India Glycols Ltd

NSE:INDIAGLYCO

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Good evening, ladies and gentlemen. I'm Pelicia, moderator for the conference call. Welcome to India Glycols Limited Q1 FY '25 Earnings Conference Call hosted by Sunidhi Securities. [Operator Instructions]. Please note that this conference is recorded.

I would now like to hand over the floor to Rohit Sinha from Sunidhi Securities. Thank you, and over to you, sir.

[Rohit Sinha, analyst]

Good evening, everyone. Thank you for joining us on India Glycols Limited Q1 FY '25 Results Conference Call. I would like to thank the management for giving us this opportunity to host the call and congratulate them for good set of numbers. We are joined on this call with India Glycols management, represented by Mr. Rupark Sarswat, Chief Executive Officer. Mr. Anand Singhal, Chief Financial Officer; Mr. Rajesh Marwaha, Head of Sales and Marketing, BSCD; Mr. S.K. Shukla, Head of Liquor business; and Mr. Ankur Jain, Head Legal and Company Secretary.

I would like to invite Mr. Rupark Sarswat to initiate these proceedings with his opening remarks, post which we will have a Q&A session. Thank you, and over to you, sir.

[Rupark Sarswat, executive]

Yes. So a very good afternoon to everybody who has joined and thank you for joining us. I, along with my colleagues, will give you a quick snapshot of how the quarter has been, and then we will take some questions.

So I'll take you through financial highlights, a quick review of the segments and quick review of the financial results. So as you may have had an opportunity to look at, we had a good quarter, I can say, especially, I know over the last couple of years, more than that, we have been through a bit of a tight situation on the India Glycols front for all the reasons that we have discussed with you, several questions that we have answered, but in this year broadly in terms of the strategy of the company, it has been, it has kind of worked for us, and it is also reflecting in the performance for the quarter as it is also based [indiscernible] performance for the last year.

So if you look at our gross revenue is up to INR 2,283 crores in the quarter, which is up 21%. On the net revenue front, which is net of excise at, we dropped a revenue of INR 969 crores, which is up 41%. And also our EBITDA is up to INR 228, which is up 21%. And our PAT margin is also up by 18%. So overall, I think a satisfying and a good growth quarter from our perspective. And if you look at most ratios, they have moved in the right direction. Now there are several things we will talk about. I think I would highlight here that one of the things which has driven our top line as well as addition to the bottom line is the emerging biofuels business. And having said that, I think even in the chemical space as well as portable spirit segment, we've seen good growth in top line as well as bottom line.

Now you remember we have had several discussions where we have briefed you that our strategy to get into grain-based ethanol was kind of also expedited by the fact that imported ethanol prices were very high, it was something that happened after many years of stability. So that helps us to mitigate the prices, but it also provides us the opportunity to cater to the blending market that we are doing right now.

And more importantly, the imported ethanol price has softened and therefore, all the grain-based ethanol that we're producing, we were able to channelize into the biofuel space. And I will talk about what's happening in the biofuel and ethanol space whilst many of you may be quite aware of it anyways.

So if I look at, again, one level below, our net revenue surged by 41% and for the chemicals business, now what we've also done is that till last quarter, we were reporting ethanol sales into the power fuel blending sector as a part of chemical. But considering that it has become significant by itself, it is now reported as a separate segment. So you see that our Chemicals business and basically specialties and performance chemicals business is 17% up year-on-year in terms of top line.

And the biofuels business on a quarter-to-quarter comparison has improved from INR 65 crores to INR 139 crores, which contribute significantly. And the portable spirits business has also done very well to grow by 19.1% year-on-year. Our Ennature Biopharma business has also seen a modest relatively speaking, the modest top line growth of 8%. And that is, therefore, also reflected in an EBITDA increase by 21.3% and an EBITDA margin, which is also better than the last few years, and you would see a steady trend at 13.2%.

So in terms of some of the things that we're talking about, we have over the last 2, 2.5 years, talked about our intent to invest in new value-added chemicals starting from almost scratch from R&D pilot plant, commissioning 1 plant. We are nearly forward commissioning. And I think I can say that whilst it's a little early, I do know, Specialty Chemicals businesses take time to build working with customers through partnerships and development work, which is what makes them Specialty Chemicals.

