PCBL Chemical Limited (PCBL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to PCBL Limited Q3 FY '23 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] I now hand the conference over to Mr. Sanjesh Jain from ICICI Securities. Thank you, and over to you, Mr. Jain.

Thanks, Mia. Good morning, everyone. Thank you for joining on for PCBL Limited Q3 FY '23 Results Conference Call. We have PCBL management on the call represented by Mr. Raj Gupta, Chief Financial Officer; Mr. Shaket Sah, Head, Investor Relations; and Mr. Pankaj Kedia, Vice President, Investor Relations. I would like to invite Mr. Raj Gupta to initiate the call with his opening remarks, post which we will have an opportunity for a Q&A session. Over to you, Raj. Thank you.

Thank you, Sanjesh. Thank you, Niraj, and a good morning to everyone. On behalf of PCBL, I expand a very firm welcome to all of you on our earning calls. I would first like to take a moment to introduce Mr. Shaket Sah, who's just joined the group as Head Investor Relations. Pakiam of elite of management in Mumbai and in product for 30 years of its strategic experience across various industries and functions. Prior to CBS give us adding up Investor Relations and ESG reporting for case industry. We also had a growth. At the group level, Shaket will also be -- we are heading, EMV and sustain PDP initiatives. Coming to quarter 3 performance. We reported INR 1,450 crores in the operating revenue during the quarter, the quarter was in INR 176 crores. PBT and PAT stood at INR 128 crores and INR 100 crores, respectively. On a bit basis, our revenue from operations was INR 4,500 crores, while EBITDA stood at INR 575 crores as against INR 3,228 crores of revenue and INR 534 crores of EBITDA during the same period last year. On a quarter-on-quarter basis, realization pure was almost flat due to steep correction in crude prices, the formula pricing would correct by over $200 per ton in quarter 4 over quarter 3. As a result, there was a significant level of inventory liquidation at customer sales, resulting in lower uptake. Volumes during the quarter were around less compounded tons, down about 10% from the previous quarter. However, due to significant destocking that has happened. We believe part of this volume, we will be able to make up in quarter 4. Also, despite the gross base volume with our well-placed customer and product portfolio, it would still maintain the overall profit margin. EBITDA further during the quarter was INR 7,357 as agent INR 1,853 during quarter 2. Setting our new food addition power plant during the year have resulted in significant debottle-king of our power capacity. And now we are able to generate and send more units of power quite enough carbon at production. On a YTD basis, we have related on an average, about 1,338 units of power button of carbon back. And this number in the same period last year was 1,148 units. So, there is almost 190 units of increased generation per tonne of patent production. Quarter 3 power division was even higher at 1,350 units per ton of thousand tonnes. Average realization during quarter 3 from our sales was INR 373 -- we are seeing an uptick in power tires in the current quarter with average exchange price of around INR 6.4 per unit in January as against an average of INR 4.55 during quarter 2. Specialty volumes during the quarter was around 9,000 tonnes, which is roughly 8% lower than previous quarter, again primarily on account of mental liquidation at customer ban. We are getting very strong cement demand commentary from auto and tire industry, and this is also reflecting an uptake in the current quarter in our industry. So, we expect a bit volume-wise quarter in quarter 4. On the project side, first kind of Tamilnadu is ready, which is roughly 40% of total tonality. We are just awaiting perm some electrical quality to give us Satapower. We expect really about 2, 3 days’ time before which can start with ada. Second line will come up with a cap of about 30. So, I deal end of this month, deadline would also be ready and we will commission the forelimbs after that. But more or less a projective JV and [ any one of happen to be entities ] to go to there. So, you can have your own assessment of the readiness of the plan. On expansion of specialty lines out of the proposed to first line is in advanced stage of construction, and we expect to in by March 23. It will be around 20,000 tonnes line, which we drive. -- committing of the time line to take another year. So, by March 24, we will have that line of ready. With this trend, I will turn the floor for your questions.

[Operator Instructions] The first question is from the line of Adit Charan from SMI Institution.

Sir, my first question is on the domestic market volume. Sir, we are witnessing in this quarter that the domestic volumes have declined by 7% on a quarter-on-quarter basis. So, are we witnessing domestic demand also have started to falter or has become weak? And how is the current trend for the month of January?

Okay. I think is -- I mean, like said, our volumes during the quarter are around 10% lower compared to the previous quarter. And I said that there we could be spice correction within last quarter and this quarter. So, I mean, there would be a completion at customer tend to give you the inventory level.

So, what we are expecting that export demand was only, but now we have started to witness a decline in the domestic volume total. So just wanted to get an idea how is the domestic market like on right now?

