Vishnu Chemicals Limited (516072) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q4 FY '24 Earnings Conference Call of Vishnu Chemicals Limited hosted by Emkay Global Financial Services. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Meet Vora from Emkay Global Financial Services. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. Welcome to the earnings conference call of Vishnu Chemicals Limited for the quarter and year ended 31st March 2024. I would like to welcome the management and thank them for giving us this opportunity to host them. We have with us today Mr. Siddartha Cherukuri, Joint Managing Director; and Mr. Hanumant Bhansali, Vice President, Finance. Before we begin this call, I would like to point out that the discussion during this call may contain forward-looking statements reflecting the company's current view of future events and their potential effect on Vishnu Chemicals operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ. The company is under no obligation to provide subsequent updates to these forward-looking statements. I shall now hand over the call to the management for their opening remarks. Thank you, and over to you, sir.

Thank you, Meet, and good afternoon, everyone. We've ended this financial year on a strong note. For the full year, we generated an operating revenue of INR 1,213 crores with an EBITDA of INR 202 crores and a PAT margin of INR 101 crores. The EBITDA margin expansion was driven by disciplined focus across both value addition and backward integration initiatives. Our performance was empowered by the belief of being persistent, taking major risks and keeping the communication simple with our customers and employees. New cash flow from operations, cash grew 179% during FY '24 compared to first half of FY '24, demonstrating the cash generation capability of the enterprise and strengthening our financial position. Macroeconomic headwinds faced during financial year '24 proved this year to be significant. Our perseverance aimed at improving the profitability of the company while prioritizing customer success led to several collective accomplishments during this year. We have acquired Ramadas Mineral Private Limited during this financial year with the plan being operational. We have saved valuable time compared to embarking on a greenfield project. Ramadas addition to our portfolio has strengthened our barium business from a long-term perspective as it enables us to curtail the cost of raw material, ensuring continued supply for our customers and create greater value for our shareholders. We also commissioned a state-of-the-art Precipitated Barium Sulphate Plant and 4.3 megawatt solar power plant during financial year '24. These accomplishments not only enhance our operational capacity, but also reflects our commitment to sustainable growth and energy conservation. Our unique capabilities like flexible product mix and process innovation executed over the year make us one of the most efficient producer of chromium and barium chemicals in the world. We have entered financial year '25 with the same core belief of doing business with efficiency, nurturing complex chemistry and grow in the areas that will provide sustained economic and commercial benefits to the company. Now I'll hand over to Hanumant, who will provide further details on our financial performance. Following that, we look forward to addressing your questions. Thank you very much.

Thank you, Mr. Siddartha, and good afternoon, everyone. The consolidated sales in Q4 FY '24 was INR 300 crores compared to INR 304 crores in Q3 FY '24. On an annual basis, the FY '24 sales was INR 1,213 crores compared to INR 1,391 crores in FY '23. The consolidated EBITDA increased by 55% from INR 41 crores in Q3 FY '24 to INR 64 crores in Q4 FY '24. The company registered an EBITDA margin of 21% in Q4 FY '24, an increase of 766 basis points during the quarter ended 31st March 2024. The consolidated PAT increased by 34% from INR 21 crores in Q3 FY '24 to INR 28 crores in Q4 FY '24. The net profit margin of the company in Q4 FY '24 was 9.2% compared to 6.8% in Q3 FY '24. On the stand-alone front, the exports accounted for 48% of the total sales in H2 FY '24, up from 44% in H1 FY '24. The stand-alone sales of the company recorded a marginal decline of 4% from INR 253 crores in Q3 FY '24 to INR 243 crores in Q4 FY '24. Notwithstanding the decline in top line, the stand-alone EBITDA rose by 37% on a quarter-on-quarter basis from INR 33 crores in Q3 FY '24 to INR 45 crores in Q4 FY '24. Our stand-alone EBITDA margins were 19% in this quarter compared to 16% in Q3 FY '24. The standalone PAT for Q4 FY '24 was INR 23 crores compared to INR 22 crores in Q3 FY '24. The net profit margin on a stand-alone basis remained at the same 9% on a quarter-on-quarter basis. The fourth quarter and the full year highlighted the resilience demonstrated by Vishnu Chemicals Limited. In fact, we recorded the highest ever volumes reduced and sold in FY '24. On the balance sheet front, the company has reduced its long-term borrowings by nearly INR 90 crores in FY '24. This reduction indicates an effort to lower our debt, which has improved the company's financial stability and also reduce the interest expenses. The debt-to-equity ratio was 0.45 as on 31st March 2024. The company has a continuous track record of paying dividends. This year, the Board has recommended a dividend of INR 0.30 per equity share of face value INR 2 each for the year FY '24 and the same shall be paid subject to approval of the shareholders. I request the members of this call to note that our results and investor presentations have been uploaded on the stock exchanges and the company's website. With this, I conclude my opening remarks, and we can now commence the Q&A session. Thank you.

