IOL Chemicals and Pharmaceuticals Ltd
NSE:IOLCP

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IOL Chemicals and Pharmaceuticals Ltd
NSE:IOLCP
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Price: 362.35 INR 1.98% Market Closed
Market Cap: 21.3B INR
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Earnings Call Analysis

Summary
Q2-2024

IOL Chemicals Reports Q2 FY24 Results

In Q2 FY24, IOL Chemicals and Pharmaceuticals experienced a marginal increase in total income to INR 553 crore from INR 546 crore in Q2 FY23 and a slight decline from INR 570 crore in Q1 FY24. EBITDA rose significantly to INR 71 crore, pulling the EBITDA margin up to 12.9% from 6.7% in the same quarter the previous year. The net profit for the quarter was INR 38 crore. Looking ahead, the company anticipates a steady revenue growth of approximately 10% annually for FY24 and FY25, with an EBITDA margin target of 15% to 17%.

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

from 0
Operator

Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '24 Earnings Conference Call of IOL Chemicals and Pharmaceuticals Limited. For the management, we have Mr. Pardeep Khanna, Chief Financial Officer; Mr. Abhay Raj Singh, Senior VP and the Company Secretary Street; and Mr. Rakesh Mahajan, Adviser, Finance and Strategic. We also have an Investor Relations team from the Adfactors. [Operator Instructions] Please note that this conference call is being recorded.

I now hand the conference over to Mr. Darshan Mankad from Adfactors PR for the opening remarks. Thank you, and over to you, sir.

D
Darshan Mankad
executive

Thank you, Lia. Good afternoon, everyone. We welcome you to the second quarter and first half ended September 30 Earnings Call of IOL Chemicals and Pharmaceuticals Limited.

Before we begin the earnings call, I would like to mention that some of the statements made during today's call might be forward-looking in nature, and hence, it may involve risks and uncertainties, including those related to the future financial and operating performance. Please bear with us if there is a call drop during the course of the conference call, would ensure the call is reconnected the soonest.

I now hand over the call to Mr. Rakesh Mahajan for his opening comments. Over to you, sir.

R
Rakesh Mahajan
executive

Thank you, Darshan. Good afternoon, everyone. And first of all, sorry for delay due to some technical glitches. A warm welcome to the second quarter and half year ended 30th September '23, earning conference call of the company. First of all, I would like to thank all of you for joining this call. Hope you all have gone through the results and the investor presentation available on all website and on exchanges.

Before we dive into the financial performance for this quarter and open up the floor for the question and answer sessions, we would like to briefly touch upon the economic and industry outlook. The growth is for slow down in calendar year '23 and with '24 as projected. The global outlet is reinforced by our ongoing consumer dynamism in the U.S., but faces pressures from China's worsening property crisis, tight persistence around the world, the consequences of Russia's war in Ukraine and the most recent conflict of Israel -- and growing geoeconomic fragmentation. Despite a challenging global environment by Asia and the Pacific region remain a relative greater spot, it is reached [indiscernible] to contribute about 2/3 of global growth this year.

Headline inflation has declined from post -- as global commodity prices have seeded and the policy has taken effect. India's economic growth remains robust, driven by large public capital venture push and resilient domestic demand. As for our Indian pharmaceutical sector is concerned, U.S. continue to show strong momentum led by elevated price erosion, easing of input cost on raw material and price hike benefit by an LEM works by government allowing to 12.1% price increase in April '23.

The recent deliberation on guidance by OT you by center government on OT3 medicines will increase access to such medicines. We expect growing structural global opportunity until we into Indian APA players over the longer horizon. For the specialty chemical sector, pricing pressure has been the system with Chinese dumping of chemical into a for market globally to overcome their domestic weakness.

Overall demand will be affected by the ongoing economic crisis, especially in Europe. There has been margin decline in prices but [indiscernible] persists with crude prices resuming their northward journey.

With this update, I now hand over the call to my colleague, Mr. Pardeep, who will briefly -- who will brief you about the financials of our home for the quarter and first half of the financial year 2024. Thank you.

P
Pardeep Khanna
executive

Thank you, Mr. Mahajan. Good afternoon, everyone, and thank you for joining us today to [indiscernible] for the second quarter and half year ended 30th September '23. I will take you through the financial highlights for the second quarter and first half of the year '23.

