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Alkyl Amines Chemicals Ltd
Earnings Call Analysis
Q4-2024 Analysis
Alkyl Amines Chemicals Ltd
During the recent earnings call, Alkyl Amines Chemicals Limited (AAC) reflected on a year marked by mixed results. While there was a noticeable volume increase in sales, the company's revenue dropped by approximately 14% largely due to a 20% decline in average selling prices. The significant price drop was attributed to increased competition, particularly from Chinese producers. Despite this downturn, AAC aims for a better performance next year as market dynamics stabilize.
AAC's management expressed cautious optimism for the upcoming fiscal year, driven by stable demand in the pharmaceutical sector. The commissioning of their new ethylamine plant in Italy stands out as a major milestone, enhancing capacity and efficiency for future operations. This facility is projected to ensure adequate ethylamine production for the foreseeable future, alleviating prior constraints.
In terms of capital expenditure, AAC completed the ethylamine project at a total cost of around INR 375 crores. The overall capital expenditures in FY '24 were approximately INR 120 crores, focusing on maintenance and upgrades. For FY '25, the CapEx is anticipated to range between INR 60-80 crores, with potential additional investments for new products pending decision over the next few months.
For FY '25, AAC is targeting a volume growth of 10-15%, striving to return to a normal EBITDA margin of 20-22%. The company does not expect to reach the exceptional margins seen in 2021, but they do foresee an improvement driven by volume growth. Management noted that as price stabilizes, they could return to more favorable margin levels within the next year.
AAC is engaged in an ongoing antidumping duty investigation related to acetonitrile, which, if resolved favorably by Q4 FY '24, could provide substantial relief from price pressures and margin erosion currently experienced due to aggressive pricing by Chinese competitors. Management estimated the potential injury from dumping at around 15-20%, which could enhance AAC's market position significantly.
The competitive landscape is shifting, with AAC continuously facing pressure due to price cuts from both domestic and Chinese competitors. Despite these challenges, AAC remains committed to maintaining market share and has plans to adapt sufficient production capacities to fulfill domestic demand that currently stands around 70,000-75,000 tonnes for methylamines.
Management also indicated ongoing development of new products, which may significantly enhance future revenues. Plans to revamp the old ethylamine plant into methylamines production could materialize based on market demand trends, adding further value as those decisions are finalized in the coming months.
In conclusion, while AAC faces several external pressures, its strategic moves in capacity expansion, product development, and capital spending, along with a positive outlook for volume growth, position the company on a path for recovery and potential growth. Investors should remain aware of the evolving competitive landscape, especially with the ongoing antidumping investigations and strong dependence on price stabilization for future margin recovery.
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Ladies and gentlemen, good day, and welcome to the Alkyl Amines Chemicals Limited Q4 FY '23-'24 Earnings Conference Call hosted by AMBIT Capital. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amandeep Grover from AMBIT Capital. Thank you, and over to you, sir.
Thank you, Davin. Good afternoon, everyone. On behalf of AMBIT Capital, I welcome you all to Alkyl Amines FY '24 earnings conference call. From the management side, we have Mr. Kirat Patel, the Executive Director; Mr. Kanchan Shinde, Chief Financial Officer; Mr. Udipt Agarwal, Chief Commercial Officer; and Mr. Chintamani Thatte, General Manager, Legal and Company Secretive. Without further ado, I would now request Mr. Kirat Patel to start with his opening remarks. Post which, we can open the floor for question and answer. Thank you, and over to you, sir.
Thank you, Gareth. Good afternoon, everybody, and thank you -- welcome to our call, and thank you for joining in to our annual review of our performance. So let me begin by giving a few opening remarks about the year that has just gone by. And then we will open the conference for questions. So the year has been a little mixed for us a bit disappointing in the sense that we were expecting it to be much better. But there are some silver linings on the cloud. That the market demand for pharma is quite stable now and growing. And we have managed to increase our sales in terms of tonnage.
However, because of price drops, due to competition from the Chinese and some internal, the top line has, as you can see, has reduced. Fortunately, the raw material prices have also dropped and margins in the last quarter is slightly better than the previous quarter. The second half has been a little weaker than the first half. But looking forward, we feel that next year is likely to be better than what we have seen in the last year.
