Ladies and gentlemen, good day and welcome to the Rossari Biotech Limited Q2 and H1 FY 2027 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Edward Menezes, promoter and Executive Chairman, Rossari Biotech Limited. Thank you, and over to you, sir. Edward, sir, please go ahead. You are not audible.
Can you hear me now?
Yes, sir.
Hello. Thank you, and good evening, and a very warm welcome to all of you joining us for the Q2 and H1 FY 2027 earnings call of Rossari Biotech Limited. We are pleased to have you on this call to discuss our operational and financial performance. I am joined today by Mr. Sunil Chari, promoter and managing director, and Mr. Ketan Sablok, Group Chief Financial Officer, and the SGA team, our investor relations advisor. I hope you had the opportunity to go through our financial results and investor presentation, which are available on the stock exchanges as well as our company's website. We concluded the first half of FY 2027 on a very strong note. The Q2 FY 2027 revenue grew by 19% year-on-year to INR 698 crore and EBITDA grew by 21% year-on-year to INR 87 crore, marking our highest ever quarterly revenue and EBITDA.
The growth was broad-based, with all three of our business divisions contributing. The external environment during the quarter continued to remain dynamic. Raw material prices stayed volatile. The ongoing geopolitical situation in the Middle East kept pressure on freight and logistics, and customers across several end user industries remained cautious in their buying behavior. Despite these headwinds, we delivered a gross margin of 31.6% and EBITDA margin of 12.5% in Q2 FY 2027. Innovation remains central to our long-term strategy. Our new Rossari Global Research and Innovation Center at Navi Mumbai is steadily ramping up and is helping us shorten the journey from idea to commercial scale. Having launched over 70 new products in FY 2026, our pipeline continues to strengthen with a sharper focus on intelligent, sustainable, and application-led chemistry such as biosurfactants, personal care ingredients, pharma excipients, agro formulations, and solutions for the oil and gas industry.
Looking ahead, our priorities for the remainder of FY 2027 are clear. Drive optimum utilization of the capacity we have built, accelerate the commercialization of new products, and further improve operational efficiency. Supported by strong R&D capabilities and a healthy balance sheet, we remain confident of delivering sustainable and profitable growth in medium to long term. With this, I now invite Mr. Sunil Chari to share his perspective on the business performance and our strategic priorities.
Thank you, Edward, sir, and a warm namaste to everyone. The first half of financial year 2027 has been a period of steady execution for Rossari. Each of the last two quarters, we have delivered revenue of close to INR 700 crore, compared with an average of around INR 565 crore per quarter in the first half of last year. We have achieved this scale despite raw material volatility, geopolitical uncertainty, and a cautious demand environment, and it reflects the strength of our diversified portfolio, our long-standing customer relationships, and the focused execution by our teams. We remain committed to continuing discussion and engagement with our customers to deliver tailored solutions according to business requirements. During the first half of FY 2027, HPPC, textile specialty chemicals, and Animal Health and Nutrition grew by 24%, 24%, and 19% respectively.
This growth has been driven by a higher share of value-added products and by increasing our wallet share with customers across end user industries. On the export front, we continue to target new customers in both new and existing geographies across Southeast Asia, Bangladesh, Turkey, Latin America, and Africa, and increase our wallet share with existing partners. Our new blending facility in Thailand is ramping up steadily. It is helping us serve customers in Southeast Asia with customized formulations, faster turnaround times, and lower exposure to freight volatility. I am pleased to share an important update on our Saudi Arabia initiative. The board has approved the leasing of land to Rossari International Limited Company, our wholly-owned subsidiary, for setting up a greenfield manufacturing facility in the Kingdom of Saudi Arabia.
This builds on the in-principle approval granted by the board earlier and is a key stepping stone in Rossari's international growth journey. The project will improve our access to key raw materials through a strong petrochemical ecosystem and brings us closer to regional and international demand centers, including the specialized opportunities in the Middle East oil and gas sector. From a long-term perspective, this facility will help us serve and align with emerging industrial requirements in these markets. We would like to share the key details of the project once they are finalized. As I mentioned earlier, our margins are yet to reach their full potential, and we are actively working on various cost optimization measures to improve them. Our strategic initiatives like monetization of non-core assets, rationalization of lower margin businesses, and improvement in product mix are progressing in the right direction.
