Jubilant Ingrevia Ltd
NSE:JUBLINGREA
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Jubilant Ingrevia Ltd
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Ladies and gentlemen, good day, and welcome to Jubilant Ingrevia Limited Earnings Conference Call for the Third Quarter and 9 months ended December 31, 2022. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Pavleen Singh Taneja, Director, Investor Relations, Jubilant Ingrevia Limited. Thank you, and over to you, sir.
Thank you, Sanvi. Good evening, everyone. Thank you for being with us on our quarter 3 and 9 months of financial year 2023 Earnings Conference Call of Jubilant Ingrevia Limited.
I would like to remind you that some of the statements made on the call today could be forward-looking in nature, and a detailed disclaimer in this regard has been included in the press release and results presentation that has been shared on our website. On the call today, we have Mr. Shyam Bhartia, Chairman; Mr. Rajesh Srivastava, CEO and Managing Director; Mr. Prakash Chandra Bisht, CFO, Jubilant Ingrevia Limited; and Mr. Arvind Chokhany, Group CFO, Jubilant Bhartia Group.
I now invite Mr. Shyam Bhartia to share his comments.
Thank you, Pavleen. A very good evening to everyone. Thank you for joining us on Q3 FY '21 Earnings Conference Call of Jubilant Ingrevia Limited. We are pleased to announce stable performance during the quarter under review, amidst the continued headwinds of higher energy costs and challenging global market situation. We are also glad to share that the Board has recommended interim dividend of 250%, that is INR 2.50 per equity share of the face value of INR 1 each for FY '23.
This shall result in cash outflow of INR 39.8 crores. We are pleased to inform that our Specialty Chemicals business revenue grew by 34% year-on-year, and absolute EBITDA grew 15% year-on-year, driven by higher volumes and improved price realization. In Nutrition & Health Solutions business, the demand of niacinamide vitamin B3 continue to be subdued, impacting our price realization, though we have improved our volumes sequentially. The flu situation in Europe and U.S. regions still continue, though the situation is improving in EU region. The demand-related challenges of vitamin B3 are short term, and we continue to remain focused towards improving our presence in Food and Cosmetics segment.
In Chemical Intermediates business, the revenue on year-on-year is impacted due to lower prices of feedstock acetic acid leading to lower sales prices of acetic anhydride and ethyl acetate. However, we continue to improve our volumes and market share of acetic anhydride globally. The company has firm plans to significantly reduce overall energy costs in phased manner through various initiatives, such as sourcing power from grids and renewable resources, optimizing coal consumption through efficiency improvement in consumption as well as in generation.
We continue to focus our growth plans to new products and platforms, and we are committed to deliver robust growth in the future. With this, I now hand over to Rajesh to discuss about the business in detail. Before that, on behalf of the entire team Jubilant, we wish all of you are a very joyful and a prosperous new year. Thank you.
Thank you, Mr. Bhartia. A very good evening to all of you. At the outset, let me welcome you all for joining us today for Q3 FY '23 investor call of Jubilant Ingrevia Limited. I sincerely hope that you and your loved ones are keeping very well.
Let me now take you through the financial and operational performance of Jubilant Ingrevia Limited for the third quarter of this financial year. Revenue during the quarter was INR 1,158 crores. Overall, revenue degrew by 10% year-on-year basis, mainly on account of lower sales performance by Nutrition & Health Solutions business, driven by lower demand due to swine and bird flu in EU and U.S. region, and Chemical Intermediates business, driven by lower price of acetic acid leading to lower realization.
EBITDA is at INR 158 crore, though Specialty Chemical EBITDA improved. However, higher energy costs due to nonavailability of contracted coal lower volume offtake of vitamin B3 has impacted EBITDA adversely, while Specialty Chemicals business volumes have grown significantly along with the improved pricing. As mentioned by Mr. Bhartia, to minimize the risk of our energy cost increase due to increase in coal price in future, we have prepared a detailed plans to work towards various initiatives to source power from grid at Gajraula and from renewable sources at all our sites.
We have also prepared detailed plan and initiatives, including digital interventions to optimize coal consumption through efficiency improvement in consumption as well as in generation. These plans will start giving benefits in phased manner.
Now let me take you through the updates on all our 3 business segments. Specialty Chemicals business. During the quarter, revenue of the Specialty Chemicals business was at INR 468 crore, witnessed a year-on-year growth of 34%, and EBITDA was at INR 87 crores, witnessing an absolute year-on-year growth of 15%. Specialty Chemicals segment absolute EBITDA increased by 15%, mainly due to higher volumes and better price realization.
EBITDA margin remained lower, mainly due to higher cost of coal compared to same period previous year. Our business team has been successful to pass on most of the raw material costs and also partially increased energy cost, although during the quarter, we witnessed softening of imported coal prices. Specialty Chemicals revenue grew mainly on ground of higher volumes across major product segments and improvement in price realization. We continue to observe positive traction of demand for our other specialty chemicals from both domestic as well as international customers.
We continue to witness higher demand of our pyridine and its derivatives from Chinese customers as well. Our CDMO pipeline is healthy and progressing positively. Our new GMP and non-GMP facilities projects are slightly delayed by couple of months and are expected to be commissioned in next 2 months' time frame.