We've had a good start, and we have -- we are quite confident in terms of the foundation that we see has been built for the new value-added chemicals business. And the other thing that we've talked about, our joint venture has also seen significant recovery in margin, which is a joint venture with Clariant which had also been under cost pressure for some time. And now you see whilst the joint venture top line has seen a nominal growth, but there has been quite a significant growth in terms of the EBITDA or the gross margin, which is upwards of 35%. And a lot of it is on account of the improved cost position and [indiscernible] that we supply to them. So that's 1 thing.

And I will give a bit of a segmental commentary, but could you highlight financials. Now for the Q1 '25 on consolidated basis, the gross revenue is INR 2,285 crores, which is up by 12% vis-a-vis last quarter and 20% vis-a-vis for Q1 '24. In net, turnover -- net revenue from operations is INR 969 crores vis-a-vis INR 926 crores in the last quarter, which is up by 5%. And Q1 '21 was INR 689 crores up by 41%. PBT is INR 64.93, I would say INR 65 against INR 51 crores in the last quarter that ended on 31st March '24 and Q1 '24, it was INR 58 crores. PAT is INR 60 crores against INR 42 crores in the last quarter and INR 51 crores in Q1 '24. For the current quarter on a consolidated basis, the EPS is INR 19.5 vis-a-vis INR 13.63 in Q4 of last year and INR 17 in Q1 '24. So this is what is the pre-consolidated results.

[Unknown Executive]

Okay. Let me talk about segments a little bit. So if you look at our Chemical segment, for example, we have seen an EBIT margin of 9.9%, which is up from INR 336 to -- EBITDA margin of 9.9% top line grows to INR 393. And for our portable spirit business, the numbers that I talked about we saw a growth from INR 235 crores to INR 280 crores, which is 19% up and with an EBITDA margin of 17.5%.

In the biofuel segment, our EBITDA margins, not only have we seen an increase in terms of the top line which I mentioned, but also because of the improved structure of the cost which is dependent on several things, which includes the cost of grain to us, the selling price of DDGS and the sale price of ethanol. The overall margin position for biofuels has also improved from, which is EBIT margin position from close 5% to close to 8% now.

In general, the top highlight in terms of the segmental performance. I've talked about the number. We see that, to some extent, our cost pressures have continued. But despite that, we have seen improvement both in top line as well as bottom line as well as percentage EBITDA margin. And we continue to work on optimizing our costs, mainly by looking at how we can optimize the additional costs, energy costs as well as processing costs.

I like to know the numbers for biofuel -- since we've also separated it as a segment just now, I'll give you a quick update on what's happening in this space. So if you know from 2014 where India hardly did any blending. In '19, '20, we moved to about 5% blending against the budget of 5%. In 2021, the government has a target of 10%, and we moved to about 8.7% billing. In '22, '23, the government had a target of 12% and as a country we did a target of 12%.

In '23, '24, there's a target of 15% blending, and the blending ratio was about 12.1% but blending in May is 15.4%. So in short, what I'm trying to say is the blending program is on track, and we expect that the '23, '24 blending program will finish it about 14% blending.

Now we also have some segment and we're not being precise here in terms of the capacity that exists in the country for ethanol. And we see that the blending programs will move up from 15% to 17% to 20%. And it will be fair to assume that even by '25, '26, even if we don't do 20%, hopefully, we'll do, it will be fair to look at the track record and say that we probably end up doing 18% plus blending. What it means is that if this level of blending has to happen, the country is still significantly short of ethanol capacity, which in some sense is a good news for the business, that we don't see overcapacity happening over the next few years. And considering that IGL have an advantage in terms of our cost structure, in terms of our brownfield sites and also in terms of our synergies in ethanol, I think it is good from an IGL perspective.

And also, the government has supported its mandate by increasing the procurement price for ethanol, which stands at close to INR 64 per [indiscernible] grain-based ethanol, surplus rice based FCI at [ 58.5 ]. We see going forward an encouragement for people to also start using maize and the supporting price for that ethanol is also good by the government [indiscernible] is close to INR 71.86.

In general, I changed this data review to highlight that the peers that the blending program is on track, and we are confident that this part of the business over the foreseeable future will continue to remain an important driver for top line as well as bottom line for IGL as well as some other players who've made a head start in this business.