We will continue to sharpen our focus on the core B2B business, and we expect these initiatives to start affecting our overall performance over the medium term. Overall, we remain very confident about our prospects. Our scale, improving capacity utilization, a strong product pipeline, and an expanding international presence are the building blocks of a more scalable and resilient Rossari. Our priorities remain centered on disciplined execution, margin improvement, and stronger returns on our existing asset base. Thank you once again for your continued support, and I now invite Ketan to take you through the financial highlights.
Thank you, Mr. Chari, and good evening, everyone. Let me take you through the financial highlights for the quarter and for the half year ended September 30th, 2026. For the quarter ended FY 2027, our revenue from operations stood at INR 697.6 crore, which was a growth of 19% year-over-year over INR 586.1 crore in Q2 FY 2026. This marks our highest ever quarterly revenue. Gross profit also grew by 19% year-over-year to INR 220.3 crore and by 6.7% on a quarter-on-quarter basis.
Gross margin stood at 31.6%, in line with the Q2 FY 2026 and around 200 basis points higher than 29.6% we reported in quarter one. This sequential improvement was driven by a better product mix. The EBITDA grew by 21% year-over-year to INR 87 crore, our highest ever quarterly EBITDA. The EBITDA margin stood at 12.5% compared to 12.3% in Q2 FY 2026 and 11.6% in Q1 FY 2027. An improvement of 91 basis points sequentially.
Employee costs grew by 15% year-over-year and other expenses by 19%, reflecting our continued investment in people, new geographies, the Thailand facility, and our newly set up R&D center. Profit after tax grew by 5.5% year-over-year and 11% quarter-over-quarter to INR 38.9 crore, and the diluted EPS for the quarter was at 7.02. Coming to the divisional performance, the HPPC revenue grew by 18% year-over-year to INR 541.9 crore in Q2 FY 2027, and by 20% to INR 1095.1 crore in H1 FY 2027. The growth was led by value-added products in personal care, agro surfactants, adjuvants, and other oil and gas solutions. On the other hand, constrained ethylene oxide availability continued to limit ethoxylate volume and cautious customer ordering kept HPPC revenues broadly stable on a sequential basis.
In the textile chemical side, the revenue grew by 26% year-over-year to INR 120.8 crore in Q2 FY 2027 and by 24% to INR 226.9 crore in H1 FY 2027. Sequentially, textile specialties grew by around 14%. This was driven by our export markets, including Bangladesh, Southeast Asia, Turkey, and Latin America, and also contributions from our Thailand facility. The new fiber chemical division and a higher share of silicone-based and sustainable auxiliaries added to these higher revenues. The Animal Health and Nutrition revenue grew by 11% year-over-year to INR 34.8 crore in Q2 FY 2027. From H1 FY 2027, AHN grew by 19% to INR 72.8 crore. The growth was supported by the vitamin premix plant, trace minerals, and our enzyme and probiotic portfolio.
Excluding the institutional and B2C business, our core B2B business delivered a revenue of INR 619.9 crore in Q2 FY 2027, registering a growth of 21% year-over-year. The core B2B EBITDA also grew by 15% year-over-year to INR 87.2 crore and an EBITDA margin of 14.1%, compared to 14.8% in Q2 of FY 2026 and 13.5% in Q1 FY 2027. The year-over-year moderation in margin reflects the raw material and trade environment and our ongoing investment in seeding some new businesses and geographies. Our institutional and B2C business reported a revenue of INR 77.7 crore in Q2, a growth of 3% year-over-year. More importantly, profitability improved significantly. This business reported a positive EBITDA of INR 0.2 crore, compared with an EBITDA loss of INR 3.7 crore in Q2 FY 2026. This improvement reflects our calibrated steps on portfolio rationalization, product mix, and cost discipline.
We will continue to focus on improving the quality of revenues across these segments. On the balance sheet side, our balance sheet remains healthy with strong liquidity and comfortable leverage. Gross borrowings reduced by around INR 46 crore during the first half to INR 361.8 crore. Net debt stood at INR 221 crore compared to INR 248 crore in June 2026 and INR 281 crore in March 2026.
Our net debt- to- equity ratio stood at 0.16. Working capital days saw significant improvement and reached 86 days in Q2 FY 2027 from 97 days at the end of FY 2026. Our priorities going forward remain optimum asset utilization, operating leverage, and a better product mix, along with working capital efficiency and strong cash flows. Together with a prudent approach to capital allocation, this should further strengthen the balance sheet. That is all from my side. We can now open the floor for questions.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from 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 comes from the line of Maitri Shah with Sapphire Capital. Please go ahead.
Yeah, hello. Good afternoon. Am i audible?
Yes, Maitri.
