Bodal Chemicals (NSE:BODALCHEM) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Bodal Chemicals Limited 2Q FY twenty seven Earnings Call hosted by Aquarius Securities Private Limited. 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. I now hand conference over to mister Pankaj Motwani from Equator Securities. Thank you, and over to you, mister Pankaj. Thank you. Good evening, everyone. On behalf of Equest Securities, I welcome you all to the q two FY twenty seven post results earnings conference call of Bodal Chemicals Limited.

0:51 From the management side, we have with us mister Ankit Patel, exec... Executive director and mister Mayupadhya, CFO. I will now hand over the call to mister Ankit Patel for the opening remarks, post which we can open the forum for the q and a session. Over to you, sir. Thank you very much. Good afternoon, everybody. On behalf of Bodal Chemicals Limited, I extend a very warm welcome to everyone for joining us on the call today. On this call, we are joined by our CFO, mister Mayur Padia. I hope everyone had an opportunity to go through the financial results and investor presentation, which has been uploaded on the stock exchange and our company's website. We will give you a quick overview of the company's performance, and then mister Mayur Padhya will walk you through the operational and financial performance in detail for the quarter.

1:45 We are an established integrated chemical company in India with a presence across dye dye intermediates, sulfur chemicals, chlor alkali, benzene specialty derivatives, and water treatment chemicals. We operate eight plants across Gujarat, Punjab, Uttar Pradesh, and we also have four four foreign subsidiaries. As Indian suppliers emerge as preferred partners globally, we see opportunities for further growth. To put our recent performance in context, let us review the company's performance over the past several years. FY thirteen to FY twenty, the company consistently performed well.

2:30 FY twenty one, despite the widespread impact of COVID nineteen, the company reported a net profit of 40 crores. FY twenty two performance was strong. FY twenty three till FY twenty six performance was weaker, reflecting both external headwinds and operational challenges. The post COVID recovery and demand for dies and die intermediates faded rapidly from f y twenty three. Major Western markets, particularly US and Europe faced several challenges. Elevated inflation and significant central bank interest rate increases, geopolitical disruptions arising from the Russia Ukraine conflict, disruptions to shipping routes in the Red Sea, tariffs imposed by The US.

3:18 Apart from these external factors, stabilization of our benzene downstream downstream plant took longer than expected because of the integration of several foreign technologies, initial operational issues, and delays in approvals from pharmaceutical customers. Together with the external headwinds, these challenges prevented us from achieving our intended profitability. The plant has significant overheads making low capacity utilization a source of losses. In each of the preceding two years, it recorded an EBITDA level loss of approximately 30 crores. In the TCCM business, antidumping duties on imports from China provided limited benefit as imports continued from the other countries.

4:04 But conditions have improved since the start of the current financial year. Although international challenges have not been fully resolved, the industry appears to have adopted to the disruptions. Several developments in China are supporting better price realization for dye intermediates in both India and China. Sticker enforcement of environmental laws has restricted the production. No significant new capacity has been added in our industry in China over the past several years. Environmental restrictions and the broader industrial environment appear unfavorable for the new capacity additions. Export trends also suggest a possible shift in China's market.

4:51 H acid has been consistently exported to China for more than a year. Vinyl sulfone is also exported to China frequently. More recently, exports of dyed stuff and benzene downstream products to China have begun, possibly for the first time. Together, these developments suggest that structural changes may be taking place in China. Further capacity utilization at the benzene downstream plant improved to a satisfactory level in the first half of the current financial year and has improved further in the current quarter. Price realizations have also strengthened. We expect the plan to begin contributing to net profit from the current quarter. We expect sustained improvement in production to support better results for the TCCA business in the coming quarter.

5:43 Coming to the operational performance, during first half financial, FY twenty seven, company achieved all time high consolidated total turnover of 1,599 crores, a 67% growth on year on year basis. This growth is led by better realization, improved volume across the divisions. The robust margin of key dye intermediates and with effective path across, the higher raw material cost. The company has achieved highest absolute EBITDA of 203 crores for the first half, a remarkable 114% growth on year on year basis for the first half in the current year. During q two, company achieved consolidated total revenue of INR $8.84 crores, a 77% growth on y on y basis.

6:34 EBITDA stood at INR 128 crores, a 197% growth on year on year basis with the margin of 14.4%. Net profit stood at 81 crores, a 1259% growth on year on year basis. For the first half FY twenty seven, our standalone net profit after tax stood at INR109 crores and consolidated net profit after tax stood at INR112 crores. Coming to the intermediates, during the first half FY twenty seven, revenue from the intermediates grew by 68% led by volume with outstanding margin. In q two FY twenty seven, revenue from the intermediates stood at 345 crores, grew by 88% quarterly on y o y basis.

7:20 Being an integrated dye stuff manufacturer, we produce major dye intermediates products, and about 40% of these intermediates production is captively consumed resulting in a cost advantage for our dyestub products. The balanced production of dye intermediate is served in both domestic as well as global markets. Coming to our dyestubs, first half of FY twenty seven dyestub grew by 42%. This improved realization helped to absorb raw material pressure in q two FY twenty seven. Revenue from dice ups stood at 212 crores, a growth of 60% quarterly on year on year basics. Coming to the basic chemicals, about 50% of our basic chemical is capitally used for our dye intermediates. During the first half of FY twenty seven, basic chemicals grew by 136% year on year basis, mainly due to increase in the prices of main raw material, sulfur.

8:16 In q two FY twenty seven, revenue from basic chemicals stood at 99 crores, a growth of 199% quarterly on year on year on year basis. Coming to chlor alkali business, during the first half f y twenty seven, chlor alkali business has reported a revenue of 178 crores, a growth by 6% on year on year basis, led by a comparative better realization on year on year basis. In q two f y twenty seven, revenue from chlor alkali business stood at 91 crores, a growth of 88%. Coming to benzene derivatives, during the first half of FY twenty seven in the Saica's benzene down... Downstream products division has started contributing to the top line. Recent better realization and improved volume will lead to meaningful contribution at even bottom line on the quarter on quarter basis.