So far, portable spirits performance -- so our revenue at INR 180 crores is up 19.1%. And EBIT at INR 49 crores is up 14.2%, with a margin of 17.5%. Of course, we can look at some of the questions later on, but sales have been driven mainly by increase in [indiscernible] sales in Uttarakhand and we continue to maintain our dominant position -- a big dominant position in Uttarakhand, but also a dominant position in the UP market.

In terms of our IMFL sales of Indian-made foreign liquor sales, our sales have been driven with excellent growth in the UP market and also a relatively new area for us, which is our product approved in the paramilitary space.

In Ennature Biopharma, which is a relatively smaller segment, which is plant-based extracts and nutraceutical, we've seen a healthy top line growth, but we had, because of a number of reasons, the cost pressures, particularly both on nicotine as well as [indiscernible], which means that the margins have remained under pressure. However, we continue to look at, one, greater penetration of the regulated markets of U.S. and Europe that needs significant amount of work, and we are in the process of working on that. And we continue to look at more value-added products in this area.

So that is a quick snapshot of the quarter from my side. And I think Rohit we can take questions and respond to the specifics.

[Operator]

[Operator Instructions] First question comes from Balasubramanian from Arihant Capital.

[Balasubramanian A, analyst]

Congratulations for good set of numbers. Sir, my first question is regarding this INR 1,160 crores allocation to oil companies. How much you're confident achieving those allocation contract by this year? And secondly, in biofuel side, we can see 7.8 kind of margins. Can we see double-digit margins in coming quarters? This is my first question.

[Rupark Sarswat, executive]

Yes. In terms of the allocation, we'd look at the number and we have seen, [indiscernible] allocation number or what is [indiscernible] November. And there are potential allocation products [indiscernible] starting with November '23, we have seen -- there is somebody who is speaking. Can I request to please mute their mic.

Yes. So we have seen that the actual orders that oil companies play have been only slightly lower than the allocation that they've given. And I don't have the exact numbers, but it has been 90% to 95% of the allocation that has been given. Our projection is that this kind of trend will continue. And whilst we may or may it allocation numbers slightly. But by and large, the kind of numbers broadly that we have given to you, we should be able to meet. It does depend on whichever contract [indiscernible] allocation that they give. There are many factors like logistics, et cetera, based on the ability of the oil companies, to be able to blend throughout the country.

Sometimes the orders are a bit lower than allocation. Now from your perspective, I had mentioned to you and I have given data for many years, based on the target that the government had on percentage lending and the actuals that the country achieved. So if you look at the last several years, more or less, we track the -- and our projection is that compared to a target of 15% blending due to 14% this year. So and I think, by and large the blending story is intact.

Now as far as gross margin is concerned, on the EBIT margin that we talked about [ 7.8% ]. I think it's very difficult for me to speculate whether this will become better because it is a function of several things. It is a function of grain prices which have been sized. It is a function of what we are able to do in terms of DGCS sales. I think DGCS as a source of [ protein ], we are looking at newer ways of utilizing it, not only are we looking at it, but the industry is looking at it. And it is also a function of the price that the government gives on procurement of ethanol.

I would imagine the right thing to assume would be that the government is committed for the blending program. And because the government is significantly involved in regulating it and controlling it in some way. They will keep it profitable, but it is not a business where early if the demand is high and the supply is low, you can put a huge amount of price.

So that's my overall take. Shuklaji would you like to add something on these?

[Shashi Shukla, executive]

Because government is continuously insisting to promote the maize to better the profitability of the industry and the farmers both. So industry and associations are doing hard and we have already started our maize farming our own catchment area of Gorakhpur and we are going to start from the Kashipur. And we are expecting approximately to 20%, 25% would be the self catchment area maize availability in 2025.

So certainly, we are focusing on the variety, which would impact the ethanol yield, better yield. And second, the catchment area in which we are focusing, we would like to ensure the back-to-back logistics. So there, the entire approximately 70% to 80% maize which grown by the farmer would be made available to our industry. So the state government is also assisting us. So as far as our raw material is concerned in a couple of years, we hopefully, very positive about the availability after new maize crop, which is the most essential for the growth plant where the water availability is a challenge in parts of UP and in some part of attached to our Kashipur plant where irrigation is a problem. You know that the 60% water is -- 40% less water is requirement of the maize crop. So looking through all these scenarios, the availability of maize for the industry seems to be very comfortable in next 2 to 3 years.