[Operator Instructions] Our first question is from the line of Sagar Jethwani, Phillip Capital.

Sir, my first question is that are we on a track to take the price hike in Q1 FY '25 as we guided earlier? What would be the quantum of these price hikes? And will it be across the product portfolio? That is my first question. Second is what led to this kind of a margin expansion during the quarter? And will these margins be sustaining going ahead? Third is on the CapEx guidance for FY '25. If you can give some details on that? And lastly, apart from the chrome metal, any other new products that are in pipeline, if you can share that?

Yes. So regarding the price hikes, yes, in certain products, we have already announced, given the market conditions and overall demand in those value adds have been quite strong. So I think we will be successfully able to have at least 4% to 5% increase in certain value-add products. But generally speaking, in our core products, we are not foreseeing any significant price increase during this quarter, which is sodium dichromate, whereas in barium vertical, we are seeing a good price increases happening during this quarter and even in the next quarter. We're looking at least 10% to 15% price increase both in the domestic as well as export market. And margin sustainability. I mean we see this going to be -- yes. So the margin sustainability is looking quite steady. These being the backward indication project is processing well. We have seen a better yield, especially on -- with respect to our CO2 expectation. This quarter, we have achieved 90%, and this is going to continue. And what we are seeing is also the soda ash price is increasing in the quarter to come. That is definitely going to add in terms of improved EBITDA margins in the next quarter. And the CapEx guidance, right now, we are quite focused. I mean, we are going to see 10,000 tonnes of additional dichromate capacity going to come online towards the end of this quarter. And we'll be right now more focused on achieving the derived outputs from the capacity build and probably towards next quarter is when we can guide towards our CapEx plan.

Yes. And lastly, on the production pipeline.

Well, the chromium metal project, it's progressing well. We have done some pilot work at our R&D plant. And we're looking at launching this product towards early next year. And regarding new products, they're still under R&D, I mean, I won't be able to talk much about it at this juncture.

The next question is from the line of Rohit Sinha from Sunidhi Securities.

Good set of numbers. So first one, with our new PBS capacity from the play and overall, we are seeing some because...

Your voice is not audible, Mr. Sinha.

Yes. So as our PBS capacity is on stream and we are seeing a bit of improvement in utilization in overall capacities. Just wanted to understand what kind of volume growth we should be expecting for FY '25? And what sort of price increase potentially we see as you have already indicated that 4% to 5% kind of price increase would be possible for value-added products. And secondly, since we have done 20-plus kind of margin in this quarter amid of -- you can say that there's a pressure on the benefit side on China. So given the point that going forward, we need this pressure to succeed, can we expect, I mean, a better sort of margin in the overall segments?

Well, let me put some light on the daily. So we are expecting at least a 5% volume growth in variant chemical. Although we are seeing some kind of pricing pressure coming from China, but that we are able to balance it with offering a better product with the desired packaging to the end user industry. In terms of -- so I mean, I take a consolidated volume growth for the complete for the financial year, we are looking at at least 30% to 35% volume growth during this financial year.

Okay. 30%, 35% might be a 3% to 5% kind of price increase possible?

Yes, it is. I mean, it depends on which product we are talking about. It depends upon what our strategy is -- because we are looking at a volume growth and do you want to pass on certain bit to the customer and the volumes and the revenue picture it's a call -- it's all we will take -- should not be a growing concern for us. But on a whole, at about 3% to 4% of the price increase.

