Jubilant Ingrevia Limited (JUBLINGREA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Earnings Conference Call of Jubilant Ingrevia Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Hemant Bakhru from the Investor Relations team. Thank you, and over to you, sir.

Good evening, everyone. Thank you for being with us on our Q1 FY '22 earnings conference call. I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release and the earnings release that I will share on our website. On the call today, we have Mr. Shyam Bhartia, Chairman; Mr. Hari S Bhartia, Co-Chairman; Mr. Rajesh Srivastava, CEO and MD; Mr. Prakash Bisht, CFO; Mr. Anil Khubchandani, Group CFO. I now invite Mr. Shyam Bhartia to share the comments. Over to you, sir.

Thank you, Hemant. Good evening, everyone. I hope you all are in good health and keeping safe. With immense pleasure, I would like to announce that we have started the FY '22 with a very positive note by delivering our record quarterly financial performance so far. Along with managing COVID-19 related challenges, we reported highest ever quarterly revenue and EBITDA during Q1 FY '22. In our Specialty segment, we have witnessed strong growth across product segments in Nutrition & Health Solutions segment, the demand grew across geographies. In Life Science Chemicals segment, we witnessed favorable market conditions, leading to strong demand and improved product contribution. Input cost continued to rise throughout the quarter, and businesses are trying to pass the cost increases. During the quarter, we also witnessed an all-time high price of acetic acid, which was passed on successfully. I'm pleased to inform that the company's growth projects are progressing as per plan. Our continuous endeavor to reduce leverage, we have further reduced the net debt by INR 45 crores in Q1 FY '22. During the second wave of COVID, we created a focused task force across our business units and locations to support our employees and their families. The efforts of the task force resulted in significant mitigation of COVID hardships for our people. We also take this opportunity to thank all our employees who have worked tirelessly across all our plants and offices to ensure continuity in company's operations while continuing to serve our global customers. With this, I now hand over to Rajesh to discuss about the business in details.

Thank you, Mr. Bhartia. A very good evening to all of you. At the onset, I hope you all and your loved ones are safe and healthy. I would like to welcome you all for joining our Q1 FY '22 quarterly investor call of Jubilant Ingrevia Limited. It gives me immense pleasure to report a robust financial and operational performance of Jubilant Ingrevia for the quarter 1 FY '22. Revenue during the quarter was INR 1,145 crores, demonstrating a growth of 55% year-on-year, driven by 18% growth in Speciality Chemicals, 13% Nutrition & Health Solutions and 103% in Life Science Chemical business segment. EBITDA during the quarter was at INR 287 crores, up 126% year-on-year, led by significant growth in Life Science Chemicals and Speciality Chemical business. Now let me take you through the update on all our 3 business segments. Speciality Chemicals revenue grew by 18% on a year-on-year basis, driven by higher volume across product segment. EBITDA grew by 22% during the quarter, along with superior EBITDA margin of 27.7%, which is 88 basis points higher than Q1 FY '21. Overall, demand continues to be strong. Domestic demand continues to improve due to shift of some of the pharmaceutical and agrochemical end product customers from China to India. The first wave of COVID-19 in India during Q1 FY '22 led the improvement in domestic customer demand for drugs, thereby improving the demand of pharma intermediates. Input costs relating to raw materials, utility and logistics are increasing, and business is trying to pass on the incremental cost. Nutrition & Health Solutions revenue grew by 13% on a year-on-year basis, driven by higher volumes and prices, and the EBITDA margin was 15.9% during the quarter. The 13% growth in revenue year-on-year was moderated due to pandemic situation. The demand started improving towards the end of the quarter. During the quarter, there has been volatility in demand of vitamin B3 due to global pandemic situation. However, the demand has started picking up towards the end of the quarter. Business is continuously making efforts to improve market share of vitamin B3 for specialized and higher-margin segments like food and cosmetics, et cetera, and also focusing to enhance our market share in North American markets. Raw materials, utilities and logistics costs, which increased sharply during the quarter, which were passed on partially and has resulted in lower margins in the segment. Demand in Animal Nutrition segment got impacted due to COVID-19, regional cyclone and bird flu, specifically in poultry segment. Animal Nutrition business is making efforts to increase share of its speciality premixes through various initiatives. Life Science Chemical business segment recorded very strong performance in our Life Science segment with 103% growth in revenue and 677% growth in EBITDA on a year-on-year basis, along with an unprecedented margin of 27.3% during the quarter based on very favorable market conditions and acetic acid stock benefits due to increased price situation. Life Science Chemical market conditions remained favorable due to disruptions created by Uri storm in southern states of U.S., which impacted availability of acetic acid and acetic anhydride. The availability of both the products started improving by end of the quarter. The demand of COVID-related pharmaceutical drugs like ibuprofen, paracetamol, aspirin and other products were strong during the quarter, leading to continued higher demand of acetic anhydride. With the improvement in COVID situation, the demand is getting back to normal levels. Demand of ethyl acetate from packaging and related industrial sectors remained strong, led by COVID situation. The demand has started getting back to normal levels towards the end of the quarter. Business had higher capacity utilization during the quarter across all plants for both acetic anhydride and ethyl acetate, driven by high demand in domestic as well as global markets. We also maintained the domestic market leadership of acetic anhydride and increased our market presence in Europe, Americas and Rest of the World. Now let me take you through our growth plans and CapExes. Our first phase of Diketene project is well on track, and we expect to have the commercial production from this plant sometime during Q3 FY '22. Further, we, during the year, have commissioned investment worth INR 360 crores for following growth CapExes. At peak capacity, these investments are expected to generate additional annual revenue of INR 9,000 crore -- INR 900 crores at prevailing prices. These CapExes are CDMO GMP facility at Bharuch, which is expected to be operational from quarter April to June 2022; two multipurpose plants for Specialty Chemicals, which are expected to be in operation during the quarter April to June 2022; food-grade acetic acid, which is expected to be in operation from quarter April to June 2022; acetic anhydride plant, which is expected to be in operation in the quarter January to March 2023; agro active Phase 1 facility is expected to be in operation in the quarter January to March 2023. Our expected cash outflow -- CapEx cash outflow for the year will be in the range of INR 350 crores. With this, now I hand over to Prakash to discuss the financials.

