Ladies and gentlemen, good day, and welcome to the Laxmi Organic Industries Limited Q3 and nine months FY 2024 earnings conference call. 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 and then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishant Dudhodia from Strategic Growth Advisors. Thank you, and over to you, sir.
Thank you, Manuja. Good afternoon, everyone, and thank you for joining us on the Q3 and nine-month FY 2024 earnings conference call for Laxmi Organic Industries Limited. We have with us on the call Mr. Ravi Goenka, Chairman, Dr. Rajan Venkatesh, MD and CEO, Mr. Harshvardhan Goenka, Executive Director, Strategy and Business Development, Ms. Tanushree Bagrodia, CFO. The company has uploaded its financial results and investor presentation on company's website and stock exchanges. I hope everybody had an opportunity to go through the same. We will begin the call with opening commentary by the management, followed by the Q&A session. Before we begin, I'd like to point out that this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call.
These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. I would now like to invite Dr. Rajan, MD and CEO for Laxmi Organic Industries Limited, to give his opening remarks. Thank you, and over to you, Dr. Raj.
Thank you. Namaskaram, and I think after the auspicious Pran P ratishtha that recently took place, Jai Shri Ram is in place. Today, what we would like to take you through, as always, is give you a view of how we have performed. Take you through first on the macro environment that we are operating in as a chemical industry. Then we will provide you a certain level of granularity of how our customer segments are evolving in their demand pattern. We will also take the opportunity to provide you how our key raw materials have evolved in quarter three, and how is this potentially looking into quarter four. The Red Sea crisis, which is the last thing we needed at this point of time, but certainly comes from a logistic lens on top.
We'll give you a flavor of how do we see the competitive landscape, provide you an update on the projects, and then Tanushree will take you through with our numbers. So let me start with the macro, and I think all of us who have not yet attended Davos had the opportunity via YouTube to get all the deep dive about Davos and all the discussions that happened there. So for us, it was a very nice cost-effective and frugal way to get be present in Davos by not physically being there. The key takeaway is what you sense from a lot of the conversations there, and also in a lot of the reports that you see on the economic backdrop, is the global economy is still very tentative, is expected to be slowing in some senses, depending on the narrative that you hear.
Certainly, it is still below the pre-pandemic growth levels that we have seen in the past, and certainly there are also certain curveballs or positive momentum that could swing it either ways. Elections in various economies, including ours, is going to be an important element. Obviously, the U.S. election, as we'll have it say, the physical monetary policy, whether the easing happens and what implications that would have, would have a certain impact. So it'll be fair to say at this point of time, there is the economic outlook looks a bit more murky. But that being said, let me end on a positive note: India, as a country, tops the growth charts, and that is also anticipated to progress also into 2024.
So that certainly we continue to be a shining light in what for our, you know, appears to be a very murky environment. Now, that being said, if you reflect that obviously into the chemical sector, which has obviously a large implication of how the buy pattern at a macro happens, not surprisingly, the chemical demand was, in the course of 2023, very muted. But what we are also certainly seeing is there is a certain stabilization that has happened, especially in the last quarter, and stabilization, but the weaker demand continues. So that's what I would talk with you when you talk about the chemical space at a global level. We certainly see big markets in the chemicals place like China, continuing to be very, very weak.
There is quite some upstream cracker capacity in China, offline or running at very reduced rates. Parts of Europe are also continuing to be weakish, when it comes down to the demand pattern. So those are, I would say, the macro environments that we are contending with as we are operating in Q3 and also as we move into quarter four of 2024 and the full year of 2024. Then, coming very specifically to certain of the key segments, where Laxmi serves our dear customers. Let me start with the first, which is CASE, which is the coating, adhesives, sealants, and elastomers segment. Towards the end of last year, last financial, calendar year, we saw quite of the innovator companies where we provide our solutions, sort of tapering down with their inventory, so there was a slower pickup.
But as this year has started, which is a new financial year for many of the foreign or innovator companies outside of India, we are seeing a certain demand pickup coming in that lens... When it comes down to the packaging segment, specifically keeping the domestic lens, and we are seeing this also in the results of a lot of FMCG companies. And our customers who tend to serve the FMCG companies certainly are reflecting that the post-festive season lull is, and rural consumption is on weaker side. So that's going to be certainly a watch-out for us as we enter our quarter four. When we talk about pharma, the sense we get in discussion with our customers is, exports continue to be weaker, but domestic focus-driven demand continues to be still reasonably strong, relatively spoken.
