Q3 23/24

Jan 23, 2024

Ladies and gentlemen, good day, and welcome to the Rossari Biotech Limited's earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, Mr. Pujari. Thank you. Good evening, everyone, and thank you for joining us on Rossari Biotech Limited's Q3 and nine-month FY24 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, Anup. Good evening, everyone, and thank you for joining us on our Q3 and nine-month FY24 earnings call. I hope all of you had the opportunity to go through our results presentation that provides details of our operational and financial performance for the third quarter ended December 31, 2023. We are delighted to announce another strong quarter for the company, marked by a notable year-on-year growth in both revenues and profits. The performance was primarily fueled by our core HPPC division. While our TSC and AHN division faced industry headwinds and seasonal softness, we are optimistic about their recovery in the upcoming quarters. Notably, while this quarter's revenues were slightly lower compared to Q2, we achieved a new record by surpassing our previous quarter's EBITDA and PAT. Our long-term growth strategy remains focused on expanding across all our business divisions. Over the years, we have proactively seeded new verticals with our core chemistries, laying a solid foundation for future expansion. We believe we are now poised to significantly scale up these ventures. Our emphasis is particularly strong on areas such as specialty surfactants, phenoxy series, institutional cleaning, and performance chemicals. By leveraging our existing and new product lines, we aim to penetrate deeper into new geographies and further increase our wallet share with existing partners. As we have discussed in the past, R&D remains a cornerstone of our growth and innovation strategy. Rossari's position as a premier solutions provider is strengthened by its R&D capabilities, enabling us to meet the evolving market needs and solidify our role as a sought-after partner for bespoke solutions in the specialty chemical sector. We are dedicated to leveraging our R&D expertise to drive future growth, create value, and strengthen our reputation as a leading provider of intelligent and sustainable solutions across various industries. We continue to focus on developing green surfactants that will act as a door opener for the home and personal care industry and also have varied applications from textile to industrial cleaning and oil and gas. As we look ahead, India is anticipated to emerge as a major hub for global chemical manufacturing in the coming years. In this scenario, with the backing of our robust R&D framework, solid financial base, increasing manufacturing capacity, and diverse range of products, we believe we are well-positioned to capitalize on growth opportunities in both domestic and international markets across all our business verticals. With this, I would like to conclude my address and now hand it over to Mr. Chari for his comments. Thank you, Edward. Good evening, and a warm namaste to everyone. The third quarter has once again showcased our resilience and capacity for growth, even amidst the challenging external environment for some verticals. We have achieved a consolidated revenue of INR 463.8 crores, a notable increase of 19%. Moreover, our EBITDA has grown by 18% to INR 63.7 crores, and we are particularly pleased with our PAT, which stands out at INR 34.4 crores, marking a significant YoY increase of 34%. These figures highlight our focus on maintaining and enhancing profitability even in a demanding market landscape. In a strategic move towards future readiness, we have announced the expansion of our facility at Dahej in the previous quarter. The expansion is designed to help us foray into new products related to our core HPPC segment. Additionally, in response to the increasing demand in sectors such as agrochemicals, home and personal care, oil and gas, and pharmaceuticals, we have also initiated the expansion of the ethoxylation capacity at the Dahej facility of Unitop. Work on both these expansion projects at Dahej has begun and is moving forward according to the planned schedule. The commissioning of these projects is expected to take place in a phased manner, with completion targeted by Q3 FY 2025. These expansions, with a total outlay of INR 180 crores, is poised to be a major driver for Rossari, contributing significantly to our long-term growth trajectory. To conclude, we believe our journey of improving our revenues at a CAGR of more than 25% between FY 2021 and FY 2024 is a testament to our emphasis on growth. This significant expansion, achieved through a blend of organic and inorganic initiatives, clearly demonstrates our commitment to delivering long-term value to our shareholders. Our focus remains on enhancing this value, supported by our confidence in capitalizing on both current and emerging market opportunities. We thank you for your continuous support and trust in our journey towards sustained growth and success. On this, I would like now request Ketan Ji to share his perspectives. Thank you, Jai Sir, and good evening, everyone. Let me quickly provide you with a brief overview of the financial performance for the quarter ended December 31, 2023. We have reported a healthy quarter, reflecting the resilience of our business models. Revenues from operations have increased significantly by 19% year-on-year to INR 463.8 crores, up from INR 289.3 crores. This healthy top-line growth, following a period marked by the volatile raw material situation in the corresponding quarter last year, showcases our strong recovery and focus on growth. The robust