Ladies and gentlemen, good day, and welcome to the Q4 and FY 2022 earnings conference call for Apcotex Industries Limited. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star followed by zero on your touchtone phone. Please note that this conference is being recorded. At this time, I would like to hand over the conference to Mr. Anuj Sonpal, CEO of Valorem Advisors. Thank you, and over to you, sir.
Warm welcome to you all. We represent the investor relations for Apcotex Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the fourth quarter and financial year ended 2022. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions.
The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call. We have with us Mr. Abhiraj Choksey, Managing Director, Mr. Sachin Karwa, Chief Financial Officer, and Mr. Anand Kumashi, Company Secretary. Now without any further delay, I request Mr. Sachin Karwa to give his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good evening and welcome everyone to this earnings conference call for the fourth quarter and full year of financial year 2022. Along with me in today's earnings call I have our Managing Director, Mr. Abhiraj Choksey, and Mr. Anand Kumashi, the Company Secretary. I hope you had an opportunity to review the financial statement and earnings presentations which has been circulated and uploaded on the website under stock exchanges. Briefly on the financial performance for the fourth quarter of financial year 2022, we had strong growth on year-on-year basis and also on quarter-on-quarter basis. The company has reached historical highs in Q4 FY 2022 across all the financial parameters. In Q4 FY 2022, the revenue from operations grew by about 48.5% on year-on-year basis to around INR 278 crore.
The EBITDA grew by 51% on year-over-year basis to around INR 45 crore, with EBITDA margins reported at 16.32%. Net profit grew by 37% on year-over-year basis to INR 31 crore, and PAT margins were reported 11.12%. For the financial year ended 2022, the revenue from operations grew by 77% on year-over-year basis to around INR 957 crore, while EBITDA grew more than 100% to around INR 140 crore with EBITDA margins of 14.6%. The net profit also grew by 100% to INR 99 crore with PAT margin of 10.32%. The growth in fourth quarter and for the year was driven by strong volume across all the industries, geographies, product groups, and also increase in realization. Export contribution grew to 21% of the overall revenue.
On the CapEx side, the work on new expansion project is running on schedule and is expected to be completed in Q3 of FY 2023. Lastly, the company has recommended a final dividend of INR 3 for equity share, making total dividend for FY 2022 to INR 5 for equity share. With this, I would like to open the call for question and answer session. Thank you.
Thank you, sir.
Thank you, Sachin, and thank you, Anuj.
Yes.
Participants who would like to ask a question may press star and one on your touchtone telephone. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we wait for a moment while the question queue assembles. We have the first question from the line of Mr. Ankit Kanodia from Smart Sync Services. Please go ahead.
Thank you. I think four years ago in Q4 FY 2018, one of the participants asked you about growth rates and vision of the company. I'd just like to share what the management said at that point of time, that our first target is INR 1,000 crore turnover. As I said, our vision is not so much in numbers that we want to be a INR 5,000 crore company or INR 10,000 crore company. Our vision is more towards where we want to be and wherever we are and aggressively grow in technology that we understand. Now, unlike some other markets where growth is 40%-50% a year and you can think of 10x in five years, it is not the case in current product ranges that we are in.
It's four years, and we are now close to INR 1,000 crore. Just your views as to how would you rate your performance given there was a year of pandemic in between. If I would like to repeat the same question today, what would be your thoughts on the next few years in terms of how we are today compared to the past? If you can give some color.
Yeah, thank you. Thanks. Thank you, Ankit. Thanks for reminding me what we said in 2018. We feel pretty happy with where we are today. Obviously, there have been challenges. I think 2018-2019 was a difficult year for us. Sorry, 2019-2020 was a difficult year for us, and of course, 2021 started off very difficult with the lockdown in India. Post that, I would say from Q2 of FY 2021, so almost six to seven quarters in a row, we have taken a lot of steps. We've learned a lot through COVID. We've made our plants flexible. We had a huge thrust on our, you know, sales and marketing.
A lot of customers, both in India and abroad, that we were looking to get approvals from, a lot of that has come through. Obviously you're seeing that in the results. We're running at 100% capacity utilization right now. Even the de-bottlenecking projects that we took up in this financial year, earlier in the financial year, are fully utilized now. We feel very happy where we are. Of course, post-COVID, there was a lot of uncertainty, and we were also wary of the risk of the uncertainty. We took some bold calls in the last year and a half, and that has paid off. We feel happy.
Going forward, you know, just the products that we have, I think there is potential to grow this business to over the next five years to maybe 2x-2.5x the current revenue. Again, I just want to quickly mention, and I mentioned this many times, that look, revenue is a number that of course feels good when you reach INR 1,000 crore, you know, INR 1,500 crore tomorrow, INR 2,000 crore. We focus more on our volumes because in our kind of business, you know, given the huge volatility that oil prices and therefore the downstream petrochemicals, which are our main raw materials. Revenue can vary.
