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Apcotex Industries Ltd
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Ladies and gentlemen, good day and welcome to the Q1 FY '24 earnings conference call of Apcotex Industries Limited. [Operator Instructions] Please note that this conference is being recorded. At this time I would like to hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you and over to you ma'am
Good afternoon everyone and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Apcotex Industries Limited. On behalf of the company I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2024. Before we begin, a quick cautionary statement. Some of the statements made in today's con call may be forward looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs, as well as assumptions made by and information currently available to the management. [indiscernible] are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.Now I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Abhiraj Choksey, Managing Director; and Mr. Sachin Karwa, Chief Financial Officer.Without any further delay, I request Mr. Sachin Karwa to start with his opening remarks on the financial highlights. Thank you.
Thank you, Purvangi, and good afternoon, everyone, and welcome to our earnings call for the first quarter of financial year 2024. I hope you've had an opportunity to review the financial statements and earnings presentation, which has been circulated and uploaded on the website and stock exchanges. First, let me brief you on the financial performance for the first quarter of the financial year 2024. For Q1 FY '24, the revenue from operations stood at INR 278 crores, which witnessed a decline of around 9% on year-on-basis, an increased by about 8% on quarter-on-quarter basis. EBITDA for the quarter was INR 26 crores, which declined by about 48% on year-on-year basis and decreased by about 25% on a quarter-on-quarter basis. With EBITDA margin showed at around 9.2%.The net profit stood at INR 12 crores, which declined about 64% on a year-on-year basis and decreased by about 48% on a quarter-on-quarter basis, with PAT margin stood at 4.36%. In Q1 FY '24, on the back of new capacity commission, we witnessed our highest ever quarterly volume and export volume growth of 22% and 110%, respectively, on a year-on-year basis, which was led by nitrile latex, carpet and construction.In spite of 22% increase in volumes, revenue from operations fell by 9% due to sharp fall in raw material prices, which led to lower price realization of finished goods. EBITDA margins were affected due to lower margins in NBR and paper binders because of pressure on demand, falling prices and inventory losses. Furthermore, PAT margin declined due to increasing depreciation and interest costs only because of new expansion projects commissioned in March 2022. With that, I would like to open the call for question and answer sessions.
[Operator Instructions] The first question is from the line of Nirav Jimudia from Anvil.
I have 2 questions. Sir, in your opening remarks, you mentioned that we have been able to grow our volumes by close to 110% in the export market on a Y-o-Y basis. And even in our annual report, we have been saying that we want to significantly up our exports going forward. So just wanted to understand your thought process like when we go and tap the export markets, are there customer approvals, which needs to be taken from those customers to whom we are already supplying because what we could understand is that we are exporting close to now 45 countries. So those customers would again ask for the approvals from the newer plants, which we have set up. So how those processes are? And then I can go to the second question.
Yes. Thank you, Nirav. So it's a complicated answer, but yes, in fact process has to -- I would not say restart from scratch, of course, not at the lab level, but customers who want to initially try out some bulk quantity and then slowly move on. So especially in our nitrile latex for gloves, where the technology of the new plant is very different from what we were making for the last 3, 4 years because we were making it in our old plant. This was not necessarily the most ideal way of making nitrile latex because those reactors [technical difficulty] optimized for other products, styrene pyridine latexes, styrene acrylic latexes, vinyl pyridine latex. So yes, the technology was a little different. So some of our customers did want to -- it's not restock, but wanted to start the offtake slowly. So starting from March itself, we started once our plant commissioned and slowly, we have moved up. Now we've completely -- I'm happy to say at least as of now about a couple of shutdowns all production of nitril latex from the old plant. Now everything is being manufactured in the new plant. And obviously, because the approval process takes 3 to 6 months, typically, we are slowly building up our capacity utilization. As far as our other expansion project in Taloja, where our current products are styrene pyridine latexes, styrene acrylic and so on, it was much quicker. I would say almost immediately, customers said, the technology was the same. It's just adding new reactors of similar technology. So there the cycle -- or the customer approval time is maybe even 1 or 2 months, and they are happy to start. So yes, that's the nature of the business, whether it's exports or domestic, it's similar. But I'm happy to say that this quarter, 31% of our overall sale is from export market. We are still very much an Indian company for strategic focus. However, many years ago, almost 8, 10 years ago, we had -- we were only at 2% or 3% of sales were exports. So we were highly -- heavily India focused. So it was a strategic decision that over time, we focus on products and geographies that would allow for strategic exports, tactical and strategic exports. And that's what we have done. And for the first time, we have crossed this 30% mark, 31% of our total revenues, almost 1/3 is to grow a little bit more. And diversified, not -- it's not only in one country. So that's another good thing. So now at least from a geographical risk perspective, we feel better about the company's sort of current position.
