JG Chemicals Ltd — Q3 FY26

JG Chemicals Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=W0o7IfxlZ8Q Published: 2 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to JG Chemical Q3 and 9 months FY26 conference call hosted by Philip 0:08 8 seconds Capital Private Client Group. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask 0:15 15 seconds questions after the presentation concludes. Should you need assistance during the conference call, please sign an operator by pressing star then zero 0:24 24 seconds on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dhiral 0:31 31 seconds Sha of Philip Capital PCG. Thank you and over to you Mr. Dir. Thank you Rudra. Good evening everyone. 0:40 40 seconds On behalf of Philip Capital private trend group. I welcome all you to Q3 and 9 month FYI 26 earning conference call 0:48 48 seconds of JG Chemical Limited. Before we begin, I would like to mention a short cautionary statement. Some of the 0:56 56 seconds statements made in today's earning concourse may be forward-looking in nature. Such forward-looking statements are subject to risk and uncertainity 1:05 1 minute, 5 seconds which could cause actual results to differ from those anticipated. 1:10 1 minute, 10 seconds Such statements are based on management beliefs as well as the assumptions and the information currently available to the management. Participants are 1:18 1 minute, 18 seconds cautioned not to place any undue reliance on this forward-looking statement in making any investment decision. The purpose of today's earning 1:27 1 minute, 27 seconds conference call is for you to educate and bring awareness about the company's fundamental business and financial 1:34 1 minute, 34 seconds quarter under review. Today from the management team we have Mr. Aner Jun Mala the managing director and the CEO 1:42 1 minute, 42 seconds of the company. Mr. An Gilpinada the oldtime director and CFO of the company and Mr. Amit Agarwal the general manager 1:51 1 minute, 51 seconds accounts and finance. I now hand over the conference to Mr. Anil Sa for his opening remark and then we will open the 1:58 1 minute, 58 seconds floor for question and answer. Over to you Anil sir. 2:01 2 minutes, 1 second Thank you Rul. Good afternoon everybody and a very warm welcome to JG chemicals earning call for the third quarter. I 2:10 2 minutes, 10 seconds would like to thank all of you for taking the time today to join us. I will begin with a brief overview of the 2:16 2 minutes, 16 seconds company followed by some key operational and strategic highlights for the quarter and for the 9-month period. As you are 2:24 2 minutes, 24 seconds aware, JD Chemicals Limited is India's largest manufacturer of zinc oxide and the country's leading zinc recycling 2:33 2 minutes, 33 seconds company. We cater to a diverse range of end-user industries which include rubber, tire, ceramics, paints, 2:42 2 minutes, 42 seconds pharmaceuticals and cosmetics, specialtity chemicals and many more industries. We serve over 200 domestic 2:49 2 minutes, 49 seconds and more than 50 global customers including all leading Indian tire manufacturers and nine out of the top 10 2:57 2 minutes, 57 seconds global tire companies. Our manufacturing network comprises today of plants in West Bengal and Andhra Pradesh with a 3:06 3 minutes, 6 seconds combined capacity of nearly 70,000 metric tons peranom. We offer 80 plus 3:12 3 minutes, 12 seconds specialized grades of zinc oxide as there is no oneizefits-all approach when it comes to zinc oxide and each customers have their own specifications. 3:23 3 minutes, 23 seconds Our Nigopeta facility remains a key competitive advantage for us being the only IATF certified plant globally and 3:32 3 minutes, 32 seconds holding also the WHO GMP certification along with other Pharmacopia certifications. 3:40 3 minutes, 40 seconds Today sustainability and recycling remain core to our business model. We focus on maximizing the use of recycled 3:48 3 minutes, 48 seconds zinc which reduces costs, reduces the energy consumption. the carbon emission 3:55 3 minutes, 55 seconds and also the environmental impact. Our circular economyled approach supports resource efficiency and also aligns well 4:04 4 minutes, 4 seconds with the environmental needs and also reinforces our long-term ESG and growth strategy. As part of a sustainability 4:13 4 minutes, 13 seconds drive, we have recently commissioned a new solar power energy generation project at Naidupa and this helps us increase our renewable energy content. 4:24 4 minutes, 24 seconds This was phase one. Further investment in renewable energy will be done to take our share of renewable power even 4:31 4 minutes, 31 seconds higher. Apart from this, we also continue to explore and work on various sustainability initiatives and the 4:38 4 minutes, 38 seconds company is fully committed to its sustainability goals. 4:44 4 minutes, 44 seconds Friends, now let us look at the capacity expansion and the new project initiatives that the company is taking right now. The green field project which 4:53 4 minutes, 53 seconds was already announced at the H Gujarat continues to progress in line with our planned timelines. This state-of-the-art 5:01 5 minutes, 1 second facility will significantly strengthen our presence in western India and also enable us to be closer to our key 5:07 5 minutes, 7 seconds customers in that region. Work at the site is advancing well with civil construction currently underway and 5:15 5 minutes, 15 seconds machinery installation is expected to commence over the next couple of months. 5:19 5 minutes, 19 seconds We expect to commission this phase one of the zinc oxide production in the first half of FI27 itself. 5:28 5 minutes, 28 seconds Once operational and stabilized, this facility will play a pivotal role in boosting our overall capacity and 5:36 5 minutes, 36 seconds supporting our long-term growth strategy. 