Thank you, Rajesh. A very good evening to everyone, and thank you for joining us on Q1 FY '22 quarterly earnings conference call. I hope you and your loved ones are in good health and keeping safe. I would now highlight the company's financial performance during the quarter ended 30th June 2021. I would like you to recall that the Life Science Ingredient business of Jubilant Pharmova Limited demerged into Jubilant Ingrevia Limited effective 1st February 2021. And our published consolidated results for Q4 and full year ended 31st March '21, comprised results only for 2 months of operation starting from 1st February 2021. Similar to last quarter, in order to provide the comprehensive picture of operations of the company on a continuing basis, the results for the previous period has been presented on a pro forma basis in the investor deck and also during this call by deriving the same from the published results relating to discontinued operations of LSI segment of Jubilant Pharmova Limited. The details in this regard are provided in the investor deck and also in the note 3 of our published results, and we request you to go through the same. Revenue from operations during the Q1 FY '22 was INR 1,145 crores as compared with INR 737 crores Q1 last year. The EBITDA during the quarter was at INR 287 crores as compared with INR 127 crores in Q1 FY '21, with margins firming up further at 25.1% against 17.3% in Q1 FY '21. Depreciation and amortization expenses during the quarter were at INR 32 crores against INR 31 crores in last year. Finance cost during the quarter was significantly lower at INR 13 crores versus INR 28 crores in Q1 FY '21, a reduction of 54% year-on-year on account of repayment of debts and lower interest rates. The average debts were lower by INR 706 crores in Q1 FY '22 over Q1 FY '21. And the average blended rate of Q1 FY '22 was 7.09% against 7.84% in Q1 FY '21. PAT during the quarter was INR 168 crores as against INR 53 crores PAT in Q1 FY '21. The company maintained a steady deleveraging in Q1 FY '22 also. The gross debt was reduced by INR 91 crores. Gross debt as of 30th June 2021, now stands at INR 457 crores against INR 548 crores as on 31st March '21. The company net debt stood at INR 386 crores at 30th June, a reduction of INR 45 crores from 31st March '21. The net debt-to-EBITDA ratio further improved to a very comfortable level of 0.5% on 12 months trailing EBITDA. Capital expenditure during the quarter was INR 44 crores. With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have.

[Operator Instructions] The first question is from the line of Rahul Veera from Abakkus.

