Jubilant Ingrevia Ltd
NSE:JUBLINGREA

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Jubilant Ingrevia Ltd
NSE:JUBLINGREA
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Earnings Call Analysis

Q3-2024 Analysis
Jubilant Ingrevia Ltd

Recovery Hopes Amid Agrochemical Slump

The company experienced a reduction in agrochemical business, dropping from over 30% of total business to about one-fifth, nearly 20%, with volumes hit up to 40%. Management is working to ramp up utilization to 70-80% in the next 18 months, committing significant capital investments, running into a couple of hundred crores. Despite these challenging times, the company is determined to not increase its debt. There's optimism for volume increases and a return to normal operating margins, as efforts continue to overcome recent setbacks.

Challenging Market Conditions and Strategic Responses

The company experienced a quarter with revenue decline mainly due to a muted market environment in end-use industries, which led to low utilization rates and lower inventory levels. This affected the volume and resulted in a decrease in revenues within the segment. Despite these challenges, the company succeeded in maintaining its market leadership in acetic anhydride domestically and internationally, even adding 27 new customers. Additionally, the company has been proactive in addressing workforce efficiency and diversity, aiming to have a 50% multi-skilled manufacturing workforce, which should contribute to agility and efficiency.

Financial Performance and Capital Investments

The quarter witnessed a drop in overall revenue from INR 1,020 crores to INR 966 crores, which was attributed to lower revenue in the Specialty and Chemical Intermediates segment. This also impacted the EBITDA, which declined from INR 158 crores to INR 104 crores. Capital expenditures for the quarter were significant, amounting to INR 123 crores, adding up to INR 429 crores over nine months. The company is focusing capex predominantly on Specialty and Nutrition segments and is aiming for an additional INR 190 crores in investments in the following quarter. Efforts to reduce net debt have been successful, resulting in a net debt of INR 636 crores and a net debt to EBITDA ratio of 1.36x. The management is optimistic about further reducing debt in the forthcoming quarter through ongoing lean initiatives.

Capacity Expansion and New Projects

The company is moving forward with several capacity expansions and new projects, aiming to reach over 70% utilization in the next 18 months. There are several new plants that will commence operations, including an intermediate plant and another agro active and intermediate plant in the current quarter, as well as Diketene derivatives and a niacinamide plant expected to start by June. With ongoing customer traction for newly introduced plants, there exists an expectation that already operational capacities will be potentially filled within that timeframe. Additionally, the company is exploring the semiconductor chemicals market, having entered advanced discussions with potential customers interested in leveraging its Contract Development and Manufacturing Organization (CDMO) business.

Strategic Shifts and Market Share Goals

Management has indicated a shift to the new tax regime in the coming year to improve earnings per share (EPS) and is currently finalizing the CapEx plan for FY '25 and '26. While the exact figures will be announced post the Q4 earnings, the existing INR 2,000 crore plan from two years ago remains on track and the company expects to see continued investment in the coming fiscal year. There is confidence that as the global agrochem industry regains strength, the company will be able to capitalize on market opportunities and potentially increase its current 20% market share.

Earnings Call Transcript

Earnings Call Transcript
2024-Q3

from 0
Operator

Ladies and gentlemen, good day, and welcome to Jubilant Ingrevia Limited Q3 and 9 Months FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Pavleen Taneja, Head of Investor Relations. Thank you, and over to you, sir.

P
Pavleen Taneja
executive

Thank you, Jessy. Good evening, everyone. Thank you for being with us on our quarter 3 and 9 months of financial year 2024 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. Hari Bhartia, Co-Chairman; Mr. Deepak Jain, CEO and Managing Director; Mr. Prakash Chandra Bisht, CFO, Jubilant Ingrevia Limited; and Mr. Arvind Chokhany, Group CFO; Jubilant Bhartia Group.

I may now invite Mr. Shyam Bhartia to share his comments.

S
Shyam Bhartia
executive

Thank you. A very good evening to everyone. Thank you for joining us on Q3 and 9 months of financial year 2024 earnings conference call of Jubilant Ingrevia Limited. We are pleased to announce the stable business performance for Q3 amidst the continued challenging market conditions.

We are also glad to share that the Board has recommended an interim dividend of 250%, that is INR 2.50 per equity share of face value of INR 1 each for the FY '24. This will result in a cash outflow of INR 39.8 crores.

Let me first take you through the overall micro trends globally. We see that the following trends in our business. The agrochemical sector continued to witness sluggish volume pick up globally. Although we believe that inventory destocking is in the last leg, but the broader challenges to the sector still prevail.

Prices globally were under pressure on account of excess Chinese supply at very low prices. Consequently, the Agrochemicals Intermediate business was affected both on volume and prices. In pharmaceutical end-use segment, we saw steady growth on Y-on-Y basis, resulting in healthy placement of volumes across the value chain at a stable price environment. In segments like Feed, Food, Cosmetics and FMCG, we successfully placed good volumes in the market and maintain market share; however, pricing recovery was muted due to aggressive volume push by the competition. As we draw near to closing the financial year, we are hopeful and continue to have a view that Agrochemicals segment would witness a recovery in H1 of next financial year.

We anticipate signs of pickup in volume by the end of Q4 FY '24. As a key supplier to agrochemical companies, we are confident of our role in managing the transition of supply chain sourcing away from China. We are witnessing continuous interest and inflow of inquiries from global agrochemical clients, where these inquiries are also graduating towards advanced stage of discussions. And we are confident to meeting their long-term requirements in times to come.

On input cost front, we kept cost under control through lean initiatives. Energy costs were also maintained at a reasonable level through sourcing coal at optimal pricing and other efficiency and mix initiatives. Driven by robust domestic consumption, we expect the Indian market fundamentals to remain strong, and fuel further growth for us.

As we have reminded on track towards investments in high-potential categories through our well-defined modular CapEx plan of INR 2,000 crores till FY 2025, we remain focused to deliver structured growth in future.

With this, I hand over to Deepak to discuss about the business in detail.

D
Deepak Jain
executive

Thank you, Mr. Bhartia. A very good evening to all of you. At the outset, I would like to thank you all for joining us today for Q3 and 9 months FY '24 Investor Call of Jubilant Ingrevia Limited. Let me now take you through the overall business and financial performance along with key highlights for the company for the third quarter of financial year.