So sir, just to add here, like when customers approach us like in terms of -- from the different geographies, what you mentioned, do they require some high value-added products, which probably they are not able to get from the existing set of vendors to whom they may be getting those products. So we have been able to, one, innovate the products, which is also visible in our R&D expenditures, which have been consistently moving up on a Y-o-Y basis. So have we developed some products where this product itself is giving us first mover advantage of tapping those customers to whom earlier we were not supplying? And to add that what you mentioned in some of our previous calls that with this new capacities probably our OpEx won't be going up. But with this new set of products, probably our per kg realizations can or could move up, which would ultimately flow to our EBITDA per kg?
Yes. Look, in some cases, we -- of course, we have certain advantages as far as product performance or product quality is concerned. In some cases, we have a geographical advantage, as I've said before. So for example, there are a lot of our customers in Africa, the Middle East and the GCC that are any way importing the product from Europe. So there, in the current context because of the high energy prices, the costs are higher, the time taken from Europe to come to some of these countries is higher; service levels, they've not been able to keep up with our kind of service levels with the talent that we have in India. And by that, I mean technical service, helping them with the final performance of the product, visiting often, building a relationship often. So there's a combination of reasons why there is a competitive advantage. In some cases, it's not necessarily that product performance or product quality is significantly better. We have been able to develop it, but we have been able to provide other services and that are better than our competitors. So it's a combination of both.
And the second question is on COVID. I think one of the statements in the annual report is that we have significantly upped our sales value, we have increased the distribution network. So if you can throw light in terms of the opportunity size for our B2C business, where we are currently, what needs to be done over the next 3, 4 years to up the business from the B2C revision significantly. So could it form a significant part of our business because probably the margins there are better, stickiness of the customers are better. And with the distribution network, I think we can penetrate more. So if you can just explain better those lines of?
Yes, look, our strategy in the B2C business has been to focus on our strength, which is polymer, so we're backward integrated. And so a lot of the products for the B2C market that we are focusing on are the polymers that we manufacture and some that we understand we're outsourcing and so we have a basket of products. We are slowly building our distribution network. So we are -- earlier, we were only in Bombay. We moved it to Maharashtra. Now we're in 4 or 5 states within the 4 or 5 states we are working with more distributors to distribute our products. As of now, we are growing organically, and we have been growing at perhaps about 20% a year for the last few years. Barring the 1 year in COVID, 1, 1.5 year in COVID, which was difficult. So we plan to continue to grow that. As the total value of the business, it's still a very small percentage of overall Apcotex's revenue. Over time, over 5, 10 years, we expect it to play a more significant role in terms of profitability and then valuation at the right point because there the business is a little different from the B2B business. So building takes a long -- building takes a while, building the brand, building distributor networks takes time.
Correct. But sir, can this business or whether the thought process within the company that could this business be scaled up to INR 300 crores, INR 400 crores of size within the time limits what you mentioned upon or it's too ambitious?
Unlikely. No, that is too ambitious. I don't think that will be INR 300 crores, INR 400 crores in the next 2, 3 to 4 years.
No, I'm not talking about 3, 4 years, I'm talking about 5, 10 years of the time period what you mentioned, where we can...
Yes. I mean, frankly, we have -- we don't talk about it too much in terms -- because it's an internal -- it's a smaller business and for competitive or proprietary reasons. We are not talking about the numbers of that business. Correct. Numbers or we -- obviously, we are in it because we think it will play a significant role to diversify the business. It's a good opportunity. We can be backward integrated. We understand the market. And so we hope that it plays a significant role in the overall business, either in terms of revenue or profit or EBITDA. INR 300 crores That's the endeavor of course.
So just a small...
Can we move on, if you don't mind Nirav. Give other people their opportunity.
Fine, fine, I'll join back in the queue.
The next question is from the line of Aditya Khetan from SMIFS Institutional.
Sir, my first question was, so what was the utilization level we clocked for nitrile latex in first quarter? And what is our target for the full fiscal?
So for the first quarter, our utilization level was approximately 30% -- yes, 30% plus minus yes, somewhere around there. And obviously, every quarter, we -- or every month rather, we are looking to increase that. And so for the -- we hope by the end of the fourth -- by the fourth quarter, we would be at 70% - 80% capacity utilization for that quarter. The average for the fiscal may be only 40% - 50%. But I must say that in the first quarter itself, we've exceeded both for nitrile latex as well as for our other products where we had built capacity [indiscernible] latex for paper, carpet construction, textile and all. So we are quite happy. Most plants are at about, I think, 30% or so. Sachin correct me if I'm wrong, but it's around 25% to 30%, right?
Yes, 25%.
And sir, sir, we have taken also inventory losses into this quarter. So the complete impact that has been taken away and in terms of per kilo margins, so can we take a call that we are standing at the bottom or there is more room for inventory losses or things can go wrong and there could be further downside into the per kilo margin?
