Ladies and gentlemen, good day, and welcome to Jubilant Ingrevia's Q1 FY 25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pavleen Taneja, Head of Investor Relations, Jubilant Ingrevia Limited. Thank you, and over to you, Mr. Taneja.
Thank you, Darwin. Good evening, everyone. Thank you for being with us on our Quarter 1 of Financial Year 2025 earnings conference call of Jubilant Ingrevia Limited. I would like to remind you that some of the statements made on the call today will be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release and results presentation that has been shared on our website. On the call today, we have Mr. Shyam S. Bhartia, Chairman, Mr. Hari S. Bhartia, Co-Chairman, Mr. Deepak Jain, CEO and Managing Director, and Mr. Arvind Chokhany, Group CSO, Jubilant Bhartia Group. I now invite Mr. Shyam S. Bhartia to share his comments. Over to you, sir.
Thank you, Pavleen. A very good evening to everyone. Thank you for joining us on the Quarter One of the Financial Year 2025 earnings conference call of Jubilant Ingrevia. We are pleased to announce healthy sequential performance for Q1 on the back of improving business performance of our specialty chemical business and positive impact coming from our cost initiatives from the last three quarters. Let me share the overall market update with you all. The pharmaceutical end-use segment continues to witness rising demand trends with healthy volumes placements. We are also glad to share that we have gained significant traction in the regulated markets of North America, Europe, and Japan. Visible signs of further improvement in demand of certain products are signaling near-term outlook remaining positive, while pricing remains steady.
However, we are witnessing continuous pressure on Acetyls segment owing to lower demand coming from the Paracetamol end-use segment. The agrochem sector has started to show marginal improvement. While the excess inventory situation is gradually easing out and the volumes have started to move, the prices still remain under pressure due to excess supply of agrochemicals globally. We are hopeful that recovery should continue to happen in the coming quarters. In Nutrition segment, the demand remained steady in line with our previous two quarters, and the prices also moved up marginally towards the end of the quarter, except for Choline, where the prices remained subdued. Now, let me talk about our business updates. The volume of Pyridine and Nicotine Derivatives witnessed a rising trend, while demand for Niacinamide and pyrithiones remained steady.
In Acetyls, we remained focused towards maintaining market share despite challenges being faced due to lower demand, higher freight costs driven by Red Sea issues, and a decline in acetic acid prices. Strong traction continues in our CDMO business, wherein we have started delivery of new orders during the quarter. We are also in advanced stage of discussions for multiple projects in pharma, agro, and semiconductor end use. We are pleased to share that our manufacturing facility at Bharuch has successfully completed its USFDA inspection with zero 483 observations. This GMP-compliant facility is intended for manufacturing of nutraceuticals and dietary active ingredients for human consumption. Now, let me share few details of our future outlook. We reaffirm our expectation of witnessing improvements in all three business segments in FY 2025 over FY 2024.
Like last quarter, our key focus remains customer centricity, ramping up newly commissioned plants, remaining lean, and bringing back the margins to normal levels. We are focused towards keeping the costs in control through our Project LEAP, and are on track to source renewable energy for our long-term energy requirements, which also underscores our firm commitment towards sustainability and environment. We continue to see increasing utilization of our newly created plants. We remain on track with our CapEx plans towards investing in high potential product categories to deliver on our bold vision of Pinnacle 3-4-5. That is 3x revenue, 4x EBITDA in 5 years. With this, I now hand it over to Deepak to discuss the businesses in detail.
Thank you, Mr. Bhartia. A very good evening to all of you. At the outset, I would like to thank you all for joining us today for the Q1 of FY 25 investor call of Jubilant Ingrevia Limited. Let me first take you through the overall market overview for the first quarter of FY 2025. In pharmaceuticals, during the quarter, we witnessed steady demand with good visibility on volumes across segments. Also, volume growth was seen in both pyridine and diketene derivatives. Prices were stable across segments, with the uptick in prices in some areas. Paracetamol-driven demand continued to remain under pressure, with customers running their plants at suboptimal capacity. In agrochemicals. On the agrochemicals front, demand is gradually coming back, with issues relating to global inventory de-stocking waning out. Complete recovery is expected to be gradual. Pricing pressure continues due to excess supply from China.