Congratulations for the bumper results. Sir, just wanted to understand in terms of our Diketene capacity that's going to come online. Have we started test marketing via trading or marketing from any other players? Like just have we started feeding the market, sir? What kind of response are we getting for that?

So in Diketene, our facility, as we stated, will be ready by Q3 this year. And our -- we have actually test marketed with our sample quality with our -- some of the customers. And based on that, we will be producing the product as required by the customer.

Okay. Okay. And sir, a product will have any like overlap with the Laxmi Organics products or customers?

Yes. Some of the products will be also common. And most of the products we are -- for future, we are developing the value-added products. So of course, some of the products will -- may be common.

Okay. Okay. So can we assume that there will be some kind of market formation that will be required from our end by lowering the prices of the products?

No. I think there is a lot of imports of the products. We'll be pursuing basically imports.

The next question is from the line of Rohit Nagraj from Emkay Global.

Congrats on a really good set of numbers. Sir, the first question is in terms of the capacity utilization for the newer project. So the CapEx that we are doing, and it will be coming into phases, when do we see optimum utilization of this incremental capacity maybe over the next 2 years, 3 years, 4 years?

So in each case, the capacity utilization of the new CapEx takes time. So we -- normally, we plan to utilize the full capacity after 1 full year. So after 12 months of operation, we expect to utilize 80% to 90% of our capacity in each of the investments which we are trying to do.

Understood. Sir, the second question is in terms of the price transmission. So you indicated that in most of our -- I mean, all of 3 segments and in terms of individual products across the segments, we have been able to pass on the price hikes at least partially or completely in some cases. So is it completely passed on now since we are in probably mid-July, and some of the prices of our inputs such as acetic acid have now started receding? So the entire price increase from the input cost front, logistic as well as other inflation, is it completely passed on?

So as you must have seen that last quarter has been very, very volatile in terms of input pricing, and it has been continuously increasing. So we have been working to pass on the prices. And with the lag, I think we normally try to pass on in every product. So if you ask me today, I think depending on product to product, there is a situation of 100% passed on and partially passed on. But our endeavor is that after a lag, the input price increase is to be passed on.

All right. And if I can just squeeze 1 more question. In terms of the Life Sciences segment, we have certainly benefited because of the acetic acid stock situation. Could you quantify what was the benefit due to the lower priced stock?

So it is very difficult to give you the exact numbers. But as you know that acetic acid price of the last quarter versus this quarter -- last to last quarter, there has been a significant increase, which, of course, has some benefit on the stock price or stock valuation.

The next question is from the line of Amar Mourya from AlfAccurate Advisors.

Sir, my first question is on the Specialty Chemicals. Out of this 21% year-over-year growth, which we have seen -- I mean, 47% year-over growth in terms of the revenue, how much would be the volume like?

Yes. So in case of the Specialty Chemical year-on-year, the major growth has come from volume.

Okay. You're saying the 47% growth year-over-year is largely led by volume?

Volume as well as price, but more volume.

Can we get the mix, if it is possible for you, the volume and price mix?

Difficult to get the exact number, but I can tell you that the growth has been significantly good in volume in Specialty Chemicals.

Is it -- we have -- I mean, we [indiscernible] capacities? Because I believe the capacities are yet to come, right?

No. So we -- as we stated earlier also that we continuously do the augmentation of capacity of those products, which are in high demand. So during the last year, of course, we have done the augmentation of capacities of those products. And of course, we are utilizing those capacities because the demands have gone up.

Okay. Because I also assume that -- why I was asking that, I believe, on the pyridine prices overall and the derivatives of the pyridine prices have also gone up on a year-over-year basis. So just wanted to understand, obviously, we would have benefited because of the volume also, but there would be a good portion of the price increase which is also sitting in the revenue today, right?

Yes. So there is a portion of price increase. But as I stated earlier, that the price increase happens gradually. So definitely, the partial impact has come, and further impact will come in future as well.

Okay. Okay. So basically, you are saying that still you have not been able to pass on the whole prices?

This is exactly I said earlier also, that in some products, of course, partially, we have passed on. In some products, we have passed on.

Okay. Okay. And do you expect these prices to sustain, sir?

Depending on the input prices, definitely, if the input prices remain at this level, these prices will be sustained, definitely sustained.