For example, again, if oil falls to half, then, you know, you could see a dip in revenue. What we are more interested in is focusing on our EBITDA margins, on our contribution margins and of course, per ton margins as well, more than anything. I hope that kind of answers your question.
Thank you so much. That really helps. In terms of EBITDA margin or EBITDA per ton, as we understand, EBITDA per ton is a much better figure for us, metric for us to look. I think it would be fair to say that we are still at an all-time high in that number. I mean, close to all-time high.
I think yes. Yes, we would be overall at a pretty high number. Yes.
Okay. Any ballpark, I mean 10%, 20%, below high or what would you like to quantify that? I mean, how-
Well, I'll just say that our EBITDA per ton for the financial year is up by, you know, a good double-digit margin of around 40%, 50%, almost 60% for the year. For the quarter is up by also 20% 25%, 22%, I think. Between 20% and 25%.
That would be compared to the last year, which was a pandemic hit year. If you compare it with 2018 or 2019 pre-pandemic period.
Yeah.
Would we be close to all-time high?
Yeah, for sure. Yes. We would be higher compared to 2018, 2019 as well.
Okay. One last question before I go back to the queue. In terms of ApcoBuild, I think, last time, we mentioned about Maharashtra, Gujarat, Madhya Pradesh, and Goa was the latest state we entered. Have you added any more states, or we are still focusing on these three?
No, mainly these four states right now.
In terms of volumes of ApcoBuild in this quarter, would you like to give any growth rate?
You know, I would say for the year for ApcoBuild, we are in terms of volumes higher by more than 100%, I think 120, 130%. We feel. As I said, it's still a small part of our business, and we don't give out numbers separately for ApcoBuild. But as and when it becomes we feel it is a you know reasonable portion, we will talk about it more. But as of now, we're very happy with the development in our sort of construction chemical B2C as well.
Okay. Thank you so much. I have a few questions, but I'll come back in the queue. Thank you. Thank you, Ankit.
Thank you. Participants are advised to ask two questions. Participants are advised that they may ask two questions to the management. We have the next question from the line of Farokh Pandole from Avestha Fund Management. Please go ahead.
Yeah. Hi, Abhiraj. Congratulations on the great results. I hope that we are building up momentum for the future and confidence for the future as we go along. I had two questions. My first question, you know, you mentioned in the earlier sort of caller, focusing on margins rather than on revenues. I just wanted to get some sense of in light of where oil prices are and what has happened with oil prices over the last year, you know, what sort of do you feel like the full year margin is a more sustainable margin with the expansion, et cetera? Is the current quarter margin something that we should be aspiring to? Some color basically on the sustainability of margins going forward.
My second set of questions was on the CapEx, both for the gloves latex capacity, and I noted with some that we've extended our sort of commissioning date further another three months. We're now talking about December of this year. There has been a pushback of few quarters over time. And also, if your answer to me in the last quarter on the NBR project, if there is any change in the last three months to make you sort of evaluate that project any differently from the sort of response you gave us in the last quarter?
Sure. I'll take it one by one. The easy one is CapEx. Frankly, we are not delayed really. I had said that it would be around, you know, towards the end of the second quarter. Just to be conservative, we're just saying Q3, because while today there are no delays, but you all know the situation with the supply chain and availability of a lot of materials, not only raw materials for our product, but even capital goods. You know, there's been a huge demand for capital goods. In case there is a delay, it would not be on account of anything sort of, we have, not internally. It's on, really on account of any delays that the suppliers, there may be a delay of a month or so, but, certainly not a quarter.
We are saying in Q3, but we are hopeful that, you know, one project would be even end of Q2, and the second project would be in Taloja would be early Q3. I think we're just being conservative given what's happening in the world today. Therefore we mentioned Q3.
Yeah. We will see some revenue in Q2, and then maybe more revenue in Q3 and then so on and so forth going forward.
No, I had always mentioned that end of Q2 would be the commissioning from what I recall at least. For one of our projects, yes, that would start kicking in from Q3, but obviously it will not be overnight 100%. It would build up over, you know, we hope six months, but it could take a little longer because some of the reapproval cycles, you know, from a new plant, even for our existing customers, they would want to test it out for a couple, two, three months before completely moving whole hog, you know. That does take time.
You'd see some of it in Q3 and some of it, and then from Q4, of course, both the plants will be completely ready, and then it'll depend on how quickly we're able to ramp up and, you know, complete the approval, reapproval cycles with a lot of our customers. Yeah, we'll have to add new customers as well. Unfortunately, there are customers that are asking us for material, but we're not able to go through the approval cycle because we just don't have material to give them. Even a few tons we don't have today. The demand cycle is quite strong. We're focusing on the current customers that we have been working with for the last year or two strategically. At least we feel that's important.
