Q1 24/25

Jul 22, 2024

Summary

Q1 FY25 revenue rose 19.3% and PAT 19.5% YoY, with strong HPPC and textile growth offset by flat AHN. Capacity investment and export expansion underpin the outlook, while freight costs and working capital remain watchpoints.

Ladies and gentlemen, good day and welcome to the Rossari Biotech Limited earnings conference call. 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 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. Anoop Poojari from CDR India. Thank you, and over to you, Mr. Poojari. Thank you. Good evening, everyone, and thank you for joining us on Rossari Biotech Q1 FY 2025 earnings conference call. We have with us Mr. Edward Menezes, promoter and executive chairman; Mr. Sunil Chari, promoter and managing director; and Mr. Ketan Sablok, group chief financial officer of the company. We will begin the call with opening remarks from the management, following which we will have the forum open for a question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Edward Menezes to make his opening remarks. Thank you, Mr. Anoop, and good evening, everyone. Thank you for joining us on our earnings conference call. It is a pleasure to have you with us as we discuss our operational and financial performance. We are pleased to report a strong start to the year, driven by healthy year-on-year growth in both revenues and profits. This performance is particularly commendable given the current environment, and it was largely driven by the strong expansion of our HPPC business and a healthy uptick in our TSC division. While challenges in our AHN division persisted due to industry headwinds, we remain optimistic about the recovery in the remaining fiscal year. Our commitment to R&D continues to drive our success, and we have seen many synergies emerge through our past acquisitions. A notable example is the development of a single component emulsifier last year for the agrochemical industry, particularly in enhancing the stability and dispersion of herbicides. The emulsifier simplifies the formulation process, improves long-term stability, and ensures uniform dispersion of the active ingredient, thereby providing better coverage and absorption by target plants. Such product developments are a key reason we have delivered strong success in the agro space despite the industry witnessing subdued demand. These innovations demonstrate our ongoing dedication to offering advanced, environmentally friendly solutions that meet the evolving needs of our customers. As we have mentioned in the past, R&D is a cornerstone of our growth and innovation strategy, strengthening Rossari's position as a leading solutions provider in the specialty chemicals sector. Our R&D capabilities enable us to meet evolving market trends and offer bespoke solutions, driving growth, creating value, and enhancing our reputation for intelligent and sustainable solutions. While commodity chemicals have benefited from global industry trends in recent years, we see a promising shift where solution providers and formulators with strong R&D capabilities like Rossari will lead the way in creating sustainable value for all stakeholders going forward. The recent expansion at Dahej, along with increased ethoxylation capacity expected to be completed by year-end, will help meet the growing demand in all key segments, including agrochemicals, specialty surfactants, oil and gas, and performance chemicals. As India emerges as a major hub for global chemical manufacturing, our R&D framework, solid financial base, enhanced manufacturing capacity, and diverse product range position us well to capitalize on growth opportunities in both domestic and international markets. With this, I would like to conclude my address and now hand it over to Mr. Chari for his comments. Thank you, Edward, sir, and a warm namaste to everyone. The first quarter of FY 2025 has demonstrated our resilience and growth potential. We have had the best quarterly performance ever, both in terms of revenue and profits. We are especially pleased with the outstanding performance of our HPPC segment, which achieved a robust 21% growth. Our textile specialty chemicals division also performed well, registering a 21% growth. However, the AHN performance, animal health and nutrition performance, remained flat due to industry headwinds. Our ongoing efforts to expand our domestic and international customer base have been instrumental in achieving significant year-over-year increase in both revenues and profit, which grew by 19.3% and 19.5% respectively. We are experiencing notable success in our export markets, which are growing faster than our domestic markets. This growth stems from our strategy of targeting new customers in both new and existing regions. Our participation in key industry events worldwide has significantly contributed to this success. At ChemSpec Europe 2024, a key global event for the fine and specialty chemicals industry, we unveiled our latest innovations in specialty chemicals, connected with industry leaders, and showcased our commitment to cutting-edge solutions. Similarly, our engagements at in-cosmetics KOREA, in-cosmetics Global in Paris, and CPhI Southeast Asia 2024 allowed us to present our advancements in beauty, personal care, and pharmaceuticals. The positive reception at these events has helped us build strategic partnerships and stay at the forefront of the industry trends. These strategic efforts underscore our dedication