performance of our HPPC division has been the key driver for this growth, registering a notable 31% YoY increase. Substantial contributions have come from specialty surfactants, the phenoxy series, institutional cleaning, and the performance chemicals, all of which we believe hold immense potential for further expansion in the future. Additionally, our animal health division has demonstrated recovery with a 22% increase compared to the last quarter FY 2024. While our textile specialty division faced a slowdown this quarter, largely due to soft demand in the underlying textile industry, we are optimistic about the demand uptick in both domestic and export markets in the next fiscal, which we expect will lead to a positive turnaround for this vertical. The division-wise revenue contribution for this quarter stood at 77% from HPPC, followed by 18% from the textile specialties and 5% from animal health. Our EBITDA for Q3 FY 2024 stood at a high of INR 63.7 crores, marking an 18% increase YoY, with EBITDA margins at 13.7%. This growth in operating profit has been supported by a stable raw material situation, combined with our revenue growth. Additionally, our PAT for the quarter improved significantly by 34% to reach INR 34.4 crores on a YoY basis. Looking forward, we expect to report a continued uptick in profitability, backed by improved capacity utilization levels and various growth initiatives undertaken by us. With a robust balance sheet as our foundation and a disciplined approach to financial management, we believe we are well-positioned to achieve sustained long-term growth in the coming years. Our focus continues to be on adding new products in our chemistry basket, continuously strengthening our R&D capabilities, and increasing our customer and geographical presence. As the macroeconomic environment and the RM situation stabilizes, we remain confident in our capability to deliver healthy performance across all our business segments going forward. Thank you for your continued support and confidence in Rossari. That is all from my side. Now, we would be happy to take any questions that you 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 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 Perewal from Axis Capital. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. My first question, on the new product launches. Ajit, you did mention on our focus on cleaning surfactants, performance chemicals, et cetera. You can drill slightly deeper into it. The reason I am asking this is we have been focusing on launching new products. How has been the ramp-up of the earlier ones and what all remains on the pipeline there over the next two to three years? Thank you, Ankushi. Yes. In the capacity expansions that we are taking up with our focus on these surfactants as well as ingredients, we are actually increasing our ethoxylation capacity almost more than doubling the ethoxylation capacity, because in the last quarter, we had a very robust demand for our surfactants. Apart from that, our phenoxy series sales was also very robust. Although capacity is less utilized in Rossari, we have to go for capacity expansion at both Unitop and Tristar. In Tristar, also we will increase distillation capacity. Some projects in the last quarter that we have discussed, where the esters and the ester quats that we manufacture, we will be focusing on this product because we got good success with the initial introduction of these products, and we intend to increase the capacity manifold here. Two new products have been introduced, the CAPB, that is the Cocamidopropyl betaine, as well as the Cocamide DEA. These two products have been introduced have very good demand, and we are planning to expand capacities there. In the silicone blocks, the block silicone that is a newer technology, in the last two quarters, we established a large number of new products, and now we have increased our capacity for the manufacturing of these blocks also. In the last quarter also, I mentioned about biosurfactants, which is our key focus area, not only for the detergent sector, but also for textile, as well as oil and gas. The biosurfactant capacity was at the pilot scale in the last quarter. We now are establishing a 200 ton plus capacity per annum for these biosurfactants. And in fact, in the silicone surfactants, which we already launched in the last year or in the last season for agro, we are now in the process of launching a few other silicone surfactants, which will go into industries like cosmetics and textiles and in paper, et cetera. In addition to that, we have strengthened our water treatment chemicals range also. We have promoted very aggressively the ceramic chemicals. And we have also introduced a new range of products for coating of pharma tablets. So these are the new focus areas that we are looking at in the future. NMMO, which is an N-methylmorpholine N-oxide, which we tasted success in the last quarter, here again, we are looking at increasing capacities. Apart from that, although textiles had some headwinds in the last quarter, but volume-wise, we have done pretty well in textiles. Although we see a 13% drop in revenues, but we have grown in volumes and a fresh focus on spin finishes. We are looking at spin finishes for textiles and lubricants for yarn and thread. So we have invested in certain specialty equipment and machinery for the silicone wax lubricants for this large part of the market. The newest initiative in textiles is the green chemistry. So we have introduced a concept called RENEWA, R-E-N-E-W-A, which is focused on renewable energy. And we have introduced a range of products for processing in the towel