Nutrition and Health Solutions business. Nutrition business revenue was at INR 132 crores, which witnessed degrowth by 39% on account of continued lower demand scenario owing to excess inventory across the value chain, primarily led by continuation of avian and swine flu in Europe and U.S. market. Demand continued to be remain impacted also due to geopolitical situation in Europe and severe COVID restrictions in China.
EBITDA and EBITDA margin was significantly lower, mainly on account of lower sales volume and price realization of niacinamide. We continue to increase our presence of niacinamide, vitamin B3 in Food and Cosmetics end use segment. Our domestic business of choline chloride, that is vitamin B4, as well as its specialty premixes have grown in volume and value both on year-on-year basis as well as quarter-on-quarter basis. We have also seen positive traction of demand from Southeast Asia for our choline chloride vitamin B4 and its specialty premixes.
We believe these challenges to short term and remain positive on the prospects of niacinamide vitamin B3 business in the medium and long term, and we aspire to retain our leadership position in global market.
Chemical Intermediates business. Revenue from Chemical Intermediates segment was at INR 559 crore, down by 23% on year-on-year basis, mainly driven by lower price of feedstock, that is acetic acid, leading to lower realization of finished products that is acetic anhydride and ethyl acetate. EBITDA in Chemical Intermediates segment stood at INR 71 crore due to normalization of domestic market conditions in Q3 FY '23 same quarter last year.
We continue to grow our volume to increase our market share and maintain leadership position in domestic market as well as in international markets, mainly in Europe and Southeast Asia. Global demand of acetic anhydride continues to grow in several new segments, and there is no new capacity coming up globally. While we continue to leverage our capacity from existing as well as newly built plant, further, our upcoming acetic anhydride plant at Bharuch is nearing completion and is expected to be ready during Q4 FY '23. For ethyl acetate, we remain focused towards our key strategic customers.
Outlook and growth CapEx plans. Our Specialty Chemicals segment would continue to grow. Overall, our FY '23 full year performance is expected to remain in line with our last 3 quarters. We are fully committed towards our growth aspiration, and we are excited to realize the emerging opportunities through our ongoing growth CapEx plans, which we had now improved from earlier INR 2,050 crore to now INR 2,275 crore during FY '22 to FY '25 period.
We continue our efforts towards improving our revenue mix of Specialty & Nutrition segment to 65% by FY '27, from 44% in FY '22, and we believe this to be a key driver for our overall EBITDA and margin improvement.
With this, now I hand over to Prakash to discuss the financials.
Thank you, Rajesh. A very good evening to everyone and thank you for joining us on Q3 FY '23 earning conference call. I would now highlight the company's financial performance during the quarter and 9 months ended 31st December 2022.
Revenue from operations during Q3 FY '23 was at INR 1,158 crores, as compared with INR 1,286 crores in Q3 last year, witnessing a degrowth of 10% on Y-o-Y basis. Similarly, revenue from operations during 9 months of FY '23 was at INR 3,628 crores as compared with INR 3,654 crores during the same period last year, witnessing a marginal degrowth of 1% on year-on-year basis.
The EBITDA during the quarter was at INR 158 crores as compared with INR 222 crores in Q3 FY '22, witnessing a decline of 29% on year-on-year basis. The margins stood at 13.7% in Q3 FY '23 as against 17.3% in Q3 FY '22. Though our Specialty Chemical EBITDA improved absolute, the overall impact is mainly due to significantly lower profitability in Nutrition business and nonavailability of contractual coal, leading to higher energy cost.
Similarly, EBITDA for 9 months FY '23 was at INR 469 crores as compared with INR 712 crores during 9 months FY '22. Margins were at 12.9% during 9 months FY '23 as compared with 19.5% for the same period last year. The EBITDA is impacted due to lower volume offtake of vitamin B3, Chemical Intermediates segment normalization and high input cost impact in the Specialty Chemicals business due to nonavailability of contracted coal.
Depreciation and amortization expenses during the quarter was at INR 30 crores. Finance cost during the quarter was at INR 6.7 (sic) [ 7 ] crores versus INR 4.9 crores in Q3 FY '22. Interest cost was higher mainly on account of increase in the interest rates and higher utilization of working capital facilities. Net debt was at INR 352 (sic) [ 351 ] crores at the end of Q3 FY '23, and blended interest rate as on 31st December '22 was 7.03%.
The tax expense for Q3 FY '23 was at INR 30 crore. Tax expenses for the quarter is lower on account of certain onetime true-ups. The company remains under the old tax regime during FY '23, and the ETR is expected to remain around 31% for the full year. PAT during the quarter was at INR 92 crores as against INR 129 crores in Q3 FY '22, witnessing a decline of 29% on Y-o-Y basis due to lower EBITDA. Similarly, PAT for 9 months FY '23 was at INR 256 (sic) [ 255 ] crores against INR 408 crores PAT in 9 months FY '22.