[Balasubramanian A, analyst]

My next question is regarding this -- the new commissioning of plant NSU, like supposed to be completed by this quarter. So what kind of progress in those CapEx? And what kind of volumes we can expect in coming quarters?

[Rupark Sarswat, executive]

Sorry, can you please repeat the question?

[Balasubramanian A, analyst]

So this NSU plant is supposed to be complete in this quarter? And what kind of -- right now we are doing around 150 tonnes per month. And post these completions, what kind of ramp-up we can expect, what kind of additional revenue opportunities? And other CapEx plans also, you can likely touch upon like this grain-based distillery and bio-based ethanol CapEx progress. How much CapEx we can -- we spend in this quarter Q1?

[Rupark Sarswat, executive]

[indiscernible] will take the question on CapEx [indiscernible]. So look, as I mentioned to you, we've had a good start in terms of our projects. And this business is different from, say, ethanol business of petrochemical business where you have ready demand and you are able to then starting to cater to it. It involves working with partners to customize open development projects. So that for us has been a good story. And I don't take this as a projection. But I think in the financial year, we are targeting to do INR 150 crores to INR 200 crores kind of top line through new value-added products.

Which in my opinion, if we are able to do, is a very good start. Keep this in context compared to some other speciality chemicals businesses or our own business, which was there which after many, many years had reached levels of INR 600 crores to INR 700 crores. So in that context to Specialty Chemical business to start making INR 100 crores to INR 200 crores in the kind of first year after commissioning is, I think, a very healthy planning.

But these are projects which are not only dependent on capacity, these are dependent on application knowhow, technology development. The pipeline is robust and we are working on it.

[Unknown Executive]

regarding the CapEx phase, which we are already in for the increase in capacity in Kashipur from 400 KL to 500 KL. We hope that CapEx will be completed in third quarter. And as far as the CapEx, which we have undertaken in Gorakhpur from 110 to 290 KL, I think that will also be completed in the third quarter.

[Unknown Executive]

Sorry, we will be able to start both the plants, I think the 50% of additional capacity we get from the new ethanol year, maybe November second half or first week of December, which would be adding our 50% additional capacity.

In respect of the expenditure on the CapEx in Q1 '25, we have spent around INR 60 crores on all the CapExs, whatever is going on right now and hopefully will be capitalized once these are commissioned.

[Balasubramanian A, analyst]

Sir, my last question regarding...

[Operator]

Can you join back the queue, sir? [Operator Instructions]. Next question comes from Imran Khan from Longbow India Capital.

[Imran Khan, analyst]

I'm fairly new to the company so my questions would be a little fundamental and maybe repetitive. So please excuse me for this. First question is on the portable spirit business. I wanted to understand what raw material do you use for this business to make ENA.

[Rupark Sarswat, executive]

So 100% grain-based ENA we use, which may be the broken rice, which is unfit for the human consumption. And second maize, so we are consuming both the previous stock for the making of extra [indiscernible].

[Imran Khan, analyst]

And sir, lately, where is the raw material basket tilting towards? Is it maize or it is still substantially broken rice?

[Rupark Sarswat, executive]

Yes, certainly, maize is in India, which is more popular for using -- making the ethanol from the last 13 to 14 months so maybe very new. So mostly, we are using grain.

Talking about the Indian made liquor. Indian made foreign liquor is made from the grain-based ethanol and country liquor we made from the both grain-based and the molasses based.

[Imran Khan, analyst]

Got it. Got it. And the second question is on the biofuel business. So you reported EBIT margins for Q1. And in Q1 for FY '25 and '24 but I was looking for the same margins for Q4 FY '24, but I didn't find it. So can you please share that if it is possible?

[Rupark Sarswat, executive]

Okay. We will share separately.

[Imran Khan, analyst]

Would it be similar or there would be a marginal difference compared to Q1?

[Rupark Sarswat, executive]

We can share the numbers to you. But in fact, I had spoken about it earlier that our biofuel margins have actually improved slightly. But we can give you the specifics...

[Imran Khan, analyst]

Okay. Okay. I'll wait for that.

[Rupark Sarswat, executive]

I can give you right now, for Q4 financial year '24, the EBIT margin was 7.9%, while in the current quarter, it is 7.82%. So [indiscernible] it has improved.