So I'm glad you asked that question. So there are 3 reasons. I mean exactly about a year ago, it was the other way around, a perfect storm. About a year ago, there was a lot of tailwinds. There was -- because of the supply chain disruption, the issues with China, freight rates are very high. So Apcotex as a company because 50% of our products are imported the competition only benefited from that. Now sort of -- and prices were going up from petrochemical and finished good prices. Now we're in a, so to speak, this quarter, at least, where we have seen raw material prices crash. And frankly, earlier Q4 and Q3, we had a lot of stock that we had over bought, raw materials at that time because of supply chain issues. In beginning of Q1, we had pretty much exhausted all of that and we had sort of normal levels of inventory, but the drop for some reason has been so sharp and so unexpected in the last quarter [technical difficulty] in fact even with regular stock, we've had to bear with these inventory losses. To answer your question, yes, it continues into Q2. I don't -- I think from what I -- it's a little bit recent, but in the next -- last week or 10 days, I would say, things have -- seemed to have bottomed out. But I think it's too early to say. We have to wait for another couple of weeks, but it was still dropping as of July. So it's difficult to predict where -- if you were to ask me in my opinion, there's not much less to go below it really, some of our petrochemical raw materials are at the lowest that I have seen in many years, even some of them below COVID, believe it or not, when the first COVID hit, so it's unbelievable.
Sir, just one last question, sir, considering our nitrile acrylic business when it runs at full utilization level and since this product is majorly for catering the export market. So this mix of 30% of exports, how much this can shift at peak utilization when nitrile acrylic will run? Can you just go to around 45%, 50% or...
Over the next 5 years, obviously, we're going to grow the domestic market as well, where we have high market share in all our products, but that will grow at [indiscernible] as long as we are adding new products for the domestic market as well. But yes, we think with nitrile latex and some of the other products that we are pushing, we're still pushing with some customers. There -- at the peak, I think we had worked about it was 40% to 45% of our overall sales should come from export. [indiscernible] 4, 5 years later.
[Operator Instructions] The next question is from the line of Bhavya Sonawala from Samaasa Capital.
So basically, I mean, just looking at our customers and competitor commentary that Top Glove has closed 17 factories temporarily and Synthomer also and other kind of guidance that nothing is getting better in at least 1 or 2 quarter in terms of inventory pileup. So what -- how are we seeing the situation right now? What is our take on the current market? If you can just close on that one.
Bhavya, I think very similar. As of now, at least for the next 1 or 2 quarters for nitrile latex, it doesn't look like margins are going to improve. However, as you can see some of the capacities that were added, both at least the glove capacity, there is some shutdown happening. So hopefully, with then normalizing at some point, things should return. I know from the way we are looking at it is that our nitrile latex margins are well below pre COVID levels maybe 1/4 of pre COVID levels, when I say margins, contribution margin, at the gross margin level. And obviously, like 1/10 of what they were during COVID levels, but let's assume that also compared to our other products, they're much lower. So at some point, it has to correct. Supply-demand will correct itself. Unfortunately, we came in at a time, our new plant came in at a time when the market is at the bottom, it has been for the last 6, 8 months or more. And it's expected to be, as you said, from the commentary that some of our customers like Top Glove and others have been giving and some of our competitors as well. I don't think we have any different view. So our focus is to focus on [technical difficulty] in capacity quite small, at 50,000 tonnes. And we're already doing, as I said, about 30% in the first quarter of commissioning the plant, which I think is a fantastic job that the team has done. So we hope to continue to improve that, focus on improving our capacity utilization of market share. And at the time when it turns, we'll be there. We'll be there in the market. And there are a lot of opportunities, not only in Southeast Asia and with some of the big customers, but in South Asia and Sri Lanka, here some opportunities have arisen with specialty products in the West, in Turkey, Europe. So we are now focusing not only on Southeast Asia, but other markets as well.
So just one more question that I had was, is the medical glove market growing, irrespective of what's happening on the inventory side. Is there any degrowth or it's going at a lenient level, if you can have any sense on that?
So the way to think about growth rate, I mean I'm ignoring 2021, '22, right, calendar year 2021, '22 because that was a blip, all medical, whether it was gloves or masks or everything else, demand was through the roof. So obviously, compared to those numbers, you can't count growth. But if you look at 2019 and then kind of draw a line, yes, absolutely. All -- at least for gloves, I can tell you there are [technical difficulty] one is that the quality of health care and the awareness of personal protective equipment in Asia is really almost at the bottom that only can go up. And in America and Europe, yes, it's a mature market. So that's growing. So that's -- I'm talking about gloves overall. But within gloves also there is natural latex gloves and nitrile gloves. Now because of the availability issues, uncertainty of availability plus the protein allergies in the west, issues around those things. The market is moving from natural latex gloves to nitrile latex gloves. It has been moving for the last many years, 7, 8, 10 years, but that continues to move. As a result of which nitrile latex gloves are growing at a faster clip than overall other PPE market. So we continue to remain bullish. All reports show that growth over a 10-year period for nitrile gloves, worldwide.