However, volumes are gradually recovering in Pyridine-based products, with prices remaining muted. In nutrition, overall, Niacinamide volume remained stable, with steady pricing during the quarter. We also witnessed marginal improvement in pricing in the last few weeks. Demand in Choline was also stable, but pricing pressure was seen and continued for most part of Q1. We also observed good traction in human nutrition-grade products during the quarter. As you know, we have rolled out several new initiatives in the last quarter, in line with our Pinnacle 3-4-5 growth roadmap that we announced in the last investor call. Let me share 7 key highlights to demonstrate the progress on these initiatives. Number 1, our core product platforms continue to drive growth and leadership, with significant volume growth in Pyridine and Picoline on a year-on-year basis.
We are now globally number one player in Pyridine and Picoline, and the only scaled non-Chinese player. Prices are also inching up substantially in our Pyridine and Picoline business. In Niacinamide, we maintained a leadership position, being top two in feed grade, with steady quarter-on-quarter volume growth. In Acetic Anhydride, volumes were low and prices were hit due to macro factors, although we maintained our market share in both India and Europe. Number two, we have improved our revenue share of the specialty and nutrition business to 60% and EBITDA share to 75% in the overall portfolio. Our fine chemicals and microbial products are showing strong year-on-year growth. In CDMO also, inbound queries from pharma, agro, and even semiconductor remain strong. Our new product lines in Diketene and food-grade Choline Bitartrate are also showing strong traction.
Number three, we launched our efforts to open up new customer opportunities through roadshows in Japan, Europe and the US, wherein we met 100-plus customers in Q1 FY25. We have identified several new leads through these roadshows, which we hope to convert into commercial opportunities in the coming quarters. Our persistent efforts on international push have started to yield results. For instance, in the North American region, our revenues doubled up in the last 1 year, and in EU and Japan also, we steadily grew our revenue on a year-on-year basis. Number four, we increased focus on EHS, safety, and efficiency further in Q1. For instance, we are unlocking our efficiency via several initiatives such as Surge, Lean and Business Excellence. The impact of that is visible in our P&L.
During the quarter, we have increased our safety measures by focusing on the 5 S culture and achieved zero incident months, post signing contracts for Gajraula and Savli facility for renewable energy. Our captive renewable energy initiative with O2 is now being extended to our Bharuch facility as well. Number five, our long-term CapEx plans are on track, with continued investment in new opportunities such as food and cosmetic grade niacinamide, slated for commissioning in Q3 FY2025, and other multi-purpose plants in the pipeline. We are glad to share that our Diketene plant is running at 80%+ utilization for season products and 50%-70% utilization for newer products. Number six, we are also strengthening and expanding our leadership team with the onboarding of our new CFO, Varun Gupta, who has 18+ years of experience at Unilever.
Alongside, there are several new additions in the top leadership team, which are in progress. And number 7, our manufacturing facility at Bharuch received USFDA EIR with zero 483 observations. This will help us accelerate our growth further in regulated markets such as the United States. Now, let me take you through the updates on all our three business segments individually as well. In Specialty Chemicals, during the quarter, the Specialty Chemicals segment revenues grew by 18% on a year-on-year basis on account of significant improvement in volumes of fine chemicals and pyridine products on YOY basis. EBITDA for Specialty Chemicals grew by 50% on a year-on-year basis, and 28% sequentially on the back of healthy volume uptake and efficiency-led initiatives, touching almost 20% EBITDA margins.
Our CDMO business remains on a strong growth trajectory, and our new plants are optimally utilized. Our microbial control solution business is steady, and products comparison platforms are well accepted in the market, with 80%+ capacity already booked. Nutrition and Health Solution business segment update. During the quarter, revenue for the nutrition business improved sequentially by 13% on account of higher volumes coming from human and food and cosmetic grade products. EBITDA during the quarter improved 165% quarter-on-quarter and 37% year-on-year basis, mainly on the back of the favorable shifts in volume towards food segment products, along with our lean initiatives optimizing the input cost. Overall, niacinamide demand remained stable during the quarter. The pricing remained steady. Our newly launched products, food grade choline chloride and choline bitartrate, are gaining good acceptance in the markets.