Net debt-to-EBITDA ratio was at 0.57x on the basis of trailing 12 months EBITDA. The net working capital percentage and number of days of working capital for Q3 FY '23 on the basis of trailing 12 months turnover was at 19.4% and 71 days, respectively. Increase in net working capital is driven by strategic decision of inventory building of certain products, and temporary lower creditors due to procurement of domestic ethanol. The capital expenditure during the quarter was around [ INR 148 crores ].
With this, I would like to conclude our opening remarks. We will now be happy to address any questions that you may have.
[Operator Instructions] The first question is from the line of Tarang Agrawal from Old Bridge Capital.
Three questions from me. One, if you could give us the volume growth across each of your segments for this quarter. Second, in the press release, I noticed that there's a comment around Specialty Chemicals' garnering a lot of traction in the agrochemicals segment. So if you could give us some sense on what proportion of Specialty Chemicals business was from agro customers for 9-month FY '23, and what was this number for 9-month FY '22.
And the last question is on power and fuel. You alluded to cost softening, so how should we look at it going forward for Q4 and probably subsequently from Q1 next year onwards?
So Tarang, on your first question of volume growth, as you can see that the volume growth has come clearly from Specialty Chemical business. And in Nutrition business, we have informed you that there is a degrowth in volume both year-on-year as well as quarter-on-quarter. In Chemical Intermediates, though you see the volume degrowth overall basis, but as we informed on acetic anhydride, we have grown in volume. So actually, other than the Nutrition business in overall business, the volume consistently is growing in Specialty Chemical as well as acetic anhydride. And since Nutrition business, niacinamide situation has not improved, we are not in a position to grow volume.
And the question #2, on agrochemical business portion of our specialty chemical. If you see the agrochemical is close to 40% of our Specialty Chemical business. This is almost same in quarter-on-quarter as well as year-on-year basis. On power and fuel, the -- regarding this Q2, we have seen little bit softening of coal prices of imported coal. And therefore, there is a slight benefit, not much, very, very little. But in Q4, we are expecting a little more benefit because of 2 reasons. One is, the coal prices are also coming down in import, as well as we have now got some clearance of our contracted coal with road transportation. So there will be some benefit of cost. But of course, it will not be the full benefit of our cost of FSA. Hope I have answered all your 3 questions.
Sir, just one question for volume growth. I was actually looking at numbers, specifically for each of the segments.
Yes, I explained to you that in Specialty Chemical, we have grown both quarter-on-quarter as well as year-on-year in volume. Nutrition, we have not grown, particularly on niacinamide, though we have grown in our vitamin B4 choline chloride, which I also stated in my speech. On acetic anhydride, we have grown in volume both quarter-on-quarter as well as year-on-year. But ethyl acetate, it's not a focus product. We sell only when we get sufficient margin for us, and that's where you see the reduction in volume. We have not sold much ethyl acetate.
The next question is from the line of Nitesh Dhoot from Prabhudas Lilladher.
So my first question is on the Specialty Chemicals. So we see that there is a sequential revenue decline in Q3. So what is that on account of? Is there a sequential volume decline or a price decline? What exactly it is?
So the revenue decline on sequential basis is purely on product mix. As you know, we have almost 60 to 70 products in our Specialty Chemicals segment, so sometime in some quarter, you have a product mix, which gives you little bit of lower revenue, but that doesn't mean that our volume has not grown. So volume -- as I said, volume has grown. But there is a product mix change, which changes the price realization, but of course, does not changes the EBITDA and volume.
Sure. And on the domestic sales for Specialty Chemicals, that has declined from INR 197 crores to around INR 164 crores. So are we facing any pressure in the domestic market? And what would be the status of our diketene derivatives plant there? What will be the utilization currently?
Yes. So you are very right. In current situation, as you know, we are facing a very low demand in diketene derivative, which now, we can see a positive traction happening even in diketene derivative this quarter. But yes, you are right, last quarter, we have seen diketene demand having lower, but that's an opportunity for us to grow our revenue in domestic market through diketene, which we can see now, as well as with other products.
Sure. All right. And sir, on the EBITDA. So basically, if you see that there is a sequential increase in the Specialty Chemicals EBITDA and the margins have come up to 18.6%, and this is despite the coal availability not easing. So how did we manage to increase the margins in the Specialty Chemicals segment, if you can give some color?
Yes. So I expressed to you that the increase in EBITDA has come both -- one is from volume. Secondly, we also said in the last call that though we are not in a position to do anything on coal cost, but we are definitely working with customer to pass on the cost to our customers. And somewhat, we are successful to partially pass on that cost increase, and therefore, you see the EBITDA margin improving. And going forward, both, we will see the softening of coal prices as well as the realization, which we have now taken the price increase to customer giving us better result in future.
Sure. Sir, just one clarification here. So if I remember our previous discussion, so basically imported coal price movements are generally a pass-through, it is the difference between the FSA coal price and the imported coal price, which is in a way a benefit for us. And if the FSAs availability is not easing, so does it really have any benefit for us, I mean, the imported coal prices going down?
Yes. So as we have been saying that our contracted coal issue is only at our one site, which is Gajraula, rest, and all other sites are based on imported coal. Now in Gajraula also, we partially have imported coal. So therefore, the impact in the Gajraula products is there. But I also mentioned to you that we are in a position to partially passed on the cost increase, even in Gajraula for our contracted coal. And therefore, you see the EBITDA improvements in Specialty Chemicals.
