Ladies and gentlemen, good day, and welcome to the NOCIL Limited Q3 fiscal year 2024 and nine-month fiscal year 2024 conference call. This 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 are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anand, the Managing Director. Thank you, and over to you, Mr. Anand.
Thank you. Good morning, and a very warm welcome to everyone present on the call. Along with me, I have Mr. Prakash Srinivasan, our Chief Financial Officer, and Strategic Growth Advisors, our investor relations advisor. Hope you all have received our investor presentation by now. For those who have not, you can view them on the stock exchanges and the company website. To start, let me give you an overview of the company's performance in quarter three fiscal year 2024. During this period, revenue from operations amounted to INR 341 crore, showing a slight decline compared to the previous quarter. Similarly, volumes experienced a marginal decrease in quarter three fiscal year 2024 compared to the preceding quarter while maintaining the selling prices. This drop can be attributed to the ongoing global recessionary trends and the consistent influx from Chinese competition.
The surge in supply from China, largely owing to the subdued demand in international markets, including China itself, is exerting pressure on volume and price dynamics both in the domestic and international markets. Despite the challenging environment, it is worthwhile to note that our continuous efforts to bolster our export business has started yielding positive traction. We have clocked a year-on-year volume growth of 14% on a nine-month fiscal year 2024 basis in exports despite the current circumstances. It is important to highlight that though the latex part of the imports business has remained flat to the prevailing market conditions in Malaysia, our non-latex products business has developed on a positive trajectory. Just to reiterate that even the volumes year-on-year for nine months fiscal year 2024 in the domestic market is flat. Domestic market volumes continue to face the brunt of aggressive dumping from China.
Nevertheless, our supply reliability and deep engagement with our domestic customers continue to hold us in good stead. Given the ongoing uncertainties, we maintain a balanced approach by strategically managing both price and volume. Now, quickly on the industry scenario. The tire industry in India is well-positioned on account of the steady growth of the automotive sector. India is holding onto its spot as the world's third-largest automotive market and is expected to reach 4.1 million passenger vehicle sales by fiscal year 2024, remaining one of the fastest-growing markets globally. On the tire exports front, following a slowdown in tire exports, tire exports have been making a slow recovery, barring a few hiccups with the Red Sea challenges. This situation has partially impacted both tire exports and imports of raw materials.
The domestic demand growth for tire in tonnage terms is estimated to grow at about 3%-6% CAGR from fiscal year 2024- fiscal year 2026, a combination of both replacement and OE sales. The tire industry aspires to double its revenues by 2030, driven by rising demand for SUVs, infrastructure development projects, and stricter safety regulations. The non-tire sector also holds good promise with strong growth plans of the auto component and allied sectors. In summary, while there may be short-term challenges, the long-term outlook for other chemicals is promising with good growth expected from our end-use sectors.
We as NOCIL continue to focus on our key customers with our wide range of products, sustainability initiatives, and supply reliability. This positions us well to capitalize on these opportunities for growth. That is it from my side for now. I will hand over to Mr. Prakash Srinivasan to give you updates on the financial performance.
Good morning. Thank you, Mr. Anand, and good morning to everyone. Let me run through the consolidated financial highlights. Volumes on the sales volume front, volumes for Q3 fiscal year 2024 is INR 123 crore, taking the base of Q1 fiscal year 2020 as INR 100 crore. Coming to the revenue parameters, net revenue from operations for Q3 fiscal year 2024 stood at INR 341 crore as against INR 351 crore in Q2 fiscal year 2024, a degrowth of 3%.
Selling price has remained largely stable on a quarter-on-quarter basis. Volumes for Q3 fiscal year 2024 has degrown 3% on a quarter-on-quarter basis. Net revenue from operations for nine months fiscal year 2024 stood at INR 1,088 crore as against INR 1,224 crore recorded in nine months fiscal year 2023. Coming to the operating EBITDA performance. Operating EBITDA for Q3 fiscal year 2024 stood at INR 49 crore as against INR 45 crore in Q2 fiscal year 2024.