Okay. Okay. And how about the situation would be in your Life Science Chemicals? I mean, I believe there, the spread was significantly in our favor, right? That is primarily visible with the EBITDA margin. But in terms of the revenue growth also, I mean, the revenue growth has been very sharp. So is there some capacity addition we did here in Life Science?

Yes. In Life Science Chemicals, if you recall, we had added 1 plant of anhydride in 2020, and that is coming handy to us in getting our volume growth, along with the positive scenario of market as well as raw material prices.

Okay. Okay. But sir, it would be easy if we can give some mix of the price and volume, which we got benefited in Specialty and the Life Science. Is it possible for you, like 40-60, how the benefit has been? So that it helps for understanding the future better.

Well, it becomes very difficult to give those specific numbers, but you can fairly calculate that -- what was acetic acid price in the quarter 4 and quarter 1. And that's, again, everybody must have got who has the inventory [indiscernible]. And of course, there have been some positive market conditions as well because of the demand scenario. Demand was high and the availability was low. So both put together, the benefit has come. And some of it will continue. Like some demand scenario and our volume increase is happening. So our volume will further go up in the coming quarters. However, it is difficult to give any estimation on market condition right now.

The next question is from the line of Vineet Gala from Monarch Networth Capital.

So at the outset, congratulations on an excellent set. On the Nutrition segment, how much of the business is under long-term agreements? And how often do we renegotiate the pricing since we procure entirely from in-house? Do we actually get the benefit on RM escalation?

So in Nutrition segment, I think the volume scenario is looking very good. And in terms of raw material prices, if the raw material prices are going up, the cost also goes up for Nutrition segment.

Now regarding the Nutrition segment, our contract is normally quarterly. So on contract prices, we are not able to increase. But next quarter, we will be able to increase the price.

Yes. Sorry, I missed that question. So basically, the Nutrition segment, we don't have any long-term contracts. We normally have the volume commitment for a year or the quarter, and the prices are mostly driven on quarterly basis. So if the price goes up and raw material cost goes up, we are normally in a position to pass on with a lag.

Okay. Got it, sir. But do we get benefits on our -- considering we procure it entirely in-house, so do we get the benefit?

No. So we always transfer the internal raw material through [indiscernible] pricing. So obviously, the raw material cost has gone up. Even the internal transfer of products will be at higher [indiscernible] obviously because it has to be transferred with the [indiscernible] pricing, [indiscernible] pricing.

The next question is from the line of Rohan Gupta from Edelweiss.

Congratulations on very strong set of numbers in the first quarter. Sir, 3 questions from my side. So first, you gave a CapEx outlook for the current year, almost INR 250 crores with the [indiscernible] potential of INR 900 crores. So can you just further segmental, like how much of this comes from which segment and [indiscernible] revenue, which again that is contributing to each segment? Are there breakup of this segment and [indiscernible]?

So difficult to give you that specific, but I can in general tell you that most of our capital investment gives us in a range of 2 to 2.5x of investment for the revenue.

Most of our investments. And this year, our capital expenditure is going to be not INR 900 crores, but INR 350 crores.

No, sir. I think the growth CapEx, which [indiscernible] mentioned that are making the revenue for [indiscernible] of INR 900 crores. I think [indiscernible].

Yes. That is for about 3 years.

Yes, during the 3 years period.

I think [indiscernible] this year, current year growth CapEx is INR 360 crore, right?

No, no. So the investment committed is INR 360 crores. The revenue from this investment will be INR 900 crores at peak capacity, which Mr. Bhartia is saying will take 2 to 3 years' time to reach to that peak capacity, as we also mentioned. Yes, it will gradually increase. Your question was, can we give specific on each CapEx-wise? I said it is a little difficult, but you can fairly assume that 2 to 2.5x of each investment, we will be increasing capacity. So right now, we are not giving the CapEx-wise investment here.

Right, sir. And sir, [indiscernible] commission from [indiscernible] FY '22. That is the [indiscernible] statement down the line. Sir, [indiscernible] long destination period. These are the longer -- very critical chemistry processes which we understand. So if we are going to start this production almost 6 months down the line, I believe that we must have got a fair amount of customer [indiscernible] product approval and some kind of order visibility. If you can, sir, give not for the Q3 FY '22, but how much [indiscernible] you win the current [indiscernible] from the customer and contribute into the revenue next year, FY '22 fiscal year?