The total income of the company in the second quarter of financial year '24 stood at INR 553 cr as against INR 546 cr in the corresponding quarter of the mentioned year '23 and INR 570 cr in the previous quarter ended June '23. EBITDA for the quarter was INR 71 cr as against INR 37 cr in the corresponding quarter of the mentioned year '23 and INR 80 cr in the previous quarter ended June '23.

EBITDA margin for the quarter improved by 620 basis points to 12.9% as against 6.7% cost from this quarter of mentioned year '23, and 14% in the previous quarter ended June 23.

The net profit in the second quarter of financial year '24 was INR 38 cr as against INR 15 cr in the first -- second-quarter of the last year and INR 46 cr in the previous quarter ended June '23. Even of input costs and better realization, EBIT margin for the pharmaceutical payment was at 15% in quarter 2 of financial year '24, while EBIT margin for the Specialty Chemicals segment was 1.5% in quarter 2.

The CapEx for the first half of the current fiscal is INR 114 cr, whereas it was INR 211 cr for the full financial year '23.

With this, we open the floor for a question and answer session. Thank you very much.

Operator

[Operator Instructions] The first question is from the line of Ketan from Robo Capital.

U
Unknown Analyst

I wanted to know what will be the revenue and margin guidance for H2 FY '24 and FY '25 and '26?

R
Rakesh Mahajan
executive

The company is expecting revenue growth of around 10% every year. So we still maintain that revenue guidance in upcoming FY '24 and FY '25.

U
Unknown Analyst

Okay. And margins will be how much?

R
Rakesh Mahajan
executive

Margin, the company has planned for around margin of 15% to 17% EBITDA margins.

U
Unknown Analyst

For H2 or for full year?

R
Rakesh Mahajan
executive

For FY '24 and '25.

U
Unknown Analyst

Okay. So right now, we are at some 13% to 14% margin for the first half. So can we expect a rate of 18% to 20% sort of to cover up for FY '24 from, say, Q3, can we expect...

R
Rakesh Mahajan
executive

There are some products in which we are manufacturing. The prices are drastically down in the September quarter, which we expected as the demand is there. So we expect that the prices may likely to some extent, which will increase our bottom line.

U
Unknown Analyst

Okay. And that will happen in Q3 or Q4?

R
Rakesh Mahajan
executive

Yes. We expect that?

U
Unknown Analyst

Sorry, I did not get -- by when do you say will that happen?

P
Pardeep Khanna
executive

No, basically, Q3 will definitely be -- I think it will be similar to the Q2, but Q4 will be better than the Q3. So the most of the recovery will come into the Q4.

U
Unknown Analyst

Okay. Got it. And what was the paracetamol utilization in this quarter? And are we planning for any expansion on that side?

R
Rakesh Mahajan
executive

For paracetamol, we are running at around 95% capacity, which we have recently increased to -- from 1,800 to 3,600. But the prices are aggressively down during that quarter, June and September quarter. But the capacity utilization is running at 90%, 95%.

U
Unknown Analyst

Okay. And I mean, if you're using 95% then, are we planning for further expansion?

R
Rakesh Mahajan
executive

As of now, we are considering various revenues, and we have come -- come back to you within next quarter.

U
Unknown Analyst

Okay. Got it. And one last question. I just wanted to know if you are selling any non-Ibuprofen products in Europe?

R
Rakesh Mahajan
executive

Yes. We have literally got the approvals from various European authorities and small amount of food has been started.

U
Unknown Analyst

Okay. That has been started?

R
Rakesh Mahajan
executive

It may took 1 or 2 quarters more to increase the quantity in Europe.

U
Unknown Analyst

Okay. So I guess that will also support our margin. Is that understanding, sir?

R
Rakesh Mahajan
executive

Yes. We will get some more export -- we will sell more in 4 markets in these non-Ibuprofen baskets rather than selling domestically.

Operator

The next question is from the line of Neelam Punjabi from

N
Neelam Punjabi
analyst

Sir, my first question is on our ibuprofen business. Could you help us understand what's the capacity utilization in the -- during the quarter?

R
Rakesh Mahajan
executive

The capacity utilization of ibuprofen remained at -- stable at around 90%.

N
Neelam Punjabi
analyst

Around 90% during the quarter. Okay. And our ibu business has been pretty strong with almost like 29% Y-o-Y growth during the first half. So are we expecting the revenues to sustain in the second half as well?