5:39 5 minutes, 39 seconds In addition to this deh project, we have also undertaken a brownfield expansion at an IDUPA facility to support future 5:48 5 minutes, 48 seconds demand. Our existing capacity remains adequate for near-term requirements and these expansions will further strengthen 5:55 5 minutes, 55 seconds our ability to cater to the customers in future. 6:01 6 minutes, 1 second As part of our focus on new projects and initiatives, I'm also pleased to inform you that during the quarter we also made 6:09 6 minutes, 9 seconds very significant and meaningful progress on the recycled rubber project. Pilot scale trials for a recycled rubber 6:17 6 minutes, 17 seconds project have commenced and the initial results are very encouraging. Further details on this will be made available 6:24 6 minutes, 24 seconds at the opportune time. This would be a specialized product and increase the content per tire from the house of JG. 6:33 6 minutes, 33 seconds Let me now dwell upon the and give you a perspective on the industry scenario. As 6:41 6 minutes, 41 seconds you are already aware, tire and rubber formed a significant demand contributor. 6:45 6 minutes, 45 seconds As far as we are concerned, demand momentum in the tire industry remained healthy during the last quarter. The 6:53 6 minutes, 53 seconds tire industry has benefited from the GST-led reforms. The reduction in GST rates from September 25 has improved 7:01 7 minutes, 1 second affordability and overall customer segment uh sentiments across both OEM and the replacement market. Good and 7:09 7 minutes, 9 seconds widespread monsoons have also revived the rural economy, supporting the two-wheeler and the agriculture tire demand across the tier 2, tier three 7:18 7 minutes, 18 seconds markets. The automotive industry continues to witness strong momentum across vehicle segments supported by 7:26 7 minutes, 26 seconds infrastructure development, improving freight movement, healthy consumer demand and favorable financing conditions. In international markets, 7:35 7 minutes, 35 seconds the demand for radial commercial vehicles offhighway tire and passenger vehicle segments remain strong with 7:42 7 minutes, 42 seconds India now emerging as a creditable global sourcing base for these category of tires. India is well positioned now 7:51 7 minutes, 51 seconds to emerge as a leading automo hub which is expected to act as a key growth driver to the on auto ancillary sector 7:59 7 minutes, 59 seconds supported by both domestic as well as rising export demand. The demand in the last quarter has been robust and the 8:07 8 minutes, 7 seconds same momentum is being experienced in the current quarter also. Our customers today are operating on good capacity utilization. 8:16 8 minutes, 16 seconds This has therefore led to leading tire manufacturers in India announcing significant capex plan of over 12,000 8:24 8 minutes, 24 seconds crores over the next two to three years which provides us with a strong visibility on long-term volume growth. 8:32 8 minutes, 32 seconds When crier invests in growth and capacity expansion, your company JG Chemical is a direct beneficiary. 8:40 8 minutes, 40 seconds The union budget 2026 presented by the honorable finance minister further enforces India's commitment to 8:46 8 minutes, 46 seconds manufacturing le growth. The continued focus on capital expenditure with infrastructure allocation exceeding over 8:53 8 minutes, 53 seconds 12 lakh cr is expected to improve logistics efficiency and support demand momentum across automo and other sectors. 9:04 9 minutes, 4 seconds Recently with the trade agreements with EU and the US, we are hopeful that the 9:11 9 minutes, 11 seconds export opportunities for some of our customers would also grow significantly which had become subdued over the last 9:18 9 minutes, 18 seconds few months and thus we feel that these customers would now again come back to higher level of productions. Apart from 9:26 9 minutes, 26 seconds rubber and tire, we are also seeing encouraging traction in the non- rubber segment such as pharmaceuticals, ceramics, specialtity chemicals and 9:34 9 minutes, 34 seconds agriculture. Our focus on product customization and customer specific solutions continue to strengthen our 9:43 9 minutes, 43 seconds partnerships with them and improve our penetration in these areas. Over the long term, we remain committed to 9:50 9 minutes, 50 seconds increasing the contribution of non- rubber allocation to drive margin expansion and also portfolio diversification. 9:58 9 minutes, 58 seconds Overall, as a company, we remain optimistic about the long-term growth prospects of the zinc chemical business and our ability to gain more market 10:07 10 minutes, 7 seconds share driven by strong customer relationships, product innovation, our focus on sustainability and capacity expansion. 10:16 10 minutes, 16 seconds With this brief overview, I would now request our CFO, Mr. Ano Junjin Wallala to share with you financial highlights for the quarter and the 9-month period. 10:26 10 minutes, 26 seconds Over to you now, Anush. Thank you. Good afternoon once again to everyone on the call. I will now take you through our financial performance for the third 10:34 10 minutes, 34 seconds quarter and the 9-month ended of the current fiscal followed by some operational and business updates. I am pleased to share that in this quarter 10:43 10 minutes, 43 seconds your company witnessed its highest ever quarterly sales ebita and PAD. 10:49 10 minutes, 49 seconds The improved performance was driven by strong demand across most customer segments. For Q3 FI26, our consolidated 10:57 10 minutes, 57 seconds revenue from operations stood at 249 crores, registering a yearon-year growth of almost 19%. The strong growth during 11:06 11 minutes, 6 seconds the quarter was driven by higher realization, improved capacity utilization and increased mix of specialized orders. These factors 11:15 11 minutes, 15 seconds collectively enhanced operating leverage and supported the sequential improvement in margins. In terms of key figures, the 11:22 11 minutes, 22 seconds EBIDA for the quarter was 26 crores. The PAT was approximately 18 crores. 