Okay. So I mean, again, on the margin side, I mean, just wanted to get some sense that with a 20% plus kind of margin run rate would be sustainable for us?

It should be given that we are talking about the volume growth, definitely, the economic of scale will definitely kick in. So that should drive the EBITDA margin. I can't give you the exact number. I mean I won't be able to give guidance for the whole year. But yes, for sure, where we are in terms of the EBITDA margin of 17% to 18%, yes, that's definitely achievable. What we aim for will be 20%. Will that be achievable? I mean, given the order book and given the kind of value we want to do, it is something we will aim for. And towards the end of the year, we will be targeting in that kind of EBITDA margin.

Okay. And can we get just a breakup in terms of revenue, which is coming from our end user industries like from pharma and from paint industry that what sort of broader sense on the percentage side?

I won't be able to give you a breakup per se, but I can tell you about the pharma is about 20% to 25% of revenue and like the leather industry will be about 15% to 18% and electroplating, in the electroplating and wood preservative application will be close to 20%, 25% today. And we also have now wood pigments and paint industry, which contributes to about 20% and the rest would be other.

The next question is from the line of Suruchi Parmar from NX Wealth Management.

Sir, I would like to know about your strategy going forward to tackle the sales pressure on the restricted balances.

Like I said, it's not to do with the sales pressure. It's more to do with the pricing issue. There is a good -- in general per se in the powder coating industry, there's a good growth. So we're looking at a year-on-year growth of about 11% to 12%. So the volume still going up like when we have any sized the project versus now, the demand has gone up by close to 40% in terms of volume. But being a new player in the market, like we have launched this product in 9 months now. I think we made a good customer wins over the last 9 months. Obviously, that has come with the cost. And moving forward, we will definitely work towards direction where we can get some price increases in this account, but it will be a very gradual pace. I mean, the plant is currently operating at close to 60%, 70%, and the order book is looking solid. So moving forward, we will try to work towards a direction where we can announce some price increases and should be accepted. Volume is not a concern, more to do with the pricing.

Okay. So this pricing issue is because of you have said that dumping from China, particularly?

Yes. I think especially towards -- for the last 6 months, they have been, especially because the construction industry and the paint industry is not doing very well in China. And for the India is a big market. So we are having some challenges with respect to the pricing, but it's been taken care because we are able to offer tail-end made product with a certain specification and a better trading. So by leveraging this, we are able to get some premium over what Chinese can offer in the market.

So there must be a difference in quality, what they are offering and your company is making the rest.

Yes. There's a difference in the quality also on the -- in terms of delivery systems, what we offer versus what I mean is a lot more flexible.

So what feedback you have got from your clients like who are taking precipitated barium sulphate from you that how they feel like they are part of their products or they want to continue?

Yes. The feedback is very positive, but they are already -- I mean, they say that they will definitely go up to 80% of their demand with us, but it will be in a very gradual pace. But right now, we are at 40% to 50% in certain big accounts. So they do -- I mean, they will definitely make a switch and give us a higher share, close to 80% to 90% over the next 6 months, I'm hoping it because they want to see the consistency in the product in the daily, we can get quite confident to deliver and archive.

And sir, regarding the chromium metals which you are going to launch next year. So how is like the market demand and who all are the competitors like you are the only one that's making in India? Or is there any competitor in India and outside India, what you see?

This is quite an interesting product mainly going into the defense and building electrode industry. In India, we'll be the only producer because most of the India demand, current demand is made by imports, mainly coming from Europe, China and a bit from Russia as well. there has been a consistent growth in this product, especially in the defense side as well as vending electrode industry. So I think the total Indian demand is closer to about 2,000 tonnes, this center and it will continue to grow.

So the imports like if you bring your capacity, so in India, they will prefer from you buying from you rather than buying -- importing the product like what basis like you think.

In this scenario, domestic producer, obviously, they will lean towards us. Obviously, it takes time. because it has to go to a process of testing, approving and then accessing. But yes, I think we -- also, we try to focus on offering a quality product. So that will also give us benefit moving forward. And we are working with the whole set of team and the right consultants. So we are achieving a right quality product.