to pioneering innovative, sustainable, and customer-centric solutions across diverse sectors worldwide. Overall, we remain committed to our growth strategy across all business regions with a particular focus on agro surfactants, the phenoxy series, the institutional cleaning, oil and gas, and performance chemicals. While our export markets have shown remarkable growth, our domestic market continues to be a key driver of our success. By developing new verticals within our core chemistries, we have laid a strong foundation for future expansion, both domestically and internationally. This balanced approach ensures that we can capitalize on growth opportunities globally while maintaining a robust presence and driving significant value in our home market. I would now like to invite Ketan sir to share his perspective. Thank you, Charita, and good evening to everyone. Let me provide you with a brief overview of the financial performance for the quarter ended June 30, 2024. As Charita said, we've had one of our best quarters and a strong beginning to FY25, with revenue from operations growing by 19.3% to INR 489.7 crores compared to INR 410.6 crores in the same period last year. Our EBITDAs improved by 12.5% to INR 64.9 crores from INR 57.7 crores, with an EBITDA margin of 13.3% compared to 14.1% in the previous year. The drop in EBITDA margin was primarily due to increase in other expenses, mainly driven by higher freight, travel and maintenance, and selling and distribution costs. We've reported a record PAT of INR 34.9 crores, an increase of 19.5% from INR 29.2 crores. Coming to our segment by performance, our HPPC division saw robust growth of 31% YOY during the quarter, reaching INR 365 crores compared to INR 301 crores. The Textile Specialty Chemicals division also grew by 21%, up to INR 98 crores from INR 81 crores. AHN division experienced muted performance with the revenues at INR 27 crores in Q1 FY25 compared to INR 29 crores last year. In terms of revenue contribution this quarter, HPPC leads with 75%, followed by textile specialties with 20% and AHN with 5% of the revenues. Moving forward, our expansion projects at Dahej are progressing as planned and are expected to be completed by the end of the current year. The expansion includes adding 20,000 tons of capacity for products related to HPPC in the specialty chemical space, as well as producing ingredients for our subsidiary companies. Additionally, to cater to the growing demand in the agro, home and personal care, oil and gas, and pharma sector, we are adding ethoxylation capacities of 30,000 metric tons at Dahej facility of Unitop. The commissioning will happen in the phased manner within the current year. These expansions will enable us to meet the growing demand across key sectors, further driving growth. To conclude, we are confident about the opportunities in our business verticals and believe that our robust R&D framework, strong financial base, and a diverse product portfolio will continue to drive our success going forward. We remain dedicated to our strategic growth initiatives, consistently driving innovation, improving operational efficiencies, and better capacity utilizations. We are confident that these initiatives, coupled with our disciplined financial management and investment in our people, will enable us to deliver sustainable growth in the coming years. That's all from my side. I would now request the moderator to open the forum for any questions which the participants may have. 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 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 Ankur Periwal from Axis Capital. Please go ahead. Yeah. Hi, good evening, sir, and thanks for the opportunity. Congratulations for a decent set of performance given the current macro. First question on the revenue growth. Over the last three, four quarters, we have been reporting around, let's say, 15% to 20% odd year-on-year revenue growth. How has been the volume growth trend here, if you can highlight that? Thank you, Ankur. I think the primary core driver for the last few quarters and this quarter has been the volumes for us, both in HPPC and this quarter we also saw good volume of take in the Textile Specialty Chemicals. I would say the entire growth mostly is coming out of volumes. Prices are more or less stable now. There are some places where we have taken slight price cuts just to get into the volume game, but overall prices seem to be stable now. Sure. Would it be fair to say that last part of the growth over the last, let's say, 2-3 quarters is led by volume, which is, let's say, 15%-18% of volume growth year-on-year? Okay, great. Now, second question on the standalone and the separate performance for standalone here. If I go back, we used to do 15%, 17% odd EBITDA margins, even higher than that, right? Pre-COVID. After that, the numbers had come down, and we have been consistently in that 12%, 13% odd EBITDA margin range for the last 6-8 quarters. Will we go back to those 15%, 17% EBITDA margins there, or this is the new normal that one should look at? Ankur, the major businesses, Surfactants and Unitop, which was, of course, planned at Rossari as a calculation earlier, I think we should consider this as a new normal in terms of EBITDA margins. Sure. So both on the subsidiary and on the standalone franchises. Yes, Ankur. Since both the subsidiaries and the standalone Rossari, a lot of the ethoxylation and products are going to go in a cross-selling mode. It would be ideal to look at it at the similar levels. Even going forward, some of the capacity which we are putting up in the Rossari facility at Dahej will actually manufacture ingredients which will go in as inputs for the products which are manufactured at Unitop. So there will be a lot of cross-selling now. As it is, we are having a lot of cross-selling, this is only going to go up now over the year. So it would be ideal to look at the EBITDA margin at a consolidated level, and as Mr. Chari said, at least for the current year, this is what we are seeing, 13%, 13.5%. We play it between these two numbers only. Okay. Great, sir. That's it from my side. Thank you, and all the best. Thank you. The next question is from the line of Abhishek Navalgund from Nirmal Bang Equities. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. So my first question is on the HPPC revenue. So could you clarify what sort of contribution would have come basically from the Buzil Rossari segment here? Buzil Rossari segment is a similar sales as last year. Traditional chemicals business was about INR 60 crores. Okay. The reason why I am asking this is, we did around 160 odd crores last year, full year. We are talking about, let's say, doubling the number. Just wanted to understand. This quarter also, I mean, the other expenses looked little higher. Just wanted to understand that business is like a relatively low margin business, and any significant growth in that business would have contributed to this blended margin profile. That was the main question, actually. You are saying 60 crores for the quarter, right? Yes. Abhishek, we have done around 60 crores for the quarter, and I think we are in line with what we had talked about earlier for reaching the annual number. Sure. Do you think because of this 300 crore number, the ex Buzil Rossari margins should improve on a consolidated level? Yeah. See, that way, if you see lot of ex things, margins will improve, but we have to see the business overall. While this is a tough business to be in, but this is a business we want to grow. Even if it is currently a challenge on our margin percentage, we are okay to keep feeding this business for the next few years till it reaches a certain size. Sure. Perfect. Last question from my side regarding that GST penalty notice, press release that you have put. Should we expect a provision going forward for a INR 25 crore number? No, there won't be any provision. All right. That is an order which has been passed for some FSSAI department. It is an IGST refund which they claim to be erroneous. We have taken Yeah proper legal views on the order which has come, and we are now going to appeal against this order with the higher authority of commissioner appeals, and we are quite hopeful of getting a favorable order on this. No, because you are very confident, so you are not going to provide for the same, right. Abhishek, this notice has been given to practically thousands of exporters, who have taken a refund on IGST paid on exports. It is industry-wide, and there is a due and try, and everybody is sure that this will not stand in the court of law. Sure, sir. Perfect. Thank you so much, and all the best. Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Yeah, thanks for taking my question. First, a clarification on textile revenue. Have you made any changes to the reporting? Because I think the base year revenue appears to be lower than what you have reported last year same quarter. I think this presentation is showing it. Yeah. Sanjesh, that change actually we had done in quarter 2 of last year. We had done a reclassification of a product. From textiles to HPPC. If you see our Q2 presentation of last year, we had done this change and we had put in a note that we regrouped. What was the product? I think it was I will need to check the exact product, what it was. But it was a HPPC product which was grouped into textiles in the first quarter, and we have made that correction in Q2 of last year. Okay. This was only for that one quarter that mistake happened. Yes. If you see our Q2 presentation, it has been corrected. Okay. Got it. Just one more clarification on textile. If I look at over a three years trend, we have been hovering around INR 100 crores of revenue. While you look at the peers like Atul, Rudolf and all, they have reported quite a healthy revenue growth in the textile segment. Any particular reason why we are not able to grow while some of the peers who are listed and report the number have been growing faster than what we are growing? Any particular reason, or we are more focused on HPPC and hence textile is taking a back seat? Oh, no. We are focused. Sanjesh ji, carry on. Namaste. We are focused on the textile business. We have a bigger base. No, your base is now bigger than ours. Just in terms of growth rate, are we losing any market share there? No. Because our volumes have grown, because raw material prices have fallen, SG prices have fallen. Volumes, we see better volumes in textile compared to last year. Okay. Why then we are not able to translate? I thought Edward had also said that we are introducing many products in the finishing side of it, which I thought were higher realization and hence would have grown faster. But if I look at the revenue, for last three years, we have stuck at that INR 100 crores kind of a quarter year-on-year. No. Compared to last year, the finished goods prices