On the capital expenditure side, I'm happy to let you know that the Italy plant, which we had been constructing over the last 2, 2.5 years has been commissioned and has been running very well to much better than our expectations. And it is now the -- probably the largest ethylamine plant in the world. And this takes care of our need for capacity or ethylamine for foreseeable future. And with that, I think I will conclude my opening remarks and hand over the floor for questions. Please go ahead and ask whatever you may need to ask. Thank you.
[Operator Instructions] the first question is from the line of Nilesh Ghuge from HDFC Securities.
My first question is on CapEx. As you mentioned, that you commissioned this ethylamine plants during this fiscal. So can you just tell us how much total CapEx we incurred in FY '24? And then -- it is -- can you give us the project-wise breakup for that?
Okay so the ethylamine project, which was the largest project which we had finally was capitalized at about INR 375 crores. it is 120 tonnes per day. However, since we have spent a lot of the money in the previous 2 years, this year, our total capital expenditure is about INR 120 crores. In that INR 120 crores is also some expenditure for routine maintenance CapEx and the solar plant to supply electricity to our barge facility. So this year's FY '24, the CapEx was about INR 120 crores.
INR 120 crores
The capitalization was more because the mean ethylamine plan was a very large plan.
Yes. So capitalization, I can see that it's about close to INR 500 crores in this fiscal.
INR 400 crores. Approximately
INR 400 crores. Okay. And second thing, on the utilization. Can you tell us the utilization of acetonitrile plant in this fiscal because in our earlier communication that you mentioned that first half, the utilization was close to 60%, 65% -- so I just want to get the sense how it was in the second half of FY '24.
Okay. The second half was not as good as the first half because the Chinese pressure continued in terms of price and aggressive selling in the Indian market. So -- we were at about half our capacity 55%, a little better than half. And we are facing competition, both domestic is very small, but largely the Chinese.
Okay. And the pricing is also under pressure? Or it was a.
It has been the last quarter stabilized. Of course, it is difficult to say whether we have in the bottom of out I hope that is true that this is as low as it will improve.
Problem with this as well, the problem with price is we are, of course, fortunate because we are 1 of the first movers. So our Productivity on asset or nitrile and our cost structure is probably lower than the newer people who have come in. And this would be a big difficult price for the newer entrants. So that's why I think we don't see too much activity from the -- our domestic competition and mostly from the Chinese.
Okay. And sir, just on the ethylamine side. So you recently commissioned this plant and you mentioned that planned utilization is going -- but I mean sufficient utilization is a ramp-up. But you did mention that there was also pressure on the ethylamine side in our last communication. So how are the prices on that side? And what was the utilization of your ethylamine plant? including new capacity?
Okay. So this is a big mix because we were using the old plant until about October, November. And the new plant also over lapped with it. So -- the old plan was obviously in the first half was almost fully utilized. The second half, it's been largely the new plan. And that utilization is maybe at about 60% of the thing, which is, of course, more than the old plant could deliver, but still, we have headroom in the new plant.
But as far as pricing is concerned, yes, it has improved on both the selling side as well as the raw material side, the ethyl alcohol has softened. compared to what it was, say, 6 months 1 year ago.
The next question is from the line of Nirav Jimudia from Anvil Research.
So 1 is on the volume growth for FY '25 FY '24. So I think in the first half, we were at around 14%, 15% volume growth. So if you can just let us know what was the volume growth for FY '24
Yes, total volume growth for the whole year is under 10%. -- second half was much -- I mean, it was disappointing largely under pressure from asapotrial, as I said earlier, to Malaysia. And also, mono[indiscernible], also, we are facing Chinese competition. However, we have been able to compensate that with a few of the other downstream products of methylamine. So on balance, we do have -- we have a little less than 10% growth, less than 10%. We were disappointed in that because we were expecting it to be more than 10%, given that the first half was so strong.
So in absolute amount, the volumes could be closer to 1 lac tons for FY '24? Nearly there.
It's just short of that.
Correct, correct. Sir, if you can just walk us through the demand outlook for beta element like at what level of capacity we are at currently -- are we planning any expansion there also? And along with it, if you can just let us know the demand drivers for beta element particularly in context of the derivative.
Okay. I'll just hand it over to Udipt my colleague, who's the Chief Commercial Officer, who can give you a background on beta.