So as Mr. Bhartia has mentioned, that most of volumes, if you see Diketene today in India is being imported, right? So we are going to replace most of the imported volume. And we have already communicated earlier that our capacity is going to be in the range of 6,000 to 7,000 tonnes. So we will try to place this capacity 1 year, 1.5 years time.

We are confident that 6,000 to 7,000 tonnes of capacity which we are going to put back in FY '22. Maybe over the next year, we'll be able to [indiscernible] that. During 1.5 years time, 2 years, we should definitely be facing that volume.

Okay. Sir, when we talk about import replacement, so can you just give some size of the opportunity in Diketene [indiscernible] coming or it's getting imported in India right now?

Yes, today, if you see the imports of Diketene in India is in the range of 4,000 to 5,000 tonnes. And sometimes it goes up, sometimes it goes down, but in the range of 4,000 to 5,000 tonnes.

These 4,000 to 5,000 tonnes, sir, include the value-added products [indiscernible], right?

No. Mostly, these are basic chemicals, not -- value-added products in India is not very large.

Okay. So then [indiscernible] getting imported in India 4,000 to 5,000 tonnes in the market there.

Yes. And also, we will -- we are working towards the value-added advanced intermediate exports, which we have mentioned earlier.

Okay. Sir, when we are talking about the Diketene commissioning, first, our focus is more on the replacing the import, right? Not -- we are directly not looking at the export possibilities of the customers, which we are already dealing with. We are not trying to sell [indiscernible] right now, right?

These are very, very specific questions. I think we will deal it when we reach to the market. But broadly, we have explained to you our strategy in Diketene.

See, what -- our exports will be used -- we'll be doing value-added intermediates out of Diketene for exports.

Right Okay. Sir, just last question from my side. So we have definitely gained [indiscernible] current quarter from the higher commodity prices [indiscernible] you already mentioned. You also mentioned that the prices have now -- because the pandemic [indiscernible], the prices are rising right now. So where we see that for the current year, if you can give some outlook in terms of margin profile of the Life Science business. I understand the current quarter has been a significant benefit on [indiscernible]. Where we see that this segment, Life Science Ingredients, can continue in terms for the current year, full year FY '22 in [indiscernible] process.

All the 3 business segments are doing very well. They are very strong in terms of demand scenario, except for Life Science Chemicals, where the pricing scenario, nobody can confirm for future. I can confirm you that our Specialty Chemical as well as Vitamin businesses, volume as well as prices are in a good space. And we expect the overall year to perform much, much better than last year.

See, overall, we expect to perform much better than the last year.

That is very much sure because [indiscernible] also from the current scenario. The cost prices are much higher than the prices from the last year. [indiscernible]. Just wanted to understand that where the normal profit can be in Life Science business.

In Life Science Chemicals, our demand situation remains very strong, and that is why we are adding more capacity there. So demand is very strong. Therefore, we expect a good volume increase in our Life Science segment.

The next question is from the line of Deepak Poddar from Sapphire Capital.

So sir, just wanted to understand, you did speak about the passing on the input prices, and it comes with the lag. So currently itself, we kind of did quite a decent EBITDA margin. So is there any scope for improvement that we are talking about when we are able to completely pass on the input price increase on an overall basis?

See, overall, we cannot say that. As Rajesh mentioned, that we have increased the -- we have been able to pass on the -- in most of the segments. In some segments like Nutrition, where there is already a contract during the quarter in some quantities where -- contracted quantities, we are not able to pass on, which we'll be able to pass on during the second quarter and during the third quarter also.

Yes. So that will kind of will help in terms of...

The margins in the Nutrition segment.

Okay. Okay. Fair enough. Understood. And then can you help me with the capacity utilization of individual segment-wise, if that is [indiscernible]?

So on our Speciality Chemicals business, we are at the level of 85% to 90%. In our Nutrition segment, we are at around 75% to 80%. In Life Science Chemical business, we are close to around 90%.

The next question is from the line of Alisha Mahawla from Envision Capital.

To start with just taking the previous question forward while you shared the capacity utilization. For most of the segment except Nutrition, your capacity is completely utilized or almost close to being utilized. So is it fair to assume that incremental growth at least for 1, 1.5 years will only be from the Diketene business and then the CapEx that will come in FY '23 will be the next leg of growth driver? Or is it [indiscernible] debottlenecking at existing facilities also?