Our GMP compliance facility for food and cosmetic grade D3 is expected to be commissioned in Q3 FY25, for which we have also started to receive good interest from customers to book advance volumes. In chemical intermediate business, revenue for the quarter was lower, driven by marginally lower volumes and muted prices. Ethyl Acetate volumes improved on good demand in the export markets, whereas Acetic Anhydride volumes were lower, owing to key end use markets of Paracetamol and Agrochemicals remaining under pressure. EBITDA during the quarter was impacted on account of lower demand, higher ocean freight due to Red Sea issues, and overall realizations remaining subdued. We maintained our market share of Acetic Anhydride in Europe, wherein we increased our market penetration by acquiring new customers. We also retained our dominant market share for the Acetic Anhydride in domestic markets.
Now, let us discuss the overall financials of the company. The overall revenue during the quarter stood at INR 1,024 crore, as against INR 1,075 crore in Q1 of FY 2024. The revenue was lower, mainly due to lower year-on-year revenue in chemical intermediate segment. The EBITDA for the quarter stood at INR 119 crore. Sequentially, we improved our overall EBITDA by 18%, largely owing to margin improvements witnessed in specialty chemicals and nutrition business segments, as well as cost improvement initiatives. The net debt of the company as on 30th June 2024 was INR 677 crore, and net debt to equity ratio was 1.5 times on the basis of trailing twelve-month EBITDA. The capital expenditure incurred during the quarter was INR 116 crore, which was primarily funded through internal accruals.
Net working capital percentage to turnover for Q1 FY 2025 was lower at 18.6%, as against 20% in Q1 FY 2024. Number of days of working capital was reduced to 68, as against 73 in Q1 FY 2024. We opted to move to the new tax regime from last quarter onwards, wherein the applicable effective tax rate is now 25%, as against tax rate of approximately 35% in the old tax regime. The tax for quarter was INR 49 crore, as against INR 29 crore in Q4 FY 2024. With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have.
Thank you very much. We will now begin the question and answer session. 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 please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Siddharth Gadekar from Equirus. Please go ahead.
Hi, sir. Good evening. First of all, specialty chemical EBITDA side, what has driven this sharp improvement, both in terms of margins and absolute EBITDA growth on a YOY and on a sequential basis?
Yes, that's so. That's probably the main highlights of this quarter results. Couple of things, on a year-on-year basis, the volumes have increased significantly, and that is a trend which started even in the last quarter, if you look at our last quarter numbers as well, Q4 numbers as well. And even though pricing is slightly lower, but the net impact of that is that EBITDA is improving at an overall level versus last year. The second thing which has played out here very strongly is the cost initiatives that I think I've been talking about for last three quarters now. The full impact of all those cost initiatives is reflecting now in the bottom line quite strongly.
Sir, can you quantify the cost impact in this quarter, so we could get a sense of how much is the actual cost savings that would be coming in in the entire year?
See, all the initiatives that we have taken on the cost side between, and then we have put that in our IR presentation as well, between Surge, Lean, business excellence initiatives, and also on the energy side, in last quarter. The combined impact of those initiatives on an annualized basis is INR 140 crore to INR 140 crore, INR 120 crore to INR 140 crore. Obviously, not all of that kicks in immediately. Some of that takes its own time to ramp up, but on an annualized basis, that is the kind of impacts we're talking about of all those initiatives.
Okay, got it. So secondly, our unallocated corporate overheads have increased very sharply. Is there any one-off in that?
Yes, from last quarter, from Q4 of last year to Q1 of this year, there is an increase of about INR 8-9 crores. It is on account of some one-off expenses which were unavoidable in Q1. But we expect our unallocated corporate expenses to stabilize at INR 16-17 crores every quarter from now onwards.
Okay, so, broadly, we should do anywhere around INR 70, 65, 70 crores on an annualized basis, that is how we should look at it, right?
Yes, INR 60 crore, around, around that number. You're right.
Okay, so, thank you. I'll get back into if I have any other question.
Yes.
Thank you. We have the next question from the line of Yash Goenka from Auriga Capital Advisors. Please go-
Yash, you're not audible.
Yes, we can't hear you at all.
Yash Goenka, you're still not clear. You are not audible, sir. I'm sorry. Sir, since you're not audible, we will move to the next question. We request you to please, with a better connection, join. Thank you. We will proceed to the next question, which is from the line of Rohan Gupta from Nuvama. Please go ahead.
Yeah. Hi, sir. Good evening. Sir, first of all, on the specialty chemicals, conversation is on a significant improvement. Sir, you in your opening remarks gave some sense that there has been a significant improvement in the fine chemicals and also in the trading. In Picolines, sir, you mentioned that the old product is roughly utilization is 80%-90%, and new product is roughly 50%-70% utilization. Just wanted to get some sense that how much contribution to EBITDA improvement is actually driven by the ramp-up in Picolines-based new products and overall utilization levels in them?
