Transpek Industry Limited (506687) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Transpek Industry Limited Q1 FY '27 Business Update Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Bimal Mehta, Managing Director. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. On behalf of Transit Industries Limited, I would like to extend a warm welcome to all participants joining us today. I'm joined by our GT Financial Officer, Mr. Pratik Shah, our company's Secretary, Mr. Alak Vyas, and SGA, our Investor Relations adviser. We will begin with a brief overview of the industry and business environment, followed by the key operational updates and financial highlights. Thereafter, we will open the floor for the question-and-answer session. For participants who are new on this call, our company should be best reviewed and assist more on an annual basis due to its nature of business. Now we look at industry and macro environment. As you all are aware, the global business environment in FY '26 remained complex and volatile. -- marked by geopolitical tensions, elevated energy prices, trade uncertainties and continued supply chain disruptions. The global chemical industry continued to face subdued demand across key markets, particularly in Europe and China, along with volatility in energy and raw material prices. Ongoing tensions in West Asia further ready to uncertainty around global trade flows, logistics and commodity markets. Against this backdrop, the Indian chemical industry has demonstrated reasonable resilience supported by steady domestic demand and several emerging growth opportunities. Trade agreements, including the recently concluded India, U.K. and India, EU free trade agreements are expected to improve market access and strengthen the competitiveness of Indian manufacturers. At the same time, the growing preference among global customers for diversified sourcing and reduce dependence on single geographies is creating opportunities for Indian chemical manufacturers with strong compliance standards and operational capabilities. Our business, however, continued to operate in a challenging environment with pricing pressures from Indian and global competitors impacting the industry. Despite these challenges, we remain focused on improving productivity, strengthening operational efficiency and protecting our competitiveness. While near-term uncertainties remain, we believe the industry is gradually moving towards a more favorable and sustainable growth environment. Now coming to the company positioning and core strength against the global and the domestic backdrop, Transpek remains well position. supported by its deep expertise in chlorine and sulfur-based chemistries, together with significant work undertaken in other chemistries for diversification. These chemistries requires specialized infrastructure, technical expertise and stringent safety standards creating significant barriers to entry. This remains a key competitive strength for transfer and helps differentiate us within the industry. We also continue to receive strong recognition from customers and certification bodies for our commitment to quality, safety environment stewards and sustainable manufacturing practices. Combined with this, the current almost no debt balance sheet and cash results, the company has now built a strong foundation to grow. This trend will support new investments being planned without being overleveraged in terms of the balance sheet. Coming to product development and growth initiatives. A key pillar of our strategy continues to be product diversification and value addition. Alongside strengthening our existing portfolio, we are expanding into newer chemistries beyond San Alcentra to broaden our product offerings and address evolving customer requirements. During the year, we introduced new acid chloride products in smaller volumes, which are expected to be larger volumes in the current and next year. The company continues to work on expanding its product portfolio by adding nonacid and nonalchoride chemistries with a focus on developing innovative hire value-added products and strengthening its presence across existing customers and new end user market. I would like to give some more details on this. At present, we are working on 2 polymers, both of which are developed in R&D laboratory, and we have also done some compounding, which is basically making component out of polymers, where also we have been successful and test has also been carried out by independent expert testing agencies like TUV, and our products have proven to be matching the required specification, which is being used globally. And these are very high-end polymers going into mission-critical applications. Due to confidentiality requirements, I am not able to name those polymers, but I will just give you some idea as to where they are used. So they are used in medical and medical implants, automotive, aerospace components, electrical and electronics, semiconductor, oil and gas, all these places, these polymers are used. There is another polymer which is used in 3D printing filaments. Another polymer, which is used in MO dialysis membranes, water are filters and membrane, electronics insulation and food processing equipment. So isomer is being done in -- on polymers. And of course, polymers is not very easy to develop. It's kind of little longer process, but we have a good team, and they have been successful in at least establishing R&D scale products, and now we are working towards scale. Another product area that we have taken up is basically polymer modifiers and polymer additives because that is also a very, very huge market. So there, we are developing 3 products. One product is almost at pilot stage, and we are supposed to supply required quantity to our customer for their production trial. So once that production validation is then we can move -- we ourselves can move into commercial scale. That product goes into as an additive as a hence, rather modify into polyester and other polymers. I mean, different types of polymers and -- another 1 that we are doing is basically a coating and modifier or you can call it additive. So that is a replacement for a chemical product with a product which is having a biological raw material coming from fatty acid or rather coconut oil and palm oil and those kind of natural sources. So some of these are being developed for specific customers and some of these are being developed based on the market size and market for NCL. And our core portfolio being, of course, not polymers, but monomers. So therefore, it's a natural extension. On the other hand, we are also working on sulfones and chemistry, or rather using sulfur has been our core strength. But now we are going beyond what is typical single step sulfur for us. So we are working on a couple of complex products, multistep complex products, which again are being used in some of the petroleum and