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Gujarat Fluorochemicals Ltd
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Ladies and gentlemen, good day, and welcome to the Gujarat Fluorochemicals Limited Q4 FY '23 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Archit Joshi from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.
Thank you. Good evening, everyone, and thank you for joining the 4Q FY '23 and FY '23 Earnings Conference Call of Gujarat Fluorochemicals. I thank the Management on behalf of B&K Securities for giving us the opportunity to host this call. We have with us today Dr. Bir Kapoor, CEO; Mr. Mr. V.K. Soni, Head of Projects and Initiative; Mr. Manoj Agrawal, Chief Financial Officer; Mr. Domingo Agarwal, Head of Investor Relations. Without further ado, I'll refer to Dr. Bir Kapoor to begin with his opening remarks, after which we'll have the floor open for questions. Thank you, and over to you, sir.
Thank you, Archit. Good evening, everyone. This is Bir Kapoor. A very warm welcome to all of you on this GFL's Quarter 4 FY '23 and FY '23 annual earnings call. The company announced its quarter 4 results at its Board meeting held today. The results, along with the earnings presentation is available on the stock exchange and also on our website. I'll briefly touch upon the numbers and then give you an update on the business operations and future outlook. The company reported a consolidated revenue of INR 5,685 crores for the year ended March 23 and INR 1,471 crores for the quarter ended March 23, which is up by 44% and 37%, respectively, on a year-on-year basis. Consolidated EBITDA for the FY '23 was INR 2,047 crores. And for quarter 4 FY '23, it was INR 529 crores, up by 71% and 60%, respectively, on a year-on-year basis. The EBITDA margins continue to remain healthy and close to 36% for FY '23 and for quarter FY '23 as well quarter 4 of '23 as well. Consolidated PAT for FY '23 was INR 1,323 crores. And for quarter 4 FY '23, this was INR 332 crores, up by 71% and 52%, respectively, on a year-on-year basis. ROC and ROE improved to 34% and 27% for the financial year '23 and 24.5% and 20.1% for FY '22, respectively. The net debt-to-equity ratio has reduced to 0.23. It has been an extremely satisfying and a rewarding year for us. We are happy with our efforts and the theme is showcased in the numbers. We have been investing in capacity building, which has yielded rich dividend for us. In the recent years, our focus has been on new fluoropolymers, where we are adding capacity to almost 1,300 to 1,500 tons by quarter 1 in the coming financial year. As is most of the investments, the new CapEx that we put in takes almost a year post commercialization to realize the full potential in revenue terms, and these new capacity would give us the optimum revenue by FY '23 when it will be fully utilized. Similarly, in the Battery Chemicals CapEx, what we are putting in now should realize the full revenue after almost a year when it's commercialized. This year and the year after, we expect the growth to be fueled by new fluoropolymers. And we are already in the process of commercializing our new growth driver, which is battery chemical segment. This should help us maintain the healthy growth for the next few years. We are building this -- we are building this large chemical company from India, which is competing with global giants and now primarily focusing on the sunrise industry sectors, which is EV, solar, hydrogen, 5G in telecom, semiconductors and energy storage system among others. As we are export oriented, especially in our Fluoropolymers segments, the global macro environment plays a major role in our business environment. Now let me quickly take you through the performance of each of our business segments for the quarter. To begin with, let me talk about the bulk chemicals. This segment has seen a quarter-on-quarter revenue decline of 17%, which is primarily led by the drop in the prices, which is in line with our view of the prices to be under pressure due to additional supplies in the market. The Fluorochemicals segment has done well, mainly on account of the refrigerants. Going forward, we expect the revision to be slightly subdued in quarter 1 FY '24. And the neutral chemical plants are gradually ramping up production and expected to contribute to increased revenue in the upcoming quarters. In the Fluoropolymers business, the volumes have remained stable during the quarter. However, the prices have corrected marginally. In addition to the debottlenecking of DFP capacity, creation of new addition capacity of new Fluoropolymers are on course. We'll have some plant turndowns during quarter 1, and we expect the demand fundamentals for Fluoropolymers to be continue to be robust because of growing demand from new and emerging sectors. Let me