[Imran Khan, analyst]

So then in that case, you don't make biofuel from grain, is it? Because in Q4, I think the grain cost was very, very high end. People had very -- margins were a little lower for almost all the people. You haven't seen that thing at all?

[Unknown Executive]

No, no, we are making 100% ethanol from the grain and our margin would be operational efficiency and better sourcing. So all these things will be dependent on making margin.

[Rupark Sarswat, executive]

Just to add to that, I mentioned to you so I think previous Bala had asked us a question or somebody had asked us this question. As to whether our margins in the biofuels business, we see getting into double digits then I responded. That is actually a function of many things. Grain price is one of the factors. There is also selling price of grain, there are energy costs and conversion costs. And more importantly, there is a procurement price, which is decided by the government.

So if you are seeing an improvement in margin, it is on account of rice grain have gone up, they've also come down a little bit. It is a function of a combined effect of these factors.

[Imran Khan, analyst]

Right. Completely understand. Just one last thing before I move to the queue. Can you call out the average grain cost for Q1 and Q4, if it is possible?

[Rupark Sarswat, executive]

Do you want separate numbers or you want what is it running right now?

[Imran Khan, analyst]

If you would be able to share for rice and maize separately, that would be very helpful, yes.

[Rupark Sarswat, executive]

We will share these numbers with you. If you want for previous year and this year as well just drop...

[Imran Khan, analyst]

Yes. It may be last quarter and Q4 only, just 2 quarters.

[Rupark Sarswat, executive]

We will share with you. Okay. Right now, we are not having that handy, send me the mail, I will reply to that.

[Operator]

Next question comes from Ranvir Singh from Nuvama.

[Ranvir Singh, analyst]

Congratulations for the good numbers in this quarter. So 2 questions I have. One related to industry dynamics around ethanol. So I just wanted to understand that how much ethanol is required to use the 20% [indiscernible]. And off that, how much has already been supplied. So what I see is that roughly [ 401 crore liter ] has been supplied and that constitute 15.9% of, I guess, target at 20% so they have reached 15.9% in June. So that led into some 500 crores to 550 crores liters required for 20% revenue. So I think somewhere, I'm not calculating, maybe my calculation seems wrong. So just wanted to understand how much liters actually government needs to make a 20% mainly.

[Rupark Sarswat, executive]

So I will respond to this in terms of our assessment. I don't have some authentic source to quote to you that is the exact number. But our assessment based on percentages and I think some sources which my colleagues would have looked at, is that the total demand for ethanol has risen at 5% blending. Obviously, the consumption also increased so 5% is increased number. From something like 173 crore liters in '19, '20 to expected 725 crore liters in '23, '24 which is at 14% to 15%.

Now this number is expected to go up to broadly 1,000 crore liters in '24, '25. And in my assessment, if you do 18% blending -- rather 20% in blending to about 1,100 crores liter, and we can proportionately increase if the blending goes up to 20%.

[Ranvir Singh, analyst]

Okay. So roughly ballpark, I think, 1,100 crores liter would be required.

[Rupark Sarswat, executive]

[indiscernible]

[Ranvir Singh, analyst]

Okay. Okay. And when -- because our capacity in KLPD so what would be the N1 capacity, if you convert into liters. So how much liters would that translate into if we have the expanded capacity would be roughly 1,000 KLPD, 1,095 KLPD. So how does it translate on an annual basis?

[Rupark Sarswat, executive]

So approximately, we would be able to supply the next ethanol year, which start from November or December, INR 25 crores to INR 26 crores each.

[Ranvir Singh, analyst]

Okay. So normally we multiply because in case of molasses or sugar-based, normally, 1 season -- half of the season normally we take for calculating the list for annual capacity. So in grain also, we calculate the same way? Or for grain, it is that whole year we normally process to produce ethanol.

[Unknown Executive]

Correct. Your question is very correct. The sugar season start from November and end by April or lately by May in a few cases. But grain distillery would run around 350 days in a year. And sugar mills whatever they will store the molasses for last 3 days, they again can be utilized in 3 to 4 months maximum, depending upon their storage capacity of molasses.

So you can say -- on an average, they are running around 260 to 270 days and grain gets roughly in 340 to 350 days.