Domestic demand scenario looks very encouraging. I mean not only Taranto companies are manufacturing more volumes were also exporting lower domestic demand as well as overall manufacturing level in India that has gone up, right? And that is not structural. So, we don't see any challenge on the remark side. But if there is 6%, 7% price drop between -- and we operate in a formula pricing industry, right? So, our customers know that by shifting part of the update to subsequent quarters, we will be able to secure more costly. So therefore, to domestic market and impact market over the volume block. Now in better market, yes, in Europe, there is decision and therefore, there are a few but we have our own strategy. So, we don't get bought up by what is happening in the industry level. It's a pretty big market. And what we are doing globally tenant is pretty small. In [ markets ], the volumes that we do is it about 10% of the total global demand. So, all we have to do is mitigate more customers or that's all they have to do. And we have already invested in our supply chain network. We are well connected with customers, has very fast paces. -- nobody in for many countries. So, we don't see this scenario as content is concerning.

Okay. Sir, for the month of Q3 FY '23 or whatever shaking the broadband data will we get the imports of carbon line -- so there it was showcasing that imports in India have started to increase on quarter-on-quarter basis, we have gone up by roughly 7%. So just wanted to know for -- so this is particularly for which country, if you can highlight from China, Russia, South Korea when we started to which we increase in imports... In India.

Okay. First of all, China is not as potent a cat of volume as well as in terms of their product costing. So, both in China, in India is far later than last month because it was 500 tons. -- right? So, you're right that our level of export in the interim has gone up, see what happened. I mean, last 1.5 years that we be qualities that of this or Eastern Europe, later not being able to utilize the capacity they were selling primarily in Western Europe. And then eventually, in importers in on to come in the insecure or cost. And significantly in quarter to an quarter 3, the realization of catenation high, we were selling at almost 140,000 to 2%, right? And therefore, there was an opportunity for them. things will continue to happen. Some products will be import going down significantly from other quarters that we but for us, what is important is to hold on to our own strategy ensure that we have a fair balance between our margins and capacity utilized. And that's exactly what we...

Got it, sir. Sir, now we are mistaking that -- so the carbon flat prices have started to decline. So, in declining carbon black prices in value, how does our spread move like just an idea if situation is you can maintain or then the decline into the spreads?

Any change in crude prices or partly are downward do not impact our ag because almost 70%, 70%, 30%, 35% of our sales director directly link it cost or a material. And therefore, there would not be any margin impact. Margin impact may come from different regions. -- if you are talking about a tenth happens, maybe there is some kind of inventory duct in the system to that end. EBITDA level margin change may because of change in some system structures, like pickup is moving up for dingdong, -- and there are other cost outs. But otherwise, plainly speaking, changing crude prices, as one we are not building on massive inventory that's in or impact of half.

And similar declines and are you expecting into the CCS prices also. So just wanted to know for this price decline in carbon bank. So, this is lately because of demand sorting or this is a raw material part-out kind of see what happened.

It's a raw material part. Prior quarter, quarters when we are selling our lotions at $100, and both quarters lira material is been INR 85 crores. So it is just a reflection of the [indiscernible].

And for the current pond also, sir. So, for the current quarter also, so you are expecting that the crude prices remaining die $80, $25, so that could be the [indiscernible]?

For a month, crude pricing have remained range down, right, between around $8 and $5. So, we are not seeing any significant pricing next quarter as of now, under 2 changes in the vein magnificently.

Sorry. One last question from my side. Sir, on to the specialty business, so the global growth what I was seeing. So that is expected to be around only 3% to 4% in around 2027. But sir, we are confident that the specialty business will -- will grow faster than the normal rate. So how should we look this in context with PCB?

It is -- so globally, even if you look at global industry are the industry last 4, 5 years has been growing at a CAGR of about 6% to 7%. So that 4% to 5% number, I don't think that is select number one. Number 2, we are a new entire business sales, specialty sales. And therefore, we have a smaller portfolio as compared to some of the large mean. Also, an affected is very small 1 billion in market what -- this is a very small market share. We have yet to a larger portfolio and we are yet to connect it a number of or. So that's an opportunity for us. And that's exactly what we are doing. And therefore, we believe that the spoke to 5 years a rapid grower product in specialty state.

Next question is from the line of [ Arthur ] from ICICI Prudential.

Basically, just on the previous question, just wanted to [indiscernible] of inventory impact, if you can help us understand, given you said there is some decline in formula planning, et cetera. So, should we expect some kind of inventory valuation-related impact going ahead in the coming quarters?