Okay. And lastly, what is the status on Red Sea prices like still it is going on or you have to own more inventory on?

Yes, it seems -- still seems to be holding on not getting any better in general because lately, there's another challenge of shortage of equipment. Pricing has been done on a monthly basis for the container. So that seems to be a challenge, but we are hoping maybe in a quarter or 2 quarters down the line, it should get better.

The next question is from the line of Pritesh Chheda from Lucky Investments.

For the chrome chemistry of the Chromium business, in '24, what would have been your volume performance or volume growth?

In FY '24, our volume performance was marginally better than FY '23. But overall, we still operated at nearly 80%. Last year, we operated at 80%. This year we operated around 80.5%.

So which means that the whole revenue that I see of about plus 20% is to purely do with the realization.

That's correct. And with that -- in line with the overall reduction in sea freight through the year and also the reduction in prices of raw material barium chrome ore.

So there is a reduction in raw mat barium chrome ore?

That's right. Yes.

Okay. Chrome continues to go up. So were you unable to -- was there any inability to take price increase linked to grow more there?

There are 2 parts to this question is we had the ability to increase the prices in select products where there was good demand, especially in the areas of electroplating, wood preservatives, segments and dice. But in certain areas, we saw a little bit of softness, especially in the export sector. So to contain this macroeconomic scenario, we did not particularly go for a price increase for our export customers to assist them with their -- in user handling. But since slightly changing the ground now, the stand-alone revenue in Q4 improved for the quarter -- from the quarter that ended in December and an increase from the export segment. So if the trend continues, maybe by the second half of the year, we'll see the export markets reviving a bit more and then it will be easier for us to pass the increases -- to the increase in the prices to our customers.

So now Q4, specifically for us, chrome is if you look at the last so many quarters, which seems to be a quarter where it's a seasonally higher quarter only. Do you still want to take this Q4 as your base to comment? Because Q4 last year is also the same way Q4 '22 was also the same way.

Q4 last year, so we don't have a trend where Q4 is necessarily better as such. But just to answer your question, our Q4 FY '23 was better than Q3 FY '24 because we had a maintenance that we had taken in Q3 FY '23 due to which our capacity utilization was in the range of about 65% and that's the reason why Q4 FY '23 operated at higher levels due to which the operating revenues went up. This year, it was not like that. We rated at nearly the same capacities in Q3 and Q4, and we did not see any major change in the realization per kg. So over the last few quarters, our entire efforts have been to keep the margins intact without necessarily having to increase the prices for our customers. We have done this primarily through backward integration measures, which has helped us reduce the offtake of input feedstock for the production to a certain extent and also our carbon diesel recovery and a certification plant, which has improved our engine production of sodium carbonate.

So in chrome chemicals business, we should now consider as a more FY '24 to be a more stabilized number and not FY '23 because FY '23 had the realization as well?

We hope the markets will improve, especially in the export markets. The domestic market is very good in terms of volume demand. But prices are more driven from the export markets. And that is something that we are also watching on the ground.

I didn't understand. Should these are -- so basically, I didn't understand this. So there have a big variation in your profitability from '22, '23 and '24? And '23 to '24 had the backward integration benefit also considering the variation in the profitability being so largely absolute number for the similar utilization. It would be very helpful if you guys could comment, what's a more stable number?

Here, the answer is very simple. FY '23 and FY '22 were 2 years that probably were very, very different year in terms of the entire last 2 decades of manufacturing that we have seen, right? Where the prices of raw materials went up, the sea rate went up. At the same time, demand globally also went up. FY '24 was a year where the prices of raw materials did not come down. The sea rates did come down but the demand also came down significantly, especially from the export markets. Having said so, as a company, what we try to do is we mitigated the risk of losing our market share without trying to be overambitious on price increase. And that's where we saw good customer retention through the year compared to our global peers, which could not hold on to EBITDA margin profile. So on a year-on-year basis, you see we have maintained our EBITDA margins on chrome chemicals level.

Yes. But you have lost absolute EBITDA by 25% despite the carbon dioxide benefit coming in. So I don't understand this comment.

