Rossari Biotech Limited (ROSSARI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Rossari Biotech Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mitesh Jain. Thank you, and over to you, Mr. Jain.

Thank you. Good afternoon, everyone, and thank you for joining us on Rossari Biotech Limited's Q2 FY '26 Earnings Conference Call. We have with us Mr. Edward Menezes, Promoter and Executive Chairman; Mr. Sunil Chari, Promoter and Managing Director; and Mr. Ketan Sablok, Group Chief Financial Officer of the company. We will begin the call with opening remarks from the management, following which we will have the forum open for a question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you all earlier. I would now like to invite Mr. Edward Menezes to make his opening remarks. Over to you, sir.

Thank you, Mitesh, and good afternoon, everyone, and thank you for joining us on our earnings conference call. It is a pleasure to have you with us today as we discuss our Q2 FY 2026 operational and financial performance. We are pleased to share that our revenues for quarter 2 FY '26 grew by 18% year-on-year, driven by healthy volume expansion across all 3 of our 4 businesses. While the operating environment remained dynamic during the quarter, underlying demand across segments stayed firm. The HPPC, TSC and AHN businesses each registered healthy year-on-year growth, supported by improved volumes and steady customer offtake. Although a subdued pricing environment impacted realizations, our broad product mix and diversification helped cushion the overall impact on growth. Innovation and R&D remain central to Rossari's growth journey. Over the past 6 to 9 months, our teams have developed new products, both in ethylene oxide-based and non-EO-based guided by green chemistry principles to deliver sustainable, scalable and customized solutions for customers across industries. These developments strengthen our technology pipeline and enhance our ability to address emerging global trends and export opportunities in advanced chemistries and performance formulations. On the manufacturing front, we are pleased to announce the successful commissioning of an additional 20,000 metric tons per annum capacity at our Dahej facility and 15,000 metric tons per annum of ethoxylation capacity at Unitop, marking the first phase of the planned 30,000 metric ton per annum expansion. The second phase and other capacity additions are progressing well and are expected to be commissioned over the coming quarters. With these new capacities coming on stream and a robust pipeline of new products developed through focused R&D, we remain optimistic about sustaining healthy growth momentum in the coming fiscal year. With this, I now invite Mr. Sunil Chari to share additional perspectives on our business performance and strategic priorities.

Thank you, Edwardji, and a warm namaste to everyone. Q2 FY '26 reflected a strong growth trajectory across our core verticals with the HPPC, TSC, Textile Specialty Chemicals, and AHN divisions growing 16%, 21% and 29% year-on-year, respectively. The performance was largely volume-led, supported by deeper customer engagement, a broad-based product portfolio and expanding application coverage across industries. On the export front, our international business delivered robust growth with exports rising 36% year-on-year in Q2 and 27% in H1. This growth was driven by improved traction with key customers, higher wallet share with strategic partners and deeper penetration in both existing and new geographies. We now derive nearly 28% of our overall revenues from exports, highlighting the expanding scale of our international franchise and the significant opportunities emerging across global markets. As Edwardji mentioned, our new ethoxylation capacity at Unitop is now operational, marking an important milestone in strengthening our manufacturing base. The continuous loop ethoxylation technology as a new facility will offer improved efficiency, higher throughput and better product consistency, which should help us optimize utilization and support higher output levels. Our existing ethoxylation facilities are currently running at optimal utilization levels and we have adequate EO availability to support them. From a long-term perspective, we continue to explore avenues beyond our footprint in global ethoxylate markets. To support this initiative, our Board has approved an investment of up to USD 8 million in Rossari International Limited Company, our wholly owned subsidiary in Saudi Arabia. The proposed investment will be made in tranches and is intended to evaluate and assess expansion plans, which align with the company's strategy to enhance its global presence and strengthen its position in international markets. With that, I again once again thank you for your continued support. I now invite Ketanji to share the financial highlights for the quarter.

