Balaji Amines Ltd

NSE:BALAMINES

Earnings Call Analysis

Balaji Amines Reports Steady Performance Amid Expansion Plans

In Q2 FY '25, Balaji Amines reported revenue of INR 356 crores, down from INR 395 crores in Q1, but boasted an improved EBITDA margin of 20%. The company successfully launched its methylamine plant, raising capacity nearly 100% to 88,000 metric tons. Looking ahead, a revenue growth guidance of 10% to 12% is anticipated for FY '25, bolstered by expansion into new technologies and products. Additionally, a phased investment of INR 750 crores is planned for broader product offerings, signaling a strong commitment to growth while maintaining a debt-free status.

A Resilient Performance Amid Challenges

In the second quarter of FY '25, Balaji Amines Limited reported a revenue from operations of INR 356 crores, a decline from INR 395 crores in the previous quarter. This downturn is attributed to ongoing sector challenges, including flat sales volumes influenced by pricing pressures. Despite this, the company has curbed some impacts by focusing on higher-margin products, resulting in an improved EBITDA margin of 20%, a notable increase of 110 basis points compared to Q1 FY '25. PAT also saw a minor drop to INR 41 crores from INR 46 crores in the preceding quarter.

Growth Initiatives and Capacity Expansion

Balaji Amines is not only steady in its current operations but is also positioning itself for substantial growth. A new methylamine plant has been successfully launched, effectively doubling its capacity from 48,000 metric tons to 88,000 metric tons, although it is expected to reach optimal utilization by FY '26-‘27. Furthermore, the company is expanding its product portfolio and enhancing production capabilities across various segments such as Dimethyl Ether (DME) and N-Methyl Morpholine. The DME plant is projected to be commissioned soon, with a strong anticipation of positive financial implications due to its potential to offer a cost-effective alternative to LPG.

Strategic Investments and Future Projections

Balaji Amines is making significant investments aimed at future growth, including a INR 750 crore project in specialty chemicals. The company continues to emphasize a debt-free strategy, relaying confidence in managing financial risks while capitalizing on market opportunities. With expectations for a volume growth of 10% to 12% in FY '25, alongside an uptick in product pricing by the end of the financial year, Balaji Amines aims to achieve INR 1,300 to 1,400 crores in standalone turnover, potentially reaching up to INR 1,800 crores should conditions improve.

Addressing Market Competition and Regulatory Challenges

The company acknowledges pressures from international competitors, particularly from China, which has affected its pricing. However, the management is confident regarding addressing these challenges; for instance, ongoing discussions about antidumping duties are underway. Additionally, the successful launch and certification of key products will play a crucial role in enhancing Balaji's competitive stance in the specialty chemical sector.

Commitment to Sustainability and Innovation

Balaji Amines is also focusing on sustainability and efficiency improvements. Plans for establishing a 20-megawatt solar power plant demonstrate a commitment to reducing operational costs and reliance on traditional power sources. This initiative aligns with the company's objectives to enhance profitability while adhering to environmental regulations, reflecting a comprehensive strategy that combines growth with responsibility.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to Balaji Amines Limited Q2 FY '25 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Amogh Deshpande from Elara Securities Private Limited. Thank you, and over to you, Mr. Deshpande.

[Amogh Deshpande, analyst]

Yes. Thank you. A warm welcome to everyone to discuss Balaji Amines Q2 FY '25 results. It is our pleasure to be able to bring to you the management of Balaji Amines Limited led by Mr. D. Ram Reddy, who is the Managing Director.

So with these words, I will now hand over the conference to the Balaji Amines management for their opening remarks, which shall be followed by a question-and-answer session. Over to you, sir.

[D. Reddy, executive]

Thank you, Amogh. A very good evening, and a warm welcome on behalf of Balaji Amines Limited to all of you who have joined us for this con call to discuss the operating and financial performance for the quarter and financial year ended Q2 FY '25. We appreciate your time and interest in our company's performance. I hope everyone had an opportunity to go through the financial results and investor presentation, which have been uploaded on stock exchanges.

We are pleased to announce a steady performance in Q2 FY '25. The industry environment has remained challenging, impacting our revenue streams with volumes staying flat during the first half of the year. Despite these pressures, particularly from pricing, our EBITDA margins have improved by 110 basis points over the previous quarter. This positive growth is a direct result of our strategic focus on higher-margin products, which has strengthened our overall profitability.