industry. So all in all, our focus on surfactants as well as polymers is very sharp. One other product that we are looking at is also PEG in powder form. We used to manufacture the PEG in flake form. We are putting up capacities for making powders for our PEG products. So that too will add a 5,000 plus ton per annum capacity to our Unitop facility. And lastly, but not the least, the anti-redeposition agents that we were doing so well with, and we cracked for certain multinationals. We are on the cusp of getting approval for another couple of products. And I think in the coming quarters, this product also will give us a lot of traction. And in the oil and gas industry, promotion and product development has begun in earnest. We got the first orders from ONGC, first large order from ONGC, and we expect to do well even in this segment. Sure, sir. Thanks for the elaborate answer there. But just a follow-up. If I could broadly break up these product launches and the initiatives in two or three revenue segments, HPPC, textile, and the animal health and nutrition, what sort of time do you believe it will take for us to see the ramp-up in revenues? For the first nine months, if I see that we are around 9%, 10% up, largely led by HPPC. When can we see a double-digit growth, and what could be the magnitude of this growth with these new launches and overall expansion? I think Ketan can answer this question because we have given him the CapEx justification. Hi, Ankit. Most of the CapEx revenues are going to come up by the end of FY 2025. We will see some things coming up in the last quarter of next year, and then the entire ramp-up will happen in the year FY 2026. We see some of the initiatives that Ajit talked about are going to come up mostly in the last quarter of next year and then the following year. Sure. On the product approval cycle, how much time should one budget for these products? I think most of the approval processes will happen through the year because a lot of piloting work for some of these specific molecules which we are setting up in the CapEx, we will do it through the year before the plants come up. It is not a very long approval process. We should be ready with the approvals prior to the plants getting commissioned. Okay. Great, sir. I will get back to you if I have more questions. Thank you and all the best. Thank you. Thank you. The next question is from the line of Jaynam Gelani from Svan Investments. Please go ahead. Hi, sir. Congratulations for a good set of numbers. I just have two or three questions. Mainly we had guided earlier that we would be growing by 10%-12% in FY 2024, but based on the results, do we think we can surpass that and achieve 20%-25% by any chance? I think we'll still stick to the guidance that we've given. Okay. How much are we spending on the CapEx at Behror? Total spend is about INR 140 crores in the CapEx at Unitop and about INR 50 crores. Sorry, it's about INR 130 crores at Unitop and about INR 50 crores at Behror. Okay. Sir, are we planning any acquisitions in the textile segment or animal health nutrition segment? Nothing as of now. We have nothing on the table that we would like to discuss. Thanks a lot, sir. That is it from my side. Thank you. Thank you. The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead. Good afternoon, sir. Thanks for taking my question. I have a few of them. First, on the HPPC side, the growth looks phenomenally good at 31%, and I believe there was a price decline. Can you help us understand what was the volume growth for the company and HPPC? Another small request, can you give a little more detail in terms of helping us understanding which segment is driving this growth? How much is agri, how much is performance chemical? What is the growth in the Buzil Rossari? I think these are all various segments we have within the HPPC. Can you help us understand what has been the growth in each of these industry and what exactly is driving such a strong growth? That will be my first question. Yes, Sanjesh, the HPPC growth, overall, I think most of it is all volume driven. YoY HPPC volumes have significantly grown by almost 30-35%+. The growth is coming from the specialty surfactants, the non-agro surfactants that we manufacture. That is where the major growth is coming. Second, again, on the phenoxy series products, we have seen a phenomenal uptake in this entire series. Both in domestic and majorly in the export market, we have been able to ramp up these products quite significantly. The other areas of growth have been the performance additives business, which again, it is a smaller base, but it is seeing a fantastic growth in the overall product basket of ours. Of course, as we recognize, the other is the institutional chemicals. These institutional chemicals are also seeing almost doubling of revenues compared to the last year, same quarter. These about four business segments within HPPC have seen the growth driving this to the 31% growth that we are seeing. Most of it is all volume driven. Got it. But within these, which are the segment which is growing above average of HPPC? What is growing faster? I can understand there is a low base as far as performance additives is concerned, but from an absolute growth perspective, which segment is driving a higher incremental revenue for us? I think if you see it in terms of percentage, I think our institutional chemical business has grown the fastest, followed by the surfactants, non-agro. Non-agro specialty surfactants have really picked up a lot. I think that was evident even in the last quarter, when we were almost at peak demand capacities for non-agro ethoxylates. That is what is going to