Yeah, so hi, Rohan. I think, it's a combination of all the factors, Rohan. I think if I just talk about our key businesses within specialty chemicals, what is last year, the trading business has seen significant improvement in volumes, and obviously, the cost improvements we have done, a major part of that, or the trading business is a major beneficiary of that because that's one of our biggest products as I think you know. On the pyridine portfolio, as you would remember, about 1.5 or almost now 2 years back, we had launched phase one of pyridine products. Those products are running at 80%+ utilization level, and the recent products that we have commissioned in March, one of them is already running close to 70% utilization levels.
The other one, hopefully, will get there in next 3, 4, maximum 6 months. So there is significant contribution coming from these products in the overall EBITDA improvement. On an incremental basis, while I don't have the number handy, what is the percentage contribution and we can't even disclose that in public domain. But there will be a significant contribution coming from incremental revenues coming from Vitamin portfolio, apart from what trading has contributed. The third main driver, of course, is the CDMO business, where, as compared to last year, particularly on the pharma side, we are getting more traction, we have more products, and obviously, those are high-margin products, so they are also contributing significantly to overall EBITDA increase.
Because the question I was asking, because of the... You also mentioned that energy costs, where we have done a big saving and, in last two years, our energy costs have gone up very sharply because of the unfavorable changes which has happened at the government level. So you mentioned almost at INR 120 crore-INR 125 crore annualized saving from the energy cost itself, so-
No, no, sorry. I didn't say INR 120-INR 125 from energy. Rohan, sorry, if I didn't mean that. What I said is, we have 3, 4 different big initiatives in the company on the cost side, which have been running. One is a digital program, which we call Surge, and we have talked about it in the last few calls. It is focused on improving the efficiencies and productivity of our plants through digital interventions, as well as improving our supply chain efficiencies. And even on the sales side, it is contributing. So that's one program. The second one is the Lean program, which was focused largely on the overheads cost optimization, which we launched almost 3 quarters back. The third one is the ongoing business excellence initiative that we take in our plants.
The combined effect of all these initiatives is about INR 120 crore-INR 140 crore of annualized savings. Energy did contribute to it, but it's not the only thing in that overall savings bucket.
Out of this, how much of this has already been achieved of INR 120-INR 125 crore annualized?
I think, as I said that many, many of these initiatives, or at least some of these initiatives, will take time to ramp up. So if I say the annualized impact is INR 120 crore, every quarter it's at least INR 30 crore plus kind of impact. I would say at least in Q1, we hopefully have achieved at least two third of that. And then as we move into the subsequent quarters, we will start to see the full potential impact of those initiatives.
Okay. So at least we can assume safely that INR 20 crore from in this current quarter itself has been contributed by the efficiency and benefit which we have talked.
Significant part, I would say, right? Exact math, obviously, we should not be on this call. But, but it has, as I said in the opening comments also, even chairman said that in the very first line... The big improvement in profitability has happened on account of, one, specialty portfolio firing, and second, whatever we have done on the cost side.
Sir, on this CDMO, if you can share, you also mentioned in opening remark, almost you have in the quarter itself, have met almost 100 plus customers in Japan and other countries as well. The kind of feedback if you can share with us that, you know, these are the CDMO specific categories or specialty chemicals, or how soon you think that, you know, some of these conversations can get converted into the top-line addition?
Yeah. No, so the 100+ customers that I talked about is not just CDMO, to be very transparent. It's across Japan, U.S., and Europe. We obviously did these roadshows and met all our existing key customers of some of our catalog products as well. But at the same time, there are at least, I would say, one third of these customers whom we are calling our key customers, and there we see opportunities of CDMO kind of opportunities existing. In fact, in many of those conversations, when we met the CXOs or senior executives of these companies, the discussion has been at a fairly strategic level, and we discussed where we can become a long-term partner to them. And obviously CDMO is one key lever to create that long-term strategic partnership.
I think I explained in the last quarterly call also, we look at our CDMO business in three parts. There is an agro part of it, where we are in discussions with all four or five major innovators, and we have several opportunities we are discussing with them. And one of them is in very advanced stage of negotiation. Hopefully, we should be able to announce it very soon. But there are at least a half a dozen more of such opportunities which are in various stages. And as you probably would know, these agrochemical opportunities are... They take time to brew up, but when they happen, they happen as a step function. So that's what we expect.