No, nothing significant because we don't increase inventory levels. We have a fair visibility around how the crop sizes are moving. And the complaint works with a quarter yet. So, it is not something that happens certainly for us. And we use that at this size because it is a part of as prices are going to drop steeply and there will be tendency for our customers to just part of the procurement to next quarter. And accordingly, if we depart structure number when the production has gone down. We think with our sales force. So, we have produced about 105,000 tonnes as against 101,000 tonnes of outage. So just 4 that is because we wanted to make up volume part of the lost volume in quarter 3, right? And we believe that Poor subsiding the overall demand scenario plus order book FPI, we believe that 4,000, 5,000 tonnes and additions that we can take during the quarter. over and above common volumes earlier like 1,500. So that's how we are looking at port. So, no impact of no significant impact of inventory.

Sure. And second question on -- in terms of margin, like if you see gross margin per kg or EBITDA per kg, which we have reported. So broadly, one should expect similar trend even in the near term, like or should one expect some more normalization in the next 3, 4 months, given where the pricing has moved.

So, I mean, our ecos indicated that because of all the initiatives the company has taken on portfolio building, manufacturing efficiency side. We believe that cut there would be a change in our margin profile. And we took 2022 as the full year number as is. And we believe that in the next 4, 5 years, on an average, in the year, they could be about INR 1,000 a thing in a very EBITDA performance. And we stick to that inanimate that will be little more from other years in a little late. Quarter on quarter, there can be some kind of fluctuation because the tattoo conditions we are in currently, the except volatile demand scenario product scenario, everything is teaming -- the 3 quarters, they can be getting up and down. But trajectories, I think we are on the right part to reach what we communicated earlier.

Next question is from the line of [ Brian ] from Equirus Investments.

My first question will be in regards to since, we've seen the 0.5 million tonne capacities coming up in domestic for all the players. And we've seen that export demand is also decreasing. How do we -- do you see that going forward, the domestic demand will make up for the incremental supply as well as decrease in exports going forward? And where a part click, where do you see this coming from?

Well, yes, we think within we'll have to understand here. Yes, supplies have come up. The capacity has come up the riots -- but if we go 2 years back and if you look at where Dana terms of capacity and where we are today in terms of their capacity and production, we have created a massive one on the supply side, and this is for -- million. So, in a normal steady state, the market will remain under supply, right? That's number one. Number 2, so we are already looking at more discussion of demand in Europe, right, we are talking about is on. So it has been not a , but we are talking about maybe a possible decision scenario -- what has also happened times have gone up significantly. And therefore, the level of manufacturing in Europe will also go down. And one of the overall collection might go down, but because the manufacturing level will also should go down and not will act go down. So should also import more from other countries. And that's an opportunity right? So, we want believe that overall potential for Port is going to go down despite whatever you're talking about Europe and the part of the world. So that's one second area is certainly producing more and selling more. So domestic demand in some and pot across the whole chain, not only cabo, but also authorities and in that is going up. So, we believe that this product in supported by month. And why then can we see it when the capacity comes up, markets look maybe a little oversupplied. -- the restate function, you will see that capacity gets -- so like when we also commissioned some in our capacity, you are not saying that we will be able to utilize it for it. But what we told earlier also that we feel that in 2 years’ time, we should be reaching the utilization. And therefore, we are already now working on some from expansion we -- so we don't see demand it, happy to look like it will be a challenge for us going forward.

Okay. And for export, like you said Europe in the opportunity, things go the other way. Where is the export -- where do we see a decline, which came in.

The current quarter was not a reflection of demand scenario engine in Europe. Even now when people are talking about recent growth, it is not reflecting India and large. And therefore, since a quarter we have [indiscernible] drop primarily to the price, which is expected 15. So, it is not in a broad progression. But then again, laid the destocking which happened is going for higher volume of...

So basically, I'm talking about 30,000 production of carbon laid for export 29,098 versus 39,000, almost 14,000 last year and almost 36,000 of previous quarters. So, we've seen a 20% decline on a Q-o-Q basis. So where is this decline coming from in export volume?

It is across geographies. Europe had case is just about 20% of our working volumes. As of now, Europe is not very big for us. Almost 75% of our volume are still sold in Southeast Asian look strategically reported station for us because we believe that going forward because of change relation, sign up making less retire becoming kind of logistic for them. It tilts a bigger opportunity for India. So that is factual change integration tabulation. But our puts that train presented qualities. And we are having what we are doing on the product side because we really, I mean what everyone is talking about in that comes to. So, we also do we need to create a category we don't depend on the part of the world in a big base. So, our strategy is to make offer more customer growth, typically demand or making some part of the model. And like I said that we have invested heavily in our supply network capability. We have created a lot of offices, warehouses, depending stations even are independent of previous -- and a lot of people when we met.