So thank you for the question. As you know that the methylamines and methylamines derivatives have a different application areas and the growth rates are different for those. For example, subordinary derivatives, which is largely dependent on the personal care related products that has a different dynamic versus the other derivative, which is largely on the pharma antidiabetics segment, and that is a different growth trajectory. So it's a different thing at both the derivative end. The base methylamine growing at their normal historical growth rate of low single digits. I would say primarily because these products find application in the agrochemical industry and agrochemical industry, as we all know, is the kind of pain which in the recent past. So this is where we are at this moment, but I would say that the derivatives are growing a little faster than the base metal.
Sir, sir, here, you mentioned about the firm up predominant you are talking about BMS. So if you can let us know like how is the market size both for the base methylamines, I mean, as well as the derivatives of methylamines and how much of the methylamines which are currently using captively for our derivatives and how much we are probably selling in the market at this point of time?
We are using about 30% of our methylamines captively and about 50% is so.
Sorry, sir, if you can just repeat, I lost in between that. .
Yes. So it's 30% of our production is self-consumed in methylamines and about 60% is sold merchant.
Okay. Okay. And the old ethylamine plant, which we were having -- so any plan of converting into methylamines or that would be kept separately as a ethylamine plant only?
No, we are having plans to convert it into methylamines. So the engineering has just started. So it would take a little time to converted that we are preparing for 2 years down the line when the demand has grown to a level where we will need it. As you know, we already have as a standby to the edge. [indiscernible], second plant, the old second plant methylamines -- ethylamine plant and that we bring online whenever there is demand peak when it happens in a few months or some particular homologue of methylamine between mono, di and tri is in short supply, and we have to bring it on.
And sir, is it possible to share the current market price of methylamines in India and at what level of capacity we are currently on?
So market price, you said .
Market size of methylamines in India and at what level of capacity we are at currently?
Well, market size would be about I think at 70,000, 75,000 tonnes of production because both Balaji us and RCF all self consume some of their production.
Correct. .
Maybe about 70,000, 75,000, we are at about almost 80%, 85% capacity utilization of the [indiscernible] plant. Which, as you know, is about 45,000 tonnes a year.
Correct. Correct. And the standby plan, what you mentioned would have a capacity of how much whenever we would.
That's about -- the old plant is about 15,000 tonnes.
But it is also used for ethylamine as a standby.
Got it. Perfect. Sir, next question is on on contribution margin. So let's say, if we exclude Estonia, which had a good year in FY '21 and because of which our profitability was better. Let's say we compare FY '21 and now FY '24. For rest of the products of tone, let's say the metal and ethylamines chain along with the derivatives. Has the contribution margins per kg had an impact in between these years? Or they were well taken care of through the price increases or the introduction of new products in that methyl and ethyl chains because of which those margins are protected. If you just can help us understand that, that would be helpful. .
Okay. So if you export the volatility in the asset on nitrile business other business. Between the products, there has been a little bit of up and down in the margins, the Methyl chain has done well the margins have done well. The ethyl went through a little bit of a rough time 1 year ago and has stabilized and improved now. And we hope to get back to the old levels of margins in the ethylmine change. Of course, MIPA has been last year being a bit of a disappointment because -- as you know, our antidumping duty expired a year ago, and they did not renew it. And the Chinese have again become active. And so we've had price pressure in isopropilamine, and we have lost market share there.
So sir, Phase II conclude that probably as compared to FY '21, Methylamine margins in per kg basis would have improved ethylamine is still lagging, but you are expecting FY '25 to -- for ethylamine amounts also the margins per kg should be back to the levels of FY '21, and that should overall help us to improve our contribution margins per kg.
Yes. I would say you're right, except to I will correct you that the ethylamine margins have already improved already in the last quarter, we have seen the signs now.
Sir, last question, if you allow me. And before...
Sorry, sorry, to interupt. This is Udipt Agarwal here. Just to add to that, year 21, 22, was also the special year of the COVID time, yes. Yes. as we look at the ethylamine of this product margin over the last 10 years or so and think about the margin situation for better way of looking at it, right?
Got it. Correct. .
Go ahead to your next question.
Yes. Sir, any new products, are we planning to introduce in the -- on the specialty side or on the derivative side of methylamines and ethylamine -- because after acetonitrile, I think such a meaningful contributor to the top line level of products have not been introduced by us. So are we planning any newer products, both on the ethylamine or methylamines as well as on the specialty side which could meaningfully help us in growing our volumes turnover as well as the margins?
