a huge capacity, which competition does not have. And naturally, we have our own ENA, we have our Tetra Pak capacity. So we are able to get most of the business of country liquor. And though it is not fair for me to exactly give you the figure, but the country liquor margin is higher than the IMFL margin of Uttarakhand where we are leaders. As opposed to UP, where the margin -- because UP is a very, very large state with a lot of players. So naturally, the margins are under pressure. But the good point about country liquor is it is all quota-based. Now what is quota? If you understand this, then you will get how sustainable our country liquor business is. See, as opposed to IMFL in the country liquor, there is a quota. In other words, the wholesaler has to buy a certain volume every month, month after month to give certain revenue to the gov -- et cetera, resulting in a certain assured income for country liquor for us. And the consumer behaves in such a manner that naturally, certain regions have gone to certain brands. So we are -- since we are a leader, so we -- particularly in east and central UP, we are in a very dominant position. So to sum up, country liquor is very consistent, quota-based and assured income. The margins in UP are satisfactory, but the margin in Uttarakhand is very handsome. And it is in the foreseeable future, they are likely to remain as such. So this will become a very big revenue stream for us. Yes, of course, IMFL gives a multiple. But as our CEO said, it requires time. It requires marketing inputs. But on a long-term basis, IMFL any day will give a huge, huge value, both top and bottom line to the organization. So we work very closely on these segments on a day-to-day basis. The MIS control systems are so brilliant here that every day we get exactly what is happening into the market. This is not the forum to talk about, but the processes are brilliant here and IT controlled very nicely. So everybody knows on SAP what is happening transparently. And that is why perhaps the investors are quite happy with the work we do on country liquor.

That was a satisfactory answer. If you allow me, I have a couple of more questions for you.

That is fine.

Yes. I just wanted to dwell into the distribution you just talked about the quota base. So the quota that is out there, is it for like a segment of liquor like for country liquor, or IMFL? Or is it like a brand base, like a wholesaler or retailer has to buy certain brand of country liquor?

It's not -- naturally, it can't be brand because brand is depending on the consumer choice. But it is the retail college or the wholesaler has to buy a certain quota -- because actually, it's related to revenue because he has to buy. For example, in Kanpur, the quota is, say, for 1,000 cases per day. So they have to buy 1,000 cases per day. If they don't buy, they have to put the cash into the exchequer. So they might well sell that 1,000 cases, resulting in business to us, consistent business to us. This is the beauty of country liquor. And we are leaders there.

So considering that your dominant position in this quota base, this might give you very close competitive advantage compared to somebody else who is coming into UP because you know the distribution way better, the retailers way better and can push your IMFL brands forward.

Yes. Just one point in addition, maybe you already meant it, that by and large, all states or at least UP and Uttarakhand, the country liquors that they supply in their state are sourced from country liquor, which is manufactured within the state.

No, I'm talking about the IMFL initiatives that you are bringing the more premium brands. The understanding of industry dynamics, the distribution being in this field might help you compared to somebody who's -- the other IMFL brands that are coming into the state.

Yes, by all means, yes.

The next question comes from the line of Vanshika Gupta from JRK Stock Broking

I had 2 questions. One, sir, you mentioned that our CapEx cycle is almost complete only, our Gorakhpur plant is remaining. So for '26 and like maybe the next 2 years, what do we look -- how does the CapEx cycle look for the company? Maybe 1 year because then we'll have the demerger. So let's just talk about the next 1 year. And then I wanted to touch upon the glycols business that you spoke about in the introduction that the revenues have declined. There is some declassification of business compared to last year, which is why it's not purely comparable. So if you could elaborate on that and just let us know what is happening in that segment, some details on it.

Okay. So let me give you a qualitative answer on CapEx first because I don't have specific numbers for the years ahead on CapEx. And if Mr. Anand wants to add, I would request him to do so. So look, there are several opportunities that we continue to chase in various businesses, particularly the Potable Spirits business and the chemicals business because they are most significant compared to Ennature Biopharma in terms of CapEx intensity. So as we grow the IMFL business or the country liquor business, from time to time, there are 2 capacities which are important. One is the ethanol capacity. We have added significant ethanol capacity already. So as far as our captive consumption is concerned, we are more than covered. And supposing we have more need for captive consumption of ethanol into the Potable Spirits business, we can always, if required, sell less to Bio-Fuels, divert more to Potable Spirits. So that we are more or less covered, except that from time to time, as this goes up, we may need to put up capacities to make ENA or Extra Neutral Alcohol, which need a higher level of purification, which does not need too much CapEx, but based on needs, we have been increasing our ENA capacity. And if there is need going forward, we will augment it. The other CapEx in the liquor business is about putting up blending and packing lines, where also most industry takes a modular approach. It is not something where you put up one big plant. You can continue to add lines, which are now -- which are kind of -- largely, it is about assembling them and putting them up. And many of these lines can be changed from doing one brand to another brand and so on based on how the market is. So we don't expect a huge amount of CapEx, but we would be doing CapEx, which will be required to support the growth in the business, which may be in terms of ENA, which may be in terms of putting up lines. As far as the Chemicals business is concerned, we expect that we will probably have incremental, but not huge CapEx is going forward to expand our value-added specialties portfolio. We don't have a number fixed for it. We are working on a large number of projects. As those projects fructify, we will add more capacities to add more CapEx. So that is based on business requirement. The other question that you had was on chemicals rather than only glycols, and I will comment on it a little bit, and I will also comment on glycols. So if you look at only our glycols business, I mentioned to you, and I will give you a little bit of a breakup in terms of how we've looked at our overall business. So our glycol ethers and glycol ether acetate business in 9 months, sales have been more or less flat, but our gross margins have actually -- are up by 42%. Our glycols business, our sales are actually up by about 26% and our gross margin is up by about 83%. Now these are not as granular numbers that we report in the -- on the stock exchange. But since you asked me a question from my internal management meetings, what we review, I'm letting you know. Our specialties business, which is small, has again seen excellent revenue growth about 300% and a contribution or gross margin growth of about 183%. Our Bio-Polymers business has declined slightly. It's a smaller business in terms of top line, but the gross margins have been flat. Our gases business has seen a revenue growth of 16% and a gross margin growth of close to 38%. And we also have -- we also sell a methane oxide. That business has seen some decline in revenue, but has seen a contribution increase of about 72%. So I mentioned earlier that for 9 months, the chemicals business other than Extra Neutral Alcohol, and I'm separating Extra Neutral Alcohol because going forward, Extra Neutral Alcohol will become part of the alcohol business. And if I separate what is JV, which is based on an agreement and contract, has seen a top line growth of 13% approximately year-to-date and a gross margin growth of in excess of 50%. So to put these things in context, it is not a business which has been falling apart or not doing so well. I think it is -- we've had challenges, but it is a business which has -- for the period so far has done quite well. And even the glycols business, I mentioned to you that our contribution is actually up close to 52%. In fact, we've added a large number of -- just specifically the glycols business, we've added a large number of new customers. So we've had a very interesting story in glycols, where if you just go back 5 years ago, almost 95% of our business was with Coca-Cola. And that business -- we have completely lost because of RPET-related mandates in the U.S. Now interestingly, whilst our volumes declined to as low as close to 30%, and I don't know the exact numbers compared to when we were doing that business. We reclaimed 85% of our margin because of developing more niche, more people who pay a premium for greener products, et cetera. So I think the business has been growing steadily. The business is strong. And I would like to assuage your concerns about the chemicals and the glycols business.