Yes, that's on the CapEx front. As far as margins being sustainable, look, we have always said there could be a quarter or two where, you know, suddenly if there's a crash, then we could be stuck with some high-cost raw materials. There's a crash on oil prices and subsequent petrochemical. But on average, we have over the last two years, barring maybe one year in the middle, we have consistently grown on our EBITDA margins percentage-wise and certainly on the EBITDA per ton. And that will be our endeavor. Yes, there have been tailwinds in the last six, eight months that I must admit. For example, you know, there's really been no crash, let's say in the last six, eight last I'll say six quarters. So that's obviously helped us.
The last quarter, for example, we did have some inventory gains due to, you know, due to the war, suddenly oil spiked, all our petrochemical prices, the raw materials spiked, but we had some good buying that we had done in December and January and February and so on. Obviously that to some extent, I would say maybe about 10%, 12% of our profits were due to that factor as well. But we are quite confident that with the set of customers we've built, as long as the macro picture and the macro environment is strong, we feel pretty confident of sustaining these margins in the long term. Again, I just clarify, there could be one or two quarters where margins will fall, but our endeavor is to stay between this 13% and 17% margin numbers, you know.
Sure.
Your last.
On the NBR?
Yeah. Your last question on NBR, we are waiting on the final environmental clearance for NBR project, which should come through. We're expecting this quarter, by the end of this quarter, after which we need to take a call. We feel bullish, as I said, but we haven't taken a final call. There's no major update. Our focus is just to get these two projects off the ground in the next six months and, hopefully as and when we take a call, I'll let you know.
Sure.
It's certainly, as part of our strategic plan, it is on the cards.
Excellent. Thanks a lot.
One more thing that's changed, I just wanna mention is that commodity prices and CapEx costs have significantly increased in the last three to four months, as you can imagine. We would have to reevaluate the IRRs of the project and actually take a call, because we're very conscious of, you know, of allocating the right amount of capital, and we don't want to do it in a cycle which is at the peak. We may choose to wait. We were not sure. I don't know if that's a smart thing or not because things can go up further. I'm not sure. We'll reevaluate the IRRs once we get our environmental approval, see what the commodity prices are then.
When I say commodity, I mean steel, cement, you know, all the commodities that are required for big CapEx and then take a call.
Sure. How much money have we spent on the gloves capacity that we are planning for the third quarter?
Just to clarify, we are doing two projects, one in Valia, one in Taloja. The one in Valia is completely for gloves. There will be some flexibility that we'll try and build in, but the one in Taloja is a multipurpose latex plant, and at this stage we're not sure, depending on, again, the margins we can use it for styrene butadiene latex products that go into carpet construction paper and so on, or use it for nitrile latex for gloves. I just want to clarify that. Sorry, what was your question?
I think we were talking about INR 150 crore, if I'm not mistaken. How much of that-
Yes.
How much has already been spent and how much is balance?
Oh, yes. How much has been spent?
Spent.
The cash outflow up to March 31 out of you know our total project size is about 190-odd crores between both plants, and we are investing in a zero liquid discharge plant in Valia as well. Both everything put together, out of which we would have spent about 35%-40%.
Okay. Got it. Yeah. Okay.
That's cash outflow, yeah? Everything. All this will be obviously commissioned. I mean, it'll hit the balance sheet only when we commission the project.
Of course. Great.
Yeah.
Thanks a lot, and good luck for the next year.
Thank you, Farokh.
Thank you. We have the next question from the line of Mr. Karan from AMSEC. Please go ahead.
Hi, sir. Thank you for the opportunity. Am I audible?
Yes, we can hear you well.
Yes. Just wanted to have some understanding with respect to our product mix, between, you know, two product categories, latex and rubber.
Yeah. It remains about the same, which I had mentioned last time. Around, let's say about 55%-60% is latex, maybe around 56%-67%. The rest is all the rubber products, which are solid polymers. The liquid polymers or latex is about 56%-67%.
Got it. Like you mentioned that we are already running at peak utilizations, you know, even on a debottlenecking exercise. How are we preparing for the volume growth for the near to medium term?
For the short term, we are unfortunately. It's a good problem to have, but we don't have capacity, and the new capacity will all start coming on stream from Q3 onwards.
We were working on some incremental CapEx for latex as well. Are we on with the plan?