We have a couple of products under engineering. In fact, 1 almost close to finishing the engineering, and we have to take decision shortly. And these 2 products are not actually derivatives or part of the I mean current I mean portfolio anything linked with that. Of course, there is also, as I said, a CapEx view for revamping the old ethyl plant to make it into methyl. But all these will happen over the next couple of years. Decisions will be taken in the next 3 to 6 months on proceeding because currently, the market situation seems to be very volatile with the Chinese active so much that 1 hesitates to put CapEx in the ground and then find that the Chinese have under continued all over the world.
So we are being a little careful on that, but we have proceeding with all the soft part of the engineering permissions, getting everything in place. So when the decision is made, we can implement it quickly. .
Got it. And sir, lastly, any volume growth guidance which you can give for FY '25? .
Well, we are always -- we've always been optimistic, and we always feel that 10% to 15% growth rate has been our norm. There have been a few years like last year where we have dropped below that. But otherwise, 10% is, I think, what we expect into 15% definitely may happen. Some part of it may be because we are still to ramp up the [indiscernible] -- we have not been able to actually exploit that product fully. But we hope that next year will be better for us and will be -- and that will contribute to some extent to the 1% or 2% of that growth rate will be just like on from a very low base, adding to volume.
What was the utilization rate in FY '24 for DEK, sir?
Very poor. I think it was maybe 20%, 30% .
So roughly 1,000 tonnes. .
Yes, less than that.
The next question is from the line of Jaiveer Shekhawat from AMBIT Capital. .
Kirat sir first question is on the antidumping duty investigation that has been going on, on acetonitrile so basically, the evidence that you have provided to the department, one, what has made the extent of dumping or the injury that has been supported by you because it's the dumping? And second, if the order is passed favorably, what kind of volume or margin benefit you expect?
Shinde here. So we have filed antidumping in December and in March '24, the investigation has been iniciated catering are going on right now. and we are planning for filing interim release also in that -- and it will take time.
Maybe in Q4 of '24 to '25, we expect that to come, if it is favorable on our side.
Injury is in the range of 15% to 20%.
Sure. And so if I were to compare your FY '24 revenues with pre-COVID FY '20 revenues, the revenues have increased by roughly 50 percentage whereas your EBITDA is largely flat. So one, if you could help us understand this 50% growth in revenues, how do you break that into volume growth and realization growth? And secondly, if your realization was to remain wherever they are, as of now, when do you think you can reach back to the 25 percentage EBITDA margin level that you had also guided earlier in the call.
Last year, our average selling price dropped by almost 20%, though there was a volume increase. Our top line dropped by about 14%, and the average pricing dropped by about 20%. So given that the margins obviously have come down per Kg looking forward to it, I don't think that margins will ever go back to the 2021 levels because those were exceptional years. But our average before that -- so we expect that the next year, we will get back to the average margins and we'll make up to the level which we were the year before by sheer volume increase. We are growing in terms of volume, and that is adding to the bottom line.
Sure. Because sir, if I see Pre-COVID, I think prior to FY '20, possibly you're doing 18%, 19% EBITDA margins which possibly might be in a position to do in a couple of quarters. Was FY '20 also impacted because of COVID by any terms because we still had a March lockdown that happen? Or was it still a normal level of margin that you would expect going forward?
FY '20?
Yes, that was around 25%, 26% EBITDA margin. That as a normal level of margin? Or was there a operation in the..
That is on the higher side, 25%
20% to 22% is what has been our norm and 18% has been low. We have even gone down as much as 14 at 1 point. But I would say that 20% EBITDA margin is what we hope to achieve between 20% and 22%
Sure. Sir, next question is in terms of realizations. So analyzing your data as well as that of our competitor. We find that after like many quarters of sequential decline in realization, we have seen some increase on a sequential or a quarter-quarter basis. So one, what has led to that? And secondly, would you call that as an aberration? Or do you believe that realization can increase from here on?
I hope it is not an elaboration. The main reason why the slide in the top line has dropped because the prices are stabilizing. Volumes have been growing little by little. So because the prices have stabilized with Q3 and Q4 numbers are looking on the top line a little better than Q3. And I hope going forward, this trend continues. Have been the bottom of the prices and on both on the finished goods and on the raw material side, maybe rock size still, there is a little bit of softening could happen acetic acid or ethyl alcohol, but I think we're near the bottom. So I think these margins are what you could predict would happen next year.
And sir, what gives you the insight or the foresight to possibly comment that it could be the bottom? And secondly, has there been change in the industry dynamics over the last couple of months or quarters which has led to this improvement in realization? And what has really led to the improvement?