now briefly touch upon the future growth drivers. The Fluoropolymers segments should keep providing us the growth momentum. Beyond the current capacity that we are in, we are optimistic on new Fluoropolymers like PVDF, PFA and FKM that are critical for the industries like EV, Solar and silicone. In battery chemical space, we are looking at the entire bouquet of battery chemicals, including electrolytes. We expect to get our electrolyte plant to get commercialized by quarter 2 of this financial year. And we are working with major battery manufacturers to provide them with electrolyte matching to the requirement. And this segment is progressing well and as per our plans. We are continuing to look forward and focus on potential long-term growth drivers. As communicated earlier, we are progressing well on some of the new development areas like PEM, for hydrogen fuel cells and electrolyzers. We expect to build the new business based on these developments in the near future. With the growth opportunity before us, we are also strengthening our infrastructure for future growth, including new sites for future expansion. At the end, I would like to emphasize that with emerging sunrise sectors in energy transition space and semi con growth, we see a substantial opportunity for Fluoropolymers, raw materials and battery chemicals. We are well prepared in terms of the product portfolio as well as capacity building capability to capture this growth opportunity. With this, I would like to thank you all, and I would like to open the floor for question and answer.
Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] We take the first question from the line of Mr. Harsh Shah from HSBC.
First question is on the business mix. If you see a Fluoropolymers provision earlier you used to keep the breakup between PTFE and the new Fluoropolymers. And on Q4 FY '20, it was almost 46% of the business anywhere in this quarter, and it is 49% of the business. So as a mix, it has not changed a lot. But it means the Fluorochemicals as a business has grown quite rapidly from almost an 18%, 20% businesses to now almost on part of the business. The last part of that has to do with a tie sheeting up. So my first question is, what is the visibility or what is the outlook on red gas for next year? And where do you see the business mix changing for next year?
The way we see it now is that we expect the red gas prices to remain stable. And demand may create a little bit subdued in Q1 FY '24. However, the prices we expect to remain stable going forward, okay. So this is -- so you are right, the revenue which is coming in the vertical of Fluorochemicals is primarily contributed by the gas compared to the previous quarters of the year that we are seeing.
And in terms of next year, right now, as on Q4, 16% is battery chemicals, 1/3 is Fluorochemicals and 50% is Fluoropolymers of your business. How do you see the business mix shaping up for next year? I mean it's okay if it moves there and well because of some pricing. But in general, where do you see the business mix going up?
Early, as I said in my opening statement, we are focusing in the coming years this year and maybe next year. Our growth is going to come from Fluoropolymers, primarily the investment that we have made in the sector. So we expect the Fluoropolymer revenue to go up, okay? There's a marginal correction here and there, which we spend because of the pricing, which is corrected marginally from its peak position in the earlier quarter. We expect the Fluoropolymers segment to grow as we go along.
And my second question is, can you just help us understand the plan your CapEx for next year? So how much of CapEx is going into what capacity and also the time line of commissioning of the project? That will be really helpful.
Harsh, we would -- it's difficult for me to answer the specific question on capacity on the CapEx . This year, our CapEx plan is very close to INR 1,300 crores -- INR 1,500 crores in the coming year. Out of which, we are looking at close to INR 2,000 crores in Fluoropolymers and battery chemical space. The capacities what we are talking about, I will not comment on that, but these investments will lead to the capacity with new Fluoropolymers like SKM, PFA and PVDF. And we expect most of these capacities will come online by Q1 and Q2. However, the capacity utilization, which will reflect in revenue will take several quarters from there on, because it takes -- it's a long cycle of product development and then eventually get the capacity utilized. So we expect to see that in FY '25 fully utilized.
And just last thing, in terms of margin, where do you see margin stabilizing product going forward? So full year FY '23 we remove the seasonality of quarter-to-quarter movement for full FY '23, where do you see the margins going from here?