polyester and other types of application. So then we are also looking at products which are chlorofluorocompounds. So as you know, we are exporting chlorination. So we are adding products that are going to be a combination of 2 chemistries of chlorination, which is our expertise and fluorines, and we are already developing expertise. This is going -- these are all indirect floor essence, so we don't use fluorine as a guess or anything, but we use flooring compounds to create chlorofluoroproducts, which have also good value and good demand in the market. So this is some -- I mean, I just wanted to give you a little more details on what is happening. On the other side, we are also building our talent pool -- so we are -- in this financial year, we are going to double our research and development team as well as our infrastructure in research and development. The idea is to speed up product development and bring out products commercially as fast as possible. In this context, we are also setting up a multipurpose pilot plant, the design of which is already done, and now we will start building that plant. It will take another 6 to 7 months to -- for that plan to be ready. But that plant would provide us significant capability to scale up our products in all of these chemistries that I talked about. So it's a real multipurpose plant having streams, and it can carry out different, different types of reactions. Now coming to manufacturing and operational bit. Over the years, we have built strong and enduring relationship with our customers and supply supported by our constant focus on quality, reliability and operational excellence. During the quarter, we renewed our responsible care certification from the Indian Chemical Council, the certificate is valid for 3 years from July 2026 to July 2029. These initiatives reflect our continued commitment to safety, health and environment while driving operational efficiency and strengthening our focus on sustainable and responsible manufacturing practices over the long run. End user industries, I already spoke about a few of them. in addition to that, our products cater to diversified range of industry, including polymers, plastic sizes, pharmaceuticals, agrochemicals, die, surfactants and pigments. During the quarter, we also saw an increased contribution from segments such as specialty chemicals, organic peroxide dyes and service, reflecting the continued progress in diversifying our product portfolio and expanding our presence across end user industries. Polymers continue to remain our largest end user segment contributing more than 48% revenues during the quarter. This is application of polymer, not polymers themselves. We -- right now, we make monomers. So 48% revenues during the quarter. If we compare this with a few years back, contributions were as high as 60% to 65%, which is now reduced to 45% to 50% level following a strategy of having a diversified portfolio. Going forward, our product development initiatives are expected to further broaden our presence across industries and applications supporting greater diversification of our revenue base. Way forward, looking forward, going ahead, we remain cautious given the evolving macroeconomic environment, particularly the uncertainty surrounding the West Asia conflict and its potential impact on global demand, supply chains, logistics and commodity markets. At the same time, we remain focused on executing our long-term growth strategy. The company continues to work towards expanding its presence to newer geographies, strengthening customers advancing research led innovation and broadening its product portfolio. Our medium- and long-term strategy, I already spoke about some of the products. So it's the same. It's focused on polymers, monomers, additives, enhancers, multistep sulfonation products, electronics and battery chemicals and chloro intermediates. In all of this, the focus is on value-added complex products. Company is also looking to or considering to add another manufacturing site for which options are being explored. The company has recently expressed interest in acquisition of land in Odisha in a notified zone which has been approved by the Odisha government. And now they are asking us to give a detailed feasibility report, which we are preferring and once we also have our internal Board review on the feasibility and then we will submit to the Odisha government and the Board approves, then we will go for that. Supported by our technical expertise, strong customer relationships, responsible manufacturing practices and ongoing initiatives around energy efficiency and cost optimization, we believe we are well positioned to create sustainable long-term value and capitalize on emerging opportunities in the years ahead. Now coming to our financial performance. As I mentioned earlier, growth across the chemical industry has remained soft and Transpek has not been an exception. Against the backdrop of aggressive pricing over supply and subdued demand in export markets, your company has delivered a steady performance. Total revenue for Q1 FY '27 stood at INR 155.1 crores while this is 6.5% lower than the corresponding quarter last year. Revenue contribution from Prime stood at 48.7% followed by Specialty Chemicals at 22.5%, Pharma at 10.1% and others at 18.7%. International business accounted for 84.4% of our revenue. North America continues to lead our region-wise mix and contributing more than 52%. EBITDA for Q1 FY '27 stood at INR 24.1 crores, lower by 32.4% year-on-year. EBITDA margin for the quarter stood at 15.6%. Profit after tax for the quarter came in at INR 8.9 crores. As of June 2026, we continue to remain a net debt-free company with a strong balance sheet supported by healthy cash flows and a healthy cash balance. Now some of you have also questions on the DuPont plan and long-term contract in a it, I would like to address it right here. So the contract with DuPont has already been assigned to Arclin and now Arclin is fully into it and the supplies are going as per the -- what has been going on for last few years. I mean, there is no change in terms of their demand and their orders to Transpek. We will be restarting -- or rather we will be starting our discussion on the renewal of the contract by last quarter of this year between last quarter of this year, a calendar year I'm talking about and first quarter of the next calendar year. So -- and there is no difference in terms of any terms or conditions that were there in DuPont contract. It is assigned fully in the same letter and spirit as it was with DuPont. So I mean we are very strongly in terms of -- I mean we are very strongly connected or rather we are in discussion in contact with Arkle as we were with DuPont. And we are having reasonable visibility in terms of orders and order book and et cetera. So with this, I conclude the speech and now we open the floor for question and answers.