Hello. Yeah. Just a couple of questions from my side. Firstly, this quarter, we have seen exports contributing close to 31%, and this proportion has been increasing quarter-over-quarter. Where do you see the contribution coming from? What are the segments that are driving this growth coming in from the export side? Maybe 2 years from now, how do you see the proportion from this business kind of increasing and ramping up?
Yeah. Thank you, Maitri. Yes, we've been able to accelerate our export revenues now for the last few quarters. This quarter was especially a very strong quarter for us on the export side. Primarily, the exports were driven both in the HPPC and in the textile segments. With textile, we've been talking for some time now of the Thailand facility coming in. I think that also played a good role this time for the textile exports to grow. Within that, we've also looked at a lot of new geographies, especially in Southeast Asia, in the African continent, and now we've also looked at new areas in the Latin American space. That is helping the textile register a good growth on the export side. Primarily, HPPC continues to show a strong export push.
In fact, in this growth that we've seen of almost 34% in the export revenue year-over-year, and almost 35% quarter-on-quarter, the major contributors are HPPC and the textile business. I think going forward, as you asked, we expect this trend to continue. While we may not see, I cannot really now tell you about this kind of growth coming every quarter. But definitely our target is that exports should slowly become a larger portion of our overall revenue. We've already hit 27%, if you see, on a H1 basis. This quarter, we were at 31% of our overall revenue. Our first target, I think by the end of this year should be that at least 30%+ of our revenue should come from export. We've been working towards that, and I think now the numbers are quite visible in this quarter at least.
Okay. That's great to hear. On the HPPC side, on the export business, are we seeing growth coming in from more higher value products? With the oil and gas contributing more, and what sort of margin differential you are seeing on the export sales and on the sales in the domestic markets, if you can. Just some color on that.
Hello, this is Sunil Chari. Good evening. As you see, our export and our B2B EBITDA margins are increasing every quarter now. This quarter, our EBITDA margins for the B2B business was 14.1%. The focus has been on a very prudent product mix, where higher margin products are being sold in the export but also in the domestic market. We have had a rationalization by tail cutting. Tail cutting means with the bottom 5% of the products who have the least margins are cut off from the tail, and we stop producing or selling those products. This focus on product mix optimization has helped us get better gross margins and also EBITDA margins. I do not have the exact details of what is sold in the last quarter in terms of products. But the higher gross margins and higher EBITDA is a proof of the same.
Got it. We also mentioned we've taken a lot of portfolio rationalization on the B2C and institutional business, and currently we are at kind of EBITDA break-even margins. Going forward to the next two quarters, do you expect this business to turn a bit EBITDA positive? Also, what plan do we have for the B2C business? We were planning on kind of having a sale of that business. Just some color on that as well.
Yeah. So maybe this quarter, I think after many quarters, we saw this B2C business breaking even. I think we've done a lot of portfolio rationalization. A lot of the low margin products we've not really gone at in a very big way to promote. That's also visible in the fact that the B2C revenue has not grown to a large extent. Our aim now is to make this business profitable, even if they. So two-pronged approach we are doing. One, as I said, we are looking at higher margin products in this as well as some sort of a cost restructuring, cost optimization activities which have also been started internally. So our aim is that at least in the next two quarters, at least H2 should also be an EBITDA positive H2 second half for us.
Overall, on a full year basis, we should at least break even in this business because the first quarter we had a loss. Our plans for this business is we still are on that plan of moving out of this B2C business. We'll do that as we had said last year also, at an appropriate time and at an appropriate value. So till we reach that point, I think our aim is that we should still run this business on a positive note, and that's what we are doing. But our overall plan still remains to move out of the non-core businesses that we have.
Got it. Just lastly, on the oil and gas business that we have in the HPPC segment, any sort of outlook you have? Where are the sales coming from? Which regions are we targeting? Are we targeting the U.S. as well? Because I think the oil and gas kind of segment is growing a lot over there right now. So yeah, just some color on the oil and gas business in the specialty chem. Yeah.
As you know, we have been talking about oil and gas business. Primarily our focus is now the India market and the Middle Eastern market, but also Kazakhstan, Turkmenistan, Uzbekistan, on those belts. U.S. we have distributors who sell into the oil and gas industry, but we do not have exact figures segment-wise on what they are selling into. But where we sell it is basically India, Middle East, and the East European part of the world.
Got it. Thank you so much. I will join back in. Thank you.
Thank you.
The next question comes from the line of Gagan Dixit with Emkay Global. Please go ahead.