Additionally, both the API and agrochemical sectors have demonstrated strong potential for long-term growth, presenting promising opportunities as we move forward. We are pleased to announce the successful launch of our state-of-the-art methylamine plant at Unit IV on 10th November 2024. This advanced facility will provide us with a significant cost advantage over the competitors. We have successfully increased our annual capacity from 48,000 metric tons to 88,000 metric tons, representing a close to 100% increase. However, it is important to note that while the plant is already commissioned, it will take some time to reach optimal levels of capacity utilization. We anticipate achieving full utilization by financial year 2026 and 2027.

Additionally, Unit I and Unit III have successfully achieved BIS certification for morpholine, reinforcing our commitment to the highest quality standards. This accomplishment positions us as the only BIS-certified morpholine manufacturer in India, further elevating our reputation for quality and reliability in the industry.

With this, we move on to the update on the progress of our critical projects, reflecting our unwavering commitment to innovation, operational excellence and value creation. The announcement of our DMC/Propylene Glycol plant, with additional equipment is progressing as planned. The majority of the required equipment has already been delivered, and we anticipate commissioning within the current financial year. Efforts are underway to enable with production and pharmaceutical-grade propylene glycol by augmenting the existing DMC/Propylene Glycol plant.

The commissioning of this capability is also expected within the current financial year. The installation of the Dimethyl Ether is advancing steadily. We project commissioning by the end of this financial year or the first quarter of the next financial year. The company is undertaking modifications to the existing Ethyl Amines plant at Unit I to enable the production of isopropyl amines. With a planned capacity of 20 to 21 tons per day, this project will utilize most of the existing infrastructure. The plant is scheduled to commissioning in the next financial year.

Speaking of the N-Methyl Morpholine plant. It is currently being developed at Unit IV with a capacity of 50 metric tons per day. We are in the final stages of detailed engineering and half of the required equipment has already been ordered. Civil works are expected to commence by the end of November 2024, with the plant anticipated to be operational in the next financial year.

In alignment with the ESG commitments and carbon emission reduction goals, we have obtained the necessary approvals to establish a 20-megawatt solar power plant near MIDC, Chincholi, Maharashtra. In the first phase, we are setting up an 8-megawatt DC or 6-megawatt AC solar power plant expected to be commissioned within this financial year. This initiative will substantially reduce our costs across all our plants, further strengthening our sustainability efforts.

We are also proposing to set up the new plant for the manufacturer of NBPT with a capacity of 2,500 tons per annum. This project is scheduled to be undertaken in the next financial year. We are planning to establish a new acetonitrile plant at Unit III, MIDC Chincholi with a capacity of 60 metric tons per day, discussing -- regarding the transfer of the latest technology aimed at reducing production costs are in the final stages.

We expect to sign the agreement by the end of November 2024 and new equipment based on this technology will be integrated to the existing acetonitrile plant at Unit III. Balaji Specialty Chemicals Limited is making significant investments across a diverse range of products, which will enhance the portfolio and strengthen our market position. The products include hydrogen cyanide, sodium cyanide 30% and 100%, ethylenediaminetetraacetic acid, EDTA disodium salt, benzyl cyanide, phenyl acetic acid, triethyl orthoformate and trimethyl orthoformate.

In recognition of the scale of potential of this expansion, the Industries, Energy and Labor Department, Government of Maharashtra has granted Mega Project status to our Balaji Specialty Chemicals expansion under the Packaged Scheme of Incentives 2019. This project involves a proposed phased investment of INR 750 crores.

I would like to reaffirm our commitment to maintaining a debt-free strategy, which continues to be a cornerstone to our financial approach. We ensure that we remain agile, resilient and well positioned to capitalize on growth opportunities while minimizing financial risk. We want to strategize on expanding our product range and investing in advanced manufacturing capabilities to set ourselves apart from competitors and seize a larger share of the market. We also believe that this approach will continue to serve us well as we move forward.

Now let me take through the consolidated financial operational performance. Revenue from operations for Q2 FY '25 stood at INR 356 crores as compared to INR 395 crores in Q1 FY '25. Total value stood at 26,345 metric tons for Q2 FY '25 as against 28,071 metric tons in Q1 FY '25. EBITDA for Q2 FY '25 was INR 70 crores as compared to INR 74 crores in Q1 FY '25. EBITDA margin for Q2 FY '25 stood at 20% as against 19% in Q1 FY '25.

PAT for Q2 FY '25 was INR 41 crores as compared to INR 46 crores in Q1 FY '25. Diluted EPS for Q2 FY '25 stood at INR 12.65 per equity share as against INR 13.36 in Q1 FY '25. For Q2 FY '25, Amines volumes stood at 7,616 metric tons, and Amines Derivates volumes stood at 8,685 metric tons, and Specialty Chemical volume stood at 10,046 metric tons.