Right. And in terms of China and ask what is the trend currently these pendant will be the break-in for them... As 0.

Other location, it is still more than $300. I mean, Cotai plus higher Yes, a with stock prices in $300 higher -- but yes, I think the time has come when we would start looking at what is doing in Data space. They are no longer dominant for in our industry. This is reality. For doing in 2 years’ time, we will be competing with them and we can then our stock competition in the holography.

Got it. where are you seeing the higher import coming from do we see it coming down this quarter?

Mostly, it is Russian Palic is getting noted in India or directly at food country.

Okay. And in terms of specialty or since also inventory liquidation at customers end this quarter? Or do we see the volume of 11,000 coming back again next quarter, like when do we see such kind of volume?

We hope it will come back in this quarter.

Okay. There's no demand issues in specialty, right?

No, there is no demand issue. And as I said that we are still very small for the next 5 years or is that a problem.

Next question is from the line of [ Bharat from Quest ].

Q-o-Q despite decline in the quantity, we have been able to improve our EBITDA margin. So, what has led to this is a structural change, which we were talking has helped us in improving the EBITDA margin.

[indiscernible] First of all, seawater in the domestic industry, we have to do a -- and therefore, the [indiscernible] supplies coming up, thus a little softening on offtake because of price corrections we [indiscernible] and did not start right for us right?

Okay.

That's number one. Number 2, a good part of our patents is also related, even volume goes down and our expenses also go down. what passivity to the delicate significant pain trade costs. Fedora means very high for 1 quarter has dropped significantly down in quarter 3, right? And it has almost come back to the [indiscernible]. And complement to that, we could still maintain better EBITDA for 5 despite this volume drop.

Okay. So again, in Q4, again, Y-o-Y, there would be a significant improvement in EBITDA because last year, we had a very high logistic cost, correct? Is that fair understanding?

Yes. No, there profits costs on an upside to where this year, it is on the lingo.

Okay. So now coming to the specialty business, Raj. See, we were expecting around INR 45,000 crore 45,000 tonne in initial, I mean, first part of the overall estimate, which now is we are roughly around 29,000, 30,000. So how do we see and then going back from 45 to 54 that, I mean, medium-term projection that we were looking. So where do we stand in that? And how many number of products we have been really able to add during 9 months.

At area, I would say that more or less, we are on track. I mean, I understand that initial guidance was around 44,000, 45,000 tonnes. Secondly, we started the year, the global growth out was at about 3.5x utility growth rate. This already come down 1.5%. It is more than 50% decline in boat for current year is... FY '20... Now in [indiscernible] if you look at our mandate, it is still better than last year's run rate. Third quarter, what has happened is the volume loss which has happened by roughly 1,000 odd tonnes. It is primarily on account of the ice is part of our ability to sell that is there. And therefore, we are confident that, I mean, then we ask them that there will be, again, be able to get past that 1,000, 2,000 some kind of a run rate quarterly -- we feel optimistic about that.

So, is that fair understanding that roughly we will be able to order around 40,000 to 41,000 tonnes for 23?

I think so...

Okay. And now coming back to -- I mean, then again, going back to see we were talking about adding additional 10,000. So then it will remain around 51 rather than 54%. Is that a fair understanding or...

Currently, the head market conditions are extremely volatile, right? And therefore, it is not that once we have some volume in one quarter, we cannot make it up in subsequent quarters. So as of now, I'm not giving any indication about next year. Let's go through the next quarter or so. I think you can talk the year we will be in better position because then the last year basically the around our order book. So, I think with more condition, I'll be able to. But we feel confident about our specialty we are launching a reinitiating specialty customers. So, I mean, we don't see any challenge.

So how many new products we have been able to? And now currently, what is product portfolio and where do we see in 2, 3 years' time?

Every year, we have been working about 9 new grades. I think that should be on based of launches. As of now, we have close to 50-odd potion portfolio.

Okay. And is that fair under again, new products, I mean generate a better margin than the current one?

Not necessarily -- while some of these plans will be a little higher on the value side. But the whole idea [indiscernible] keep us giving you our solutions for our customers because what is especially today, eventually 45 years tacit commodity. And then we'll have the content we do in that contra something which is more than input for our customers and at...

Okay. Last question, I mean, commissioning of this new Tamilnadu plant will have some kind of a because of lower utilization on fixed costs. So, our EBITDA may not be high as well as interest costs may also go up.