Thank you, Mr. Chari, and good evening, everyone. Let me take you through the financial highlights for the quarter ended September 30, 2025. In Q2 FY '26, we have reported revenues of INR 586.1 crores, a growth of 18% Y-o-Y, led by robust volume performance across all our 3 verticals, HPPC, TSC and AHN. While volumes supported the top line, profitability remained steady, reflecting the impact of subdued pricing and continued investments towards scaling up new business initiatives. As these initiatives begin to contribute more meaningfully to the revenues, we expect profitability to strengthen progressively. Our institutional and B2C business remained soft during the quarter, growing around 1% Y-o-Y and 7% quarter-on-quarter. However, it is encouraging that losses in these verticals have reduced, driven by our efforts to improve profitability and operational efficiency. We remain committed to building this as a high potential platform for a long-term focus on scale and sustainable performance. EBITDA stood at INR 71.9 crores with a margin of 12.3% compared to 13.2% in Q2 last year. Excluding the institutional and B2C verticals, our core EBITDA remained steady at around 15%. Expenses during the period. Much of these is in line with our growth initiatives, capacity expansion and some businesses being in their growth phase. We remain confident that as these initiatives scale up and reach operational maturity, they will contribute to margin improvement in the future. On the CapEx front, we have made significant progress with successful commissioning of our new capacities during the quarter. These additions take us closer to our total planned capital outlay of INR 192 crores with the remaining projects to be commissioned and capitalized over the next few months. These projects are being funded through a prudent mix of internal accruals and debt and are expected to deliver 3 to 4 asset turns at full utilization. On the balance sheet front, we remain strong, supported by healthy liquidity, conservative leverage and sufficient headroom to support ongoing growth initiatives. The net working capital was higher during this quarter, where we ended at 102 days compared to 95 days in March. Given the slightly tight business conditions, some of the receivables have got stressed and also a major institutional sale, which we did in quarter 2 has a long payment cycle. However, all the receivables are good and have a long relation with us. Inventory levels have been kept marginally high due to strategic stocking of certain raw materials and semi-finished goods. As we enter the second half of FY '26, our focus remains on disciplined execution, operational efficiency and scaling innovation-led businesses. With recent investments in place and our operating framework firmly established, we aim to prioritize enhancing capacity utilization, deepen market presence and broaden our product portfolio, as well as unlock new opportunities across customer segments and geographies as we drive this next phase of the growth journey. Thank you, everyone, and I would now request the moderator to open the floor for questions. Thank you.

[Operator Instructions] The first question comes from the line of Rehan Saiyyed with Trinetra Asset Managers.

Am I audible, sir?

You're not very well audible.

[indiscernible]

We can't hear you. We can't hear you at all.

Mr. Saiyyed, we cannot hear you. Can you come in the range and talk.

My first question is we have commissioned an additional 10,000 metric tons per annum capacity at Dahej [indiscernible]. So could you share how [indiscernible] on ramping up and what incremental revenue for [indiscernible] to deliver at full capacity?

I'm sorry, Mr. Saiyyed, you were not clear, but what I could gather was you were talking about the capitalization that has happened at Dahej and how the scale up is going to happen. Yes. So this plant has got capitalized in this quarter. The scale-up is going to happen over the next 2 to 3 years. And our assessment is that by FY '28, we should be reaching the peak utilization of this CapEx.

Okay. You have mentioned FY '28, right?

Yes.

Okay. Fair enough. And my second question is around the capacity expansion. You we have said that with multiple capacity expansions, global initiatives and ongoing investments. So how do you plan to manage working capital and maintain a healthy leverage profile [indiscernible]?

Sorry, I couldn't get your question...

Sorry to interrupt.

Can I repeat my question again?

Mr. Saiyyed, go ahead.

So my last question is with multiple capacity expansions and global initiatives and ongoing investments. So how do you plan to manage working capital and maintain a healthy leverage profile in near term?

No. So all the capacity expansions that are happening are happening in a phased manner. It's not that we are going for multiple expansions at one go. We are very mindful of how much of leverage we can do in terms of the balance sheet and the profitability numbers that come in. There are certain initiatives which we are -- which are still at the exploratory stage. So these will probably come up a year or 2 years down the line, assuming that we understand that it makes sense for us to do. So some of them are more exploratory, and we'll be mindful of in terms of leveraging and funding these CapExes.

Next question comes from the line of Pranav Doshi with ARDEKO Asset Management.

Am I audible?

Yes.

Yes. So my first question is on our growth in export momentum has been very strong. And like which are the geographies which are driving the growth? And like which are the emerging geographies which will help us in sustaining or even increasing our sales momentum in the export market going ahead? Yes, that is my first question.

Yes. So we have now been targeting for quite some time geographies other than the Americas and Europe, which traditionally have been majority of our exports. So the new geographies are Far East, Southeast and the MENA region. And we have seen growth in all these countries in the last quarter.

Okay. And yes. So like those would be the emerging geographies then, right? So currently, that would be like less than 10% of our sales, the Far East and the MENA region?

I don't have a bifurcation of each of these countries, but we have been able to grow very well in these countries.