When we talk about the ag chem space, the overall conversation of inventory in the pipeline is ebbing away now, but that seems to be something I would say is not as prominent in conversations with customers, but it is going to be more the topic of demand pickup and more competition that certain of the customers, and especially certain of the innovators, continue to see as cheaper substitutes from their competition, that's primarily from Asia. So that gives you, I hope, a good bit of a sense about the key industries. We certainly, as Laxmi, are serving more industries, but we felt these were some things that this would be food for thought for the audience in the call. When it comes down to raw materials, I'll state two raw materials. One is acetic acid and then ethanol. These are the key building blocks for us.
The last time we had the opportunity to have this conversation was October, and we were sharing with you in September, we had seen an unusual spike in the acetic acid prices, which went upward of $600 per metric ton. We had also, at that point of time, shared with you that we felt it is not sustainable because that spike was really driven by an unprecedented and unplanned shutdown in capacities, was not driven demand-dependent on demand. And since then, we have certainly seen their prices moderating lower. So in the whole of quarter three, our quarter three, we have seen prices in the range of about $430-$440 for acetic Acid. And as we also move into quarter our quarter four, we are seeing prices at that range or maybe slightly less by $10-$20.
So I think there seems to be, from today's perspective, enough capacity to serve the demand. That is, that is how they're in the market. The other element is ethanol, and ethanol prices also, what we had seen in quarter two, were sort of peaking out at $860. Since then, we have also seen the ethanol prices moderating lower, and as we speak and as we see now, ethanol prices are in the range of about $725. In the quarter four, we are looking at about $770-$740 range of ethanol prices. This is also linked with the fact that in USA, the prices have softened as a result of enough inventory, lower corn prices, and Brazil, which is another big market where ethanol is produced, we are seeing there is surplus inventory of sugar.
So sugarcane has been diverted to ethanol manufacturing, thereby putting pressure on ethanol prices in a downward trend. So those are the two big raw materials, which we also felt that we wanted to share the development in quarter three and what we see in quarter four. The other elements that have certainly taken all of us by surprise is not, not surprisingly, the Red Sea crisis that we are all now familiar with. Does it have consequences? Yes, it has consequences. The implication of that is it is taking much longer for the ships, so there are delays. If you go via the Cape of Good Hope, this is delaying the entire transit time in the range of about four to five weeks. We have also seen prices increasing in the range of 2-3x times than where they were.
They are actually subsided to pre-COVID levels. In fact, the prices before the Red Sea crisis, now we are seeing them spike. So obviously, the element of vessel availability, space constraints, container shortages, are all being prevalent and being experienced. Recently, there were also reports that a lot of the European producers who depend on imports from Asia, are feeling the pinch even more. So I think there are also conversations that are happening with customers to secure, again, talking from a supply reliability, flexibility. When it comes down to the element of competitors, talking about the local competition, again, it depends product to product. We are seeing that, and you will see that in our business performance, certainly, we are able to hold our own, and we are seeing...
We are being resilient by being very, I would say, on one side, being defending our share, on the other side, being aggressive and going into hunting mode and expanding our customer base, so that's keeping us in good stead. The Chinese competitors and the capacity, as I started this conversation with, certainly there seems to be overcapacity in China. Certain of this is moderated, but especially in certain of the export markets, we continue to see a lot more competition from China with very, very aggressive pricing. So that gives you a sense on competition. Then, let me just come closer to home, talking a bit about our how we have talked on a qualitative basis on our performance. So as I said, the operating backdrop for the chemical industry continues to be challenging.
In this environment, I'm really happy, and I'm thankful to the entire Laxmi team, that we have really delivered on a standalone basis. We have delivered quarter-on-quarter and year-on-year basis, profitable growth. This has been achieved by the levers that are in our control. One, stronger customer engagement. Second, a product mix steering within both the business units. The third one, the manufacturing operational excellence, which we have embarked on even more stronger with data analytics, which has resulted in higher output from an existing asset base and an active working capital management. When we talk about our projects, and we have shared that in the past, we were double-clicking on that. The first project, which I'm assuming top of your mind, is our chlorochemical projects in Lote.