Yeah. I mean, I don't know what you mean by incremental CapEx. That was done last year. Last year meaning in the middle of 2020 when we finished that. That was debottlenecking, small debottlenecking projects to the extent of INR 10- INR 15 crores investment, which we already completed and that is already on stream and fully utilized. Now we don't have any incremental plan. It will be our two big projects, which are coming on stream between Valia, between both our plants for latex.
Got it. Yeah. That does it. I'll come back in a bit. Thank you.
Okay. Thank you.
Thank you. We have the next question from the line of Prathamesh from Axis Securities. Please go ahead. Mr. Prathamesh, can you hear us? This is the operator. Mr. Prathamesh, can you hear us? We will move on to the next question in the meanwhile. I now invite Mr. Satish Kumar from NB Investments. Please go ahead.
Hello, can you hear me?
Yes, we can hear you.
Yes. Yes, Mr. Satish, we can hear you.
Congratulations, Abhiraj, for a wonderful performance. Sir, I have two questions. The first one is the Valia, the one XNB Latex which you are doing. I think you have plans to do in two phases, Phase I and II. Just wanted to know the environmental approval, what you have. EC approval, sorry. Is it for both the phases we have got?
Yes. We will have the full approval by the end of this quarter. For both phases we will have it by the end of this quarter.
Oh. The phase two we don't have as of now?
No, but we'll have it. The phase two decision we have not taken. That's something we'll take next year anyway once we have utilized the first phase or close to utilizing the first phase. We have enough time.
This NBR you are sourcing, it may take more time. That's right?
I mean, the decision, well, we're waiting for the environmental clearance, and then after that we will take a decision, as I said, as I was explaining to the
No, no.
one of the previous callers.
I know. I know.
That it will depend.
I understand.
On what the CapEx is.
No, no. I was saying, when are you expecting the EC approval for NBR?
Same. This quarter altogether.
Altogether, both you're expecting, right?
Yeah, yeah.
Okay. On a quarter-to-quarter basis, the sales have gone up by 11%. Is it possible to give us in terms of volume and value growth?
Well, I would say, yes, I think I have those numbers. If you can give me a second. I mean, while we don't give exact volume numbers.
Okay.
11% is the value growth, out of which seven out of 11% is volume. The remaining 4% is because of sort of price increases or raw material increases which led to price increase.
Okay. Now that you are saying that, you know, we are already running at optimum capacity, without any more increase in the raw material prices, so this INR 270 crore-INR 280 crore run rate per quarter is what we can expect during the first half of the current financial year?
That's correct. That is correct. Of course, again, to qualify, it depends on oil and downstream petrochemical prices. For whatever reason if oil falls, then revenue can fall also.
Yes. If you can, throw some light how it has behaved during this last one month.
I think it has gone up further.
Yes.
It's consistently gone up since, I would say, February. Now I think there are some talks of some respite. I would say last three months, four months in a row, you know, mainly due to the war. It was post-COVID, you know, obviously the bull run on goods and some of our products, and then the war in Ukraine caused the sudden spike in oil prices, which resulted in all petrochemicals, I think, going up substantially.
Okay. Since you said the war. This war in Ukraine, is it having any impact for the company in terms of, let's say, the sales, the raw material availability or, freight rates, container, anything? Anything it has affected other than increase in the crude prices?
Well, two things. One is directly we don't have much business in Russia or Ukraine. We do have small business, but it's a very small percentage. So yes, certainly that has been temporarily affected. We don't buy any raw materials from Russia and Ukraine directly, so that's really no impact to us. Overall, you know, like everyone else, I think the whole world is facing this issue because of the China COVID situation and the war in Ukraine, and Russia. A lot of containers are stuck. Shipping rates are going up and up and up. So it's more than the rates. Availability is an issue. So I would say in terms of risk and really our focus these days is managing the supply chain and ensuring because a large chunk of our raw materials are imported.
Ensuring that all our imports come in on time. Of course, a lot of delays are there already, but we have increased our inventory cycles, developed vendors in different areas. We had anticipated this. So far we have not faced any major raw material shortage issues, but it remains a very high risk for the next one year. As far as exports as well, right? I mean, we are responsible to ensure that our materials reach our export customers on time, and that has also been a challenge. That remains a risk going forward, and I think it will remain a risk for the next six months at least.
In spite of all these challenges, are we in a position to?
Mr. Kumar, would you kindly please come for the follow-up question in the queue as we have other participants connected.
Let Omar finish one question. Mr. Kumar, go ahead. You are already up.
Yeah. What I want to know is because of all these challenges you mentioned, going ahead, are we in a position to protect our margins?
We feel pretty confident that we can. We have developed a set of products, a set of customers that are now quite sticky. As I said, look, there could be a certain situation where for one quarter or, you know, a few months, where there's sudden drop in prices and we are stuck with some high cost raw material inventory because we have no choice but to stock up on, you know, imported raw materials. That could happen. You know, in the long term, I think as a business, we have grown from strength to strength. We have grown our volumes, we've grown our customer base, we've grown our geographic base.