On a stand-alone basis, we are a zero-debt company. Revenue from operations, Q2 FY '25 stood at INR 336 crores as compared to INR 338 crores in Q1 FY '25. EBITDA for Q2 FY '25 was INR 64 crores as compared to [ INR 64 crores ] in Q1 FY '25. EBITDA margin for Q2 FY '25 stood at 20% as against 19% in Q1 FY '25.

PAT for Q2 FY '25 was INR 40 crores as compared to INR 41 crores in Q1 FY '25. Diluted EPS for Q2 FY '25 stood at INR 12.47 equity shares as against INR 12.51 in Q1 FY '25.

Now coming to the consolidated performance for the Q1 FY '25, the revenue from operations for the H1 FY '25 stood at INR 749 crores as against compared to INR 857 crores in H1 FY '24. EBITDA for H1 FY '25 stood at INR 144 crores as compared to INR 164 crores in H1 FY '24. EBITDA margin for H1 FY '25 was at 19%. PAT for the H1 FY '25 stood at INR 87 crores as compared to INR 104 crores in the H1 FY '24.

Coming to our stand-alone performance for the H1 FY '25. Revenue from operations in H1 FY '25 stood at INR 664 crores as compared to INR 672 crores in H1 FY '24. The EBITDA stood at INR 128 crores in H1 FY '25 as compared to INR 109 crores in H1 FY '24. Our EBITDA margin was 19% in H1 FY '25 as compared to 16% in H1 FY '24. PAT for H1 FY '25 stood at INR 81 crores from INR 67 crores H1 FY '24. The diluted EPS for H1 FY '25 stood at INR 24.98 as against INR 20.73 per equity share in H1 FY '24. We remain steadfast in our pursuit of excellence and are confident in achieving these milestones, thereby delivering enhanced value for our stakeholders.

Now I leave the floor for the question and answers.

[Operator]

[Operator Instructions] The first question comes from the line of [ Rajeev Rupani ], an individual investor.

[Unknown Attendee]

My first question is regarding DME. Sir, in the May con call also, you had mentioned about the gazette notification for blending of DME with LPG. And it's been, I think, 5 months. So when do you think do we get this gazette notification for blending of DME with LPG?

[D. Reddy, executive]

It shows as of now, it's gone for the publication. So we're just waiting for the publication. Maybe by end of this month, the notification may out.

[Unknown Attendee]

Okay. And sir, once this DME plant gets commissioned, what kind of capacity utilization can we expect in the first year?

[D. Reddy, executive]

Too early Rajeev. See, it's product first time in the country, an introduction to the -- as an alternative to the LPG also, first time in the country. It will take some time. It is too early to assume any numbers or any capacity. But definitely, we feel that it should be a game changer.

[Unknown Attendee]

Okay. Sir, my next question was on DMF. So now that a new methylamine plant is commissioned. Can we expect 100% capacity utilization for DMF? And also let us know on [indiscernible] antidumping duty and exports.

[D. Reddy, executive]

We are aiming for, if not 100%, at least 80%, 85% capacity utilized for the rest of the year. And we are trying our level best for the antidumping. Maybe for the next quarter, we'll have to initiate again for the antidumping if the price trend continuously grows like this.

[Unknown Attendee]

Okay. My next question is on the BSC Unit II. Sir, last, you had updated us that the CapEx will be in 2 phases, Phase 1 and Phase 2. So I would like to know when does the Phase 1 CapEx gets complete? And when do the plants get commissioned? And Phase 2 time line?

[D. Reddy, executive]

You can take Phase 1 exactly 11 to 12 months from today. The Phase 1 will be completed. There will be 2 to 3 plants will be commissioned by exactly 365 days from today, you can calculate. On the Phase 2 will be another 12 months from the date of commencement of the Phase 1.

[Unknown Attendee]

Okay. And my next question is in BSC Unit I, sir, last time you had talked about debottlenecking. And by that, we would get -- produce more quantities of piperazine and DETA instead of EDA. So can you update us on that and the capacity utilization in Unit I?

[D. Reddy, executive]

Yes. That work is actually going on. Probably, it may take another 4 to 6 months' time, whereby you will see not only piperazine and DETA, we are likely to get the additional new value addition products like TETA also we are likely to get. And most of the EDA will be consumed for producing these things. So a lot of new things are happening Mr. Rajeev.