At an overall level, the last quarter remained challenging, quarter for Global and Indian chemicals industry, driven by subdued demand in key and new segments such as Agrochemicals and continued price pressure across segments. The demand traction for the Specialty Chemicals business from Pharma end-use segment witnessed improvement. However, pricing is yet to witness a recovery, whereas agrochemical demand continues to remain impacted on account of lower volumes and prices with the overall market situation remaining challenging.

In Nutrition & Health Solutions business segment, vitamin demand was stable. However, we witnessed increased competition from Chinese suppliers due to which niacinamide pricing remained under pressure. In the Chemical Intermediates business segment, we continue to witness muted demand in some of the downstream industries, including Agrochemicals and Paracetamol. Softer paracetamol market also led to reduction of overall revenue Pharma end-use despite strong growth in Specialty and Nutrition end-user markets for this segment. We also witnessed lower realization against our pass through cost of acetic acid during the quarter, leading to lower revenue in the segment.

As informed by Chairman, we are encouraged by continued interest of global agrochemical clients for supply chain transition away from China, and we are confident of capitalizing on this opportunity in the times to come. We are in advanced stage discussions for strategic partnerships with several key innovators.

On the customer front, we are continuing to witness healthy inquiry traction with several customers across Acetyl and Specialty Chemicals business for longer-term contracts. In the CDMO business, we have a healthy pipeline across Pharma, Agrochem, Fine Chemicals and Semiconductor chemicals.

Our major CapEx projects are on track as planned. We commissioned one agro intermediate plant towards the end of the last quarter, while the Diketene derivative expansion and another Agro Active/Intermediate plants are planned for commissioning in Q4 FY '24.

The capital expansion plan demonstrates our commitment and strategy to structurally expand and shift our business mix towards value-added specialty intermediates. We are also revisiting our expansion plan for coming years in light of several opportunities where we are seeing increased and accelerated traction from our customers.

As communicated in previous quarters, with the help of our project lean initiatives, we successfully kept our costs under control and brought our working capital down. Further, we also continued to source coal at optimal prices and deployed other efficiency and input material mix initiatives to improve the overall energy costs.

As we move into Q4 of the financial year, our channel check and clients order bookings for the next year indicates that the Agrochemicals segment may start witnessing recovery from H1 of next financial year. However, we also anticipate some early signs of volumes recovery during the end of Q4 FY '24.

Now let me take you through the updates on all our 3 businesses segments individually. Let's start with Specialty Chemicals. During the quarter, lower volumes driven by lower demand of agrochemical end-use induced pressure on margins of Specialty Chemicals business. Although agrochemical market witnessed decreasing pressure from destocking during the quarter, the influx of material from surplus Chinese capacity mitigated the demand and price pickup.

Pharma end-use demand witnessed improvement; however, pricing in the end-use segment is yet to witness a recovery. On the back of good Pharma demand, our share of revenue from Pharma end-use customers improved on year-on-year and quarter-on-quarter basis, wherein we also added 38 new customers to our Specialty Chemical business segment.

We also witnessed a steady demand for our products on domestic markets, wherein North American region also performed well, whereas muted demand continued in Europe, owing to downstream industry slowdown in the region. Our CDMO business continued witnessing positive traction during the quarter, wherein we are also very hopeful of closing strategic partnerships with large global clients on the back of some inquiries, witnessing positive momentum in our Diketene range of derivatives, wherein we also operated our Diketene plant at optimum capacity utilization during the quarter. Our expansion of Diketene derivatives is also in progress, and we are expecting the commissioning of the new Diketene derivatives plant with 2 new products to take place during the quarter 4 of FY '24.

Under microbial control solutions, expanded capacity of Pyrithiones to cater to increase demand witnessed continued healthy traction in pyrithione business, new customers and product approvals were also added. We commissioned a multipurpose Agro Intermediate plant towards the end of Q3 FY '24. Further another Agro Active Intermediate plant to be commissioned in Q4 FY '24.

Now moving to the Nutrition & Health Solutions business. During the quarter, revenue and EBITDA within the segment grew on a year-on-year basis, primarily led by improved demand and price recovery in major products. Vitamin demand during the quarter remained stable, whereas we also witnessed competition from Chinese suppliers. We observed downstream industries continue to maintain lower inventories across regions, wherein niacinamide pricing also remained under pressure. .

Customers seem to be in wait and watch mode due to pricing -- prices continuing at lower levels. We witnessed a marginal uptick in pricing in the month of January, which we hope shall continue. Our Nutrition & Health Ingredients business witnessed improved demand from Food segment end-use on quarter-on-quarter and year-on-year basis, wherein we acquired 12 new customers during the quarter.

Our Animal Nutrition & Health Solution business witnessed demand traction in premixes, especially in mineral premixes, emulsifiers and chromium and herbal formulations. We continued our focus on increasing market share in 3 segment and acquired 17 new customers during the quarter. We are continuing to prioritize improving volumes and market share from customers in niche segments of Cosmetics and Food grade end use. Our CapEx for GMP compliant facility for expansion of Food and Cosmetic grade niacinamide is expected to commission in Q2 of FY 2025.

We are also planning to enhance capacity for Choline and Specialty Premix products and for Food Grade Vitamin B4. Finally, let me take you through the Chemical Intermediates business as well. During the quarter, revenue within the segment was lower mainly due to muted market environment in end-use industries, which maintained low utilization and lower inventory levels, leading to lower volumes in the segment.

Despite the challenging situation, the business continued to maintain its market leadership for acetic anhydride in domestic as well as international markets and added 27 new customers during the quarter. We improved share of domestic sales on year-on-year and quarter-on-quarter basis, but taking initiatives to promote sales within small Indian manufacturers for augmenting domestic market share with value-added product sales.

During the quarter, our new acetic anhydride plant at Bharuch operated at optimal utilization levels. Lower demand in ethyl acetate continued during the quarter. In order to scale our volume in the segment, we are continuing focusing on volume-based contracts with global customers.

On the overall financials, the overall revenue during the quarter stood at INR 966 crores as against INR 1,020 crores in Q3 of FY '23. The decline was due to lower revenue of Specialty and Chemical Intermediates segment. The EBITDA in quarter -- EBITDA for the quarter stood at INR 104 crores as against INR 158 crores in Q3 FY '23. The lower revenue in Specialty and lower realization in Chemical Intermediates led to a decline in EBITDA margins. The reason for the same were explained earlier.

The capital expenditure incurred during the quarter was INR 123 crores and INR 429 crores during the 9 months of FY '24. The expected capital expenditure in Q4 is around INR 190 crores. Majority of this expenditure will be in Specialty and Nutrition segment towards Agrochemical plants, Food and Cosmetic grade niacinamide, value-added derivatives for Diketene and towards new boiler and power plant at Bharuch.