drive the growth. We are seeing that growth coming from these ethoxylates. Sanjeshji, chemistry is ethoxylates, which has grown very well. That is why the expansion both at Tristar and Unitop. Practically, we are using 100% capacity in ethoxylations. When we say specialty surfactants or non-agro surfactants, what exactly the product are we talking? Is this the anti-redeposition are we talking about? No. Surfactants going to home care, personal care. There could be different kinds of surfactants which are like alcohol surfactants, castor surfactants, and there would be phenol surfactants. One exact application are we talking here, is it home and personal care are we talking here? Yes. The home personal care, coatings, inks, agro, paints. All these are areas where they have grown. Can you help us understand more the specialty surfactants? In HPPC category, it is the private label where probably we were using a lot of surfactant. Then I can understand paints, where we were trying to expand in the performance. Apart from this, where exactly the surfactant is these two the key area, because I think rest of the application was largely driven by acrylic polymer. There are a lot of customers in private label, who were not our customers and have become our customers now. These are various industries which ethoxylates, our teams have been able to cross-sell and get more volumes for the ethoxylates. If you remember during the IPO, ethoxylation was supposedly put up in Rossari, then we got the acquisition done, then we did not put up. We are already using a lot of ethoxylates in-house, which we are all consuming now. Exports also, Sanjeshji, has done quite well. Its exports is now nearly 23%, which is the highest ever in our history. This is in spite of prices going down, finished goods price going down because of raw material pricing. Export again, one segment in the U.S. market was food processing. We had surfactants for food processing, we did well. Also, I think home personal care and agro would be top. No, I am still not able to get what exactly is specialty surfactant and what is driving that growth. I will take that offline with you, sir. Second, on the Unitop and Tristar, can you help us, what was the growth in this quarter for Unitop and Tristar? Yes. This quarter, Unitop YoY was almost 25% growth. Tristar was about 5% growth year on year. But we said that phenoxyethanol is doing well. Yes. Because of the pricing decline, the growth is lower in Tristar? Yes. The volumes have gone up, but there are pricing pressures. And of course, as I said, there is a capacity constraint also. Okay. Last quarter and we completely utilized capacity. Now also the capacities are completely utilized. There is a little bit of stagnation in terms of growth. Some of the products we are now shifting into Unitop facilities to manufacture. That is why Unitop is seeing almost 20% to 25% kind of growth. While Tristar being a smaller ethoxylation capacity, it is almost full now. What is the capacity utilization for us in the ethoxylation? Have we completely run out of the capacity in ethoxylates? Yes. This quarter and the last quarter we have almost used. Last quarter, of course, we were 90% plus utilization. This quarter we are about 85% plus utilization. Sanjeshji, also in Tristar, phenol is a key raw material for phenoxyethanol other than ethylene oxide. Phenol prices have come to all-time low. Volume it is doing well. That is good. When is our next ethoxylation facility going to come? Else we would be capped in terms of growth because of ethoxylates not having the capacity. When is our ethoxylation plant expected to commission? We are going into stages. The first, I think in the next five months, we should have the first ramp-up happening now. We are also adding the distillation capacity for Tristar. That also should take four, five months. The next ethoxylation capacity is coming in five months, and how much is that capacity? 20,000 tons. 20,000 tons. 20,000 tons, yeah. On the base of what? What is the current capacity for ethoxylation? 36,000 tons. Oh, so we will be almost expanding close to, or probably more than 50%. Yes. Got it. Next on the overall capacity utilization, where will it be today for us at the Dahej facilities? Sorry? What will be our capacity utilization at Dahej? Dahej, currently, only ethoxylation side at Unitop, we are completely utilized. In our facility we will be above 55%-60% utilization because some of the formulation capacity, we still have headrooms to work on that. Sanjesh, I want to add here, October, we were the highest ethylene oxide consumer for Reliance in India, which is a proud moment, proud month for us. Great, sir. Congratulations on that. I thought the Rossari last quarter itself we were at, what, 55%, 60%, and this quarter it seems that we have grown volume significantly. The utilization sequentially is the volumes have not grown so much. Is that the right understanding? Yeah, because if you see, lot of, as I said, the growth that has come has come from specialty surfactants, ethoxylate series. So in these scales, the capacities are more utilized at the rate of facility and at Tristar. Sanjesh, growth also has come from the institutional hygiene, cleaning, and disinfection side. The Buzil Rossari business, it is growing at a very good speed too. Sorry, sir, I have a request to Pritesh, sir, as well. We would appreciate it if you can give a little bit more detail on the HPPC side on, say, performance chemical, agrochemical, specialty surfactant. That will really help us understand the business better. Because for us now to visualize this HPPC growth, it becomes slightly more complicated