Ladies and gentlemen, our last question for today comes from the line of Ram Mohan J Rao, who is an investor.

Am I audible?

Yes, sir.

Congrats once again to the Board on a very good set of result. And also congratulations on the bold move, okay, for the demerger because this is -- this is much desired, especially in the context of Potable liquor, okay? So my -- just my one observation is that long-term value basically comes from investing in our own brands, okay, vis-a-vis, say, also getting revenues from, say, collaborations with Amrut or with Bacardi, okay. So I just want to understand how big are our own liquor brands, IMFL brands compared to the Amrut and Bacardi?

See, there are 3 types of arrangements we have got. One is co-packing for Bacardi, which is like contract bottling. But since we have made investments into maturing the spirit and so many other CapEx, so the returns are there, but that is steady. But we have no control because Bacardi does all the selling, distribution investment, everything. Then the second one is the organic growth that we get from our brands. So in our mind, it is very clear that up to premium brands, it will be all organically done. In other words, Amazing Vodka and our whiskey -- Amazing Whiskey. So because the consumer does not drink premium brands without a company legacy. That's why you find only for top multinational companies are able to quarter most of the premiumization story in India. Indian companies do not have the legacy of quality or scotch. So people struggle. The fatality rate in premium segment of INR 1,000 plus is very, very high. So in order to insulate ourselves from that risk, we have tied up with Amrut. Now it is not a tie -- it is not a partnership. It is a royalty on a very long-term basis, and we give a certain royalty. Everything else comes to our bottom line and top line in terms of we make the investment, we do the marketing, we get the profits, everything we are doing because these are non-malt brands. Amrut being a parent company doing malt whiskeys are able to concentrate only -- they have bandwidth to do only top-end malt whiskeys, while all other brands, premium IMFL brands we are doing. To put it in simple words, once we give the royalty, which is defined in the agreement, the entire top and bottom line comes to us. So it is like for 10 years -- for so many years, the brands belong to us.

Raju ji, can I add? Yes. So you mentioned this that value is created only if we have our own brands. Well, I would like to believe that it is partly true. Remember, we didn't start like a Diageo in this space. So we started because of our strength in ethanol, moved into ENA, moved into country liquor. Then started to take baby steps in the [indiscernible] space. So the logical right strategy for us to do is to, first of all, establish ourselves as a quality manufacturer and what better than being a very good partner of big brands like Bacardi and Amrut. Now first of all, this gives confidence to us to be like an Intel inside or to be like an important API supplier to a big pharma company is no less value creating than only doing brands. It is differently value creating. It may not give you the entire profit margin on the entire value chain, but it gives you a significant amount of profit, as Raju ji explained. And also, it gives you much more resilience in terms of your business. Supposing you are an important component of big brands, let us assume you are a very important component of what Diageo does, what Bacardi does, what Amrut does. It is a strong building block for you to also build your own brands. So honestly, looking at where we started our journey and where we are going to be an important partner to report -- to reputed firms who have strong, steady building market share, in my opinion, I might like to make my case is a stronger case for sustainable value creation than a weaker case.

Okay. Got it. So I basically see this as there are significant learnings from being associated with such quality brands. And hopefully, those learnings will go into building stronger brands for our spirits division in the future.

Thank you. Yes, you summarized it well.

Thank you, sir. Ladies and gentlemen, that brings us to the end of the question-and-answer session. I now hand the conference over to the management for closing comments.

No, nothing more from my side. Thank you for organizing it on behalf of IGL. And I think it was a good conference in many ways. There was no disruption. Voice was clear and good, we could clear the queue in terms of questions. Thank you very much for sparing your time and going through the details of the organization and asking those questions, giving us the opportunity to explain our position and clarifying questions or doubts that you had. Thank you very much. Have a good evening, everybody.

Thank you. On behalf of Nuvama Wealth Research, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.