Yeah. Thanks for taking my question, sir. First, my question is about the capex ramp-up. Around 50,000 ton of the new ethoxylation capex is now built, sir. What utilization do you expect in FY 2028 and FY 2029? What peak revenue does that support, or is it the same 4x asset turnover still holds, sir?
As we had said earlier, the peak utilization will happen about two years post these assets coming into commissioning. Probably we will have the peak utilization targets by end of FY 2028. We still stick to the target of 3x of the CapEx value to be the peak sales revenue.
And sir, is this a constraint in the EO supply on consumer demand for that currently? How much is the additional ethylene oxide that you secured from the Reliance expansion, sir?
Namaste. This is Sunil Chari. Last quarter, we had the constraint on EO supply from our supplier, which is Reliance. We are hoping that this quarter we should not have the EO constraints. The new expansion will come up in two quarters, three quarters, and as soon as it comes, we should get a higher allocation than the current ones. We do not have any confirmation from Reliance on how much quantity will be allotted to us.
About the margin mix, sir. If I see over the next one or two years, what is the share of the revenue do you expect from the value-added product business lines like pharma, oil gas, personal ingredients, versus the commodity ethoxylates? What is the typical margin premium these new businesses carry?
As you would have seen on each presentation which we uploaded, we have got the EXCIPACT registration for our Unitop plant. This allows our surfactants, which are excipients in the pharma industry, to be exported without any audits from the customers. This also reduces a lot of audits and costs for the customers, but also for us. The pharma approvals take close to six months to two years, depending on the customer geography. We are gradually ramping up the pharma exports. Last year it was about INR 50 crore with pharma exports, and this year we are confident that we'll have a very good growth in the pharma segment. Our exports in pharma also are picking up every quarter. We see pharma, food, aroma as new lines where we want to focus on higher margin products.
Going forward we would continue to focus on higher gross margin products than lower margins for all new products which we are launching.
My final question is about the cash allocation, sir. Over the next two to three years, how much will the free cash will be split between the debt reduction and Saudi Arabia? I think debt free also removes infinite amounts of annual interest. That's something how you want to go with it, sir.
Our first priority now with the cash flow would be to reduce the debt. That is what we have been doing in the last two quarters. I think now with most of the CapEx spend done, we will have some more spends in this year, but not to the extent that we have already done. Going forward, our CapEx spend in India will be significantly low and most of it will be in KSA once the project, et cetera, is finalized. We also hope that by that time we will have some of these non-core businesses also sold. We expect that a lot of these cash flows which will come in both from exiting the non-core business and the cash generated from the current operations.
Firstly, we will go into debt reduction and parallelly, depending on how the Saudi project timeline is coming, we will also put in money there. Of course, Saudi project will have equity and a mix of debt also, but that we will work that out once we have more understanding of the size of the CapEx and the timelines. Currently, all cash flows will go into debt reduction.
Yeah. That is all my answers. Thanks for the elaborate answers, sir. Thanks.
Thank you.
The next question comes from the line of Nitesh Dutt with Anand Rathi Institutional Equities. Please go ahead.
Hi, team. Good evening. My first question is on the core B2B EBITDA margin that was at about 14.1% versus 14.8% year-on-year. That's even on a 21% revenue growth. So 20 basis points consolidated margin improvement came entirely from the institutional or the B2C swing. Without that swing, the consolidated margin would have been about 11.9%, if I'm not wrong. Could you please give some color on what compressed the core margin year-on-year and how to get back above 15% there?
Vishal?
Sure.
No.
No problem.
I have not understood your arithmetic, Nitesh. Can you just repeat your question?
So year-on-year, sir, if we look at the core EBITDA margin, that is at about 14.1% versus 14.8%. Right? And the consolidated 20 basis points improvement that is coming through is largely because of the B2C swing when that came about. Where you ended positive on your B2C on the institutional business. So without that swing, the consolid margin would have been 11.9%. Am I clear, sir? Hello?
Without the B2C business, our EBITDA margins are at 14.1%. Right?
No, I am talking about the consolid margin would have been lower. In any case, the question is that, what has compressed the core margin year-on-year, despite the revenue growth at B2C, and what steps are we taking, or what is our outlook on how to get it back above the 15% indicated numbers?
So, I really have not understood your working, so maybe we can connect later. But on the EBITDA margin, which you see year-on-year, we are down from 14.8%- 14.1%. The expenses on freight has significantly impacted in the current year. Even though our exports have grown significantly, the freight costs have almost doubled, tripled over what they were in the first half of last year or Q2 of last year. That has significantly impacted our EBITDA margin. And also, apart from this, raw material prices, especially prices of some of our core raw materials like phenol and all, have gone up significantly over what they were last year. While we have been able to pass on most of these increases, the freight element still remains a challenge for us. And not all customers are really ready to absorb the entire freight increase.