because there are so many businesses within the HPPC, right? For us to really appreciate that performance, I would really request for you to re-look at the disclosure, and if you can get a little bit more granularity in HPPC, I think we would really appreciate that. Sure. We will look at it. We actually want the businesses to reach a certain size and then probably we would be able to give a little more granular. But point well taken. I think we are reaching quite significantly, and we will look into it, Sanjesh. That's a point well taken. Great, sir. Thanks, and best of luck for the coming quarters. Thank you, sir. Thank you. Thank you, Sanjesh. Thank you. The next question is from the line of Aditya Chheda from Incred Asset Management. Please go ahead. Yes. Good evening, sir. Congrats on a good set of numbers. My first question is on the gross margins. We have improved sequentially. Do you think there is an element of positive surprise which is still possible on gross margins going ahead? I think this quarter we should be similar in terms of the gross margins. We should be able to maintain this 30% gross margin going forward. Got it. Next was on growth excluding of CapEx. You have highlighted that over the next five months, and then there will be CapEx which will come up in a phased manner. But growth ex of CapEx, you mentioned the plant is operating at 60% utilization. Would you want to sort of reiterate what sort of growth number you are anticipating for the next financial year on the top line? Next financial year, we said that we should do a mid-teen kind of growth. We are aiming at 15% kind of growth on the top line. Sure. For your CapEx, you mentioned that you will take some debt. Can you share some guidance on what kind of debt and interest costs you are looking for going forward? What will be the mix of debt and internal accruals within the number you shared for CapEx? Yeah. We are still working with the banks, but we will do a debt that should be about 70/30, 75/25. That's the kind of mix we are looking at for debt. Got it. Sure. Thank you. That's it from my end. Thank you. We have the next question from the line of Archit Joshi from B&K Securities. Please go ahead. Hi, sir. Good evening, and thanks for the opportunity. Sir, a bit inquisitive on some of the newer projects or more product launches that you were speaking of earlier. Apart of disclosures, maybe even qualitatively, could you categorically kind of mention what is the kind of potential of those industries we are targeting and maybe biosurfactants or the silicones that you spoke of or the water treatment chemical initiatives that we are taking. Is there a potential synergy from existing customers? What is the profiling on that front? What is the kind of value addition we can do? Some qualitative information so that we can understand a bit better on the growth journey that we are reckoning upon. That would be really helpful. So, like I explained or I narrated some of these products that we are planning to introduce, some are at pilot stage and some are already introduced kind of products. Just to give you an example of biosurfactant, which you mentioned. So biosurfactant, the market potential is in different industries. At the current moment, we are targeting the agro business. We will be targeting the agro business, and also we will be targeting our own textile business because in textile, there is a good big need from the ESG point of view for the carbon footprint as well as the biodegradability. So at the current moment, in the biosurfactant, we stand at about 3 tons per month, and we plan to expand it at least 10 times. So that is the plan, and that's the CapEx that we are planning to utilize. If I look at the silicone surfactant, that is primarily being focused on the agro market at the current moment, and we are tripling that capacity, basically. So we feel that there is a good potential, more than 1,000 tons per annum potential in the silicone surfactant market for agro. So we aim to take a share from that market. In addition, we are already ready with products for the other industry. In the silicone surfactant, you just change the molecular weight, or you change the ethoxylation, and you get products for different other industries. So those industries are cosmetics, they are textiles, they will go in coating, et cetera. Interestingly, also, CAPB and CDEA are two big products that we are aiming at, where the quality of the product is very important for the home and personal care industry, especially the color of the product and the smell of the product. So our R&Ds have done a great job, and we have cracked that issue. And I think this product can also give us 1,000 tons plus sale in this year itself. The other esters that I'm talking about, which are the sorbitan esters, these we were actually buying from outside, and they were used for captive consumption in our agro industry. Now that we've successfully manufactured this at Rossari, we will go for a 10 times increase in these esters, which we will stop buying from outside and start producing in-house. Ester quats, they are called as softeners, which go into laundry, and they go into commercial laundry. Sorry, commercial as well as retail laundry, mainly into retail laundry. So which is a large product for us, and it's a great candidate for export. So this product also is targeted. We have targeted many countries with the ester quats as a softener in retail products. Likewise, there are a number of projects. One of them is phenoxypropanol. So at the present moment, we do large quantities of phenoxyethanol, and we have started seeding the market with phenoxypropanol because