We always...

One way you look at percentage, the other way you look at absolute. So it will be very nice if you could comment on the absolute.

On the absolute, it's the same answer. Like I said, demand is not in the hands of the company. We, as a company, never anticipated that export market would come to a standstill the way it does right now. Things on the ground are looking to change. And we hope that by Q2 or Q3, export market by -- and we can also see the uptick in the absolute EBITDA for us to achieve that we have achieved in the past.

Okay. Then on the balance sheet, there is this INR 100 crore increase in inventory and about INR 120 crores being spent on the fix. So you guys raised about INR 200 crores via equity. But I see only about INR 60 crores, INR 70 crores of debt repayment. So what is this INR 100 crore inventory increase? And what is -- and you've been spending in CapEx since the last 2 years, I see a number of INR 120 crores. If you could just comment for last 2 years back to back your spend now? Where doe it spend for?

On the inventory side, as you have seen that through the year, we started seeing the red sea crisis becoming a problem for all of us. So the prices have increased, the transit time by nearly 2 weeks to 4 weeks on most of the routes. As a result, we have been maintaining higher inventory of raw materials to ensure continued supply of feedstock to our plants as well as higher inventories of finishes are being maintained so that we can enable quick dispatches to our export customers. And that's the why the inventory has gone up. Secondly, the inventory has also gone up because of the higher value of cohort which forms a significant part of our inventory compared to FY '23. On the CapEx side, FY '24, we spent nearly about INR 190 crores on CapEx throughout the company. Out of this, INR 53 crores were spent towards chromium chemicals and the balance was spent in barium chemicals. In chromium chemicals INR 53 crores went primarily through the following things. One is the volume expansion in sodium dichromate that we've already started. And second is we have done a replacement CapEx of nearly about INR 25 crores to replace the depreciated assets. And we undertook nearly about INR 20 crores of investments in product improvement and modernization of certain equipments, which has led to a reduction in input feedstock in chromium chemicals. And INR 67 crores were spent in bearing chemicals towards upgradation of the newly acquired plant under the company, Ramadas Minerals and also completion of pending works in precipitated medium sulfate plant, which is commissioned in FY '24.

Okay. And my last question is, in the quarter 4, there is a significant upswing in the number or change in the number for the barium business, the EBITDA number is a fairly larger number. Any comments there specifically? For Q-o-Q, hardly any change in revenues. The change in EBITDA is very high significant.

So here, the improvement was on 2 drugs once the plant that we acquired last year under the company, Ramadas Minerals, started giving us good throughput from the Q4 onwards that led to a margin expansion. Secondly, our product by the name barium carbonate saw increased throughput throughout the quarter due to very good demand that we put see from the North American region markets.

It should reflect in your revenue, right? If there's a throughput increase or there is -- because the revenue is just INR 5 crores up.

There are 2 parts to it. Our fixed costs, which were expensed at a lower capacity utilization until about Q3 got -- where the flat -- whereas that INR 5 crores that you are talking about the increase in revenues, straightaway improved our operating leverage, and we did not have to spend more on conversion costs, be it our employee costs or manufacturing expenses or power costs also to that matter.

But then that explains this INR 5 crores. There's a movement from INR 7 crores to INR 19 crores. So there's an incremental INR 12 crores, INR 5 crores comes from revenue out of that INR 12 still there's a INR 7 crore extra number.

In our precipitated barium sulphate project where we increased our capacity utilization over there. So until about first 9 months, we operated at nearly about 24%, whereas in Q4, we operated at more than 40% capacity utilization.

And how about the Ramadas acquisition contribute to the EBITDA? What is the P&L there?

We cannot share those numbers right now. It's quite sensitive because it also is passed on to the market at large, but the savings are quite attractive for us in the long term.

That company will help create a raw material?

That company helps us in converting lower rate feedstock into higher-grade saves us on the cost of acquiring the pure speed of light from the market.

Okay. So and that started working full swing last quarter?

Not full swing, we are still operating at 75% utilization, which were up to about 85% from this financial year onwards.

So barite to make Barium, right?

That's right.