have fallen substantially, which has translated also into higher volumes in the textile chemicals. So for us, we are steady, means we have grown. There would be other companies who would be on a smaller base and would have taken share from our competitors. We have also taken some share from our competitors because the textile markets as such have not grown. The home textile business is now on the upstream in India. Orders are good with our home textile exporters, especially for the U.S.A. market. So we are confident of better sales in the coming quarters. Fair enough. Second on the HPPC segment, if I just take out the Unitop part of it appears that quarter-on-quarter, there is a decline of 18% in a non-Unitop kind of a business. Any particular reason why? While we are still very healthy, I appreciate that, but on a sequential basis, it appears to be a much steeper fall. Any particular reason there? What you are saying is take of what? That is HPPC ex of the consolidated minus standalone. No, you cannot see it like that, Sanjesh. As I already just sometime back talked about it, we have a lot of products now which we are cross-selling. Okay. Please don't subtract. I think we had talked about this earlier also, that it's not a right way to look at the numbers now for Rossari. Because part of HPPC is done through standalone, part of it is done through Unitop and Tristar. Some of the customers of Unitop and Tristar, which we have developed within the Rossari distributor network, sales are actually routed through Rossari. So there are lots of cross-selling that's going on, and that's only going to increase now with the new capacities coming up, both at Unitop and Tristar. So my submission would be to not simply subtract numbers in the financials and look at it. It will be better to look at it at a group level. Sanjesh sir, to add to what Ketan sir is saying, quarter 1 FY 2024, we had did 301 crores in HPPC. In last quarter, the quarter 4 of FY 2024, we did INR 344 crores, and in the quarter 1 of FY 2025, the last quarter, we did INR 365. So we have consistently grown in HPPC segment. Please look at it holistically, sir. No, I appreciate that. But the problem is that one of the product, which is agrochemical, is a seasonal product, and it has become fairly large, and I don't think it is an HPPC product. It's completely an industrial product. It's a B2B product. Hence, I just wanted to see if I take it out, then how is our underlying actual HPPC product, which is our earlier standalone product, looks like. But I appreciate that. I know there is a lot of cross-selling, so I don't read it very thoroughly. Because it was a sharper drop, hence I thought of asking it. No. Sanjesh, also, you must note that Unitop, that's not an agro. Today, I think we had spoken something earlier also. At the time of acquisition, Unitop's Sales of agro products are 60%-65% or Correct even higher. Today, the ratio between the agro and non-agro is almost 50/50. Maybe this quarter it would have been 45 and this thing because of the season. But the non-agro business of Unitop has also grown significantly in the last few years, post the acquisition. Got it. Even the non-agro business in Unitop grew by nearly 30% in this quarter. Agro did grow, but non-agro also grew very well. One small request. Can we have a product like agro, oil and. Sanjesh, can you hear me? Yes. You are not audible, sir. Can you hear me? Yes, this is better, sir. Please go ahead. Okay. Apologies for that. Chetan Ji, if we can have a separate segment for agro, oil, and gas, and can we have one clean HPPC, so we can appreciate the growth in both the segment. That would be very helpful because agro is more seasonal product, it will create certain volatility. That is a small request from our side. Yeah, okay. Go ahead, Sanjesh. The other question is on the new product portfolio. Last time when Edward highlighted as there was new of product in terms of green chemistry, in HPPC and all, including some of the pharma side. Can you just highlight which are the products being launched and other products where are they in the pipe? Sanjesh, in the HPPC segment, we have introduced a lot of esters in the last couple of quarters. All these products which were in the R&D stage, they have been launched both in the market as well as raw materials for Unitop. Most of the esters were being outsourced by Unitop. Now they are being manufactured in-house at our Rossari, Dahej plant. That project has taken off very well, like the SMOs and SML and SMS as well as the MRO kind of products. That has already taken off. Then we have the cocamidopropyl betaines as well as the coco diethanolamide product, CDEA. There are many such other ingredients that we have started at Rossari. These have been launched in the marketplace as well as we are stockpiling to Unitop. Like we said that last time, that biosurfactant was pilot scale, we have scaled up. Now this has gone into production, and we have taken action to increase the production capacity of our biosurfactant as well. Finally, also the silicone block polymers are now completely made in-house barring one or two products, which we still outsource. Otherwise, all other products we have started manufacturing in-house. If you look at whatever projects we had taken up in the last couple of quarters, most of them have been introduced in the marketplace. And some of the green chemistries like the bio scouring agent, the Greenhydro, these also