Well, I think the improvement is only that it has -- it has not improved. It has stabilized. That means if the price was, say, 150, it dropped from 200 to 150 it stop dropping and remained at 150, while volumes kept creeping up. So it's stuck at about that level of prices have remained stable for some time. So that gives us hope that perhaps we've reached a stable point equivalent in the industry based on what the Chinese are doing because the Chinese were the ones who upset the whole Apple car. And they seem to be now at this price over the last few months.
Sure. And we say, of course, back out then prices will go up. But if they again become more aggressive, then it would happen strong -- it's a little worry that the yuan is weakening.
Sir, last question to concern possibly Kanchan, if you could explain the quarter-on-quarter increase in your other expenses?
Quarter on quarter increase. So mainly.
Yes, yes.
So there's roughly about INR 15-odd crores increase that is happening in other expenses if you could just follow up that.
Yes, nothing much. So mainly CSR expenses, which we could not spend, we had to make provision for that, and there was an asset at Patalganga, which was not being used, so we had to impair that. and see there is increase in production, the foreign fuel expenses have increased. So nothing exceptional other than this.
The next question is from the line of Rajiv Rupani, an Individual Investor.
I had a question on methylamines. Sir, our competitor has a 48,000 tonne plant, and they are commissioning new 40,000 tonnes planned in December '24. And right now, we have told that 60% of our Methylamines is sold in the market. So what would be the impact on the prices of methylamine in our production.
Okay. I think we have been expecting expansion on Malades methylamines capacity -- we have actually 2 plants, 30,000 and 15,000, that's how is at 48,000 and now we're putting up 1 plant which is 40,000. So obviously, we will shut down 1 of the older plants, which is probably less efficient. And -- there is tightness for him and some other -- 1 of the homeloan which is dimethylamine most of dimethylamine as far as Balaji goes into BMS, which is its own product and DMA HCL. So I assume that he is expecting the DMF market to, which has unfortunately been very low to improve, and therefore, we will need more DMA. That is the kind of analysis that we've come to that is putting up new capacity in methylamine to support an increase in the DMF situation. Because between RCFs and MP has -- there is enough capacity currently to supply the market. And barring few odd instances, there's not been any shortage of methylamine in the country.
In the country. And also is a question that you planned something 2, 3 years ago looking at some growth when they come online, sometimes you are off by by a year or so. So perhaps maybe 1 year too early for him maybe that just happens.
So you're saying that there would be no impact on the prices of methylamines.
There will be. There will be an impact because, obviously, we would like to use this plan fully at least 2 of them, it's not the 3. And that could create some pressure on the methylamines merchant market.
Okay. And sir, I have a follow-up question. Do we have any intention of setting up DMF plan in the future?
We are always looking at we have the technology, but we don't find it at the current pricing very exciting. So -- and that's the reason, I think why for the last year or 2, both RCF and Balaji have been struggling with the DMF capacity.
My next question is from.
Both the Chinese and the Saudi.
Okay. Okay, sir. My next question is on Ethylamines. So in the con call, you have said that prices have improved for ethylamine, and we are operating at 60% capacity utilizing in the second half but what is your outlook going forward is the prices of ethylamine per KG, if you could let us know?
What would be the average right for 150.
Yes, about 150 to 160 depending on mono, di, tri going forward, I think ethyl is a very steady growth market. It grows by 5% to 7% every year. And our plant is now planned for the next 5- to 10-year kind of view so that we don't have to put up a new capacity for ethylamine again. Okay so our competitor has also had about 22,500 tonnes. So are we -- I mean, exporting some ethylamine or what is the domestic total demand for ethylamine.
So both of us are exporting small quantities of ethylamines and their derivatives. But largely in domestic. Most of the ethylamine is largely domestic. And both of us are -- as I said, we are at 60%. We estimate that this capacity utilization is also in that region 50% to 60%.
But of course, being a slightly smaller plant capacity utilization. But we have a larger market share.
Okay. My next question was on ACN. Sir, we have been facing this pressure from the Chinese people since the last 6, 7 months, and we have filed for the antidumping duty. So when do you think this Chinese competition tapers off? And what is the antidumping duty does not come in our favor.