There is an understanding how much we will absorb, how much we will be able to pass on. But overall, we are, I think still working on this freight element, but otherwise I think the business in terms of growth, in terms of volumes, has shown a significant improvement over what we had done last year.
Does that answer your question, Nitesh?
Yeah. Okay. Can you also help us with the volume growth for Q2 segment-wise?
Yes, we do not give the splits specifically, but most of the growth that you have seen has all come out of volume because a lot of the prices have softened. With the raw material prices in the early part of Q2 had come down, so we had to also reduce prices of some of our products. So this growth that we have seen in the second quarter, most of it is a volume-driven growth.
All right. Sir, just one last small on the AHN bit. There the growth rates have come off. Is it like a seasonal or customer specific thing or if you could just help clarify that?
Yeah, that is true. Generally, the second quarter is the weakest for the AHN division. The third and fourth quarters will peak. Even with this low season, we have done pretty well, clocking about INR 27 odd crore. The next two quarters are going to be the peak season for animal health.
Okay. Sir, just one last, if I may. Sorry. Can you help us with the blended utilization numbers on the total capacity and specifically for the Dahej part too, and Unitop phase one ethoxylation?
Yeah. On a blended level, the capacity utilizations are at about close to 60%. The new ethoxylation facility that has come up earlier this year or late last year, I would say, is currently at about 30% utilization. We are slowly ramping that up. Hopefully, we expect by the next year, with the Reliance capacities also coming in and the flows of EO also increasing by probably Q2 or Q3 of next year, we should have a healthy utilization of the new ethoxylation facility also.
All right, sir. Thank you so much. I wish you the best for the coming quarters.
Thank you. The next question comes from the line of Hemkesh Khattar with Green Portfolio. Please go ahead.
Hello, sir. Thank you for taking my question. My first question was regarding the new upcoming plant in Saudi Arabia. Is there any timeline that the management is targeting that by this particular financial year, we are targeting to start commercial operations? Or we are still in the outline phase, so there's no set timeline for this?
Yeah. For the KSA project, if you see, we are taking a step-by-step approach. We first taken an approval from the board to start exploring the initiatives of Saudi. We did that for the last 8- 12 months, and we've zeroed down on the strategy for Saudi in terms of the plan, the area, the potential feedstock suppliers, et cetera. And we've been talking to all the relevant authorities there in terms of the process approval and how we can take the project forward. And now in this quarter, we have taken again, an in-principle approval from the board for leasing out land in KSA for the project.
Currently, a piece of parcel of land was offered to us and we have decided to go ahead and lease it and probably will do some initial activities like fencing, boundary wall, et cetera, in the next few months. Finally, we are, as I said, in discussions with potential suppliers of feedstock and parallelly internally working also on the overall product, the CapEx, the market size both domestic marketing, KSA, and the export markets in GCC, Europe, et cetera. So those activities are finally going on.
Once we have the entire blueprint on paper and the financial for the project done, we will go back to the board to seek approval for the next step to go ahead and that is when we will be able to give a little more color and light in terms of the timelines, the cost and what exactly we are going to do in KSA. As of now, whatever we have done, we have talked about it, the land, et cetera. The next steps, once they get firmed up, we will come back and talk about that.
Okay.
Hopefully some of these developments will happen over the next 8- 12 months.
Understood, sir. Thank you. Sir, next question was regarding the core B2B business. We have seen steady margins of around 14% for this business for the last, I would say 2.5 years now. In the earlier call also you mentioned that the aroma business and pharma business you are targeting and ramping up as they offer higher gross margins for you. So in the core B2B business, what kind of margins are you expecting going forward like FY 2027, FY 2028 and 2029?
I think as we have talked about in this quarter, the initiatives of pharma we are now taking that up, taking it forward. We had this audit which we have cleared. These things, especially these businesses in pharma, et cetera as Mr. Sunil Chari said, takes a little time in terms of approval and all. We are in that process. Hopefully we will get the approvals now going over the next couple of quarters. Then yes, as I said, as these segments like pharma, aroma start becoming a significant part of the overall business, we should see steady gross margin improvement going forward. I think we are still a couple of quarters away from seeing some significant contributions from these businesses. But we are already online to expand the scope that we have in both pharma and the aroma space.