Within customers, we've increased market share. Overall, we've increased market share. We've gone into new industries and fields that we were not in. We've done a lot of work over the last three, four years, and we feel pretty confident in the long run that these kinds of margins between, as I've always said, between 13%-17% are sustainable. We focus on EBITDA per ton. I think the bottom line number is what we focus on. I think we feel confident that it is sustainable in the long run. To repeat for the fourth time, quarter-over-quarter, we could have it. I'm not sure. On the rest, I'll come back in the queue.
Thank you.
Thank you very much, Mr. Kumar.
Thank you. We have the next question from the line of Nikhil from Perpetual Investment Advisors. Please go ahead.
Hi, Abhiraj and team. Congrats on a great set again. I have a few questions on the broader industry structure. Firstly, on the Ukraine-Russia war. Since there is a lot of synthetic rubber production capacity in Russia, do you see any permanent opportunities emerging out of this? Or do they get routed through China or some other country?
Thank you. Thank you, Nikhil, first of all, for your wishes. You know, hard to say. I don't think anything is permanent in the world. I think at some point the war will end and Russia will come back on stream. Sure, I mean, right now, you know, because of all these bans on Russian materials from Europe, America, also on the supply side, a lot of raw materials that Russia was importing, you know, they're having challenges with that. I think in the next three to six months, sure, a lot of synthetic rubber that is coming out of Russia seems to be affected. I don't know how long that will last. As you know, oil from Russia is flowing.
Oil and gas is flowing fairly smoothly from what I understand into Europe and other parts of the world. Maybe in a few months all other, you know, materials will also flow. As I said, I mean, that can be some short-term advantage, but, you know, that's fine. I mean, we don't really focus on that. Our business is not dependent on what happens in Russia.
Okay. On the latex side also, now Synthomer has shut down two of their facilities in Europe. I think it's probably due to high cost base. Do you see any change in industry structure even on the latex side?
Look, all I can say is demand has been very strong for us. Whether that is the reason, I don't know. It could be partly, but I think if I were to venture a guess, it's really I would say whether or not that event happened or not, I would say what we have done and the way we have sort of grown in customers in India and abroad, since we're talking about Europe, I think that would have happened anyway. Sure, structurally right now, for various reasons, margins are very strong, demand is very strong. I'm not sure what will happen. You know what is happening in the macro environment, inflation going up.
That's likely all, economic reports are saying that's likely to affect overall consumption and therefore demand for goods in the next six months to one year. That will affect us, that will affect the world and all companies, you know.
Got it. I mean, you are on the good side. Irrespective of these plants shutting down, we would have delivered the same numbers. That's assuring.
I think so. If you see the last six, seven quarters, I mean, we have delivered quarter-over-quarter no matter what's happening in the world. Whether there was a second wave in India, no matter what's happening in China, no matter what's happening in the due to the war, all these bans of Russian material by U.S., Europe, you know, we have sort of put our, you know, kept our heads down and sort of focused on our business. Sure, there are some tailwinds, as I mentioned right now for sure. Whether they last or not, we are quite confident that we are quite happy with where the business is.
Okay. I have two more questions. I'll put it quickly. Is there any update on the cases at CESTAT? As part of the acquisition at Valia, do we also get access to technology for other products?
The appeal process is on in CESTAT, and there are not only us, but many other companies, maybe 50, 60 other companies that were affected by the same ruling in various different industries from pharma to chemicals to steel to everything. I think that will take some time in India, you know, the whole legal process. As far as technology is concerned, certainly, when we acquired the company, while it was adjacent technology to us and we understood it well, there were certainly some nuances of the technology and some new things we learned, which now we can take forward and use it for newer products. We are working on it with our R&D team.
Okay, hoping to hear about that from the incoming quarters from you.
Yeah. I think frankly, our hands are full with our current projects in the current context. Yes, hopefully in the next few quarters, you know, when we make some progress, we'll keep you posted.
Yes. Thank you.
Thank you. Thank you very much. Thank you, Nikhil.
We have the next question from the line of Anisha Mahawal from Envision Capital. Please go ahead.
Hi, sir. Good evening, and thank you for taking my question. While you did mention slightly earlier in the call that the EBITDA per ton has gone up substantially from a YOY perspective, is it possible to quantify what has been the increase on Q-on-Q basis?
You mean Q3 over Q4 or?
Yes.
Q3 FY 2024 compared to
No. Q3 over Q4 over Q3.