11:27 11 minutes, 27 seconds Overall, the quarter reflects improved operational efficiency and stronger profitability supported by disciplined execution and a favorable product mix. 11:36 11 minutes, 36 seconds On a 9-mon basis, the revenue from operations was 687 crores. EBIDA was about 71 crores and PAT was at 50 crores. As mentioned by Mr. 11:48 11 minutes, 48 seconds The GST reductions implemented in September have led to a meaningful improvement in demand across the automobile industry which has obviously 11:56 11 minutes, 56 seconds had a direct impact on the tire segment as well. This momentum has continued in the current quarter supported by improving customer sentiment and 12:05 12 minutes, 5 seconds industry activity. We remain optimistic that these trends will sustain in the upcoming fiscal providing strong growth visibility for the Thai industry and 12:14 12 minutes, 14 seconds related value chains. In addition to this, various FDAs which have been signed between India and the west also bode well for general manufacturing 12:23 12 minutes, 23 seconds industry in India. In addition to the Thai industry investments which was mentioned earlier, we also seeing various automobile and its ancillary 12:31 12 minutes, 31 seconds companies announcing new capex plans in the im immediate future. All this bodess well for the general demand in India and 12:39 12 minutes, 39 seconds I feel our country is fully geared up for attracting new investments from both Indian and foreign companies going 12:45 12 minutes, 45 seconds forward and to meet this demand JGC is also expanding its capacities to ensure that it has enough capac capacities 12:54 12 minutes, 54 seconds available to cater to the demand which will follow. With this we can now open the floor for question and answer session. 13:01 13 minutes, 1 second Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 13:09 13 minutes, 9 seconds 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 13:18 13 minutes, 18 seconds question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 13:26 13 minutes, 26 seconds Our first question comes from the line of Moit Ch from Chub Lab Research. Please go ahead. 13:35 13 minutes, 35 seconds Uh hi sir. Hope hope I am audible. Yes sir you are. Please go ahead. 13:39 13 minutes, 39 seconds Uh sir my first question is I wanted to understand more about pricing scenario given OEMs have commented about 13:46 13 minutes, 46 seconds offsetting the input cost pressure with volume growth and operating leverage. 13:51 13 minutes, 51 seconds Are we noticing some free hand in pricing to increase our margins? Could you repeat your question please? Once 13:59 13 minutes, 59 seconds again the first part of the question. Uh sir uh I wanted to understand more about pricing scenario given the auto OEMs 14:07 14 minutes, 7 seconds have commented about offsetting the input cost pressure with volumes growth and operating leverage. So we are 14:14 14 minutes, 14 seconds noticing some free hand in pricing to increase our margins. 14:20 14 minutes, 20 seconds So as a company we believe in responsible pricing and whether the demand is muted or is in a buoyant stage. The company has very 14:29 14 minutes, 29 seconds long-standing relationship with our customers wherein any cost pressure on the company is passed on and is absorbed by our customers and in indirect they 14:38 14 minutes, 38 seconds obviously try to pass it on to their OEMs. But having said that I think our relationship is quite mature that where 14:46 14 minutes, 46 seconds each one you know plays that part and we do not try to take any unfair advantage of the customer. Any cost increase on the company's side definitely we try to 14:55 14 minutes, 55 seconds pass it on to the customers and because we operate in a premium segment more often than not it is absorbed by our customers and it is appreciated. 15:03 15 minutes, 3 seconds Similarly, if there is any possibility of cost savings etc from our side, we also continuously try to pass it on to the customer because if the customer 15:12 15 minutes, 12 seconds benefits ultimately we benefit in the long run in terms of value and relationship. 15:20 15 minutes, 20 seconds Okay. Oh very understanding sir. So my second question is on the inventory side like I have been noticing some price 15:28 15 minutes, 28 seconds increase in rink. So if you can throw some light on how will our margin look in quarter 4 with increasing prices. 15:37 15 minutes, 37 seconds So see uh as we have maintained before also as a company generally we are agnostic to zinc prices whether zinc 15:45 15 minutes, 45 seconds prices go up or go down does not really affect our margin profile on the core business. how because if you understand 15:52 15 minutes, 52 seconds how the pricing works basically our product is priced on the LME which is the London Metal Exchange where zinc is quoted and also the raw material that we 16:02 16 minutes, 2 seconds buy is also based on the same London metal exchange so in effect it's a pass on model wherein supposing in the month 16:09 16 minutes, 9 seconds of January we have bought our raw materials bases the LME of January in February we sell our zinc oxide bases 16:17 16 minutes, 17 seconds the price of zinc on the LE in the month of January so it's an M minus one model. 16:22 16 minutes, 22 seconds So technically there is no difference in or lag in the pricing mechanism. 16:28 16 minutes, 28 seconds However, when obviously zinc when you're seeing a favorable impact on zinc prices then we also carry a core inventory on 16:37 16 minutes, 37 seconds which obviously gains can be acred. So in the last quarter we have seen in the last few months zinc prices going up. So 16:44 16 minutes, 44 seconds obviously those gains should acrue in the current quarter on the inventory which the company carries. But generally speaking it's it doesn't matter whether 16:52 16 minutes, 52 seconds zinc is 3,00 3500 or 2500 doesn't matter that way. 16:57 16 minutes, 57 seconds Okay. So okay so uh that's very helpful sir. Uh and sir my uh third question is on rubber plant if you can help me explain the supply chain of USA. 17:09 17 minutes, 9 seconds Basically what is the procurement channel of us? If you can have uh throw some light on it. 17:16 17 minutes, 16 seconds So as far as this business is concerned, the procurement of used tires would be both domestic and international. For 17:23 17 minutes, 23 seconds international, it's a controlled mechanism wherein you need to take a license and once you have the license, you can import. In the meantime, you are free to procure domestically. 17:33 17 minutes, 33 seconds Domestically, this comes to traders and dealers who are basically scrap collectors, scrap tire collectors. In 17:40 17 minutes, 40 seconds fact going forward there is also a model wherein as we scale up and as we set up the industrial scale we will also look 17:48 17 minutes, 48 seconds at tie-ups with large tire companies wherein their rejects and their replacements would come flow directly to 17:57 17 minutes, 57 seconds us. So that is also a model but yes so it's a combination of three models directly from the tire companies from the domestic market and from the international market. 18:07 18 minutes, 7 seconds Okay sir. And a last question if I can squeeze in uh if you can provide a revenue mix between a tire and non- tire in quarter 3. 18:16 18 minutes, 16 seconds So uh the rough revenue mix as we've guided earlier uh it's it was earlier 18:23 18 minutes, 23 seconds about 90% rubber and 10% non-rubber which became 85% rubber and 15% non- rubber. I would say we are in the 83 to 18:32 18 minutes, 32 seconds 85% range for rubber and the balance 15 to 17% would be non- rubber and you know as we mentioned earlier that as we go 18:40 18 minutes, 40 seconds forward the mix of rubber would also reduce not because of lesser growth in rubber but obviously rubber will continue to have good growth but 18:49 18 minutes, 49 seconds increased uh you know more products and more application areas which we're focusing on. 18:56 18 minutes, 56 seconds Okay sir. Uh thank you sir. These were my question. I will join back. 19:01 19 minutes, 1 second Thank you. Our next question comes from the line of Koshal Sharma from Equinox Capital Venture Private Limited. Please go ahead. 19:09 19 minutes, 9 seconds Hello. Hi sir. Very good evening. Am I audible? Yes. 19:14 19 minutes, 14 seconds Yes. As you said that sir there is more demand challenge going ahead in ring capacity of around 40,000 MTP and that 19:23 19 minutes, 23 seconds is being commissioned in H1 financial 27 as expected. So what kind of revenue potential are we expecting from this and 19:31 19 minutes, 31 seconds how are we going to ramp up monthly capacity online and sir uh my second question you know your recycle rubber project that we are investing in recycle 19:41 19 minutes, 41 seconds rubber project. So what kind of efforts are we investing in this and the capacity we are putting? 19:47 19 minutes, 47 seconds So I'll take your first question first on the on the revenue potential from the new projects that we are doing. So the 19:54 19 minutes, 54 seconds project would have a capex of total 100 crores and it has a revenue potential of about 900 crores plus uh over or a over 20:02 20 minutes, 2 seconds or a couple of phases. So in first phase we'll obviously not be putting up the entire capex. It'll be about 4550 crores and the revenue potential should be in 20:10 20 minutes, 10 seconds the range of about 400 odd crores for that. And on the rubber project I think it's still early days. We would not like to give any guidance on the revenue 20:18 20 minutes, 18 seconds potential and the capex. We are working on it and as you mentioned it's a trial plant. It's a pilot plant right now. 20:24 20 minutes, 24 seconds Once we moved ahead with that we'll share all the requisite details with the market in due course. 20:30 20 minutes, 30 seconds Got it sir. And uh we are also changing our product right now. 20:35 20 minutes, 35 seconds we are moving. So what kind of revenue mix are we expecting moving ahead like one to two years in the revenue potential are we from non bubble segment 20:44 20 minutes, 44 seconds could you please explain the margin difference so your your voice is a little muffled but if I 20:52 20 minutes, 52 seconds your voice is breaking now is it I'm sure hello so I I've caught on to the question that 20:59 20 minutes, 59 seconds he asked so just to clarify uh just to answer to his point the revenue mix between rubber and non-rubber would 21:06 21 minutes, 6 seconds change to about 7030 I think in the next 2 to 3 years time that's what our internal target is and from the IITA margin could you wide 21:15 21 minutes, 15 seconds like in the segmental ITA margin how so as we mentioned earlier the core IITA margin of the company is around 10 21:24 21 minutes, 24 seconds between 10 and a half to 11% that's the basic IITA margin that we aspire to make and as we you know increase the you know 21:32 21 minutes, 32 seconds the contribution of specialized products with operating leverage etc. This would increase to about 13 to 14% minimum in the next two to three years time. 21:43 21 minutes, 43 seconds Okay sir. Got it. Thank you for the question. 21:48 21 minutes, 48 seconds Thank you. Our next question comes from the line of Ashita from Electrum Capital. Please go ahead. 21:56 21 minutes, 56 seconds Uh hello. Uh uh thank you for the opportunity sir. Just wanted to understand that the gross margins have declined on a Y basis. So could you 22:04 22 minutes, 4 seconds elaborate what were the key drivers behind this compression and going forward what uh gross margin range uh should we look at? 22:13 22 minutes, 13 seconds So you see uh as we mentioned that you know in our business uh there is a lag effect of materials flowing in uh 22:20 22 minutes, 20 seconds there's imports which happen sometimes there could be a couple of months lag between the you know the date at which we've contracted with the supplier and 22:28 22 minutes, 28 seconds the time at which the material is actually consumed. there could be certain uh you know there could be certain you know time differences there 22:35 22 minutes, 35 seconds could be 3 to 4 month difference between the time of the contract and the time of actual consumption in the factory. So that's why we've always guided that 22:43 22 minutes, 43 seconds rather than looking at the gross margin number on a standalone basis, it's always better to look at a lower number of you know on a more operational 22:51 22 minutes, 51 seconds efficiency number of the IBIDA or a PBT because that gives a more uh you know a holistic view of the performance of the company for the current for the particular period under consideration. 23:01 23 minutes, 1 second So if you see the 9 month number for uh for you know last fiscal and current fiscal our IBIDA margin is more or less 23:10 23 minutes, 10 seconds in the same range barring I think 70 80 basis point difference because of a lower IIDA in the first couple of quarters. So I think the right way to 23:17 23 minutes, 17 seconds look at our business is not just the wrong uh on the gross margin but on the IITA margin segment because 23:25 23 minutes, 25 seconds a lot of other factors also come into play in terms of uh delays in uh usage of the material which was contracted earlier. 23:34 23 minutes, 34 seconds Sure sir. Uh second question would be uh could you just share the planned capex for the ground field expansion and nidupa and the incremental capacity 23:42 23 minutes, 42 seconds addition. I think I missed the last participant's uh question. I think this is 23:50 23 minutes, 50 seconds so the incremental capex would be under 5 crores because a lot of the common utilities infrastructure is already in 23:56 23 minutes, 56 seconds place in Idupa and approximately the capacity expansion would be for about 4 to 5,000 tons approximately. 24:06 24 minutes, 6 seconds Okay. 24:07 24 minutes, 7 seconds Uh and lastly would be could you please provide the details on the volume growth for the quarter and 9 months for uh zinc. 24:15 24 minutes, 15 seconds So as a company policy due to confidentiality reasons we do not disclose exact volume numbers but I'm happy to say that we have registered 24:23 24 minutes, 23 seconds doubledigit volume growth in a zincside business in the current uh period. 24:29 24 minutes, 29 seconds Sure sir. Thank you. That would be from Thank you. Participants who wish to ask a question may press star and one on the 24:37 24 minutes, 37 seconds touchstone telephone. Our next question comes from the line of Deep Gandhi from I thought portfolio management services. 24:45 24 minutes, 45 seconds Please go ahead. 24:46 24 minutes, 46 seconds Yeah. Hi sir. So firstly uh I think you highlighted that there were some kind of uh inventory gains due to zinc price increase. So can you quantify the amount of inventory gain in Q3? 24:59 24 minutes, 59 seconds So as I mentioned that the zinc prices rose in Q3. So the inventory gains for that weren't really much acred in Q3. 25:08 25 minutes, 8 seconds They would rather flow in bit by bit in Q4 I would imagine. 25:15 25 minutes, 15 seconds Sure. And so just again continuing on this question and talking more about the balance sheets. I mean historically if I see our cash flow conversion has been 25:24 25 minutes, 24 seconds quite poor because I think our main raw material is um zinc whose prices keeps are quite volatile. So I mean in this 25:31 25 minutes, 31 seconds environment when the uh zinc prices have increased quite significantly. So going ahead do you think you'll have to increase the quantum of debt in order to manage the working capital. 25:41 25 minutes, 41 seconds So currently if you see a balance sheet we have over 150 crores of uh cash avail cash and cash equivalents in the 25:49 25 minutes, 49 seconds company. Further if you see the cash flow uh generated from operations in this particular uh 9 month period is 25:58 25 minutes, 58 seconds fairly healthy. So obviously ours is a business which requires about 100 days of working capital. So if we increase our turnover by say 200 crores that 26:06 26 minutes, 6 seconds means we need to have about 60 65 crores of you know incremental working capital but if we are you know doing a turnover 26:13 26 minutes, 13 seconds of say uh a,000 crores and with a 11% ebida margin we are more than the cash flows that is generated from the 26:21 26 minutes, 21 seconds business is more than sufficient to finance any incremental working capital requirements. So there there's absolutely no question of taking on any 26:28 26 minutes, 28 seconds debt because the company anyways have surplus cash and the current cash flows and the future cash flows that we uh you know plan to generate should more than 26:37 26 minutes, 37 seconds you know more than sufficiently take care of the working capital financing that is required. 26:44 26 minutes, 44 seconds And so coming on to the new plant uh can you first highlight what utilization are we currently operating at uh and then maybe I'll ask my other question. 26:54 26 minutes, 54 seconds So, so uh currently our utilization would be in the late 70s of the achievable capacity and we've always mentioned that you know our target is to 27:03 27 minutes, 3 seconds be in the 80 85% range 85% to 90 max is what we like to do and that is why as a 27:10 27 minutes, 10 seconds matter of you know our prudent strategy we always believe that our capacity expansions and our projects should get commissioned before our customers start 27:19 27 minutes, 19 seconds commen commencing their new projects. So we believe that in this current calendar year 2026 we will commission the dahage 27:27 27 minutes, 27 seconds plant. We will also increase the capacity in Naidupa. These put together would add a reasonable amount of capacity which would cater to the incremental demand from the tire 27:35 27 minutes, 35 seconds companies which will start you know trickling in in large numbers from 2027 2028 onwards. 27:44 27 minutes, 44 seconds Sure. And when you mention 80 85 90% that is basically achievable capacity not the name plate right. 27:51 27 minutes, 51 seconds Yeah. Yeah. Absolutely. 27:53 27 minutes, 53 seconds We are most happy at 80 85% achievable capacity utilization. That's that's for a chemical plant that is at best one 28:01 28 minutes, 1 second should imagine for efficient running of the plant. 28:05 28 minutes, 5 seconds So what will be the difference between the main plate and achievable capacity I mean is there a 15 20% gap or how what is the range of that? 28:14 28 minutes, 14 seconds We handle complex scraps. So this is zinc scrap that we are increasingly using more and more of scraps instead of 28:22 28 minutes, 22 seconds virgin and scraps come in different qualities etc. So the chemistry also changes. So uh I mean 15% is a fair 28:30 28 minutes, 30 seconds number. 15 to 20% of the name plate that has to be struck off when it comes to you know running the plant efficiently. 28:37 28 minutes, 37 seconds Again please watch out for efficiency that is also very important because you might go up to 90 95% but then you lose 28:43 28 minutes, 43 seconds out on efficiency. We have almost we are making more than 80 grades. So all this thing combined I mean we are most happy if the plant runs between 80 and 85. 28:54 28 minutes, 54 seconds Sure. 28:56 28 minutes, 56 seconds And so coming on to the new plant, I mean we are quite near to commissioning now. So you might have visibility in terms of you know how the scale up will happen for the first phase. So if you 29:05 29 minutes, 5 seconds can you know broadly guide say in one year two or how long do you think it will take for us to reach full utilization for at least the first phase 29:12 29 minutes, 12 seconds of the cape and when you say it will come in H1 of FY27 will it be say towards the end of Q1 towards the end of Q2? Any specific timelines you can share? 29:23 29 minutes, 23 seconds I would say the commencement should be in Q2. That's our internal target. And in terms of full utilization, I would 29:30 29 minutes, 30 seconds say about two two and a half days should be the base case scenario for uh you know for reasonable utilization. And 29:37 29 minutes, 37 seconds then we'll start the expansion for phase two and some of the utilities etc. 29:43 29 minutes, 43 seconds common infrastructure which is already being planned keeping in mind phase one and phase two. 29:50 29 minutes, 50 seconds Sure. Excellent. Last question from my side. I mean I think there in the budget there was also some announcement of removal of duty on import of zinc oxide. 29:58 29 minutes, 58 seconds So is that even relevant for us and do you think that will benefit our business also or are there some provisions which do not allow us to take that benefit? 30:08 30 minutes, 8 seconds There there has been no uh removal of duty on zinc oxide. There was a removal of duty on scraps scraps which were 30:16 30 minutes, 16 seconds last year budget but that does not really impact us because the item that we manufacture is zinc from which we manufacture is zinc 30:25 30 minutes, 25 seconds draws. We are working with the government there should have been removal of duty also on zinc draws because zinc draws is also a form of 30:33 30 minutes, 33 seconds zinc scrap. So I believe duty should be removed when the honorable finance ministers announced that zinc scraps 30:40 30 minutes, 40 seconds should no longer attract duty import it should automatically be extended to zinc gross also. We are working with the government to ensure that this is done 30:49 30 minutes, 49 seconds as in when this is done obviously this will be beneficial to the company because our raw material cost goes down. So it will definitely be a good thing. 30:57 30 minutes, 57 seconds It should have been done in the first place. It has been a slip and now you know sometimes it takes a little longer to get things rectified than one would imagine. 31:08 31 minutes, 8 seconds Awesome. That was helpful. Thank you. 31:11 31 minutes, 11 seconds Thank you. My next question comes from the line of Dil Javi from Crown Capital. Please go ahead. 31:19 31 minutes, 19 seconds Hello. Uh good evening sir. Thank you so much for taking my question sir. Uh firstly congratulations on a great set of results. Uh so I'm just a bit new to 31:28 31 minutes, 28 seconds the company so uh you know pardon me for some nice questions sir. Uh so just wanted to know uh in terms of like our 31:37 31 minutes, 37 seconds performance in Q3 we've you know achieved like uh you know I think the highest revenue that we've ever done. Uh but then why have we not been able to 31:46 31 minutes, 46 seconds you know recreate the iittita that we've you know usually had in the past. So just wanted to you know be able to link that up to like we should get le you 31:54 31 minutes, 54 seconds know benefits of operating leverage right so how do we reconcile that sir so you see as we mentioned you know 32:03 32 minutes, 3 seconds there is a lag effect on inventories which keep flowing in there's domestic material which is purchased there's imports also so all this you know causes 32:12 32 minutes, 12 seconds some impact on the exact translation of a increase in prices increase in you know volumes etc to the bottom line I 32:20 32 minutes, 20 seconds think we expect that the you know the margin accretion which we're talking about should occur in Q4. 32:27 32 minutes, 27 seconds Okay. Okay. Fair enough. Fair enough sir. So I just wanted to know sir in terms of FI27 sir uh you know our plant 32:35 32 minutes, 35 seconds is nearing full utilization and we'll be commissioning another plant. So any kind of revenue guidance that you know we can have for FI27 sir. 32:44 32 minutes, 44 seconds So you know we mentioned that our internal targets are that every 3 to four years max we want to double our revenues. So last year we closed with 32:53 32 minutes, 53 seconds about 850 7 crores of topline and I think this year our based 9 month uh 33:00 33 minutes revenue is close to 700 crores. So I think we should be closer you know I mean if the the same run rate continues we'll be definitely over 900 950 crores 33:09 33 minutes, 9 seconds of revenue in this particular financial year and next year also we should be able to increase by a similar number given the growth plans that we have and 33:18 33 minutes, 18 seconds the new products launches that we have in the pipeline. 33:22 33 minutes, 22 seconds Okay. Okay sir. I'm so uh just wanted to know like when we are saying that you know we want to increase our IITA you 33:30 33 minutes, 30 seconds know going forward sir. So the new plant will be catering to more value added products. That's one of the bigger drivers or what would be you know the 33:38 33 minutes, 38 seconds top two drivers of you know a bit margins. 33:42 33 minutes, 42 seconds So it'll obviously the new plant is you know in Gujarat. It has a lot of you know specialty chemical companies and a lot of our special specialty customers 33:51 33 minutes, 51 seconds are located in and around the western region. So the new plant will definitely cater to them along with the tire industry and the ceramic industry which 33:58 33 minutes, 58 seconds is also in close proximity to the the plant. 34:04 34 minutes, 4 seconds Okay. Okay. Okay. Fair enough. So yeah uh that's it from my thank you so much. All the best. Thank you. Thank you. 34:12 34 minutes, 12 seconds Our next question comes from the line of Duven Kadakia from SKP Securities. Please go ahead. Uh thank you for the opportunity sir. 34:20 34 minutes, 20 seconds Actually most of my questions have been answered. Just one uh question that remains is for this year in terms of 34:27 34 minutes, 27 seconds realization per tons for uh uh zinc oxide as well as uh zinc sulfate. Uh what kind of growth are we seeing and 34:35 34 minutes, 35 seconds what kind of uh growth in realization do we expect in the coming years going forward for them. 34:41 34 minutes, 41 seconds You see the realization per ton of zinc oxide is directly related to the prices of zinc on the enemy. And if you see on 34:49 34 minutes, 49 seconds a 9-month basis, there has not been much change in the price of zinc on the LME. 34:54 34 minutes, 54 seconds If you see the April to December average for 24 and 25, the LME averages are more or less the same. So the average selling 35:02 35 minutes, 2 seconds price per ton is more or less the same for zinc oxide. Zinc sulfate prices have increased slightly because of increase in the prices of the key raw material 35:11 35 minutes, 11 seconds which is zinc ash and sulfuric acid. In the last couple of you know last three to four months these costs have increased. So obviously these have then been passed on to the customer and 35:19 35 minutes, 19 seconds prices the realization per zinc sulfate has increased uh slightly 9 months over a 9 month period but I don't have 35:27 35 minutes, 27 seconds the exact number with me off hand I can share it with you offline on zinc sulfate 35:33 35 minutes, 33 seconds sir that'll be all thank you so much thank you our next question comes from the line of Jigna Kaliada from coherent 35:42 35 minutes, 42 seconds wealth please go ahead Hello. Yes, please go ahead. 35:51 35 minutes, 51 seconds Yeah, I just had a couple of questions. 35:53 35 minutes, 53 seconds So, the first one is that you had mentioned that you are looking out for some inorganic acquisition. Then you are going to announce 36:00 36 minutes relating to that in the coming few months. I just wanted to know what is the status of that. And the second question I just wanted to know that what 36:08 36 minutes, 8 seconds is the sorry to interrupt the voice is the voice is not clear at all. 36:20 36 minutes, 20 seconds Ma'am can you repeat your question? 36:24 36 minutes, 24 seconds I can sorry to interrupt you ma'am but your voice is not clear at all. Uh can you move to a different environment and ask your question? 36:34 36 minutes, 34 seconds Is it available now? 36:38 36 minutes, 38 seconds Hello, we are not able to hear her clearly. So perhaps 36:46 36 minutes, 46 seconds we proceed with the next question is to join the fact the cube and she has better network. Is that possible? 36:51 36 minutes, 51 seconds Uh yes ma'am. Uh yes sir it works. Uh Jna can you please uh rejoin the queue? 36:58 36 minutes, 58 seconds Yeah yeah I'm sure. 37:01 37 minutes, 1 second All right. All right. Our next question comes from the line of Dhiril Sha from Philip Capital. Please go ahead. 37:09 37 minutes, 9 seconds Yeah, good evening sir. Uh thanks for the opportunity. So on the Y basis, what is the growth that we have seen on the zinc sulfate side? 37:17 37 minutes, 17 seconds Uh on a Y basis on the zinc sulfate side our growth is about 3 to 4%. 37:27 37 minutes, 27 seconds This is particularly for the Q3. 37:31 37 minutes, 31 seconds I'm talking about a 9-month basis and on in the future sir would be similar I mean not much 37:38 37 minutes, 38 seconds different maybe a percentage higher or low I don't have the exact number off hand ready but it'll be similar but there particular reason why we are 37:46 37 minutes, 46 seconds not able to grow double digit uh you know on a on a on a low base see while the base was low but we must 37:55 37 minutes, 55 seconds also understand that prior year the zinc sulfate market was not good and the last financial was a better year. So, and the 38:03 38 minutes, 3 seconds company had just started that time. So, we could take advantage of that. Current year, the business has not grown as we 38:10 38 minutes, 10 seconds would have expected on the volumes is because with the zinc prices going high, the farmer community is always a little more sensitive to the zinc prices and 38:19 38 minutes, 19 seconds because of sulfuric acid and zinc both going up, there is obviously a little slowness in demand. Basically, this demand has to come but it gets pushed. 38:28 38 minutes, 28 seconds So people tend to you know push away the use of micronutrients like zinc sulfate etc. They try to push it that look we 38:36 38 minutes, 36 seconds instead of putting it now we may put it after 2 to 3 months. So as and when this comes it'll be a effect of a pent-up demand coming in but for the time being 38:44 38 minutes, 44 seconds we noticed that there was a slight uh you know uh slowness in the offtake. 38:55 38 minutes, 55 seconds Okay. Okay. Depends on whatever uh expansion that we are doing on the noda side of let's say 5,000 tons. So this is on the zinc oxide sir or zinc sulfate side. 39:03 39 minutes, 3 seconds Currently it's only planned for zinc oxide. 39:07 39 minutes, 7 seconds Okay. And so what is the utilization of zinc sulfate as date sir maybe 9 month basis? 39:14 39 minutes, 14 seconds Currently it must be utilized about 60%. 39:20 39 minutes, 20 seconds Okay. Enir you also mentioned that we are investing on the solar power you know to increase our renewable uh you know portions to the overall power cost. 39:27 39 minutes, 27 seconds So what kind of saving that you know we might see in the coming years and what is the investment that we are doing on the solar. 39:35 39 minutes, 35 seconds So we've invested about 2 and a half crores or so in the first phase of solar power generation. This solar power 39:43 39 minutes, 43 seconds generation is expected to commence this month and we will be going in for future expansion of our solar power generation in both Naidupa and in the DH plant. 39:54 39 minutes, 54 seconds Okay. And what kind of saving we are expecting from this sir and how much this will uh you know cater to our overall power requirement on the 40:01 40 minutes, 1 second renewable side. So our renewable power you know the share of renewable power our target is to go up to about 55 to 40:09 40 minutes, 9 seconds 60% in four years time and with phased investments over the next 3 to four years time we feel this can be done and 40:17 40 minutes, 17 seconds in terms of the saving I would say based on our understanding and our workings the IRRa of a solar power plant basis 40:26 40 minutes, 26 seconds the current power cost etc that we have is close to about 18 to 20%. 40:32 40 minutes, 32 seconds So I would say it's a decent investment if you look at it from a you know from a invest return on investment perspective 40:40 40 minutes, 40 seconds where the the return on investment is about 18 to 20% peranom so it's a decent saving I would say 40:47 40 minutes, 47 seconds okay and so what was the contribution on the export side uh on a 9 month basis as well as in Q3 40:54 40 minutes, 54 seconds so export share is about 13 to 14% uh on I would say give or take a percent on a 3 month and a 9 month basis and as 41:03 41 minutes, 3 seconds we've guided earlier you know exports will be in the range of 10 to 15%. Yes the the base gets higher so the volume 41:10 41 minutes, 10 seconds number in exports increases but we don't expect this export share to become 25 30%. Uh in the near future 41:20 41 minutes, 20 seconds okay okay that's all from my side. Thank you so much sir. Thank you. 41:26 41 minutes, 26 seconds Thank you. Our next question comes from the line of Koshal Sharma from Equinox Capital Venture Private Limited. Please go ahead. 41:32 41 minutes, 32 seconds Hello. Am I audible? Yes. 41:36 41 minutes, 36 seconds Hello. Am I Hello. Am I audible? Yes, we can hear you. 41:44 41 minutes, 44 seconds Yeah. Yeah. So, I just have one followup question on your solar project like you have put one solar project. So what kind 41:51 41 minutes, 51 seconds of uh margin improvement from this project and the capex and the size of the project in the phase one and uh and 41:59 41 minutes, 59 seconds we are also putting another phase two project what amount of capex is required and how would they impact on how we become so you please explain it. 42:08 42 minutes, 8 seconds So I think I just answered this question that the first capex was under 2 and a half crores and uh we expect that the 42:16 42 minutes, 16 seconds return on investment on these projects is about 80 to 20%. So I think the incrementally incremental profitability 42:24 42 minutes, 24 seconds per year should be about 60 to 70 lakhs per year over the next four years each year. So this will be the you know incremental uh profitability because of 42:33 42 minutes, 33 seconds the solar project. I think I just answered this question in detail before this. 42:39 42 minutes, 39 seconds Okay sir. Okay. Thank you. 42:44 42 minutes, 44 seconds Thank you. Anyone who wishes to ask a question may press star and one on the touchstone telephone. 42:54 42 minutes, 54 seconds Participants who wish to ask a question may press star and one on the touchstone telephone. 43:02 43 minutes, 2 seconds Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments. 43:11 43 minutes, 11 seconds Thank you. 43:13 43 minutes, 13 seconds Uh thank you to all the participants who have participated in today's earning calls conference. I hope we have been 43:20 43 minutes, 20 seconds able to answer most of your questions satisfactorily and at the same time offer insights into our business. If you 43:28 43 minutes, 28 seconds have any further questions or would you would like to know something more please reach out to our investor relation managers at Valerum Advisers. They would 43:36 43 minutes, 36 seconds be most pleased to answer you. Thank you and thank you once again for joining us today. Have a good day. Thank you. 43:43 43 minutes, 43 seconds Thank you on behalf of Philip Capital Private Client Group. That concludes this conference.