Harsh, we have always said that our target is to have margins around 30%, and we expect it to continue at 30% plus. This is what we expect.
We take the next question from the line of Sanjesh Jain from ICIC Securities.
I have 2 of them. First, on the ramp-up of the new Fluoropolymers, I think we added free capacity in Q3 and Q4, and we are planning to have 2 more capacity over the next 2 quarters, if I understand right, from your previous statement. And if I look at the Fluoropolymer revenue growth over the last 3 quarters, it has broadly remained stable. I understand there is some amount of price decline. But how should one build a ramp-up and considering the capacity we have added? At the peak, what should be the Fluoropolymer revenue, assuming that the prices remain stable at these levels? I know we're going to take the call on sizes. So assuming the prices remain where they are today, what will be the peak revenue from the capacity which you have put up and which we are putting over the next 2 quarters or so together, what should the revenue deal go? That's my first question.
It's difficult to give the number on the revenue because it depends on prices. However, as you said, that if I take the same pricing as in now, what do we see? Where is it going? So we see almost -- as you said, our growth is get to come from Fluoropolymers, which is approximately 30% from where we are. So that's where the INR 3,000 crores plus going in Fluoropolymer when the capacity gets fully implied.
INR 4,000 crores, fourth quarter?
This is for the annual asset of third quarter?
No, no. We are already at INR 700 crores for the Fluoropolymer as we speak in this quarter, right, INR 720-odd crores of Fluoropolymer revenue this quarter.
Yes, sorry, I misunderstood,Ă‚Â Sanjesh. It's going to be -- from the quarter perspective, it will at least cross INR 1,000 crores, INR 1,000 crores to INR 1200 crores.
INR 1,000 crores to INR 1,200 crores of quarter revenue will be able to proceed with all the capacities with the intent, and this will be visible in FY '25 as the ramp-up will take the time. That's the right way to understand it. Sanjesh, also what you should look at is the current capital that we have reported, we have almost at 100-odd tons per month. This will go up to if you guided every to INR 1300 to INR 1,500 crores by Q1. There's further additions happening through the year. Accordingly, next period, the ramp-up would happen and the revenues would go up. We cannot guide anything further other than that. So you could build up as 1,100 today going up to 13 to 15 million prosumer. But end of the year, you should be in the ballpark future of 1,700 to 1,800 tons per month on the first polymer cell.
And speaking of the capacity addition of 3,000 metrics and on the debottlenecking which we were planning. When should that come?
That should come probably by the end of mid of this year, probably third quarter of this financial year.
Okay. Third quarter of this financial year. Do we plan to add more on the CM because premium opportunities still remains there?
What's happening in CM Sanjesh is that, as you know, they will remain in operation until the end of '24 or 25. So actual capacity volumes going over the market is still, I don't know, 1.5 years away. So our expectation is that although we are seeing some tailwinds in terms of customer approach and product qualification level, but we'll see impact on our volume probably from the beginning of next year.
Are we planning to add more capacity to that?
Sanjesh, we can always add, but we'll see how the business progresses. That's all we can say.
On the battery chemical side, one of your peers has announced a partnership with the Japanese company on making solution. And it looks like they're progressing too and a very large capacity on a retro solution. How are we looking at on the battery chemicals business, both from the electrolyte salts as well as solutions business? How prepared are we to capitalize on this opportunity?
As I said in my, Sanjesh, in the opening statement that we are very well ready. In fact, we are very well prepared. Our electrolyte plant will be ready in Q2. And also, we have the final stages of commissioning of our salt plant. So I think we are very well positioned to capture that. We'll have our own electrolyte plant, and we will be engaging with customers and fulfilling the requirement based on the combination provided by them.
When should we see the revenues coming from battery chemicals? Will it be in '24 or will it be in '25?