Q4 over Q3. I am not sure if I have that number ready with me. Sachin, if you are on the call and I am not sure if you have the number. Sorry, we're not in the same location, so maybe my finance team can come up with a percentage. Q4 over Q3, if you have the number. If you don't immediately, then we can get back to Anisha after the call.
Yeah. Yeah. Sorry.
Go ahead.
Yeah. Approximately 20%.
No, no. She's not asking Q4 over Q4 of last year. She's asking Q4 over Q3. I don't think it's 20%. Is it 20%?
Yeah.
Okay.
If I may take this question further, what is driving this improvement in EBITDA per ton? Is it a particular product that is doing exceptionally well for us? Because if this is the kind of growth we're seeing on a quarter-over-quarter basis, it could be. I think it would be great for us also to understand where it's coming from.
Look, partly it's coming from overall strong demand. We've been at 100% capacity utilization for the last couple of quarters. We were able to pass along the price increase and do a little bit better. We were able to renegotiate some of our contracts, as I mentioned. We've also had tailwinds in the sense, as I mentioned, some amount of it would be because of some amount of stock profit that we would have had from buying raw materials at a good rate, you know, back in December, January, February. Then, of course, we saw February, March, April. February and March, you know, prices shooting. Partly a couple of reasons. I'm sorry, I'm just asking Sachin this question again. Sachin, 21% is Q4 over Q4 in EBITDA per ton increase.
I don't think Q4 over Q3 would be that much, but anyway, if you're saying so, it must be true. I just want you to re-
No, sir. No. Q3 is higher. It's 25%. I just missed it. Yeah.
Okay.
Yeah.
Anyway, I think, Anisha, broadly, you know, it improved, I would say, but these are the reasons why what I just mentioned.
Sure. Again, with respect to what you were saying earlier, even if crude does correct the EBITDA per ton that we are currently enjoying, which is, you know, 50% higher YOY or 20% higher QoQ, the absolute EBITDA per ton we're confident of maintaining.
Yes. Under the current context, yes. As I said, the macro picture, at least for the next one or two quarters, things look quite strong. With inflation and the macro picture turning, I don't know, you know, what would happen maybe. Our endeavor would be to always improve on EBITDA per ton.
Understood.
As we grow, you know, in our kind of business, the fixed costs are lower. Sometimes even the contribution per ton may drop. When I say contribution, gross contribution per ton, the EBITDA per ton may still go up. Yes, that would be our endeavor to keep improving on that.
Understood. Just coming back quickly.
Ma'am, this is the operator. Would request you to kindly join the queue for follow-up questions.
I just finished my first question.
Yeah, go ahead. Finish your last question. Yeah, finish it up.
Thanks. With respect to the gross margin, which was in, I think about 38%, is this number a sustainable number? Because it is on the higher end if you compare it to the previous quarters. I just wanted to understand this. Or is this a benefit of some low-cost inventory that you were carrying?
There is certainly a benefit of low-cost inventory.
Understood.
Is it sustainable? I'm not sure. It has been one of the highest numbers, so I'm not sure. As I said, EBITDA per ton and EBITDA percentage, we'll try and keep it at this 14%-17% range. Hopefully we won't drop under 14%, but at least 13%-17% and increase it further, hopefully.
Okay. Thank you so much. I'll join back the queue.
Thank you.
Thank you. We have the next question from the line of Kamlesh Kotak from AMSEC. Please go ahead.
Hi. Good evening, everyone. Firstly, congratulations for a wonderful execution, sir. I have two points just to have your thoughts. One is, I don't know whether you spell it out or I missed it. How much of the growth is volume and value for this quarter out of the 48% growth that we read, sir?
About half is because of volume.
Okay. Okay.
About 24%-25% is about that. Yeah.
Okay. Secondly, if I have to just dissect the strong growth that we have seen in the revenue as an extension of that, are we gaining market share from the players domestically, or is it that the imports are getting prohibited because of the global supply chain dislocation? What is driving the strong growth? Is it either of the two factor?
I think it's both external and internal. As you said, certainly imports have become harder for everyone, and everyone prefers local supply. As far as the India market is concerned, which is almost 80% of our total turnover.
Right
we have certainly benefited from imports being more expensive due to higher shipping rates, you know, higher detention charges and so on. Availability is also an issue in many cases. We have certainly benefited, but that's the external factor. On the internal side, you know, we have done so much work over the last five years, six years since we acquired-
Sure.
Omnova Solutions India in our Valia plant as well as in our older business in Taloja. We have grown market share across the board. At this point, I'm fairly confident that across all the product categories that we have, almost all I would say, we are number one in India or a joint number one, let me put it this way, you know, where market share is very close to somebody else. We're quite confident. This amount, if you compare this to about five, six years ago, I would say we were number one in a few categories, but a strong number two in most categories.