The net debt of the company as on 31st December 2023 was INR 636 crores. Net debt to EBITDA ratio was at 1.36x on the basis of trailing 12 months EBITDA. We decreased the net debt by INR 65 crores during the quarter to reduce the working capital by [Indiscernible] lean initiative. Consequently, net working capital as a percentage to turnover for Q3 FY '24 was sequentially lower at 20%.

We hope to reduce our debt levels for the incoming quarter on the back of continual lean initiatives. The company continues to remain under the old tax regime and ETR for FY '24 is likely to remain in the range of 29% to 30%.

As we move forward, I would also like to share some updates on a few strategic initiatives undertaken in recent times. The leadership team of Jubilant Ingrevia conducted an ambition workshop recently to jointly redefine our new compass and bold growth ambitions.

With that, we kicked up the exercise to redefine our next 5-year growth strategy. We'll be able to share the specific plan and actions from the new strategy in the coming quarters. On the energy efficiency front, we activated programs to improve power mix towards renewable power, grid power and power purchase through exchanges in addition to the capital generation.

With the help of this initiative, we expect our share of the renewable power increased to 4x by FY '28 and also reduce our average power cost significantly in coming years. On people front, we have taken initiatives towards having 50% multi-screen manufacturing workforce towards achieving higher workforce agility, efficiency and diversity.

We are leveraging our R&D capabilities through our newly commissioned state-of-the-art R&D lab at Greater Noida with our new products like electronics and semiconductor chemicals and fluoride based chemicals. On the digital front, we progressed with our program Surge, which is focused towards enabling transformation of business processes across manufacturing, supply chain and sales through digital interventions.

We have rolled out multiple digital initiatives to improve our yield and efficiency. The full impact of these will be realized in the next financial year. With this, I would like to conclude our opening remarks. We'll now be happy to address any questions that you may have.

Operator

[Operator Instructions] We have a first question from the line of [Divya Sethi] from Electrum PMS.

U
Unknown Analyst

I just wanted to understand. So globally, I understand that agrochem industry is facing challenges. And like you mentioned that improvement might be seen in the post H1 of FY '25. So is it really fair to say that we are already at bottom or is the worst yet to come?

Or if you could give us an idea on the best and worst case scenario for next 2, 3 years that would be really helpful. And my second question would be to understand the contribution of the CDMO business to the total revenue that we are doing.

D
Deepak Jain
executive

Thank you, Divya. On your first question on agrochemical markets, you're right, at least the general feeling in the market based on all the customer discussions we have done and as well as what we can see in terms of our volume trajectory that we have hit the bottom, and I say that because the destocking which has been going on for the last 6 quarters or so, we can see as well as we have been hearing from customers that it is at the fag end now.

So hopefully, we have already hit the bottom in the last quarter itself, and there could be some lingering effects in this quarter as well, but in general, the expectation is that volume growth will in fact to come by end of this quarter and will continue into H1 of FY '25, as I said earlier.

And with that, the hope is in the next year or 2, it may take a few quarters for demand to come back to the normal levels. But we are hoping that next fiscal year will be a growth year for agrochemical industry. And once it becomes stable, then it will get back to the normal cycle, which agrochemical industry goes through, which is a positive cycle for next few years.

On your second question, I think CDMO business, as I said, I think, in the last call as well, it's a meaningfully large business in our Specialty Chemicals, and it is expected to grow very fast. It's the fastest-growing business in our portfolio, and we are hoping that in coming years that will be the biggest driver of our Specialty Chemical portfolio and then it will grow on the back of growth coming from multiple end-user segments. We obviously have a huge share or a significant portion of that is clearly coming from pharma, where we are continuing to get good traction from the customers, but increasingly we are also getting traction from agrochemical customers for long-term arrangements, and we also have some few inquiries in the semiconductor space.

U
Unknown Analyst

Got it. Sir, can you quantify the numbers like the total revenue that we have done [Indiscernible] for this quarter, how much was CDMO'S contribution?

D
Deepak Jain
executive

Divya, we don't disclose the numbers at [geo] level as you know. But I can tell you is within the Specialty Chemicals, I'd say meaningfully large number.

U
Unknown Analyst

Okay. Understood. Also on my question on agrochem, if you could give an idea in terms of numbers, again, where are we looking at closing this year and next 2 years, what are the projections, if the situation of agrochem pans out completely?

D
Deepak Jain
executive

So again, we -- I won't be able to give you any specific numbers in terms of the growth. But as we said, the agrochemical industry is expected to come back to growth in the next fiscal year. And as it from, we will be able to get to a growth trajectory for the overall business because 1/3 of our business is depending on the agrochemical industry. And that part has taken the biggest hit, as I explained in my opening remarks as well.

So at the company level and obviously, agrochemical segment itself will grow in our portfolio, but also it will have a meaningful impact on the overall growth trajectory of the company, and we should be able to see good growth next year as the industry comes back -- as the markets come back.

U
Unknown Analyst

Got it. So for our estimate, would it be fair to take a ballpark number of 20% to 25% growth year-on-year?

D
Deepak Jain
executive

Sorry, I would not like to comment, Divya on that. It's your model, you should put the assumption you are comfortable with, but it will be a growth year in all likelihood is all I can say.

Operator

[Operator Instructions] We'll take the next question from the line of Harsheel Mehta from Mehta Vakil & Company.

H
Harsheel Mehta
analyst

Sir, my question is regarding the CapEx that you are currently undertaking. We've already commissioned an Agro Intermediate plant in Q3. We have another couple of plants coming up in Q4 in Specialty Chemicals. And then in the Nutrition & Health segment in Q2 of FY '25 as well.

Sir, what is the outlook for these new capacities be in the coming years given the subdued market demand in Specialty and the Chinese dumping that's happening in niacinamide?

D
Deepak Jain
executive

Yes. So Harsheel, you're absolutely right. There are at least 3, 4 of our planned CapEx or capacity, which is coming on stream. So just for your benefit, there's an intermediate plant that we started last quarter. There's another agro active and intermediate plant that will start in this quarter. The Diketene derivatives that was lined up that will also start in this quarter. And then we have the niacinamide cosmetic grade and food-grade plant, which will start in May or June time frame -- roughly June time frame.