We will be hearing in the next 4 to 6 months in the realistic figures, we will be adding 1 or 2 fresh equipments for the existing plant of the Unit I, where we will get all these new products, like increased capacity of the piperazine, increased capacity of the DETA. Then new additional of TETA and AEP also. Much better-quality AEPs we will be getting.

[Unknown Attendee]

Sir, is this taking longer than usual, the debottlenecking because we had talked about this in the May con call also?

[D. Reddy, executive]

See, there is a lot of new development happening, Rajeev. We don't want to take the hasty decision. We want to take the right -- whatever decision we take, whatever modification we do, it should be the latest as of the date of commencing. So there's the reason it is taking a little time. So you will hear better only. Maybe in 4 to 6 months, the new things will happen.

[Operator]

Next question comes from the line of [ Devang Mehra ] with SKB Capital.

[Unknown Analyst]

Yes. Can you give us a guidance of what will FY '25 look in terms of volumes? And are you seeing any sort of like price increase, which is visible across certain segments?

[D. Reddy, executive]

Yes, definitely. We -- as of now, for the half yearly, if you take a stand-alone basis, we have done 6% to 7% volume growth in compared to the last year volumes. And by end of the year, we expect a minimum 10% to 12% of the volume growth. And as regards prices, you are well aware that last 2 quarters, prices were going down and going down.

Now we expect 1 or 2 -- leaving 1 or 2 products, majority of the products are getting settling down with the reasonable prices. And maybe it's not in this quarter, definitely, you will see the -- end of the financial year, you will see the actual realistic increased prices.

[Unknown Analyst]

Okay. Okay, sir. Got it. And sir, who are the primary target customers for MIPA and DIPA? And in which industry do you foresee the highest demand? And how we are going to fund our CapEx plan for both our like Balaji Amines and our subsidiary company?

[D. Reddy, executive]

See, MIPA and DIPA is within the same basket. The customers are into pharma and agro, dyes. All these actually existing customer base only who are required these materials. And CapEx for this product, there will not be major because this -- we will be using our Unit I ethylamine plant, which was old ethylamine plant idle. Same equipment, same catalyst we are going to use. And there will not be much only -- there will be some storage and some modifications required in the clearance like environmental clearance and MPCB, those things were already end up being.

And as regards Specialty Chemicals, we are having almost INR 750 crores CapEx totally lined up in the Phase 1 and Phase 2 together. And Phase 1, maybe about INR 300 crores to INR 400 crores, which will be met from the mostly internal accruals. At the end of Phase 2, we may need INR 100 crores to INR 200 crores from the borrowing -- Balaji Amines, all the expansions will be done from the internal accruals only.

[Unknown Analyst]

Okay. Okay, sir. Yes. And sir, last question, like methylamine plant has just been commissioned, right? So how do you see it's like going to impact our top line?

[D. Reddy, executive]

Top line, see, because this is -- you might have heard what I said just now in my opening remarks, our existing capacity is 48,000 tons, which we are increasing to 88,000 tons. So definitely, it will take some time to get into the optimized level of capacity utilization. Maybe in the next year, you will see some 50% to 60%, but we expect in '26 and '27, we should be in a position to utilize more than 70%, 80% capacity.

[Operator]

Next question comes from the line of Mukul Deshpande from Insightful Investment Managers.

[Mukul Deshpande, analyst]

A few questions from my end. Sir, we were at active discussions with the battery players for some chemicals like 2P, NP, NMP and the others. So have we received any orders from their end? And if not, then when is the same expected? And if you could just tell me what is the situation over there?

[D. Reddy, executive]

Mukul ji, we are also worried on this because battery manufacturers, nobody has started as of now. We are hearing this for the last -- 2 to 3 years, we are hearing that today or tomorrow they will start. I thought that somebody said that in November they will start -- one will start the actual manufacturing. But to my observation, they will -- nobody is going to start at least the first quarter of the financial year.

We are fully ready. NMP is approved with 2, 3 manufacturers who are going to use this. And even DMC is also approved. And we are going to do much better DMC with this battery grade implementation in the facility. So we are ready. Only thing is, actually, they should start the manufacturing, then we will be done.

[Mukul Deshpande, analyst]

Understood, sir. Sir, and on DME, could you quantify the revenues and the margins at 100% capacity from this chemical?

[D. Reddy, executive]

Which product you said?

[Mukul Deshpande, analyst]

DME, sir.

[D. Reddy, executive]

Dimethyl ether?

[Mukul Deshpande, analyst]

Yes, sir.