We expect the revenue mostly to come in '25 because the qualification time in battery chemicals is very long, Sanjesh. Sometimes it could be almost 4 to 6 months because it's a sector where qualification times are very long. So full -- in terms of impact on the revenue of battery chemical, I'd probably start seeing it from the next financial year.
So bookkeeping question, last one for myself. One on the prostate Chloromethanes we had a 17% sequential decline. This -- did we have any long-term contract benefit and the full impact of the lower prices we will see in the next quarter? And if you all can just help us understand what is the exit month revenue annualized? Do you think there is scope for another INR 50 crore kind of a decline from this level existing for the current prices? That's number one. Number two, on the net is, sequentially, despite as a recurring to INR 250 crores from the related party, the netted to be flattish on a Y-o-Y basis. The working capital looks like has again each up a little bit. We have improved from the back to previous year, but this quarter, it again looks like we haven't. So how should one look at the deleveraging of the balance sheet from the next financial year. These are the questions.
Let me answer Sanjesh, the first part of your question, which is related to Fluorochemicals, optics, et cetera. As far as the pricing is concerned, we believe that the pricing is pretty much at the bottom level and don't expect it to go down further. We don't have any long-term contracts, so we do not see any impact in terms of -- so we will probably be following the market whatever how way it goes, but we do not expect it to go down further. Coming back to your second question regarding sort of deleveraging the balance sheet and the question on working capital I'll invite Manoj Agrawal to answer that question, please.
So Sanjesh, if you remember, we were selling at around 155 days of battery capital, which we have brought it down to 120 days, which has now got leased up by around 8 days again to 120 bps. This is silly because of lag effect of the inventories, which we are building up for the new capacity and certain debt new sales in the new regions and new customers, so that is because of that only. So we expect that it will as sales pick up from the -- all these new product profile and the customer profile, it will be able to contain it at the end of the same level. Our target remains at 120 days.
Got it. One last question, sorry. I forgot on the pricing or on the Fluoropolymers we have seen slight decline. This is more to do with the lower demand in the euros, so the prices are falling down or it's more of a lower power price and the input cost falling? What has driven the sequential drop in the Fluoropolymers prices?
I think is that if you look the history, Fluoropolymers are at the peak and the very high prices and there's some marginal correction that is going on. From the volume perspective, we do not see much of an impact, okay, which is again some seasonal issues also maybe be head and there. But other than that, we don't see much of a decline.
You expect no price from the current level? Or how is it because we thought about prices is very high?
I see there might be a minor correction, but we don't see a very significant deviation from where they are. And again, it depends from product to product. The Fluoropolymers itself is a very large book, and there are polymers which are for very high-end applications and versus Fluoropolymers. It depends on the -- but overall, as a bouquet, we do not see it changing very much, maybe my genal connection going forward.
We take the next question from the line of Mr. Rohit Nagraj from Centrum Broking.
So my first question is on the guaranteed part. So we have received the advances. How about the guarantee and a similar aspect from the balance sheet perspective. The other current assets have gone down from about INR 1,000 crores to INR 600 crores. So I believe that we have received the money, probably it could have gone down. So what are the leftover noncurrent assets of about INR 600 crores?
Yes. See, as we got the guarantee compared the rentals are concerned. We have already started putting it down, reducing norm on quarter-on-quarter basis. So we are well on track, and we see that reduction on a continuous basis as we go along. And as regards to the quality of currencies also, there is another party involved. So there is one more point you need to note before must querying about the [indiscernible]. So one as regard to your other current assets, there is a bouquet of actually 2 items, a number of items so that I can tell you afterwards once we will work out separately.
The second question is on the electrolyte salt and electrolytes. So based on current capacity and pricing, what is the kind of peak revenue potential that we envisage from the electrolyte salts?
Rohit, it's -- again, it's sort of difficult to answer because we already indicated capacity on this all here. But revenue because if you look at today, the lithium prices because the salt prices are linked to lithium prices, okay? And there has been a very significant change. And there's a lot of volatility in all prices, okay? It's anywhere from $30 to $45 and it was almost $60. So it's a very large volatility. So it would be very difficult for me to answer the future revenue expectation from this. It all depends on the lithium prices.