Sir, you talked about audits. Were these audits customer related or certification from regulatory bodies?
Regulatory, we explained that EXCIPACT we already have the approval, the registration which does not require frequent customer audits. But customers do stability studies in pharma and in overseas customers the time taken is more also in MNC customers in India, the time taken is more for stability studies. For example, if it is a cough syrup where polyethylene glycol 400 will go or a laxative where polyethylene glycol 3350 will go. They will make samples, do stability studies, do some trials and then go slowly. Ramp up in pharma is always slow but it's steady and doesn't go back. Once you get into the customer, the customer does not throw you out fast. Price and all are not the key criteria for changeover in a pharma side of excipient.
Understood, sir. Safe to assume that pharma and basically the capacity expansion of ethoxylate are the two growth drivers until the KSA plant comes, right?
Yes.
Okay. Thank you so much.
The next question comes from the line of Rohit Nagraj with 360 ONE Capital. Please go ahead.
Thanks for the opportunity, and congrats on good set of numbers. Sir, first question is, probably I missed a comment on ethylene oxide. How are we placed in terms of incremental ethylene oxide availability? When is it that we will now likely to
I am sorry to interrupt, Rohit. You are not audible. Your voice is breaking. Could you please change your location and ask your question on the handset mode, please, in case if you are using hands-free.
Yeah, I'll just Hello. Yeah. Am I audible now?
Yes, please go ahead.
Yeah, thanks. The first question is in terms of EO availability for our incremental ethoxylation capacity. So how are we placed for that, and what is the latest timeline that is suggested by Reliance in terms of the EO project commissioning from their side? Thank you.
Hello.
Hello.
Hi, Rohit. Are you able to hear me?
Yes, sir. Yes, I can hear you.
Yeah. We are expecting in the first quarter of next financial year for the Reliance expansion to kick in, and we should get higher amount of EO allocation from the first quarter. Yeah. Thank you.
Yeah. In time, how are we secured in terms of the incremental availability of EO for our volume growth?
At this moment, there is no confirmation on what is the incremental quantities, and hopefully in the next couple of months we should get a confirmation.
Got it, sir. Second question is on the exports front. Which particular user segments have we seen that the growth on the HPPC part is coming? Is it only driven from HPPC or has textile chemicals also taken some part in terms of the exports growth? Thank you.
We saw broad-based growth in the export side. Within the HPPC, I think personal care was one of the key drivers, if you compare it on a year-over-year basis. Then also some of the new segments like oil and gas also saw some traction in this quarter. Because not only HPPC, the export numbers in textiles were also pretty strong in this quarter. So Q1, if you see, almost the textile export revenue grew by, year-over-year, if you see, the textile export revenue grew by about 51%, which was quite heartening because these were the efforts which we have taken over the last few quarters in terms of seeding some of these new geographies like Latin America and Southeast Asia, some of the African countries also. So some traction we saw in this quarter.
Also the Thailand setup which we have put, that has also started playing a role in moving up these exports, especially in textile. So majorly HPPC, which continues to be the main driver, but also textile has shown a significant improvement on the export side.
Sure. Thanks. I will just squeeze in last one. In terms of the current CapEx projects, which are in CWIP and in progress. What are the projects and when are these projects likely to get completed? The context is that once, I think, these projects are completed, our focus will shift to the KSA investment. From that context, just wanted to know how much CapEx is remaining, which is currently under progress and across what verticals. Thank you.
Yeah. I think most of these projects will close by the end of this year. That is what the current plan is. Going forward, I think over the next year at least, we will not have any significant CapEx spend. Then we will of course, look at Rossari International Limited Company which will be the new area. On this CapEx side, some of the expense will happen on the pharma business, the aroma where we have, in both these places we have done some piloting, so we will start now setting up some more higher capacity setup. Some of that are in CWIP and some more spends will happen. Also we are doing some new initiatives on the hydrogenation side, so that will also come up during this year. Yeah.
These are basically some of the new initiatives that are going to come up, and hopefully most of these will happen during this year itself. We should not have any major spillover going into the next year.
Sure. Thanks for answering all the questions. All the best, sir. Thank you.
Thank you.
The next question comes from the line of Saket Kapoor with Kapoor & Company. Please go ahead.
Yes, sir. Namaskar, sir. Thank you for the opportunity. Hope I'm audible.
Hello.
Yeah. Thank you.
Yes.
Yes, sir. Just in continuation to the other participant, the capital work in progress is, I think, closer to INR 150 crore. So what kind of capacity augmentation would be penciling in post the commissioning of the same or the capitalization of the same towards the end of the year?