[D. Reddy, executive]

That is also too early [indiscernible]. We were expecting some 15%, 20% originally, but that depends upon the situation as on the date we commence the production. And during that time, how the market acceptance will come. And you are well aware, whenever any product comes first time in the market, the buyer industry definitely will try to squeeze -- we try to take the advantage of the new entrants. If you want to hear realistic margins, at least you will have to allow a minimum 6 months to 1 year time to ascertain actual margins.

[Mukul Deshpande, analyst]

Understood, sir. Sir, and can you give an idea of what our second half might look like in terms of the Specialty Chemicals business? And has the Chinese dumping eased or reduced in the third quarter so far? And when will we be back to our historical revenues and margins over here?

[D. Reddy, executive]

As I said, we are really facing in 1 or 2 products the major dumping from the China. That is one was the DMF and NMP in the parent and EDA in the specialty, [indiscernible] specialty. We look at the -- going forward, NMP, once the battery grade thing starts, definitely, there will be good opportunity.

And DMF, since we are thinking of utilizing -- going to utilize the 80%, 90%, there we may get some volume advantages even if it is the lower margins also. On a stand-alone basis, I feel that we should definitely reach to -- with the same prices also, INR 1,300 crores to INR 1,400 crores annual turnover. If the prices improves, our top line also may improve towards INR 1,700 crores, INR 1,800 crores also.

[Mukul Deshpande, analyst]

Understood, sir. Understood. Sir, and some CapEx that we have allotted for each of those divisions as you've shown in the PPT, which is MIPA, DIPA, MMM, NBPT and acetonitrile. So each of these categories, if you could quantify the CapEx numbers and the asset turns over here?

[D. Reddy, executive]

See -- as I said, some of the plants we are utilizing, like if you talk about the MIPA, DIPA, we are not going to spend much, only debottlenecking is happening. And acetonitrile, there may be INR 40 crores, INR 50 crores we will be spending because most of the existing plant will be integrated with the new equipment. So that's the reason you will not see much of the expenses there. And NBTP and N-Butylamine morpholine, these together maybe about INR 70 crores, I'm telling approximately, INR 70 crores to INR 80 crores will be CapEx in that.

[Operator]

Next question comes from the line of [ Rajeev Rupani ], an individual investor.

[Unknown Attendee]

Yes, sir, I had a question on ACN. Sir, earlier, I believe we had the latest technology and you are supposed to set the plant in Unit IV. But due to some issues, dumping by China, we didn't go ahead with the plant. Now again, you're talking about the latest technology in your press release. So I...

[D. Reddy, executive]

We are modifying the existing plant. The reason I'm telling you, if you heard my answer to the other question, we are going to see of equipment integrating with the existing ACN plant for the new technology, and which can be faster than the establishing a new plant.

[Unknown Attendee]

Okay. And sir, our competitor also has a 30,000 ton capacity and the Indian demand is 30,000 tons. So how does it look for us? I mean, we will export some and supply India?

[D. Reddy, executive]

No. When I'm talking about the competitive price. So definitely, I'll have my own share in the domestic market as well as international market share also. We will be having definitely -- see, the technology, and I'm talking the technology on the consumption coefficiencies will be definitely totally different from the competitors. I'm talking about not in the Indian. I'm talking about the international competitors I'm talking. So you will see once we commence that.

[Unknown Attendee]

Got it. Sir, my next question is, let's say, after 2 years, when the CapEx in the stand-alone and the subsidiary is complete, what kind of revenues do you expect to do after 2 years -- 2, 2.5 years?

[D. Reddy, executive]

There should be between INR 3,000 crores to INR 4,000 crores if the prices go to the realistic level. Suppose the acetonitrile used to sell at INR 170, INR 180, reasonable prices rather than high price up to INR 400 also and lower price is INR 110, INR 120 also. If the product goes to the reasonable level, so we can definitely touch the kind of capacities we are established. We should be in a position to reach INR 3,000 crores to INR 4,000 crores in the 2 years from now.

[Operator]

Next question comes from the line of Rohit Sinha with Sunidhi Securities.

[Rohit Sinha, analyst]

Just in continuation of earlier participant on this ACN side. I mean, although we started this product quite a long time back, and there were some, you can say, issues in the stabilization also of this product. But of late, we have been also looking at the prices, which have corrected. So kind of lower production was there from this product. Now what has changed that we are adding up the capacity also? And what kind of demand outlook changed in the last few months?