R
Rakesh Mahajan
executive

We hope it will be sustained.

N
Neelam Punjabi
analyst

Got it. What's the average pricing that we've realized in ibuprofen during the quarter?

R
Rakesh Mahajan
executive

It was remained at the same level, which was in June quarter and also remains in the September quarter at the same level.

N
Neelam Punjabi
analyst

Understood.

R
Rakesh Mahajan
executive

Substantially increase or decrease in the prices.

N
Neelam Punjabi
analyst

Got it. Sir, for the other API business, it's been down almost by 13% in Q2. So is it largely because of price decline in paracetamol?

R
Rakesh Mahajan
executive

Yes. It is primarily due to the -- our capacity of ibuprofen -- sorry, paracetamol and the sale has increased essentially, but the price is more than 80%. So it affect our top line in terms of reduction in prices of paracetamol. To some extent, metformin prices are also corrected to some extent.

N
Neelam Punjabi
analyst

Could you quantify how much has the paracetamol and metformin prices declined, respectively, on a Y-o-Y basis?

P
Pardeep Khanna
executive

Paracetamol, it was about 25%. And in case of metformin, I think it was around...

R
Rakesh Mahajan
executive

6% to 10%.

P
Pardeep Khanna
executive

6% to 10%.

N
Neelam Punjabi
analyst

Got it. Okay. Any new products...

R
Rakesh Mahajan
executive

[indiscernible] fall in the paracetamol is on an average basis. However, there has been very fluctuating prices during the whole quarter. So what Pardeep ji has told about is the average price reduction if he said during the whole quarter as compared to the last quarter.

N
Neelam Punjabi
analyst

Got it. And since you mentioned that the capacity utilization has gone up, is it fair to assume volume growth in both of these molecules has been decent like single-digit Y-O-Y?

P
Pardeep Khanna
executive

Volume growth in paracetamol, yes, it is obviously there. And what other molecule you are asking?

N
Neelam Punjabi
analyst

Metformin.

P
Pardeep Khanna
executive

I think it's -- It's stable.

N
Neelam Punjabi
analyst

Stable. Got it. And you had mentioned that we would want to start exporting to regulated markets in a couple of quarters. So any progress around that, if you could just share an update.

R
Rakesh Mahajan
executive

A little bit increase in export from the European market has already been started, and we are expecting that it will be increased further. these sample are already floating in various markets and various customers are interested -- has shown their interest, and we are expecting increase in volume for exporting Europe for our non-ibuprofen segment.

N
Neelam Punjabi
analyst

Got it. Sir, we have given a guidance of around INR 500 -- INR 550 crores of other API revenues in FY '24. And given the first half is at around INR 236 crores. Are we confident on maintaining this guidance because that would imply almost like a low teens kind of growth in the second half?

P
Pardeep Khanna
executive

Yes. Neelam ji, surely, we are very hopeful about the meeting are the targets of around 500 non-Ibu business in this financial year. And I think we are approximately half of the way. So a little bit is to be -- better recovery will be there in the third quarter and fourth quarter. Maybe we can cross the 500 mark.

N
Neelam Punjabi
analyst

Got it. And sir, for the next 2 to 3 years for this other API business, could you give us a directional guidance as to what kind of growth rates can we expect for non-ibuprofen APIs for FY '25, '26, next 2 years?

P
Pardeep Khanna
executive

We are having the similar guidance we've given in the last quarter. We expect around 20%, 25% the non-Ibu business growth for the next 2 to 3 financial year.

N
Neelam Punjabi
analyst

Great. That's helpful. Next on the chemicals business. So this top line has been flat on a Y-o-Y basis. And as I look at your EBIT margins for this segment, it has come off during the quarter. So could you help us understand what's the reason behind it? And we had also a commercialized acetic anhydride facility during the quarter. So -- I mean, what's the sales of that and why has it not reflected in the overall segment numbers?

R
Rakesh Mahajan
executive

First of all, regarding ethyl acetate. Ethyl acetate, the major on deal for ethyl acetate is for acetic acid, which was again very volatile in this quarter, especially in the September month. So that is one of the reason. Plus prices almost remain the same, which were earlier in the month of -- in the quarter of June itself. But the volatility in the raw material prices affected the price and bottom line of ethyl acetate. As regarding acetic anhydride, we have commercialized it and started selling to the market also. Around 40% of our present production has been selling to the domestic market as we are entering to the new segment and new customers. In the prices, the sales already in the chemical sector shown in the Chemical segment. But the level which remain the same for the 2 quarters due to the reduction in prices of ethyl acetate primarily.