But in agro, I would say, hopefully, that at least one we should announce soon, and there is another half a dozen, which will hopefully materialize over the course of next year, year and a half. On the pharma side, obviously it is a lot more fragmented versus agrochemicals. There we start with small volumes in early stages, and then gradually they ramp up. So it's more steady growth that we are expecting there, and that is an ongoing process. Our CDMO pharma business has grown quite well in the last three years also, and we are hoping to accelerate that growth, with the wider funnel that we have created. Not just through these roadshows, but otherwise also we have intensified our efforts to engage with pharma customers.
The third part of CDMO business is the semiconductors-related opportunity. I had mentioned in the last quarterly calls that we had 4 or 5 opportunities. The good thing is, on the back of these roadshows, those leads have now become at least 2.5x. We have at least 10-12 real leads which have come up. We have already provided samples for at least a couple of them, and we are working with our customers to see how to move to the commercial stage of production sooner there. So that hopefully that answers your question, Rohan. But CDMO opportunities do take their time to materialize. But we are right now building up a funnel, which will hopefully at least get the ball rolling for next couple of years.
As we move along, we'll continue to build up more opportunities in that funnel.
Okay. I suggest last bit from my side, just a confirmation on the EBITDA margins in the specialty chemicals, which is up by 20% in the current quarter. So you are still talking about some more efficiency and benefits to kick in, and, and the product mix will keep on improving in favor of Diketene. So, some, some guidance, ballpark number on EBITDA margin for the current year on specialty?
No. So I think I've been saying it consistently, that, our specialty chemical business should be, at least 20% plus EBITDA margins in steady state. And, and as we scale up and as we add more products, not just in Diketene, but also in other parts of that portfolio, including CDMO opportunities, we hope to take that 20% to closer to 24, 25%. Now, whether that happens this year or not, that, that depends on a lot of factors. The market has to recover fully. Some of the opportunities we are working on, they have to materialize. It's very difficult to, to ascertain the timing of that right now, whether that will happen in a single year or not. But our aspiration is to keep our specialty chemical business at 20%, plus, from here onwards.
Okay. And, sir, just if I'm allowed, just one last remark on your agrochemicals, which you mentioned. The inventory de-stocking situation seems to be almost at the last stage. How much confidence do you have? Because we're still getting a mixed view there on the global agrochemical inventory. So do you see that the customers are coming back, or, or it was just only temporary things which have just led to some kind of volume recovery and may fade down further?
That's a valid question, Rohan. I would say the hope is it's in the last leg because of the reasons you said. At least in our, some of our product categories, we have seen volumes coming back and customers coming back. And obviously, Pyridine is our, one of our biggest products, as we know. As soon as the volumes come back there, that gives a sense of where the agro market is moving... Having said that, what we are hearing from our customers and even in these discussions, during the roadshows, what they are saying is, that from a demand perspective, the volumes will continue to come, but not as fast and as quickly as everyone was expecting them to be, six months back.
The recovery on the demand side will be gradual and steady, is what the anticipation is. Obviously, the challenges now are more acute on the supply side, which are leading to lower prices. Hence, in many of our products also, we talked about it in the last quarter also, the prices have been muted. But, the good news is in last few months, the prices have not declined further. They have been holding up steady at a lower level versus what they were last year, but they are holding up in last few months where they are. They're not going any further down.
Okay, that's it from my side. Thank you so much.
Thanks, John.
Thank you. The next question is from the line of Divya Sethi from Electrum Portfolio Managers. Please go ahead.
Yeah. Sir, a couple of, you know, firstly, want to understand, specialty chemicals, you mentioned the margins, might go up to 24%. So, and really for nutrition-
Sorry, Divya, but the line for you is not very clear. It keeps breaking up in between.
Is it better now?
It's slightly better. Please go ahead.
Yeah, just wanted to understand specialty chemicals have gone up to 20% of nutrition gone up to 12%. So but like you mentioned, will be getting 20%+ forward, any guidance on nutrition business and sustainable are these coming two, three years? And any revenue mix that the company is targeting for the-
I'm sorry to interrupt, Divya, but your line is not clear. I request you to please move to an area with better network.
Is it better now?
No, there are a lot of words that are going missing or the audio is not coming through.