We don't have significant borrowing in Samengadu. So, interest on will not be much. Number one. Number 2, because this plan is based on related technology, we expect our overhead to be also relatively lower in this company. It's a new either we are developing the grant. And therefore, I don't think I have that to be concerned but we don't see a challenge around utilization of capacity. So, like we said that in period time, probably it should be utilizing.

The next question is from the line of Andrey Shen from ICICI Securities.

First, on the demand side, particularly demand supply Anakin domestic. For the export market, it's us who have been dominantly established by the capacity addition, which is coming by the 2 of our competition is largely catered to the domestic market. And so we have highlighted this earlier as well that they don't have a meaningful export presence. Will this create a sort of imbalance in terms of demand/supply situation in India? That's number one. Number 2, will it have any pressure on relooking the business model in the domestic way the last 5 years has been a phenomenal for us in terms of cost less basis. Do you see risk in terms of your cost plus basis in the situation where we expect for next 2, 3 years, at least, it will be an excess supply -- but on the domestic market side. Second, on the feed store side, we have seen India importing almost 1/3 of the crude oil requirement from Russia. Are we also looking to import more CDSS from the Russian market, which gives us some sort of a cost advantage in terms of the raw material procurement. Are we doing it is there on the card? So, these are 2 of my initial questions. I'll come back for more questions.

Okay. Just to answer your first question, -- we consider the more low weather market. And while remains the largest market for us. But so far as our own strategy is concerned on the part side, it won't depend on any covering India in a big thing. -- then selling capacities have come up and because the they don't have that asset to export more or sell more innovative market. Possibly, there is a data utilization. And we are selling aware of that, right? And this quarter also will be that therefore we are contend we allow side that 150 and margin. Speaking on how we are looking at the overall demand-supply scenario. The stage is keen by an very, right? And globally that has to be built up, whether the capacity comes in in other. So, while they can be retooled demand and supply. But from overall client demand perspective, we don't see in annual real market in roofing. Number 2, the meat that enacting in Western Europe is also for the sale because of higher energy prices now there. And consequently that we don't -- we don't feel that we will not be able to infection fact for our other international contractors we sign this contract sometime in November, December, we are calendar year and give a good order book action right. So, we have ability around that. Coming to your question on the feedstock in port side. Will we explore the possibility of establishing procurement relationship is tetra. -- problem is the quality that we get content, that quality part period than what is available in tune -- so the logistics cost of premium material to India is even now it is very expensive. And it will be a orthoganal on the pricing side. And maybe there is some more tactical problem which is currently, it is very difficult to get insurance comes which are trading tesa materials. So, with these key problems as of now, it looks to look and commercially also, it doesn't make not paid for.

Got it. One follow-up on the first answer. Is it fair to assume the way you have explained, our mix in terms of domestic and international is going to significant change in next 2 years because while domestic market is oversupplied, export market looks a very interesting positioning. So is it fair to assume that a lot of incremental capacity that is sold in an export market. In such a scenario, do you also see a risk to the gross profit for TG because historically, we have seen that export market has been at a slight discount to the domestic market. Do you see that also panning out along with it? That's my first question. Second, on the power side, with all this power capacity coming up, how much more power at a peak utilization that we can sell incrementally how much more units can be sold from the increased capacity? And what is the capacity shown today. So these are the 2 questions.

Yes. Last people and we over maintain, have been almost salaries. So sometimes the in margins for us, sometimes international margins. So, if you look at average margin generation from Sonotrand international segment, it will always be there because it was the reason for us to take that in to say a little more in the case market and part right -- coming to power provision side. Let I said that we have been getting lower number of units per ton of carbon that production because of the population which we are believe deep on. And we believe that our quarterly run rate of our sales, which was -- last year, if you look at core about 25 million, 26 million units per quarter, it has already increased to 19 million to this per quarter. gladly taken towards -- more towards 1 million or -- so based on our selling capacity, I'm not considering coming out of the fact that will be separate. Based on our current capacity, we can go up to maybe run rate of about $100 million a...

So another 10% from here is what we can see upside in terms of the power unit sales? Yes. Got it. Got it. One last question to sum up from all the earlier answer you have said. So, it is safe to assume that next year, whatever has happened, assuming the situation is being stable, we should be able to add 50,000 metric tons on a standard Carbon Black and another 10,000 metric tons on the specialty, that would be a fair assumption?

But like I said, that maybe in a couple of months' time that we are tires and we'll be in a better position to give the guidance. But it on fairly reasonable.

And the gross profit sustained at this level doesn't think like it is, right?

We don't consider anything...

Next question is from the line of Dhiral Shah from Phillip Capital.

Sir, what is our debt position as on December 2022 -- in terms of long-term and short-term debt as our finance costs are even sharply in Q3? And how do we project by March 2023.