9:07 Coming to the coming to the subsidiary companies, the Senor Boya at Turkey, a Chinese subsidiary, Bodal Chemicals Trading Private Limited subsidiary have all performed overall satisfactory during q two FY twenty seven. Thank you. And now I hand over the call to mister Mahupadhya to walk you through the financial performance. Good evening, everyone. The overall performance of the company has been satisfactory for the quarter gone by. Our stand alone performance for q one f y twenty seven is as follows. Total revenue for q one, q two FY twenty seven stood at 872 crore. EBITDA stood at $107.27 crore in q two FY twenty seven.

9:56 Net profit for the quarter stood at INR80 crore. Total revenue for H1 FY twenty seven stood at INR1576 crore on a stand alone basis. EBITDA stood at $20.02 crores in H1 FY twenty seven. Net profit stood at 109 crore for H1 FY twenty seven. Our consolidated performance for Q2 FY twenty seven is as follows: Total revenue stood at Rs. $8.84 crore for Q2 FY twenty seven. EBITDA stood at R128 crore for Q2 FY twenty seven with a margin of 14.4%.

10:41 Net profit for the quarter stood at Rs. 81 crore for Q2 FY twenty seven. Our consolidated performance for h one FY twenty seven are as follows. Total revenue stood at rupees $15.99 crore for h one FY twenty seven against rupees $9.59 crore for h one FY twenty six. EBITDA stood at INR203 crore in H1 FY twenty twenty seven, a growth of 114%. Net profit for the half year stood at INR112 crore against net profit of 16 crore for h one f y twenty six. Division wise performance on a consolidated basis for the h one f y twenty seven are as follows.

11:32 Dye stuff revenue stood at 361 crore. Dye intermediate revenue stood at rupees 562 crore. Basic chemical revenue stood at 183 crore. Chlor alkali revenue stood at 178 crore. Total production volume on a standalone basis for the H1 FY twenty seven are as follows. Die stuff reported 9,056 metric ton, dye intermediate reported 16,956 metric ton, basic chemical stood at 113,312 metric ton, chlor alkali stood at 38,886 metric ton.

12:20 With this, I conclude presentation and hereby open the floor for further discussion, question and answer. Thank you. Thank you, sir. Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. We have first question from the line of C. A. Garvik Goel from Sini Alpha. Please go ahead. Hello. Am I audible?

13:05 Yes, sir. You're audible. Hi. Good evening, and congrats for a good set of numbers. My first question is on the industry environment, specifically on the asset pricing. How are you seeing the current scenario and price acceptability among the end users for asset? Do you see any risk of end users definitely in the demand, particularly once the festive season season in China comes to an end? So do you think any buyer resistance to current prices will start to appear? Currently, the pricing of HSA that they had reached around 1,800 levels, and then later on, they corrected to around 1,600 rupee level.

13:52 And the current level has been comfortably being passed on into the forward integrated products like dye stuff. So at the current level, there are a lot of orders which are going to be supplied to China from India. And as well as, the Indian dye industry has also been able to pass on the high level of excessive prices. So, I feel that this is going to sustain for a while. Even after the festive season in China. Right now, our our... We can see up to the month of January. I think there are a lot of commitments, you know, of material going to be supplied from here. Suppose that we will see, but usually it is one or two months advance work going on. So we will figure out about February, March, also around December only.

14:46 Understood, sir. And secondly, if I look at your cash flow from operations for first half, it has been lower than h one last year despite doing the better profitability. This appears to be mainly because of higher trade receivables. So given that we are in a positive demand slight gap, should not be our negotiation power be on a on a higher side and hence our realizations to be better and faster. Could you could you please give some color on why receivables have gone up and when you expect them to realize? See, you can very well see from the profit and loss count, the turnover has gone very high.

15:33 So last year, whatever was the turnover, it has gone 70, 80% plus compared to earlier year. So it is very clear that realized receivable is going to pile up. So since last two, three years, our turnover is continuously increasing. Last year, we closed at about 2,000 crore. Now in first half only, we have reached to almost 1,600 crore. So because of this higher turnover, pile up of inventory is... Pile up of receivable is expected. No. When are we going to reassess it? Like, what will be the time period within which we are going to realize? See.

16:23 Yeah. When you convert it into number of days, you will find that it has not gone up much level. And once the level had to stabilize the turnover, at that time, you will able to see the normal level of receivable for the company. So till now, you are watching that continuous upward trend is there as far as turnover is concerned. Once there is a stabilized turnover is there for one or two quarters, then the things will stabilize. At that level, you can compare the things with the with the earlier period.

17:13 Understood. Understood, sir. And third question is on the debt reduction and capital allocation side of it. Looking at the current environment, we expect the company to generate the healthy cash flows. Right? How are you planning to deploy these cash balances? Is there any plan to repay the long term borrowing, which is pending as on the date in the balance sheet? And if we are... And or what timeline we can expect that to happen? See, we are keen to reduce our debt. Last year, at the balance sheet date, whatever the turnover or whatever the date was there, the similar date is at present. But of term date has reduced drastically, and the working capital has increased because of the turnover increase for the company.

18:11 Now whatever is the generation that we want to deploy it into the repayment of the date only, presently for the first half, as you have seen, turnover has increased. So inventory level receivable has increased. So major part has deployed in that level. But as I was explaining earlier, there is a consistency in turnover, then there won't be additional deployment of cash into working capital. So at that time, we will have a cash flow, which is... Which can be utilized at... Elsewhere. So presently, we are keen to reduce the debt. Understood. So...

18:59 I'll... I will add something here. Yes. We do have some long term debt on the books right now. But, yes, like you said, very good cash flow is now being generated in the system. So we we do have a great opportunities to grow the organization in terms of... We have couple of good sites, one being our Baruch, Gujarat site, which has a lot of land and lot of integration possibilities as well as, you know, we can get into some other new molecules also. At the same time, our chlor alkali site in Punjab also has a lot of spare land as well as, you know, there is a expansion possibilities, which is that business is doing good for us consistently. So we do have our own plans as well as, you know, we can look for some acquisition opportunities also if something good comes along. But we want to keep our ratios very, very strong. We don't want to get into any any stressful situations because globally also there are some uncertainties still going on, geopolitical issues still going on. So we will focus more on the debt, but we are also we are also going to make our own growth plans and execute them as well.