we have the propoxylation facility at Unitop, and now we've already put up the propoxylation facility at Praisha. So this product it's a next generation antimicrobial which is used in personal care. So that product will also go in a big way in the future. These are some of the examples. Another big example could be the PEG powders. PEG powders, that is polyethylene glycol powders. Right. We will be targeting these products for the pharma industry. There is a high CapEx that we plan for that, and maybe 6 months down the line, we will be ready with this product, the PEG powder. The PEG we already manufacture both in liquid as well as in flake form. But in powder form, this will be the first time that we will attempt it, and it requires some special machinery for the same. I hope that answers, in short, qualitatively exactly what we are trying to do. Sir, definitely. I will probably have some pointed questions. Maybe I can take them offline. Yes. Another question that I had while you were speaking of ethoxylation as a chemistry and the kind of significance that it holds for us, I just wanted to understand the number of products that you manufacture, what is the extent of value addition we do, given that ethylene oxide is something that we buy close to between $1, $1.5 per kg? Because we are a host to multiple products towards multiple industries, as an application area, I do understand that this treatment basically makes other chemicals a bit lesser in terms of their harshness. But in the value chain, what exactly do we do from ethylene oxide from on a $1, $1.5 kg of raw material? What is the extent to which we have our offerings in terms of our product profile? If you can explain a bit from the chemistry angle also, and a bit more on the commercial aspect also. Thank you. Ethylene oxide is one of the components of the ethoxylate. The other is the hydrophobe, which could be various different alcohols or fatty acids, et cetera. The most common ethylene oxide surfactants are made from alcohols, and they are actually from very commodity alcohols like lauryl alcohol or tridecyl alcohol. That is what most people do. But when we use these products in formulations, then we use special alcohols. We do not use the same commodity alcohols there. That actually adds at least 20%-30% in value. To give you an example would be, instead of lauryl alcohol, you do an ethoxylate ethoxylation with a secondary alcohol, or you do ethoxylation with Guerbet alcohol. There are different types of alcohols, different types of branched alcohols, different types of secondary alcohols, as well as other alcohols, which I cannot discuss here. That is one part of it. The other part of it, because Unitop has the facility for both ethoxylation and propoxylation, then we make some special products, where the hydrophobe ethoxylated as well as propoxylated. When we do an ethoxylation and propoxylation, then the properties of the surfactant are enhanced tremendously. The cost or rather the value addition is also excellent. Apart from doing only ethoxylation and propoxylation, we do phosphate esters after the ethoxylate is produced. Again, that adds 20%, 30% to the value. Then we do sulfonation. We make the product cationic. We have capped alcohols. We also have, sorry, capped ethoxylate, and we also have EOPO block copolymers. You could have a EOPO block copolymer, or you could have a EOPO-EO block copolymer. These are all the special surfactants that are produced here, which go for as adjuvants in agro, in textile, in paper, in coating, as well as in paper, cosmetics, et cetera. That is where the value addition comes from. The run-of-the-mill product ethoxylates make. But all these different kinds of additions is what we are doing. One of the latest one is, as I said, silicone surfactant, which very few people do because the reaction is quite a tough reaction, and it contains hydrosilylation also. It consists of hydrosilylation, which is also a very controlled kind of reaction. Therefore, after we do the silicone surfactant, at the present moment, we do silicone blocks. But we can now produce the silicone epoxides because we have the EOPO facility with us. There are various things that we are working on, various things we have already introduced into the market, and various things that we have been using in-house for agro as well as textiles. It is not that we just make the simple ethoxylate and sell. It took some time. It took a year or two before we could use the facility properly. Now we are poised to do a proper value addition, and that is where we see the growth coming from. Right, sir. Thanks for this detailed answer, sir. Just to sum it up, with the run-of-the-mill kind of ethoxylates that you spoke of, even if I sort of discard that from our not discard, just for the sake of calculation, I meant, we can add close to 30% of value. If we are buying, let us say, ethylene oxide at $1.5, maybe we can sell the final product at close to $2, maybe $2.2, something. Absolutely. Got it. You are right. Okay. Got it. Thank you, sir. Thanks a lot. Thank you. The next question is from the line of Ranbir Singh from Nuvama. Please go ahead. Thank you, Abhishek. On margin side, for subsequent quarter gross margin, we are looking to maintain. Any comment on the EBITDA margin? In the opening remarks you mentioned that profitability will improve. That I wanted to understand what is your sustainable level of EBITDA margin and where actually this improvement will come from. This year, I think we should, the Q4 we should be at similar levels in terms of the EBITDA margins, what we have reported in the quarter 3. Going forward, I think we should see