I think we have grown market share here in India, and we have also obviously, you know, look, INR 200+ crores of our sales this year is from exports, which if you compare to a few years ago has been a you know a phenomenal growth. It's multiples of what we were maybe 5-6 years ago. Maybe 30. At that time it was only 20 crores-30 crores. You know, 30 crores-40 crores maximum would have been our exports at that time.
Right. Second point, sir, I just want your understanding on the ApcoBuild. Though it's a small business, but how are we strategizing there? Any vision statement in terms of the distribution ramp up, geography expansion, and how our product is priced vis-a-vis the competition, how the growth rates. If you can just add some more color on that.
Yeah. Yeah, look, our main focus has been in ApcoBuild to focus on our strength of the product that we manufacture for the B2B customers.
Mm-hmm.
Obviously, since we're backward integrated, we do have some advantage there. Distribution scale-up is really the challenge in this sort of, you know, B2C space where ApcoBuild is. We just want to ensure we do slowly, profitably. Of course, we have added some products that we are outsourcing and adding to our product portfolio. We want to ensure that what we deliver to the customer is at a price point and the quality that's not available in the market anywhere. We're focused on a few products, and as of now, we are still learning and growing in the western part of India.
Any growth directionally you are looking at in terms of the percentage growth or how you are going to?
Yeah, I mean, look, we have grown at more than 100%, I think 120%-130% in the last financial year. The way we are adding, I think that growth should be sustainable even for the next financial year. Of course, as the value goes up, obviously the percentage may start dropping. We feel pretty confident that the business model that we have, being backward integrated and focusing on a few products and few specific niche applications around waterproofing, I think, we feel pretty confident that over the next few years, you know, we will grow geographically. There's a lot of scope to grow.
Wonderful. Any price differential you can highlight between-
Mr. Kotak, would request you to kindly join the queue for the follow-up questions.
Sure. Okay. Thank you.
Thank you.
Thank you.
We have the next question from the line of Anubhav Sahu from MC Research. Please go ahead.
Hello. Yeah, thanks for the opportunity. First of all, wanted a bit of a clarity on the CapEx projects. As much as I could understand, I think there are two projects which you are looking. For the completion by Q3. One is 50,000 ton capacity for NBR plants, right, at Valia. The second one is a latex plant. The capacity increased by around 20% in Taloja.
In terms of total tonnage, it's 50,000 tons at Valia and about 10,000 tons at Taloja as of now.
Okay. It's 50,000. The one for which we are waiting for EC is the NBR project, right?
Yes.
Okay. As per latex capacity is concerned, your latest presentation mentioned 65,000 tons. Is it the result of debottlenecking you are discussing for the last year?
Yes. We have increased it from 55,000 to 65,000 tons.
Another question was on the sourcing of our imported raw materials. I think Sachin Karwa mentioned styrene and acrylonitrile. Is there any change in you know sourcing these two materials because of the macro challenges, you know, it is happening on the European side, on the China side. Which are our key sourcing partner countries, if you'd like to mention on styrene acrylonitrile.
For styrene, I think most of it comes from within Southeast Asia and Middle East. It doesn't come from very far. We have not seen a major challenge for importing raw materials from these areas. Acrylonitrile, fortunately, I mean, we are a very compared to the rest of India, we are still a small importer. While there have been challenges, delays coming in, you know, our requirement is not significant compared to the rest of India. Maybe in less than 3%-4% of the total Indian imports, you know, which goes into several different applications like ABS, acrylic fiber.
Right.
NBR and nitrile latex, you know, only 30% is acrylonitrile, 60%-70% is butadiene. That while that has been a challenge, fortunately, because our quantities are not very high, we have we've been okay so far. You're right. I mean, overall we spend a lot of time these days, much more than we have in the past, looking at all our supply chain and making sure raw materials arrive on time and we have enough, so that the production doesn't suffer.
Right. That probably, sir, it also explains the, you know, the spike in net working capital. Probably you're ensuring that availability remains.
Yeah. I mean, look, it's a combination of overall, all raw materials going up. You know, obviously that's caused net working capital to go up. Inventories are higher than what we have generally kept. Debtors are higher because the prices are higher. You know, it's a combination of all reasons that overall net working capital has gone up.
Okay. Hope that helps you. Thanks a lot.
Thank you. Thank you very much.
Thank you. We have the next question from the line of H. Kumar Pandya, who is a shareholder. Please go ahead.
Yeah. Thank you. You see, my question is that the trade receivables in 2021 is about INR 104 crore, and in 2022 it is INR 161 crore. As per my understanding, these trade receivables are an important factor in as far as controlling the cost is concerned. If you are able to reduce these trade receivables, you'll be able to reduce your outstanding and your repayment for the loans which you have taken, that will be further reduced. The capital cost will be reduced sharply. Your commitment.