Yes, yes, very right. So in most of our products, we continue our business excellence approach of continuous improvement in capacity through debottlenecking, through improvement in our processes. So wherever the demand is increasing of products, we are in a position to augment the capacity very quickly, and this is a continuous process. So whenever we talk capacity utilization, it is up today, but that doesn't mean that for next 1 year, it will [indiscernible]. In some of the products, we are already working on [indiscernible]. In some of the products, we are ready with [indiscernible]. So quarter-on-quarter, there is improvement in capacity availability for different set of products. And therefore, there is an opportunity, and you can see that last 3, 4 quarters, there has been opportunity for us to growth -- take a growth of volume from augmenting the capacity.

So if I may just ask for the clarification. You are doing close to double-digit volume growth in most of your segments, and you're saying you can maintain this kind of volume growth through capacity augmentation, which can be done very, very quickly and at minimal cost.

So in product to product, we can say that the growth will be possible, and some products may not be that double-digit growth. But wherever there is a possibility of augmenting the capacity, we are definitely doing [indiscernible].

Sure. Got it. And can you also tell us what is the CapEx that you've done in the Diketene business?

The value of capital investment?

Yes, yes.

Yes. So very difficult to give that number, because most of the time, this capital [indiscernible]. Most of the time, these capital investment numbers are clubbed with some other initiatives. So very difficult to give you specific CapEx investment number.

Okay. Okay. And so the last question I had was on your margins. So while there has been significant pricing benefit across your segments, what are the more sustainable number if you historically see over the last 2, 3 years that even if we remove any kind of pricing benefits, the kind of margin that the business can do at a consolidated basis, you're not comfortable giving for individual segments?

Okay. So again, I think Mr. Bhartia mentioned that since we have such a diverse nature of segments, it is very difficult to give a guidance on overall margin. But let me now tell you that in Specialty Chemical, as you can see, we are consistently improving our performance both on volume growth as well as on pricing growth. And that will continue. So we are adding capacities. We are augmenting capacities. We are introducing new customers. We are introducing new products. So Speciality Chemicals is going to give consistent performance. On Nutrition side, the last quarter has not been very good with regards to our price passing on, as Mr. Bhartia already mentioned. We expect the Nutrition segment to do better performance in terms of margins as well as volume. So -- and Life Science Chemical is a segment where it is so difficult to give you a scenario of margin in the future. But 1 thing which we have informed you, that in Life Science Chemicals, the demand scenario stood very strong. We are -- we have added capacity 1.5 years before. We are adding more capacity, which will be ready after 1 year. So we see consistent demand scenario. We see our requirement of products in global markets. What we cannot confirm today is the future scenario of market as well as input pricing. And therefore, it is difficult to give the margin scenario of Life Science Chemical, which we have been saying always. Hope it helps you a little bit in your scenario building, please.

The next question is from the line of Pratik Kothari from Unique PMS.

Sir, in terms of our acetic acid price, if you can just throw some light what the price would be, say, currently, what it was in the quarter that we just reported on a [indiscernible] historically, what the movement has been.

Yes. So the acetic acid price last year's quarter 1 was in the range of $350. And the last quarter, which is Q4 '21, was in the range of about $700 average. However, in Q1, it has been averaged about $1,050 or $1,080. That's the range we are talking. At this quarter price of last quarter have been around $1,150, $1,160. So that's the acetic acid price range. Hope it helps you.

Yes, absolutely, sir. Sir, also in terms of the CapEx that you have planned of INR 360 crores and we are guiding for the INR 900 sales potential when you are 2, 3 years down the line. But you also mentioned that it's at prevailing prices. If this acetic price is to correct and come back to normal historical range, should this number be revised downwards accordingly?

Yes, slightly variance, you will find, but other products may also go up. So we are giving you a number which is, on an average, that revenue will come. So yes, you are right, product to product plus/minus can happen. But a broad number, I think we should be definitely that number or maybe a little better.

Okay. Fair enough. And sir, given the huge surge in price that we saw in terms of our chemicals, I mean, your LSC business, is it fair to assume that we chose to sell more of this chemical in the market because of large windfall of profit that you are getting rather than upstream it and convert it to, say, a Specialty Chemical or Health Nutrition business?