have been launched in the marketplace and some sales have started being developed for them too. Very helpful, sir. Just one last question from my side. Any update on the cosmetic side of the business which we were developing? How are we placed there, and how is that performing? Cosmetics, Sanjesh, what kind of products you are referring to, sir? All the cosmetics. I think we started with Purple or somebody, right? Yeah. We wanted to expand that whole cosmetic side of business. Yes. The Purple business is doing well. I think it has grown quarter-on-quarter also very substantially. But in the cosmetics also, we are developing a lot of polysorbates, which are surfactants which go into personal care formulations. That sale even in export and domestic markets is increasing very well. We are introducing a lot of esters in the personal care area, and I think going forward, we should see good traction in that also. How big has it become for us now? Is it 25, 50 crore kind of a top line for us now? We do not have figures because we do not bifurcate into this and we give it as only HPPC segment. Got it. One last question, sorry, before I come in the queue. Any update from the exports? I think we were very optimistic on the exports, both on the textile side and Unitop side. Any further update on the textile business, particularly on the textile side? Yeah. Exports continues to be our main driver now. At least we have seen that in the last few quarters. This quarter also, if you see of the overall revenues, I think close to 24%-25% would be exports. So year-over-year growth is close to almost doubling on the export side. This has happened primarily in HPPC, but also now we are seeing the export arena of textiles also slowly firming up. Some of the initiatives that we took in the last quarter in Bangladesh and Vietnam, we are seeing some of that playing out now in this quarter. We also now this quarter started initiatives in Egypt. I think going forward in the next balance part of the year and majorly in the second half, we will see some good traction in textiles exports from these countries. Got it. What is our expectation on exports as a percentage of top-line we can reach say, next two years? Sanjesh, if you see overall, the business itself is growing. So it is growing both on the domestic as well as on the exports. But if you see till last year, I think last year Q1 our exports would have been 20% of our revenue. Today, this quarter, it is almost 24%, 25%. But if you see in value terms, it is almost double. Or at least not double, but at least 50% growth. So while the percentage is growing, but the absolute number is growing significantly. I think we would be happy if the exports absolute number keeps growing, and if it is within this 25%, 30% kind of range, I think for the next two years, that is what is our target number. Sanjesh, does that answer your question? I think he lost you. You can go ahead. Ladies and gentlemen, to ask a question, you may please press star and 1. We have the next question, which is from the line of Bhargav from Ambit Asset Management. Please go ahead. Yeah, good evening, team, and thank you for the opportunity. Sir, my first question, just continuing on the exports, especially on the Bangladesh front. How big can this opportunity be on the textile side, sir? Bangladesh. Bangladesh is a market which is bigger than in the Indian market. But there were also a lot of forex issues, which have now considerably eased. We see that the opportunity in Bangladesh is bigger than the Indian opportunity. We have a team of people present there. We have now a new distributor. And we think that progressively we should see better traction in sales to Bangladesh than in previous quarters. Okay. Sir, second question relating to your institutional business. Sir, at what level can we expect this business to become breakeven? If you can share some insights into what could be your sort of 3-year plan to make this business much larger from here on? Institutional cleaning business, this year, we are expecting it to be INR 250 crores. The first quarter was about INR 60 crores. We are lined, and we have had a substantial growth in that business. The focus would be on all products related to the institutional cleaning, hygiene, disinfection, and also food service. We are going as a basket by providing not only chemicals but a whole range of products together which can go into the institutional cleaning and hygiene and disinfection line. Airports, malls, food service, hospitals, these are areas where we want to focus for this and the next financial years. I think in terms of percentage of growth, because this is a smaller base. From INR 150 crores to INR 250 crores we are growing. We should see a healthy growth year-on-year on this segment, primarily because the market is big and the focus on cleaning and hygiene and disinfection is increasing. That is why we are very bullish on this business. This business is a very difficult business, because it requires a lot of service, a lot of people in the field, and also a lot of equipment. For example, if you go to a laundry in the hotel industry, we need to have dispensers to dispense chemicals to the batch washing equipment. Even if you go to a kitchen and there is a big automatic dishwashing line, we need to provide chemicals to dispense those chemicals in an automatic manner on big machines. Other than that, even in facility management, for example, to