Okay. And it has its own mines or...

No, we don't owe any mine under any company.

The next question is from the line of Rakesh Davera from 4 R Investments.

My first question, regarding our recent acquisition of Ramadas Minerals. How it actually impacts our margins ahead?

Okay. Can you ask your second question as well? We'll answer both of them together.

Okay. And second question is regarding barium segments. So what is the guidance for the barium segment growth? And is the volumes expected in Q1 FY '25 and do you have any new products upcoming in variant segment? And other thing is like we have commissioned precipitated barium sulphate plant? And how is going to impact on the price increases.

Mr. Rakesh, we announced the acquisition of Ramadas Minerals in FY '24. And it was a strategic acquisition which helped our company in reducing the overall cost of our raw materials and elevating the overall quality of our feedstock. So the acquisition includes an asset which is operating out of Srikalahasti very close to our existing plant in streets, which produces the barium chemicals. So it is right in the middle of the raw material source and our production unit. That helps us in acquiring the raw material from the mine that is owned by the state government bring it down to Ramadas Minerals benefication plant where we achieve the desired output of raw materials that we require for eventual production. And that has led to significant improvements in our feedstock, which has helped us reduce the cost of raw materials by quite a significant percentage.

Yes. Overall, you need to say that will impact the margin significantly.

We are looking at it from a very long-term perspective. Yes, it has impacted our margins positively. At the same time, where we see that for the next 10 years, we don't have to depend on the highest rate of raw material to be acquired from the mine, and that reduces our overall dependency on market movements in the minerals that we buy.

Okay. Yes. comment to second question?

On the barium segment, we've seen a good year overall. And that has been the key driver of our performance in FY '24. FY '25, also, we continue to see that the momentum will carry forward. we expect our volumes to increase by -- in the range of nearly about 50% compared to FY '24. And we're quite excited and update about this.

And then do we see improvement in domestic? Or is any deviation in exports. I mean, reducing margin -- reducing volumes in export or improvement in domestic? How can we understand this -- since the last time if I...

If I compare the markets in gentle, the barium chemicals that we manufacture goes into the building materials segment or the construction industry at large, which is not really doing well, especially in the export markets. But we have entered into newer territories compared to what we were doing in FY '24. And now we have started marketing more in developed countries. So our customer wins this year in barium has helped us increase our offtake and sales volume, which will lead to better volume uptake in the years to come also.

Okay. And about this precipitated barium sulphate and how it will improve volume?

On the volume side, sir, why and what situation. We do want to sell at a price which is going to affect our EBITDA negatively. So we are very cautious about the price acquisition because clearly, there is a quality differentiator. However, we continue to withstand against the Chinese competition that is flowing into the country. And we hope that in this financial year, we are able to be at least 20% of the market share in India in precipitated barium sulphate.

The China's impact, the dumping, when will you expect to last?

Very hard for us to answer that because it's not a market information that we are aware of, of how Chinese are going to supply the product in which territory. But we hope that globally, there is going to be improvement in exports, and that will divert a little bit of volumes from China to other countries and so just being diverted to India as of now.

And the last got regarding this client concentration in outside India, how we are looking at it?

We don't have a client concentration. None of our customers have more than 5% to 6% share in our overall turnover.

The next question is from the line of Dhimant Shah from ITI Mutual Fund.

So if one has to dissect the journey from your Clearly, you have tailwinds in your favor in the chromium with -- possibly exports also being a large portion of that. And it's coming back in terms of minus the raw material pass-through that you possibly need to overcome. And on the barium side, you are seeing pressure from the Chinese. But given our quality, given our steps that you have taken a different leading players in India well. So overall, how would you like to broadcasting it in immediate future, plus the future hands for. So if you can just quickly summarize this. I mean, what do you say that you would target a 20% top line growth by and large, given current raw material prices?

Yes. So thank you, Mr. Dhimant. When you mentioned about tailwinds in chrome, we see quite strong tailwinds even in the period. Barium aside temporary challenges of pricing-related issue in the variance of pay. That has been, I would say, partially outweighed with the strong barium carbonate order book, which is coming from the West.

