Jubilant Ingrevia Ltd
NSE:JUBLINGREA
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Jubilant Ingrevia Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Jubilant Ingrevia Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Pavleen Singh Taneja, Associate Director, Investor Relations, Jubilant Ingrevia Limited. Thank you, and over to you, sir.
Thank you so much. Good evening, everyone. Thank you for being with us on our quarter 4 and financial year 2022 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. Rajesh Srivastava, CEO and Managing Director; Mr. Prakash Bisht, CFO, Jubilant Ingrevia Limited; and Mr. Arvind Chokhany, Group CFO.
I now invite Mr. Shyam Bhartia to share his comments.
Thank you, Pavleen. Good evening, everyone. Welcome to the Q4 FY '22 earnings conference call of Jubilant Ingrevia Limited. We are pleased to announce that we have delivered a record financial performance during FY '22 despite facing severe second wave of pandemic at the beginning of the year and headwinds and volatility in the key input raw material and energy prices since last 3 quarters. We also maintained steady growth in Q4 FY '22.
In our Specialty Chemicals segment, we delivered a strong growth, led by healthy demand across industry segments. We are pleased to share that we have successfully commissioned Phase 1 of Diketene and derivatives manufacturing facility at our Gajraula location. In Nutrition & Health Solutions, we improved our profitability due to high price realization and improved volume growth in North America. In Chemical Intermediates segment, we continued the higher sales with pharmaceutical and agrochemical customers and recorded healthy growth in EU.
Though the profitability of acetaldehyde business during Q4 was impacted due to sharp and consistent correction in acetic acid prices impacting our inventory. The overall impact of acetic acid price on the profitability for the full year FY '22 was not significant. Our business team continue to work closely with our customers to ensure that the increase in input cost is passed on quickly while our supply chain team ensured the uninterrupted supplies and timely deliveries.
Due to advancement in our new product pipeline and CDMO projects, we are pleased to revise our investment plan for growth projects to INR 2,050 crores. Out of this, we have already committed investments in projects worth INR 800 crores indeed. And now we plan to invest about INR 1,250 crores to be committed between FY '23 and FY '24. These investments will be funded through internal accruals and all the new facilities should be ready for operations by FY '25.
We are also glad to share that the Board has recommended a final dividend of 250%, that is 2.5 per equity share of the face value of INR 1 each for FY '22. This shall result in a cash outflow of INR 39.8 crores. During the year, company has already declared an interim dividend of 250%, that is 2.5 equity shares of INR 1 each. And the total dividend for FY '22 works out to be 500%, that is 5 per equity share of INR 1 each amounting to INR 79.6 crores of cash outflow. We remain fully committed to the growth aspirations for the company and excited to realize the opportunities going forward in all our business segments.
With this, I now hand over to Rajesh to discuss about the business in detail.
Thank you, Mr. Bhartia. Very good evening to all of you. At the onset, I hope you all and your loved ones are safe and healthy. I would like to welcome you all for joining us for Q4 FY '22 quarterly investor call of Jubilant Ingrevia Limited. It gives me immense pleasure to report a healthy financial and operational performance of Jubilant Ingrevia Limited for the fourth quarter and for financial year ending 31st March 2021.
Revenue during the quarter was INR 1,296 crores, indicating a growth of 20% year-on-year, driven by 35% growth in Specialty Chemicals, 18% in Chemical Intermediates business, earlier called as Life Science Chemicals, and muted 3% growth in Nutrition & Health Solutions segments. EBITDA at INR 152 crores is 25% lower mainly due to impact of acetic acid price on our inventory. However, overall impact of acetic acid price on profitability for full year FY '22 was not significant. Vast increase in key input prices for Specialty Chemicals and Nutrition & Health Solutions segments were partially passed on successfully by end of quarter. We have ensured to maintain our margin in Chemical Intermediates segment. We are happy to inform you that Jubilant Ingrevia has recorded the highest ever revenue of INR 4,949 crores and highest ever EBITDA of INR 863 crores in FY '22, which is a growth of 42% and 38%, respectively, over previous year FY '21.
We continued our focus on finishing the ongoing CapExes, along with the debottlenecking of capacity for existing products and successfully commissioned Phase 1 of Diketene and derivative manufacturing units at our Gajraula facility. As we have informed you in our earlier calls, we have also commissioned our food grade acetic acid plant during present quarter, that is Q1 FY '23. In this plant, we will produce acetic acid from renewable feedstock-based green ethanol. We continue our focus on business excellence for continuous improvement in processes and achieving cost efficiencies, along with the scaling up of our production volume successfully. Global logistics challenges continue. However, our supply chain team ensure on-time deliveries to our customers, leveraging our large volume and long-standing relationships with shipping and transport companies.