airports, we need also because manpower is unskilled, which are contract labor, which is coming to the facility management companies. We need to provide dispensers so that dilution happens. We supply chemicals which are concentrated. For example, you have to add between 5 ml to 20 ml per liter. This is a service concept rather than only chemicals. There are other products which we go as a basket for this industry. We are happy to not only focus only on chemicals, but to go as a basket. We are planning to launch products based on kind of povidone-iodine, where the common big brand is Betadine. A lot of other products in the near future. Hospital hygiene also is something which we think could grow into in the future. Year on year, we should see much higher growth than the consolidated growth. That is what we foresee in the future. Sir, any gross margin guidance or working capital guidance which we can get once the business crosses maybe INR 400 crores, INR 500 crores? I think the business itself is a higher gross margin business for us. While there is a little stretch on the working capital currently in this business. We will probably understand a little more of working capital size once we reach that INR 500 crore number. I am sure it will be much healthier than what it is as on date. But currently, to give you a guidance on what the working capital will be a little difficult for us. In terms of people on ground, maybe more than 200 plus people on the ground? Yeah, more than 200 people on the ground we have already. Okay. Great, sir. Thank you very much and all the very best. Thank you. The next question is from the line of Dhruv Muchhal from HDFC Asset Management. Please go ahead. Yes, sir. Thank you so much. Sir, what's the CapEx that you're planning for this year? Cash CapEx. The cash outflow will be only for these two large CapExes, which we have announced at Unitop and Rossari. That's only the major CapEx outflows that will happen. Apart from that, we have an additional small CapEx for reagent, which is the vitamin premix and minerals facility. Overall, we will have an outflow of close to about INR 100 crores. Right. Secondly, on the sea freight issue, the container sea freight issue, what's the implication for us? Mainly the domestic market would probably benefit, probably some impact on the export market. If you can provide some context to it, please, sir. Right now, Dhruv, namaste, I'm Charu Bhatia. Right now, all our contracts we are going on FOB and we are solidifying the freight available today, and then telling them that we have arrived at the CIF price based on this much amount of container freight. Now, at the time of actual dispatch, if the freight is lower, we will CIF price. If it is higher, we give a CIF price, and we'll be open and transparent that we do not want to earn from the freight. The freights are now nearly 2, 3 times more than what it was. But they seem to be stabilizing now. Last 1 week, we did not see too much increase in what we had the week before. But also, we are also seeing shortage of containers, primarily because our freight agents are saying that the whole China is diverting all containers to shipping of electric vehicles. There's also delays because vessels are not available, containers are not available, so normal shipping times have increased. Now, what is happening is, when containers reach late to our customers they get consumed late, and then the next orders get delayed. And customers want to try out some other suppliers where they can get early freight and early availability. Overall, I think the whole of world is grappling with this problem, so it's a new normal till it stabilizes. Right. But sir, our domestic market, which is about 75%, that should ideally benefit because the competing products have become more expensive now, at least whatever was getting imported. If you see our three segments for HPPC, textile, and animal nutrition, we had lot of domestic customers because in all the three segments, all the multinationals have local manufacturing facilities. So even in our imports, if you see imports, we have very less imports compared to our exports. So if you see exports is on an average INR 120 crores, the imports would be INR 20-25 crores in a quarter. So I think similarly will be the case for our competition because domestically now, a lot of raw materials in the segments we work in are available. To give one more example. For example, acrylic acid or butyl acrylates were primarily imported earlier, and now domestically, BPCL practically imports have been much lower. Similarly, acetic acid. If you look at acetic acid, this month we are buying only from GNFC because the GNFC prices are much better than import prices. So India is coming of age in terms of lot of raw materials availability, and pricing also has become very competitive. Right. Sure, sir. Thank you so much and all the best. Thanks. Thank you, Dhruv. Bye. Thank you. The next question is from the line of Chetan Thacker from ASK Investment Managers. Please go ahead. Good evening, sir. Good evening, Chetanji. Good evening, sir. Sir, just two questions. One was, what is the contribution of agrochem to this current quarter revenue and the same number last year? Just to get a sense of what has been the growth in agchem per se. Second was on working capital. How has that played out this quarter? Have you seen some release of funds from there? Chetanji, with the agro, we do not have exact