And will we stick to the INR 200 crore guidance for in capacity?
Sorry, what is that INR 200 crore number?
No, I'm saying we expected, I think, INR 200 crores from new capacity coming in --
In terms of revenue, you're talking about?
Revenue, yes.
Well, look, we -- I don't want to give annual guidance, yes, we have certain targets. But overall, we're looking at about INR 600 crores to INR 700 crores on the investments that have been made at 100% capacity utilization.
[Operator Instructions] The next question is from the line of [ Aditi from Securities Investment Management. ]
So if you could quantify the inventory loss for this quarter?
Yes. I mean I would say I think we would have lost about almost -- around 3% EBITDA because of the inventory losses this quarter.
And sir, what was the Q-o-Q decline in the raw material prices for us?
Good question. So of course, as you know, we have multiple raw materials. I'm just trying to find those data. But for the quarter, I would say, between March and June, depending on the raw materials, anywhere between 10% and 30%. So some of our -- one of our major ones was almost 30% across -- over the quarter. And if you take up 4 months, including July, it's even more; 18% and 45% or something, right? So it's a big drop. It's one of the biggest drops we've ever seen in such a short period of time in a quarter. It has happened in the past as well, but it's very, very, very rare. So while we have what we look at as regular stock gains and losses, maybe plus/minus 1% here or there. This has been obviously much steeper than what would be our sort of average anomaly.
Sir, any specific reason why we are seeing such a sharp decrease because the crude has remained stable for the last 1 to 2 quarters?
Absolutely. So we were surprised as well. So one -- there's a couple of reasons. One is, at least in -- from March, it was, frankly, for us also internally, we didn't expect this kind of drop because we thought post-COVID, the prices have already come down a little and stabilized for 1 or 2 quarters. And then suddenly to see this happening after March, especially when crude was around the same. It's been around $70, $80 for the last 3, 4 months. So one reason is China. They are saying China post-COVID, the kind of pull that was expected has not happened. And as a result of which these commodities that we buy, at least for us, our petrochemicals and I can't speak for every price here, there are a lot of them also. Because of China slowdown, that was unexpected and therefore, there has been a sharp drop. And then of course and that also has had an impact on the demand for these raw materials as a result of which sudden crash has happened.
And sir, [indiscernible] explain what is happening in the NBR market. So are we seeing higher imports from the players in South Korea?
Yes. Look, we are seeing imports as well. But NBR see again, NBR is a little bit of a cyclical commodity market. Unlike our latex products, which are not easy to store, not easy to transport, but NBR, you can store anywhere. It's a synthetic rubber, you can store it for 6 months, 1 year. So what we have seen is because prices -- raw material prices have come down, there is also destocking happening, which typically doesn't happen in latex products, but in rubber products that can happen. People don't want -- they run at very low inventory. So there is an amount of destocking. So therefore, demand itself has been pretty poor in China, in India. When I say demand, I don't mean final consumption demand, I mean selling or buying of the product right now for the last 2, 3 months. But that's turning now in Q2. We see it turning now going forward because it's kind of bottomed out. And sometimes it's -- prices are coming down, demand reduces, therefore, prices are coming down that cycle continues for 2, 3 months then it kind of bottoms out. So volumes and margins have been quite challenging for NBR in the last quarter for sure.
And sir, what is happening in the synthetic latex business, excluding the nitrile latex for the domestic market? Because you mentioned that we are seeing some weakness in the paper segment. So if you can just elaborate what is happening over there?
Yes. Look, I think weakness in the sense that has been not much -- this quarter, we have not grown in the paper segment. That's what we mean by demand. We have added capacity, our competitor has added capacity. So there is a little bit of market share sort of grappling going on as a result of the margins in paper, especially have been a little lower. But I don't think the weak demand has not resulted in lower volume. And whereas the other segments, construction, carpets, textiles, we have seen growth in volumes, both domestic. So that's the nuance. But yes, I mean, there the business is going reasonably well besides the stock or inventory losses that we have had, there's no major issue.
Sir, one last question. So in the annual report, you have mentioned that you have completed a rebranding exercise actively communicate what Apcotex stands for, so if you can specify what is this rebranding exercise?
So a couple of things we have done. So it's been 7 years since we acquired, modified the logo a little bit. We have defined our values in our company. We have started social media marketing, which we were not doing earlier. And so please, I'd encourage all of you to follow up on LinkedIn Apcotex page and we are quite active now on LinkedIn, which we weren't earlier. So that's what we mean. So rebranding and sort of social media campaign, we have revamped our brochure. Would encourage all of you to sort of support us and follow us.
The next question is from the line of Dhiral from PhillipCapital.