20:13 So I think in your presentation, you have mentioned about the Mister, sorry for the interruption. Mister, sorry for the interruption. Please join queue for more questions. Okay. I'll join the queue. Thanks. Okay. We have next question from the line of from. Please go ahead. Yeah. Am I audible? Yes. Yeah. Thank you for the opportunity, and congratulations for a good set of number. So, sir, like, as you see that we are seeing a good strong demand for the adjust set that digitization. Just wanted to understand that, like, are we capacity expansion to capitalize on verticals? As for my understanding, we are operating at a higher, like, utilization.

21:03 I also wanted to understand what is the decision, what timeline we can expect that facility to come? Because as you say, that it's it's going to be the structural tailwind for us. So wanted to understand that how we are seeing and taking benefit out of it. If you can clarify that. And, also, wanted to un... Understand that how much realization on HSS side we did in this quarter compared to the previous quarter? And also because you say that the exports have increased, so if you can also share the... How much export volume or maybe value we have done this quarter compared to the previous quarter, and what's our current status of this HSA business going on?

21:51 So HSA, of all, HSA is part of our dye intermediates division. We are the largest manufacturer with two plants. We are also the largest manufacturer of another key dye intermediate called vinyl sulfone. This business is about 35% revenue for us, out of which, you know, HSA is probably around 50%. So at the at the overall revenue level, it is not a very, very high number for us. HSA, the overall, you know, contribution to to the the top top and and bottom bottom line. Line. Yes. Yes. The prices are high right now, so they are contributing in a big way. But like like I said in the... In my speech earlier, you know, we do have six divisions, and there's a lot of revenue, and there's a lot of bottom line comes from all of them.

22:42 So that's one one scenario. And we are... We already are sitting with the largest capacities in the die intermediate space in the country. So we are not very keen about expanding at the moment. I mean, if if we... Whenever we verify that this is going to... If if it if it is going to be a permanent structural shift where... If China doesn't come back with lot of production or or there is no further growth there, then maybe we can we can try and, you know, expand in this in this space. But we are going to right now, not not going to expand anything immediately. But the good thing is we also have a dice stuff where we use our dy intermediates such as Hidunal, from all our use to make the dice stuff. So there, the utilization is around 65 to 70, last few years average.

23:32 So we do have good capacities there. So we can always... You know, whenever there is a a good opportunity in HSE renal cell We can convert them into a dye stuff and try to increase our utilization of dye stuff. So that that is... That that gives us some advantage. Got it. But, sir, already, like, I think on the dye in... Like, the dye stuff which we... Sorry. The dye stuff which we do, there was not much volume growth we have seen this, like, this quarter. So maybe because we have, like, instead of doing the use of this HSN, we supply it in the external market. So can you give, like, first the percentage of the captive consumption of it and, like, compared to the previous quarter?

24:19 And also because, like, we are already operating at 90, I think, more than 95% of of utilization. So, like, does not we see it as a bottleneck or we have the, like, supplier in in hand to source for our dye stuff manufacturing? In dye stuff, we have seen good growth in first quarter two of current year. See, when we compare it is with first quarter of last year, it was 3,742 metric ton, which we have reached to 5,314 metric ton.

25:11 So there is a good growth in die stock volume. See, further, it is not fully utilized or at the peak level. There is a still possibility to improve it to some extent and that we we are targeting in couple of quarters. So die stuff, yes, sir. We are increasing our production and utilization level. DI intermediate, yes, you have said properly, we have reached to almost optimum level, so there is no further growth possible. And as mentioned earlier, we are not going to expand capacity as we are already biggest in India. Got it. And, sir, the... Another question I have is on the PC...

25:59 TCC acquisition, which did, like, in the past year. So I just wanted to understand, like, recently, we got this antidumping duty. So how we are seeing it as having impact on our business, and what what what our plan around this business vertical, if you can highlight that? In TCCA, we have been able to utilize the current capacity. We we were... We had ordered some equipments from China, but due to some some restrictions from from there, equipment export to India. I think last few months, we really had to try and get that equipment, but it did not work. So finally, because of the anti dumping duty, you know, we were able to increase our business, but still we are around breakeven levels in that business. But now finally, we are going to skip the Chinese equipment part, and we we have already identified to procure the same in India. So in the next few months, we are planning to expand the capacity. And I think with the higher utilization, higher production rate, I think we will be getting into a better margin game overall in that business.

27:18 And since the anti dumping slowly and gradually, the quantities of the imported material has been reducing, and the the... There is also an annual growth of consumption here in India. So I think with time, we'll be able to sell more... Supply more within the country. And with the addition of the new capacity, I think we'll we'll be able to achieve some decent margins. Okay. But I think we are only Indian producer. Don't we see competition coming in this sector because of this anti dumping duty rule coming? No. I... There is no competition... Incoming competition at the moment. Lot of the many large companies, and they they were considered this in last few years because there was always an opportunity. But even post anti dumping, you know, the... Like, we are not able to make any any great margin. I think that is why nobody is still attracted, you know, to to invest in this business. So I I feel that maybe maybe once we achieve a good size and some margins there, I think then then maybe some chlor alkali players, you know, they'll take some interest here.

28:26 Okay. But what would be the reason of us not making good margin there? Like, what is becoming a bottleneck for us? Is the utilization or is, like, the prices of raw material alone? Well, the the antidumping came on Chinese product as well as Japanese product. And now the Chinese product is a little bit different in quality you know, very much lower in the rate. So so there are people have some other routes where I think they are importing from some other countries. So some of the importers are are still trying to import the Chinese product. So so that's why we are not able to, you know, cater to the entire demand here in India. But I think with time, I mean, we'll definitely, gone from, like, a 100 tons per month to about 300 tons per month. So there is definitely an improvement there.