That, as we speak now, is taking excellent shape, and all key units are slated to be operational by end of financial year 2024. This will enhance our asset capability and expand our specialty product offering to our customers. For all projects, not excluding Lote, we remain on track. We have done a focused steering on cost and timeline adherence, is why we are now very confident as we embark on completing projects and starting new projects. Speaking about our Dahej project, we are working diligently with the relevant authorities to receive the environmental clearances to start construction, post which the project execution is expected to take anywhere between 18-20 months. For the approximately INR 710 crore that we are investing and envisaging in Dahej, our asset turn there is estimated to be 2-2.5x.
And this is, we have shared our asset turns in the previous presentations for our essentials vertical and also our specialty vertical. The CapEx split in Dahej is 65% is for our specialty business and 35% is for our essentials business. Healthy cash flow from operations, and you will hear the numbers from Tanushree, and the recently raised funds from the qualified institutional placement are funding our growth projects. Our HETS product portfolio catering to diverse industries across geographies, ongoing CapEx to serve our customer needs will all deliver future growth. We are gearing ourselves to drive positive change and create long-term value. We are also building the muscle, the process, people, systems in the organization to deliver on our growth ambitions and commitment as we move ahead. With that, I will segue into Tanushree to take us through the financials.
Thank you, Rajan. Good afternoon, ladies and gentlemen, and wishing you all a very abundant 2024. As Rajan mentioned, the market conditions continue to remain challenging in Q3 of FY 2024. But at the same time, Laxmi team's resilience also continued to remain steadfast. The overall volume dispatched by the company has been the highest. In the third quarter, we saw a 17% increase in the volume dispatched year-on-year for the quarter and 19% increase for the nine-month period. These additional volumes come without capacity additions in this fiscal. In addition to the increase in volume, the essentials business unit saw new products taking a more prominent presence in the product mix. The specialties business product mix remains to be strong, and the business continues to grow in line with the strategy.
The volume increase has resulted in a top-line increase of 8% year-on-year and quarter-on-quarter on a standalone basis. The revenue for the standalone was at INR 698 crore for the quarter, and INR 2,047 crore for the nine months ending December thirty-first, 2023. The improved product mix gave a boost to profitability, with the Q3 EBITDA for the standalone business coming at INR 70 crore, which is 17% higher than that of the preceding quarter. Year-on-year, the quarterly EBITDA on a standalone basis was 6% higher, and on a nine-month basis, it was 7% higher at INR 213 crore. There was no additional capitalization in quarter three of FY 2024 at the standalone level, and hence, the depreciation remains unchanged quarter on quarter.
The PAT for the quarter stood at INR 39 crore, which is almost 70% higher quarter-on-quarter and almost 15% higher year-on-year. On a nine-month basis, the depreciation has increased INR 17 crore, which is on account of the capitalizations made in quarter two and quarter three of last fiscal, resulting in the PAT for nine months ending 31st December 2023, coming at INR 100 crore, which is just INR 9 crore lower than of the nine months for the previous period. At a consolidated level, the overseas subsidiaries also saw an improved performance for this quarter, and this is through both on a Q-on-Q on a nine-month to nine-month basis. This has resulted in the consolidated revenue at INR 700 crore, which is 6% higher quarter-on-quarter and year-on-year.
On a nine-month basis, the revenue of INR 2,093 crore is about INR 20 crore higher or about 1% higher. While on the revenue side, as Rajan mentioned, that the teams have had a very customer-focused approach, improving the quarterly top line, the cost optimization efforts have yielded profitability benefits. With these efforts continuing, we are confident that the financial performance of the international subsidiaries will be in line with the company's internal estimates. YFCPL, the 100% subsidiary at Lote, continues to be on track from a cost to complete and internal cost estimates point of view. Given that we are still in the pre-production ramp-up stage, the costs here continue to be borne by LOIL. The consolidated EBITDA for the quarter at INR 58 crore is 22% higher quarter-on-quarter and flat year-on-year.
On a 9-month basis, the EBITDA at INR 186 crore is INR 6 crore lower than the previous nine months EBITDA. There is no additional capitalization done at any of the subsidiaries, and hence the depreciation quarter-on-quarter remains unchanged. The PAT in quarter three of FY 2024 at INR 27 crore is about 2.5x of the PAT of the previous quarter and flat year-on-year. On a nine month basis, the PAT at INR 76 crore is 24% lower than that of the previous period, given the depreciation increase by INR 27 crore. Cash flow from operations remains to be a key metric that we continue to monitor.