Okay. Sure, sir. And sir, my next question is on that there is a sharp rise in the other expenses for the quarter. So while I understand that it is on the investment front, so can you like help me and provide a breakup of the same so that I can better understand the nature of these expenses. So like exactly which head would have increased for the other expenses for this quarter?

Yes. So the other expenses have generally grown on the sales -- SG&A side. So the major heads are our freight expenses and traveling expenses. So these are the ones which have grown up. And then we also had some additional expense during this quarter on maintenance, which is to the tune of almost INR 3.5 crores. So that's a major expense we've had in our Tristar and also in our Dahej facility.

Okay. And let's say, incrementally going forward, like how do we see this head moving? So like I'm asking this because, let's say, Y-o-Y our sales have grown by around 18%, while this head has grown 27%. And you talked about increase in the expense because of investments. So I was just trying to understand that piece.

Yes. So some of these expenses have also increased in our B2C business, the institutional and the B2C business. But overall, we expect that the expense levels should be at the H1 level that we have reached now, we should be around that kind of levels for the rest of the year.

Okay. So like H1 -- sorry, H2 over H1, there would not be much of an incremental growth?

No, no. That's what we expect.

Okay. And sir, on the investments that we are undertaking. So while I understand that we were building our manpower capacity for the institutional business and now we are also doing some more investments. So I just want to understand that which are the investments in the business that we made in this quarter? And what kind of results are we expecting from the same?

So we -- in the B2C business, we've generally made investments these are basically OpEx expenses in terms of a large quantity of that has gone in the selling-related expense. So some of the large exhibitions in the cleaning space is what has come up in this quarter. We've done almost about 2 to 3 large exhibitions where we got large spaces, spent a lot of money. And these are not only in India, we did a couple of them also in the Middle Eastern countries just to showcase our capabilities in the institutional space. Hopefully, that is a little a far-fetched plan of ours that if we can get some institutional business in the MENA region, but this was the first stepping stone that we've done in this quarter.

Right, sir, right. So then just on the -- yes, like institutional business front. So I think our EBITDA losses Q-o-Q, they have decreased in this business. And like if you see the base business and the EBITDA margin was around 15.8% last year and now it's 14.8%. So then what was the reason for that decrease given that I think majority of the investments have gone into the institutional business?

Yes. But see, these also have a lot to do with the kind of product mix. And as I said, there were some additional expenses on the maintenance side of the core business, the B2B business, which has brought down that margin by about 1% compared to last year. And we've always guided that we'll remain with [indiscernible] of the B2C and institution business, we should be ranging between 14% to 16% in the core B2B business.

Okay. Okay, sir. And just finally, on the newer facility, the EO facility that you commissioned. So while I understand that the Reliance -- the new Reliance plant is coming in September or October of 2026. So until then, what kind of an availability do we see so that what kind of ramp-up we can expect in the next year or so until the newer availability of the ethylene oxide is available?

We will be using the facilities for manufacturing non-ethylene oxide products or non-EO products. We are working in the R&D with a range of products for non-ethoxylates, which includes esters, emulsifiers. There are also many enzyme formulations, biocides, disinfectants. So we'll be ramping up these products. A whole lot of about 50 products are in pipeline for us to start manufacturing there.

Okay. So if I'm correct, then I think this was originally meant for EO, but then now we are focusing on the non-EO chemistry. So is it fungible then, so then we can...

Yes, [indiscernible] this is always fungible. We can do non-EO reactions in the EO vessels. We cannot do ethoxylation in non-EO vessels. So that is not possible, but vice versa is possible.

Okay. So we'll be majorly focusing on the non-EO chemistry then? And yes, sir, just a final question. So I think, again, we've grown our sales very well, so 18% is a great growth. And like given the constrained capacity since we are already operating at the optimal level. But let's say, incrementally, when can we expect the margins so that the investments are done and the margins actually bottom out and then possibly move towards the 13% to 14% range that we are guiding on a stable level?

So I think once these capacities come full stream and the EO availability comes in from the next year, I think we should see some improvement in the margin because the new facility that we've set up is a more advanced and a continuous facility compared to the vast facility that we have now. So we'll have -- that's when we expect. And also the fact that currently, we are not very sure how globally the issues with respect to tariff, et cetera, are going to pan out. And so there is a little bit of a pressure on the pricing front because a lot of the end customers are asking for price reductions, though we've not done any of that in this quarter. But September onwards, we faced a lot of resistance from the customers in terms of the pricing. So for this year, I think at least now, it's a little difficult for us to really predict how the year is going to end up. But if we can maintain these kind of margins for this year, I think we would be quite happy.