Sorry to -- could you also comment now with all these reps, do you think you're a cost leader in both the verticals in your assessment even globally?

It depends on which product we are talking about. Obviously, I don't have a complete variable cost breakup and breakup of our PS generally per se, but if you're talking about chrome. I think we are considering the backward integration benefit and seating economies of steel, I think we should be relatively credit. But again, compared to our peer in Turkey, who is able to leverage their currency benefit to a large extent, it's very difficult to say where we stand when it compares to a currency which is deteriorating 15%, 20% on a Y-o-Y basis. But in terms of variable costs, in terms of fixed cost yes, I mean, we are one among the most cost-efficient producers. I cannot say the lowest cost producer at a big statement to make, but we are very cost efficient use and who are having a strong market -- strong market base in India being the only producer.

And both the premium and barium or only barium?

Both chromium and barium. And then coming to barium, I think, I mean, given the kind of volumes we are looking at like we have already given the commentary that we're looking at about 50% volume growth. Are we the kind of economic economies of scale is going to kick in. I think we will be quite competitive against any Chinese producer. And especially with the raw materials benefit factoring in, yes, I think that gives us a very strong position in general moving forward.

And is this a phenomena once a year, which typically the Chinese seem to be kind of be left of a normal brain usage, something of this variety happens to them in all the segments like they operate. So this pricing activity, which they typically are in a punitive form, does it happen typically once a year or slightly more?

Difficult to answer that question, to be honest with you, as you know, very well, you must have heard from the other chemical producers, it's very cyclical. It depends on how the domestic market is doing. And what kind of benefit.

Last 2, 3 years, what is your experience? Every year, they try to clear their inventory or something of that where I think?

It completely depends on their inventory levels, to be honest, yes, because like we see, again, the barium carbonate demand has come back very strong and especially with the producer in North America closing. So we have almost -- I would say we have capitalized on that benefit trying to cater with the North American market or barium carbonate that's taking care of the capacity.

Yes. Actually, that was my second question because given the way the certain costs geographies would respond. There would be also closures of some of the operating capacity. And hence, in that light, do you think we would have -- we would gain in terms of cost and ability to produce various grades and so on and so forth.

Yes. That's right.

Super. And lastly, on our ability to pass on some of these costs rise, including the freight, given the Red Sea issue. How easy or difficult is that?

Yes. Well, it depends on verticals we are talking about. If it's barium because we are comparing with China, I think we do have a benefit there because compared to China, steel price out of India to various destinations from the East or West, I think we are still very competitive of passing on trade increases doesn't seem to be a challenge and we are always talking on -- operate basis. So that seems to be going well. Apart from trying to arrange the inventory -- I mean, the equipment, I think our logistics team is still doing a very good job. So we don't see that as a problem. And in terms of chromium, well, I think because -- I mean, the clear industry spread all around the world. We're talking about Turkey, South Africa, China and Russia. So a few of them have benefits in terms of where they're located, whether they're moving West or East, they do have some benefits on the freight to certain sectors. So that seems to be a challenge with where we are trying to work and see what we could do.

Okay. And lastly, in terms of -- I can see that your entire tilt is to get cost efficiencies, be it on the barium side or claim side. And to a great extent, backward integrated. So how far are you in that journey on both the sides and any plans into the future, which will kind of really cement your cost and give some advantage as and when the pricing is conducive.

Yes. Well, just to add to what you said, yes, our focus will be to improve our cost position by means of backward integration and not just barium integration, but also in terms of process improvement, where we can improve the yield. We are actively working on it, and you must -- I mean and that's been -- we have witnessed that in the quarter gone by in terms of better throughput and output that's definitely adding to our EBITDA margin and not just it like -- we continue to focus on a flexible product mix and see which derivative is more margin to work with each other. So I think moving forward, we will definitely focus towards increasing our chrome oxide and premium metal production, which we believe will be very margin effective from -- so yes.

The next question is from the line of Aditya Chheda from InCred AMC.

My first question is, what percentage of soda ash now we would be able to produce internally?

You're looking at about 50%.

Right. And I wanted to understand whether there is an element of realization uptick possible by virtue of the mix moving more towards derivatives or SVP in the past or the mix is expected to running where it is?