N
Neelam Punjabi
analyst

What would be your current realizations in the ethyl acetate? What's the price for that right now?

R
Rakesh Mahajan
executive

It is around $1 to $1.1.

N
Neelam Punjabi
analyst

Got it. Okay. And what's the current pricing on acetic acid?

R
Rakesh Mahajan
executive

It almost remain equivalent to ethyl acetate prices.

N
Neelam Punjabi
analyst

Okay. Understood. Lastly, on the other expenses. So this has gone up to almost like INR 79 crores during the quarter. Are there any one-offs during the quarter? Or what has led to this increase in other expenses?

P
Pardeep Khanna
executive

Actually, the reason of the expenses are due to power fuel -- increase in power and fuel costs. There are 2, 3 reasons in regions power and fuel. It is due to start of operation of aspect and the power and the steam and gas consumed in -- production. And second reason is due to shutdown in the boiler, which leads to a purchase of power from outside at high cost. This is one of the reasons. And due to seasonal effect also in the second quarter, costs are on the higher side due to the major increase in power and fuel expenses in the second quarter.

N
Neelam Punjabi
analyst

Okay. So we can expect this to sustain in the coming quarters

P
Pardeep Khanna
executive

I think in the coming quarter, it will decrease.

R
Rakesh Mahajan
executive

Decrease slightly.

P
Pardeep Khanna
executive

Power and to So ultimate use to decrease in the other expenses.

Operator

[Operator Instructions] The next question is from the line of Akash from MT Asset Management.

U
Unknown Analyst

A couple of questions. Starting with the Chemical segment. EBIT segment, EBIT margins appear to be quite low. Is that because of the internal consumption? Or I mean, what's the normal kind of margins you would expect for chemicals?

R
Rakesh Mahajan
executive

For internal consumption, we have seen that around INR 80 crores have been shifted from chemical to API the reason, which is considered the cost price only. That may be one of the reason. And secondly, as I already explained the prices lately in acetic acid prices.

P
Pardeep Khanna
executive

This is a major...

U
Unknown Analyst

Understand, but what would you expect to be the normal EBIT margins for this segment over the longer term?

R
Rakesh Mahajan
executive

It is single digit. I think not more than that.

U
Unknown Analyst

Yes. I mean, currently, it's low single digits. So I mean, where do you think it should be...

R
Rakesh Mahajan
executive

From the last -- 3, 4 year, it is -- 2, 3 years, it is around 6% to 8%.

U
Unknown Analyst

Okay. I understand. And second, I was just curious that you report that you have 35% global market share for ibuprofen, but your share -- sales to regulated market is relatively small. So how does the dynamics work in terms of your market share for regulated versus nonregulated markets?

R
Rakesh Mahajan
executive

Okay. Except the U.S. market where we have very low market share. We are selling our ibuprofen since quite a long period in Europe and Latin America and other regulative markets, where we hold good market share in regulated except U.S. But now we are trying flooring various opportunities -- various flows with our market in U.S. also, and we may start to increase some share in U.S. also. But till date -- more share of export is from the regulatory market is from Europe and Latin America.

U
Unknown Analyst

Okay. Any particular constraints you have faced in the past for the U.S. market?

R
Rakesh Mahajan
executive

No, no. No constraints. We are getting good net realization sale utilization from your market rather than getting down from U.S. market.

U
Unknown Analyst

I understand. And who are the key competitors in the U.S., if you could mention?

R
Rakesh Mahajan
executive

There is one major player which are switching producing U.S. that is BASF.

U
Unknown Analyst

All right. Understood. And also finally, could you talk about your capacity expansion plans, which are going on now or say likely to be for the next 2 to 3 years?

R
Rakesh Mahajan
executive

We have recently added one product in our Chemical segment. That is an -- area. The project was completed in the June quarter itself. And now we are increasing some CapEx on infrastructure, the additional infrastructure like boilers, which we have recently is on more and more focus of infrastructure in CapEx on green chemistry and environmental activities. And what we have some plan on our growth capital, both in chemical and API division, which we may upgrade everyone in the due course. But our plan for increasing of CapEx company has around INR 200 crores, almost INR 200 crore in this financial year and the same likely in the upcoming 2 years.