So our expectation is in all these segments, as the demand comes back in the market within next 18 months or so, we should be able to take the capacity utilization to 70% plus, pretty much the way we have done it for all the CapEx that we have made in the last 2 years.

And that's one question which was there in the last call as well. All the new investments we made in the last 2 years and the capacity which has come on the back of those investments is moving on track as per our original plan and our -- most of them are already at 70% plus utilization. So similar to that, we are hoping that all the new capacity coming up will get booked in the coming quarters and in another 18 months. And obviously, a lot of it contingent on market demand coming back, at least on the agro segment, but the hope is that in 18 months, we'll be able to take the capacity to 70% plus utilization.

H
Harsheel Mehta
analyst

That's fine, helpful. And sir, one more question. Would you be able to share some more details regarding the semiconductor chemicals that you referred to in your opening remarks?

D
Deepak Jain
executive

Yes, so -- because these are very sensitive and confidential project, I can't disclose too much, but all I can say is there are at least 4 or 5 customers who have approached us, who want us to do production of some of the semiconductor chemicals through our CDMO business on a contractual basis based on the technology that they will provide.

And we are getting good traction from them. We are in advanced stages of discussions with a couple of them. And on the back of that, we hope to increase the size of our semiconductor chemical pipeline in the coming quarters.

Operator

We have a next question from the line of Nitesh Dhoot from Dolat Capital.

N
Nitesh Dhoot
analyst

So first, a question on Chemical Intermediates. You mentioned about lower ethyl acetates demand during the quarter.

Operator

Can you use your handset mode, please?

N
Nitesh Dhoot
analyst

Sure. Is this better?

Operator

Yes. Please go ahead.

N
Nitesh Dhoot
analyst

Sure. So just wanted to check on the ethyl acetate demand. So you just mentioned that the demand has been noted. However, one of your large local competitors in the ethyl acetate base remarked about growing market share there with competition getting impacted and not having the cost position and ramping down their capacities. So your comments on that. And if you could just give the capacity utilization currently in ethyl acetate?

D
Deepak Jain
executive

On ethyl acetate, look, from a market perspective, obviously, there is some impact on the demand. But from our internal planning purpose, we obviously, given the nature of that product segment, we are not achieving every demand because the margin structure has to make sense. In ethyl acetate, in general, is a low-margin product, and we, on a dynamic basis do our planning and take a call depending on the margin we are getting in the market. So in the last quarter, particularly because the demand was subdued.

We internally prioritize the demand that we want to chase where we could get at least some margins. So that is the overall situation there. I don't know about the other player you are mentioning. I would not comment on that, but at least that was our strategy, and that's been consistent in terms of how we have been running our ethyl acetate plant.

N
Nitesh Dhoot
analyst

Sure, sir. Would you be able to give out the capacity utilization last quarter in ethyl acetate?

D
Deepak Jain
executive

No. Actually, I would not be able to give that exact number for you. But as I said, it's a very dynamic capacity utilization, depending on the kind of traction and margins we get in the market.

N
Nitesh Dhoot
analyst

All right. So sir, would it be possible to give out capacity utilization for acetic anhydride, including the expanded capacity?

D
Deepak Jain
executive

So what I can tell you on acetic anhydride, as I mentioned in my opening remarks as well, we are now the world leader in the Merchant Market. And we are maintaining a very high share in the domestic market, and we have actually managed -- we have retained our market share in domestic market, and we have gained share in the European market also marginally.

And second thing I can tell you is the new anhydride plant that we came up with in the last couple of years. Both of them are running at I think at least 80% plus utilization from what I remember. So we are getting good traction. Obviously, there are some segments of acetic anhydride, which have gone through slow demand in recent quarters. And as soon as that comes back our overall volumes -- and third thing by the way our acetic anhydride volumes versus last year are higher. So all these 3 factors put together, I can tell you the overall utilization has been pretty high, but there is obviously more demand that we are expecting on the back of which our volumes should increase in coming quarters in acetic anhydride.

N
Nitesh Dhoot
analyst

So -- okay. My next question is on the Specialty Chemicals segment. So here, despite the Diketene capacity ramp-up that you saw and despite the CDMO capacity commissioning, the revenue has declined both quarter-on-quarter and year-on-year. So here, what was the volume decline and how much was led by pricing on the specialty chemicals cost?

D
Deepak Jain
executive

On the -- you're absolutely right. I think the right way of looking at our Specialty Chemicals business is to divide it into 2 parts. There is a part which is dependent on agrochemicals segment, where some of our traditional products, pyridine and its derivatives and a few other products fall in.

And then we have the new products which are coming from, let's say, Diketene derivatives, which is largely pharma, cosmetic segments or [paint] segment focus or microbial products or CDMO products, which are all pharma.

The agrochemical part of it has declined significantly on the back of the volume decline in the market and also some pressure on the price. The rest of the portfolio has actually grown in terms of volume, in terms of the mix and EBITDA margin. So the story in 2 parts, so Specialty Chemicals, unfortunately, because of the hit on agrochemical market is very deep, which is offsetting some of the growth and margin gains that we are getting on the other areas where we're getting very good traction and where obviously going forward in future we will differentially invest more time and CapEx.

N
Nitesh Dhoot
analyst

All right. Sir, just one last. Would it be possible to quantify the contribution of Diketene and in the Specialty Chemicals revenue?

D
Deepak Jain
executive

I don't really, again, able to give the specific numbers...

N
Nitesh Dhoot
analyst

Ballpark?

D
Deepak Jain
executive

As I said earlier, we don't disclose our numbers at a specific [geo] level. But what I can tell you is among the fastest-growing product segments in our overall specialty portfolio and overall trajectory is positive in terms of volumes, pricing and EBITDA margins and upward capacity utilization as I said earlier.

Operator

We have a next question from the line of Harsh Shah from Dimensional Securities.

H
Harsh Shah
analyst

My first question is on the agrochemical part of the business. As you mentioned that, that business has not done pretty well. So could you just -- if we take FY '23 as the base, I believe that around 35% or 40% of our total revenue came from agrochemical segment. So could you put a number as to how much that part of the business has come down? And by when do we expect to return to FY '23 or maybe FY '22 level of business, the normal level of business for Agrochemical?