Sure. Sure. Sir, next is on the energy efficiency projects that you have highlighted in the presentation and the debottlenecking projects. So what kind of margin benefit that we can expect from this? And what will be the quantum of investments going into these energy efficiency projects?
So honestly speaking, there is not large investment in these projects. These are mostly business excellence projects. So these projects are actually in the 4 segments. One, wherever our cost of generation of power today is higher with our own generation versus grid like in Gajraula, we are opening up to the grid, that will give us savings. #2, we are going to improve efficiency of operation through the digital intervention. So we are taking a very major program of digitalization in all our energy production. That will give us the benefit.
And third, we are also working on how to minimize the consumption side in the product. So combining all these experience in [indiscernible] we are gradually, phase wise, going to get benefit of these programs, apart from going green in solar, which is the fourth initiative, which we are talking about in energy savings. So there are clear-cut 4 initiatives in business we have planned which is going to be in phased manner. Some of the initiatives will start giving results in couple of quarters and some initiatives might take longer time because you need to make investments and take the benefits later.
Sure. But I mean, can this be quantified in terms of like 100 to 200 basis points of margin improvement in the Chemicals business? Or maybe, if you can just highlight that?
Yes. Once the entire program is implemented, then I can tell you this is going to be a significant benefit. This will be definitely significant benefit. Unfortunately, I am not in a position to give any number because we are still working with our partners to put down these numbers on a hard basis. Maybe after couple of quarters, I will be in a position to give you a certainty of numbers or some indication of numbers. But I can only assure you this is going to be a significant improvement in our overall profitability if we are in a position to implement all these initiatives.
Right -- maybe I mean, sorry if I'm repeating. But I mean on the FSA, so is there -- we had earlier expected that from January onwards, the availability will ease, but it doesn't seem that much of the benefit has started coming in. So what is our view there? I mean do we see this coming in a quarter's time or what exactly are you envisaging over there?
Right. So based on our discussion with various agencies, we don't see this FSA to be 100% clear to us in next couple of quarters. But having said so, I am pleased to inform you that from Q4 -- and I can say from this point onwards, that we are now allowed to take our contractual coal at the contractual price but from road transportation. So we are going to get benefit in our cost but not the 100% benefit. So this quarter onwards, you will see the benefit in our cost, in our coal in Gajraula because now we are allowed to take road transportation contractual coal.
But as for our information from various sources, we don't see the full FSA benefit coming to us either in this quarter or in next quarter unless there is a very, very huge production of coal and availability of rakes. Actually, the major issue is happening, the availability of rail transportation. In fact, the coal is available. Government is also working very, very aggressively to make the rail available for the industry. If they are successful to do it in next 2, 3 months, probably we'll get the benefit. But at least I don't see in next 3 to 4 months that happening. But I think major relief has happened because we have got this clearance to get our contractual coal with road transport. So that's the benefit we will start getting from this quarter onwards.
Sure. So in that case, I mean, would it be fair to assume 18.5%, 19% kind of margin there, sustainable margins for Specialty Chemicals? Would that be a fair understanding, till the time the efficiency, the energy efficiency projects don't come up fully, so would that be a fair understanding?
Nitesh, this is the discussion we had also 3 months before when you said that margins will be -- but you see margins are improving. The reason is that we are not stopping our realization, we are trying to recover the cost increase from our customer, from the products we can recover ourselves. So I don't say -- I don't make any commitment on the margins that it will not improve because it will all depend that if we can realize better pricing in our product, we can meet our -- all the volumes projections, probably we should be improving. Why not?
I'm sorry to interrupt you, Mr. Nitesh Dhoot. If you have any follow-up questions, we request to please come back in the queue. Next question is from the line of Rohan Gupta from Nuvama.
Am I audible?
Yes, you're audible.
Sir, first question is on your Nutrition & Health Solutions business. So we understand that there is a high inventory scenario, but I think that the impact on revenue is slightly less than what impact we have seen on the profitability or segment EBIT, which has come down to drastically to just INR 5 crore, while Nutrition & Health Solutions have seen some revenue improvement on Q-on-Q basis. So is there any [indiscernible] losses we have booked? Or it's a just a cleaning up the inventory at a lower prices which is impacting the profitability or the overall realization itself has come down? So what is the reason for the -- such a sharp fall on EBITDA or EBIT on the Nutrition & Health Solutions?
So Rohan, last quarter, when we started, the pricing was not as bad as what we saw at the end of the last quarter. So therefore, the margins of last quarter are better. Having said so, your observation on revenue increase is correct. So this quarter, we have sold a little higher volume of niacinamide. The reason that we are getting our customers' requirement, wherever we are selling on a positive contribution, we want to take the orders. And some improvements in volume in this quarter has happened. And in this -- in the current quarter, which is quarter 4, we still estimate that our situation of volumes would be better. As well as in this quarter, we are estimating that price should also improve.