[Operator Instructions]. First question is from the line of Keshav Garg from Counter Cyclical PMS.

I'm a long-standing shareholder, and I'm very disappointed, sir, over the years, you have been telling us that we'll grow minimum 10% to 12% CAGR. Now sir, I cannot see that growth from FY '19 when we did INR 595 crores till FY '26 where we did INR 621 crores. So where is the growth. And in FY '19, we did INR 117 crores EBITDA. Last year, we did INR 80 crore EBITDA -- so I don't know what really is happening to this company. And so if there are no plans, then at least do a share back and return the money to the shareholders.

Yes. So I already explained what we are doing in terms of growth. And I also -- you are a very seasoned shareholder. So you very well know. -- the chemical industry is not only transfer chemical industry in general in the last 4, 5 years has undergone all kinds of ups and downs. So in business naturally uncertainties come up, you plan something and you -- it doesn't happen. But as I explained that we have been steadily working on our growth potential. And now we are at the stage where we do not have to worry about our balance sheet being overleveraged in terms of taking funding for new projects. And we also have clearer visibility in terms of what products we are working on, what our customers are asking. So the growth -- I mean, estimates -- that's why we always said these are all estimates in the beginning of the call. So estimates are always estimates. I mean you cannot say that it is not written in stone that whatever is said by management will always happen because business goes through cycles business has undergone so many ups and downs across the -- or not only across many industries, but chemical industries, especially.

So sir, I appreciate your point. Sir, so now going forward, sir, is there any visibility for the current year, sir, how things look -- and how much can we grow going forward? Or what is at least the -- there is some aspiration that the management has or some internal targets?

Yes, yes. So this year, we are expecting to be at least 15% to 20% higher than what we were in the last year in terms of our revenue. You will probably see that being -- I mean you will see probably in this current quarter once the results are announced. So -- because we have added some acid chlorides, which are high volume domestic market. For example, last year, they gave us almost about INR 4 crores and this year, it is expected to give revenue of about almost INR 15 crores. So there are -- this is 1 product, but there are other products like that. So we are expecting at least 15% revenue growth this year. In terms of, we are looking at -- we have also finalized our strategy for the next 5 years. And the product or rather the application profile or product profile that I talked in my opening speech, those are our core areas, and we are looking to double our size and business in the next 5 years.

Sir, that is really assuring. Sir, sir, my question is regarding the Arsalan and DuPont, the long-term agreement, which is coming for renewal next year, sir. Now assuming the worst-case scenario wherein the contract expires and is not renewed. Sir, then do we have any visibility that, sir, will our -- will we take a huge hit or we can find alternatives where we can basically redirect the sales and there will not be much damage?

See, the size of the requirement that Arlen has is not something that can be replaced overnight or with any other customer. Because there are multiple customers, for example, in Korea, there are quite a few customers. There are a couple of customers in Japan. There are few manufacturers so far a mid in China. -- but all of them have their own limited capacities as well as their own supply chain also in place, which, of course, includes Transpek to some extent. Now assuming that the contract is not renewed, naturally, that is why we are working on diversifying our portfolio of products next year when the renewal comes and if it doesn't get renewed, naturally, there would be a significant blow in terms of volume and in terms of margins. And it may take some time to recover out of that, but we are already having certain plans, as I said, diversifying the portfolio, working with other customers where we can probably gradually, it may not happen overnight, but gradually, we can increase the volume. So what you just mentioned, probably we are more mindful of this fact than anybody else that we need to really manage this risk. And as of now, we do not see any reason whatsoever why the contracts should not be renewed. I mean Transpek has been a consistent 10-year or 9-year supplier now without a single -- not a single kilo even rejected by the customer in terms of quality, not a single delivery has been missed despite all kind of issues like rate rises, crisis, all those things where logistics could have been significant challenge. and we wrote at almost 300, 300, maybe 400 is or tanks just for DuPont. And not a single delivery has failed. So there are certain inherent trends that Transpek enjoys -- and we -- therefore, we do not see, but we are preparing for the worst case scenario, like everything in life, you have to prepare for worst case scenario, which we are preparing. We are fully mindful and aware of this, and we are preparing for that.