29:14 I think, when we when we double this capacity within a few months, I think then our cost will be lower, and we'll be able to cater the market better and make some money out of it. Got it. Thank you so much. That's all. Thank you. We have next question from the line of Dharshil Jaiwari from Crown Capital. Please go ahead. Hello. Good afternoon. Good evening, sir. Thank you so much for taking my question. Firstly, congratulations on a great set of results, sir. Sir, I just wanted to know, like, the EBITDA margin trajectory that we have had in, you know, actual, we can maintain it for throughout the year. Right, sir?

30:03 Hello? See, considering the present situation, it seems that we can maintain maintain this margin for the coming quarter. And later on, as mentioned by Ankit Dahi, that in December or January, we will come to know what is the situation after that. So our first quarter was not that great and second quarter was great. So even third quarter, we are expecting that it should be a good one. And the fourth quarter, we have not that visibility, but it should be better than the first quarter. So overall, we... It seems that we can maintain this margin for balance here.

30:51 Oh, that that... That's really great to know, sir. So, so even the of revenue, sir, we have grown significantly, so we can make up what could be our f y twenty seven revenue target if we have any, sir. See, presently, we are standing at 1,600 kind of number. So it seems 3,000 plus crore is very much achievable for the current year. Okay. Very much. Okay. That will... Achievable with around 12% margin. That's that's a fair sense, sir. Yeah. That is what we are targeting. Okay. That that that... That's great to know, sir.

31:36 I'll turn in terms of, like, our interest cost, sir. Any labor we have to reduce it, sir? Yes. Interest, gradually, it will reduce. As I mentioned earlier, we have repaid some date, but because of blockage of fund in inventory and receivable, we are required to use working capital at a higher level. That's why total debt remain more or less same level what it was standing at March 26 level. But now we are not expecting much blockage of fund into working capital and whatever generation is there, major part we will go...

32:21 That will go in repayment of debt. So gradually, we foresee that interest will reduce from this level. That's that's great to know. The other income was a bit higher than normal in this quarter, I think. So any one off or what what would be comprising of this other income, sir, of $20 roughly? Yeah. See, roughly, it is in the range of 5 to 6 crore, but this time, there were two extraordinary item. One was 6 crore of profit from sale of land at Punjab unit, and another was about 8.5 crore from the subsidy what we get from Gujarat government.

33:11 So these two are one off event and balance about 5 to 6 crore is a normal level that we we should earn continuously. Okay. That's great. So this is last At the Yeah. Yeah. At the same time, the further subsidy is expected at the Punjab level. We are eligible for electricity duty at Punjab. It is at the almost final level of approval, and we have not yet booked it. So some notification is expected from the Punjab government. Once that is there, then that amount will also be received from the Punjab government. And that is almost 50 karwara has approved by now.

34:00 That will gradually come to the company. And even for Gujarat government subsidy, about 5 crore is yet to be received that we should get within quarter or quarter. So that... That's a significant amount, sir. Yeah. So if we consider these two, then other income is going to come in next quarter also. Even one land we have already identified for sale in Punjab unit that we are expecting to sales maybe in current quarter and another small piece of land in Ahmedabad that is also expected to be sold in current quarter.

34:46 So both put together about 15 karat kind of other income. We are expecting in second half out of the profit of our... Profit on sale of land in balance half of the year. That's great to know, sir. Just two more questions from my end, sir. One related to... Okay. We had a really great f y twenty seven, sir. Any color on f y twenty eight revenue growth? And, sir, what would be our sustainable tax rate? Because there is some fluctuation in that. So, sir, what can we consider as our tax base and tax rate, sir? Tax base, you should consider flat to 25%. So presently, we we got some refund for earlier years, which we had not booked.

35:37 So because of that, the fluctuation you can see in the tax rate. But going forward, 25% tax rate is something which remain there. And as far as FY '28, Ankit, I will... Would like to say. So for FY '27, because of this overall crude high prices and some other other issues going on, I think the prices are very high, so I think that's adding to the turnover. But f y twenty eight also, I think we are going to... In terms of volume, we are going to add more business because even in this q two numbers that we see, it's hardly around 50% utilization average of our main benzene derivatives.

36:24 So that is also... We are... We've already crossed more than 85 for this quarter. And going ahead, I think in this quarter... By this end of this quarter, only we'll achieve maybe close to a 100%. So still there is... There's going to be some good contribution coming in FY twenty eight from there. We are we are going to try to add some business from the TCCF plant as well. So I think FY '28, we'll see some contribution from there as well. And like I earlier said, you know, there is some room for improvement of the utilization in the I stuff as well. So all put together, I think there will be some addition definitely in the volume part. And like I mentioned earlier, you know, there are couple of good projects internally if we want to do. We can go for expansions or put up some other other projects, and these are these are going to be brownfield.

37:12 So we can also get them online, you know, within one and a half years or two years' time. So we will we will be seeing some growth. Yes. And meanwhile, I think considering, you know, the good control on the debt and the ratios, we can... We we are also looking for some acquisitions if we if we come across something. So when... If we do that, then we'll we'll immediately add some business in f I twenty eight. Okay. So what will be the rough range? Like, if we had to do CapEx or acquisition, like, what could be the rough... Like, would it be built out of, like, a 100 crore acquisition or, you know, if you could have some rate that we have started in mind in either, you know, CapEx or organic or inorganic, you know, expenses, sir. We are not looking for anything too big in size because because of the pending debt on the book.

38:04 I think something around 100 to 200 crores is something we can... Have internal couple of couple of projects which we can do immediately. So that is there. In in... Organically, also, we've not really started looking for anything on a on a very serious note. But something in this range something in this range, you know, which, really keeps our, you know, debt in control. And we we have all the ratios and everything is in in good place. Okay. That... That's great. No. So I'll get back in the queue. Thank you so much. All the best. Thank you. Thank you. Reminder to all the participants, please restrict yourself to two two per question. We have next question from the line of Pankaj Motwani from Equirious Securities. Please go ahead. Thank you for the opportunity.