EBITDA margin for Q3 fiscal year 2024 stood at 14% as compared to 13% in Q2 fiscal year 2024. On the operating EBITDA for nine months fiscal year 2024 stood at INR 150 crore as against INR 205 crore in nine months fiscal year 2023. EBITDA margins for nine months fiscal year 2024 stood at 14% as compared to 17% in nine months fiscal year 2023.
In relation to the PBT parameters, PBT for Q3 fiscal year 2024 stood at INR 41 crore as compared to INR 37 crore in Q2 fiscal year 2024. PBT for nine months fiscal year 2024 stood at INR 124 crore as compared to INR 164 crore in nine months fiscal year 2023. The profit after tax for Q3 fiscal year 2024 stood at INR 30 crore as compared to INR 27 crore in Q2 fiscal year 2024. Profit after tax for nine months fiscal year 2024 stood at INR 91 crore as compared to INR 121 crore in nine months fiscal year 2023. With this, we would like to open the floor for question- and- answer session. Thank you.
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 touch-tone telephone. If you wish to remove yourself from 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 the moment while the question queue assembles. The first question is from the line of Nirav Jimudia from Anvil Shares and Broking Limited. Please go ahead.
Yeah. Good morning, sir. Thanks for the opportunity. Sir, I have two questions. Sir, first is on, let's say, when we see the global tire customers, I think there are some top 15 tire customers which controls close to 80% of the world tire production. I presume that we are probably registered with most of them. Just want to have your thoughts, what is actually stopping them to source the additional volume from us, given the kind of proactive discussions we have been initiating with them over last one year? I presume that currently we may be supplying very little or smaller volumes to them in their overall volume requirement. If you can just share your thoughts on that would be helpful.
Yeah. Thank you, Nirav. Yeah, so you're right. We are kind of present with nearly all the top tire customers outside of China. Not in China, but largely all the ones outside. We have one or the other product that's been going to them. That's on the one hand. On the other hand, I think, as we have also been mentioning at the earlier calls that we have been making progress and I think it's not a question of not wanting to, it's about the step-by-step approach in terms of getting approvals at each site. It's also a certain comfort down the line in each of these organizations where they get comfortable with some of the products or newer products that we are giving them.
That is ongoing, and you also see that the results in terms of the developing volumes that we just mentioned in terms of how the export numbers have been developing. I think we are on a pretty much good track as far as that is concerned.
Yeah. Because sir, earlier, I think we were facing some capacity constraints when we had not expanded the capacities, but I think we have expanded in the right products also, which probably they would be requiring to source from us. I just wanted to understand, can those incremental volumes, based on our discussions, start accruing to us from Q4 or let's say Q1, where we will see some sort of incremental volumes from those customers and then probably the building of volumes can happen from there?
Yes. So, like I mentioned, they have already started accruing, and we expect that they should start building up as we go along into the next quarters, for sure.
Okay.
And we have the right products, yeah.
Okay. Sir, it is safe to assume that some sizable incremental volumes could come to us in Q4 or that could be postponed to Q1. Just your thoughts.
My thoughts are, there will be a gradual buildup. I think, yeah, we know that there are recessionary trends out there, but we are quite positive that this buildup will be positive. Yeah.
Okay. Sir, second question is on the domestic rubber chemical market. Just wanted to understand, whether it has expanded in calendar year 2023 versus calendar year 2022. If yes, what is our incremental market share in those incremental volumes, in India? Some understanding on our overall market share in calendar year 2023 versus calendar year 2022.
Yeah. I would say, while the number as far as the domestic market is concerned, we go a lot by primary and also secondary data that we accrue. I would say it is pretty much kind of flattish, maybe 1% or 2% growth in actual kind of compounding volumes, yeah. Sometimes we look at other numbers and we assume that it is growing faster, but actually our barometer is compounding values of volumes of rubber. That is kind of maybe flattish to 1% or 2% increase over. I think we are kind of pretty much more or less also flattish, like we said, in terms of market presence in the domestic market. I expect it should start moving up because the replacement cycles should start picking up as we go along in the next quarters, yeah.
Correct. Sir, is it possible to quantify our market share in calendar year 2023 versus calendar year 2022 or exit of calendar year 2023 versus calendar year 2022?
Statistically, I would not be able to do that, but we have clearly a sizable market share in the domestic market, yeah.