Next question comes from the line of Prachi with PhillipCapital.

Sir, my question was on textile chemicals. We expect a degrowth from [indiscernible] or what is -- and even for the full year terms, we are expecting a mid-teen kind of growth in the same thing going forward? Yes.

So Prachi, as you know, because of the tariffs on textile exports to the U.S., a lot of home textiles and terry towel companies are under pressure as well as a lot of garment manufacturers, which exports to the U.S. are under pressure because of the price 50% tariff. So I believe that although this quarter, textile chemicals did pretty well, there was a 10% growth quarter-on-quarter. but we believe that there will be headwinds because of the tariffs and also not only headwinds in terms of sales, but also there would be some margin pressure. So many of the suppliers are planning to kind of share the risk based on a case-to-case basis. So if there is tariffs, then they would share the risk. And if the tariffs are reversed, then that risk will be reversed. So that's the kind of strategy people are using. And just like the tariffs arm twisting us, similarly, our customers are also arm twisting to reduce prices. The pressure has just begun. So we do not know how it will pan out because everybody is waiting and watching.

Okay. Sir my second question was on non-ethoxylation business. So do we have any in-line order book? Or when do we expect the revenue from this non-ethoxylate part in our top line?

So we should see revenue ramping up every quarter. Now a lot of -- it depends on how this uncertain situation is developing, especially with related to tariff because with the tariffs and the situation in Europe, we are very -- not very sure about what will happen. We are hoping for the best, and we hope to see improved revenues every quarter.

Next question comes from the line of Sanjesh Jain with ICICI Securities.

I got a few questions. First of all, happy Diwali and happy Dhanteras to the entire Rossari team. A couple of questions. First on the new capacity, which has come up. I thought we were running short only on ethoxylate capacity. And the non-ethoxylate capacity we already had enough. Now how does this new capacity coming in and not having enough EO is going to help us?

So we grew 20% practically in volumes based on the non-EO capacity. The capacity of EO is already fully utilized.

No, no, that's what I'm telling. We already have enough capacity on non-EO and we are already growing there. No doubt and a commendable job. What I'm telling your capacity coming in, which we have just commissioned, how it's going to aid the non-EO facility? Because I didn't think that we have ever mentioned having faced any capacity issue on the non-EO side of the business.

No, no. I said that we can use these reactors wherever needed for non-EO production. And one the capacity which is coming up is called MDA, which is methylenedianiline, which is a continuous ethoxylation facility where we cannot do anything else other than MDA and [indiscernible]. So that is not fungible. But other reactors, the ethoxylation reactors can be used for non-ethoxylation if required. But the non-ethoxylation reactors cannot be.

That I understood. I said that are we facing issue even in the non-EO side of the business?

No, no, not at all. We have capacity in the non-EO. But what is happening is there are some reactions which are special. For example, when we do distillation, then the size of the column is very, very important. The condenser size is very, very important. [Foreign Language], the size of the distillation column is not the same. So sometimes we'll have -- we have some reactors where high temperatures is required. So there, we have to use high-temp liquid, which is the boiler with -- to get higher temperatures. And there are some steam-based reactors where only steam can be used, we cannot use higher temperatures. So that could be the constraint. But otherwise, there is no constraint in non-EO production. For certain kind of esterification reactions where, again, we require high distillation. We have been -- we have some capacity constraint, but we are in the new CapEx which is approved and we are doing small, small, small, small additions and reaction capability wherever we don't have such kind of [indiscernible].

Got it. Got it. Second question is for Edwardji. Sir, you said that you are looking or we have developed a very strong pipeline on the product, new chemistry, new product. Can you help us understand how many new products, what application they deal in? What is the market we are looking at in terms of addressable market? And any initial customer approval that we have received? Some color over that will really help us.