No. Look, if the 1 event will be Chinese taper off. Nobody can say, I don't think anybody has a view on that. It's not just acetonitrile, it's across the board, they have too much capacity in most of their chemical industry. And in fact, we recently saw an announcement by 1 of their companies for a huge methylamines plant. Considering they already had a methylamines that company, which was operating at 60%. So I've not understood the logic and that company is making losses. So -- it's a very strange feature. So it's very difficult to predict when it will taper off. But we have noticed if you go historically, at some point in time, maybe they last for a year, 1.5 years and then they kind of ease off. So we have to survive and hold our heads above the water till then. And we are still making money acetonitrile, not as much as we would like to or we were making -- but we are more than breaking even. So if it doesn't -- the situation doesn't person, we will continue to attempt to grow our market share because the Indian market is growing.
So that's a good news and we will continue to hold on to our market share and grow with it. Yes, if we get the antidumping duty, which may take, I don't know, about a year maybe, from now unless, of course, we get some extent kind of a relief. Then the chances of our market share improving is much more.
Okay. And what are the current prices of ACM currently?
Acetonitrile
Yes, sir. .
About 150 or so.
145 for the smaller people, 160 that kind. Okay. And what would be your capacity utilization this year?
About 55%, 55% to 60%. About FY '23, '24. .
Going ahead? What would be the .
Same side, we are hoping to improve it to 60% to 65% because market is growing. So I'm assuming the same market share between Chinese and us because [indiscernible] if it comes, it's not going to be impacted the next year, unless we are very lucky.
Got it. And my next question was on the raw material side. What is the current prices of ammonia acid and methanol could you please guide us?
This is Udipt Agarwal. Ammonia has been, as you know, is primarily driven by the fertilizer industry and what happens there. Currently, ammonia about -- depending on the location, in the range of INR 50 to INR 52 per kg. Acitic acid has been fluctuating up and down and it is a little shy of 3 at this moment.
And methanol
Methanol or Ethanol
Methanol
Methanol is sub 30
And my last question, the last con call, you had talked about 2 derivatives of DEK. So could you please give an update on that?
No, no, no. Derivative of DK.
DK is a final product.
You have talked about some derivatives in last con call.
We may have talked of DK, which is a new product.
There is no derivative of BK.
[indiscernible] .
The next question is from the line of Aman Chaudhry from Motilal Oswal.
So there are a couple of reports that there was a downturn in the methylamine market in April or at least the first half of April with inventory destocking also in continuing along with declining downstream demand as well. So can you throw some color on the sales?
Come again, the downturn in
Downturn in the methylamine margin in April or at least the first half of April.
I don't think we saw anything unusual in the methylamines market.
Okay, sure. And also if you could give the exports to domestic sales mix for the quarter and FY '24 as well?
As a percentage
As a percentage.
22% '23, '24 is 20% .
80-20. More or less 80% is of our domestic and about 20% is exported. And I think this is what cancer has been saying. This is where we are.
Sure. My next question would be regarding an FID that in our last conversation, Kirat, sir, you had alluded to, that would be requiring a CapEx of around INR 80 crores, INR 90 crores. So any update on that?
Yes. So this year, we spent about INR 120 crores on CapEx next year, we are looking to spend about INR 60 crores to INR 80 crores. A large amount of it is maintenance CapEx and some debottlenecking in our current products. But as I said, we have 2 new products in mind. And those decisions have not been finally taken about going ahead. But if they do, then they will -- the CapEx will be additional. And they are in the region of between INR 75 crores to INR 200 crores. But okay, it will be spread over 2 years.
Sure. And yes, sir. And in the very beginning of the con call, you had alluded to the market demand for pharma being stable now, can you throw some color on the Agrochemical side?
Agrochemical has been a little bit late, depending on which kind of market do you look at -- the kind of situation with the agro industry had been in the last 2 years or so, that destocking has been going across the supply chain in the Agrochemical is still on, although we have some indicators from the public market that on a very selective basis, this might be kind of coming to an end, and we could see some upside from here.
However, having said that, there is also a large increased Chinese competition, not only for our direct product but also for our customers product, which IT are also kind of selling at a very, very low prices, the agrochemical molecules. Not only in India, but also internationally, where our customers are also exporting. So -- so on the agrochemical side, yes, it's a mixed situation, while on the demand side, we seem to be seeing taking so getting a little better, but not still there where it should be. The destocking effect seems to be coming to an end. At the same time, competition from chats are also increasing. So to see, I mean, a lot -- today, I mean, if you look at the entire chemical industry, of the strain down the stream. It's really largely what is happening in China that is affected. The rest of the world is also affected because of that because of the total chemical production, more than half of it is in China, 55%, 60% chemical industry, global chemical production in China.