Got it. And sir, last one is, if you can just elaborate, because in your opening remarks you mentioned that the domestic tire market is expected to have a CAGR of, let's say, close to 3%- 6%. Given the kind of OE customers doing lot of CapEx here for the export of tires to the outside world, is there any scope for expanding our market share here in India from where we are currently? If yes, how we can go ahead with that strategy?
Yeah. Just alluding back to your earlier question also, I think having a dominant market share, we kind of clearly see that with the tire production bound to increase in the next years, not only from OE, but also from the replacement as well as the export opportunities out there. We see a good opportunity to grow, definitely grow at market growth rates and a few percentage points above that in an incremental manner. That's clearly our outlook.
Got it, sir. Thank you so much, and I will join back in the queue, sir.
Thank you, Nirav.
Thank you. The next question is from the line of Aditya Khetan from SMIFS Institutional Equities. Please go ahead.
Yeah, good morning, sir, and thanks for the opportunity. Sir, my first question is, sir, when we look over volumes on a nine-monthly basis, this is almost flattish. This is what we had attributed to the higher competition. How you see things moving forward in 2025 and 2026? Will we be sitting at high single-digit growth or low double-digit growth can be expected going ahead, considering the competition and all?
Clearly, we see that volumes will build up from here on, going forward. But I wouldn't be able to put a specific finger to say where this number will be. But I'd expect with our approvals not only getting accelerated in the export, but also with the domestic market expected to grow, volumes will develop positively.
Okay. Sir, in this quarter, sir, there was a decline into our raw material prices, especially the aniline prices. But currently, sir, from January 2024, we are witnessing that the aniline prices have moved up by 15%. Is there any risk to our near-term spreads, what we have reported in this quarter? Can it maintain, or there is a risk that it can go down?
Aditya, this is Sridhar Jha from NOCIL. Basically, we will have to play a balanced game of judicious mix of volume and pricing. And we are constantly monitoring on a case-to-case, product-to-product, customer-to-customer basis.
I think on the aniline prices, it's a bit dynamic also, Aditya. I think, as you rightly said, there was a bit of downswing, and then it again keeps going up and down.
And we have covered something in the earlier period.
Yeah. And we generally get it covered
Yeah
over a period.
Thank you. That is all.
Sorry, did I answer your question, Aditya Khetan?
Sir, my question was, can we maintain our long-term spreads, what we have reported in this quarter?
Sorry, we just lost you in a bit, sir. Can you just repeat it, please?
Despite this aniline price movement, can we maintain our long-term spreads, what we have reported in this quarter?
Yeah, that is kind of, again, dependent on how the As we said, there is a volatile situation on the raw material. But we expect that at least to keep similar valuation levels.
Question, sir, what is the value-added segment currently? Because I believe, sir, one or two quarters back, you have stated that it has went down from 25%- 15%. So what levels are it currently?
I think this is referring to specialty part, is it? Yeah.
Specialty business.
Yes.
I think it's more or less around 15%-17%.
15%. Sir, any trend like, we are witnessing, this will again move up in the near term, or it will remain constant at least for the next one or two years?
Sorry, we're just kind of losing parts of your question. Can you just repeat that again, please?
Sir, my question was, this value-added segment, this will remain at 15%, or there is a chance, it can move to around 25% back to the normal levels?
It will be operating in a similar level, but our aspiration to increase it will be there. As and when the market opens up, we will definitely try to capitalize on those opportunities.
Okay, sir. Thank you.
Thank you. The next question is from the line of Sailesh Raj Bhan from BNK Securities. Please go ahead.
Thanks for the opportunity, sir. Sir, as per the exit data, on an average, China imports 2,500 tons per month of rubber chemical products. That has come down below 2,000 tons in November month. Both October and November month data was showing declining trend over previous months. Also, under high-tech enterprise category, Sunshine China was enjoying lower tax rate at 15% for last three years from January 2021- December 2023, and it got expired. My question to you is, because of these two factors, do you see any signs of improvement in volume and realization for us in this running quarter?