[Ranvir Singh, analyst]

Okay, fine. And the last one in portable spirit, how much cases we have sold in this quarter for [indiscernible].

[Rupark Sarswat, executive]

Okay. What I will do you send me the mail, I will give you the figure because rightly we are not having the ready data.

[Operator]

[Operator Instructions] Next question comes from Saket Kapoor from Kapoor & Co.

[Saket Kapoor, analyst]

When we look at the current quarter's performance, the finance cost is still hovering at around INR 35 crore plus, that means on a competitive basis, where we compare within Q-on-Q or last year, this number is writing unabated. So if you could give us some color on what's our strategy in lowering our finance cost? That would suffice my first question.

[Rupark Sarswat, executive]

Saket, finance cost has gone up only because of the reason that after term loan -- plus whatever CapEx we have done, that has been funded by almost term loan. Apart from this, the overall rate of interest has gone up because every bank now is giving a very good deposit rate. So MCLRs of all banks has gone up. So that is [indiscernible] and of course, we are planning to reduce the finance cost. But in this year, we are not hopeful for drastic reduction of the finance cost. Maybe from the next year onwards, maybe '25, '26, yes the finance cost will start coming down.

[Saket Kapoor, analyst]

Okay. And that will happen only when this capacity for both our distillery and biofuels kicks in and that will lead to improved margins and cash flows. And that is when the repayment start, that should be the cycle, we are referring to. That is the reason why...

[Rupark Sarswat, executive]

The finance cost only because we have almost done the INR 1,000 crores CapEx. [Foreign Language].

[Saket Kapoor, analyst]

[Foreign Language]

[Rupark Sarswat, executive]

[Foreign Language]

[Saket Kapoor, analyst]

And sir, when we look at the Ennature Biopharma numbers also, I think so last time also when our head of Biopharma spoke, he did alluded to the fact that the [Foreign Language] if you could just highlight how this segment is going to perform. I think we should have, yes.

[Unknown Executive]

[indiscernible] the numbers which you are seeing right now for the first quarter [indiscernible] expected to be seeing it in the next quarter also. And [indiscernible] despite in the third quarter onwards because normally we have started [indiscernible] and our subsidiaries are being upgraded according to that. And shortly, we are going to have [indiscernible] certification done. After that, we would be able to sell our [indiscernible] in the American market. Other than that, there are other few projects like [indiscernible].

So the margin has gone down, but we are, in absolute terms, we are having that [indiscernible] so we are going to supply the [indiscernible] to them. That is going to be added a certain margin in our bottom line.

[Saket Kapoor, analyst]

Sir, just in understanding how are you seeing that given the current market conditions, last year [Foreign Language], these are things which are dynamic also, but speaking today's condition, how should we conclude because this is where the disappoint has been for the last year.

[Unknown Executive]

So are you talking about only [indiscernible]?

[Saket Kapoor, analyst]

Yes, only Ennature biopharma, yes.

[Unknown Executive]

The revenue would be more than whatever we have done in the last year. But certainly, the margins are under pressure and could remain under pressure. We are just waiting to see the third quarter performance. Then if it [indiscernible], then there is a possibility that [indiscernible].

[Unknown Executive]

You see, as I mentioned earlier, we are looking at 2 broad categories in this space. One is penetration of the regulated markets through approvals, which is really a standard with [indiscernible] mentioned. And also getting into the branded nutraceutical space. As you would imagine, most of them are slightly time consuming. So we expect that some of these pressures will continue in the near term. But there is a strategy that [indiscernible].

[Unknown Executive]

Simply, if I may just add one more point. So that given the parameters and the base which we have built for the first quarter, especially also the performance of the JV also contribution has just doubled Q-on-Q. So based for this year, at least this would be a good showcase of what the year can translate because if you take all the variables into account, or can there will be a different picture that may appear [indiscernible].

[Unknown Executive]

[Foreign Language] we have been discussing, we have been explained [indiscernible] we talk about macro trends in terms of what we are doing. Then we give that assessment and I think you are well positioned to take an assessment.