I wanted to know how our contracts work with our customers? So is it like a monthly contract or a quarterly contract? Because whatever raw material price fall, which we have seen. So are we going to benefit from that?
So on the contrary, we're not benefiting from it because we have 2 types of pricing. One is formula pricing, which is based on -- which is based on some published rates of raw materials. Sachin, what percentage -- about 25% to 30% are on formula price customers from what I recall.
30%.
Yes. So around sort of monthly spot pricing. So what typically happens is when there is weakness in the market and prices are falling, we are forced to correct our prices on the first of every month because that's the industry norm, particularly on the first of every month, us and all our competitors issue our pricing list for the month. But we are still stuck with some amount of high-cost material, raw material and finished goods because we have to work with some kind of inventory. So that's where the inventory losses come in, and that's been the problem this quarter, so it doesn't benefit us. Where it benefits us in when things start going up and then we are -- we may have some stock gains also. So typically, as I said, stock gains and stock losses generally doesn't make a difference of more than 1% a quarter. But in this quarter itself, you had a pretty large [indiscernible] up to about 3% because the drop has been very sharp and constant over its period of 3 months. Sometimes we see a drop for 1 month and then flattening out or rising also in the third month. Especially, in March and June.
So whatever drop in the prices, what we have seen that we have to compulsory pass on to the customer?
Absolutely.
And sir, lastly, on the CapEx part, now what -- now whatever CapEx you have done till date. So what will drive the next type of growth in the company, sir?
So as of now, we have just completed a CapEx of INR 100 crores over the last year or 2. So we're more in the consolidation phase and what we have is enough for the next couple of years. So we're just consolidating right now, watching our cash flows, debt levels. In the meanwhile, we have completed the detailed engineering and budgeting for expanding our NBR business, where we are trying to double [indiscernible] we're trying to see -- now we're working at sort of advanced stages to see how we can reduce the CapEx cost and investment costs. At the same time, there is enough work going on in terms of selling this additional capacity that we've just invested in. So one area of growth is the NBR business. The second area of growth is that as and when the nitrile latex market turns in terms of margins at a minimal investment, we can further [technical difficulty] the volume by about 60%. So that's another area. And the third area is, of course, growing with our current sets of businesses, and we can always invest again in our -- expanding our current set of businesses. And the fourth is we are looking at new products, new opportunities, which are very different from our current set of products. So at the right time, as and when we have something concrete.
The next question is from the line of Aditya Khetan from SMIFS Institutional.
Thank you, sir, for the follow-up. Then the question was, so this 30% utilization figure which you had given for this first quarter, this is on a capacity of 85,000, right?
This is on an annual capacity. Yes. So the quarterly capacity is 1/4 that, so let's say about 21,000 and then 30% of that, yes.
So despite we have started one of the big projects of nitrile latex, our employee cost has, on a quarter-on-quarter basis has declined by 4%. There should be a rise in employee cost, considering we have started taking the volumes and numbers into our financials. So why that has declined?
I think one reason -- Sachin perhaps can answer is better, but one reason is in Q4 of last year, a lot of our bonuses and variable pay was included in that. I would have to go back and check -- other than that, I don't see any reason for decline -- and don't forget, we had already recruited all these people, obviously, before the plant started. So the only thing I can think of is a variable stake [technical difficulty] which generally hits the March quarter, which doesn't hit the Q1 quarter. Sachin, anything else I'm missing, why it would decline?
No, perfect. I think that's the reason.
Yes. So...
You might have recruited them early, but you will account for the numbers when you have started accounting for the volumes, right?
Sorry, we have to check for -- what do you mean account for the numbers? Because how can -- because they have already joined us, they were part of the employee cost anyway.
Yes.
Some of them at that point, were working because the plant had not started, they were work -- I mean they were working in our other current plants, those kinds of things. I mean, it's been going on for the previous 6, 8 months. So they were part of the employee cost. I mean that's the only thing I can think of. There may have been some -- sometimes we also have some provisions made that are written back or something, but that might be minor, I don't think, but it's not a big issue, yes.
So currently, sir, what the issue with the chemical industry, what they are facing, is the weakness in demand into U.S. and Europe? So out of our total exports, sir, how much will U.S. and Europe will contribute to the total export sales? And what is the outlook currently like what you are experiencing?
Sachin would you have it, but my sense is not more than 10%, 15% in Europe and U.S. for us. And that's why, as you can see, we have seen a 22% volume growth overall. We -- our exports have in fact grown by 110%. Frankly, we have not seen any after the company. But you are right, you're right, U.S. and -- especially Europe, I would say, more than the U.S. Europe has definitely seen a tough few months in terms of volume demand, and that's hear from other companies. But ours is not a significant amount, it's I think less than 10%. Sachin, do you have the numbers with you ready or...
I need to check, but yes, it is in the range of 5% to 10%.
Yes. That's what I would venture a guess, Aditya.