figures because we do not work. Our HPPC revenue is based on sub-segments in the HPPC segments. This season has been better than last season, and we have seen sales better than last season. The monsoon has been very good and our all agrochemical formulators and the big agrochemical formulation manufacturers foresee a good uptake in the next two months. As a percentage or value, we do not have exact figures to give you. Collections have also been better, but I think it is nearly the same as in the past. It is not worsened, that is a good news. Understood. Working capital, we have seen some relief or nothing materially in this quarter? No, working capital is pretty much same as what it was in March. Okay. We are taking some steps now, so hopefully by September we should see some relief of funds coming out of working capital. Understood, sir. Okay, sir. Thank you so much for this. All the best. Thank you. Thank you. The next question is from the line of Aditya Chella from InCred Asset Management. Please go ahead. Sir, first question is on the other expenses, we have seen a sharp increase sequentially. Would you highlight if there is a one-off or just in detail what these increases in other expenses are? Yes, this quarter we have about 3, 4-ish crores of one-off expenses that has got booked. One of it is on the maintenance side. In Tristar, we had a plant shutdown for about 12-15 days. So that is where the maintenance costs have gone up. Apart from that- Sir, sorry to interrupt. I request you to please come closer to the mic, sir. Yeah. Is it better? Yes. Much better. Please go ahead. Yeah. We had a shutdown at the Tristar facility. We have some expenses booked on the maintenance side during this quarter. We have also initiated in the last quarter some consulting work for restructuring on our HR front. With so many multiple businesses and a lot of new people joining in, we had taken some professional help in restructuring, reorganizing, bringing in new performance management system, job description, et cetera. Some of those bills have got expensed out in this quarter. Apart from that, I think partly freight expenses have gone up. There has been a lot of spend in the last three, four months on a lot of exhibitions, some of which Mr. Sunil Chari talked about in his opening comments. The overall travel expenses have also gone up during this quarter. I would say the selling and distribution related expenses have gone up in this quarter. That pretty much makes up for the increased other expenses that you see in the numbers. Got it, sir. My second question is on the CapEx, which is coming up in a phased manner. At current revenue run rate, we are looking at a high single digit implied revenue growth. If you could talk more about how this CapEx will come on board. If you can give some more details whether it is from Q3 or Q4, et cetera. That will be helpful. Most of the expansion is based on ethylene oxide as a raw material. As we had announced in earlier calls, we are expecting our expansion to be completed by March 2025. We are waiting for the expansion of Reliance for ethylene oxide to happen simultaneously. Because the customers will be big giants companies both in home personal care, in oil and gas, in pharma. We would take some time for approvals. I think as Ketan sir has said in earlier calls also, FY 2026, 2027 should be the right year for us to see 100% utilization of those capacities. Got it, sir. That's it. Thank you. That's it from my end. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead. Yeah. Thanks for the opportunity. Sir, first question is on the institutional business. We have a target of 250 odd crores. I believe that in terms of margins, probably it is lower margins than our company-wide margins. What could be a critical revenue level from where the operating leverage will start kicking in and probably the margins would be at a company-wide level? Thank you. Rohit, I talked a little earlier also. I think this business now, at least for the next two years, needs to show a strong growth prospect. We are investing in terms of people and other resources quite heavily in this. Some of the new additions in terms of people on the ground, if you see, are mostly happening in this instance. Currently, as we said, we have done 60. We are expecting to close this year closer to 250 odd kind of a number. I currently do not have the exact number, but I have a feeling that this number needs to at least double in the next two years. Maybe two years down the line, we will start seeing some operating leverage flowing in. Maybe closer to a INR 500 crore-INR 600 crore kind of a top line is when this business will It will really start showing some positive traction, and then post that, I think it will really bump up our margins. Currently also, it is not that this business is not giving us, but the level of margins are slightly lower than what the company average is at. Right. Got it, sir. Second question is in terms of the Textile Specialty Chemicals business on the exports front, Bangladesh and Vietnam. If you can just let us know in terms of what is the size of employees that we have currently, in terms of maybe three years or five years down the line, what is the kind of revenue that we are looking from these markets, given the investments that we are currently making in terms of manpower and keeping local professionals out there. Just a broader perspective would be good. Thank you. For Bangladesh, we