U
Unknown Analyst

Understand. And that includes the capacity expansion for ibuprofen as well because you said you're operating at almost 90% utilization?

R
Rakesh Mahajan
executive

Capacity was expanded in around 4 years back, and we are still playing on the debt capacity of 12,000 tonnes. We have not increased our capacity since last 3, 4 years.

U
Unknown Analyst

Okay. But do you plan to going forward?

R
Rakesh Mahajan
executive

As of now, we are not thinking about [ reamplification ] on non-Ibu. But if any situation comes, we are ready to expand immediately with the equity integration. We have chosen or for us to increase in a very short period.

Operator

[Operator Instructions] The next question is from the line of Mohammad Ayaz, an individual investor.

U
Unknown Shareholder

Congratulations for the good region year-on-year. Sir, I just want to ask you one we consider 1 base point investment bad quarter, what that quarter would be according to your business?

R
Rakesh Mahajan
executive

Sir, can you repeat your question?

U
Unknown Shareholder

This quarter -- if I ask you one best quarter and one bad quarter, what quarter that would -- 1, 2, 3, 4 like that September quarter or...

P
Pardeep Khanna
executive

So I mean, best quarter, every quarter, we hope that they will be better than the previous quarter. But I can say the bad quarter was the Q2 last financial year was the bottom down where we bottomed down. And Q3 last financial year was better. The Q4 was also better. Q1 and the Q2 are also better considering the overall the market situation of our industry. So we cannot say this is the best, but we can identify the second quarter of the last fiscal year was not good.

U
Unknown Shareholder

Okay. In terms of seasonality, June, September, December and March according to your business nature...

P
Pardeep Khanna
executive

Good quarter and the bad quarter within one financial year?

U
Unknown Shareholder

Yes. Yes. Yes. right...

P
Pardeep Khanna
executive

If I say in that respect, every financial year, Q2 remains on the lower side and the Q4 remain on the higher side.

U
Unknown Shareholder

Okay. Sir, another question is we have filed a DMF [indiscernible] So you ask how many tonnes of coke to get approval for the DMF?

P
Pardeep Khanna
executive

How much?

U
Unknown Shareholder

[indiscernible] from the regulated order to get approval for DMF?

P
Pardeep Khanna
executive

Basically, this is the process where we filed a DMF or DMF is 6 already evaluated and ready for references, whereas 6 DMF are under evaluation process.

U
Unknown Shareholder

Okay. So if you get DMF for a few drugs, do you we have only 1 DMF for ibuprofen, am I right?

R
Rakesh Mahajan
executive

12 DMF is what would get the [indiscernible] that is the ibuprofen since 2005-'15.

P
Pardeep Khanna
executive

And metformin is also approved by the -- without having the inspection done by the U.S. FDA. So in any case, any drug regulator is looking for importing from us that will be considered as the U.S. FDA accrual.

U
Unknown Shareholder

Okay. That forms is by what...

P
Pardeep Khanna
executive

That is -- available. This is for all the manufacturers who wish to buy the metformin from us also.

U
Unknown Shareholder

So what is the difference between the DMF margins and the normal margins?

P
Pardeep Khanna
executive

See the process is that like we follow the DMF and then the regulator follows the ANDA file and when the ANDA file is approved, that ANDA has the drug descriptions of IOL, all these files are when approved. So there is the possibility at the end of the U.S. regulatory either they can approved after inspection or if they think that this is not required, the facility already visited by the U.S. FDA in the past, and they are satisfied with that, they can also approve any product without inspecting it physically.

U
Unknown Shareholder

Okay. What are the margin difference between normal or approved drugs. And so Oxford and regular -- non-regulated margins, for metformin and

R
Rakesh Mahajan
executive

Yes. In domestic, the prices are quite low, which may differ the prices and regulator market increased ranging around 20% to 50% also in the -- depending on the product and product profile. Like -- the prices domestically, it is maybe $50 to $60, but in regulated markets, prices may be going to $85 to $90.

P
Pardeep Khanna
executive

Can you repeat that again?