Because last quarter, there were multiple problems. #1, as we said, the swine flu and avian flu in U.S. and Europe. And the lesser impact was also from China consumption was much, much lower because China had big restrictions on -- because of COVID. And -- but if you see the China is getting opened up last month, we can see the China demand improving and which is actually making the whole nutraceutical segment a little bit positive, even though the flu situation has not improved. So because of this Q2, of course it was lower Q3, but we see Q4 becoming little better than Q2, that's what we estimate.
So sir, unlike Specialty Chemicals, are there any cost increase we are trying to pass it on? Nutrition & Health Solutions business is seeing a steadier margin pressure and the prices are still under -- significantly lower than what it used to be. Just wanted to understand that how the -- this Nutrition Health Solutions business pricing works with the end customer? And how you decide on the margin strength, it is just completely driven by the demand supply scenario? Or you see that there is some cost element, cost-plus element is also there?
So Rohan, good question. So our Nutrition segment, if you see, we have 70% of our revenue of Nutrition segment coming from feed industry, animal feed industry, and 30% comes from Food and Cosmetics and others. Now this 70% animal feed is impacting our volume and revenue because of demand. So answer to your question is, it is demand and supply situation. But our efforts for future is that can we reduce this dependency on animal feed of our nutrition business to more Food and Cosmetics, so that we can balance out, so that this kind of impact does not come in our revenue and profitability. So you are right that, currently, it's demand and supply situation, which impacts our volume as well as profitability.
I am sorry to interrupt, sir. Maybe if I could request you to please come back in the queue. [Operator Instructions] The next question is from the line of Siddharth Gadekar from Equirus Securities.
So just wanted some color in terms of our -- one, we had announced a long-term contract for CDMO of INR 270 crores over 3 years. So what is the status of that project?
So we are servicing that contract. And actually speaking, the volumes of that contract will start increasing from this quarter end onwards. And as you see that the new capacity of GMP which we are building up, we are making it ready, with that servicing that contract. And in fact, the overall CDMO traction, not only with that contract but also with other products, are showing a positive result. And we are expected to see a better performance of our GMP facility which we are building up, which will be ready in the next couple of months' time. So that is on track, and we are servicing it on time.
So basically, FY '24, we can see the entire INR 90 crores coming in from that project?
No, that -- yes. So you are saying that FY '23 annual revenue, yes, it should come full, because that's the capacity we are building up, correct?
Okay. Got it. Sir, and secondly, now in terms of diketene, what kind of capacity utilization can we expect in FY '24 and '25?
For FY '24, with our current estimates, I think we are planning to utilize to 70% to 75% of capacity.
Okay. And the non-GMP plants also will be at similar levels in FY '24, they will take time to ramp up?
Yes. As of now, it looks like that. But you never know, if demand improves, we can even utilize better.
Okay. Sir, got it. Sir, the last question, in the Nutrition segment, have we changed any CapEx because or now we are looking at some cosmetic-grade vitamin B3 as well, which was not there before. Is this something new that we have announced?
Yes, yes. Very right. And that's what I just mentioned to Rohan also that in Nutrition segment, now we -- our endeavor is to improve our presence in nonanimal feed segment more. And therefore, we are bringing up more capacity of cosmetic grades. As I -- if you see my last 3 quarter statements, I have been saying that our focus on food and cosmetic is increasing, and we are getting a very positive traction. With that, our demand situation of cosmetics and food has improved, and we are adding capacity there. So that we will make -- we will actually make announcement very soon about that new capacity investment.
Above that, we also have plans on vitamin B4, which we currently have in animal feed segment. We want to bring -- we are also going to have vitamin B4 for Food segment. And that -- both of these together, once we are ready, we will have a shift in our 70:30 ratio to close to 50:50 ratio of animal feed and food and cosmetic segment. So you are very right. You have correctly assessed it. We have additionally made the investment plan for the nutraceutical segment because that is going to give us much more sustainability and resilience to our profitability and revenue going forward.
The next question is from the line of Dhruv Muchhal from HDFC Mutual Funds. .
Sir, the question probably is a bit repetition of the earlier question. If you can probably share the volume numbers for the Specialty Chemicals segment for this quarter and the 9 months. The reason I'm asking is also because for the first 9 -- for the 9 months, it seems you have grown about 40%, 50%. And I'm just trying to understand, does this -- if largely it is volume-driven, does this pose any limitation in terms of the base business growth for the forthcoming years? Because I'm just trying to understand, are we probably filled up for the producing capacity that we have with this kind of volume growth?
Yes. So your assessment is correct. So it is the overall Specialty Chemical, including the pyridine volume. So there is a increased volume of pyridine, and pyridine derivatives and therefore, you see the significant improvement in volumes of Specialty Chemical. Now on your point whether it will have an impact going forward, we don't see that because the overall volume scenario of pyridine and pyridine derivative is still, it stands strong. And we have a huge capacity upgrading in plant, as we already stated earlier, and we are still utilizing just, say, about 70%, 75%, not more. So we still have capacity. And if the demand comes, we will be in a position to take it up more.
So even after the...
So just to add on what -- just, Dhruv, just to add on to what Rajesh sir is saying, in the CapEx plan also, you would see that one debottlenecking for pyridine, that will also add to the capacity.
Okay. I was coming to that. Great, sir. So I mean, at current -- even after the 9 months volume growth, which I believe could be probably 20% of ours, I'm not sure. The pyridine capacity 70%, 75% utilized?