Yeah. Can you hear me now?
Yeah. Please go ahead.
Yeah. I wanted to understand how sustainable are margins in specialty chemical and nutrition business as well? Also, any revenue the company is targeting in next two, three years in these segments?
Sorry, Divya, it was very difficult to understand your question because you're going in and out. Can you repeat the question once again? Hopefully we'll be able to hear you better.
Yeah. So I just want to ask, for specialty chemicals and nutrition business, this quarter we did 20%, 12% effectively. So how sustainable are these in coming 2, 3 years? And any mix that the company is targeting for these 3 segments?
If I understood your question correctly, you're saying how sustainable are 20% and 12% margins in specialty and nutrition business. Is that the question, Divya?
Yes. Yes, yes. Of course.
Okay. Now, as I was saying in response to the previous question from Rohan, if markets continue to recover in the agrochemical side, and if prices remain stable going forward, we are hoping we'll be able to sustain these margins. In fact, while specialty, as I said in response to Rohan's question, over the course of next couple of years, we hope specialty margins to move up at least to 23%-25% bracket. Similarly, in nutrition, particularly with our new plant coming in later this year on cosmetic and food grade vitamin B3, the margins should move up more sharply at least on a steady state basis.
Now, having said that, as I think you guys, those of you who have been tracking us in the past as well, at least on the feed side, Vitamin B3 side, there is some volatility which exists in the market as and when the bird flu happens. So if you discount for that impact and take the steady state, our Vitamin B3 or, or the general feed segment margin should be at least at 12%-13%. And with new high-grade products from cosmetic and food grade coming up, the margin should move up, from here.
Okay. So any mix that the company-
Ma'am, we request you to please rejoin the queue for further questions. Thank you. The next question is from the line of from Auriga Capital Advisors. Please go ahead.
Yeah, thank you for the opportunity. So given the logistical challenges which we are facing in terms of this sea rate, et cetera, are you seeing any import substitution benefits which for our products where imports are reducing and are being preferred by domestic producers, consumers?
So, Gokul, that's a good question, and I'm hoping we will see those benefits because this whole issue of logistics while Red Sea has been existing for almost 7-8 months, the crunch from in terms of materials coming in from China has started to impact everyone only in the last few weeks, at least our business, in our business. So we are hoping as if that situation doesn't normalize soon, then it will start helping us. And in some cases or some products of ours, we have seen advantage of that, where, let's say, Chinese material is taking far longer to reach India, and we have been able to bridge that gap.
In some areas, we have been even able to command some premium on the product because the logistics cost of bringing the product from China has increased, and hence we had that opportunity to increase the prices. So we have seen couple of such examples playing out. Whether that is sustainable or not will depend on how quickly this whole logistics issue gets resolved in terms of container availabilities and the lead time of material coming in from China.
Okay. And could you comment on the Chinese competition itself in terms of, well, they've been very aggressive in the last 12-18 months. Has that receded or that price competition still continues, or there is some respite coming over there?
I won't use the word respite, but what I would say is, there is more stability in terms of the behavior. As I was saying, the prices on the agrochemical side have been stable for last few months. So, they're not increasing the prices, but at the same time, they're not dropping them as well. So which just makes things slightly sturdy, relatively speaking. On the nutrition business, which I mentioned in my opening remarks as well, we have seen some openness from Chinese players to even increase the prices now, in the last couple of weeks. Whether that sustains or not, again, we will have to see. So I'm hoping those are just early signs.
And then I think I made this comment in the last quarterly call. If you pull up the financials of some of the listed companies in China, they have been bleeding for a while now. So, hopefully there is an end to it and which is close by.
Yeah. And lastly, just on the CDMO business, I believe this is approximately around INR 200 crore last year. What kind of numbers are you expecting for the CDMO business in FY 2025 and FY 2026?
So, look, we never announce the numbers at sub-segment level. But as I have been saying, that's a meaningfully large part of our business. The pharma side of it should grow at steady growth rate of at least 20-25% every year, if not more. The agro side of it, as I was explaining earlier, is a more lumpy growth, because as and when any molecule comes, it comes with big volumes and big revenues. But and then obviously semiconductor is very tiny or not even existing right now in the PNL. But with the opportunities we are getting, those will start to pick up. May not contribute too significantly to revenue, but will start building up our pipeline for future years.