No. No. So let me give you a comfort that we do not consume acetic anhydride internally, right? So there is no way that we have diverted our internal volume to outside. Same way in ethyl acetate, very, very insignificant volume we consume internally. So both these products, we don't see any divergence. What we transfer from Life Science Chemical business is a product called acetaldehyde and formaldehyde. Those products, we don't sell in market as such. So what you are assuming is not correct.

The next question is from the line of Hiten Boricha from Joindre Capital.

Sir, my question is again on the margin side. So we did 25% EBITDA margin this quarter against 17% last. And this is mainly to [indiscernible] you mentioned in the LSI segment, or Life Science segment, which is because of the lower raw material costs. So just wanted to understand if this impact would continue in Q2. So if not, then our margin will again go back to 17-odd percent in this coming year. Is my understanding correct?

On quarter-on-quarter, again, given the margin guidance is very difficult, and we have been always saying that it will be good for Life Science Chemical to definitely observe us on absolute EBITDA value. So that is why...

Sorry to interrupt, but I was asking on -- mainly on like a full year basis. So our margin can go back to 20% levels.

Again, it depends on how the market will behave. If the market remains good, it can be better. If market goes to the normal level, then obviously, what you -- we should be close to that number.

Okay. Okay. Okay. And for my second question -- yes, yes, sir. Yes, sir. Sorry. You were saying something, sir.

No, that's what I said. Specifically in Life Science Chemical business, margin is difficult to say. So if the market conditions remain good, we can even do better. So we don't know. I can't comment on it.

Okay. Okay. Understood. Understood. Okay. And sir, my second question is on the debt reduction. We are focusing on the deleveraging of -- deleveraging right now. So what kind of debt number we can see by end of this year? We have already reduced INR 40, INR 45 crores in Q1.

Hiten, so as you see, that we are generating very, very healthy cash flows. We also have capital investments lined up. Our current endeavor is to meet the investments from the internal accrual. So as it is, we do not plan to add debt. So that's where we are. So at the level where we will be, it's difficult to tell at this point of time because it also depends. But as and when we have an opportunity, we are reducing that. And at the same time, we are planning to meet our CapEx through the internal [indiscernible]. So our debt-to-EBITDA level is only 0.5. So very comfortable.

Okay. Okay. So it will -- the debt-to-EBITDA level would remain at this level. So we won't need any debt for this CapEx?

Yes. No. Yes. CapEx is likely to be from internal cash generation.

The next question is from the line of Rushabh Sharedalal from Pravin Ratilal Share and Stock Brokers Ltd.

Congratulations on a great set of numbers. Just a slightly longer-term outlook question on the CDMO business. So you do mention it in your presentation that the CDMO GMP facility at Bharuch is expected to go into operations from April to June. So is this a sort of business where we'll be doing the contract research and CDMO activities for companies like Syngenta or DuPont? And what sort of companies would be there in this kind of an arrangement and contribution to the revenue and EBITDA 2 years down the line? If you can give some picture to the investors.

See we cannot talk about companies who we are doing business. We are doing business with both pharmaceuticals and agrochemical companies. But our margin and the demand remains very strong, and that is why we are investing to increase capacity. Apart from this, we are also increasing our capacity, as mentioned by Rajesh, in multipurpose facility, which are non-cGMP intermediate. That also has a very good traction. So with non-cGMP and CGMP both, we do for both pharmaceuticals and agrochemical companies. And that also large pharmaceutical and agrochemical companies. The margin there is very strong and growing.

Okay. But some sort of a ballpark number that you can give in terms of revenue and in terms of margin 2 years down the line. Because this business seems promising that's [indiscernible].

The business is very promising as you rightly said. And that is why we are investing into both cGMP and non-cGMP [indiscernible]. So there is a demand for both non-cGMP products mainly in agrochemicals and pharmaceuticals and also in cGMP mainly in pharma products.

Okay. But any ballpark number if you can share with us if that's possible?

Overall, we have said that it will add to about INR 900 crores sales, which also includes CDMO, but we have not separately called out on how much will be the CDMO and how much will be the other products. But I can only say that we are adding these plants because our future demand from the existing customers and the new customers are also growing.

The next question is from the line of Vipul Shah from RW Equity.

Yes. Congratulations on a good set of numbers. My question was on Life Science, sustainability of the Life Science EBITDA margin. But I guess you have answered it very clearly that the margin which we recorded this quarter, which cannot be taken as a proxy, so we probably will have to moderate it a bit. Is that understanding correct?