Sure. Sure. And last question from my side. Even if we get an interim release with regards to acetonitrile or say, the final antidumping duty is also levied would this encourage a private player to enter the market, which had announced the 10,000, 15,000 tonnes per annum capacity around 2 years back?
Yes. I think there are a couple of people who are already in the market who are -- in fact, our competitors are already there in the market, but they are at low production level because at these prices, they are probably not profitable. So there is always the chance that if the antidumping duty comes in and the prices go up, they will also try and grab some market share. We are just hopeful that because of our larger volumes and our efficiencies and our production cost advantage we will be able to retain market share and increase it.
Sure. That small clarification last from my side, any update on the additional [indiscernible] that we have been looking for.
No, no, we haven't got any further progress on that. But given that we have enough land in both in [indiscernible] for the new products which we are planning, there is no urgency. We have applied for it, but we haven't heard back, but we are not in a big guide. There's no urgency in the matter. But okay, sometime in the next year or 2, we will probably take action and move on that situation when these 2 projects are under implementation.
The next question is from the line of Nirav Jimudia from Annual Research.
Sir, you mentioned about the improvement in the margins of ethylene, which has already started happening on. So from when it started improving for us. So was Q4 numbers captured some portion of those margins? Or the entire increase in the margins for ethylamine was captured in Q4 #1. And along with it, let's say, on a scale of 100, the margins for retail, I mean, in terms of contribution per KG, how much on for us. SP1 So well, there's no exact point in which the market turn around. But yes, towards the last 3, 4 months, we have been seeing that the margins have improved, the ethyl alcohol has stabilized and/or in fact, actually gone down from the peak it was. And the selling prices have also improved marginally. I hope this keeps up. I don't know how we cannot predict how the market will go tomorrow. We can see that we have all the way up to half year September to October we can see the visibility on the alcohol price, and it seems to be very positive. As far as the selling prices are concerned, yes, this quarter looks good, but 1 cannot predict the next quarter and the quarters after that.
What I was trying to understand from you is the margins on a per kg basis started improving from last 3, 4 months. So let's say, if it were INR 100 a kg margin, how much it would have improved on?
Oh, I see. Well, margins would have improved by about 20% on the -- very difficult to say. I mean it's .
Rough idea would also help. I'm not asking for any exact numbers, but just to get some qualitative understanding about the improvement in the ethylamine margins, which started happening over the last 3, 4 months, and which is currently sustaining.
Yes. ethylamine margin is difficult to say that how much it has improved because it's been up and down. So we had to take what is about the bottom, what was the top was it temporary bottom. So this is a very difficult question to answer off the cuff. We'll have to look at it and say that this is a range in which it paused earlier and now it is the same and I will come back to you on this. It's not possible to ask.
Sir, on the cost side, you mentioned last time that we were in the process of putting up the solar plants, I think one-off was getting commissioned in November, December of '23. So any update on the same?
Yes, the solar plant in Base got commissioned in January, and we have already started receiving the electricity from that plant. Totally, now in the company, we have about 8-megawatt also 8.5 megawatts capacity between Kukun,Patanga and the [indiscernible].
And let's say, out of our total requirement of power, how much this would help us to use from this kept?
Okay. So there, there are 3 sources for power for us. So 1 is, of course, color. Then there is a turbine which we use back pressure turbines for our steam generation and MSCP or GB electricity board. So I think on an average, about 50% of the electricity, which we use is from the grid from the electricity board. About 20% to 25% is from the turbines and about 20% to 25% is from the solar.
Okay. And the turbine would predominantly be using the coal.
Yes. It's -- the [indiscernible] is from coal. All 3 sites is on coal.
Sir, any possibility of giving us quantitative numbers in terms of receiving in the power cost, which would accrue to us because of commissioning of this 8.5 megawatt of solar power plant.
No, no, no, 8.5 is the total amount which we have Okay. The [indiscernible] commission just now in the last year in January was, I think, 3.5
Okay. And any numbers which you can help us out in terms of savings, which have started accruing to us because of this 20% captive use through solar? which otherwise probably would have been buying through grid or through generation [indiscernible] turbines.
Yes, about -- my estimate would be this 8 megawatts would be giving you about INR 3 crores to INR 4 crores of savings in view of if you were buying from the grid, right? and we are buying and generating our own maybe about INR 3 crores to INR 4 crores savings every year.