Sailesh, we would like to clarifiscal year two things. One is the import data which you are referring to may not be the accurate data because imports come in advance, and the demand is based on actual consumption. So there could be a stock holding period. So actual import data is not a true reflection of a demand, what is happening in the market. That is number one. Number two, I think rubber chemicals comes under different chapters. So importers use Chapter 29 and Chapter 38. So I do not know which chapter you have used to compile the data. So that is something which is yet to be validated. So if we can share those data, we will examine it and get back to you.
On the-
The subsidy part, we will come back to you. We need to check up. We have not heard anything in the marketplace to state contrary to what the subsidy they are withdrawn. I do not think so we have seen any such indications in the marketplace that the subsidies have been withdrawn.
Okay. But how is the realization, sir?
If it was a listed company, they would have definitely announced it in the public domain.
Yeah. If it is there, sir, I will share it with you. Sir, how is the realization, sir, now trend, it is improving compared to 3Q?
Realization, we have held on to the same price levels of Q2. More or less similar range.
Okay, sir. My next question. One of the key growth drivers of the company is exports volume going up primarily in Southeast Asia, Japan, Europe, and U.S., these four regions. In 4Q, particularly the Europe replacement tire and truck and bus segment, it de-grew by 10% quarter-on-quarter, and YoY also there was a de-growth of 17%. Europe is roughly contributing, say, 20% of our overall exports. Still we have seen a growth in exports quarter-on-quarter. Could you please let us know what led to this outperformance in overall exports volume and which region we are seeing good traction?
Yeah. So basically, if you look at our international share, it is still moderately on the lower side. And we are kind of, as we have been mentioning in the last few calls, we are kind of getting in with the customers in terms of newer volumes with customers. So I think these are all also incremental. And on the one hand, with some of the customers we are there, they might show some impact of recessionary trends, but the newer businesses that we have got in the last month and which will build up in the next months have kind of accrued on that front.
Okay.
That is the reason.
Okay. Good. Sir, say this quarter, the exports index number is, say, 100, and how do you see this 100 index number will play out for us in the coming quarters?
We will grow.
Yeah.
We don't want to put any specific number to that. Our aspiration to grow is there, and the discussions are in the direction front.
Okay, sir. My next question, our power and fuel cost quarterly average was 45 closing fiscal year 2023. What is the current run rate and what are the initiatives we are taking to reduce the power and utility cost?
It's going on a continual basis and our efforts to reduce the cost as compared to last year has yielded some positive results, and it's sustaining, and it is maintained. I would say it's on a sustainable nature. Because of the efficiencies and other operating parameters, the team working very hard on that to improve on that, and I think it has started showing in the performance. As part of also our overall efforts in terms of operational efficiencies, I think they're also reflecting beyond just reduction in the fuel cost. There's been other efficiencies that have also played out.
What was the numbers there in 3Q power and fuel cost?
I think as a broader number, other expenditure if you see, it is in that.
Yes, sir. Okay, sir. Sir, our cash balance. Sorry, sir?
Yeah, keep going.
Our cash balance must have crossed now INR 350 crore, and the cash generation also is expected to be very strong. What is our capital allocation plan for next two years? How much you are going to spend for the new products and for the existing business, what is our maintenance CapEx? Please talk about that.
One is on the other expenditure, we have seen a nine months reduction of 40 odd crore from INR 298 to INR 257.
The earlier question.
That's the earlier question which you had asked.
Yeah.
That's the ultimate which comprises of, as Anand said, it comprises of both utilities and other operating costs in the manufacturing environment. Coming to the capital allocation, yes, we are on the discussion or we are on the evaluation stage. As and when we finalize something on CapEx, we will take it to the board and for appropriate approvals. As and when those things come in, we'll definitely announce. Yes, our aspiration to grow is definitely there, and we are evaluating various plans for that.
Okay, sir. Thanks.
Thank you.
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 the growth numbers that we are seeing on the volume front. Sir, first question is on the inventory destocking. What is your assessment when we are talking to our customers, from two perspective, one, the inventories for rubber chemicals as such, and two, the inventories for the tires or from the tire manufacturer perspective, their own set of inventories, because both these factors may, I mean, certainly have had impact last year. What is the current situation when we are talking to customers? Thank you.
Yeah, thank you, Rohit.