Understood, sir. Sir, also, we have a INR 300 crore investment in CLO, which is like 45%, 50% of our total market cap and network -- so -- and this investment was increasing in value, but in the past 2 years, the value is actually declining. And even the dividend that we have received from there, that has also declined marginally. Sir, sir, since we are now embarking on a greenfield CapEx in Orissa or at least we are planning so if -- unless this investment was increasing, there was no problem in holding. But now if it is not increasing or other decreasing, then sir, does it not make sense to really monetize this investment and replow the proceeds in the growth of the business?

Yes,you are already -- as you said, you have been an investor for so many years. And I have already explained this during AGMs, during con calls, every time this is not a liquid investment. This investment has a history behind it when Transpek in 2000 was separated into 2 parts, and 1 part was sold to a group called Trion, which is Cox. At that time, we continued with this investment as part of the shareholders' agreement. And then over the years, as that company grew, this investment is being valued at much higher value than what was originally there. It is not something that I can encash right away. It is not liquid. They have -- and as you mentioned, they have some minor dividend plus and minus that has happened because they have their own growth plans and they are investing into future assets and all that. But it would have been so easy that I could have encashed that, then why I would be sitting in that investment, which is say, for example, today, as you mentioned, INR 300 crore investment, and if it gives me INR 5 crores to INR 7 crores, anywhere between INR 5 crores to INR 7 crores of dividend, it's nowhere near any even lowest written off -- I mean, the rate of return that you can get from anywhere. So company also would not like to sit on that, but this is something that is not beyond -- I mean that is not within our control.

Understood, sir. And sir, lastly, sir, in the annual report, it's mentioned that now we have some advantage in U.S. tariff versus the other countries if you could quantify that what exactly is the tariff on our products today in the U.S. and versus, let's say, China or Japan, what are they paying? And sir, is there any real advantage on that count?

Actually, there is no special tariff on Transpek products. What is the normal tariff. I think it is 18%, if I remember correctly. That is the tariffs that Transpek products also have. So there is no specific advantage in terms of that, but -- 1 moment. So basically, it's a general statement that in the annual report that U.S. has led it higher tariff in many other countries -- on many other countries. Therefore, India is at an advantage. So that's a generic statement. But more importantly, whatever we are supplying, we are supplying a normal tariff. And to some extent, our customers are exporting the end products, so they are getting duty drawback. So if you would have seen during -- when we were imposed with much higher tariff for a short period of time. At that time also Transpek supplies did not suffer at all because our customers were on, they wanted material. And secondly, they were getting duty drawback per the U.S. system. -- from the duty that they were paying. And then, of course, as you know, now all those duties were refunded also.

So Sir, lastly, sir, just a suggestion, sir. For the first time in my memory, the stock is trading below net worth. And sir, now SEBI has permitted open market buyback -- and sir, now company doesn't have to pay tax also on a share buyback amount, which earlier used to be 23%, 24%. Sir, so we can at least do a small open market buyback. And actually, the net worth per share will increase after doing a share buyback at this price. So kindly consider that humble suggestion. Thank you very much.

I will inform the Board about your suggestion.

Next question is from the line of Sunil Kothari from Unique DMS.

Thanks a lot for explaining a lot about the products and possibilities. My question. Normally, we are very -- not very, but reasonably very conservative management. And now we have capacity also in the past you in many calls and everywhere you explained, we have capability to produce or the net revenue worth INR 900 crores. Currently, we are in the range of INR 600 crores something plus/minus -- and now we are expanding their client to another site. And 1 more thing is we have with your confidence, I see no chance of getting this long-term contract getting postpone content. But that sort is your thinking. And you are now expanding this capacity, you want to have no reset. Is there anything which you feel there is a possibility of any another large contract possibilities. If you want to say a little bit more how and why with this much capacity available with us with jobber capacity also we have contracts -- so a little bit expression.