So overall, our aspiration is to grow our CDMO business at least at 25%-30% year-on-year. And then with the kind of opportunities we are seeing in the market for future years, we are hoping that agro and pharma will be able to do that. And as and when semiconductor kicks in in a bigger way, hopefully we should be top it up with further growth.
Great, sir. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Jatin Damania from Swan Investments. Please go ahead.
Good evening, sir, and thank you for the opportunity. Sir, continue on the specialty chemical front. Now, when we are seeing that there's an improvement in the volume, both on the fine chemical as well as on the Diketene, which are the high margin business. But when we compare our revenue on the sequential basis, we have seen an almost 9% decline in the revenue. So is it due to pricing, or we are seeing some pressure on the other segment of the volume as well?
No, Jatin, so that's a good observation. So one, the pricing for most of our specialty segments on a quarter-on-quarter basis have only improved, so it's not driven by the pricing. But having said that, as you can imagine, our specialty chemical segment has several products, and just a couple of products, volume getting pushed out by a quarter or two due to the campaigns of the customers can impact volumes. So I would say the volume decline or reduction that we are seeing, that we're talking about in specialty, it's just a seasonality thing from Q4 to Q1, because traditionally, Q1 has been a lower volume quarter for us rather than Q4 of previous year.
But if I look from a secular trend perspective, the volumes in most of our segments of specialty chemical have grown in the last six months versus what it was, let's say the previous six months or last few quarters.
So, sir, is it fair to assume that definitely because of the couple of campaigns that has been done by the customers, there was a big decline in the volume sequentially, but we'll be able to offset with the offtake by the customers in the subsequent quarter?
Yes. So that is the hope. Obviously, whether it happens within a single quarter or over the course of the year, that we'll have to see, depending on when customers take. Particularly on the CDMO side, the campaigns are quite lumpy in nature. But at this stage, we are hoping that, at an overall level, over our specialty chemical segment will see significant volume growth in FY 25 rather than FY 24.
In terms of the utilization, I mean, did we operate on about 65-70% utilization, or we operated at much higher level?
... See, the utilization levels vary for our older assets versus newer assets. For our older assets, we are operating at probably close to 75% utilization level. The newer assets, obviously, depending on when they came up and which sector we are serving from them, will be at different utilization levels. Like diketene, one of the plants which was created in February, March, is already closing 70%. Another product is also on fast ramp-up and should get there in another 4-6 months, as I was saying earlier. The agrochemical plant that we created in January, given the state of agro industry, may take slightly longer to reach higher level of utilization. The newer plants will have their ramp.
Typically, in our experience, even in steady state, it takes at least 12 months, if not 18 months, to take a plant to 70%+ utilization levels. In agro, depending on how the market plays out over the next few quarters, we'll have to see what the ramp looks like.
Sir, the last question is on the nutrition front. Now, in this quarter, we clocked an EBITDA of near about 12%. Is it fair to assume that sequential improvement or the year-on-year improvement is largely because of a cost structure and improvement in the product mix? Because if you look on the volume front and the pricing, it has remained steady across all the vitamin, choline, and the food and cosmetic segments.
No, so quarter-on-quarter, our nutrition business volumes have increased by almost 14%-15%. So we are seeing higher volumes as well there. But the bigger impact in that business is happening on account of mix change. Because traditionally, that business has been dominated by feed-grade products, and gradually the share of food-grade and cosmetic-grade is increasing. And as our plant gets commissioned in Q3 on food-grade and cosmetic-grade, Vitamin D3, as I was explaining earlier, we will see a big impact coming on the overall revenue through pricing and EBITDA. The second impact is what you said, is the cost impact.
We have been focusing on costs, and as I think, I don't know whether you know the vitamin D3 is a derivative of Pyridine value chain. So like I was explaining, the biggest beneficiary of cost initiatives has been our Pyridine business. And as a result, anything downstream coming from that also gets benefited through those cost initiatives.
Thank you, sir. That's all from my side, and all the best.
Thank you.
Thank you. The next question is from the line of Ravi Singh from Cosmic Horizon Capital. Please go ahead.
Hi. Thank you for this opportunity. So with the huge shortage of containers globally, with the Red Sea crisis and also the inclement weather around South Africa, do you feel that, you know, it could lead to a major spike in commodity prices for chemicals like acetic acid, et cetera, something on the lines that we saw during COVID?