The next question is from the line of Ankit Kanodia from Smart Sync Services.
I just wanted to know what is the percentage of our revenue from NBR today, roughly?
I mean, look, I don't have today, meaning for the quarter, we don't give quarterly numbers. So I can tell you broadly, obviously, this quarter, there's been a change some from not NBR from other latexes, nitrile latex and other XSB latex for carpet construction and so on. But I would say about probably around 30%. I know plus/minus a couple of percent. I [indiscernible] have the exact number.
In the last year, same quarter, we were at the same level, 30% to 35%. So I was expecting it to come down.
Yes, yes. So maybe 35% last year, 30% now. [indiscernible] the exact number.
So given the growth we are seeing in the other segment, how do we see our product mix going forward, say, in the next couple of quarters or maybe 3, 4 quarters down the line, if you can give some...
[indiscernible] of the growth is going to come from the latex products, nitrile latex and styrene butadiene latex, styrene acrylic latexes and so on. What is going to come from there. But even NBR we are expecting a growth because we have done some debottlenecking recently, so -- which I had not announced earlier. But to the extent of another 15%, 20%, we should be able to -- we are working on the exact numbers because we were able to free up a lot of the capacity since nitrile latex now has moved into its own new plant. So at both the sites, we have some extra capacity for other products. So they're working out those exact numbers. So -- but the large chunk of the growth will come from the latex product and minor from NBR.
And related to NBR revenue do we see any dumping risk anytime?
Sorry, can you repeat?
Do we see any dumping risk here in India, which we faced in 2019?
Yes, absolutely. Absolutely. That risk is always there because it's -- as I said, it's store product, China is really the main consumer of NBR. Anytime we see China demand slowing down, we see dumping. Dumping meaning much lower margins than the -- when I define dumping it's much lower prices or margins than the average that you would see over a period of 5, 7 years, and there happens from various countries, from mainly Korea, Russia, those are the 2. Sometimes China, but we don't...
Last question is related to asset and I find it very difficult to foresee what kind of asset turn we may have in FY '24 and maybe FY '25. Can you give us some broad guidance? Maybe not exact numbers, but some broad guidance. Because FY '22, was 6x and then it has fallen 50% from there in FY '23. So some guidance.
But look, any time you commission a new project from a balance sheet perspective and in our case, we had branches for many years. So at still FY '22, all our assets were pretty much written down or lower. And suddenly, you had this large chunk of INR 200 crores, INR 250 crores coming in, in 1 year as a result of which -- and the volume hasn't picked up that much. And therefore, asset turn is lower in that one shot. Same thing happens with ROCE, for example, ROCE numbers. So when you look at asset turn numbers and ROCE numbers of our company or any other company where there is a sudden loss made in 1 year, you will see that the following 1 or 2 years, numbers like asset turn and ROCE will be lower. And then over the period of 4, 5 years, 3 to 4 years, it will go back to the original level. So yes, that's why -- I don't have a guidance for this year.
But I mean on a longer-term perspective, you expect it to go to 5 to 6 then.
Yes, 5x absolutely. Now 6x may have also been towards the end of our -- or that's at the end of our -- not end of the CapEx. So how do I put it? Just before the start of our CapEx cycle, it was. So a lot of our assets were anyway depreciated to a large extent. We did not have major investments in the last 4, 5 years. So 6 also may have been too high, but yes, at least 5, 4 to 5, we expect it to go back to.
One last question regarding EBITDA per tonne. I know that you don't disclose the exact number. But directionally, if you can just let us know where we were 1 year from now, where we are today? And directionally, how do we see...
Yes. It's much lower. It's much lower for, again, 3 or 4 reasons are given, but I'll repeat them again. One is the inventory losses for this quarter. The second is overall margins in NBR have -- especially NBR have been very low. #3, the growth that has come from nitrile latex is done. And #4, the tailwinds that we had 1 year ago are gone now. They're not there. They haven't been there in Q3 and Q4 of last year as well. But Q1 and Q2, we had them. As I said, the freight advantage that we had for our competitors' products that were imported. So as a result of which EBITDA per tonne is probably maybe half of -- it's similar. Our EBITDA has fallen by 45% EBITDA percentage, EBITDA per tonne would have also -- has also fallen by around the similar numbers.
Our next question is from the line of [ Des Kumar Pandya from Dinesh Stocks].
First thing is I'm thoroughly disappointed your -- the finance cost from the -- and your depreciation and amortization cost from the last quarter has increased tremendously. Finance cost has gone up from INR 58 lakhs to INR 363 lakhs and this amortization has gone up from INR 468 lakhs to INR 738 lakhs. Have you -- why is so much of depreciation -- increase in depreciation and finance cost?