Yes, yes, correct. And remember, this overall volume growth is from existing products as well as from new products. So we do -- other than these announced CapEx, which you see in our presentation, we have continuously debottlenecking CapEx and capital investment which happens regularly, which normally we don't announce. Because that -- as you know, we keep doing it based on the customer demand of our existing products.
Sure, sir. And sir, 2 quick questions, as your 2 cGMP plants, both are -- one cGMP, non-cGMP both are coming online, I believe, in the next quarter. So just wanted to get some better understanding on in terms of the visibility of ramp-up. Probably one often sees in the industry that they have contracts in hand based on which the ramp-up visibility is there. So just wanted to get your sense also in terms of the visibility for the ramp-up of these capacities. I mean do you have contracts? Or are these established products? Or are the products already developed so that you only have to market it once they are -- the capacities are ready? Just trying to understand on the -- get a better visibility on the ramp-up sir?
I've already stated in the last question that the cGMP plant, which we are building up is based on our new demand and new orders, which we have already got it. And there was actually additional traction. And therefore, we took little bit more expansion of the existing facility. And therefore, there is a delay of about 1 month or 2 months. And hence, the utilization of cGMP plant is going to be in a very good situation, as we stated earlier. The first year itself, you will see a utilization of more than 70% of cGMP plant. And the same is true for non cGMP plant because cGMP is utilized for the more value-added products and non-cGMP is utilized for the early derivatives and intermediates.
So both plants are going to be utilized as per plan. We have a strong order situation. So as soon as the plant will come next year, we will have a good traction of utilization as we have been saying, close to 70% to 75%. And next 2 to 3 years -- that's what we said, in next 2 to 3 years, we will reach close to 85%, 90%.
Sorry to interrupt you, sir. If I could request you to please come back in the queue. We'll move to the next question from the line of Rahul Veera from Abakkus Asset Manager.
Sir, a very interesting comment that you've given in the presentation that FY '23 year will largely be similar to the past 3 quarters. Sir, given the improvement in coal costs plus the ramp-up in the CDMO, I mean, shouldn't there be a very sharp improvement sequentially? I understand you have mentioned that it's going to be very marginal in terms of coal cost improvement, but I still believe there could be a much better opportunity, right?
As I said, in coal cost, it is a marginal improvement. And as also, I have said that nutraceutical business, we don't see much improvement. And Specialty Chemicals, of course, there is improvement. So when I say it will be in line with last 3 quarters, I don't know what you understand, but I'm not saying that we'll be significantly higher or better than what we have been doing in last few quarters.
Okay. Okay. Fair point. And sir, the CapEx -- incremental CapEx that we have given from INR 2,000 (sic) [ 2,050 ] crores to INR 2,275 crores now in the presentation, this is largely going towards the debottlenecking only?
No. So it's about 3 things. One is debottlenecking. Secondly, I just explained that we are adding a new capital plan for nutraceutical vitamin B4 for food business, you can see about INR 100 crore increase in nutraceutical segment and debottlenecking. And third, we are also having the R&D expansion because of our good CDMO traction. So we are having some R&D investment plan, which we have highlighted in this increased investment plan. Of course, debottlenecking is part of that.
The next question is from the line of [ Pranav Tendulkar ] from Rare Enterprises.
Sir, I just wanted to ask 2 questions. About diketene plant, have we started commercial sales? And has the production quality been accepted by general market? That is first. And if it is, then what is the 100% utilization revenue potential for this plant at current price? That is first question. Also second question is that, so if the rake availability improves and government, say allows railway rakes, then how much of the saving could be done in the energy costs?
So 3 questions. I think #1 question was on your nutraceutical, I believe. Can you just repeat your first question?
Sir, the first question is the quality of diketene, then capacity utilization and quality of diketene.
We have told you that we have already started selling the diketene. But unfortunately, because of the lower demand, we were not in a position to utilize the plant. But now we see the demand is improving, and therefore, we are very confident that next year, we should be in a position to utilize, as I said, about 75% to 80% or 70%, 75% of the capacity.
Now second question on your FSA coal. Now if after the road transportation, which we have just got cleared, if we convert that to total FSA coal on a quarter basis, I think we will -- we should be in a position to add about -- Prakash, if I'm right, about INR 15 crores to INR 20 crores of EBITDA further, if that happens.
That's right.
Right. So in current diketene plant, revenue potential is how much?
So we have a capacity of 8,000 tonnes. It's difficult to give a price commitment. So there are 3 products, and each of these products are ranging from a price of INR 150 to INR 200 or sometime it is more. So based on that 8,000-tonne capacity, you can calculate the revenue. But it also depends that which product you are maximizing to maximize your revenue and profitability.
Right. So $100, $150 per tonne?
No, this is rupees. Plus, as we had been saying, that the Phase 2 of diketene is much awaited because this capacity of ours is not for 100% sales, this is for a backward -- this is our forward integration of building blocks. So this we have built up to make value-added products, which I have been talking all the time. Phase 2 investments will come very soon. And therefore, the realization from the existing capacity as well as new capacity is going to be higher, and that's our endeavor not to sell this 8,000 tonnes only as a commodity or bulk volume. So our endeavor is, this was a beginning to launch as a building block and then add the value-added product which we will bring up very soon, in the Phase 2.