38:51 So sir, my first question was on the benzene segment. So just want to understand, like, what is the current capacity utilization in this segment? And, like, what kind of revenue and EBITDA we have done in h one? Our current utilization for the h one is around 50%. And... I'm gonna be happy on it. Total turnover, what we have done for the h one is 108 crore from benzene downstream product. Quarter one, we did 65 crore. Quarter two, there was some technical issue.

39:37 So utilization was not that great. But in quarter three, we are once again on track. So we have done 100 odd crores, but the current run rate is more than 300 crores, what we did recently in October month. So... And like I just commented few minutes back that we are... We still have room to grow about 15 to 20% more. So so I think we can we can do around 400 crores if the prices are higher of the raw materials. And if the prices are moderate, then we can do around $3,300 to $3.50. So so in the remaining year, that will be the run rate and next year onwards also. I think between $3.50 and 400 crores is a is a range for the moderate prices of the raw materials.

40:24 So what were the margins in the h one for this segment? And, like, what kind of margin we can expect for the whole year? The margins were maybe at the industry level, the margins were not very bad, but I our think problem was the the lower utilization was really affecting us. And due to that, we were able to not make any any any much margins in that business. But like I said, you know, in in October month, there are some exports opportunities there, and the utilization has reached around 85%. So already, we are doing very good in that business because of these two reasons. So I think going ahead, the utilization will not be a problem.

41:10 And in case... In fact, it will increase. And currently, we we really feel that at least for the next few months, I think that scenario is not going to change, and we are going to enjoy this opportunity to export the material to China. So this business, currently and, going in a... In the coming sometime is is really going to contribute well for us. Okay. And my second question was on the diced up segment. So I was see... Seeing on the quarter on quarter basis, like, the revenue growth was in diced up segment was May... Was majorly be... Because of the volume volume led, and our realization was in line with the Q1 levels. So given the increase in HSE prices, like, have you been able to pass on the higher input HSE prices to the downstream customers?

41:58 Because are more or less same from... As compared to Q1 levels. So, like, is there any improve... Is there any scope of improvement in the dice dice step step realization? See, normally, what happens when intermediate credit goes high, dice step player wait for some time. So, normally, there is a time lag of about three months, what we have seen. So it took us some time to get to establish the price at the desktop level. So prices at the desktop normally improves without some time lag. So realization will be better in third quarter compared to first and second quarter.

42:49 So this is a practice what we have seen over a period of years. So we are expecting better realization in current quarter compared to earlier two quarter in the. Ideally, our consolidated margin should improve from q two levels also? Yes. To some extent. Okay. And my final question was on the overall gross margin. So I was checking your general gross margin, which has been which has been remained broadly stable at around 40 percentage. So, ideally, one should expect some gross margin expansion from improvement in the in... From the improvement in this relation, particularly given this changes in the data segment. So just can you help me to understand, like, what is offsetting this benefit of higher relation? And, like, ideally, margin should improve, profit should improve, why the margins are not improving?

43:44 Gross profit level, what we are seeing that going ahead for the company, if one division goes down, then another division will pick up. Say, like, I just see the prices are very good at present. If that goes down to some extent, then benzene, douching division will do better. So likewise, we are expecting GP margin to remain more or less at the same level. Another thing is that prices has grown very high. So one should focus on the absolute number rather than the specific number because our raw material prices has also gone high to some extent, like sulfur and other raw material.

44:39 So raw material price has gone high. At the same time, finished wood prices also has gone high. So it has led to more or less similar GP number. At the same time, because turnover has increased and GP margin remains the same, overall number becomes better for the company. But I believe that because of the structural changes, our FG rises would be... Proportionately should be higher as compared to our increase in the commodity prices. There should be some... Yeah. So... But why it is offsetting? See, there are different division in the company. So when you see single division, say the intermediate, then yes. There is a very good growth.

45:30 But as we mentioned, Bengen Daussing has contributed only at the top line till date. It has not contributed at the bottom level. So even q one also, it was near to breakeven level. But now going forward, it should contribute at the top level top line as well as bottom line for the company. So by that time, you can see further improvement in the GP level. But it's a mix of all these divisions, so to give clear direction is difficult. Okay. Got it. And just one more question. Just want to understand what were the average current selling price of HSA and financial phone in the quarter two?

46:24 That that we need to find out. At present, I don't have the number. Okay. We'll speak to you in person. Okay. Thank you. Yes. Thank you. Thank you. The next question is from the line of mister Raj from TPR Capital. Please go ahead. Sir, this quarter, we saw that big Chinese group, Yadong, has stopped giving price quotes for each asset and then along also. So expectation is that prices on a quarter on quarter level also have gone up, let's say, from $1.51 60,000 RMB to $2.52 60,000 RMB. So that's also almost, you know, a quarter on quarter increase of...

47:25 And there was also a commentary that certain contract that we had with customers were coming to an end, and the new contract that were coming in would be in the current realization zone. So can you just shed some light on this that for us how many of those contracts were at previous prices before that have come to an end, and how many of the new ones are starting at the current realization level? It is a mixed, of, of, contracts, I mean, orders. You rightly said that, in the q two, though the prices, they have touched very high, but then, obviously, we have a thirty to sixty day supply cycle, especially in the exports.

48:12 So Yeah. Due to that, we do have, you know, some pending orders, older orders, which we have to supply. So our average is not... The average is don't reach. In the now q three, you are right that now the prices are higher. So there will be some impact of the higher prices in the dispatches that we will do. But, again, it will be it will be a little mixture mixture of, you know, different ranges. It is not going to be entirely around 1,600 rupees in HSH case. You know, there may still be orders pending around maybe, like, 1,000 rupees. There'll be something unit even pending even higher than 1,600 rupees. Got it. But but the mix to tell would be higher towards 1,500 upwards.