I think we will have another about between INR 50 crore-INR 70 crore, INR 75 crore of spend that will happen in the second half. Then I think nothing beyond that.
Sir, my question was, we have the closing balance of closer to, I think, 150 crore as on 30 September.
Yeah.
INR 156 crore. Post commissioning or the capitalization of the same, what would be the additional capacity added or where are we going to add the capacity? As you mentioned, that we will be spending another INR 75 crore, so we will be having closer to INR 225 crore for this year as a whole, or? Please correct me on the numbers.
Yeah. On the spend side, it will be about INR 50 crore. Yeah, so total capitalization will be to that extent. These are, as I said, some of the new initiatives that we are doing. So we have spends on the pharma side, on the aroma chemicals. There are projects we are doing on hydrogenation, and there are some expansions which we are doing in the biosurfactant space also. So that is a new initiative that we spent a good amount last year also, and we have seen some good results, and we are now again planning to do an expansion on that front also. So those will happen across all these segments.
That point is correct, sir. Can you give a number on the volume side or any understanding on the same, sir?
No, currently I will not be able to give you any volumes. Let these projects come on stream, then we will share these numbers.
Okay. Sir, when we look at our H1 EBITDA, I think that is INR 167 crore and the top line at INR 1,400, that 20% growth over the last year. Taking into account the initiatives and the type of inroads that we have in terms of the newer products or the higher margin products getting the higher share, what should the likelihood of H2 shaping up in terms of the EBITDA margin trajectory, sir? Any color you can share with us?
Yeah. I think this year we will be at similar kind of EBITDAs of around 12% ± . That is what for this year is our take. As I said, some of these initiatives are still work in progress. We are getting approvals, audits, et cetera. We are seeding the market, talking to customers. So much of this is future expectations. So probably next year we should start seeing improvements in the EBITDA percentage. But this year, I think we would still stick to our 12%, around that EBITDA for the year end.
And on the revenue growth, sir? This 20% may
Revenue-
Yeah.
Yeah. So revenue, see, when we started off the year, we had said that we will do about similar to the 100 we had done last year. We have done much better than that. But given the current geopolitical situation, the significant issues we are seeing in terms of market demand and the logistics, et cetera, I think it is very difficult for me to hazard a guess what is going to happen the second half. But I think our initial assessment of 12%, 14%, I think we should do between mid-teen to a little high teen numbers for the year end.
Okay. So what H1 was in terms of previous H1, that kind of growth looks susceptible for the H2. That understanding is correct, taking into account the current scenario?
Yeah, hopefully.
Right, sir. One small observation. When we represent our results, they are in the millions. Whereas when we put forward our investor presentation, they are in crore. We can opt for one of the same for displaying the same. I think that would suffice and understanding also because of the same, having two different ways of expressing the same numbers. Secondly,
Yeah.
You can see that, sir, in millions we are reporting in results and in crore we are doing in presentation. Kindly opt for one that will give this similarity. Sir, when we read your commentary and the thought process, it is quite evident that the strategic levers which you have given about margin expansion, that is firstly the portfolio rationalization, then shifting to the high margin part and asset fitting with the calibrated CapEx. This should all gather steam going ahead also. Although the environment may be dicey and quite susceptible because of the RM issue, I think we are on a strong track to at least replicate what we did in terms of the revenue profile for H1. That understanding is correct going ahead for us?
See, we are working hard and we are very happy if you see our positive cash flow of INR 131 crore in the first half, reduction in debtor days, reduction in stock.
Right.
Also reduction in net debt from INR 280 crore- INR 220 crore, making the BRPL business positive. We are working very hard and we are very happy with the last two quarters' results. What is happening is in the global market, the situation is changing so rapidly. We are not able to know whether we will be able to ship our shipments to Bab-el-Mandeb or to Hormuz. The insurance and the rates are going up. The containers are not available, the ISO tanks are not available. Our customers are very much worried. The global situation is, now the Middle East is in a bigger turmoil. All this, when you see to it, we are not able to hazard a guess because of so much uncertainty. In our internal budgets, we are very positive and very bullish.
But we do not want to hazard any guess, give anything which after six months the investors will say, "You said this but you didn't do it." There are so many things out of our control, and we will do our best as we've done in the past.
Right. And lastly, sir, for the plant visit, can investors or the MMS community look forward to visit our facility and get some further understanding going ahead? I think that's a feasible.
Yeah. [inaudible] will organize. I'm already in discussions with them, so we'll do that pretty soon.