Editorial basis has not gone up. It remains where it was last year and it was around INR 60 crores model. Out of that loss was around INR 300-odd crores to at leases have not gone up. But what has happened in March last year and now U.S. part has gone up by 425 basis points. Even point gone up by 25 basis points, from 410 is, is 25% right? And the spot market out the commercial payer etcetera as on an even right? So, we are on an average about 3% interest rate. If you slide certain interest rate on our net of INR 70-odd crores, that convert into some INR 21 crores for the full year. And for 9 months that will come to around 67 million our increasing interest cost on a -- so it is on the same in existed scenario, which is projecting on our borrowing cost. But for say that level of powering has not gone up by we have given a guidance that for maybe around INR 50-odd crores lower some the last year that's come out, we have been able to manage with the candidate.

Okay. So by March also, we see this level of 700 kind of debt?

Yes, we will compare maybe crore and there but more or less, there is no significant change in debt profile that we are seeing on a sermon basis.

Okay. And sir, on the Chennai plant, particularly since we are almost ready with the 2 lines, how much volume we expect in current quarter on these 2?

From current quarter, whatever we said that we feel like the cap, et cetera. So maybe commercial quantity cannot be what more towards getting the approvals to set up from the customers. So, no commercial products, I think, impact on the revenue side.

Okay. So, from maybe Q1, we'll see the commercialization?

Yes, because the plant is in the process of getting commission like the lane come up actually, we don't have to go through the process of approvals from various customers. So therefore, there will not be any commercial supplies accessorial quantity may be there, but we are not noting that.

Okay. And sir, if I look at our Performance Chemical business, particularly, and what I understand that majority of our sales on spot as what expense decline in the volume?

Again, I mean, like I said, that the price point difference between quarter 3 and quarter 4. And this market is very fragmented market marking up good volume. So, for them, the pricing even in more -- so I mean, other than that, we will see any structural change in the demand scenario.

Next question is from the line of Raja from B&K Securities.

So my question was on the Performance Chemicals side. So given that Performance Chemicals, the user industry projects, the industrial hoses, conveyor, agri pipe, et cetera. So is there any numbers that you track to track the volumes of performing chemicals for our business? Any industry numbers...

So price contraction industry like we did. So this is the comment segment is more line construction industry. The delivered compaction industry does work and there is better off. But for us, Rada, mean our focus is on the holistic basis, like on the overall capacity action elections point, which I do move more material. The performance segment has been related to gain better facility in part of our offering. So, we created a number of ads we are not have an application in abroad but 3 different industrial applications. So, it was back up -- I mean, to offer the flexibility to move between different kind of customer investment will be changing market...

Understood...

Happen quarter to the increase in some other quarters performing the level. What is important for us is to ensure that we operate a higher capacity in across different markets.

Understood, sir. And sir, lastly, how many grades have you launched in now in specialty for 9 months FY '23 in the next 2 years, how much can you loan?

A specific number. But every year, we have been launching about integrated and now we are when we publish our annual report, we will get to the trade reflection of what all we did. But on the kind of bigger product... Okay.

Next question is from the line of [ Jessica ] from Lama.

Mr. Rohan site. Sir, a couple of questions. So first is on our new capacity commissioning. So do you see that when we go in full commercialization from Q1 onwards or maybe on Q2, do we see any margin pressure or realization pressure in the market? Or we think that we have already created enough orders to meet the additional capacities.

We don't see any beta. And I can say that the staff should have better efficiencies compared to all of the plants, it has come up in a few right? So over our efficiency, cost-wise and manufacturing right it solve where that could make up or even if you have to maybe give a ingots, but we don't see any impact of the market condition.

Okay. So you think that realization in the market will not be under pressure with the additional capacities coming in?

We don't see that.

Okay. Sir, second, on the new capacity. So there also in terms of that the performance and the Specialty Black, the output range will be similar or initially, it will be first starting from the Rubber Black and then we going forward only will be slowly moving to performance in specialty?

You're talking about a and as of now, we are only coming up with parent performance capacity. There is not a specialty capacity in the first...

Okay. So I was saying that how do you see that the capacities of the greenfield plant in Tamil Nadu will move forward towards performance and specialty over the next 2 years to 3 years? I mean, how it will...

As of now, an expense of expansion would come up in Mundra, not in Pomellato. So we have to do some work around supply chain if we have to create specialty capacity also have performance, of course, we will produce -- and again, located for us, what is important is to ensure capacity is -- so what opportunities there in performance or entire. They try to create a proper...