The next question is from the line of Harsh Shah from Dimensional Securities.
Just revisiting your CapEx guidance, the first time when we had announced the CapEx in FY '22, the business outlook looked quite stable, we used to make 16% to 18% kind of margins, even better. But now today, where we stand, with the Europe slowing down, the prices of many of our commodities have eroded quite a bit and demand is sort of struggling, so how confident are you about the expectations of your -- of the -- with the revenue guidance that you had given for FY '27, that it will come through, because the business dynamics have changed quite a bit over the last 1.5 years?
So from where we are seeing, I'm sure you're also seeing the same angle, what we have said for FY '27 is still standing true, and all the investments which we have planned has no change. What is changing is mostly short term, which we have been talking. #1, nutrition business of vitamin B3 is not long term. I mean this is the first time in last 2 decades, I know this business, this kind of flu has never extended to 2 or 3 quarters. But nevertheless, it is not going to long last. This is one.
Secondly, this energy cost. You see, we are taking lot of initiative apart from getting the government coal of contract. I don't see this is longer term. This is going to be sort terms. We will be behind it. Beyond this, I don't see anything which is currently in problem, except for the global situation of demand. Now the global situation of demand, as we all know, India as far as chemicals is concerned, is definitely on a very high demand. So even though the global recession will happen, Indian companies of chemical will keep doing good because there is a huge shift which is happening of demand from China to India. We have still not served the entire volume of China. We are still just in single digits of percentage which we can take from China. We have a huge opportunity. So I don't see the future as dim as you are trying to explain.
The next question is from the line of Romil Jain from Electrum PMS.
I just want one -- expecting -- one question on fluorination. So I think we are doing some [indiscernible] where do we stand...
Sir, your voice is breaking up in between. If you can speak through the handset mode, please.
Yes. Can you hear me now, sir?
Yes, it's better.
Yes, it's better.
I just want to understand a little bit on fluorination. So I think we are doing some CapEx on that. So can we know what -- where are we standing right now in terms of our capabilities and whether the CapEx has started. And when do we expect to commission, maybe some details on that? And second question is on the Life Sciences Chemicals. Are we seeing some rebound in prices and maybe Q3 was more of a bottom kind of a quarter there? These 2 questions, if you can please answer.
On fluorination, as you can see in our presentation, we have still not committed the CapEx. The products which we talked about is still under development and scale-up. We hope that next year, sometime next financial year, we will be bringing up that CapEx. And that time, I will announce to you. On your question on Chemical Intermediates, as I stated, acetic anhydride, our volumes are growing. The reason for growth is that overall demand is increasing, but there is no additional capacity, which are being available globally.
And also in Europe, our competitors are not in a position to produce in full volume because their cost has gone up. So I see a continued positive traction of acetic anhydride demand. And therefore, as you know, we are having the new plant coming up, even next quarter, we are very positive about utilization of that plant also in future because of these reasons.
Okay. Sir, just one question on food-grade acetic acid. So I think that was the plant that we had started. So I'd like to know what is the utilization there? And maybe if you can just point out what kind of revenue are we generating and at what broad margins? And do we expect more capacity expansion there, because I think that was a very positive development that was there? So any insights on that?
On food-grade acetic acid, as we have said earlier, we are under the regulatory approval process. We see, we are going to start the commercial supplies from end of this quarter, definitely; or if not, beginning of next quarter. And we see a good traction of demand from our international customers. So actually, the realization of revenue of food-grade acetic acid, you will see in next financial year. This year, because of several regulatory approval process, as well as the FSSAI approval, et cetera, it took about 5 to 6 months' time. I think we are going to through in next 1 or 2 months. Next financial year, you will see the revenue realization of food-grade acetic acid.
The next question is from the line of Sunil Kothari from Unique PMS.
Sir, you said this, because of this road transportation we've chosen for this transporting coal, will it save INR 15 crore, INR 20 crore per quarter? And will it be effective from current quarter or next quarter?
No. I think you noted wrongly. What I -- somebody asked me that from the road, if you get 100% rail transportation, we will have additional benefit of INR 14 crores, INR 15 crores. But from the earlier quarter, now when we got road transportation, there is a benefit of about INR 10 crores to INR 12 crores, which we should accrue.
That is per quarter, right?
Per quarter. Per quarter.
Okay. You're right. Sir, and second question is, sir, we said that we got little bit ease of coal prices in current quarter, but if you take a percentage of the revenue, that has gone up from 14% to 15% [indiscernible] cost, power and fuel costs. So why it has happened, if you can a little bit explain.
No, because all that what you are seeing softening is happening only end of the last quarter. What you will see is this quarter impact, not in Q3. Q3 from beginning, it has been very high. It has just happened in the month of January, beginning when -- or let's say, end of December when the softening of prices have happened. So you have not seen the impact of that in the last quarter.
Okay. So both the benefit of road transportation and softening of price, both can materialize in the current quarter and onwards?