the EBITDA margins to be anywhere between 13.67% to 14.12%. So around that range. The growth, as I said, in the revenue will be about mid-teen. We expect the absolute EBITDAs to also go by around the same number as the top line. Okay. Secondly, we have been talking about new vertical of chemistry. Is it silicon? Silicon may be one, but can you give more about the new vertical what we are talking about, considering next 2, 3 years down the line? I don't think we've spoken of any new verticals. These are the four chemistries that we work on. I think we will stick to those, and within those four chemistries, we may keep adding new products and even new molecules. Our core chemistry and the four areas which is ingrained in our understanding, we'll be sticking to that. Okay. This is within four vertical, the new products will be introduced, that's it. Last one, on CapEx side, the INR 50 crore CapEx for Rossari, that is fully spent now. All CapEx has been fully spent. All of them are work in progress. They will come on stream in a phased manner over this year. Okay. How much has been spent so far on Rossari? We just started. We announced it in the last quarter. It is just the initial work that has started. The project work has started. Some advances have been paid. It is not very significant to currently talk about. We will have the major spend now happening in this quarter and the quarter one. Okay. What kind of asset turn we are looking at, both at Unitop and Rossari for a new CapEx? Asset turn will be in line with our current. We will be at between four to five, depending on the molecule, but average will be around four to five. Okay. Thank you. Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking Limited. Please go ahead. Yeah. Thanks for the opportunity and congrats on a good set of numbers. First question is on the exports front. You mentioned that exports are about 23%. I hope it is for the first nine months. If you can just give us what could be the breakup of the exports in terms of HPPC, TSC and AHN. Over the next maybe three to four years, how do we look at the exports opportunity from, say, 23% to maybe 30%, 35%, 40%? Which are the segments which will drive these exports? Thank you. You talked about the breakup of exports. I think it is quite evenly spread amongst all the three verticals. But it is about 23%, 24% in HPPC. Textile is about 16%, 17%, and AHN is also about 20%. That is how in the nine- Good. Nine months. No, of its own turnover. Of its own turnover. Of own turnover. of its own turnover. Good. That's how the average comes to about 23%. Right. How do you look at the overall exports in terms of maybe 3-5 years from 23%, and which in all segments that will drive this growth? We believe that the export turnover should grow by a higher percentage than the domestic turnover. If we are talking about the total turnover of 10%-12%, then exports should grow at 12%-14%, and domestic should grow at 10%. That is what is our forecast, generally. Sure. The second question is in terms of any write-offs that we have taken during the last nine months. The reason for asking the question is that on TSC front, we have multiple numbers of SKUs, even in HPPC. Since the demand has been lackluster, there could be expiry for those products which are more than two years, two and a half years. So any write-offs that we have taken during the first nine months and any write-offs that we may expect in this quarter or in near future. Thank you. Rohit, there is no write-off with respect to expiry of goods. Even in textile, our volumes have been intact. The raw material prices have fallen and as I said, chemical prices have fallen. We do not have a slackening of demand in textile compared to previous quarters. We remain steady. We emphasize again, there is no write-off on expiry. This is not the case normally in specialty chemicals. It may be in pharma, but not in specialty chemicals. Sure. That's all from my side. Thanks and best of luck, sir. Thank you. Thank you, Rohit. Thank you. The next question is from the line of Ajay Surya from Nivesha. Please go ahead. Congratulations on the good set of numbers. Sir, my question is regarding, sir, despite being the last- Sir, the line for you is not very clear. Request you to please use the handset. Is it better now? Slightly better, sir. Please go ahead. Yeah. So sir, we have struggled with our textile division performance. Can you just throw some light onto what has been the challenges that we are facing? Is it the imports that are rising or is it the domestic competition that has been fierce? Maybe you can just throw some light on that, as in just the demand or the imports or the domestic competition. Textile chemicals, we don't see any big imports coming into India. The demand is not so strong. What had happened is in COVID, there was a big demand because American consumers were given extra money by the government, and the focus was on hygiene and hence there was a lot of disposable taking place every month, and they were buying a lot of towels and bed sheets and linens. That has slackened off. Because of supply chain in the year 2021, 2022, there was huge overstocking. This overstocking is now gradually coming online. We see some demand slackening, and that is why the outlook is not very bullish. Our aggression maintains our volumes. Exports we feel could grow especially in Bangladesh and other areas. So sir, you mean to say that in the textile chemicals, imports is not a major portion. Is that correct? Yes. I reiterate there is no big textile chemicals imports coming into India. Sir, my next question is again on the textile chemicals. Sir, as I look at the textile