In the nine months ended 31st December 2023, the cash flow from operations stood at INR 329 crore, which is 160% of the same period last year. A large part of this increase in the cash flow from operations comes from the continued focus on working capital that Rajan also spoke about. I can share that both on inventory and debtor days, there has been a significant improvement year-on-year. The balance sheet continues to remain strong, with the gearing at 0.13x , which is very, very low. Once again, the credit rating of the company has been renewed at double A minus with a positive outlook. Our rating agency is India Ratings and Research. With this, I'll hand the call back to Nishant.
We can begin with the question and answer, Manuja.
Okay. 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 remove 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 will wait for a moment while the question queue assembles. The first question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity, and congrats for a decent set of numbers. My first question was on the volume growth side. You know, given that we have found good growth there. Two questions: One, you know, where is this growth largely originating from? Whether it's new products and, or the older products scaling up, or is the new customers that we have added in either of essentials or the specialty vertical?
So, thanks for that, Ankur, and thanks for your commendation to the performance the Laxmi team has delivered. So to your question, specifically, it's a combination of both. As Tanushree said, one is taking an internal focus, where we have looked at operational excellence using data analytics. That's where we have brought out more volumes coming from the existing asset base. And the other thing has been really a concerted, given the market tough backdrop that we are environment, you know, operating in, is basically positioning ourselves to the existing customer base and growing sort of our market share there. Because we are seeing also certain of the competition getting impacted, not having the cost position and ramping down their capacity and utilization, which is giving us headroom. And there are also new segments that we are entering into.
As we have always shared, in our specialty business, one of the big strengths has been that we have a large exposure, one into, you know, we have an even exposure into pharma, into agro, into pigment solutions and industrial solutions. And we consciously cap our market share only 25%, and we are also well hedged between our domestic and exports, so that also gives us an interesting and good headroom to grow. I hope I have answered your question.
Sure, Rajan. So, you know, just taking it on the segment-specific, so if I look at the Q-on-Q trend, essentials have shown a decent growth on a quarter-over-quarter basis, while specialty is largely flat. Will it be fair to say that large part of this benefit was derived on the essential, essential front?
On a quarter-on-quarter basis, you are coming from a volume lens?
Yeah, volume, because realizations, as you said, because of the global competitive intensity, my sense is realizations would have been largely stable.
So on a quarter-on-quarter basis, you are right that the volume growth that comes from the essentials piece. But I think what's important also to note is, Ankur, that year-on-year, there is also a significant increase in the volumes for the specialties business.
Sure. And just a clarification on the specialty bit, because if my memory serves me right, H1 exports were slightly weaker, given we were focusing more on the domestic market. How has been the trend now? And there were new products that we had launched in specialty. How has been the ramp-up there?
... Hi, Ankur, Harsha. So, you are right, Ankur, we had the there's a little bit of shifting going on in the specialties between domestic and export, but nothing significant we have seen this quarter that more or less we are back to where we were in the specialty export of where we were last year. And the new products continue to be resilient, because they are largely contractually backed.
And, and this contractual is on an annual basis, or there could be some shifting possible there as well, maybe?
No, it's on a, it's on an annual basis, in some quarters, but we are always having that flexibility with that we have in the specialties.
Fair enough. And just a last bit on the fluorination side.
You know, we had mentioned earlier that while we are still you know guiding that the full capacity will be operational by the end of this financial year. From a product feedback perspective, you know, pilot perspective, anything that you can share on those sides?
Yeah, sure. Again, we released it in our presentation that we've again had a successful launch of another product group that was, that had not started last quarter. So this quarter we successfully produced that, achieving better quality and norms than Miteni, and we're very happy that the teams have strived to achieve that. The product has gone for qualification, we are waiting some answers from our customers. But Ankur, say what we have, we stay to the commitment on this.
While Tanushree said, we shared, we publicly that the cost to compete here had escalated. We stay with the INR 550 number, and we are bringing this on board. We are also saying that the first year of revenue from this site will be derived in financial 2025. We stay with that commitment, and we also stay with the commitment we have given that this would take a certain ramp-up, as is normally the case for most plants over a three-year period. So those are all the things we are double clicking on.