Given the fact that and [Foreign Language]. We believe that ethanol prices imported have come down a little bit. If we are lucky, we will see some more reduction in the months to come, which will impact the overall business, including the JV business in a good way. We don't, as of now, nobody can, especially in today's world, be an astrologer. But we believe that there are reasons to believe that the fundamentals of the business, which have led us to a healthy this quarter as well as last year are not changing and therefore, these trends to continue. There is nothing which has happened suddenly because of which we've got a windfall. I think it is based on the broad strategy for the business. There is an element of macroeconomic dynamics, which plays out sometimes, which we discuss with you. I don't see any major structural shifts happening there which as of now look to [indiscernible].

[Operator]

Next question comes from Tushar Vasuja from Yogya Capital.

[Tushar Vasuja, analyst]

Okay. So my first question is, what's your capacity for MEG and ethyl oxide? And what would the utilization for FY '24 and quarter 1 of this year?

[Rupark Sarswat, executive]

See at capacity in terms of an MEG [indiscernible] are significantly higher than what we are producing right now. In fact, we are taking cost optimization action to ramp down the plant that we are running to make sure that our costs are kept in control.

So from a growth perspective, that is not a concern at all. In the sense that IGL was a player in the MEG potential market where we were selling large volume. But dynamics have pushed a lot of our business in profitability [indiscernible]. So we don't have high capacity to this number. I don't have [indiscernible] right now. If you [indiscernible] our total capacity in terms of MEG [indiscernible] as well as MEG put together [indiscernible].

[Tushar Vasuja, analyst]

Okay, sir. And sir, what's your capacity for producing nicotine and what's the utilization right now? And what can be the peak revenue potential for the capacity as per current prices?

[Unknown Executive]

Tushar, I don't have a precise number right now. If you will send an email to me, then [indiscernible] whatever has been given in the presentation then we will replay to you.

[Tushar Vasuja, analyst]

Okay, sir. So one more question. In your IPO, mentioned that after the Kashipur expansion, your ethanol capacity would be 500 kiloliters per day and your biofuel capacity would be 590 kiloliters per day. So will you procure more ethanol domestically for producing biofuel or how would that work? Can you please talk a bit about that?

[Unknown Executive]

We have the in-house capacity to make ethanol. As mentioned in the capacity for the Kashipur. We don't go for the ethanol from locally. We have the in-house capacity.

[Tushar Vasuja, analyst]

Your ethanol would be only self-produced. Is that understanding correct?

[Unknown Executive]

There are things that you need to understand. When we talk about our total biofuel sales, we talk about total sales from [indiscernible] Gorakhpur as well as Kashipur, I think there is some confusion there. The 2 need to be add it up. And just to clarify, no imported ethanol can be sold into biofuel and we don't do that. It is not allowed in the country to take RX from import and selling into biofuels.

[Operator]

[Operator Instructions]. Next question comes from Darshil Jhaveri from Crown Capital.

[Darshil Jhaveri, analyst]

A lot of my questions have already been answered. Sir, I just wanted to understand like from like our Q1 numbers are very good. So we hope to be able to sustain these numbers like and can the margins improve?

[Unknown Executive]

I've answered this question. As much as we would like to have a precise answer, and I would like to have a precise answer, and I would like to have a better answer, I explained this answer just with both that's the macro trends and what the business is doing, specifically, we think it's the right thing. And right now, things are moving in the right percent. I think to answer your question whether the numbers [indiscernible] whether I can project that the number will be higher [indiscernible].

[Darshil Jhaveri, analyst]

Okay. Okay. Fair enough, sir. No worries about it, sir. And sir, just like one small clarification. I think you were saying that with the new capacities around INR 150 crores, INR 200 crores revenue we could see for this year, right? So just like it's for -- what part are you saying that, sir, like our new total CapEx will come online in Q2 and Q3, was it for that?

[Unknown Executive]

So see, what I mentioned was that there is something like [ INR 150 crores ] to INR 200 crores of top line in this financial year that we are targeting to do based on new value-added products, which is speciality chemical, okay? Which is a different business compared to glycol or bio-based ethanol because the longer-term strategy of the company is to also build a good value-added sustainable hopefully, more profitable portfolio of businesses.

And so that is one part of the CapEx. Our CapEx is [indiscernible] CapEx of speciality chemicals was lower, but our major CapEx has happened in grain-based expansion or ethanol expansion. So that is what it was about. It was not -- it was only with respect to speciality chemicals that I gave that number.