But remember that any reduction in coal price imported, customers are also smart, they will ask them to pass on. As we take increase in pass on, they will also ask reduction in pass-on. So please don't just calculate in mathematics and highlight out.
Sir, our other expense on top line of same INR 3,600 crore approximate for 9 months, has gone up from INR 336 crore to INR 432 crore, almost INR 100 crore, almost 30%, 35% increase. What is the reason for this, other expenses, I'm talking about?
So Sunil ji, so if you take on the quarters, other expenses...
No, sir, I want to understand about -- for 9 months. Because quarterly, I understand there is some specific reason. But if you take 9 months, it is INR 336 crore, from INR 336 crore it has moved INR 432 crore.
For 9 months, Sunil ji, so primarily the reason for increase in other expenses is, a, the freight and forwarding cost has increased; and then it's partially also due to the processing charges and the warehousing charges and repair and maintenance. So these are the 4-5 reasons on account of which the overall other expenses has increased.
Yes. But it is, sir, sub-segments -- from the same revenue, we have spent INR 100 crore more. That is why I'm just trying to understand. This is -- I mean, we are getting control on any cost or it is going out of control?
No, no. Just don't worry. Just 1 second, Prakash. Don't worry about control of cost, very, very much control. Let me explain you, last year 9 months, all other costs were based on the volumes which we have sold. The transportation costs, travel costs, repair and maintenance costs, everything is -- this year is going up because our capacity utilization is going up, our new plants are coming up. So all that is going to increase our expenses. But at the same time, you are very right, we are in full control and we have plans to improve efficiencies all over, and this is a continuous exercise. So there are some costs, which this year has gone up like travel et cetera, which is usual because we are back to our normal situation of FY '22.
Sir, my last question is...
Sunil, just to give you a perspective, because I think you are seeing the revenue number as the same. But our volumes have increased, it is just that prices of Chemical Intermediate segment has come down, that is why you see the revenue at the same level. So volume of business has already increased. So the expenses are in relation to the volume of business. So perhaps you are just seeing the same level of revenue, hopefully, you're feeling the expenses are...
You're absolutely correct. Absolutely correct. My request will be, so many people were asking about the volume growth. I think on a 64-page PowerPoint presentation, we should have -- every time why somebody should ask, what is the volume growth quarter-on-quarter or year-on-year. I think we should follow -- because every now and then, I'm observing that people are asking about volume growth and we are not able to provide those exact precise numbers. I request, please make it a practice that we should announce or we should announce that we are not going to talk about -- anything about volume. So please follow one practice that is my request.
And sir, my last question to Rajesh ji, sir, basically what we're talking about is we'll be improving our Specialty Chemical and Nutritional business to 65% over the next 3, 4 years, and that will give us far better margin and very respectable ROE and ROCE. But looking at this nutritional segment situation currently, and I understand this is the first time in this 2 decade, so are you, I mean, comfortable and confident about whatever your thought process and your observation or your strategy to achieve some respectable margin over the next 2, 3 years?
So you're asking about revenue or you're asking about margin?
No, sir, margin. Because we are saying that Nutritional business and Specialty Chemical will become a major part of our revenue, and that's why we'll be having a very respectable margin.
What I can only tell you, of course, it's very difficult to see the future, but it is very easy to make a strategy for future. So what we have done, we have made a very strong strategy. And I'm very -- personally very confident that all the strategy we have prepared, we are going on track and we are very confident. Having said so, I think you need to realize that there are certain situations which are beyond our control like today, we have. Now you may ask that, last year you said this, but you did not see this. The question is, this can happen either side.
So if FY '23 for us was -- FY '22 for us was fantastic year, nobody asked questions. But FY '23 is a tough year, so obviously you have right to ask questions. If this kind of situation happens, it's beyond control. But having said so, what we can do best is, we are trying. If you see our intent, our energy cost is going up, we have a huge plan to bring down overall energy cost. That should give us resilience of any such trouble which we can face in future. So we are continuously changing our strategy to see whatever we are getting short-term impact can be minimizing and that's what our intent. That's what anybody can do the best.
So having said so, I'm very confident that the strategy we have at place should realize the way we are looking at it. And now your -- the other part, I want to answer that on volume. I think you must appreciate the kind of declaration we give as a Jubilant Ingrevia is much more than anyone else. What we definitely not want to give, you must appreciate Jubilant Ingrevia, which is your company, we have leadership position in many products. And if we start giving volumes number of our product wise, you must appreciate globally, we are faced with many competitors. I hope you will appreciate, we will not have to land up in a situation, so please, please respect our declaration.
And on a different side, if we discuss, I can even talk to you what kind of volume growth we are talking. But on a call like this, if you ask me to give you volume growth product-wise, I think it is too much to ask. You must appreciate the kind of presentation details we had given, you saw all the other companies, whether you get this kind of detail. So please appreciate that.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Prakash Bisht for closing comments.
We thank you all for joining this call today. We hope we have been able to answer your queries. For further clarification, we would request you contact our Investor Relations team. Thank you once again for your interest in Jubilant Ingrevia Limited. We also wish everyone a very happy and prosperous new year.
Thank you, everyone. Thanks a lot. Bye-bye.
Thank you. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.