Yes. So basically, there are 2, 3 things that I think you have asked a very good question, and it would be helpful to others also once I provide the information. See, especially, as I already mentioned earlier during our discussion calls, the site where we are, we are currently under a kind of limitation in terms of expansion. So we cannot get permission for expansion at Aclara where our factory is situated. Unfortunately, we have been trying with government for almost now 9 years -- sorry, 10 -- this is the 11th year. but nothing is moving in. To be very honest, it seems that government is not very keen on chemical industry in this area. And even in the hedge, I mean, as of today, it takes about 1.5 years to get permissions and everything despite it being a notified area, and it has become very crowded. In fact, I don't know whether you are aware, but in the edge, almost 30, 40 small, medium-sized companies are for sale because they are not able to sustain the cost of managing business and et cetera. So we looked at the edge also because that makes logistically a better sense for expansion. Now the question is that why we are not able to utilize the capacity fully at this point in time. Now because our capacities are product specific. So it is not that 1 plant generates or rather 1 brand produces 3 or 4 or 5 products. most of the plants, yes, 1 plant may have 3 products. But then for each product, there is a separate stream. It is not the same stream. It is not like pharma business where you take 1 campaign in a batch setup. And then you clean it up and then you take another campaign in the same bed setup. So same plant will be full -- running fully full year. It's largely a very high capacity. So what happens typically is that whatever our permission levels are. Even if we are selling that full -- or rather making that fully and then selling that fully utilized permission levels, the capacity that we have is higher than that because -- we have to have a mix of products. So sometimes customers may ask for product A, for which we have a capacity of, say, 1,200 a year, so 100 a month. And another one, we have 5,000 a year. Another one, we have 3,000 a year like that. So what happens is that when you put all this as a total, this may be at least 20% to 30% higher than our permission level. So whatever we utilize, even if we are utilizing our 100% permission level, you will find that our capacity utilization is around 70% to 75%. In best case scenario, about 80%, 82%. That is because of the product mix and the value of the sales. So -- this is something which is a tricky situation, and we cannot now expand here within job work sites also because oversize are also in out of the 3 job work sites, 2 are in the same area where we are. And so the same restrictions apply to them. So we have been looking at multiple options and 1 of the options that we figured out was Orissa and then we studied it more and we felt that a chemical ecosystem is gradually developing there. For example, where we are looking at is SRF is coming, UPL is coming and a few other companies, deeper fertilizers, plant has already started. So nearby, there are a couple of other -- like there is a causticlorine plant of a very large company. So -- and then, of course, government is extremely supportive and now talent is also available to run the business and everything. Infrastructure is fabulous. I mean, very, very good infrastructure in terms of road and ports and everything. So that is what we looked at. Because we need -- for all these new products that I just mentioned, we will need new facilities. Now for these new facilities, otherwise, it will be like -- will be in a chicken and egg situation that we may -- right now, we don't have product, and we do not have permissions. Tomorrow, we will have a product, but we will still not have permissions. So we will be -- with all the shareholders like you and new shareholders, we will be having the same discos in that. growth is not coming and all that. So we have taken a very deliberate decision that we need to really be a little more aggressive. I mean the conservative that you mentioned in the beginning, I fully agree that we have been conservative, but I think now there is a change in mindset of the Board. We have a new board. I mean, about 1.5, 2 years back, as you would have probably seen from the report. There is a very strong push from the Board, support from the Board for going aggressive in terms of our growth and investing significantly into new products. So that's what we are doing. And therefore, I mean, the previous shareholder mentioned about buyback, but it is not the right policy. I mean, we would prefer to invest that money into generating returns, so that's what we are looking at. And once we -- I mean, we know what we plan to do in Orissa and what kind of products we are looking at, what kind of setup we are going to do. We are also probably very soon, you will hear from us that now we are starting on a totally new product at a commercial stage and all that. So there are a lot of things where we are becoming really aggressive, as I mentioned in my opening speech that we are doubling our -- the size of our R&D facility as well as the talent pool. So that's where also we are expediting our product development process. And fortunately, Transpek has 1 very good benefit or other advantage that we don't have to convince customers to work with us. Customers want Transpek supports them, Transpek supplies name because of our quality delivery and commitment history. So this is the.

Yes. No, very, very helpful -- so basically, what you are mentioning is with now already from kilo lab to higher size from pilot plant to testing -- all this will require new facility, new cuts.

Exactly. Exactly. -- exactly.

And existing capacity can make us to reach where whatever numbers you in the past few months, and that is there.

