From this, let's discuss the quarter one performance of Vinati Organics. We have with us Vinati Saraf Mutreja, the Managing Director of Vinati Organics, who joins us on the show. Hi, Vinati. Good morning. Good to see you in, as always. Well, before you get to your numbers, just want to understand what is your exposure to the United States. Exports are roughly around 55% of the mix. But to the United States, what is it at? This recent Trump's tariff tantrum, so to call it will have some impact on your business, I am guessing?
Okay. Good morning. Thanks for having me. Out of the 55% exports of our total company, about 33% out of the 55% is to the United States, of which the bulk of it, 80%, is ATBS and related products. So roughly you can say 25% of my revenue, which is exported to the United States, ATBS and related products, which are under exemption from any sort of tariffs. This has been the case since the beginning of the year. So as such, the impact of tariffs is very little. Coming back to the remaining 5%-6% of my sales, which is to the United States, there is no manufacturing in the U.S. for those products, and hence, in most cases, either the customer is absorbing the tariff or they are lobbying with their government to remove the tariff.
Thirdly, 2%-3% of my revenue, which is some of the butoxyphenols and the AOs, which are under the tariffs, again, we are still competitive, and if not sell to the United States, we have many other markets, including India, where we can sell that too. So net-net, there is almost zero to no effect of tariffs on my company's sales.
Thanks for explaining that to us, Vinati. So you are sounding very confident in saying that. You gave us the breakup and not much impact to your business. Take that on board. Let's get back to the numbers then. What led to the margin expansion in this first quarter, and is this sort of a margin performance sustainable? What's the outlook for FY 2026? We normally ask you for two numbers, margin outlook as well as revenue growth.
Sure. See, the margin expansion, and I've always maintained it's because the raw material prices came down in Q1 vis-à-vis Q4, and hence you saw that slight increase in EBITDA margin from 26% to 30%. Since we have a quarterly lag in our pricing, I still maintain, on average, on a year-on-year basis, 27% of EBITDA margin is what is sustainable for our product mix. Given that, this year revenue growth, I do expect 15% revenue growth. Again, volume growth may be 20%, but because the raw material prices are falling and are fluctuating, hence I'm predicting a revenue growth of 15%.
15%. Okay. Vinati, hi. Morning. Just wanted you to address the news which came out yesterday. The anti-dumping duty, which commerce ministry said DGTR has recommended anti-dumping duty on PVC. Now, upstream, downstream, is there any implication or anything at all, Vinati, for you as a company?
Look, if PVC imports come down and more domestic PVC is going to be in use, then of course the demand for my antioxidants increases in India, which anyways has been increasing steadily over the last four or five years, and hence we are very positive and bullish on the demand outlook of domestic consumption of AOs in India, because that primarily goes into plastics.
Is there enough? I think Reliance was setting up a PVC capacity. Adani were setting up capacities, large capacities. In terms of pricing for your products, et cetera, is there any lift at all because of this?
Well, for pricing on my products, as you can see, my products, I still compete with China and Singapore. As such, it is a competitive industry. But the demand is increasing. We are backward integrated. We make our own raw material. We have reached breakeven in AO, and as the volumes pick up, we will soon see profitability there.
Another aspect, Vinati, again, this is slightly global in nature. In China I spoke to this JP Morgan analyst last week, end of last week, who said that across a range of chemical industries, especially polluting industries, China is once again curbing supply. Various measures, buying out capacity, 20-year-plus capacities shut down, et cetera. They are calling it anti-involution. Basically preventing a race to the bottom across a range of these things. And one of the sectors most talked about is chemicals. Anything you can tell us, Vinati?
See, look, if it is a polluting process, and that is why Chinese industries are shutting it down, then most likely we are not in those chemicals. We are into very specialty niche chemicals with green processes. Hence this may not affect us directly, what you are saying. That shutting down of polluting chemicals, that will not affect my business.
Vinati, hi. Morning. Coming to your capacity expansion, there is a large expansion at Tapti, right? I think your ATBS capacity will eventually go up by 50%. So where are you in terms of the commissioning timelines of all this? And then what visibility do you have in terms of the utilization of this new CapEx and overall revenue growth, say over the next two years? Vinati?
Can you hear me?
Yeah. We can hear you now. The question on your revenue growth and the utilization of your expanded capacity because it is such a huge amount of capacity that you are putting on stream now.
Sure. The ATBS capacity expansion is happening in two phases. The first phase of 10,000 tons is actually completed now in August. We need to take a shutdown to integrate that plant, and since we are oversold on ATBS, it is taking a bit [inaudible]. That plant pretty much in the new line over the next six months. The second line, the other 10,000 tons will come in at some point next year, around April 2026.
All right. Vinati, we will leave it there. Thank you very much for joining us. Good speaking with you, and indeed, thank you for that outlook.