49:00 Sorry. Say it again? The mix would be higher, let's say, in the price range of 1,500 upwards, not the older contracts that we had for prices. Right? 1,500, I I think it'll be too too high to to achieve as a... As an average. Okay. We only hear about the, you know, very high prices that that that it touches, but, I mean, all orders are not really possible to get around, you know, all the all the all the peak prices because there is a lot of volumes, and we have to supply locally. We have to supply to China. So I'm not sure. I cannot comment on what kind of a number we will achieve in in HSA. But, yeah, it it can be higher than the q two. Got it. And, sir, dye prices also that we have seen, see the color dyes and the etcetera derivatives that we have, they were almost increased 30, 55% respectively.

49:50 So can you just give us a bit light on how the realization for these color dyes were in this particular quarter and the month of October that we have seen. And then the item, it is it is a similar similar cycle where also we have... When the increase in the intermediate prices happen, again, the item also goes through one or two or three month supply cycles. So there also in the coming quarter, you know, we can have some more realization in the overall average prices of the of the supplies of the diced up. Because diced up prices would happen with a lag. Right? As you mentioned, the low group and then they would... And then you will start looking at this price level as of base.

50:36 When the prices increase, they and then then we we noticed that then the... Whenever... Wherever the price settle, that's where I think there are more buying stats. So... But but it settled around 1,800, but then there was some correction now. Currently, has settled well around $16.50 levels. So right now, there is not too much pressure because of the pending orders, because of the exports. So I think this can continue to settle around this range. Got it, sir. And I think you already mentioned the point on receivables. Is inventory also for higher because of raw material price increase? Yeah. Yeah. Yeah. Overall overall cycle...

51:25 Overall system is is is higher because the annual prices are so high around $2.50. Sulfur is around 100 now, but it's gone down to around 90. So these prices are, like, you know, extremely, extremely high. And not not only these, but even many other chemicals are, you know, high in cost right now. So, yes, inventory naturally is also... Overall has a higher value than usual. But we are able to pass on do no sulphur and annual impact in high prices, We are able to pass on. I mean, the companies... Our sulphuric acid business, has has a little impact of lower margins. If you look at other competitors also, their numbers are not come out great. Mhmm. Mhmm. Correct. Correct. Yeah. So... But but we are about 5050% captive. So, I mean, we... We're not we're not burning anything there. You know, it's just that there's not too much margins left right now.

52:17 Sulphur has also started going down now. It is... It it crossed around $11,000 110 rupees per kg. It's gone down to 90 within within a month or so. So I think may... Maybe that can add... That can help us add some more... Little bit more margin in our sulfuric acid business as well. Got it, sir. And just my last question adding on to this, sir. Can you just give an idea on what amount of sulfuric acid, if any, that we sold during the quarter? And was because there was a moment when sulfur sulfur prices were obviously going up, but sulfuric acid No. No. Not really. That has never happened. I mean, maybe there may be little bit of correction. Like, let's say, sulfuric acid maybe reached around 37,000 rupees a ton, and sulfur was probably increasing maybe by five or 10%. But the sulfuric acid probably corrected by five or 10%. So, yeah, maybe something like that may have happened once or twice. But overall, it never reached a level where sulfur was increasing a lot. Sulfuric acid was decreasing a lot. That never happened.

53:21 Okay. And were there any sales of sulfuric acid during this quarter? Sorry? Did we sell any sulfuric acid, sir, apart from the captive usage this quarter? We don't sell. We always sell about 50% quantity of sulfuric acid and derivatives we make, like chlorosulfonic acid, all the o three, etcetera. So these products, we always sell. Since inception of the plan, we have been always selling about 50% of the materials in the in the... Outside in the market. So that's that's our usual mix, 50% capital, 50% we sell in the local markets. So we are here already to sell. Yeah. Got it. Thank you so much, sir. Thank you. Thank you. We have next question from the line of Aman Soni from Seven Alpha Investor Private Limited.

54:12 Please go ahead. Hello. Am I audible? Yes. Sir, looking at the changes and the events happening in China, these are looking very structural in nature. At the same time, if I am hearing this conversation, you people are a bit conservative in the in the terms of the outlook. And even the CapEx, we we are taking the stand that we are not going to expand our HSS capacities. Why is it like that? Like, are we not sure whether it is structural or not, or what is the exact reason for that? Because we are... Even in this scenario, we are speaking about a visibility for the next quarter, and we are not sure about what will happen after after quarter or two.

55:03 So can you put some color on that? We... I think this could be structural shift, but I think it is little bit too soon right now because I think it's only been a few months. And I think we want to really see how things are in the last quarter of the financial year, and then maybe we can decide. I mean, this... Expanding this capacity is is very easy thing for us. You know, we've been doing this for many, many years. We already enjoy the... Being the largest player in the space in the country. So so I think I think we still would like to, you know, see and verify how how how long term this is going to sustain.

55:54 I mean, it can... If it... If we feel confident, then we can immediately go for an expansion. And how much time will it take to expand the capacity? We can expand these in less than twelve months. Usually, the chemical projects are minimum one and a half year, two years time. But like I said, you know, we can just do it in our in our existing brownfield site. So we have two options. So we can we can definitely do it less than two... In less than twelve months. Understand. I'm asking this because the number... The base that we may end up for this financial year in the terms of the absolute EBITDA and maybe the fat as well, are you confident enough to sustain that level in the terms of the absolute amount for FY '28?

56:45 I agree there will be volume growth. But what about the realizations you are looking at? I mean, overall, are you able to sustain that higher base in FY '28? I think we can definitely sustain the EBITDA margin percentage because we still we still have a few things which are which are improving currently, and that is going to add to the bottom line. So we are very confident about the the EBITDA percentage. Again, the... I cannot really comment on the on the turnovers because because of the higher prices of crude, because of the... Some some intermediates are at very high price. So maybe that's... That... For top line can be corrected, let's say, next year, you know, there are no issues globally, and then let's say, is around $70.80 dollars, then the overall top line can be corrected by 20%, 30%. Yes. But but because of the confidence that I'm I'm having from some other things that we are trying to improve in the companies, some other things that we are trying to turn around in the company, I think that they will start contributing.