Yeah, yeah, yeah. Sure, Rajan. Well, so my, my question was more on, you know, the incrementals. I take your point in terms of the CapEx investments and the ramp-up.
But, but, you know, in terms of number of products and, let's say from a quarterly revenue perspective, maybe the revenues from Lote should start coming in H2 of the financial year 25, or, we should start seeing in the Q1, Q2 itself?
I would... It is a, a fair analysis to say. We have always been also very transparent in saying once we sample customers, it will take minimum of six months for them to qualify. So H2 of financial year 25 is where we'll see revenue being contributed from Lote. That would be a fair understanding. That, that's helpful.
Thanks and all the best. I'll get back into the queue. Thanks. Thank you.
Thank you very much. Before we take the next question, a reminder to all participants that you may press Star and One to ask a question. Thank you. The next question is from the line of Dhaval Shah from AlfAccurate Advisors. Please go ahead. Dhaval, you are not audible.
Hello, am I audible?
Yes, sir, you are.
Yeah, yeah. So my question is, on the, volume side, you mentioned that because of the, you know, the, one of the factors is data analytics, which, you know, led to improve the volume growth for this quarter. So can you shed some more light on this? What kind of data analytics you have done? And, I mean, is that sustainable?
So, Dhaval, maybe I take it, and then the entire DG Center of Excellence is nestled under Harsha. He will give more color to it. So data analytics, basically we have, we all our plants, we have DCS integration. It is really leveraging, looking at historical data coming, and then looking at tweaks and then what is the sweet spot? How we should operate our assets, what should be run rate, what are feed ratios, what is temperature? You know, what could be the best-in-class technology. So I think, it's, it's not one element, it is really looking at history, trying to...
As I said, when we also embarked on our strategy, which we presented about two quarters ago, we also did a top-class benchmark analysis, and we found that luckily, we are in the top quartile of producers when it comes down to essentials and specialties. So it was building on all of that learning, and certainly to the question of is it sustainable? Certainly, it is very sustainable. With that, I will also pop it to Harsha to bring in its perspective. Yeah. So, Dhaval, I think the basic innate philosophy is how can you use your assets more? That's what we're trying to do, and some of that has come out last quarter in a difficult environment, and we believe that will be sustainable.
What is the capacity utilization right now? And how much of the volume growth can you attribute because of this analytics out of the 70-odd%?
So we'll keep that a little confidential, Dhaval, but essentially, we are operating at good, good level of capacity utilizations like we always have been. We have not turned down the plants, despite having difficult demand, and we'll continue to be at this rate.
Sure. Yeah. Thanks.
Thank you.
...Thank you very much. Ladies and gentlemen, you may press Star and one to ask a question. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Yeah, thanks for the opportunity, and congrats on good set of numbers. My first question is regarding the exports breakup. So on slide 19, we have given, last year, nine months, we had significant exposure to Europe with 56%, and this time around, partially that has been taken care of by higher exports to Asia Pacific. If you can just give us a little more understanding in terms of which segments have, you know, we have supplied to in Asia Pacific, which are the geographies that we have penetrated, and any other reason for the shift which has happened during the last one year? Thank you.
So Rohit, thanks for that question. So as we've also been sharing very transparently, that our Europe part of the business for our essentials, which, you know, encompasses a large chunk from just purely a volume perspective, is the one where we have consciously taken a bit of a backseat because of the demand decline that we observed in Europe. And also the price arbitrage, where even the local competition, given that the pie had shrunk, were a little more aggressive to take market share, and some of the Chinese were also moving in predatory pricing. So that's where we have seen a dip, primarily on our essentials part of the portfolio, and very specifically in ethyl acetate. We want to be very specific about that. And there, therein, we have also seen our domestic demand and also across Asia.
When we talk about Asia, for us, we have also certain elements in Middle East, Africa. We have seen certain opportunities there, where we have been present in the past, where we can slightly augment. But we are also seeing in the domestic space that we have been able to garner market share, because some of the marginal producers, with the swings that have happened in the feedstocks, they are no longer producing, and that's where opportunities came in.
Right. Just one clarification. So you categorically mentioned, Chinese competition as far as Europe is concerned. In these other geographies, did we not face, any Chinese competition? And, would it be, safe to assume that incrementally also the pie would, be shifting to what has happened in nine months of FY 2024?
Can you just clarify what you mean, the pie would shift in the sense?