Ravi, very hard to answer this question, and I'm not an expert on that, the correlation between the logistics and commodity prices. But what I can tell you is that Red Sea issues has been happening for almost now 8 months, since December last year. You look at the acetic acid price, it has only come down from $430 to $408. So if something like that had to happen, it should have started by now.
Right. Makes sense. And finally, sir, you know, you've given the guidance of 3x revenue and 4x EBITDA in five years on the FY 2024 base. So that kind of gives us a target EBITDA margin of about 13.6 odd%. But now, given the fact that you just mentioned that Spec Chem, you're expecting to do about 23%-25% EBITDA margins, and that should be a significant chunk of our business going ahead. So just try to understand the disconnect here as to why the EBITDA margin guidance for FY 2029 is coming to just about 13.6%. Shouldn't it be much higher?
13.6, I don't know how you calculated that, Ravi.
On the FY 2024 base, if I just do a 3x revenue and a 4x EBITDA.
No, I think, EBITDA is right, 4x. But, Ravi, I think, somebody else also had asked a similar question in the last quarterly call. It depends on what the starting EBITDA we are talking about. We had—When we set up this vision for ourselves, Pinnacle 3-4-5, we had certain view of our steady-state EBITDA on a revenue of about INR 4,500 crores. At that time, that was visible. Now, obviously, FY 2024 numbers, because of the market, turned out to be what they are, and the EBITDA also took a hit more than what we had anticipated at the time of 3-4-5.
But without getting into the nitty-gritties of what 3x and 4x and 5x means, what our aspiration is, from a steady state, INR 4,500 crore top-line company to at least, INR 13,000 crore, INR 12,000-13,000 crore plus of revenue and, 20%+ EBITDA margin on the overall company level. And that 20%+ EBITDA margin, as I was explaining earlier, we hope and aspire, and we also have a bottom-up plan, as I explained in the last call, when I talked about Pinnacle 3-4-5. Within that, the specialty chemical business, we can see that to reach 23%-25%.
The nutrition business, which, like somebody was asking, currently at 12%-13%, but with specialty product added to it, hopefully getting to 17%-18%+ margin profile. And, our agritile business, the long-term average, should be 10%-12%. So if you take a weighted average of that, you will get to that 20% kind of company level EBITDA margin, which is what we aspire to get to.
Great. So that was very helpful. Thank you, and wishing you all the very best.
Thank you. Thank you.
Thank you. The next question is from the line of Siddharth Gadekar from Equirus. Please go ahead.
Oh, hi. So you had mentioned in one of your previous comments that we are in advanced stages in talks with the agrochemical customer. Broadly, for that CapEx, is that CapEx already done, or we will have to do incremental CapEx for that project that we are looking to tie up?
Sorry, can you repeat your question? Which project you're talking about?
So you have just mentioned in one of the, remark, comments, that we are in advanced stages with the agrochemical customer for a contract. Just wanted to understand, is that from an existing, with, plants, or we will have to do a new CapEx for that?
No, so the one which I mentioned, we. As I think at the last quarter also, I said that, we commissioned a plant in January this year, agrochemical plant, which can do both intermediates and actives. At this stage, we are still evaluating it, and we have invested significantly in that plant. Our plan right now is to do the modifications in that plant and take some incremental CapEx to be able to serve that demand. Having said that, we are still going through the evaluation process, and obviously, first objective is to first sign that contract and then work out the remaining details, in terms of how and where we will sell it from.
Secondly, sir, in UP, if we look at the presentation, we have mentioned we have around 483 acres of land. How much of that is currently utilized, and how much of that is unutilized?
Sorry, which, which plant are you talking about? Which plant are you talking about?
The Gajraula land, we have around 483 acres in Gajraula. How much of that land is currently utilized, and how much is lying idle currently?
No, so I think it's a big plant, and I think we have significant proportion of that, which is still available for us to do future expansion. So particularly on the fine chemical front, our multipurpose plants, we have plans to expand there. At this stage, I think I can safely say whatever expansion plans we have thought about so far for next five years can be served from our Gajraula and Savli facilities together.
Okay, sir. Thank you.
Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, gentlemen. Members of the management, if you have any closing comments?
Thank you.
Yeah, we thank you all for joining on this call today. We hope we have been able to answer your questions. For further clarifications, we would request you to contact me. Thank you once again for your interest in Jubilant Ingrevia Limited.
Thank you. On behalf of Jubilant Ingrevia Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.