Yes, there still can be possible, but when we have a mix, which is the best mix Also, you see also what has happened, Sunil bhai, by that over the last few years, there have been significant competitive pressures. And that has resulted in some price euros and in some of the products. And naturally, even if your quantity all may remain same or may not go down as much. The sales value in terms of value would definitely be seen a little lower than what it would have been seen. There are for example, as you know, DuPont contract is a pass-through contract in terms of raw material and other costs. So there can be ups and downs where raw material prices go up, then our revenue or rather our price will also go up and revenue will see a little higher. That's why we also had don't look at quarter-to-quarter. And when the raw material prices go down, then the price that we charge to our customer also will go down because of the formula-driven pricing in a couple of cases, especially DuPont and 1 other customer. So that also affects the overall sales value. But moving forward, as I said, we have -- because we also wanted to make sure that we do not let our asset chlorate capacity remain idle. So we are adding asset close 1 we added, which goes into agrochemicals in large volumes. So as I mentioned, we are looking at -- last year, we did INR 4 crores. We are looking at almost INR 15 crore worth of sells from that 1 product this year. So that way, we are trying to utilize maximum of our capacity and within the permission limit. This quarter, as we speak, we are looking at almost full capacity utilizers and full permission utilization, 100% at all 3 so obese job work and Transpek all 4 sites.

Sir, last question. We've been conservatively always informed the possibilities of what can go on -- anything you would like to think positive or I'm not saying positively, but any possibility with your 50-year track record, you have 10-year interested supply to DuPont and now new possibility of getting a sizable good opportunity from those type of Customers?

We are working with about 2 customers on the same line for quite some time. discuss I mean, I would not say it is as large as DuPont, but a significant size of contract. Unfortunately, what is happening that everybody has turned so cautious -- in fact, you would have seen also cancellation of some contracts with the large Indian companies, chemical companies, I'm sure you are aware, I cannot take name, but -- so the discussion continues, but decisions are not being made because every time a point comes where some decision is supposed to be made, things happen where everybody says, no, no, it's very volatile, let us wait. So that's where these things are stuck up. And naturally, at Transpek, we cannot wait for that. So we are -- that's why we are looking at multiple products, especially products which are higher value in terms of per kg price and, of course, higher realizes and in terms of margin. So that's why we are aggressively now looking at developing multiple products -- and while we continue to have that discussion on contracts, if it happens, great, it would be something that would definitely speed up the growth process. But at the same time, we need to do whatever organically we can do in terms of product profile.

Next question is from the line of Samarth Singh from TPF Capital.

First question was just a follow-up from the previous speaker. Our philosophy in the past has been that we don't want to commit to any CapEx until we sort of had a concrete customer offtake or demand visibility. So are you saying now that proxy has changed, and we are putting up CapEx ahead of sort of demand? Or are you saying that we see the demand coming through and that's why we're going ahead and doing -- we have got this all for.

Both, both. As a combination because there are a few products where customer is already working with us, and therefore, we have a very clear visibility in terms of the requirements that they have. And in some cases, we have studied the market, and we believe that we can penetrate the market considering the relationships that we have and considering the track record that we have -- so that's where we will be investing ahead of having a very confirmed kind of a business. But in quite a few products, it's largely driven by customer requirements. But now we are not going to be as conservative as we were. So we will invest in facility -- as I just mentioned, we are investing in a multipurpose pilot plant which is basically -- there is no specific product there because it is going to be used to scale up multiple or other different products. And it's a very large pilot plant for streams and with very complex equipment and other things.

Right .In the last con call, which I think is more than a year ago in February that's sort of guided to crores INR 200 crores of new revenue annually from 3 or 4 products we're working on. So I'm not -- I don't think we've seen that coming as then. If you can just talk about what is the revenue in rupee terms from these new products in FY '26 and in the first quarter?

So out now, as I said, most of the products are under development and final rather, some of them are under final development, and some of them are at different, different stages. So for example, 2 products which we are looking at commercializing 1 is very close to commercialization. So that would have probably last quarter as revenue last quarter of this financial is revenue. But on an annual basis, that can be at least about INR 50 crore worth of business for that particular product. Second product that we are looking at commercializing probably it will -- the commercialization will happen end of the current financial year. So we will see revenue in next year. Annual revenue there is expected to be about another INR 50 crores. Then a few other products, which are under development, where markets are very big, -- but we are -- we have yet to connect with specific customers in terms of what kind of business we are looking at. But even if we are able to fetch a very small portion of market, then each product is INR 50 crores to INR 100 crore that we are looking at. And as I mentioned in the very first in response to very first question, we are looking at doubling our revenue in the next 5 to 6 years is a combination of current products, wherever we have potential for growth and new products.