Well, yes, it is possible. I mean it depends on which value add we are talking about and how the end user industry is doing. And we are seeing a value add where there's more internal consumption of our starting raw material. So by virtue of that economies of scale is increased, and we will definitely say improved EBITDA margin as a whole.

Sure. And my last question is on the more longer-term vision that you have for this year. You've already spoken about capacity expansion in chromium there is a new product in varying chemicals. But if you could sort of if you have anything to share about what do you think about would be sector for the company in a more longer-term scenario, which would be after 3, 5 years? Yes. That's the last question.

Well, I mean with this capacity expansion and the chrome metal coming in, I think we will be quite busy for the next 2 financial is, I would say. And moving forward, our R&D team is actively developing working on the other value adds, which we are very seriously working on a value add in barium, which would be an organic solvent. That seems to be very interesting and exciting for us. But I can't give you the name right now, but that's something we will be very actively working on, which would also need a CapEx probably a year down line.

The next question is from the line of Sri Narayana Mishra from [ Noobs ] Consultants Family Office.

Sir, so is there any development on the chrome reserve...

Well, at this juncture, excuse us, but we won't be able to comment.

Okay. So this quarter, there would be some price increase in the promo. So once we acquired that reserve, how much would the benefit due to the chromes reserve.

Like you said, I mean, we are seeing some price increases further for the next quarter. So what we are currently focused on is to discuss with our end users and pass on those price increases, which we are quite confident on achieving. That's what I can say.

Okay. Okay. And is there any time line in terms of this? Or as of now, no concrete plan?

No, I mean, we don't have -- we can't give you a time line, but yes, I would -- we can only say that we are still work on.

Okay. And in terms of the mix export and domestic, so how it will be like in the next year in both the barium chemical? And in terms of exports, how much would be the repeat orders, how much it was in FY '24? And how much you expect next year?

So FY '24 was like the ratio was 55% domestic and 45% exports. I mean the way I look at it, although there will be a revenue increase on account of exports and domestic, I see that the share will remain more or less 3 or maybe 1% or 2% more towards exports in general. I would say it could be 52% to 53% domestic and 47%.

And in terms of repeat orders, sir, so are you getting good -- audience as well in export revenue?

Yes, yes. I mean, we are seeing a good order pipeline. That's what I would say for both chrome and barium chemicals. So we call that out.

Okay. Okay. Okay. And sir, you alluded to that it would be easier for us to pass on free cost. So just wanted to understand if that can be done for the past quarters also or that is gone. So I mean if you can pass on will it be for the quantity already supply or it will be only for prospective deliveries?

It will be for the prospective delivery, obviously. So I mean, most of our customers -- well, all of them are aware of what's happening there. So they're cognizant of the fact that prices are going to increase in the prices are long being exceeded.

So this is a prospective?

Yes.

The next question is from the line of Shyam Garg from Ladderup Finance Limited.

My first question is with respect to the order book that we have in chrome and barium?

Sorry to interrupt, Shyam sir, your voice is sounding muffled. If you are using speaker phone may we request you to use the handset and ask the question once again please.

Is it better now?

Slight better, sir. Yes, please.

My first question is, what is the order book in chromium and barium products.

Mr. Sham, we can't quantify the order book right now. Our order book has been quite robust at this moment, like I shared with you, we have a combination of chromium and barium capital. We have a coherent portfolio of more than 7 products in our chromium chemicals, and now in barium chemical, we have more than 2 products. So we won't be able to give you exact number on our order book in either of the chemistry because the chromium chemicals, our product mix is quite flexible. So since all our plants are operating, we have a steady flow of inquiries for our products. We are able to penetrate into developed technologies like North America, U.S., et cetera. not just in existing applications, but in applications where there is more value for every kg that we sell. We are quite hoping to keep developing these rates to meet the newer requirements of our customer.

Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you. I'd like to thank all the investors and participants who joined the call today and before taking out your time. If you have any queries, feel free to reach out to us on investors at the website of vishnuchemicals.com, and we'll be able to reach out to you. We'll be able to respond to your queries on priority. Thank you so much.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines.