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Alkyl Amines Chemicals Ltd
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Ladies and gentlemen, good day, and welcome to the Alkyl Amines Chemicals Limited Q4 FY '23 Earnings Conference Call hosted by HDFC Securities. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Nilesh Ghuge from HDFC Securities. Thank you, and over to you, Mr. Ghuge.
Thank you, Tanvi. Good afternoon all. On behalf of HDFC Securities, I welcome everyone to this Alkyl Amines conference call to discuss the results for the quarter ended March 2023 and full year FY '23. It is a pleasure of having with us top management team from Alkyl Amines represented by Mr. Kirat Patel, Executive Director; Mr. Chintamani Thatte, General Manager, Legal and Company Secretary; and Ms. Kanchan Shinde, Chief Financial Officer, Alkyl Amines.
Without further ado, I will now hand over the floor to the management for making opening comments. Over to you, sir.
Thank you, Nilesh. This is Kirat Patel. Thank you, everybody, for joining us on this annual call after our annual results. I'll take a few minutes to just give you a brief outline of how the year has been, and then we can throw the floor open for questions.
The year has been, as we all know, a little peculiar because of Ukraine war which affected all the commodity prices, and there's been a lot of volatility in prices. Fortunately, over the period of the year, we have been able to maintain market share, increase certain our volume sales and managed to at least stay on track as profitability is concerned. There have been, of course, in the marketplace between our main customer industries, some degree of volatility with pharma having some stress. The pricing on our inputs have been under stress, fuel, for example, coal, has gone up considerably in the last year. Fortunately, it looks as if all that has now settled, and we look forward to a much stabler time in the next -- in the coming year, which is '23-'24.
As far as our projects are concerned, the big project of ethylamine's expansion, where we are planning to spend close to INR 400 crores is almost ready for commissioning. It will probably be commissioned in the second quarter of this financial year, that is July to September some time, and we will be on track. In the meantime, we have already commissioned 1 new product in the last year, Dahej, Acetonitrile, which plant has stabilized now in production.
With that, I will leave the floor open for questions and we'll try and answer to the best of our ability. Thank you. Nilesh, if you could open the floor for questions.
[Operator Instructions] The first question is from the line of Nirav Jimudia from Anvil Research.
Sir, I have 2, 3 questions. Sir, if we see the amines chain, like from C1 to C6, like highly trial profile and hexylamine up to, I think we are fairly stronger in the first 3, like methylethyl and diisopropylamine. So if you can take us through how we are placed in the other 3 amines? Because I think we are the only player in India who is into this higher chain of amines. I was just checking our website where 1 of the key product in hexylamine is 2-ethylhexylamine. So if you can walk us through like how much of our current turnover is coming from this higher amine? And what is the size of this higher amines into India? So are they totally imported into India, or how has the situation be?
Yes. Nirav, we are in the business of aliphatic amines. And as it happens, the market for the amines, the largest market is for the C1, which is methylamine, by far the largest market. The second largest market is for ethylamine. And the third largest, which is C2 -- the third largest market is for isopropylamine. The C4, C5, C6 [indiscernible] mix of C6, and the butylamine are relatively smaller markets. In fact, in terms of turnover, I mean, part of our revenue, they would comprise less than 5% of our total revenue. So those are much smaller markets in India. Yes, we are the only manufacturers and our competition is in imports from both China and Europe. And we do command depending on the product, a reasonably good market share because since we happen to be the only manufacturer of these products.
Sir, you mentioned C4 to C6 total our revenue share is close to 5%, right, or only C4 butylamine is 5%.
No, no, all put together. There are 3 products in that.
Correct. So the new products, what we alluded last time, like 5 to 6 products, what we are going to launch over the next 10 to 15 months when you recently mentioned DEK, which we have launched. So apart from this 1 product, the remaining products, does it qualifies into this higher amines where probably we are the only producer in India and we can get some immediate import substitute volumes once we commission those capacities?
No. The products which we mentioned in our last meeting that we are going to launch about 5 products over the next 24 months with some months have -- already 6 months have already gone, 1 product was diethyl ketone. And that's not part of the amine family, and neither are the -- others are part of the amine family. One or 2 are derivatives and the others are specialities.
Sir, the second question is, what we have seen recently is like 1 of the key raw material ammonia. The prices have corrected from close to $900 in December to $300 now. So my question is, what sort of volume growth we are expecting for FY '24, coupled with the fact that some of the raw material benefits could be passed on to the consumers because of the -- some commodity nature of the business, but some we could retained on in, which could help us to improve our per kg margin. So like if you can guide us in terms of how much out of this INR 1,700 crores of our business can have a scope of improvement in the per kg margins? And like FY '21 was a year when acetonitrile was doing very well, and we reported very good numbers. But now with new products, ethylamine's plan also getting commissioned, probably the contribution of acetonitrile would be coming down in the overall pie of our revenue. So if you can help us explain in terms of the situation for FY '24 and FY '25, that could be helpful, sir.
Yes. So in terms of volumes, the last year, we have done -- we had always -- we had predicted this to between 10% and 15%. Unfortunately, it's been at the lower level at around 10% volume growth. We are expecting next year to be a little better because things have stabilized and our customers are being a little more optimistic. And we hope to be able to do at the higher end of this 10% and 15% in volume growth.
You're mentioning ammonia has a particular input, yes, ammonia prices have come down, and it is 1 of our key -- the top 5 inputs into our products, and it would help us. But you must understand where margins are concerned, it's not just the raw material prices going down, but it's also how the competition changes the finished goods prices because prices are set by competition. So margins are always following a sequence where raw material prices come down when the finished goods prices have come down. When the raw material prices went up, the finished prices -- finished good prices went up. We and our competitors are all in the same boat. So sooner or later we have to come to reasonable margins.
So yes, it is a good thing that not just ammonia, but even coal seems to have come down a bit. And we are hoping that raw material prices have seen their highest -- have seen their peaks and will settle down.
Correct. Because, sir, if we see probably some of the products are difficult to even import, case in point is methylamine. So there we could retain some portion of the raw material cost benefits. And coupled with the fact that in the higher set of amines where probably the competition is limited, we can retain the benefits of this raw material cost. Is it safe to assume that?
Yes. No, the point remains that even if methylamine is domestic, there is competition. So what affects our competitor, and he gets also equal benefit, so the market share struggle will remain. So it's not a one way street that the prices come down and we can retain that. Okay. It happened in some peculiar circumstances, but it's not a general rule.
Just a small follow-up to this, like you mentioned on the coal cost, but I think we use a lot of steam also. So if you can just help us explain like what has been the cost initiatives on the operating cost side? Because on a quarterly basis, if we see the difference between our gross margins and the operating profit is close to INR 114 crores in terms of the operating costs. So I think this has come down sequentially by INR 6 crores on a higher top line. So probably some steam cost savings would have come or some benefits on the freight cost could have be sitting in this Q4 reduction in the operating cost. So if you can just help us what are the cost initiatives which we have taken in FY '22 or FY '23 in terms of the CapEx which could help us to reduce the cost from FY '24 on a permanent basis, be it steam or any other initiatives. If you can just highlight, sir.
Yes. So what we're referring to is the item called other expenses in our results. They have gone down -- well, they have gone up in the last year compared to the year before, and largely on account of coal. This coal, which used to be the year before, I mean, the year before that was about INR 5,000, INR 6,000 a tonne went to about INR 10,000 a tonne. And last year, it peaked at some INR 14,000, INR 15,000 a tonne. And now it is coming down to about INR 11,000 a tonne. So obviously, it plays a very large role in the element called Other Expenses.
The other role is electricity. Electricity for us the rates at least have been stable. Part of the reason being that we have commissioned solar plants which supplies to Kurkumbh and Patalganga, which have started somewhere around about half the year, somewhere in August, September of last year. And that has helped us reduce our electricity costs. Of course, the ongoing process of doing little projects to increase -- improve our energy utilization also helps. So the per unit consumption also has come down. And all this has played a role in helping us save some costs in terms of fuel, power and [ watts ]. And I hope that the prices of coal come down. Then, obviously, the utility costs will come down. And we do plan another solar plant in Gujarat for our Dahej plant. So some portion of electricity costs will also get reduced there.
So sir, just to conclude, like what we have seen in the other expenditure in Q4, and based on the cost initiatives, what you just highlighted upon. Based on 10% to 15% of volume growth, what we will achieve for FY '24, this absolute amount of other expenditure could remain at these levels of Q4 only and won't go up substantially from here, could be the right assumption, sir?
I wouldn't -- well, because the volumes will go also obviously, the absolute amount will go up. We do need more electricity, more steam when we produce more tonnage. If the prices come down by a same amount, then obviously, we will -- it will flatten out. It depends on where the prices [ compete ].
The next question is from the line of Pujan Shah from Congruence Advisers.
One bookkeeping question. In capital work in progress we are seeing INR 198 crores of appreciation from FY '22. So is it about the ethylamine or we're planning something as usual, because [ featurization ] have also been increased.
Can you just repeat the question?
Yes, sure. So in our balance sheet we can see the capital work in progress has increased by INR 198 crores. And we are also seeing fixed assets increase somewhere or the other way. So is it about the only ethylamine or we have been proposed to some other expansion as well?
So there are other projects also apart from ethylamine, but capital work in progress of INR 352 crores out of that around 80% is of ethylamine. And also we have capitalized around INR 140 crores of project during the year. We will see that movement also.
Okay. So -- could you just spell out 20%, which are the products we have been using like developing to?
See, out that INR 140 crores, the 2 bigger items, 1 is the solar facility. And the second was the [indiscernible] plant...
And 1 hydrogen plant.
And 1 new hydrogen plant, which we commissioned in June, July. So these are the big items on the...
Self-service or process improvements and all.
Yes. The others were small, small items.
Okay. And sir, on overall basis, as -- previous question I was been asked. So overall, if we say the -- how much on the raw material basis, the peak -- from the peak has been corrected? So let's suppose it was INR 100 on the raw material, which was peak around. So how much percentage has been corrected till data? And what are the estimates still about to get corrected in the coming quarters for the raw material side?
Okay. I think predicting the coming quarter is not a good idea because these prices are a little volatile. But they have seen 10 -- I think -- I would say, about 10% overall, there are a couple of like ethyl alcohol has become a little more expensive while coal has come down. So as a mix, I would say about 10% to maybe 15% drop from its highest peak.
And sir, I just wanted to understand the C4 and C6 chain which we are talking about. So is that the thing that the market size is small, or is that the thing that it's a very niche product? Or the -- all this -- the demand is being substituted by imports? So could you look into...
Market size is small. These are butyl, hydroxyethyl, all these are very niche products in the sense the market sizes are small. Yes, imports are coming in, and we are making, so it's not a very large market in India. They go into niche products -- while they are not very large products.
Okay. [indiscernible] industry is in use for all these products for the...
[ Captivity level ] goes into rubber chemicals. So there are niche used for all this.
[Operator Instructions] The next question is from the line of Bhargav Buddhadev from Kotak Mutual Fund.
So in the opening remarks you alluded to the pharma industry sort of not doing that well last year. But if you look at data points in the last 2 months, we are seeing some signs of double-digit growth sort of coming back. So if we look at a few portfolios like respiratory anti-infectives, vaccines, chronic, acute, et cetera, et cetera, we are seeing almost 10% to 12% growth being reported. So is it fair to say that in turn, given you are the supplier, you are also seeing some sort of pickup in demand from the pharma sector?
Yes. What I was alluding to was the last year up to March, we were referring to the year '22, '23. But yes, going forward, as I mentioned, the pharma industry seems to be a little more optimistic that they have passed the stage of -- they were -- they had, I think, produced -- overproduced during the COVID era. And then when normalcy came back, and I think they had to destock. So obviously, production -- sales were about 2% or 3%, probably higher, but they had to destock. So in actual terms, where purchases of raw materials were less than the previous year. So now they are back to what we might call the normal pre-COVID. It will not be -- I mean, the booming years of COVID, but better than the pre-COVID years. So I think, yes, you are right that the current number is from the pharma industry look a little more optimistic. And therefore, we are hoping that our growth rate will be on the higher end of the 10% to 15%.
Secondly, sir, in the environment where raw material prices have been coming off. So we saw a sharp correction in ammonia, happening in the last 2, 3 months. But even acetic acid, et cetera, other raw materials have been coming off. So in that scenario, why would our gross margins declined sequentially? I'm referring to fourth quarter versus the third quarter.
No, I don't think the gross margins in the fourth quarter declined against the third quarter. In fact, it was about a couple of percentages points higher. But there is -- it's not just the raw materials. It's also the finished good prices. For example, in the fourth quarter, we did face a little more competition from imports, mainly Chinese. So it isn't a 1 way history. It's just not raw material prices, but it's also the -- there is good prices here to watch. That's the differential which makes the margins.
And lastly, sir, is it possible to share what has been the realization in Acetonitrile now?
You mean what is the current prices?
Yes, yes, yes.
Yes, I think they are floating around INR 150 a kg. In terms of dollar prices, they are among the lowest we have seen for a long time.
And is this primarily because of increase in supply or is demand issue over here?
I think it's an increase in supply. Mainly -- last year, the Chinese had lot of issues, but now they have straightened it all out and they are coming back into the global market.
Okay. So unlikely that prices may significantly improve from here on in the near term. Fair to say that?
I don't know. It's very difficult to say whether the prices will -- but I don't -- I think it may not go down too much because there is not -- as I said, it's the lowest it has been ever in terms of dollar terms.
But we don't need to worry about our domestic competitor adding capacity, right? We may not be servicing the same set of customers.
In Acetonitrile?
Yes, yes.
We don't have significant competition domestically. As of now, I mean, there are people talking about it. But as of now, we don't have any significant competitor. Our main challenge is imports.
The next question is from the line of Archit Joshi from B&K Securities.
Sir, just alluding to the same question asked by the previous participant. This is with respect to the product mix, sir. So if I see -- if I track the EBITDA margins of our company, maybe for the last 12, 16 quarters, we have been maintaining a very healthy EBITDA margin competitor. It was -- it used to be up by a healthy 400, 500 basis points until September '21. Post which, if I just see our EBITDA margins have been contracting, and our competitors EBITDA margin have been improving or relatively have been kind of better off than us. So just taking the Acetonitrile point, sir, will it be safe to assume that earlier because Acetonitrile used to be a big contributor to our EBITDA, and now with the falling prices, the inferior product mix has caused this fall in EBITDA margin, or is there any other element as to why we are able to see this fall in our EBITDA margins?
Yes. So Acetonitrile, you're right, the margins have narrowed, mainly because the finished good prices have narrowed. Of course, the [indiscernible] is now coming down. So we are hoping that the Acetonitrile margins will widen again. And it is an important product for us.
The other big product is ethylamines where, again, the alcohol prices have risen. However, the finished good prices have not risen because of competition. So those margins have dropped. And these 2 are the main reasons why our margins have dropped a few basis points compared -- well, I don't know about the product mix of Balaji, but this is the reason why our margins have dropped. Overlapping about 40% of our businesses that other businesses don't overlap. So we're not exactly like-to-like.
Yes, yes. I do appreciate that, sir. But when it comes to ethylamine, sir, other than Acetonitrile, we have a far larger capacity than our competitor. So along with Acetonitrile, ethylamines also has been kind of disappointing, which is way heavy on our EBITDA margin. So is that what you're saying, sir?
Yes. We have some -- these are the main 2. There have been others which have -- some have done. I mean a couple of products have done well and some have not done so well. And these are 1 of the 2 concerns. Both the products seem to be doing a little better now, but looking forward to better times.
The next question is from the line of Noel Vaz from Union Asset Management.
So regarding the import substitution, so now on is the company looking at import substitution into some other products as well in replacing our products -- replacing imports with our products? And if so, what exactly is the opportunity size that we're looking at?
I'm sorry, I'm sorry, I don't quite understand the question. You are asking whether our products are replacing import into the country?
Yes, exactly.
So that is -- across the board, I would say, yes. Most of our products are replacing imports coming into the country because now competition is global. So if we don't make the products, people will import it. And even if we make the product, people will still import it if it's cheaper. So you have imports as a benchmark, I mean whether Europe, America or China. There will be competitors for all products whatever you make. So whenever we even launch a new product in the country, we obviously check there is market. And if there is a market in India, which means somebody is importing the product if we are going to be making it for the first time. So that's going to happen. It's an import substitute market by and large. Yes, sometimes, we have a situation where we've launched product where we're eating into domestic players. That can also happen.
Okay. Understood. But generally, if you want to look at the imports as of here as a market size, what are -- what exactly would be the size there, roughly speaking?
First, product to product, but I would say that in the products where -- for example, ethylamines are hardly any import, 2% to 5%, maybe not even that of the market share. In Acetonitrile, it would be the other extreme where it would be almost 30%, 40%. So product by product, it does wane. But I would say that an average of 10% to 15% import is probably there.
AC, you must understand that the customers also export. So when they export, they have what they call the advantage of duty-free imports. And some time we can match it by giving them prices which are equivalent, called [ win ] exports. But sometimes, we cannot match those prices. So there is always going to be some amount of imports coming into the country to the extent that our customers are exporting their products.
The next question is from the line of [ Chandrakant Alok ] from CD EquiSearch.
Sir, I wanted to know, what do you think -- why do you think like the improvement in pharma industry will sustain? And second, can you give -- what is your margin outlook for fiscal year '24?
Okay. One, I'll answer the second question first, the margin outlook. We normally do not speculate on our future margins because it's very difficult. We only give a broad indication of volumes which we expect because margins, as you know, we have all have very quite widely. And unexpectedly, we do well. And expectedly, we don't do so well. So I wouldn't speculate on the margin at all. But we are always hopeful that given that the raw material prices seems to be coming down, we would get some advantage in that.
What was the second part of the question, sorry?
Why do you think the improvement in pharma industry will sustain?
Well, the pharma industry has gone through a bit of a rough time. I mean during the COVID period, they did produce a lot and exported. And then they had the normal times there to destock. So compared to that time, yes, it will be better than last year. And pharma, if you notice as the penetration in our country is fairly low, of drugs. As the country given the population, pharma is going to be a big provider of our medicines for a long time to come. So they are still at a very nascent stage. I mean, I think only 15% of our population actually uses allopathic medicine. So they are going to be there for some time to come. And maybe they will have some quarters not so good, but by and large they are a very essential commodity.
So volumes -- in terms of volumes, they will be there. They have their own kind of constraints of pricing and other things and supply chain difficulties and other things. But by and large, the demand will always be there in India and growing.
The next question is from the line of Jaiveer Shekhawat from AMBIT Capital.
So first question is in terms of the Acetonitrile capacity addition itself. Now we understand that even your domestic competitor will add about 15,000 tonnes per annum, and the combined capacity post that will be about over [ 45,000 ] tonnes per annum as against the demand which is around 30,000 tonnes. So how do we understand your strategy about trying to be with a possible oversupply, and we have already seen the prices already having crashed down to about $2 per kg or let's say, $3, $3.5. What will be your strategy there?
Look, it's something like this. When we have competition coming up, and there is always -- I mean, we have seen enough announcement over the last 10 years of people coming into the Acetonitrile mark. As and when it comes up, we will face it. This has been among the lowest prices we have seen. And if we are able to sustain this margin, we will always have an [ edge ] over the newcomer. Because our experience in making this product makes us far more efficient than the newcomer. He has to absorb his capital costs. Our capital costs have got absorbed by and large. And I'm sure we will be able to compete with the best in the world. We have done it over the last 10 years, and I don't see any reason why we won't be able to do it in the next 10 years.
During FY '22, we had commissioned extra 18,000 tonnes per annum capacity. So as of now what will be the overall capacity utilization for Acetonitrile capacity? And what will be the share of exports?
We have 2 plants, the old plant and new plant, and the total capacity was between 28,000 to 30,000 tonnes per annum. And we are at about 60%, 65% utilization of the 2 plants.
And are you also exporting anything? What would be the share of exports?
In fact, this particular year, 1 of the things that has happened is that our exports have increased quite a bit. So we are now almost about 22%, 23% of our sales in exports.
Understood. Sir, on the new product that you mentioned diethyl ketone, could you help us understand, say, the overall market size there is and also your right to win over there and the margin profile as well for these products?
Okay. So the market size is growing, but it's not very large. We would be, I think, aiming at about 50% to 60% market share over the next 18 months or so. Our capacity, we are trying to establish and debottleneck over the next 18 months to make sure that we -- but it's just a couple of months since we have been in the market. So it's a bit early to say about the margins and all and how the market will react a bit. At the moment, it is following the trend which we had predicted, but it's early days. So it's difficult to predict -- project that. But it's not a very large market in terms of tonnage or in terms of value. It will be kind of a 5% or 3% to 5% of our turnover at best as you go along.
Understood. And sir, last question is that, given that you largely have pass-through arrangements with your customers, so what does ammonia pricing crashing by about 60% to 70% mean for your realization? How should we think about that?
So we don't have any pass-through arrangement with our customers. It's just that because the competitor and us have the same kind of exposure to the raw materials because our technologies are similar, that we have to keep in line with the market. Otherwise, the competitor will eat your market share. So it's not that we have an agreement with the customers, although the customer is sharp enough to realize what is going on in the market and how -- but it's not necessary that we have an arrangement with the customer. It's just the market dynamics that play a role in determining that.
Sir, I just want to understand if the competitor were to reset the prices down. How much should ammonia coming down by 60%, 70% mean for your realization? What kind of impact? Because you also have other raw materials that you use which have largely been stable.
Yes. So I would say we use -- ammonia would be about -- maybe of all our raw materials, maybe about 20% cost price. And if it comes down by this thing, we may save about 4% or 5% compared to last year. But of course, the finished good prices also. It's not a one-way street. I mean ethanol, ammonia coal, acetic acid are probably the biggest. So ammonia would be maybe 15%, 20% of our raw material costs.
Understood. Sir, lastly, any expansion plans beyond what you have already announced? Are you starting for land, for say, methylamine capacity expansion as well?
We are -- we have already said this earlier, that we are looking forward to -- because we have all the land in Dahej and Kurkumbh has now been allocated to these new products which we mentioned and the expansion plans, which we have over the next 18 months to 24 months. We will need more land after that. And we have applied to GIDC in Gujarat for new land. The process is on. And hopefully we understand that the middle of this year some progress will be made in allocating some land to us and we may have to then start making downpayments. But it's at least 12 months in the future. But definitely, yes, you're right. We need more land for expansion, whether it is methylamines or any other expansion of our business -- [ we'll ] be using up all the land that we have in Kurkumbh, Dahej and Patalganga with the projects which we already have in mind.
The next question is from the line of Chetan Thacker from ASK Investment Managers.
Just wanted to understand CapEx for '24 and '25 and the time lines of those coming on stream, the capacity increases over the next 2 years.
Okay. So the '23, '24 would be around INR 200 crores. This does not, of course, include the land which we just mentioned earlier -- which is a little bit of a floating amount -- so we don't know when GIDC will allocate the land and all that. But the projects which we require in '23 -- '24 and '25, between the 2, it would be about INR 300 crores, INR 200 crores and INR 100 crores or whatever, INR 180 crores and INR 170 crores or something like that.
And this will essentially add how much capacity in terms of volumes?
This -- in terms of [ positive data ], some of these products are speciality products. So it will not be a volume driven, but it may be a value driven. And as we mentioned earlier, given all these 4, 5 products, which we'll be adding -- including the diethyl ketone which we have already commissioned, over a 3- to 4-year period, they may comprise almost 15% to 20% of our top line, and perhaps, hopefully, a larger portion of the bottom line.
Got it. So essentially, given what we've seen historically in terms of payback for us, this will be a shorter payback period because these are higher value-added in line margin products.
Yes. But capital wise also they are -- 2 of them are heading intensive, 1 or 2 are not that capital intensive. So return on capital employed, yes, we hope to maintain our good record and improve it.
Got it. Sure, sir. And in terms of the Acetonitrile, a bit fair to assume that the exit that we are seeing at Q4 is probably where it is in terms of pricing, and it shouldn't get worse from here.
I hope so because it [indiscernible] $2 as I mentioned, pretty low.
[Operator Instructions] The next question is from the line of Pujan Shah from Congruence Advisers.
My question was, on our finished products, are we seeing China has been reopening up. So is there any overhang inventorization which has been dumping out all over the world, that's why some of the finished good prices have been corrected, or is it been not like that what I'm able to [ leading off ].
I think what you mentioned is what the market is saying that there is a little bit of overhang of stock with their cleaning up. And perhaps once that is done, some kind of sense or normalcy in return.
Yes, because -- as we have listening to the pharma con calls, we are getting that pharma has been very bullish on getting a volume of double-digit growth. And at the same point, we are also getting expiration of touching of 15% growth. So are we being conservative or we have been -- like because of this issue we have been seeing a bit conservative on that part due to some of the pushing of some key products at lower cost?
First, I think we are as traditionally a conservative company. So predictions of the future are always a question mark. But yes, the pharma industry seems to be very optimistic. But if they deliver, we'll be more than happy to match their requirements to keep up.
The next question is from the line of Nirav Jimudia from Anvil Research.
Sir, you mentioned that these new products could contribute 15% to 20% of our overall sales. But in terms of absolute amount, if you can help us -- because the CapEx what you mentioned is close to INR 250 crores for all these products put together. So over the next 3, 4 years, how much could be the turnover which these products could achieve in terms of the absolute amount, if you can?
CapEx is off the cup kind of numbers, but it will be between INR 500 crores, INR 600 crores once these products stabilize in the market. Of course, they will also grow as we grow and -- so it would be at least that much turnover once they all come in line. So which will be about 15%, 20% of our turnover, more than that, because the amines and derivatives business will also grow.
And sir, these products would be predominantly catering to which of the user industries?
Most of the same user industries, which we have been supplying to, life sciences largely.
Correct. Sir, in terms of our overall turnover for FY '23, so if you can just break it down between the aliphatic amines derivatives and the speciality in terms of the revenue contribution.
I don't think that has changed much from the past. It's about 50% amines. And 20%, 25% derivatives and about 20%, 25% specialities. The only thing that has slightly changed in percentage terms is the percentage of exports is higher than it was earlier compared to domestic.
And sir, like FY '21 was the best year for us in terms of the operating performances from last so many years. So like -- let's hypothetically presume that if you want to achieve that sort of numbers, what sort of volume growth do we need to do from the base level of FY '23, keeping rest of the things consensus?
So what you are saying is that if we had to match the profitability numbers of the year '22 -- FY '22, which is about INR 300 crores PAT, right, a little less than INR 300 crores PAT...
That was in FY '21, sir.
Grew about 20%, 25% volume growth, given the margins which are there now to meet that.
Correct. And let's assume cost benefits do accrue towards in terms of the falling raw material price.
It will require much [ less ] volume.
Absolutely, absolutely. So keeping things constant as it is, we need to do a volume growth of 20%, 25% to achieve this, right?
Yes. But if, of course, if the margin widens a bit, then [ it will be ] only 15% to catch up.
The next question is from the line of Rohit Nagraj from Centrum Broking.
Sorry, I joined a bit late. So I'm not sure whether my question is answered earlier. What was the domestic and export mix during FY '23? And whether we faced any particular challenges for exports?
Yes. Okay. So as I mentioned earlier, that the exports has been between 22% to 23% of the turnover, which was earlier a little under 20%. So we have grown. And at the beginning of the year, there were some challenges in freight costs, but now they have all settled down, and availability of containers, everything all got sorted out. So now the challenges are more related to the growth of the economies abroad, Europe and America, which is mainly our market.
Right. Now sir, second question is in terms of competition outside of India. So are we hearing any other players who are putting up capacity in any other geographies and in Asia?
In the amines business?
Right, sir.
No, I don't think in our core business. There has been a lot of consolidation over the years. And the existing depots, we don't know much about China because that's a bit of a -- and China is a very big player. So it could be happening in China. But I don't think in Europe or America, there is any movement to expand much more. They will be doing their debottleneckings and all that, our competitors, whether it's BASF or Taminco or whatever. They will certainly be looking at going a little marginal increases in their production. You know that BASF had a little concern about production because of the gas issues with Russia, but that seems to -- they have seem to overcome all that.
Right. But I think they would not be a direct competition for us because they are more into proprietary demand and further downstream in terms of specialty amines.
No, no, no. BASF is the largest player in this field.
Okay. So in our products as well and in the proprietary products as well.
Yes. Taminco and -- sorry, Eastman, not Taminco. Eastman and BASF are the biggest players in this field. And there, of course, the Chinese, there are a number of them.
Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you, everybody. And I hope we have been able to answer most of your questions. As a concluding remark, I would say that we hope that we have got over the worst volatile period, and we are looking forward to now growth, especially because our customers, mainly in the pharma industry, seem to be so optimistic and our raw material prices are stabilizing. And hopefully, when we meet again, we will have good news to share. Thank you very much.
Thank you very much. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.