Okay. And sir, you also mentioned that the steep correction in crude prices, the falling pricing which we have. So realization definitely will come down from Q4 onwards, right? So will it have -- do you see that our margins will definitely demand impact because we generally have a EBITDA per kg margin impact? Or you see that with the fall in prices, there will be some impact on margin as well.

So like I said, movement in crude prices or raw tactics or a realization that it not happening at fourth quarter margin -- but second in time, our guidance inanimate that in this way because of all the lasers that we are taking internally at and, of course, movement is in our market.

So in EBITDA per tonne, generally, would we have a 9-month out 17,000... It's not partly not -- some quarter.

It can be a little more, but like if you look at 2022 and I think we are on plan.

Next question is from the line of [ Peter ] from Fatima Wealth Management.

Sir, the Mundra plant, the first line is commissioned or the second line is in process. Can you throw some light on that?

First line is an advantage of concession, we believe that by end of current quarter, it should be able to do the donation. And the second one will take about a year or 24 will come...

And sir, you missed the volume. So can you give the volumes like for domestic export and by the [indiscernible] specialty in performance?

Yes. Investor Update. Can you take it from there?

Okay. And so in terms of export also, which are the top 3, 4 export countries buy market share for you? And what is the demand outlook on those respective regions?

I think our exposure demonstrate. So we have points in more than 45 countries now. And if there is no people can be adopted for more than 78% of over volume. But we have a strong content Japan, Indonesia, Vietnam in the output pie. On the op side, we are applying to countries like U.K., level, it any plans there. it will play basically. And demand outlook like it is that domestic demand outlook in crit even impact size demand growth may not be very high leasing target. So on statistic that is operative time most of the economists are talking about a codon Europe and the litigation, but it is to some of the local auto and tire industry report, they gain an update in the domestic demand in these geographies, right? So we like to -- I mean their orders at in giants is excited to grow at a higher rate than what it was in the period, right? So from that success come against expected of margins. And then -- because currently, we are very small in metal market, the market is very large. We don't see any kind of challenge in being able to...

Okay. And sir, this was mentioned that there is availability of low-cost product from Russia and including you many other Indian players and global players have increased production. So there seems to be oversupply. So how much pricing pressure can you expect in FY '14 and FY '24 and '25. So from the current levels, how much is the price fall also given that crude prices are coming down?

Look, Russia, the focal leaner are not new in the market. When we look at the global market, but a in any case of petition... But they were in... Earlier compete retention not because there is a relation issue there. Therefore, they are [indiscernible], including direct is important here is or in any country. There is a bank like between the order and they're event trusting group special.

Sorry, [indiscernible], but your voice is not coming to you.

Okay. Could you clear first part what I was talking about?

Time lag you mentioned?

Yes. So I was talking about the time line between one placing the orders for imports and then eventually imports happening. Now last quarter, I think whichever customers place orders for Russian material, they have to buy at a significantly higher price and surprising price. There is 15%, 70% price correction between last quarter and this quarter. And both us understand that. So it poses the risk before them. So whether to import such a fluctuating price scenario or to depend more on domestic supply. So this quarter, therefore, in the first month, we have been significantly lower important...

Okay. So in terms of pricing pressure, so going forward, like from the current highs, how much can the price correct for next fiscal...

I think especially because from a global demand supply scenario. I think there is a fair balance between demand and supply. The market is not oversupplied. And therefore, it is unlikely that there will be pressure on the margin side. So I think it would be a reflection of changing scenario.

I think you mentioned that there was a possibility to visit the Chennai plant when you sell, sir?

Sorry, [indiscernible].

You said that it's a possibility to visit the Chennai plant?

Yes. You can do the data. I mean you can coordinate with the IR maybe.

And finally, sir, just last question. So what is the CapEx plan for FY '24 and '25.

Our current CapEx program is coming to an end, most of it. I mean, there will only be one line in Mundra after the current phase of its pant. But then we have also acquired small pipes of land at distant into our existing facilities. The whole idea is to do some ground in the increase in the next 2 years, FY '24 and '25, we might undertake some down to expansion. But as of now, the plan is not really with us, right? So once we finalize that, then we'll come back with more details on that. But our current CapEx would have come in to.

Okay. And sir, what is the current capacity utilization hereon?

In last quarter, we were around roughly 80%, 83%, 828.

In this quarter, sir?

This quarter is better.

Next question is from the line of Nilesh Shah from Envision Capital.

So what kind of investments will you need to meet these a... Turk...

Can I request speak a little louder please?

Yes. Is this better? Yes. So what kind of investments should we need to make in terms of ramping up a strategy time in terms of R&D and adding newer grades?