Yeah. While the destocking has happened in the last few months, there is still a trickle-down effect that continues. On the other hand, there is a more cautious approach given the uncertainty in terms of the various factors that keep coming up in the external environment. There is a cautious approach in terms of procurement. You could say sometimes delaying, sometimes slowing it down. These things are happening. Some plants tend to then operate at lower capacities. That tends to play out. I wouldn't say it's all across, but that's the conversations we tend to have with our customers there.
To add to that, some of our critical raw materials, we are also making an effort to, by shifting from imports to indigenous sources, that has also reduced the overall inventory procurement time.
Customer destocking.
Customer destocking.
Sure. That's helpful. Sir, second question, you also alluded in terms of the Red Sea issue in terms of the logistic and freight cost. What is your assessment till now over the last couple of months since the freight costs have gone up, in terms of both availability of containers or shipping, and second, whether there could be a transitory impact during Q4 because of the higher freight rates which probably will be compensated in Q1 when we will again go in for our newer negotiations. Your perspective on the same. Just in terms of even from the raw material availability, Srini sir just told that we have gone in for some domestic resourcing as well. From the imported raw material, are there any constraints that we are facing because of the Red Sea issue? Thank you.
Yeah. First on the customer side and the business, we don't see any major impact on account of that. Yes, there is a marginal increase in freight costs. There has been an increase. We are discussing with customers on how this can be addressed. We don't see a major impact. Yeah, we have had to recalibrate our shipping timelines and things like this, but not a major challenge at this point in time. On the other hand, as far as raw materials, we don't see any major disruptions on account of that. Yeah, so we did have to again plan for longer lead times, but not major disruptions.
Sure. Just I will squeeze in one last clarification. We have been working on fewer products in terms of application apart from the auto segment. If you could just let us know what is the status for the same, and obviously at a certain point in time, that may entail CapEx. Currently, where are we in terms of any timelines for freezing such kind of initiative or next leg of CapEx? Thank you.
One, as Srini had mentioned, as far as CapEx for the rubber chemicals is concerned, we are closely studying the situation. We are looking at where we need to do, and as and when we have something approved at the board, we will share that with you. That is a constant study that is on. On the other hand, with regard to other adjacencies, or I assume that was part of your question, we are also working on that, and as and when we have something, we will come back. Very difficult to put a specific timeline to this, Rohit, because you will understand that these things take time. I think they go up to a certain point and still we are not sure whether these things happen. That is where we are.
Fair enough, sir. Thanks for answering all the questions and all the best. Thank you.
Thank you. Thanks, Rohit.
Thank you. The next question is from the line of Nitesh Dhoot from Dolat Capital. Please go ahead. Yes, Mr. Nitesh?
Hello, am I audible?
Yes, sir, you're audible.
Voice is a bit garbled. Please go ahead. We'll try and-
Yeah. I hope this is better.
Yes, please go ahead.
Yeah. Thank you for this opportunity. My first question is basically, from one of the previous participant's question, you indicated that the imports from China and elsewhere would be in advance of the actual consumption. Since the December quarter witnessed a decline in imports, does it indicate that Q4 would be looking weaker in terms of domestic volumes sequentially? Any insight since we are already in the middle of the quarter?
No. We do not have any reason to believe that it will be weaker, so we do not see it from that perspective. We see that Q4 should be better than Q3.
Right. My second question is again on one of the previous questions, on the volumes. Not just last year, but last couple of years, there's practically no volume growth, so to say. Have we lost market share domestically or has the market itself remained flattish or degrown?
On a domestic thing, I think it's more or less flattish and we have not lost any market share per se.
The market has also remained flat, you mean?
More or less flat. I think what we have to look at is, I think if you look at the investor presentation, there's a slide which depicts about the IRSG year rubber consumption globally, and look at the consumption trending over the last six years. It's actually coming back to the last six years levels. So maybe we are talking about 2017 levels when we are speaking now. From that perspective, we have grown in that sense, the demand being flat across the globe. Largely it is in the Western market. India and China is little different.
Right. So again, just continuing. So, what gives us the confidence that the next couple of years would be different versus the previous couple of years, only as far as the domestic market is concerned. Your thoughts there would be really helpful.