Just if you just look at the post us getting that contract with DuPont, which shows FY '18, FY '19. So if you just look at FY '20 numbers to FY '26. I understand our revenue goes up and down based on our raw materials, but even if you look at the gross profit number, it has increased by about 10%. And the dollar -- the is depreciated against dollar only by 23%. So have our volumes remain stable and this is all pricing such as it or we have lost volumes also in that period?

No, no. See, when you look at -- it is not about losing volume. We have continued to be the main supplier for DuPont, and they bought very small quantities from others. But DuPont's own business of Aramid has undergone significant competitive presence time and again, especially coming from Chinese and Korean manufacturers. So for them, a particular year may be good, where are here also may be good and the other years may not be good naturally, they will order on us what they will be able to sell in terms of their end products. So it's not something that Transpek has lost any orders significantly. It is purely the market of Aramid, which is their end market at play, which is affecting them. And in terms, it is affecting Transpek, that's why as you now have witnessed, that they had -- they were not very keen on having any strategic interest on Aramid business. And Arclin has been looking at performance material as their core growth area. So they came in and they chipped in and they bought over the business. So this is purely a market play. It has nothing to do with Transpek loss of volume are in ability to supply or any competition taking up a big chunk of that market.

Got you. So just a follow-up on. So for Aslin, is there -- it's a cost-plus model, but any sort of the rupee depreciation that gets passed, the benefit has kept with us or do we pass it on to the customer?

It is past one.

It is passed on to us. Got it. Okay. Okay. And feedback this -- the Chinese and Korean competition is affecting the ambusiness for Aman or what was DuPont. So isn't that a risk for us when they come in for a negotiation they would squeeze us further on the crop cost-plus basis saying that because their business is affected, they would ask us to take a hit on the margins as well going forward?

Yes. So that is 1 possibility because there are 2, 3 reasons. One is that they are more focused in terms of getting returns on this investment. That is one. Secondly, as you rightly said, competition is definitely creating pressures on them. And naturally, that pressure will pass on to us. But 1 good thing that we are noticing now without having -- currently without having any pricing pressures on us at this point in time, at least. is that because of their way of doing business, they are trying to operate -- I mean, they are trying to utilize the production facility to the maximum level and thereby optimizing their products and cost. And we are seeing that they are being -- they are able to do it very successfully. And therefore, the requirement for material that they had or rather DuPont had a few months back is now higher from us in this quarter. This very quarter, we are seeing some higher quantities that they want us to supply. And this is what we believe that is going to be their way of looking at things that even if they have to reduce some price and which in turn will make supplier like us monomer suppliers like us reduce our prices. Eventually, there will be largely -- the whole reduction will be compensated by higher volumes. So overall margins for us may not be affected in that sense. But yes, if you look at per kilo margin, we believe that there will be some impact. But overall margin will be -- the loss that will be there will be more than offset by the increase in volume.

Very helpful. And sir, this -- we've done about INR 200 crores over the last 5, 6 years. Can you split that between what has been the growth CapEx? And what has been maintenance CapEx? And the -- there has a significant growth CapEx, I mean, it seems that we are investing into business where because pricing is constantly affected, I mean our EBITDA, our profitability, our profits are lower. So we are not actually getting any return on the CapEx as talk about that.

So basically, see, the nature of our products is such that even a minor exposure to at most year creates a lot of corroson. Secondly, Transpek this site was started all the way back in 2000 -- sorry, in 1981, 1982 in -- and some of those -- some of the plants that we had were of that era. So during this period, we dismantled those plans because they had become almost unsafe and no further repairs could be done. So we replaced those plants partly or fully, that was 1 CapEx, which naturally will not result into any addition in terms of capacity or in terms of revenue. Secondly, a part of CapEx went into increasing the capacity of our canelchloride production because we can or captive consumption material key material and we were buying from outside, which was not making sense because we are the pioneers in the country. So we decided to expand our facility of, right? And therefore, we build that. I mean, we spent some money on that also. And again, that would not result into any additional revenue because what we were buying, we are now producing ourselves. So that's why you are seeing a very large chunk of CapEx being done, but it has not resulted into any growth because none of them was really in true since growth CapEx. Now some of the CapEx that we would be doing moving forward would definitely be tied to specific products or specific product groups. And we will inform all of you through stock exchange that what kind of objective is behind some of this.

Sorry to interrupt, Mr. Singh, maybe please request you to return the queue, sir, for the follow-up questions. Thank you. Next question is from the line of Mani Arora from Northern Lights.