[Darshil Jhaveri, analyst]

Okay. Fair enough, sir. I just want to understand in terms of the ramp-up for grain-based plants. So what kind of utilization would we get in the start? Like what kind of extra revenue could we hope to achieve from those in the current year.

[Unknown Executive]

As I told you that our capacity is proposed to be 50% additional on this year from the first of December. So accordingly, we hope our margin will be increased.

[Darshil Jhaveri, analyst]

Yes. But it will take some time to ramp up. Like what kind of utilization will be able to hit in maybe the Q4 quarter?

[Unknown Executive]

Around, we can say 80% to 85% capacity will be utilized.

[Unknown Executive]

[indiscernible] that we are quite confident that the government, we base it on how we see the government is improving the blending. And we have kind of timed or phased our capacity. And what we do is we kind of -- maybe is not the right word. We apply for allocations, okay? And then we have allocation, then we tie up or couple our expansion plan based on allocation. I also explained in the beginning, somebody asked me a question that allocations are there, but how much will happen. So I said, I cannot predict, but I have looked at the trend and the actual figures has more or less being -- with allocation, a slight percentage below.

And I expect broadly the trend to continue, and we are kind of matching our capacity to follow the government example.

[Operator]

[Operator Instructions]. Next question comes from Mani Sadana, an individual investor.

[Unknown Attendee]

Yes. Yes. So the first question relates to the last conference call of the last Q3 '24, we were expecting the margins in the country liquor space to improve on 3 main factors. One increasing the supply rates of [indiscernible] and mix and second, increase in volume and third, the lowering of the packaging cost. But when we compare the EBIT with regards to the Q1 '24 available and Q1 '25, the margins have gone down slightly. So what sectors have played out exerted pressure on those margins. And we are already in the first month of the Q2 and how are those factors playing in the current quarter?

[Unknown Executive]

The country liquor margin, we have increased already our volume around [ 20% ] as compared to Q1 of the last year. So certainly, our overhead expenses reduced. And the packaging prices [indiscernible] of 10% to 11% as compared to last given prices. Since we have increased our capacity in the both plants, Kashipur and Gorakhpur. So relatively, our margins in the Kashipur plant, little bit higher than the last year. So this is the reason as of now, increasing the more profitability in the country liquor...

[Unknown Attendee]

So how are [indiscernible] be playing in the first -- the second quarter and the first month? I mean do you see any improvement in the margins going up?

[Unknown Executive]

No margin would remain the same because both prices, because mostly country liquor, all the raw material prices, basically [indiscernible] stock prices is already fixed by the government. So we don't think so, any negative impact in the Q2.

[Unknown Attendee]

Okay. And the second question is regarding the debt. And I was going through the MCA website and there were certain charges being created in the month of June and July. So to the tune of INR 165 crores from [indiscernible] bank and few other banks. So are these the fresh borrowings or are these the modification of the charges not taken or loan being taken over by the other so what is the rationale behind?

[Unknown Executive]

That is the [indiscernible].

[Unknown Attendee]

So and this fresh borrowings, we are utilizing it for what CapEx are we utilizing that?

[Unknown Executive]

For running CapEx as well as raising some funds for the working capital requirement.

[Unknown Attendee]

Okay. So our net debt as on date stands at what figure and we were to get some money from carry? And have we got that? And what is the delay? And when we do -- when we look forward to receive that and reduce our debt?

[Unknown Executive]

Our debt is around INR 1,000 crores right now. Regarding the money, which is to be received from Clariant that is still outstanding, and that will come by 31st March '25.

[Unknown Attendee]

So this INR 1,000 crores that you mentioned includes the fresh borrowings of the working capital and that has been [indiscernible].

[Unknown Executive]

We have outstanding debt as on date. That's what I am saying. It means that already includes the [indiscernible] we have already taken.

[Operator]

There are no further questions. Now I hand over the floor to management for closing comments.

[Rupark Sarswat, executive]

Yes. Thank you very much for your time and as usual good probing questions. It's good to be here with you all after a decent or rather good quarterly performance and we hope as much as you hope that we have a positive trend continuing for the business. We are here to make sure that we have the right strategy, we execute it well. And hopefully, with your good wishes, we will continue to support our shareholders also.

Thank you very much on my behalf as well as my colleagues here, who were on the call.

[Operator]

Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good day.