Okay. Sir, last year, our absolute power cost was like INR 215 crores, INR 216 crores combining everything put together.
That would have included fuel.
Yes, fuel. So what was the similar number for FY '24?
Can you -- we'll have to look it up, but it is lower because coal prices have dropped from -- it would have been considerably lower because the coal prices are on .
Sir, last question would be in terms of the breakup of sales, if you can just help us know the breakup of INR 1,440 crores of sales what we have reported between mines and mines derivatives and the specialty chemicals for FY '24.
SP1 I think the percentage change has not been very significant. It's still, I think, in the region of 40% to 50% is the main means about 25% is derivatives and about 20% to 25% is especially, which is the main 1 being acetonitrile. Got it. Got it.
[Operator Instructions] we have the next question from the line of Dhruv from HDFC Asset Management.
Firstly, you mentioned that methylamine demand-based demand is -- methylamine demand is about 70,000 tonnes domestically. So this would be -- just be base or, say, for example, even the downstreams of, say, DMF and everything, all inclusive demand
No, all inclusive. The DMF is a question mark because DMFs all the DMF demand in the country was to be -- all the neos to be made within the country of what we are importing, then yes, another 10,000 tonnes could be added to the methylamine demand. But obviously, this has to compete with imports. So it's not going to happen.
So when we say these demand over these are based on production of base methylamines.
Basically production of base methylamines.
So what goes into downstream is separate. That is not included in these demand numbers. Probably those downstreams could be imported from use
Doing what the RCF, Balaji and us would be producing my estimate of what we would be producing they will be producing every year. Or this year, other -- and it goes up by 5% to 7% every year.
Sir, any kind of assessment is all -- of course, this is hypothetical, but all the downstream were also to be made in India, which is probably currently supported. What would be the base demand for methylamines.
Sorry, what could be the
I mean base demand for methylamines for example, currency is about 70,000 for example, DMF is currently not sure how much is imported if that was also to be manufactured in India, and that would use base metal mines. So how much would you.
Spend another 10,000 tonnes. So Okay. Got it. Sure, sir.
Sir, the second question is
In fact, both NMP and DMF and all if you add up, it could be 80,000 tonnes to maybe 90,000 tonnes. So there is a potential in India is competition. But obviously, competition doesn't go away. It's 80,000 to 90,000 tonnes could be a kind of market size, you would say, potential market size.
The second question is on a per kg basis, for Methyl and Ethylamines lets take before 2020 what the spreads would be on an average per kg contribution or EBITDA? And what were they in the current year? Or I mean, I'm on a benchmark basis, I'm not asking for an absolute number, but how different would they be. I mean current year FY '24
Yes. pre-COVID when there was some abnormality post that. So let's pre 20 and the current year on a per kg basis methyl and ethyl.
I'll have to come back to you on that because I have to look at the numbers of pre-COVID per kg but my feel would be that we would be slightly better off than that just now. But I couldn't say for -- obviously, we are not as well off as the COVID years per kg but pre-COVID to now, we'll have to just check which is you're talking about '19, '20.
Let's say 3, 4 years at an average of 3, 4 years before just to get a sense
We have to look it up and -- good way to look at our long-term pricing.
And sir, lastly, you mentioned the few players in China are still adding -- one player in China is the adding capacity. Is it possible to name that player -- which player is this?
No, I think it's in the -- you can google it [indiscernible] there in the
[Operator Instructions] we have the next question from the line of Pradeep Rawat from Yoga Capital.
I have 1 question. What is the market size of acetonitrile and how much is imported?
Market size would be in the region of 30,000 to 35,000 tonnes. And I would say about 40% of that estimated is important last year 50% to 55% was imported.
And the there are no further questions. I would now like to hand the conference over to Mr. Kirat Patel, Executive Director; for closing comments. Over to you, sir.
Thank you, everybody, for listening in and spending this hour with us. I hope we have been able to answer most of your queries and look forward to your continued support in the future. So as a few closing comments, I think we are looking forward to the next year with some degree of cautious optimism because I think the next year is likely to be better based on what we see happening in the last quarter. And the good part is that our customers are growing and the opportunity in India is large. So over a long-ish period, we will be here to stay and let the company will grow from strength to stand. Thank you very much for listening in, and thank you AMBIT and for hosting this conference.
Thank you. On behalf of AMBIT Capital, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you.