Yeah. So, I think in the domestic market, there is always this cycle of the replacement tire segment. I think we see that the cycle will also kick in with all the things going together in terms of expansion and production of tire companies, investment in infrastructure. All these things will hold good even for commercial vehicles, replacements that happen. So we are quite positive the domestic market will grow and there are quite positive plans by our customers to grow on that front. Also, on the export side, we see that, with gaining approvals and penetration that happens, volumes will tend to grow over the next quarter.
Right. Any number that you can ascribe, what kind of a volume growth you're targeting for the next couple of years? Or in terms of capacity utilization, any indications there?
Nitesh, that would be difficult to put a finger on that, but we are quite positive it should be on the ascendancy, yeah.
All right. Thank you, and all the best.
Thank you.
Thank you. The next question is from the line of Nirav Jimudia , from Anvil Shares and Stock Broking. Please go ahead.
Yeah. Thanks for the opportunity again. You mentioned that the latex market has virtually remained flat for us, and I think from the peak, from our earlier discussions on the con call, you mentioned that our latex volumes have come down significantly. Anything if you can share, how do you see those markets recovering or any chances of getting recovering in the short term, which could again bring back those lost volumes to us?
Yeah. I think, on the latex, at least what we are seeing is that it's kind of bottomed out. We see some recovery that's happening, not necessarily significant volumes coming back, but at least, the view is that it's kind of bottomed out. While there has been some market shifts happening within the latex production itself, within Asia, but expect that it's kind of more or less bottomed out, yeah.
Okay. We could see some incremental volumes from there also starting fiscal year 2025, if that could be-
That's our expectation, Nirav. Yes.
Got it. Sir, second question is on the imports of rubber chemicals to India. I think there are a few categories of products where probably we don't have those presence, like in terms of the total market size. If you can just give us some understanding, like, out of the total rubber chemical market in India, how much is like we are able to serve on. Some of the products where we don't have the presence and that are getting imported to India, obviously, our market share gets diluted to that extent if we take the overall market size. If you can just give us some understanding about what are the volumes coming to India, where we don't have the presence, and how much it forms of our total rubber chemical size of India.
In terms of rubber chemicals, largely for the applications, there are maybe one, two, three products which we see we might not have in our range. But that also, in the recent past, we have done some indigenization to also start local production of those products. By and large, then there is the other specialty additive segment, which is not necessarily along the same value chain, a bit more different. That is another market segment that I would say, and not put it along with the same market that we are defining and defining for our strategically relevant market. Not too many products which are outside of our strategically relevant market, Nirav.
So when we say our market share, we do not include those specialty additives in that, right?
Yes, we do not include those specialty additives.
Got it, sir. Just a small clarification, if I could understand it correctly, you mentioned that Q4 volumes should be trending higher than what we have done in Q3.
Yes.
Got it, sir. Thank you so much, and all the best.
Thank you.
Thank you. A reminder to all participants, you may press star and 1 to ask questions. The next question is from the line of Radha from BNK Securities. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, wanted to understand a bit on the domestic market. We understand that we are the largest players in rubber chemicals. But other than that, there are a few small players like PMC Group, et cetera, who have expanded capacities in rubber chemicals. So how is that panning out for them? Also wanted to understand whether Lanxess has any rubber chemical capacities in India or are they only trading from the U.S. entity?
Lanxess has capacities in India. They make a couple of products in the segments we operate. Apart from that, they make some additives also. The other players have come up with some small capacities. I think some of them overlap, some of them do not overlap. Also at the same time, I think some of these products are critical from an intermediate point of view. I think from that also gives us an advantage in terms of being able to manufacture the intermediate also in-house, yeah.
Sir, how much capacity does Lanxess have in India?
I would not be able to put a number on that, Radha. Yeah.
Sir, any of these two players also having backward integration?
No, they do not have backward integration.
Sir, given that we have backward integration, wanted to understand whether we are selling any of the intermediate products in the market.
No, we are not doing that. We are using it largely for captive. Yeah.
Okay. Sir, globally, anyone recently announced any capacity expansion?
Not in the last quarter, I would say. Yeah.
The first half actually, that accelerator capacity is expected to come back and for Sunshine China. Other than that, no new capacity expansion.
Nothing that is in overall. Yeah.