D
Deepak Jain
executive

Yes. So Harsh, the Agrochemical business share, you're right, it used to be not 35% to 40%, but at least 30% plus minus until last year for about 1/3 of our business; in this fiscal, or at least if I talk specifically last quarter, it has come down to about the 1/4 of our overall business. So that is the kind of impact. In fact, not just fourth, it's 1/5, almost 20%. So that is the kind of impact. And as I said earlier, in the overall Agrochemical volumes, there has been a hit of even up to 40%, 50% in some segments. So that overall impact has led to the reduction in share of agrochemicals from 30-odd percent to close to 20%.

H
Harsh Shah
analyst

Okay. And regarding pyridine and picoline business, are we seeing any specific threat from Chinese competitors? And do we expect that the pricing...

D
Deepak Jain
executive

Harsh, sorry, your voice is...

Operator

Please use the handset mode.

H
Harsh Shah
analyst

Is this better?

D
Deepak Jain
executive

Yes.

Operator

Yes.

H
Harsh Shah
analyst

So yes, I was referring to the pyridines and picolines business. So are we seeing any specific threat from the Chinese competitors? And do we expect the pricing to improve from current levels or the current prices will be a new normal going ahead? .

D
Deepak Jain
executive

Yes. So I think on pyridine and picoline, the Chinese competition was always there, and we have been competing against them. In fact, as we explained in the last quarter, if anything, the competitive scenario has gotten slightly better in pyridine and picoline with Vertellus closure and we being the only non-Chinese and world's biggest pyridine and picoline player now. Having said that, there has been pressure on pricing, but we are hoping that going forward, the prices should increase. In fact, we have yes -- and one of the reasons, of course, on the -- for the pricing pressure to be there was because pyridine, one of the biggest end-user segment has been agrochemicals. And because volumes were down there, obviously there was a second order effect on the pricing of pyridine and picoline portfolio as well.

Having said that, to the second part of your question, we have already seen marginal price increase in pyridine and picoline portfolio in the last few weeks, last couple of months in fact. And we are hoping that going forward, as the agrochemical demand comes back, the pricing will also start to come back, and the volumes will also come back.

Yes, in fact, we are already seeing volume booked for our pyridine and picoline portfolio for the next few quarters, which is a good sign and which again reaffirms our feet that the agrochemical demand is gradually coming back.

H
Harsh Shah
analyst

Sure. And last question is on the nutritional segment. So is the competition or the pressure mainly on pricing only? Or have we lost market share in terms of volume as well?

D
Deepak Jain
executive

No. We have maintained our volumes. Last few months of our volumes, in fact, if I just talk about the first 9 months of the year, Q1, we gained share significantly. Q2 and Q3, volumes have been in line with our expectations and our fair share of the market.

It's only the price and that to only in Q3 because Q2 pricing was also quite good. So the pricing took a hit in Q3 and there is a lingering effect in the early part of Q4, but we have already started to see marginal uptick in pricing in the last 15, 20 days.

Operator

We have a next question from the line of Jainis Chheda from Spark PWM.

J
Jainis Chheda
analyst

Continuing with the earlier point because of the closure of Vertellus, I'm not to understand that why were there a decline in specialty chem that the demand should shift to us since we are the second -- we are now the largest producer of pyridine and picoline products?

Operator

I'm sorry, can you use your handset mode, please, Mr. Chheda?

J
Jainis Chheda
analyst

Yes. Am I audible?

Operator

Yes.

J
Jainis Chheda
analyst

Sir, my question was in continuation with the earlier point that because of the closure of the largest player, shouldn't the demand shift back to us since we were the second largest producer and now the largest producer of pyridine and picoline products?

D
Deepak Jain
executive

Yes, absolutely right. Mr. Chheda, but what has happened in the market is because, number one, the agro volumes came down. So overall demand is less. Second, Vertellus before it closed down, it provided at least -- at least based on our intelligence, at least 6 to 8 months of inventory to its customers.

So while a lot of those customers have already started to reach out to us to inquire for volumes, but order booking in a big way have not started. We have gotten a few orders which have not made a huge impact on the overall quantum of the volume, but we are already in touch with all those customers, we have mapped out all the customers, which our competitor was serving before the close down, and we have started to get inquiries, if not smaller volumes from all of them. So as markets come back, the demand comes back, we are hoping to get a lion's share of whatever capacity, which went out of the market because of that closure in the coming quarters.

J
Jainis Chheda
analyst

Sir, is it possible for you to quantify how much the capacity went out and what will be our market share currently in the overall market?

D
Deepak Jain
executive

See, there are the different numbers, obviously, we have heard, but what I can tell you is there was a meaningfully large volume that our competitor was serving from the U.S. plant, but their utilization was only 30%, 40%. And of those volumes, we are hoping to get at least 70%, 80% share.

J
Jainis Chheda
analyst

Okay. What was the market share? And what will be our market share now?

D
Deepak Jain
executive

At an overall level?

J
Jainis Chheda
analyst

Yes, industry-wide?

D
Deepak Jain
executive

Sorry?

J
Jainis Chheda
analyst

Industry-wide market share, what was their market share and what will be our market share because of the closure?

D
Deepak Jain
executive

Our share in the market at an overall level is close to 20%. Obviously, that will go up as those volumes come back and we are able to catch those volumes.

J
Jainis Chheda
analyst

Secondly, two small questions. Number one, what will be -- when will you move to the new tax regime because that will have a significant impact on our EPS? And what is our CapEx plan for FY '25 and '26?

P
Prakash Chandra Bisht
executive

Most likely don't -- we will decide it next year, but most likely, we may move to the next year because this year, we had a net credit, which we wanted to utilize. So at the end of this year, we take a call -- final call, but possibility is that next year, we may move to the new tax regime.

And Capex for the next year, we will come back to you after the Q4 because right now, we are going through our strategy as well as our budget finalization. So when we come back in the Q4, at that time, we will tell them.

D
Deepak Jain
executive

Yes. I think broadly, the CapEx plan for next year, I will answer it in two parts. There's the part one, which is linked back to the INR 2,000 crore CapEx we had announced 2 years back. That part, as I mentioned in my opening remarks and Chairman also mentioned stays on track. We have -- we had planned for INR 2,000 crores. And last quarter, I explained roughly it was INR 600 crore in each of the 3 years.

First 2 years have passed or by the end of this fiscal year, we will be almost 2/3 done with that CapEx, remaining 1/3, we already have plans to deploy in the coming fiscal year. When Prakash ji said that we will come back with the final number, we are revisiting some of those CapExes in terms of where we need to take slightly bigger capacity, where we are getting some additional traction from our customers or in these product segments.