Mr. H. Kumar Pandya, you know, the trade receivables have gone up by, as you said, about little less than 60%. If you see our total revenue has gone up also by 70% for the year, I think. Let me just find out the exact number.
Seven.
77%.
Seven.
If you see in percentage terms, actually we have done better in terms of reducing our trade receivables in terms of percentage term, because revenue's gone up by 77%, but trade receivables have gone up by maybe around 60%. Sachin, do you have the exact number trade receivables increase in terms of percentage?
Yes.
Trade receivables.
It's about 60% on that.
60%.
Yeah.
60%. Yeah. While we understand and we've tried a little bit to reduce the you know, credit period that we give to our customers, unfortunately we are also in a competitive market and lot of the imports that come in you know give large number of days of LC credit. We are forced to walk along with the market as of now. Hopefully that will change a little bit going forward. We understand the issue and we review it regularly.
Okay. Thank you so much. As long as you are aware of this issue and you're taking care of it, thank you so much.
We are trying. Thank you.
Thank you. We have the next question from the line of Deepak Shah from Shah Financial Services. Please go ahead.
Hi. Congrats for the good set of numbers. As usual, I pose complaints. This is just a small point that we have been paying taxes by way of taxes to the tune of INR 33 crore on a capital base of about INR 11 crore. Plus, we have a dividend payout of about INR 25 crore. Counting your last dividend, what you have declared, 3 rupees per share, 3 plus 2 equals 5 . If I count, that is a INR 25 crore. We are paying taxes to the exchequer INR 30 crore plus INR 25 crore by way of dividend. That dividend becomes taxable to the majority of the investors. Can we not address this issue as every third company is going for a buyback or buyback of shares or reduction of capital? Can you again not relook at the same?
Because that has nothing to do with your efficiency of the business.
I understand. Deepak brother, you've asked this question multiple times over multiple.
Yes.
con calls, and while you are saying every third company, I beg to differ with you. It is not every third company.
It's a good company of our category.
Yes, a few companies are doing it, but in our case, you know, as I've mentioned before as well, that there is a cost to doing this buyback.
Yes.
If the buyback is not successful, it's an illiquid stock. As you know, it's not, we're not as big a company as some of the other liquid companies that you have referred to in the past. And therefore, we didn't see any point of doing a buyback if we are only able to get about 0.5% or 1%. You know, then it's not a successful buyback. You're right, we can do it, but there's a cost to it and it do make sense in the current context.
It will.
We, trust me, we discuss it every six months.
Yes.
We see if it makes sense. As of now, in the current context, it does not make sense, and we would not be doing it.
Okay. At the same time, if I have to draw your attention, the promoters also can participate. Their percentage of equity will not go down. No? It is in lieu of dividend, right? The buyback of share is.
Why are promoting only for the promoters? Deepak Shah brother, if the promoters participate and nobody else participates, then what happens?
Still 80% goes through, no? It's a wonderful thing, because the price will be always higher than the buyback price will be little higher than the market price of last, say three, four months, six months. It will be very beneficial, you know. It is in lieu of dividend anyway.
Yeah. I see, Deepak brother, you're a well-wisher and you've been a shareholder for a very long time, and we appreciate it. Let us agree to disagree.
Yes.
For the last five years, I think we've had the same discussion and conversation.
Correct.
We've discussed it with many bankers, thanks to your suggestion, and we have been advised by many people not to do it for practical reasons. That's the way it is.
Okay. It's just a feedback complaint. It's not a complaint.
If something changes, we're not closed to it. If something changes, we'll do it at the right time. This is not the time for the company to do it.
Okay.
We are very happy as a company to pay to the exchequer what is rightfully the exchequer.
Sometimes you feel.
I know you may not agree with that, but that's our philosophy and that's what we believe in.
Okay. All the very best. Thank you.
Thank you, Deepak brother. Thank you.
Thank you. That was the last question.
Thank you.
I now hand it over to Mr. Sachin Karwa for the closing comments.
Okay. I think Sachin is not available. I'm happy to do the closing comments. Maybe he dropped off. So thank you very much. Thank you again. It's been a very eventful year, a strong year for the company, and would like to thank all the shareholders, analysts, and everyone else who's on the call, investors. Thank you so much for your support. We appreciate it. We will continue to strive hard and work hard to keep improving the company's performance and growing from strength to strength. Of course, there will be some good times, some bad times. Once again, we appreciate your support. We look forward to starting the new financial year, and we hope to continue this momentum going forward. Thank you very much.
Thank you, sir. On behalf of Valorem Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.