This is just an example. When the domestic prices for non-ibuprofen portfolio, the prices increase and the difference between the prices domestically and regulatory market, maybe different from 20% to 50% depending upon the product. And as I gave one [indiscernible] which in India, it is being sold at $50 to $60. But in the export market in the regulatory market, it may range to $80 to $90 per kg. -- depending on the regulations.

U
Unknown Shareholder

Okay, sir. Sir, another one question I'm having. Sir, any positive development from CPHI Barcelona?

R
Rakesh Mahajan
executive

Yes. We have set up one stall there. And our team will remain there for the whole event. And they call out that they have expected to get very good response there also. And I think...

P
Pardeep Khanna
executive

And in fact, there were 213 companies participated for the process, and there was some event wherein our company was within the top 5. It was IOL process was within the top 5 best processes, which we have already precured -- patent on this. So we were the finalist in -- in the CPHI against out of the 213 companies.

U
Unknown Shareholder

That's a good -- Sir, any update for that process? Are you planning to introduce a product that we take some time?

P
Pardeep Khanna
executive

So basically, this depends on the market viability and the overall commercial economic liability to the company. We have got a very clean and greener process developed for the sitagliptin. And we are working on it if all these parameters, EBIT margin and the economic call is viable to the company, we'll definitely start this, but this is just the study we've done. Nothing final decision has been taken away so far.

U
Unknown Shareholder

So chemical quarter has been low in this quarter. Is there any improvement we can see in Q3 and Q4 in terms of profitability?

P
Pardeep Khanna
executive

Yes. Sorry, can you please repeat because your voice was echoing. We were not able to understand this.

U
Unknown Shareholder

Okay. My question is, you have seen low profit margin in chemical sector in this quarter. Can we see any improvement in Q3 and Q4?

P
Pardeep Khanna
executive

Yes, definitely, yes. Q3 and Q4 historically remains better for the chemicals vertical for the company.

Operator

[Operator Instructions] The next question is from the line of Neeraj, at individual investor.

U
Unknown Shareholder

I just wanted, you mentioned that we'll have a CapEx of approximately INR 200 crores to INR 250 crores for current financial year. So any guidance for future CapEx? Let's say, for the next 3, 4 years, what would be the tentative CapEx we have planned? And what would be the breakup in terms of chemical in the API business? I mean how much will go in chemicals and how much will go in API business?

P
Pardeep Khanna
executive

So the guidance for the next 2, 3 years is on the similar pattern that last year, we did around INR 200 crores, more than the INR 200 crores. This year, we have a planning for INR 200 crores. Out of this INR 200 crore already, we incurred INR 115 crores. So next 2 to 3 years, we are having the similar plan for having the CapExes. And this CapEx is majorly will be in the growth CapEx, and this may be divided into in any proportionate depending on the market and the products we finalize. So this is pretty early to say that -- which -- how much CapEx will be used in a particular product or this segment?

U
Unknown Shareholder

Okay. What is the major part of it?

P
Pardeep Khanna
executive

Major part of it will remain towards the growth CapEx.

U
Unknown Shareholder

Growth CapEx. Okay. What would be our current spend in R&D? And what would be it in terms of overall revenue? R&D spend would be what percentage of our overall revenue? And what are our plans on R&D?

P
Pardeep Khanna
executive

So we are having the moderate R&D expenses. Our R&D expenses ranges from 2% to 3% of overall turnover, that is for the CapEx only, R&D CapEx.

U
Unknown Shareholder

Any other plans in the future to increase the R&D budget?

P
Pardeep Khanna
executive

Yes, yes. We are working on it. And we will come out with the appropriate announcement in this regard at an appropriate time.

U
Unknown Shareholder

What is the current position of cash and debt?

R
Rakesh Mahajan
executive

The company is totally debt free. In terms of term loan. And further, we have not raised any debt since 2017. And as of now, we have bank balance of around...

P
Pardeep Khanna
executive

More than INR 250 cr.

R
Rakesh Mahajan
executive

INR 250 crores.

U
Unknown Shareholder

Okay. Any CapEx we have planned where we intend to raise debt?

P
Pardeep Khanna
executive

As of now, no, because whatever the CapEx as we are doing for the last 2, 3 years also is being done through internal accruals only.

U
Unknown Shareholder

Okay. So going forward, in the next 2, 3 years also, we are planning that we'll spend around INR 200 crores to INR 250 crores?