No. See, as Rajesh said very clearly, you should not focus on the margin. You should focus on growth of EBITDA. That is very important. So...

Absolute EBITDA?

Yes, absolute EBITDA growth.

This was the absolute EBITDA, which we recorded this quarter. Is it fair to assume that the quantum of the EBITDA will be sustained going forward?

No, we cannot say that because of the different uncertainty in both raw material pricing is very important. There is a complete volatility in the raw material pricing. So we cannot comment on this. But I can -- we can only say that the demand situation is very strong in our -- all our products in Life Science segments.

The next question is from the line of -- sorry. The next question is from the line of Ronak Jain from Jeeto Adviser LLP.

Congrats for your absolute and fabulous results. And actually, I need to ask you about the -- and I believe -- actually, I need to ask you about the future expansion plan and I believe in your business and the quarterly results and [indiscernible] growth also. Just I want to understand the future expansion plan, what you are going to do for further having a good result, maintaining this result and so on.

Some of the expansion plan you have seen in our [indiscernible] as well as in our presentation, the CapEx which we have already committed. And further, I just want to inform you, we are working on Speciality Chemicals side to grow our business both in CDMO as well as our Speciality Chemicals. And also in Nutrition side, we are planning to grow in vitamin B3 and other products. So these are our growth plans along with the anhydride, which we have just informed that we are adding 1 more capacity. So all the 3 segments, we have a clear growth plan, and we are moving towards that -- implementing it as we have communicated in the past as well.

Sir, you are going to acquire any acquisition for the future like as of any plan of like that?

As of now, we are not working on any acquisition.

The next question is from the line of Kavita Thomas from First Global.

Sir, my question is on the Speciality Chemicals segment. So sir, I just wanted to understand if I even see on a sequential basis the Specialty Chemicals segment, revenues are almost flattish, but there is a significant improvement in the margin. So -- and it's quite significant of around, I think, 21% or something has gone up to 27%, 28%. So could you give some specific contributors to the significant improvement in margins?

So on a sequential basis, why you're finding flat is because during quarter 1 in domestic market and also in global market, demand has got a little bit impacted, right, during -- between Q4 to Q1. With regards to margins, I think our product mix is improving, as we have communicated, that we are seeing a good traction on our CDMO business where our margins are better. We are getting a good traction on some of the products where we are getting a better pricing also because of the -- because of our niche capabilities. And on our capacity side, we have unique capability. So margin is improving because of our product mix improving. And volume side and sequential basis, revenue also, we can see the growth in coming quarters.

Okay. Sir, I actually wanted to understand, sir, when you say Specialty Chemicals, as far as I know, I know pyridine, which are there as part of the segment. Are there -- could you just give some examples so that it gives us an idea in terms of what kind of Specialty Chemicals are we talking about, which is giving us this improved margin? Some flavor on that.

So in pyridine and pyridine beta, alpha, gamma, this is 1 product range in Speciality Chemicals, but we have a host of products, which are very high value and 6-step, 5-step chemistry, which are used for a specialized product. And we have almost 25, 30 products which are going in pharmaceutical and agrochemical fields. So these are the products where we have niche customer and niche business. The margins are good. As well as the CDMO business where we have developed the products specifically for customers. And there are also some products are 6-, 7-, 8-step chemistries. So these products are definitely higher-margin products. And it's a continuous process of adding value. So Speciality Chemicals business is not a constant business. Pyridine -- and pyridine, picoline is 1 set of products which is our cash-generating product for long, but we continue -- we have continued developing new products with higher value addition as per customer demand using our chemistry expertise and manufacturing expertise. And those continuous improvement and value addition is happening all the time. So that's why you see the consistent improvement in Specialty Chemicals.

Okay. So -- but sir, I mean, as we know, there are various companies even within India who are manufacturing various specialty chemicals. So are there players manufacturing products similar to what we are doing?

So most of the products which we are producing in India, you will hardly find any producer, maybe a couple of products out of 20, 30. Most of the products, we are producing, which are very niche.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thank you, everyone. We appreciate the time you spent interacting with us today. I hope that we have addressed all your questions and queries comprehensively. If you have any unanswered questions or any area where you have a clarification that we need to provide, please get in touch with the IR team, and we will be happy to engage and clear those doubts. Thank you so much. Stay safe, and good evening.

Thank you.

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