57:53 They already have. So so about the percentage margin, I think I'm very confident. And earlier also, we guide guided about 25 to 2,800 crores of turnover. So we are not we are not too far. I mean, this extraordinary amount is is not... It's not too far from, you know, what we were, you know, targeting and what what what we were going to achieve. So it is maybe only around 20%, 15, 20% higher because of the current scenario and higher prices. So I think even if we... Even if things normalize, you know, we can still do about 2,800 crores of turnover. We can still do about, you know, 14, 15% of EBITDA margins. So I think we are we are placed well to achieve that. Understood, sir. And if I, look at your company Mister, sorry for the interruption. Please, rejoin the queue for more questions, sir.

58:49 Okay. Thank you. We have next question from the line of Mr. Vishaykh from Padmaja Investments. Please go ahead. Am I audible, sir? Yes. Hello? Yes. My question is on the average verification of the traffic in q one and q two. Do you have all this? Should I contact the other users? Hello? Yeah. Did you hear my question, sir?

59:36 Can you repeat it? Yeah. Average realization of that we have recorded in quarter one and quarter two. Do you have that number? I don't have the exact number, as I mentioned earlier, but our realization for q one may be in the range of about 600 crore. And in the second quarter, it can be in the range of about 900 crore. Sorry. 900 rupees. 600 rupees or 900 rupees. Okay. Yeah. This is a rough number. Okay. So along with the charges, even the banking vertical is also going... We actually doing good as of now.

1:00:23 Is that my... Is that the right understanding? Correct. Correct. Engine adoption product realization has also improved, but that improvement is in the third quarter, not in the second quarter. Okay. Okay. It's expiring on alternate system. Yeah. Thanks. Congratulations. Thank you. Great job. You. We have next question from the line of Mr. Priyansk Lakotia, an Indian investor. Please go ahead. Hello? Am I audible? Yes, please. Hi. So my first question is, what was the average sales price of hydrochloric acid for both the quarters? Do we have that now?

1:01:12 Did you ask about the sulfuric acid? No. H acid. H acid, I just mentioned. I don't have the exact number, but it can be in the range of 600 rupees average price in the first quarter. And second quarter, it can be in the range of about 900 rupees per kg. Okay. Okay. Yeah. And my follow-up to this, how do you see the price of, as I said, over the next two to three months? We have discussed even earlier also. Yeah. Sorry. I did join the call queue a bit late. Yeah. Presently, it's in the range of 1,600 to 1,650 level. And if what we see that in China, there's some structural changes.

1:02:04 And our belief is correct, then it should sustain for quite some time. Okay. So we can see it sustaining. And I'm not sure if this has been asked. Please bear with me. What is the current capacity utilization? And are there plans to increase it further? And what is the timeline for it? Current utilization for dye intermediate, including HSE is almost at the optimum level. So there is no possibility that we can increase from this level to further level. Okay. Do we have any rough number on terms of the 10% for this? Utilization is at the optimum level, as I mentioned, and we don't foresee further improvement in the intermediate.

1:02:57 Whatever is that, we may be the next negligible number. You cannot consider that, your projection. Yeah. And then a follow-up to this, what is the percent, let's say, allocation of our production of adjusted between what we sell in market and what we use captively? It's almost 40% we captively consume for DiceHub and balance of 50% to be sale in the market. Okay. Got it. The second question is regarding Vinaya cell phones. Similar set of questions. Do we have the average for... I mean, across both quarters or not for this also? Average sales price? No. I I don't have it.

1:03:42 As far as Vinyl cell phone, the breakup of utilization is same. So 40% about we consume captively for die stuff and balance 60% we pay. And as far as number is concerned, in the first quarter, it can be in the range of 320. And in second quarter, it can be in the range of $360.70 kind of. Okay. And what about the... How do you see the price going over the next two to three months? Presently, it's the $4.52... $4.40 to $4.50 level. And Mhmm. Similar, it should remain at this level for quite some time.

1:04:31 Okay. And do we have any plans to increase the capacity utilization for the cell phone? No. Not in near future. It's also optimum right now? But at the optimum utilization. Yes. Okay. The final question is, what are the growth levels for the next two quarters? Hello, mister. Sorry for interruption, sir. Please rejoin the queue for more questions. Sure. Sure. Thank you. We have next question from the line of from Senior Alpha. Please go ahead. Hello. Hello, Adolf? Yes, please. Thanks for the follow-up.

1:05:16 Just wanted to understand one more thing on on the second half. We are speaking about 300 CR plus top line for this year with the margins of maybe around 12%. That brings $3.60 CR EBITDA. Right? In first half, we have already achieved $1.76. At the same time, we are speaking about the two three will be the one which will be bringing in the highest effect of the of the increased prices of dye and dye intermediate. So isn't that number very conservative we are speaking about? Or what is the exact number it can look like? How how h two can look like as compared to h one?

1:06:04 H two. So for q four, we cannot really comment because that is a little far away. But for for the current quarter, with our existing order book, we can see definitely a little bit more addition to the top line compared to q two. We can definitely see better margins as well. What... And for q four also, I I feel confident right now that a similar kind of a situation should shouldn't be maintained. And we should be able to do, you know, another similar quarter like q two and q three and q four as well. So, yeah, compared to h one, yes, h two can be... Because of our h... Q q one was little lower in terms of EBITDA as well as top line compared to q two. So if q three and q four sustain and the... Even even if it remains flat on an average, I'm saying, then it can it can be... I mean, q two can be much, much better in terms of top line and and margins than the q one.

1:07:08 H one. Sorry. H one. H two. H one to h two. Understand. It is better to be conservative than to give aggressive guidance. Yeah. I understand, sir. But looking at the current scenario Correct. That's why I again and again asking the same thing. Yeah. I got your point. And lastly, if I look at your competitor, JD Industries, they have reported better profitability than us on a on a smaller revenue base. In q two twenty seven, the chemical division did a revenue of close to $4.40 CR with debit of about 80 CR, whereas we have done around $8.50 CR top line with debit of about 90 CR. I want to understand if if we look at the capacities of both, yours is very high in the entire intermediate.