And obviously, there are new opportunities on the horizon always, which have come up in the last 6, 8 months, which we are considering how to accommodate either in the existing capacity or should we take additional CapEx. So all of those deliberations we are doing as we define our strategy, and we will come back, but one thing stays constant, whatever we announced earlier, that is on track and will happen.

Operator

We have our next question from the line of Rohan Gupta from Nuvama.

R
Rohan Gupta
analyst

Sir, first question is on our Agro Intermediate MPP, which we have commissioned in the current quarter, one more we are planning to go in Q4? So given the weakness in global agrochem industry, global agri industry, do you see that the utilization we will see going to remain very poor or we have got some firm order on agro intermediate from our customers?

D
Deepak Jain
executive

Yes. In fact, Rohan, that is a very good question, but from a timing perspective, our capacity is [Indiscernible] about the time when volumes are expected to pick up. And hopefully, even faster than what they were in the last couple of years. So at least our hope is that as our -- obviously, one small plant team on stream last quarter, which we announced to the market, the one which will come up in this quarter is actually at least 4x bigger.

So if the volumes come back by end of this quarter, as we are expecting, we should be able to ramp up the capacity utilization faster. And as I said earlier in response to the question Harsheel asked, I think we should be able to take the utilization to 70%, 80% within next 18 months.

R
Rohan Gupta
analyst

70% to 80% in 18 months?

D
Deepak Jain
executive

Yes.

R
Rohan Gupta
analyst

And sir, put together, MPP 1 and 2, what is the CapEx which we have incurred?

D
Deepak Jain
executive

MPP 1 and 2, you're talking about GMP, I mean -- so you're talking about agro plants or...

R
Rohan Gupta
analyst

Agrochemicals or multipurpose plant which we have put?

D
Deepak Jain
executive

I think it's -- it goes into a couple of hundred crores. As we can expect, I won't give the specific numbers. But as we said that there are 2 plants. The first one was smaller, which was focused on intermediate. The second one is also multipurpose, which can do both active and intermediates. And we are, in fact -- we already have orders in hand on contractual basis to actual CDMO model -- business model to serve at least a couple of customers.

And we are -- as again, I said in my opening remarks, the multiple conversations we are having with global innovators for long-term contractual arrangements to pull up that capacity. In fact, that 70%, I'm saying with the assumption that will take time, but if 1 or 2 of those contracts get signed in next few months, then we can even try to fill up the capacity faster, depending on which contract to get signed first. Yes, that's a multipurpose facility.

R
Rohan Gupta
analyst

And sir, investment you mentioned roughly INR 200 crores, I mean a broad number?

D
Deepak Jain
executive

You [Indiscernible] comfortable with, I said couple of hundred crores.

R
Rohan Gupta
analyst

Okay. Sir, second question is on our comment which you had mentioned on the global agri companies trying to reduce their dependency on China. However, we are seeing that there is significant disruption has happened from China in last 1 year. Sir, what kind of confidence which we have in the current scenario that the capacities which are still there in China, and they will keep dumping at the lower prices and which can have a continuous long-term impact on our companies or global companies procuring from China -- I mean, procurement from China may continue. I mean, we're still basing our theory that they will try to reduce their dependency on China, but however, it has not happened in the last one year. Actually, opposite has happened.

D
Deepak Jain
executive

No, that's -- I don't think your last part of your statement is entirely true, Rohan. So let me just at least share what we believe based on what we have been hearing from our customers also. Number one, at least all the customers we are in touch with, everyone is very explicitly talking about diversifying out of China.

They're not going to shut down things in China, but at the same time, they are looking for reliable strategic suppliers from India for their products. And this is happening despite the fact that in some of the product categories, China is selling the same products that we are speaking to our customer about at very low cost in the global markets.

So I think traction-wise, there's not even a single customer, which has told me in last several months that because the China prices are low currently that they will change their overall strategic direction and will not add more suppliers. Secondly, the belief at an overall level is that China pricing or low China pricing was a temporary phenomenon.

And in fact, it's -- I think I mentioned in the last quarterly call also, and we are tracking the pricing as well as volumes of all our key raw materials and products, we have already tracked to see that the prices have stabilized at a certain level. And in some areas, we are already seeing a slight uptick in pricing as well, which essentially means that whatever dumping which was happening earlier has at least stopped and in some cases it has started to reverse as well, which again gives confidence that whatever was happening in the last, let's say, couple of quarters from China was temporary and will not sustain.

So as demand comes back in the market, as China -- Chinese players become hopefully more rational, the combined effect of that should be that people will continue to look for our reliable strategic suppliers from India, and that is -- those are the discussions we are also having with our customers.

R
Rohan Gupta
analyst

Sir, just last bit from my side and I'll come back in queue after that. Sir, you mentioned a very important point in that -- the leading player Vertellus getting out of the business and they filled the inventory 6 to 8 months before closing the operation.

As we see that the inventory is getting over with the customers and the market in agrochemical is picking up, you are talking about taking almost close to 70% market share, which Vertellus will be leaving. And do we expect and -- do we see that maybe Q4 or Q1 onwards, when the inventories are dried down globally, we will be having a significant pickup in our Specialty Chemicals volume also benefiting from the Vertellus getting out of the business, and that will drive our operating rates and profitability?

D
Deepak Jain
executive

Yes. So that's the general expectation as market volumes come back as some of the customers which were being served by our competitors start to book volumes with us. And that goes back to the overall point I mentioned that the starting Q1 of next fiscal in Agrochemical, we are hoping recovery. So we will start to -- we'll hopefully start to see a volume uptick.

In fact, a couple of products, we are already seeing some signs of uptick even in this quarter, just so that we know, we are hoping that, that will accelerate by next quarter. Now whether it will happen like a full recovery or part recovery, then we will see. We will start to get more indications, I think another month or 2, as we get into March of this year and start booking volumes for next quarter.

R
Rohan Gupta
analyst

Sir, does it give you capacity utilization level right now in the Specialty Chemicals at current level?

D
Deepak Jain
executive

You're asking for capacity utilization in which business?

R
Rohan Gupta
analyst

In Specialty Chemicals, pyridine derivatives -- mainly pyridine derivatives.

D
Deepak Jain
executive

Our Specialty Chemical is a very spread out business. As I explained earlier, the right way of looking at that business, there's a part, which is dependent on agrochemical, they are pyridine and its derivative go, largely exposed to agrochemical and then there is everything else, which is Diketene derivatives, microbial and other things...

R
Rohan Gupta
analyst

I was particularly asking for pyridine derivatives, the segment, which can see the significant pickup due to the largest -- second largest player getting exited from.