We take the next question from the line of Mr. Viral Shah of Kanan Holdings.
Sir, my question was, if I look at the consolidated cash flow statement, the capital expenditure comes out to INR 675 crores, whereas in the presentation, that number is close to INR 50 crores. So is this differential of INR 675 crores largely the transfer from advances to CWIP for the wind project? Or is there something else? How should we look at that?
I look at the final computation of the cash flow it has to be net of capital advances. So any decrease in capital advances and actual CapEx outlay. The full capacity is 1,350. Net of catalog terms, which was reduced to reforming of INR 625 crores. So that is net is reflected in the cash cost.
Okay. Sir, would it be fair to say that INR 675 crores were towards the wind at INR 67 or was it all of the Fluoropolymers? Is that the right assumption?
Yes.
Perfect.Ă‚Â So in the coming year out of this INR 1,500 crores of CapEx that we've guided, how much would be towards wind and how much would be towards the Chemicals business?Ă‚Â So out of the advance environment.
Out of these out of the advances, which we have remained has repaid us around INR 65 crores. So the residual advances, which we have already taken in our earlier CapEx plans, the CapEx on which we have guided for the future financial years is mostly on the chemical side.
We take the next question from the line of [indiscernible].
Sir, my first question is that the media I had recently commented on our pot-breaking invention in membrane technology, which is expected to reduce the production cost of green hydrogen. This was at the CS and CRI at Hoeven. I just wanted to know what role will GFCL solar and green hydrogen products play in this?
See, we have -- our GSM is working on 2 types of Proton Exchange Membrane, PEM. One is for electrolyzers, which is the sulphuric acid membrane and the other one is for fuel cell. So the effort is to reduce the cost of the electrolyzer membrane because that contributes largely to green hydrogen output. So there, we are working very actively with another Indian institute to develop it.
Sir, I understand that there has been some transfer of technology for whatever transacted amount. So does that mean that essentially now this technology belongs to us?
Yes. Actually, we have a transfer of technology from ONGC, and that is on the lab scale, and we are now developing it further on pilot scale thereafter on to provide commercial scale, and we have the full rights for it.
So that means we will be now present in 2 of the 4 forms of green hydrogen manufacturing. Am I right?
Which are the 4 ones you said?
So I understand, sir, there's PEM fuel cells, and there are 2 other forms of green hydrogen in manufacturing. But essentially, this particular technology transfer is for green hydrogen through fuel cell and as well as we already exist in the PEM.
No, actually, I'll explain again. There are only 2 applications of PEM. One is for electrolyzer for making green hydrogen and other is for mobility sector for converting the hydrogen into -- by using fuel cells for creating that city. So we are in both the sectors, in one sector, we have tied up with ONGC. The other sector, we are developing -- developed our own technology.
Sir, my second question was particularly for the LiPF6. Sir, is it possible to give us some time line with respect to where we are in the lab trials, where we are on the validation with customers. And I think the out-of-commercial output you mentioned that in the introduction.
In battery chemicals install, we had stated earlier that we are going to build a fully commercial salt plant, which is at the final stages of commission. In fact, the mechanical completion is almost done, so which we expect the salt will come out in the next 3 months, essentially by quarter 2 and this -- then after that, the call will go for validation and qualification stage. So we are not going to the last stage, first of all, okay? We want to -- we have gone and decided to go ahead and straight that we go for the commercial scale and build up the commercial scale plant, get it qualified and start getting into the more supply. So that has been our approach. And depending upon the qualification period, how it gets ramped up, we will see. But we accept -- we expect the commercial scale probably will happen by end by the third or fourth quarter of this year.
And sir, just a little bit of similar detail maybe on the solar PVDF bank channels and the PFA semi con product?