Okay. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Harshil Parekh from Acuitas Capital. Please go ahead.
Thanks for the opportunity. Sir, I would just like to know about volume mix in terms of domestic and exports.
What is the updated mix now?
Yeah.
It's basically around 70:30, 68:32 something.
68:32. Sir, within exports, what would be the percentage for our latex part?
About, as a percentage? Well, latex is about probably 18% or 16%. Sorry.
Okay. Sir, for the value part, can you give the mix?
No, value part we do not wish to share that. We would prefer to
Okay, sir. Understood. Sir, in the exports market, especially in the European markets where we have been seeing cheap Chinese tire imports, which is impacting rubber chemical demand also for us, how is that scenario panning out? Is there any improvement there?
We have not seen any major impact on account of that in terms of our business in the European market as yet. Yeah.
Cool. Understood, sir. Sir, this new approvals which you mentioned in the call, is it coming from the U.S. market or the European markets?
It's across.
Okay, sir. Thank you.
Thank you. The next question is from the line of Prolin, an individual investor. Please go ahead.
Yes, Prolin, please go ahead.
Hello. Am I-
Yes, you are audible. Please go ahead. Sorry, we just lost you there.
Hello.
Yes, now we can hear you. Please go ahead.
Yeah. My apologies. I am sorry. There was some issue at my end. So, yeah, thank you for taking my question, sir. I have a couple-
Sorry, we lost you again. We are not able to hear you.
Hello. Is this better now?
Yes, we can hear you. Yes.
Yeah. Sorry for this. Just wanted to understand your products, right? I mean, a bit better. You know you mentioned that there are a lot of approvals that you are working on with some of the global players. So, from-
Sorry, Mr. Prolin, we cannot hear you.
Let me dial in back. Thank you.
Okay.
Yeah.
Yeah. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Yeah, thanks for the follow-up. [inaudible] , for the first nine months, what has been the export domestic mix in terms of revenues?
Revenues. I think exports will be about 34%.
Sure. In terms of margin, is there any distinction between the exports margins and domestic margins, or more or less they are in line?
See, I think for a similar product, you will be having in exports a lower margin because of the duty protection in India. Other than that, it is the same margin. The basket of export is different than the domestic. That is the other part.
Right. In terms of exports, I mean, currently which are the key markets and incrementally which we are focusing on? The reason for asking the question is that I understand in Thailand, there have been a lot of new capacities by the global tire manufacturing companies are coming up. Just wanted your view in terms of our target markets, and we are also trying to get into this market as well. Thank you.
Global customers, it is always to work with them across geographies, right? That means if there is an investment in additional capacities, we hopefully feel the trickle-down effect of that also, yeah. It is across, Rohit.
Sure. That is helpful, sir. Any key markets that we are working in terms of exports?
Across all the markets. If we work with a global player, like we mentioned, we always had a traditionally good presence in Asia. We continue to expand in Asia as well as the other markets, yeah.
Sure, sir. Thanks and best of luck.
Thank you.
Thank you. The next question is from the line of Aditya Khetan from SMIFS Institutional Equities . Please go ahead.
Yeah. Thank you, sir, for the follow-up. Sir, my question was, in our presentation on slide 23, we had given a comparison of NOCIL sales as compared to the global rubber consumption. So sir, will this trend continue over the next scheduled calendar? How do you see the rubber consumption trend for the next 10 years?
Rubber consumption trend, per se, the projections normally turn out to be about globally around 3%, 2.5%, 3%. That is what the projections are, but they have not really played out to that extent in the last couple of years, two, three years, like what Srini was mentioning. Due to one reason or the other, one market or the other does not do well, and it does not then globally play out to the same extent. But I think with consumption and things remaining at a certain assumed level, we still see that overall, globally, the growth will continue to be at least 2.5%, 3%. And the emerging markets will obviously be at a higher rate, yeah.
Main
Aditya, you are not audible. You are not audible properly, sir.
Can you hear?
Is it okay, ma'am?
Yes.
Yeah. Please go ahead.
So mainly it is outperformance as compared to the relative. So rubber consumption ahead also or there could be like some indexation can happen over there?