So on an average, we are spending about INR 15 crores to INR 20-odd crores. on R&D every year. And the selling is going to increase from here. We are adding more number of people. And also, we are undertaking some projects not only on product long side but also on locating a new kind of manufacturing sources.

And any further expansions along in terms of capacities?

Like I said, currently, we are running the play once it is over, then there is some brownfield expansion, which is happening on efficiency side. And after that, we intend to do some small pull downfield in Mundra and Chennai. But as of now, we have not finalized the time. So we'll be final, we'll come back to...

Next question is from the line of Shachin Kasera from Svan Investments.

Sir, what is the current CapEx, which is pending to be spent from the current ongoing that is already announced?

We have about roughly INR 100-odd crores against our downfall expansion and roughly around INR 250-odd crores on Samanage. Now where is it at INR 250 crores, which also includes retention money, if it release after the last based on performance and cast exactly from pending orders perspective.

Sure. My question is also margin on the cash flow side. So fair to assume that March will be take there. Where do you see the debt picking out? Is it the December ended that you mentioned? Or where do you see budget picking out Q4, Q1...

We have taken INR 250 crores worth of following right as part of this funding. So, it is more or less going to be the same level. Other than let working capital once it's our operations, small working capital. And on a stand-alone basis, we would see more or less where we were last year. I'm talking about March 22, as in March '20. It is more or less similar...

More on the consol side. So consol side, what is the level at which you see the debt will peak out?

It will be only that implemented the loan up to INR 50 crores... More or less.

Okay. But then once the line commission, while the CapEx will be over, we'll also made some funds for working capital, right as we repeat volume?

I mean, that will not be significant. Chennai just about 25% of our existing capacity. And to look at it on a stand-alone basis, our total working capital borrowing is about INR 400-odd crores.

So fair to assume that in FY '24, our consol debt at the net -- or let me even net debt on consol basis in FY '24 and should be lower than what we...

I'm not commenting on that again because one thing we need to understand our business and working capital department also depend largely on crude levels. If you're already to come down 40%, yes, what we're saying possibly will be that kind of a scenario excludes that will be in kind of scenario. Anite remains at the current level... Yes. But even these borrowings and all, I mean, Chennai boring norm. If you look at leveraging rates are there, it highest be 0.3 version there hardly everything, I mean the consolidated level and including working capital.

And one thing on the return ratio, sir, you mentioned that on an average, you're looking at INR 100 per ton EBITDA improvement on average are so less and more. So in that senior how do you see your return on capital employed moving up in the next 2, 3 years from the current level?

Because we have proved with our CapEx program that, obviously, I mean, the ROC should be somewhere closer to about 20%. Currently, we are incurring CapEx, therefore, billon ratios looking a little lower. Yes.

Next question is from the line of Anik Mitra from Fransat Research.

Sir, my most of the questions have been answered. I have a question like what was the price of Camelback last quarter is what is current coming scenario?

Past quarter average reduction was about INR 140,000 slightly over that, right? And this quarter, it will be around INR 700, INR 8,000 lower.

Okay. And sir, on the quality, I could not understand the inventory situation, if you can tie speaking.

I could not see an offering.

Sir, what is the inventory situation? I actually look for detours. Is a question.

Okay. In... We are not... We have not filled up any significant inventory it is a line Yes, it is a line is easily what we retain. We have just built up about 3,000, 4,000 tons of extra inventory to support our higher volumes in current.

Next follow-up question is from the line of Adit Charan from SMI Institution.

Sir, continuing with the earlier participant question, sir, on to the inventory side, sir, how is the inventory with the tire players right now. So they're at the nominal level? Or cost they have some 2 months of inventory in?

You're talking about inventory level Arie?

Yes, sir.

Sorry.

It's a tire sales in?

A position at the time the See, last quarter, there was significant destocking at their level. And while I don't have that number, how much quantity they are maintaining currently. But it is reflecting in the higher offtake. So they are trying to rebuild that.

Okay. Sir, one more question on to the Chinese plant. Sir, sir, we were told that the China clients have a benefit of additional yield. So can you explain like as compared to our 4 plants, how much is the additional benefit of yield which we will get into the chain?

No, I did not mention that. I said that in terms of number of parameters, both on the manufacturing side as well as on cost side, this plan should be more efficient while because it is coming up in the latest industrial technology and second, because it is a new plan. So there will not be any packages that we'll be hating here right? But the exact assessment of the yield, et cetera, it is the manufacturing team. can we don't publish this exactly planned.

Thank you very much -- on behalf of ICICI Securities, we conclude this conference. Thank you for joining us. You may now disconnect your lines.