So the concentration which was there in Europe, which was more than 50%, and now it has come to, say, 30%, would probably remain at similar levels of, say, 30%-35% or so.
I think it is going to be evolving, because when you look at our essentials portfolio, there is a large bearing on feedstocks, right? And now we already see, for example, in the end of quarter three and also slightly into quarter four, we are seeing opportunities opening up, where end-to-end there is still value creation that we can do, but we will take it case by case. So I would, at this point of time, not simply swat it away, saying that the pie would shrink or it would remain. The essentials portfolio, what we do from an export lens, primarily into Europe, are going to be, we have some regular customers, and we have other certain opportunistic customers, so we will view it from that lens.
For our specialty part of the portfolio, that will be even more solid because that is really solution offerings that we are providing.
Sure. Thanks. That was clear. The second question again harping on the, data analytics and its, resultant, increase in output. So, is it safe to assume, say, last year the capacity was 100, and now the capacity has become, 170? And whether, increment, is there any incremental upside from this 117 to maybe 120, 125, given that, we are probably still in the process of implementing those, solutions? Thank you.
So, first of all, I think just let's give some color. So we should not look at 100 or 117. You know, we have multiple reactors when we start from the essentials part, and each reactor has a certain output that we've been able to design. They are continuous operations. So net-net, what we are seeing is we are with the data analytics and what we are able to glean out, we are able to have improved utilization without a dollar of CapEx being spent. But as is the nature of the beast, at some point of time, you hit a ceiling, right? Unless you augment that capability by putting another CapEx.
So at this point of time, I think we are in a good space, and we are really, as for to paraphrase Harsha's words, "We are juicing it out." And I think that's really what we will continue to see and where is the sweet spot that we are able to get across this range of assets.
Right. Just one clarification on this. Is there any further possibility of debottlenecking at these existing assets?
So what we have always said in, in our Mahad setups, both at unit 1, 4, plus unit 2, in our land bank, we are basically blanked out. We are fully utilized assets, as you heard from Harsh. We are also reasonably, very well utilized across these assets, despite the macro operating environment. So at this point of time, really, to have large CapEx, I think there is no possibility, and hence for us, it's really looking at smarter option at the existing sites... portfolio mixes and others, and especially when you talk about the specialty in the multipurpose reactors that we have. And then really the big hurrah for us is the Dahej project, which comes in with a large land bank, as we have explained in the past, of 85 acres.
Our first wave of CapEx will only cover 20% of the land bank. And then obviously, our chlorochemical projects at Lote provides even a 50% additional land bank for, other ideas to be installed.
Sure. Fair enough. Thanks for answering all the questions, and best of luck, sir.
Thank you.
Thank you very much. A reminder to all the participants, you may press star and 1 on your touchtone telephone to ask a question. The next question is from the line of Arjun Khanna from Kotak Mahindra Asset Management. Please go ahead.
Thank you, sir, for taking the question. First question is, in the opening remarks, you did talk about the impact of the Red Sea situation. Just want to understand what kind of impact would it be? Is it, A, availability of raw material that's an issue? Secondly, in terms of ability to export or the freight costs itself have moved up to a large proportion, what impact do we see from the same in the fourth quarter, at this point in time?
Arjun, I was waiting for somebody to ask that question, so I'm glad you asked it. So when I was giving you this information, I was sharing this at a more macro level. So the elements of cost increasing 2-3x, this is experienced by most, market players. Vessel availability is more relevant now because it takes some time before it starts hitting you, and the space constraint. Now, specifically speaking about Laxmi, the way we are positioned, especially for our export business of finished goods, the entire essentials portfolio, we are freely negotiated, so this is something we are already able to capture in the pricing and account for. And specialties also obviously, from the learnings from the COVID period, when we had these escalations, these are also hardwired into contracts and formulas, so that flexibility.
At this point of time, as we look into quarter four, where certain of these impacts will come, we are well positioned to navigate through them. We are also certainly taking more preemptive measures when it comes to raw material to secure our supply chains internally.
Sure. That's good to hear. Sir, the second question is in terms of our cash flow. So, we've talked about cash flow from operations of almost INR 330 crores in nine months, and our EBITDA is substantially lower. So effectively, it means that our working capital cycles have improved. So could you help us, which part of it? Is it payables, which have increased to historical levels? Is that the right way to understand this?