So some of the products very recently that we have developed are the biosurfactant. The earlier facility was a pilot facility, which was in excess of -- a little bit in excess of 1 tonne. Now we have ramped up this facility to about 10 tonnes. So the biosurfactant is something that we are looking at to make about 250 tonnes plus in the year. These are sulpholipids and some research has already been initiated for the rhamnolipids. So this is one kind of product that we've introduced in the recent past. Then we have cocamidopropyl betaine that is CAPB. We have CDEA that we have developed. And we had some color issues in the past, which have been solved recently. Similarly, the silicon block polymers were basically made at our subsidiary company, Romakk. Again, there, the capacities were much small, much smaller than what we have installed at Rossari. So we have ramped up our silicon-based products. Another product that we've successfully introduced is the silicone surfactant, which is a super -- which goes into agro and goes into other textile formulations. So this is another product that we have introduced into the marketplace. We have stabilized our ester quat for softeners and various esters like SMO, SML, SMS, all these products have been now scaled up to produce -- I mean, to give us volumes in place of the ethoxylate capacity constraint. Finally, we've also now established a full range of spin finished products for staple polyester for POY as well as for the FDY polymer. In the past, our NMMO production capacity was about 150 tonnes. We have done quite a lot of work in developing better processes and more efficient production processes to increase this production from 150 to about 300 tonnes now. So a lot of work has gone into these chemicals. Apart from that, we have developed -- I mean, we had installed the cold powder producing technology for the polyethylene glycols. So a lot of work has gone into that for stabilizing the product. Now the final plant is under commissioning. And I think our R&D work will help us also go into that direction. Apart from these products in the Animal Health and Nutrition, we have introduced short and medium chain fatty acids as a new product category to improve gut health and for the reduction of antibiotic dosing in poultry. And finally, happy to say that we have developed a lot of improved formulations, both in the vitamin premix and the mineral premix which will now go into production. By the end of this month, this plant is under trial now. I mean they call it water trials. So this plant is under trial, both the biosurfactant as well as this plant is in the trial now. So the new formulations for vitamin premix as well as the mineral premix mixes will go on stream. So I think there is a whole lot of product development that we have done in the recent past. One other product in textile is also stabilized now, which is the silicone wax lubricant for which we had installed a special [indiscernible] or special homogenizer for this product. So this product has been accepted in the market now. After the hard work of our R&D, we had a lot of seeding problems in this. So if you see all these developments, in addition to a lot of esters being developed, some new products, which I do not want to reveal at the present moment, some new products also are being developed in the non-EO state because of the delay in the expansion as a delay in the expansion of Reliance.

Got it. Got it. That's quite clear and quite elaborate. The third question is on the Buzil Rossari. The revenue growth of 1.4% looks quite muted versus what we have been doing for last 2, 3 years where the growth was upwards of 25%. What led to this sudden drop in the growth rate in the Buzil side?

So we have been restricting low-margin products and trying to filter out some kind of range. So the focus for the team was given is trying to improve margins in this. And that was the reason why we did not focus on the growth there. But growth will certainly come there.

Okay. The last question, again, on the margin. We have significantly cut the losses in the Buzil at the overall margin improvement, in fact, it has deteriorated sequentially Y-o-Y, there is a sharp drop. Now how much of these investments are -- what we are doing is onetime in nature or these are all largely recurring in nature?

No. So Sanjesh, on the expense side, I think there were a few onetime charges that have happened in this quarter. So this quarter, approximately about INR 2.5 crores out of the total expense is a onetime kind of an expense that we had to do. Hopefully, these will not come in, in the next following quarters. Otherwise, the expenses are generally in line with the business. So some freight and all, as I said, a lot of the exports that we did, there were certain -- because of the issues of tariff and all in certain cases, while we didn't drop the prices, there were certain freight expenses, which we took to our account. So those have also hit us in this quarter. But that, I think, is not a onetime. We -- at least for the next 2 quarters, we should -- we will keep having those kind of expenses.

Got it. Got it. So margin expansion largely rests in FY '27, right? FY '26 should be similar range?

Yes, yes.

[Operator Instructions] Next question comes from the line of Rajit Aggarwal with Nilgiri Investment Managers.

This is regarding your operating cash flows, which turned negative as of September 2025. And you mentioned -- you had a brief mention about the working capital getting extended. So do you see that persisting in the coming quarters? Or do you see that trend reversing?

No. So this quarter, we had, as I already talked about, a little stretch on the working capital. I think that led to this negative cash flow. Hopefully, things will ease out in the coming 2 quarters, and we should be back to the positive number by the end of the year.

Right, sir. And sir, now just to understand your overall strategy around managing the balance sheet, and this is not a question from leverage point of view or debt-to-EBITDA point of view. It's more to understand how you're going to finance the requirements coming up. Let's say, the working capital stays stretched. You have substantial CapEx coming up. You have also committed investments in Saudi Arabia and Southeast Asia. And you have actually raised a large amount of short-term debt during the last 6 months. So I mean, do you see yourself raising long-term funds? And what will be the kind of debt number as of end FY '26? I mean, any -- if you can explain how you're looking at or how you're approaching funding your cash flows and your CapEx and your investments?