1:07:56 Then why that is not visible on a relative basis, sir? I understand one reason is the... Probably the depreciation. But despite that, the gap is big. So can you help us to understand why is it like that? I think they are in the chemical that they do. I think most of the revenue comes from the dye intermediate business where there is some extraordinary scenario. So I think they are able to do... Have a good increase in in terms of top line as well as their margins. I saw the results. I think they've done about 18% EBITDA. We've done about 14 and a half. I think there are couple of reasons. One reason is that we we sell about... We cap... We use about 40% of our intermediates into dice stuff. So we do... We also have a lot of revenue coming from dice stuff, which traditionally is not a very high EBITDA business.

1:08:52 We we do... We we have a dice business actually because we are the largest in the intermediate. You know, we we we see dice stuff in a way as a selling tool of our dice intermediates. And, traditionally, dice stuff is not a 12 or a 15 or 18% EBITDA business. So that is one reason, you know, that brings down our EBITDA percentage compared to the the competitor you mentioned. Second is that our benzene derivatives business in this q two only had about 50% utilization. So because of that, there was hardly any contribution, you know, to the EBITDA or or a bottom bottom line, but there was some turnover. So so that is that is one more reason. And then one more... Third reason is we also have a TCCA business where, again, it doesn't add much to the margin side.

1:09:42 So so due to due to these things, you know, I think maybe they are only just making and selling intermediates mainly. Whereas, you know, we have other divisions, you know, where we are where we are still improving in the... So I think this is the difference. This the main difference here. Mean, the iced up sales that we have at lower margins as well as couple of divisions which are not contributing. But now benzene is contributing very well. So I think we'll see we'll see a very good upside, and it'll it'll add very well in in overall numbers. Understood, sir. Thank you very much, sir, and all the best for the future. Thank you. We have next question from the line of mister Pankaj Motwani from Credit Suisse Securities. Sir, just I have one question. Like, do we have made any assessment? Like, how much was the per kg spread by selling HSA external in quarter two?

1:10:41 No. There is no such assessment. Okay. No worries. That that was my question. Thank you. Okay. Reminder to all the participants, please restrict yourself to two per questions. We have next question from the line of Vikat Agarwal, which is an individual investor. Please go ahead. No. Thank you. My all my questions are answered. Thank you. We have next question from the line of Abhishek Singhvi from Niveshay. Please go ahead.

1:11:27 Yeah. Thank you for the opportunity again. So, sir, basically, on the TCE side, I responded to understand the industry scenario because, like, we are hearing a lot of players like Jalagua, Dolly... Doya, or organic chemicals are evaluating to enter in this business. So wanted to understand, like, how difficult it would be for any new player to enter because we are currently holding the sole supplier status in domestic market particularly. So just wanted to understand that how easy or maybe, like, tough for these players to enter in this business. And also as now because the anti dumping duty have been placed, so just wanted to understand that how it has been impacting the prices increase happening in this particular product. And it's, like, it's becoming more lucrative for other players to come and to have a better margins?

1:12:28 Like, we are also expecting to do in going forward quarters. Both the antidumping, the prices are around $151.50 rupee levels. I think that even at that price, because of some more material coming from other countries or via some other routes, even at this $150.60 level, there are there are not too many... Too much margins at the moment. Our problem is that our utilization is very less, which we are we are fixing that problem. We have we have been waiting for this equipment to come from China, which is the main... One of the main equipment. And now over here, you no problem. We will figure out that it will not come. So now we are doing it. We are trying to do something locally. So anybody wanting to enter this space, it's not going to be easy technically because our plant was set up by a team of Chinese people, and there is a lot of Chinese technology and equipment involved in the entire plant. So it's not that easy to to just set up a plant like any other chemical plant here in India. So I think that there are some entry barriers there.

1:13:42 And with... I think what we are trying to do is we are trying to add more capacity, whereas lot of the work has been already done. I think we just have to add a couple of equipments and smaller things in which we... Where we can achieve a higher utilization. I think once we do that, I think we can really create a sizable business from this, you know, which can also contribute some margins. I think... I know anti dumping sounds, you know, attractive, but then post anti dumping activity implementation, there has not been... The price is not really that great where, you know, these other interested parties would be would be, you know, entering the space. Okay. Can you tell me, like, what was the prices before antidumping and what has been currently? Like, you said $1.50.

1:14:34 So what was the pre antidumping duty prices were? Well, around a 110,120 range. Okay. So so the last few years before before the antidumping, the range was around 110,120. And then post post empty dumping, the prices have gone up to around $1.70, and now it's around $1.60. Okay. So how much cost it takes us for us to manufacture this particular? Because I just wanted to understand, like, once... Because now the empty dumping is there, we will also get the utilization. So how much margin we will be able to make out of this business? We are not, like, we are not making much margins here in this business. At EBITDA level, there's hardly any contribution.

1:15:21 So let's say if I if I sold in in October at 01:60, I think I think my overall cost would be around $1.60 only. That's why we want to... We have... We made some changes in the plant in the in the energy part. And also by adding... Doubling the production, it will bring down our what it cost. So that way, you know, we can we can probably at least make some margins, let's say, percent or 8% EBITDA. That's our first target to convert that into, you know, some profit. Got it. So you mean to say those who are able to make, like, at a low low cost would be the most beneficial out of this? Otherwise, it would be tough to compete even after ending up in duty. Yes. Exactly. Okay. Thank you. That's all. Thank you.

1:16:10 Participants, due to time constraints, this was the last question. I now hand over call to mister Ankit Patel, his duty director, from for closing comments. With this, we conclude the call and would like to thank everyone for joining us today on this earnings call. If you have any further queries, you can please connect with us. We would be happy to answer your queries. Thank you. Thank you. Thank you. On behalf of security securities that led to this conference, thank you for joining us. You may now disconnect your lines. Thank you.