D
Deepak Jain
executive

So there the utilization compared to previous years were of course low because agrochemical volumes have been down, but we are hoping an uptick in the utilization in coming 2 quarters.

Operator

We have our next question from the line of Resham Jain from DSP Asset Managers.

R
Resham Jain
analyst

So my question is with respect to your comment regarding the CapEx. You mentioned that INR 600 crores is the remaining CapEx out of that INR 2,000-odd crores, which will happen in FY '25. And beyond that also you are looking for some more CapEx plans, which you will finalize. And since the demerger of the company, I'm asking this question from that perspective, you have maintained your balance sheet in a very decent manner in terms of the overall debt situation.

Given the current situation where your overall cash profits are closer to INR 70 crores, INR 80 crores only, how would you balance your CapEx plans, given the current profitability scenario? Will you still go for those CapEx by taking debt? Or you will wait for green shoots to happen and then you will go for those additional CapEx? So just on capital allocation and maintaining that financial discipline perspective, I'm asking this.

D
Deepak Jain
executive

So that's a very good question, Resham. So we have done a little bit of modeling there. I think in -- as I was explaining, for next year, CapEx was divided in 2 parts. There is an INR 600 crore of planned CapEx, roughly, which we will go ahead. And given our expectations for EBITDA for next year with market recovery happening in, let's say, Q1 of next fiscal, we are not expecting to increase our debt further if we do only that much, that we are reasonably sure.

Now of course, if the market recovery gets pushed out by quarter or 2, we will see what happens to our debt level. But even in that scenario, we are not expecting to delay any of our originally planned investment significantly because we believe in that and those are linking back to the areas where we are already getting very traction, be it the Diketene derivatives or our CDMO business or some of the food-grade vitamins business or choline chloride business that we have planned.

So some of those planned CapEx will happen obviously with the assumption that recovery will happen. If marginal delay, I don't think we will change those plans, and it will not increase our debt from current levels at all.

Now obviously, anything new that we consider and as Prakash ji explained earlier, we are going through that exercise internally to see what could be those additional items. I have fairly high degree of belief that the areas that we're thinking about are the right areas. But obviously, if markets don't come back or if the recovery gets delayed, then we always have the option of taking those new CapEx beyond what was planned in the original INR 2,000 crore plan by a few quarters.

So that will be the only change. The original plan, as I said earlier, I'm repeating, we believe in it, and we will stay on track on that based on the traction we have seen. And if we do that much and with the recovery happening in Q1, our debt should not increase.

R
Resham Jain
analyst

Understood. That was the only question I had.

Operator

We have a next question from the line of Pranav from Rare Enterprises.

U
Unknown Analyst

Can you hear me?

Operator

Yes.

U
Unknown Analyst

Sir, I just have two questions. One is that since COVID and related supply chain abnormalities, now there are -- this is third year. So what makes -- so what I'm saying is that after COVID, this is now third year and anybody would assume that all the supply chain abnormalities would have normalized. And then in that case, if Chinese people are still dumping chemicals, what makes us sure that they will stop it after, say, 1 quarter.

So that is the first question. And second question is, sir, about CDMO, you -- I heard the commentary, you're mentioning that there is also some semiconductor chemicals research projects also in inquiry stage. Can you just elaborate what is the market size that could open up for us in this?

D
Deepak Jain
executive

Yes. So on the first question Pranav, Chinese dumping now -- obviously, it's very hard to predict what will happen from China completion perspective. But what I can tell you, as I said earlier on the call, is the volume demand is going to come back from whatever we can see.

And once that happens, obviously, the level of the aspiration, which is existing today, at least in China, that hopefully should come down. Second thing I can tell you based on the facts and the numbers I have before me is we are already seeing a little bit of rationality coming back in the products we compete in vis-a-vis Chinese players. And I gave a couple of examples earlier for the vitamin B3 business we have, niacinamide. We have seen in last 15 days some price increase, a few other products whose pricing we are tracking and we were seeing very intense competition from China until last quarter.

There also, we have seen a slowdown -- stagnation in price decline, and in some cases even an uptick in the pricing. So these factors will come together that give us a hope that at least dumping will not happen, in fact, as demand comes back and there is some rationality which comes back to the market, the profitability and pricing should start to come back. So that's the hope. Now obviously, if somebody wants to gain their P&L completely and continuing doing that, that you cannot control, but the indications are it will slow down and hopefully, market will start to see an uptick starting next quarter.

On the CDMO business, I think I answered that question already. These are initial stage 4, 5 inquiries from 4, 5 customers in the semiconductor space, where they are asking us based on some of the chemistry capabilities we have, if we can make products for them on the back of technology provided by them some time, sometimes based on our own capabilities.

And we are getting good traction. We are in advanced stage discussion. And for us, because so far, we have not been doing semiconductor chemicals, this will like an entry and once we get entry into it, we'll figure out the plan to scale it up.

Operator

We have a next question from the line of Dhruv Muchhal from HDFC AMC.

D
Dhruv Muchhal
analyst

The question is on the Life Science or the acetic anhydride business. So is it possible to share what would be the per kg spread, not a number, but in qualitative term, what is the per kg spread in this quarter. And say if you have to take an average of the last 4, 5 years, 6 years, lower -- how low are they versus that? Just trying to understand, as the business normalizes where could the numbers settle...

D
Deepak Jain
executive

Dhruv, I won't be able to give you specific numbers. But as you know, the spread in anhydride business is linked to the pricing or the costing of acetic acid as well. What I can tell you is, obviously, because of the demand pressure and slightly aggressive competition, the spread in the last quarter has been lower than what the average was for last 3 quarters.

And as I explained in my opening remarks also the 2 factors which led to lower demand was number one, agrochemical, because acetic anhydride goes into agrochemical segment in a big way, and second paracetamol.

As demand of these 2 areas start to come back, we are hoping the volume will increase. And obviously, depending on what the trajectory of acetic anhydride prices, we are hoping to get back to our normal operating margins, contribution margins. That's all I can say qualitatively, Dhruv. Hope it answers at least part of your questions.

D
Dhruv Muchhal
analyst

Yes, but the idea was just to get some sense for example, are these spreads in the current quarter and even in the last quarter 2Q, are they 40%, 50% lower than the average over the last 5, 6 years because this business is generally spreads business so that will help us understand the trajectory as the...