Yes. So as I said some time earlier today that most of these CapExes, the large ones, the cash flows have already happened. Now the other CapExes, which we have announced, they are going to come over the next about a year or so. And there is a substantial spread in these CapExes. So we expect that the cash flows internal would be good enough, and we are not averse to taking a little bit of debt -- further debt on the balance sheet to fund some of these expansions, which we have announced. On the working capital front, I think this was a temporary glitch, which has happened because of the various business and business environment reasons. Once the agro season now slowly tapers off, the collections will start improving. We have seen this even in the last year. This quarter was a little -- the Q2 becomes a little stretched with the agro season being around this time. But by the end of the year, we were very comfortable in terms of our cash flows. And in terms of further leveraging our balance sheet, I think we have a lot of options in terms of raising debt or capital. But those calls we'll take only when some of these projects which we are planning actually see the light of the day are a little more advanced. The current investments in Southeast Asia or Thailand that we've done, that will also come on stream by the end of Q3. That is a small CapEx. It's not a very large payout because that's just a blending unit that we are setting up there. We'll see how that pans out. And then if required, we'll set up a little more expanded facility there. But the current one is pretty small. On the KSA front, I think we are still a little while away in terms of our plans. The announcement that we did was only because we wanted to explore a little more in KSA in terms of do some feasibility studies and talk to a little more the ministries in KSA, and that was the reason why we have taken that approval, a small approval of $8 million-odd in case we need to expand something there for further understanding the business profile and the project that we are going to set up. That funding too will be spaced out as and when we need, we'll be infusing this capital over there. So that's how -- that's what the plan is. However, if something strategic comes up, say, a large one in India or outside India, then at that time, we will take necessary calls in how we would like to fund those CapExes.

Right, sir. Got it. So sir, in terms of numbers, the first half saw an outflow of about INR 142 crores for CapEx. So this number is not going to go up drastically, maybe another INR 5 crores, INR 10 crores more?

Yes, it should go up by about -- as of now, go up by, I think, another INR 20 crores, INR 25 crores, not more than that.

INR 20 crores, INR 25 crores. And the debt figure should also stabilize at the current number?

Yes.

Next question comes from the line of [ Tanvi Parrikar ] with [ Anand Rathi Institutional Equities ].

I just wanted to have some clarification regarding the reported numbers for Unitop capacity. So in FY '22 and '23 annual report, the Unitop capacity is reported at around 86,000 tonnes, whereas in FY '24, the reported capacity is 60,000 tonnes. So could you just elaborate what's the difference here?

Which 2 years you said?

FY '22 and '23, it's reported at 86,000 tonnes.

Okay. Got it. So in '22, '23, the Unitop had 3 facilities. So one was at Dahej, the other one was at Patalganga and the third one is at Jammu. Post that, we closed down the Patalganga facility and that's the capacity difference that you see.

Okay. Understood. And if you could just give us the differential between the ethoxylate and non-ethoxylate based utilization levels for the capacity?

So ethoxylation, we have about 30,000 tonnes at Unitop Dahej, which is practically running to the full production capacity, which is possible. We are utilizing the assets like 24/7, 365 days. And in fact, even in Diwali this time, we are running the assets because this one, there is an EO shortage because the Dahej plant of Reliance is not operational. There is a sudden problem in some manufacturing asset in Dahej, whereby we are not getting a single kilo EO from Dahej in this month. So we are running even Diwali now. So the non-ethoxylation capacity is mostly blending and then blending capacity normally always is -- could we run 3 shifts or you don't run 3 shifts. And the blending capacity is not so expensive to put up. So normally, we put up higher capacities to keep it operational when we have the opportunity to get bigger orders.

Okay, sir. Understood. And this newly [indiscernible] capacity [indiscernible]...

We cannot hear you.

Ms. Parrikar, we cannot hear you. Can you bring the headset closer to your mouth.

Can you hear me now?

Yes, please go ahead.

Yes. So this newly announced capacity of 13,000 tonnes in Rossari, is this in the Dahej facility of [indiscernible] what will this be placed for?

It's in Dahej because [indiscernible] Dahej and there is some blending capacity in Jammu. Jammu, the capacity is not too big. It is only for servicing the local agro customers. We are adding -- trying to add some capacity there, but it is mostly in blending and in Dahej.

I mean 13,000 tonnes, which was announced last quarter.