We are already going to the sort of the qualification stage on both of them. And in terms of the PVDF films, which is for the solar, we expect to get our plant gain get commissioned by quarter 2, and then we will be making a commercial level sheet for this application. PFA semi con is -- we have already developed the product, and it's again going through the major stages of qualifications.
So sir, Solar, you said Q2 of the current year, right?
Financial year.
All the best, and I look forward to the next interaction, sir.
Exactly. I'm sure that with PFA, with semiconductor qualification happening, we are also -- as part of our new polymer portfolio, where we are adding capacity in PFA as well in next few quarters.
[Operator Instructions]Ă‚Â We take the next question from the line of Mr. Aman Vij from Astute Investment Management.
My first second question is on the new Fluoropolymer side. So we have added almost 300 to 400 tons per month capacity in the last 1 year. But in terms of utilization, I think it still lacking, it maybe at 50%, 70% utilization only. So if you can talk about, is there some kind of little slowdown in the last 3 quarters that we have not round up because we have enough capacity compared to what we are doing as well as the questions also on the PFA semiconductor and PVDF EV. So when can we see some revenues coming in from these 2 products? Is it this year or next year in the yea '25?
Looking back to Fluoropolymer capacity. Again, these are -- that addition has been in the new fluoropolymers. And as we had stated earlier, that the revenue potential of these new capacities will take some time as it gets qualified in the process is a little bit complicated because these are sort of very specific application where products are developed and qualified by customers and then orders are placed. So we expect these capacity probably to get fully utilized by the end of this financial year. Now coming back to your second question was related to PVDF. Now PVDF, you said which application, are you asking about battery application?
Yes. PVDF as well as PFA semiconductor, when will we see them contributing to our revenue?
One, we have products which are developed, okay? And again, we are going through the qualification stage because in PVDF for EV sector also, there are multiple grades. It's not one single grade. There are different types of PVDF polymer. And we have capability to develop both. We have developed it, and it's going through the qualification process. Unfortunately, the qualification period is very long, okay. For one time is it's almost 6 months.
So do you expect this to contribute in FY '24 or FY '25 only on these 2 products?
No, I think the qualification will complete by this financial year in both of these products. In fact, PFA, it might happen much earlier. And in PVDF, I think particularly in the EV application, 6 months approximately from now and subsequently there after.
My second question is on the 2 parts. So you talked about there will be a shutdown in Q1. So if you can quantify, is it in PFA or fluoropolymer and is it like 10%, 20% shutdown? Or is it like major capacity won't be there? And for how many months also, if you can talk about that.
Not a major in Q1. It's purely in PFA because it's like an annual shutdown that we do for PFA, we just wanted to sort of issue a guidance that PFA shutdown in this an PFA only, not nuclear polymers.
Yes. And on residual gases, you have talked about a little subdued demand in Q1. Is it like 10% kind of subdued or is it 20%, 30%, 40% kind of subdued demand?
Residual and gases are a cyclical business, Aman, and it depends a lot on the weather condition, looking at -- you saw the temperature in Delhi lately and even all over India. So I think overall, the demand depends a lot on the weather conditions. So we expect the demand to be slightly subdued. Now it's difficult for me to tell how much, but possibly, I think 10% this is something difficult for us to estimate it depends on more on the weather conditions.
We are talking mostly on domestic front, Exports front, the demand is still okay, on deference?
And also it is -- demand is slightly subdued, not significantly. And that, I think, is partly going to be seasonal also.
[Operator Instructions]Ă‚Â We take the next question from the line of Mr.Ă‚Â Nitin Agarwal. AM Capital Advisors Limited,
So my question is the [indiscernible] You've indicated a rapid increase of PVDF price in battery from last year's assessment prices. Also another large global player only prevent that prices of PVDF to maintain at the elevated level. So very clear to the size of our market or helping at. I presume we will be taking into consideration the various rates and applications of the polymers. However, what I gather is we are not seeing any sharp declines of PVDF going forward. So just wondering if that was to happen, whether our profitability could be lower than what we are indicating. I mean to the 30% margin guarantee challenge is what my question is.