Sir, you've already given a lot of details on the new product, the polymers and the additives. And I think you've given a lot of color on the revenue potential as well on some of them. Just to color if you can give, sir, on are these like difficult-to-make products, are these low competition products. So once they become commercial do we see another chance of pricing pressure? Are there large capacities available. So just trying to understand, are there low complication complex to make and yes.

So see, some of them are not very -- I would not say it's impossible or extremely difficult. They're not very easy to make. There are not many manufacturers so some of this polymer that I just mentioned. There are manufacturers, there are small companies. There are large companies, but there is still market open for players like Transpek, where because of the history and relationship in monomers market. So for example, 3 polymers that we are working on. One is extremely complex to make, especially the 1 which goes into water filters and RO membrane and all those things because there the basic product is not difficult to make. But the grade that is required for extreme purity processes that grade is extremely difficult to make. So it's a mix and match, for example, again, when it comes to additives -- to additives, there are already patterns, for example, in place, which says that this kind of additive can be made with this process and all that. So some of those patterns have been abandoned because they could not find a viable approach to make those products. And so far, we -- whatever work we have done, we believe that we have found a commercially viable approach to make those products, a couple of products. And that's where probably the complexity for anyone to make would be higher even. Some products are not complex that we are looking at. But then they are large volume products, and we believe that we can penetrate that market with the strengths that we demonstrate in terms of sustainability and in terms of quality delivery. This is kind of a mix and match. We want to -- strategically, we want to be in those products where entry barrier can be created to some extent. I mean in today's time, there is no entry barrier to anybody. Anybody says that I'm creating entry barriers. It's purely a timing-based entry barrier. So if somebody sets up something and runs very fast, then for a couple of years or 2, 3 years, they will enjoy the fruits, but then there will be someone else who will start making it. So entry barriers are not as strong as they used to be in the past because there are so many ways to develop processes for new products. But we are trying to look at products which have some entry barriers. And in addition to the strengths that we can bring to the table, which many others are not able to be. Even in chlorides, for example, that is our typical products, while we have not grown, we have sustained largely what we have been doing despite having in last 6, 7 years, despite having almost 8 or 9 new manufacturers coming in within India. And we -- because of our strength that we know that that's not that easy to replicate. A basic manufacturing process can be replicated, but there are so many dimensions which cannot be repeated. So we are working on the mix and match in terms of the product profile.

That was very helpful. Sir, just a clarification on the multipurpose plant, is this plant planned for the Orissa CapEx or this.

No. This is going to be set up here. Orica is still yet under approval, I mean in terms of Board approval. And then finally, we'll have to submit the final feasibility study to Orissa government. This is for -- this is a multipurpose pilot plant. So what happens typically is that there are products which we are able to develop in R&D and kilolbscale. But we have -- we do not have facilities which can help us scale up to, say, tonnage, so 2 tones, 3 tonnes, 5 tons because that would be the real process that we will eventually replicate in the commercial plant. So that's why we decided that we need to invest in such a facility. And it's a multipurpose facility. So we can do chlorination, we can do fluorination, we can do nitrate. We can do multistep, -- so 5 steps, 7-step, 8-step chemistry. We can do following full distillation, we can do short path distillation we can do normal distillation. -- all kind of unit of operations, different unit of ores and different different chemistries that we can do. So did whatever product we take, we can easily understand the scale of requirements do trial on this pilot scale, produce few tonnes, understand the entry cases of process and make sure that when we go to commercial scale, we do not fail. So that's the objective of this facility, and that would be currently housed in Ekalbaronly.

Okay. Understood. So this will come towards the end of the year.

Yes, around maybe February, yes.

Okay. And on this relationship with Arclin now that DuPont has sold the business, does it -- it's a new relationship for us. Does it give us opportunities to expand within the portfolio.

Yes, yes. So of course, they are -- their core business has been a very different business, but there also, we believe we have some opportunities. So we are talking to them. On top of that, because their interest is in Performance Materials, I mean, is a very critical strategic objective. So -- and performance materials are in other words, they are largely polymers. So we are talking to them in terms of our polymer development that we are doing. So we do see an opportunity -- we also have built relationship at the highest level already, and we had some meetings also. Looking at now furthering that and they are also probably understanding what strength Transpek brings because for them we are new. And for us, they are also new. So we all are -- we both are trying to understand each other in terms of the business philosophy, the strengths the approach to business. And -- but there is a very strong positive environment and discussion also that we can look at working together in multiple other opportunities.

Next question is from the line of Pratik Kothari from Unique BMS.