[D. Reddy, executive]

See, you are well aware, Mr. Rohit, Balaji is a company that does not go for the manufacturing for the sake of numbers. The reason we were not very active in the ACN because the margins were very low, the competition for the international market was very high. And we were looking for an opportunity for the technology of the better where we can get the better margins.

Now we could achieve in our R&D. And the reason we are talking today, the new technology will give the advantage and we have the -- already having the plant, just adding a few equipments, integrating, and we are going to launch this new technology with the latest pricing. And even you will see the quality of the product also will be like HPLC and all.

[Rohit Sinha, analyst]

Okay. Okay. And second question on our morpholine side as we have received BIS mark on that. But already, we are also adding capacity for 1-step forward product for morpholine. So is it like going to impact demand also for our new product or we'll continue to see good demand for morpholine?

[D. Reddy, executive]

The third plant, which we are talking today, used for the N-Methyl Morpholine or part of the capacity can be also used for the morpholine. Today, our capacity is almost 10,000 to 11,000 tons we have the capacity in both the plants together. And the country's consumption is almost 9,000 to 10,000 tons.

So looking into the next 2 years' growth, including the domestic and as well as international market, we are adding these capacities, thereby partly we will cater for the N-Methyl Morpholine customers and partly will take care of the upcoming growth of the morpholine in the country as well as international market.

[Rohit Sinha, analyst]

Okay, okay, okay. And just looking at the overall capacity which we have right now, I mean a lot of capacities are about to commission maybe in FY '26 or some would be coming by FY '27 also. So after all these capacities coming into commercial stage, just wanted to know what kind of volume growth we are looking at for Balaji on a stand-alone basis and on consol level for next 2, 3 years?

[D. Reddy, executive]

See, current year, because the new capacities are only part, like the DME comes in the end of the financial year. It may give very little. The reason I'm talking about the 10% to 12% on an annual basis growth in the current financial year. But definitely, after commissioning this, we will see the minimum 40,000 to 50,000 tons of the volume will be added into the total manufacturing in the next financial year after commissioning this dimethyl ether and the other 2 plants.

[Rohit Sinha, analyst]

Okay. Okay. And sorry to maybe asking again on this DME product. Just I missed out that what is the status right now on the DME side for blending? And are we...

[D. Reddy, executive]

The commissioning will be ready maybe end of the year or maybe first quarter of the next year, we will see the product out. In the meantime, the blending notification from the Bureau of Indian Standards, which is initiated by Government of India, is at final stage. It shows on the -- if you go to the website, if anybody is listening, you can just go to the website of the BIS and click on the dimethyl ether situation. It shows that gone for the publication. So it can -- because of the elections, the state and the other activities, in even international country level also, we expect minimum by end of this month, the notification should go out after publication.

[Rohit Sinha, analyst]

Okay. Okay. And 1 last question on this DME only. I mean, since we are already adding capacity of MA, on this full capacity once this DME would be operational, would it require further addition of methylamine or that would be sufficient whatever we have added?

[D. Reddy, executive]

There is no methylamine consumption in the DME. It is totally different. So it's no way related to the methylamine. Dimethyl ether is totally different.

[Operator]

[Operator Instructions] our next question comes from the line of Anil Shah with Insightful Investment.

[Anil Shah, analyst]

Yes, so just quick -- I just wanted to ask a question on, are we not really doing a lot of CapEx in anticipation of things going the way they should? So we did a large CapEx for DME in the hope that the alternate to LPG will happen. We're still waiting for the notification. We did similar CapEx for a lot of products, primarily for battery, but we are seeing that, that's getting delayed quarter after quarter, quarter after quarter.

And now we've now planned another INR 750 crores of CapEx in our subsidiary, which today is running at INR 3 crores EBITDA in the last quarter. I'm not able to understand where exactly are we headed in terms of -- obviously, I understand China dumping in multiple products. We've seen many other chemical companies also going through the same thing. But nobody has planned large CapExs on the hope of a few either in EV battery charging or the government doing something. We seem to be doing completely on that side only. And if these things don't happen, we've seen what happens to our P&L and our profitability over the last 2 years. So can you just explain, sir, how this all works?

[D. Reddy, executive]

Mr. Anil, first of all, you must understand the -- what is going on around the country. You must understand the government policies, then you will not talk all these things. There are almost INR 15,000 crores investment at the verge of end in the EV battery. Do you think that these people not thought of anything? And government has spent on the PLI scheme, a few thousand crores they have allocated for this battery. So that is number one.