Dahej, yes. That's in Dahej.

Next question comes from the line of Madhur Rathi with Counter Cyclical Investments.

Sir, I wanted to understand with the current asset base and the CapEx that we are doing, our [indiscernible] will go to closer to INR 920 crores, INR 930-odd crores. So is it a fair assumption that we should do INR 3,200 crores to INR 3,300 crores revenue based on that whenever we reach optimum utilization levels?

Madhur, can you just repeat your question a little slowly because your voice is...

Yes, sir. Yes, sir. Sir, what kind of revenue potential are we looking at with the CapEx that we are doing for this year? So what is the revenue potential that we could generate from that?

So this CapEx would give us an asset turn of about 4-ish at its peak utilization.

And sir, that is also the number that we should consider for our current asset base? Or is it lower or higher for that?

No, it is around that same number.

INR 3,500-odd crores revenue potential, is it a fair assumption?

Which one?

INR 3,500 crores.

INR 3,500 crores.

Yes. With this additional capacity, that's a fair assumption.

Got it. Sir, if I look, sir, for the last 3 years, our gross margin is kind of stagnant. So with this new capacity coming in, sir, where do we see our gross margin improving as the either value-added products or the new products that we are planning ramps up?

So we expect the gross margins to remain the same in the coming quarters. The world is really very uncertain, and you can understand where other chemical companies are going. I think we are proud of our performance that we continue to break records and grow quarter-on-quarter every quarter. So in the B2B business, traditional B2B business, assuming the chemicals, the institutional chemicals and the consumer businesses, we continue to have a healthy 15% EBITDA. We would like to continue the same guidance and not project anything increase now at this moment. If we are able to grow on the absolute terms in terms of profits is something which we are focused on, and I think we will be able to achieve that.

Sir, even on a 2- to 3-year basis, as most of these capacities reach optimum utilization, still then we should consider a 15% EBITDA margin and a similar 30-odd percent gross margins? Or can we expect an improvement on that as well?

No. So see, sitting today, I would not hazard a guess 3 years down the line how the market is going to behave. But I think shown off the consumer institutional business, I think we would be at anything between 14% to 16% kind of margin level.

Next question comes from the line of Pranav Doshi with ARDEKO Asset Management.

Just one question. We talked about tariff and the price pressure related to the same. So I just wanted to confirm that around 12% to 14% of our exports go to U.S. So only that portion of the revenue or the price impression will be only for that part, right?

No, no. What is happening is in certain areas, the chemicals that we supply go into textiles, which are exported to U.S. So a is the 10%, 12%, which we export directly; and b is we supply chemicals locally to exporters who produce the fabric. So both ways, there will be a hit. So to add to what Edward sir said, we have, for example, customers in the agro formulations, the pesticides, fungicide, herbicide and weedicide. Many of these customers who we were supplying in the agro industry, they were exporting their agro formulations, the pesticide, weedicide, herbicide formulations to U.S. and now that is under tariff. So -- but also, there are a lot of products which are not under tariff, but our U.S. customers are not willing to import, not willing -- even orders which have been given have not been left, they say we are not sure that tomorrow, there is no tariff now and tomorrow, new tariff will come. Every day, we -- there is uncertainty on what is going to be happening next. So this uncertainty is killing. Similarly, we had a lot of textile chemical formulators who were buying our ethoxylates and who are supplying to the textile industry. And these have come into trouble. There were home and personal care customers who were making formulations for Walmart and Costco and CVC, there are a lot many customers who are exporting to U.S. and now everything is under a cloud. So in spite of all this, we -- I think we have done admirably well in the last quarter. Given the situation, we could have done better, I think.

Okay. So sir, just then one question finally. So let's say, what is our indirect exposure to the U.S. then like you talked about some of the agrochemical formulators as well as the textile chemical guys. So then what would be our indirect exposure?

No, we do not have any idea because when the customer buys a surfactant for me, it doesn't tell me whether it's going to U.S. for exports or it's going to look for the domestic market. But because orders are less in domestic also with some customers, we have been given that reason, but they don't even share with us how much is their export.

Next question comes from the line of Parth Mehta with Vallum Capital.

This is Priyank here from Vallum Capital. Just had a question on HPPC, which is 78% of your sales. What would be the large -- I mean, I understand that there's a detergents and soaps, which are -- which is one of the large -- which is one of the products. What would be the revenue contribution within HPPC coming from soaps and detergent?