chemicals value chain between pretreatment, dyeing, or even the finishing chemicals. Sir, where is Rossari dominantly present? Is it more on the pretreatment side or is it on the finishing chemical side? If you can just also provide information on what sort of realization and margin difference do we see across each of them? Would a pretreatment be anywhere between 10%-12% kind of margins or even better? What sort of margins do we gather from the market for the finishing chemical? Traditionally for us, finishing has been the strongest area because we have backward integrated into raw materials because we manufacture the silicone fluids, the silicone blocks ourselves. We have traditionally focused. But now with the coming of Unica where we manufacture only phosphates, this year has been the focus to grow also the pretreatment and the dyeing segment. We do not calculate margins segment wise. But we feel the same gross margins will be there across all the sub-segments in textiles as well. Got it, sir. My last question is, are we expanding on the textile chemical front? How is the U.K. FTA going to benefit the overall textile chemicals market? Just last question on this. U.K. FTA. See, in the textile market, like in the opening question, I replied that we are refocusing on these few areas. One of them is spin finishes. The spin finishes are products which go into the textile before it is spun into a yarn or before it is spun into a fabric or woven into a fabric. Similarly, we have taken up development of lubricants both for yarn as well as thread. When I mean lubricants, these are silicone plus wax lubricants. These are special products which require high-value equipment. We have earmarked some CapEx for this equipment in this year. Pilot batches have been successful, and I think in the next three to four months this product line should be launched in the country. Apart from this, we have also introduced the full coating range for technical textiles. In technical textiles, it requires a lot of different kinds of acrylic coating, soft coating, medium hard coating, or hard coating for various applications in technical textiles, geotextiles, et cetera. This coating range with our expertise in acrylic chemistry, we have launched this product range. One new idea that we are trying to get into the textile is waterless dyeing. That means using less water for dyeing, looking at the ESG and environment. We have been trying to focus on this concept. And finally, as I said, RENEWA, R-E-N-E-W-A. That is RENEWA is for renewable energy. We are focusing on a processing sequence or a processing method to process towels or terry towel specifically with a completely green chemistry. That means from the pretreatment, which will not be with surfactants, but it will be with enzymes which we call as bioscouring, desizing. Then we will be using sequestrants, which are bio-sequestrants. Apart from that, we will be using biosurfactants for wetting and scouring in all these operations. The softener will be based on a biocarbon which is greater than 25%, as well as with very low cyclic D4 and D5. That is the siloxane. And we are also going to use vegetable oil softeners for this process. So textiles is a very strong focus. And the Esterquat that we launched that is not from animal origin, it is from vegetable origin, and this can be a large product for Rossari, not only in India in the retail market, but also worldwide. We have got very good success in some countries, and we are pushing hard with the Esterquat which is vegetable based. Got it, sir. All the very best for the future. Thank you. Thank you. The next question is from the line of Parth Mehta from Vallum Capital. Please go ahead. Yes, sir. Am I audible? Yes. Please go ahead. First of all, congratulations on good set of numbers. I just have one question on our utilization. So what would be our total utilization, all capacities included? You mean utilization, you said? Utilization. Capacity utilization. Sorry, I am not clear. All capacity utilization. Overall, like we said, our overall ethoxylation capacities are completely utilized now. Okay. Yeah. Last quarter we were at 90%. Ethoxylation, in terms of tonnage, what would be the capacity of ethoxylation? It is 36,000 tons. Okay. And the balance? What I wanted to know in terms of our Unitop and Tristar, and the heat, I am clear, sir. Can you come back again? Your voice is not clear. Hello. Is it audible? Yes. Yeah. I wanted to know on a total capacity of 352,000, what would be our utilization? Or if you can also help me with the volume numbers. Either of it will be fine. On the overall, our capacity utilization, as I said, is about 55% odd. But capacity consists of formulation capacity, ethoxylation capacity. The ethoxylation capacities are fully utilized. Formulation capacities generally will always be in the range of 60%-70% kind of utilization. They will never go beyond that, and then there are some reaction capacities also which are used. Okay. So right now, on total basis, it will be around 50%-60%. And what would be the peak utilization that you can go on total basis? As I said, ethoxylation, we are fully utilized. Formulation, we can go up to 60%-70%. So if you take an average, our max utilization would come to about 65%-70% at a peak level. Okay, peak level would be 65%. We are almost near to our peak. Yes, absolutely. Okay. Thank you, sir. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Okay. 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 our 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 great day. Thank you. On behalf of Rossari Biotech Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.