These are things that right now globally, the EV chemicals as well as the PVDF price is pretty much dependent on the China market. China is today the world's largest market of battery chemicals and in the batteries. So China demand has been subdued, and there has been a slowdown in the EV sales in China and that essentially are reflected in terms of the overall price situation that you see. In our case, we are not significantly affected at the moment because our EV capacity in PVDF is expected to come up after the qualification by end of this year and early first quarter next year. So coming back to the pricing, we see that this could be a momentary because there is a long value chain. And the industry may have because the EV is on a growth path, and it depends on which part of the value chain come faster versus later. So I think this is maybe a short-term phenomenon, which is expected to get picked up as demand improves in of EV in China and EV capacities come every other places.
We take the next question from the line of Mr. Rohan Gupta from Nuvama.
Sir, first is that our understanding generally what has seen that from the product development when you go to qualification and then you go towards the ramp-up and finally, commercialization, Generally, the time line here involved into new qualifications and approve development and ramp-up and commercialization finally takes 2 to 3 years and even sometimes we take more. We have seen in your journey also in case of PVDF, which has taken a long time. However, in the case of battery salts, you're talking about that we are almost tipping or developed. And we have already probably developed the product, but we are keeping the ramp-up part and directly going for the commercialization. Even from the qualification point of view also, we are talking about the customer qualification will be as small as maybe 4 to 6 months, and we are expecting the revenues to ramp up by end of this year. After the planned commercialization happening by Q2 or Q3. What is giving us this confidence that we will be able to ramp up this battery chemicals and maybe so fast? I mean, given the net income, what has changed if you can just give some insights on that?
Rohan, these applications are very different because if I look at, let's say, our Fluoropolymers experience of Fluoropolymers, they are very small applications, and each volumes, each of these applications has a certain volume, limited volume. In contrast, lithium salt or the battery salt is different. It's the chemical. Once it's qualified, the requirement for each plant is very large. The customer's intake is very, very large. Somebody is having a maxicapacity, let's say, of 5 gigawatt hour a 2-gigawatt and the requirements are very large. So it's overall a significant kind of application, different set of requirements. For example, the kind of one customer can take certain quantities, say 5,000-ton of battery chemicals, you would not find any customer taking 5 tons of very specialized Fluoropolymers.
So you are saying that basically the confidence is coming even you are able to crack one customer. Then from himself requirement will be pretty large. Have you got any such kind of indication because you are still in the qualification round only. So have you been getting the earlier initiatives in earlier signs of product getting through? And that's what that as soon as you commercialize your plant and you have to ramp up the production. Is it the case?
The situation, on is that, yes, we are talking to all the players, but unfortunately, we still do not have a material or samples with us. And obviously, the question of the volumes come from once we have a deal with us and also it gets qualified. Our confidence primarily is coming from the growth in this sector. If you look at our capacity, which is very, very small compared to the growth number that we are talking about and either globally or even domestic numbers. So there's going to be significant growth in this sector, and that's where our confidence is coming from. And we are even after commercialization and full capacity utilization, our volumes and the capacity are going to be significantly small compared to the overall market potential.
We'll take the next question from the line of Mr. Ravi Naredi from Naredi Investments.
Sir, can we take the good time for fluoro industry going to end there's too much new plants and capacity are coming?
I'm sorry, I did not get your question, Ravi.
Fluorochemical industry is going to -- good time for Fluorochemical industries going to end as too much new plants are coming?
I don't think so because if I -- as I said earlier, there are entire space of energy transition that we are talking about, whether it's a hydrogen economy, EV, solar cells, fuel cells each of these applications have requirements for fluoromaterials. So I do not see -- if you look at the numbers and compare the projections for the transition is very, very high. We do not see that happening at all.
Okay. And third, now is vertical the electric vehicle later plant or we are going to install, how much CapEx we made? This vertical electric real battery. How much CapEx we made?