We do not have a breakup and we don't share the breakup between home care, personal care, performance chemicals. And then a lot of these products goes into different industries, including agro, pharma, oil and gas, coatings, textiles, so besides home and personal care. And we do not maintain it inside also the bifurcation industry-wise.

Fair enough. Would it be fair to say that this would be -- soap and detergent would be one of the largest one within HPPC?

The home, personal care, so we divide basically home care and personal care. The home care, personal care, performance chemicals, there will be a good distribution between these 3.

Understood. Understood. And on the same aspect, while you say that the balance 30% or 25% of your sales would get impacted given the tariff tensions within the textile space, the HPPC portion, which is -- which I suppose is purely domestic, that should continue to grow at double digits given the consumption boost that countries -- in India is witnessing. So what would be your rough estimate or guidance around, say, HPPC as a division, which is purely a domestic led?

HPPC exports [Foreign Language].

So HPPC is not a domestic-led business. HPPC split between domestic and export is almost 30% is exported and 70% is domestic. The textile generally was -- had a split of 80-20. Recently, in this quarter, it has -- the domestic has come down, but it has been more than made up by the exports. In textile, we have actively in the last 6 to 10 months, built up a lot of new geographies in Southeast Asia, North Africa, Turkey, et cetera, Egypt. So some of that is now actually paying off because the domestic demand having softened for these reasons, the exports have not really got impacted. In fact, we've been able to grow in the export market in textile.

Understood. Very clear. One last thing, at the start of the year, we were guiding for a 15% kind of an EBITDA growth, which I'm supposing for H1, it has been much lower than what we would have thought for FY '26 as a full year. I somewhere heard you that saying that we still continue to maintain the same guidance. Is that correct understanding? Or should we think of revising the guidance for FY '26?

No, no. We have said that for the balance year in terms of the EBITDA margin, we will -- we have guided that it will remain at the same -- similar level as the H1. In spite of pressures on pricing and all, we are still hopeful that we'll be able to push through this year with similar kind of margins. Excluding -- and excluding the consumer and institutional business, we said we'll be in the range of 14% to 16%. That's what we are guiding.

14% to 16% is the EBITDA margin guidance for H2. That is what the guidance is that we take away, right?

Without the consumer business.

Without the consumer business, what would be the guidance for -- so -- okay, got it. Understood.

Next question comes from the line of Bhawana Israni with Ambit Asset Management.

Am I audible, sir?

No. Not audible.

You can be a little louder.

Last week, there was a news that the U.S. has sanctioned some distributors who are importing chemicals from Iran. So we have seen that the prices of some chemicals like methanol, acetic acid and of the other chemicals has increased. So how we are seeing this development, sir? Is there any impact to our business? Or how to read this?

So I think the major imports from Iran, one of the big ones was methanol. And methanol saw a spurt of INR 8 or INR 10 on the same day when this news came in. But methanol is not a very big raw material. Our consumption of methanol is very small. Acetic acid also was there, but acetic acid as a percentage of imports into India from Iran of the total imports was very negligible. It's not very big. So the major acetic acid comes from Singapore and from China and from Saudi. And we also have a domestic producer, which is GNFC, which has a good capacity. So for us, of course, there will be some other products which would be coming from Iran, but nothing is so substantial to cause any disruption. With times, even I think methanol will find the right pricing and availability here. So that should also not be -- even for big methanol customers, there should not be a big issue in the future.

Next question comes from the line of Rajit Aggarwal with Nilgiri Investment Managers.

Will it be possible to share the numbers, the top line growth in terms of volume growth and decline in realizations on an average basis?

No. So as we said, the growth that has happened, most of it is volume-driven growth. We don't give a specific in terms of the numbers, but...

If there was a realization dip, it would be marginal. It's not substantial. I'm just trying to understand...

Yes. That we've been able to hold on to prices at least for this quarter.

Right, right. And sir, on capacity, the INR 97 crores and INR 95 crores of CapEx that was announced in the last quarter, that is going to come on stream in FY '27. Is that correct?

Yes, that's going to be happening in sometime in FY '27. That has 5, 6 projects that are part of that entire thing. So some of them will happen a little earlier, some will happen a little later. So in a phased manner, it's going to happen.

Right. So at the end of FY '26, we will have a capacity of about 385,000 tonnes approximately?

Yes. Yes, approximately. Correct.

385,000 is the number you can go through, right, sir?

Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call. And on behalf of Rossari, I wish all of you a very happy Diwali. Good evening.

Thank you. On behalf of Rossari Biotech Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Thank you, Manish.