Okay, we heard parts of your question. I am assuming your question was how do we relate to this, is my assumption that you asked. We expect to grow above market growth rates for sure. I do not know if that was your question, Aditya, because I could not hear you clearly.
Aditya, you are not audible. I just request you to connect again. Okay? Thank you. The next question is from the line of Prolin, an individual investor. Please go ahead.
Yeah. Thank you for giving me this opportunity again. I just want to understand, you mentioned that in a lot of global tire companies, you are trying to get that approval, right? So maybe they have tried some of your products and then over the period of time that gradual approval will come. So from a point of view of, let us say, a switching cost for these tire companies to switch from a competitor to our product and vis-a-vis also to switch to a competitor from our product, how easy or difficult is it to do that? And is there a part of the portfolio which you want to quantify, which is more specialized in nature, hence that switching cost is very difficult?
So if you can help me with some color in the context of switching cost and how does this progression of volumes takes place at some of these customers, where we have already started supplying some pilot quantities.
Okay. So, thanks Prolin for that question. Maybe I will start with the latter part first. Maybe you will need to, if I do not answer, just have to come back again. But typically what happens is, the approval process can take anywhere between six months to one year and even plus and beyond. It depends on how present you are with the customer. I think it is also with the kind of support you give customers in terms of supply reliability, quality reliability, you always increase the switching cost and that is what we always endeavor to do for anybody else. And it does take time, so there is a switching cost of technical approvals, not only at the laboratory but other applications.
So it is a cost. And as a player, you tend to hope that you can increase it with all the service and support that you give customers. Your latter question, I just missed the last part. Sorry.
I just wanted to understand as to what percentage of portfolio would you quantify where switching cost is typically high. And just to add to that, I mean, is it fair that maybe in fiscal year 2024 we have been working on a lot of these projects and fiscal year 2025 we will see a lot of these approvals finally fructifying and resulting in higher volume. Is that a fair comment to summarize how things could be in fiscal year 2025?
Yes. That is the outlook. That is how we see it. I think on the specialty part, I think like we mentioned earlier, it is about 15% as far as our specialties are concerned. So there again, the switching cost will be higher than the others, one can expect.
Okay. When you say 15%, is it your overall mix or are we talking about only tire chemicals here?
The overall mix.
Overall mix. Okay. From a capacity point of view, from a gross block point of view, if I were to ask you to divide the capacity between specialty and the other parts, would it be 25/75? Because I think if I am not wrong, in the past you have had 25% of your sales coming from specialty. So from a capacity point of view, would it be 2/3 . How would you divide capacity between specialty and non-specialty?
Today it will not be directly proportional to the business proportion. Capacity per se, in case of specialized application, the capital investment is much
relatively a little lower as compared to the overall conventional thermodynamics.
Okay. Where are we on capacity utilization on both the fronts or maybe a consolidated number or a separate number will also help just to understand.
Around somewhere operating between 62%-65%.
Okay, 62%-65%, and maybe 70%-75% is when you will think of expanding. Is that a fair way to think about things?
I think that's a little premature question from your perspective. I think we said we are evaluating various plans.
Sure.
When anything plan gets finalized, we will take it to the board and then we'll come back to you.
Okay. One last question from my end would be on the export market. You mentioned that export mix is significantly different, or different, versus the domestic mix. Let's say, for example, in terms of realization, if let's say domestic is INR 100, how different would be realization in the export market?
We announced just a few minutes back. In domestic market, the international pricing are adjusted for duties and exchange rate.
Okay.
For example, if export market is fetching only INR 100, domestic on the same product will be INR 110. But the basket of exports is slightly different vis-a-vis the basket of domestic.
Taking that basket into consideration, I am assuming that realization would be higher. So by how much? It is like 25% higher just based on the basket.
It is a sensitive information. We don't wish to quantify.
All right. No worries, sir. Thank you for answering my question and all the very best.
Thank you.
Thank you.
Thank you. As there are no further questions, we will take prolin as the last question. I would now like to hand the conference over to Mr. Anand for closing comments.
Thank you. I would like to thank everyone and take this opportunity to thank you for joining the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with me or Strategic Growth Advisors, our investor relation advisors. Thank you once again, and have a nice day.
Thank you. On behalf of NOCIL Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.