have about six people working in the Bangladesh office in the sales. Because our sales are low, we are gradually scaling up this thing. The textile exports as a whole, we are expecting it to grow, primarily because restocking has happened in the American market and our customers are having in India and as well as Bangladesh and other countries are having good orders for this current financial year. Sure. Sir, just one last clarification. We have incorporated a subsidiary in Dubai. What is the strategy behind that? We have incorporated the subsidiary in Dubai primarily for any global expansion that we may plan going forward. Rather than holding it through India, we have currently incorporated this subsidiary. Any new setup which we were planning to do in any other country, we would like to do it through this Dubai subsidiary. That is the plan as of now. We are looking at some of the geographies, it is still in the planning stage, where we would like to set up some small facility. We will do that under this company in Dubai. Will it be a manufacturing setup or will it be purely a marketing or selling? It will be a mix of both. We may start off with a marketing facility, and then maybe as the business grows and as we see some traction in the customer base, we may even set up a manufacturing facility. Sure. Thanks a lot. That's all, and best of luck, sir. Thank you. The next question is from the line of Pradeep Rawat from Yogya Capital. Please go ahead. Yeah. Good evening, and thank you for the opportunity. I have a couple of questions. First of all, on working capital. Over the years, our working capital days has been constantly increasing. Why is this happening and what should we expect in future on this front? If you see our business before our acquisitions and now, the acquisitions is mostly based on the surfactant business. The surfactant business like Unitop and Tristar, is also where we have to buy EO and also the hydrophobic which reacts with EO, like lauryl alcohol or nonylphenol or tridecyl alcohol or any fatty acid. These are all purchased in advance terms, and we have the normal standard 90-day terms with our customers. We cannot compare apple to apple what Rossari was four years ago, before the acquisitions happened and what it is now. As we said in the last two earnings call, between 90 to 100 days is the new normal which you should consider. Okay. With regard to demand dynamics, how are we seeing the demand dynamics unfolding for textile and HPPC segments? What growth should we consider for FY25? Both the markets we see healthy demand, both domestic and in exports. As I said earlier, the home textile markets, especially from the U.S., the orders are filled with our current customers in India and also in Bangladesh. We should see higher sales in both these countries with other countries also. In HPPC segment, again, we see exports and domestic market, both having good demand. We see both the segments should continue to do better than what it was last year on quarter-to-quarter basis. Yeah. One quick question about utilization. What is our current utilization? Pradeep, on the ethoxylation side, our utilizations are at 90% plus at both the sites of Tristar and Unitop. Okay. Our peak utilization is somewhere around 65%-70%, and we are operating at 90% of that 60%-75%, right? No. We have capacities of ether of ethoxylation, and we have the other capacities of reaction, et cetera. So on the ethoxylation, which is our core activity, our plants are working at almost 90%. And overall, if we take an average, we are at about 55%-60%. Okay. And the other one is that we are doing two CapExes that we are doing. So what would be the revenue opportunity from those CapEx? At a peak, they will give an asset turn of about around four. Okay. Thank you very much. Thank you. We have the next question from the line of Bhavin Soni from Anand Rathi Share and Stock Brokers Limited. Please go ahead. Hello. Good evening, sir. Thanks for the opportunity. Am I audible? Yes, Bhavin. I just wanted some clarity on the freight expenses. You mentioned that the other expenses are one-off with respect to the exhibitions and travels and sales and distributions. Can you just give a breakup of how the freight increased on a QOQ and YOY basis? Offhand, I do not have those numbers, but freight is an increase. I would say about, if you see YOY, it would have definitely increased about 35%-40% of what it was in Q1 of last year. Okay. How do you see it going forward? Now you have said that it is stable since last week, but for this quarter and next quarter? In terms of freight, we see at the same level that we said now based on June and the first half of July. We do not increase destination-wise too much increase in freight. The container and the shipping freight availability, and ship availability also is little better, not the same as like in January to March quarter. I think this is little better than previously. Okay. And sir, any one-offs or spikes in employee expense because they also increased around 17% YOY and 14% QOQ. No. That is not a one-off increase. There we have gotten people through the year between last year and current year, and of course, there has been a general increment that has happened. Okay. Thank you. That is it from my end. Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call, and have a good evening. Thank you. On behalf of Rossari Biotech Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.