So, Arjun, as I had also mentioned, both on the debtor days and the inventory days, there has been a substantial improvement. So from last year to this year, our inventory days have reduced by more than 10%, right? And our debtor days itself have also reduced by about 15%-16%. So that's the one large delta. On the creditor days, yes, there has been... Because we've been importing a lot more, so yes, the creditor days have increased versus last year, but that delta is lower than the delta on these two.
Sure. Fair. That helps. If we look at it more sustainably in FY 2020 and say FY 2021, we used to run at less than 30 days working capital. Is that the right direction of where we are headed? Or is it more in terms of closer to the two months period in terms of the working capital days?
So I think, the roughly 30 days net working capital days is fairly okay from an operating standpoint. I think, the higher days comes in, you know, in, in blitz, but on a sustainable basis, operating working capital at 30 days is, okay.
Sure. That helps. My final question, sir, is on the R&D for our fluorine chemistry. We had stated once the plant started, we would look at a facility both in India and in Italy. Could you help us with the thought process on that, and what's the progress in setting up these labs? Thank you.
Hi, Arjun. Harsh here. So Arjun, when we initially conceptualized the Miteni project, we had planned to continue on with the labs at Italy. However, with the entire COVID scenario, we had to change plans and were forced to set up a pilot plant in India to fast-track our learning process, which then led to us establishing and starting research even before the plant had moved. So while our Italian colleagues ended up not coming to India, a lot of the transfer of technology and new product research had already had started in India. So we've had a lab now that's fully operational in India. We are expanding on that lab, which will start up in the first quarter of next year in Mumbai.
The piloting facilities have already delivered, and we have dispatched new products to innovator customers for launches in the future.
... Sure. So, just to understand then, we won't be having a lab in Italy at this point in time, and we, and the erstwhile Miteni personnel who we had stated would work with us as consultants, they would be working remotely. Is that the right way of understanding this?
Yes, that's correct.
Sure. Thank you and wishing you all the best.
Thank you. Thank you, Anders.
Thank you very much. A reminder to all the participants, you may press Star and One on your touchtone telephone to ask a question. Thank you. The next question is from the line of Raj from Arjav Partners. Please go ahead.
Hello, am I audible?
Yes, you are.
I wanted to know your outlook for FY 2025.
I'm looking at my CFO as a public listed company, whether we can give an outlook for FY 2025.
No, no, but you can always give a qualitative outlook of the same.
Quantitatively, we don't give a-
Qualitatively. Qualitative outlook, ma'am.
Qualitatively, I think, if you look at our trajectory for FY 2024, right? If you just look at the nine months to nine months, I think it's fair to say that on a volume perspective, we have grown. We have also diversified the product mix. We've also gone ahead and had a better customer approach strategy. And I think those are, those are the elements that we will focus on. In FY 2025, the other key elements to look at from a business perspective would be our Lote plant coming on stream and revenue starting to come in the second half. And of course, then this year also, the other thing qualitatively, which is important from the, for the company, is to start the construction at Dahej.
Because then that is where, you know, the changes to the financials will also come in from. I will then let Rajan add.
So, Raj, I, in my opening statement, I gave you what is the macro environment, and what implications it has for the chemical industry. So from today's perspective, as we look into 2024 as a calendar year, I think it still remains challenging. That would be fair to say. While the demand has stabilized, that's, that's the important part of the puzzle, but we are still to see the demand pickup happening. And we will continue to steer our businesses across, as we have, Harsha previously just alluded to, and as we shared in our performance for quarter three.
Okay, thanks.
Thank you.
Thank you very much. That was the last question. I would now like to hand the conference over to management for closing comments.
So thank you for all the questions, and I think let me conclude by firstly, again, thanking the whole Laxmi team, some of them who are on the call. It's really a pleasure and pride to lead this team, and especially what makes it fun is in a tougher environment. When things are easy, then you can always say, you know, things, it's because of us. It's when things are tough that the true mettle of the team is seen. So again, a big thank you from my side and the whole management team to the Laxmi colleagues. And let me conclude by also saying our hedged product portfolio catering to diverse industries across geographies, ongoing CapEx to serve our customer needs, will all deliver future growth. And we are gearing ourselves by building the muscle to drive this positive change and create long-term value for all stakeholders.
With that, thank you and have a wonderful year ahead.
On behalf of Laxmi Organic Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.