I cannot answer that question about the batteries, what CapEx is required. But right now, for battery chemicals, it depends on what chemical what capacity will go. For the capacity that we have announced, we have already indicated for flouropolymers and battery chemicals, our CapEx is going to be close to INR 1,000 crores this year.
[Operator Instructions]Ă‚Â Yes, sir, please go ahead.
Sir, as you mentioned in earlier conversation, things projects likely to contribute from FY '25. And considering that the plant shut down in Q1, FY '24 and some price corrections, which likely don't introduce. So can we assume like FY '24 likely to be muted or from the levels of the '23, like our base is quite high now as compared to earlier years?
I think somewhere we have been misinterpreted. I think we never said that our FY '24 is going to be. We have always maintained that our top line is expected to grow by 20%. So I expect that the number, as we indicated earlier, for example, these capacity and choose to reflect INR 1,000 to INR 1,200 crores to top line will continue.
No, I was talking about the bottom line perspective.
Bottom line also, we have been maintaining a fairly healthy margin. And we have said that it will probably be around 30% in which we expect to continue.
And second thing, sir, do you keep witnessing any kind of lack of demand from medium and top side? Like I think in a controls, we would expect to get some of the revenues from our active plans from FY '24, right?
Probably, as we said earlier, that we have indicated that our capacity would come, which is on course and which we expect to get the sale make-line, our capacity will come on time basically in quarter 2. And then there's a qualification period. So by the end of this financial year or probably by quarter 4, we started seeing the capacity.
Top line and bottom line, both will continue to grow in FY '24 onward, right?
Yes.
We take the next question from the line of Mr. Shah from Investor.
Sir, my first question was regarding the PFA. We have here mentioned that we are going to completely transition by the end of calendar year '23. So I wanted to understand what is the current status right now, yes? And how many products have been expected by the customers?
So regarding the transition from fluorinated polymerization aid to non-fluorinated polymerization aid. We have already converted almost more than 80% of all our Fluoropolymers into non-fluorinated polymerization aids. And we expect by end of this financial year, we should be achieving almost complete conversion.
Have the products been started accepted by the customers?
Already a few products which have been converted have been in the market for several months now.
Sir, my second question was regarding our electrolyte business, our battery chemical business. You mentioned earlier that we will ramp up instead of we will commercialize instead of the large [indiscernible] label part. So for commercialization, we will require a significant quantity of lithium carbonate. And we had earlier mentioned that we had a tie-up with -- sorry, we had basically appointed E&Y as a consultant. So what is the status on that at this point of time because we will -- as you understand, we will require a significant amount of lithium carbonate. Some light on that, sir?
So I think when we talk about the lithium carbonate procurement, there's a short term versus the long term. In the short term, of course, our capacity are not matching. Our requirements are not much, and we have been already discussing with E&Y and connecting with some of the global suppliers for Diet in the long term. So that has not yet completely closed. But in terms of short term, we have the required volumes for the our local -- our short-term require requirement has already been side. We do not see any issue on that.
So it is safe to assume that the short-term supply will be enough to ramp up of your electrolyte sold business, right?
I do not see that as an issue.
Sir, last one, a clarification question from my end. I'm sorry if I missed it earlier, what is the quantum of guarantees left from Inox Wind?
I don't have that number readily available with me. After the call, we can connect and go through it.
We take the next question from the line of Mr. Rohit Nagraj from Emkay.
Notes to accounts, there has been -- one of the points which mentioned that there are INR 18 crore commission, which is supposed to be put up to during our AGM for some executive, nonexclusive directors. So we know what exactly the commission is for and who is the excluded?
This is part of the -- this is part of the remuneration, which is paid to the MD segment, but as a part of the second trial procedure that has to be keep up for the approval at AG also. That's what that is.
Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.
Thanks a lot. I would like to thank all of you for showing interest in this call and asking questions. So any further questions, I will request all of you to keep in touch with our communication person, Mr. Vijay. And we'd like to thank you all again.
Thank you, on behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.