Number two, you are talking about the DME. You know how much we import today, the LPG. There's about 30% -- more than 30% of the country's consumption is totally imported today, which goes in millions of tons. And I'm not talking about I'm going the total country. If we think of catering surrounding districts, it's more than half my 100,000 tons. If I go to the commercial level, if we invest some more money on the small cylinders, which we are not presently concentrating, we are talking about only bulk. We are talking about only blending. If it is -- if you go to the commercial -- we all surveyed, checked, there is more than 10,000 to 15,000 tons in the 3 districts consumption of the commercial LPGs there.

If we cater to them because government is not -- will not come in the way if we cater this to the private. And there is an RSO requirement in the country who are presently struggling for the various type of this thing and depending for the imports. So that is on the DME -- in fact, many people are thinking, if this goes as a 20% blending, we need to go minimum another 10 plants like this in the various part of the country. And if you Google what the government is thinking on the alternate for the LPG, alternate for the fuels, if you see the speeches of the Honorable Cabinet Minister, Mr. Nitin Gadkari, so you will understand all these things, what is happening around the country.

And number two, you are talking about the specialty chemicals. Did you heard what we said, what are the products. These are the products, countries largely depending on those products. We are not producing -- nobody is producing in the country like triethyl orthoformate, trimethyl orthoformate. Earlier we were struggling for the imports. During the COVID, there was an acute shortage of these products.

And the reason we have selected all these products. Simply sitting -- and we are not doing the -- any big borrowings. And simply sitting on the cash will not give you any results, right? We are doing the majority of the expansions from the internal accruals and looking to the future thinking of the government, future policies of the government, we have designed. And not -- any product is not taken a decision in single year. These are all taken a year or 2 years' time for the -- concluding the decision for the -- taking these products.

[Anil Shah, analyst]

So coming back to DME, sir, since we have already -- obviously, the CapEx is done, you're talking about COD by latest in the first quarter of next year. At optimum capacity utilization, what do you think will be the possibilities of absolute EBITDA that we can make in that 100,000 tons capacity in DME that we have, sir?

[D. Reddy, executive]

Mr. Anil, it's very difficult to assume that's what you people are looking. Everybody, you will be very hurry. Before starting the plant, you want to know the -- what is the EBITDA and what is the profit...

[Anil Shah, analyst]

Sir, before -- if you have set up the plant, there would be some assumptions that we would have made, sir. We are just asking on what is -- that's all that we are asking. Where do you think on a rational basis that you can make?

[D. Reddy, executive]

Let me finish my dear. If I say today, 30%, immediately, you will ask in the next quarter, what happened to 30%. That's the reason I'm not in a position to tell you.

[Anil Shah, analyst]

So we are not asking for a quarter. We are asking in a broad year, in a normalized year. And I'm presuming even next FY....

[D. Reddy, executive]

Broad year already given. It will be with the -- par with the existing investment, the EBITDA will be between 18% to 22% for all the investment what we are doing.

[Anil Shah, analyst]

On the DME side?

[D. Reddy, executive]

Yes.

[Anil Shah, analyst]

Okay. And sir, battery chemicals now, we also believe that some of these companies are going to start their production very soon, probably in the next couple of months. All of them...

[D. Reddy, executive]

Did you visit them?

[Anil Shah, analyst]

Yes, sir, we visited them.

[D. Reddy, executive]

Then how did you ask me why I'm planning for the expansion...

[Anil Shah, analyst]

No, no. The question to ask here is, sir, what is -- they also would have given you...

[D. Reddy, executive]

Don't waste your time and my time my dear. Let us go realistic. If it is realistic, you should tell us, yes, what you have done, then...

[Anil Shah, analyst]

That's what we are asking you, from next year perspective, if these plants actually come in operations, then what is the kind of revenue that we, as a company, can provide to these people in the products, particularly going towards battery chemicals?

[D. Reddy, executive]

I'll tell you, see, there are 1 main solvent, which is NMP. So nobody is producing. We are only people producing in the country, which is required for all the batteries. And out of all these 3, 4 people, there are 2 people who have already approved the sample. And they -- in fact, they said that we will discuss and we'll place create order in November. But when we verified, it's too early. Probably it may take minimum another 4 to 6 months' time, maybe in the first quarter of the next year only -- if the realistic commercial things will happen. That is one thing.

Second thing, they call it as the electrolytes. All the carbonates are required in the electrolytes, which are only a couple of companies, not all the companies, a couple of companies, are going to start this, where we will be catering this. And third thing I will tell you, the government has allocated and there are 1 or 2 big companies have already jumped into these semiconductors. Again, same products.