Okay, sir. I'll join the queue, Ketan sir, and congratulations, sir, for the very steady and improved set of numbers. I think the numbers speak for themselves. Only a small pointer, as you told about the reduction in debt, what is the current maturities that is needed to be repaid? Or what should be the likelihood to exit the year in terms of our closing debt number? Any color you can share on that front?
These are all mostly working capital debts, so this will be a moving number. I said that all the working capital debts, probably by mid of next year, we should become debt-free on that. As of now, I still hold on to that number of mine.
And the long-term borrowing, sir?
Long-term borrowing will take its trajectory. If we have good cash flow, we pay off earlier also. But on the other debts, probably by mid of next year, we should be debt-free.
The next question comes from the line of Saurabh Jain with Sequent Investments. Please go ahead.
Hello.
Saurabh, please go ahead with your question.
No, my question is already asked.
Thank you. The next question comes from the line of Madhur Rathi with Countercyclical Investments. Please go ahead.
Sir, thank you for the opportunity. Sir, I wanted to understand the working capital improvement that we are seeing during this quarter, this H1. Is this sustainable or was this more driven by customers giving us better priority in a raw material shortage scenario?
No. This was, I think, through sustained effort which we have done during this year in terms of rationalizing inventory, improving our collection cycle. That's the result of this 10-day improvement that you're seeing in the net working capital position. I think this is a good position we have. I have always said that our aim is to be in that 90-day kind of a net working capital position. I think we are pretty much on that. Even lower than that. We are at about 87 days in September. Hopefully, in March also, we will be within this range of 87 days- 90 days.
Got it. Also, coming on to our ROCE, sir, our ROCE used to be upwards of 20%, 25% a few years back, but that has moved to low teens right now. Sir, we've spoken about that we have moved into value-added products. We have acquired between that. But our gross margin profile has changed and our ROCE profile has declined. So how should I look at this metric going forward? Sir, a sub-question would be, we will be doing a greenfield CapEx in Saudi Arabia. So what kind of ROCE or TVA profile do we expect for this or any new CapEx that we'll be doing going forward?
Yeah. So ROCE, I think you will see ROCE start improving once all the CapEx spends that we have done in the last two years, the capacity utilizations start improving in that. We've always maintained that the initial spends that have happened for a couple of years, we'll see a little bit of a suppressed number in the ROCE. But as these plants start delivering products and the products we start selling, these are all good margin products. So we'll see the ROCE improvements coming in. Improvement of working capital, reduction on debt, these are all part of that whole process of ROCE improvements. So we are on track on that, and hopefully we'll see these playing out in the ROCE numbers probably in the next year. You'll see the upward trajectory.
In terms of our spends in KSA, as I said earlier, we will come back to you with all the details of the CapEx, the returns, the products, et cetera, at a suitable time when we have internally finalized the entire project plan. Currently, it's only the land that we have taken on lease.
Sir, I understand that operating leverage will help us improve the ROCE profile. But our gross margin profile has stayed the same even with us acquiring Unitop. In the meantime, we have moved to value-added products, but still our gross margin profile is stagnant. Why is this not reflecting in gross margin profile at least?
See, when we acquired Unitop, the gross margin of Unitop was always much lower than gross margin of Rossari. The expenses in Unitop were lower, and that is why the EBITDA also of Unitop when we acquired was in the range of 12%, 13%. EBITDA of Tristar was in the range of 10%, 11%. We have been able to improve these businesses. When we acquired the business, we were not doing any ethoxylation in-house. We were buying ethoxylates at credit of 90 days. Now we have to buy all the raw material for ethoxylation in advance. For example, EO is purchased in advance, hydrophilic lauryl alcohol, nonylphenol, phenol, tridecyl alcohol, cetostearyl alcohol. These are all coming on the oleo route or the petrochemical route, and these are advance. That is why our working capital cycle increased.
But now, with our focus, the working capital size is now being compressed. As Ketan sir said, we will be below 90 days, hopefully even in this current second half. We have not worsened. When you combine 2021 figures of gross margins of Unitop, Tristar and Rossari, we are much better than what we were at the end of 2021.
Got it. Sir, that is from me. Thank you so much and have a good day.
Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks.
Yeah. Thank you everyone for joining the call today. I hope we have been able to answer all your questions. For any further queries, you can get in touch with our team or Strategic Growth Advisors or investor relations advisors. Thank you once again for taking the time to join us on this call, and have a good day.
Thank you, sir. Ladies and gentlemen, on behalf of Rossari Biotech Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.