P
Pardeep Khanna
executive

Definitely, yes. Definitely, yes. We have the projections and the estimates relating to the CapEx. The cash generation from the business is more than what we are looking to invest into the CapEx.

U
Unknown Shareholder

Okay. So we can say safely that in next 2, 3 years also, we would not need any debt?

R
Rakesh Mahajan
executive

No, no, no. The other -- earlier so many times that we are not service going any going to for any substantial debt.

Operator

The next question is from the line of Praveen Sharma from Sharma Investments.

U
Unknown Analyst

I just wanted to understand how is the impact of Chinese economy on our business expected to be for the current quarter and for H2?

R
Rakesh Mahajan
executive

For China, there is -- like in our pharma sector segment, especially Ibu, we are not dependent on China. And for non-Ibu segment to some extent, we're dependent on China, but China play a critical role in our chemical also and this metformin also. Their policies remain unknown to everyone. And there's when there go for increasing prices, reduction in prices, no one knows. A impacted all our industry. But as we have airy ordered some chemicals and place the order for chemical from China of our upcoming 2 quarters. So we are hoping that we may have to impact badly for import of chemicals from China. However, its upcoming half year.

U
Unknown Analyst

Got it. Got it. I also would like to ask, in case you could throw some color on which new products will be contributing for growth in EBITDA? If you could give some inform that as well.

P
Pardeep Khanna
executive

See, overall equity of the non-Ibu products, they are contributing, and they all will start contributing in a better pace with the passage of time and increase in the capacity utilization. So we have 3, 4 products. And we also -- we are having a good amount of the filing in the regulated markets. We are receiving the CET -- we received the CET during the first quarter for this paracetamol. so as in the earlier questions, we responded that we are getting the good responses from the customers from the regulated market. Whenever our exports will increase to the regulated market for the non-Ibu products, our EBITDA margin, I mean the contribution from these 2, 3 non-Ibu products will increase our 2, 3 of EBITDA margin. It will be contributed in a significant manner.

R
Rakesh Mahajan
executive

Also paracetamol and metformin are doing well in the market.

Operator

The next question is from the line of Anuj Pawar from Family Office.

U
Unknown Analyst

I just have two quick questions. My first one is, can we look at the margin sustaining at the current levels or improving for the rest of the year? And my second question is...

R
Rakesh Mahajan
executive

Physical instrument?

U
Unknown Analyst

Yes. Yes, you can go ahead.

P
Pardeep Khanna
executive

Margin, what you are asking, if I understood you correctly [indiscernible] next 2 quarters, whether the margin will remain same or it will improve. This is your question?

U
Unknown Analyst

Yes, that is correct.

P
Pardeep Khanna
executive

Yes. So we are very much hopeful that the margin we -- we have, for the 6 months will definitely improve in the next 6 months.

U
Unknown Analyst

Okay. And do we have any plans to increase the ibuprofen facility? Also like any time to go beyond the 35% global market share?

R
Rakesh Mahajan
executive

I already discussed during the call, we are -- as of now, we have not planned for that. So all section of ibuprofen, but we are ready with the -- our spending ready with the -- we have already got when any opportunity come, we will that hope to increase our capacity along with the toy integrations of raw materials in ibuprofen. But still, we are running at around 90% capacity. As of now, we are not planned, but we have worked out how to come increase the capacity within short period of maybe 6 months or 3 months. We are ready with that plan.

Operator

The next question is from the line of Mohammad Ayaz, an individual investor.

U
Unknown Shareholder

Sir, when can you expect Mr. Vikas...

R
Rakesh Mahajan
executive

Actually, he was traveling. When he was there in CPHI also. And while upon there, he went to some client and he is expected to come back tomorrow most probably. So we -- let's wait and next call quarter we think about that.

U
Unknown Shareholder

Yes. I hope I'd like to host, we would like to love to host him in the conference call.

Operator

I now hand the conference over to Mr. Rakesh Mahajan for closing comments.

R
Rakesh Mahajan
executive

Thank you very much for joining us today and discussing our second quarter and half year ended 30th September 2023 performance. The company continues its tragic focus to diversify in every ways with strong domestic demand in both sectors and integration. The next quarter or next half year will bring in on more value addition put investor and shareholders Thank you very much again for attending this call. Have a nice day. Thank you.

Operator

Thank you. On behalf of IOL Chemicals and Pharmaceuticals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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