So there are 2, 3 products from the -- our total basket are required in the semiconductor also with a same little modification in the quality, more of the purity and more of the metals free, so required. Assuming all these things, looking into all these things, we are ready with the capacities. And we never expected those people will take 2 years, 3 years' time for the commencement.

For your information, there's the company's -- largest company going for the EV batteries, they asked for the sample and price today, they not even started the land digging. When we went and verified the sites, they did not start even the land digging and they are asking for the price and sample. So this is the situation with the battery manufacturers. That's the reason we are ready with the capacity, but we are waiting for the opportunity.

[Anil Shah, analyst]

Okay. And sir, other than these 2, one being DME and the other obviously being more related to the battery chemicals. In general, are we now seeing a little bit more stability in end product pricing? And are we seeing the intensity of China's pricing pressure across the world easing a bit?

[D. Reddy, executive]

Definitely, because there are a few products like to see, in China, other thing also you must aware that U.S. and Europe, they started putting the huge antidumping on the Chinese products. That is another additional opportunity to going around world like U.S. and Europe. There, you will get the opportunities for these new chemicals, which we are talking today that like cyanide based intermediaries. In addition to the India, we have opportunities going around the world. And yes, you are right that earlier, 4 to 6 months' time because prices were went rock bottom. Now it started coming to the realistic. This month, we have seen something, but it may not be full of this quarter. But definitely, next quarter onwards, we feel that the prices should come to the realistic levels and that will give an advantage to the companies who are having the ready-made capacities.

[Operator]

Next question, the last question comes from the line of [ Pawan Choudhary ] with [indiscernible] Capital.

[Unknown Analyst]

Most of questions have been answered. Just 1 question I have. This is regarding that you had mentioned that DMA, the new capacity is coming with the new technology as well as the ACN also you are coming with the new technology, where you will be more competitive in terms of the pricing and all. So how should we think that initial capacities which we are having, will those be obsolete?

[D. Reddy, executive]

This is really a right question you asked me. Number one, the DMA, the methylamine, new technology, as of now, all the plants, even we and whatever competitors are having, those are by nature, you will get the 3 products, dimethylamine, monomethylamine, triethylamine. By default, you will get it.

And for selling the -- like if I'm not in a position to sell my monomethylamine, sometimes even why I do not have the DMA, I'll have to shut my plant. That was the situation. Even for the many people are having the situation. In this new plant, we can produce single DMA 100 tons, 110 tons per day without producing other 2 products. That is the beauty of new technology.

What we achieved in ethylamines also, I said this, I was selling for the almost 1 year. The trimethylamine alone, we can produce 50 tons, we are producing today without producing other ethylamines. Same thing will happen, methylamines. If the DMA demand is there, we can operate only -- our plant only for the DMA. So that is the beauty of the technology. That's the reason I'm talking...

[Unknown Analyst]

And same is true with the other, mono...

[D. Reddy, executive]

Acetonitrile.

[Unknown Analyst]

The same is true with monomethylamine. Means if you want to produce the 100% monomethylamine, that is also possible.

[D. Reddy, executive]

No. We can take -- plant can be -- we can take into the mode of natural, like existing plants, like that, you can get all the 3 products. You cannot get the single MM and TMA. Only DMA, which is having the demand for the years. So we have developed the technology and we have implemented the technology, but the DMA demand is more around the world. So the reason we thought that single DMA can be produced and we started that last 10 days, we started on 10th. For your information, yesterday's production was 110 tons, only DMA.

[Unknown Analyst]

Got it. And you think the initial -- the earlier plant will also there be in existence and the requirement for other amines will be there. So that will also be functioning equally?

[D. Reddy, executive]

Yes, yes. You're right.

[Operator]

Due to the interest of time, we have reached the end of question-and-answer session. I would now like to hand the conference over to Amogh Deshpande for closing comments.

[Amogh Deshpande, analyst]

Thanks to all the participants and special thanks to the Balaji Amines management for sharing their views on the company's Q2 FY '25 performance. We take this opportunity to thank Mr. Ram Reddy and his team once again. Would you like to make any closing comments, sir?

[D. Reddy, executive]

Thank you. Thank you, Mr. Amogh. Thank you. I would like to thank you all the participants, all the investors, stakeholders who have shown the confidence on the company. And once again, thankful to all. So I assure you all the members, company will not let you down for the investment you made and the company will be with you. All the expansions, investments are made by the -- giving the due thought. And I once again thank you, all the investors and participants. Thank you very much.

[Operator]

Thank you. On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.