Mr. Pandya, in fact, I don't know if you were in our con call, the last con call that we had where I had mentioned that we expect higher depreciation and finance costs going forward? Simple reason is that we have commissioned 2 projects worth about more than INR 200 crores in the month of March or around March in Q4 of last year. And therefore, the depreciation of those projects and the loan that was taken to partly finance those projects. All those start hitting the P&L from Q1 of this year. So you can expect depreciation and interest going forward for the next few years, next few quarters to be at these levels. Of course, as we repay the loan from next year, interest rate -- interest amount will come down, but the depreciation will be high for a few quarters.
But this should help you in increasing your turnover from INR 1,000 crores a year to something about INR 1,500 crores. Is that a...
Absolutely. But our turnover, as I explained to one of the previous callers that our volumes have gone up by 22%. But as a result of the decline in raw material prices, overall, our realizations have come down by 30%. Therefore, it looks like our turnover has come down by 9%, which is true, but please don't look at our turnover only in terms of -- that will correct depending on our raw material prices and business that we are in, where there is a huge volatility in turnover.
Thank you so much, but I hope that turnover and bottom -- top line and bottom line will increase and help your shareholders will gain from it, some of your...
Our endeavor is always to increase our bottom line -- top line will depend on what's happening with the raw material prices and oil prices, but...
Bottom line is more important. Bottom line is more important. So that -- based on that, we get our dividend.
Absolutely, Mr. Pandya. Thank you.
The next question is from the line of Aditi from Securities Investment Management. [Operator Instructions]
Thanks for the follow up. So in March quarter, we had a revenue of INR 255 crores, which was coming from our old facilities. So considering average 15% realization cost, we would have done INR 220 crores from old facilities. So would that mean we would have done around INR 55 crores to INR 60 crores coming from our new facility. Would that be a correct understanding?
Sorry, but I don't have the Q4 versus Q1 numbers with me right now. But yes, it will be very similar Aditi because from what I recall, our volumes across the last are pretty much flat because we were running at 100% capacity utilization for all of last year. So between Q1 and Q4 of FY '23. Now in Q1 of FY '24, we have gone up by 22% volume terms compared to Q1 of last year, corresponding quarter of last year. Sachin, would you have this number with you? What's our percentage growth compared to Q4, but I mean, I would assume it's about the same, maybe a little higher or [indiscernible]. Sachin, are you there? You have it?
Hello?
Yes, I can hear you now.
Yes. For the increase in terms of...
What's the increase in terms of volume compared to Q4?
It's in the same range.
Same range, yes, that's what I thought.
Yes, it's in the same range.
So what I was trying to get at was the revenue from a new facility is around INR 55 crores to INR 60 crores in this quarter.
Let's talk in percentage. As we said, it's about the same. I don't have the numbers in front of me and sorry about that, but I know it's a 22% -- 20%, 25% growth in volumes.
And sir, the new facility in Taloja, where our capacity is 30,000, we could have expanded that capacity, but we are waiting for some environmental hearing. So have we received this same?
Sorry, say that again?
Our Taloja facility was 30,000 metric tons for the nitrile latex but we converted it to synthetic latex, but we could have expanded that capacity by, I think, around 20,000 to 25,000 tonnes, but we are waiting for some environmental clearance for the same.
No, no, no. So it's about -- it was about 10,000 -- initially when we invested it was 10,000 tonnes of nitrile latex. Then when we realized the latex market was going to be challenging for a few quarters, and the demand for our current products really took us by surprise, especially exports. Therefore, we converted that facility while we were investing in a project last year to also manufacture our current products with styrene pyridine latex, styrene acrylic latex. And a capacity of about 35,000 tonnes. So 10,000 became 35,000 tonnes. And you are right, we had -- we had a permission to make up to 10,000 tonnes, which is what we have done for the Q1. Now we expect the final -- to go above 10,000 tonnes. We expect that to happen in the next couple of months. So we have been running that at about 10,000 tonnes full capacity, which is about 25% to 30% capacity utilization, which is what we mentioned in the earlier -- is that clear? I hope it is clear.
The next question is from the line of [ Aman Shah ] an individual investor.
My question is related to investments of shares which you have in your portfolio. Now is this the right time to dually keep selling everything with the market also at a all-time high, and we can use the money to reduce the debt or use it for more strategic purposes. I know --
Sorry, Aman you were saying something, your last part of the question. I can't hear you anymore.
So my question was related to the investments of shares which you have in your portfolio in the balance sheet. Now with the stock market also at its all-time high. And is this a good time to maybe gradually reduce the portfolio and use the money for your next leg of expansion as well as use it to reduce your debt?