D
Deepak Jain
executive

I again, won't give specific numbers here, but I think the drop is not as significant as we just mentioned because then will be out of business.

Operator

We have our next question from the line of Tarang from Old Bridge Asset Management. .

T
Tarang Agrawal
analyst

I have 3 questions. Some of these might have an element of repetition. So please bear with me. The first question is, was this quarter as per expectations when you started the quarter?

D
Deepak Jain
executive

Expectations of whom, Tarang?

T
Tarang Agrawal
analyst

Management. The quarter that's gone by, the Q3 quarter, did it play out the way you anticipated it to play out when you started in say, October?

D
Deepak Jain
executive

Yes. I think for non-agro part, I think it's more or less in line with our expectations. Agro part, honestly, I was hoping to see at least some more -- at least some recovery, which -- traffic to show signs -- some signs, early signs towards the end of last quarter, but didn't actually happen in reality.

T
Tarang Agrawal
analyst

Sir, I asked this because that's the sense that we've picked up or at least I have picked up from a host of other companies who are exposed to that industry.

Typically, Q2 earnings are held probably 30, 40 days into subsequent quarter. And you, one believes that one has a good sense in terms of how the current quarter would pan out. But did something go drastically south in the latter half of the third quarter? Is that how you would probably see it if you were to introspect it?

D
Deepak Jain
executive

No, no, no, not at all. At least, I don't know about other companies, but we have been pretty consistent because that, at least in the time, I came into this business and started speaking to the customers. I think, the hope was always that meaningfully big recovery in agrochemicals will happen only by Q1 of next fiscal.

But the only difference was that we were hoping that recovery process will start from last quarter itself, which has not started. And now we have visible signs that it has started. So that's the only change. I don't think we ever announced that especially in the last because I ran the last call...

T
Tarang Agrawal
analyst

No, no, sir, you did -- and I'm not indicating or insinuating you did. I was just looking at numbers, the way Q2 panned out over Q1. And given the challenges that we faced in the previous year, that was the sense that I had. So I mean, I might overreading, but I just wanted to get your sense. So that's okay.

Sir, my second question on pyridine, you're a global leader here. China is extremely active in the space. How has the market pricing behavior here been? I mean in your assessment, the realizations that you've seen over the last 6 months, do you think your peer set out there is making money? I mean, you can never be sure, but I just wanted to get a sense, are they...

D
Deepak Jain
executive

You don't need to get that. You just go online and check [Indiscernible] financial results, they're publicly available. You'll get the answer to your question.

T
Tarang Agrawal
analyst

Okay. That's helpful. Sir, and this is to the management and Mr. Bhartia. Sir, given the recent developments that we've seen, especially the aggression that we've seen in this industry, coupled with whatever is happening in the end market, how has the project IRRs changed from the time you calibrated INR 2,000 crore outlay?

D
Deepak Jain
executive

So I think I'll start and then Prakash ji and Mr. Bhartia can add, Tarang. But our -- I think I mentioned in one of the previous calls, when we projected all this CapEx and then when we approve them because each one of them goes through an approval process, we look at least 20% [Indiscernible].

So that is the internal hurdle based on which we evaluate each of the projects and CapEx. Obviously, there has been some pressure in certain segments on volume and price, but the internal hurdle is not changing. We still believe, and that's why we still are very confident of taking this incremental CapEx that we have planned 2 years back, even in the next fiscal year, that we will be able to get back to that trajectory, which will work 20% plus EBITDA margins leading to higher [Indiscernible].

Obviously, because of a little bit of slowdown in volumes and some impact on pricing because of what happened in the last 1.5 years, it was just disrupted slightly, but it won't change the overall profile of these investments.

Operator

We'll take our next question from the line of Sanjesh Jain from ICICI Securities.

S
Sanjesh Jain
analyst

Apologies, I'm sticking to the agrochemical question again. In post January, agro commodities have suddenly started correcting sharply. The soybean prices are at the long-term median and corn, which is expected to have larger acreage has actually did below long-term mean.

So are we moving from a supply side issue to a more demand side issue now? Are we getting any of that kind of a sense when you're talking to the customer?

D
Deepak Jain
executive

Sanjesh, honestly, not so far, and we will at least based on the commodity price movement, we haven't heard any impact coming on the demand side. In fact, if anything, and in the last 1 month, I have interacted with at least 15 -- 10 to 15 of the CEOs, the CFOs of different agrochemical companies in different parts of the world.

Everywhere I've heard that we have bottomed out in the last quarter from demand perspective. So obviously, if this commodity, what you talked about agro commodity pricing things sustained, then at some stage, there could be some impact, but we can't comment on that right now.

S
Sanjesh Jain
analyst

Got it. One follow-up to that, I spoke to a few other companies as well. And they tend to believe that a lot of companies have pushed the procurement from Q3 to Q4, and Q4 may have part of Q3 sales on the agrochemical side because now they are ramping up.

Is it a structural change or is it just a timing gap and underlying demand still remains weak? Have you seen that kind of inventory purchase push up by a month in our business, which can have a better Q4?

D
Deepak Jain
executive

Sanjesh, can you just repeat your question? Sorry, I missed that.

S
Sanjesh Jain
analyst

Okay. Some of the companies commented that the buyers, which is agrochemical company, have pushed their purchases from December to January. And that's why January, February may optically look better, may not be a right indicator. Did we have any experience where some of our purchasers who are postponed from January -- from December to January, February, and hence the Q4 may look better?

D
Deepak Jain
executive

No, I don't think at least -- I haven't heard any such requests or any such actions from any of our customers. In fact, we -- given the pressure in the last quarter, in fact, if anything, we have [Indiscernible] and convinced some of our customers to do some of the sales early given how much the pressure was. So it could be either way. Sanjesh, at least we haven't gotten any such request from any of our customers.

S
Sanjesh Jain
analyst

Great, sir. This question was just to understand that is that really early signs of recovery or just another deception? And because the guidance for next year by most of the agrochemical company is 2% to 3% growth. And I don't think that's changing. And that's the whole reason just to check upon the real recovery in the demand, but really helpful. Thank you, sir, and best of luck.

Operator

ladies and gentlemen, we'll take that as a last question for today. I would now like to hand the conference over to Mr. Pavleen Taneja for closing comments. Over to you.

P
Pavleen Taneja
executive

Thank you everyone for joining this call today. We hope we have been able to answer your queries. For further clarification, I would request you to get in touch with me. Thank you once again for your interest in Jubilant Ingrevia Limited.

Operator

Thank you. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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