Yes. Look, we debate this very often as well. There are a couple of ways to look at it. The way we have looked at it is, #1, we don't time the market. I mean we never know. So our treasury is something that we keep on the side. Invested about 70%, 75% is equity and about 25% to 30% is debt depending on -- obviously, recently, there has been a run-up, so equity percentage has gone up. So we will keep making those tweaks in terms of debt equity ratio for our treasury. But we have specifically taken a call to keep some amount interest. Today, the value of our treasury is INR 100 crores against the term loan that we have of about 125 we can immediately make the term loan close to 0 and use our entire treasury. But what we have found in the past is having some amount of treasury fund is important because there are times when even -- let's say, if we want to expand immediately into some other areas, banks will fund us only to a certain percentage. Some of the others are internal accruals and our savings. And so for that reason, or sometimes there's an acquisition opportunity where you really have to put the money down on the table immediately. So as a result of which INR 100 crores in our current context of the company's total market capitalization, total revenue, is a -- is we feel a fair amount. At the right time, if we feel the treasury amount is much more than we would need, then we will tweak it. And we did. In the last few quarters, some of the treasury for some of our CapEx investments. But largely, if we want to keep that strategically and since we are long-term investors, we are not touching it. We try and maintain this ratio of about 70:30 equity to equity and debt.
Okay, fine that is the philosophy.
And we don't time the market. We don't try and get in...
No. No, my question was not about more about timing. I'm saying like the now that you've done the CapEx --
I'm sorry to interrupt. Markets are looking good, why don't you come out of it. It's the timing, right.
No, no that way. Now that you have like -- you have a major CapEx done and you have debt also. And you spoke about next leg of expansion also, right, 3 or 4 areas. So that money not invested in the shares and just keep it liquid. Of course, repay a little bit debt will be more strategic and will be more helpful, right?
There are different views and that's in our philosophy. But yes, at the right time as and when required, we will do that absolutely. If you require that we decide to go ahead with expansion or if there is an acquisition opportunity, we will use this cash immediately for it.
All right. Okay. Perfect.
And we've also given an example, I don't know if you were on my previous con calls. One of the reasons why we -- 7 years ago when we acquired this plant or this company, one of the reasons was the company that was selling wanted to see if we had cash in hand. We said we did and we literally closed the deal in 2 weeks because of that opportunity. And some of the other people who were eyeing that business could not because of that reason. So there are strategic advantages, which are hard to quantify on a year -- but if you look at a long-term basis, now that investment has given us multiples of returns of cash, and we could only do that because we had the treasury at that time.
The next question is from the line of Nirav Jimudia from Anvil.
So just wanted to understand, like you mentioned that exports from 31% of our total sales in 1Q. If you can disclose the volume terms, like in terms of volumes, how it was -- so the breakup in terms of our domestic volumes as well as the export volumes in Q1.
So domestic and export volumes. Export volumes overall -- so we don't give volume numbers, as I've said many times in the past. Yes. Export volumes have grown by 110%. I think Sachin mentioned that in his opening remarks as well.
But in terms of our overall mix. So let's say, if we have sold 100 tonnes in Q1, which forms INR 278 crores of sales, how was the volume breakup in terms of the export as well as the domestic. So was export 20%, 22% in terms of the overall volumes, which contributed to...
So we have given 21% -- 31% is in value terms. You want to in volume terms? Okay. Got it. But I would add with you, what is it in terms of volume terms, percentage of revenue or percentage of total volume, sorry, not percentage of revenue. I can tell you, actually, hang on, it's about 1 second. Sachin, you have that number? I think it's about -- in volume terms, it's a little higher, INR 34 crores, INR 5 crores.
And if you can share for FY '23 as a whole, that would be very helpful, sir.
You're asking difficult questions. Okay. I have all these numbers, FY'23. FY'23 would have been about 23% -- I mean I think from what I recall value terms, it was about 20%, 21%. So volume terms would have been 2%, 3%, 4% higher, 2%, 3% higher [indiscernible] Again, I'm mentioning a guess, but this is what I said. You have the numbers.
Just a rough figure.
Yes, it's a rough figure. Because the volume is a little bit higher than the value. Let's put it that way, generally, because of the product mix.
Why I ask is, let's say, if our volumes also are going in the export market with some higher realizations, that would probably take us our overall sales to 40%, 45% at that point of time because then realization depends upon our raw material [indiscernible] so it's better to track volumes rather than percentage sales at that point of time.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for any closing remarks.
Thank you, everyone, for joining the Q1 conference call of Apcotex Industries Limited. We look forward to again seeing you in Q2. Just to summarize, I want to mention it's been a difficult quarter for us on 2, 3 fronts raw material price [indiscernible] sharply, resulting in inventory losses, margins in some of our products also falling sharply irrespective of the raw material prices coming down. In general, it's been difficult, especially in NBR. And to some extent, in the paper industry as well where we supply our binders or polymers there. In the long term, we continue to work on the -- and our target. The silver lining is, of course, the 22% growth in volume. So focusing on volumes and market share and increasing our geographic breadth and depth with each customer. And we look forward to seeing you again in Q2 now. Thank you.
Thank you very much. On behalf of Apcotex Industries Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.