Now let me take you through the updates on all our 3 business segments: Specialty Chemicals. Specialty Chemicals revenue during the quarter grew by 35% on a year-on-year basis, driven by higher volume across the product segment. Sales to agrochemical customers during the quarter grew to 37% from 28% earlier, and sales to nutrition customers also improved during the quarter. EBITDA during the quarter increased by 17% on a year-on-year basis, while EBITDA margin decreased to 13.2% from 21.1% in Q4 FY '21, mainly driven by higher input costs, which we are in the process of passing out.
The Specialty Chemicals overall revenue for FY '22 grew by 24% over previous year FY '21, mainly due to volume growth of 16%. This growth has come both from domestic market as well as from international market. We witnessed positive traction of demand from both domestic as well as international customers across the region and industry segment. We are witnessing positive traction of demand in CDMO business as well. During the quarter, we have signed a 3-year CDMO contract worth INR 270 crores with one of our innovation pharma company of international market. Our new product pipeline specialty chemical is quite robust and we are working hard to expedite and bring them to commercial scale after thorough process development, optimization and scale-up.
Nutrition & Health Solutions. Nutrition & Health Solutions business during the quarter recorded modest growth of 3%, driven by higher price and increased share of North American market to 19% as against 14% last year same quarter. Our focus to maximize Niacinamide share in this segment like food and cosmetics is giving positive results. During the quarter, volume in Food & Cosmetics segment grew significantly over last year's same quarter. EBITDA during the quarter grew by 15% on a year-end basis. Also EBITDA margin during the quarter was higher by 308 basis points as to 24.4% versus 21.4% over previous year in FY '21 due to better price realization.
Nutrition & Health Solutions overall revenue for FY '22 grew by 22% over previous year FY '21, mainly due to volume growth of 9%. Revenue in North America and European Union grew significantly by 78% and 65%, respectively. Food & Cosmetic revenue has gone up significantly with 48% and 56%, respectively. We continue to focus on improving our market share in each segments like food and cosmetics, and to enhance our market share in North American market.
Animal nutrition business continues making efforts to increase share of specialty premixes through various initiatives, clinical intermediates. Let me, first of all inform you all that we have renamed our Life Science Chemical business segment to Chemical Intermediates. This new name appropriately represents the product and business we do within the business segment and is in line with the industry understanding. Revenue of chemical intermediates during the quarter grew by 18% on a year-on-year basis. This growth was driven by higher price of acetic anhydride and ethyl acetate it highly mainly due to higher price of feedstock.
Revenue during the quarter from Europe and Japan has gone up significantly on a year-on-year basis. EBITDA was impacted year-on-year basis mainly due to impact of acetic acid price on our inventory, led by sharp correction in acetic acid price during the quarter. However, overall impact of acetic acid price on profitability for full year FY '22 was not significant. EBITDA margin stood at 4.6%. Overall revenue of chemical intermediates for FY '22 grew by 61% over previous year FY '21 due to volume growth of acetic anhydride as well as overall price realization both in acetic anhydride and ethyl acetate. With the result, overall EBITDA also grew by 77% in FY '22 over previous year FY '21.
Despite the challenging situation, we maintain domestic market leadership for acetic anhydride and ethyl acetate and successfully increased our market presence in Europe and Asia for acetic anhydride.
Outlook and growth CapEx plans. All our ongoing growth-related capital investment projects are more or less on track. As mentioned by Mr. Bhartia, out of our announced growth investment plan, we have already committed CapEx worth INR 800 crores so far. All plants within this committed investment will be completed and commissioned by FY '24, and has a potential of incremental peak revenue of INR 1,750 crores at current prices.
As mentioned in our last call, we have reviewed and summed up our traditional growth capital investments, and we are pleased to inform you that during FY '23 and FY '24, we plan to commit additional CapEx worth INR 1,250 crores to expand our newly added chemistry platforms like Diketene and Agro Actives and further strengthen our leadership in [indiscernible] and AVR product portfolios, including the CDMO projects.
In addition, we plan to enter into fluorinated derivatives, fungicides, which are Agro Actives and grain-based especially ethanol as new business platform. We plan to complete and commission all these new plants within by FY '25, and has a potential to bring incremental peak revenue of INR 2,750 crores at current prices.
We are happy and excited to inform you that after completing this overall growth-related capital investment of total INR 2,050 crores at their optimum utilization, Jubilant Ingrevia is aspiring to achieve overall annual revenue of INR 9,500-plus crore, which will also improve revenue mix of specialty and Nutrition segment together to 65% from 46% in FY '22, and is going to be the key driver for overall margin improvements of Jubilant Ingrevia Limited. Estimated cash outflow of FY '23 will be around INR 550 crores. And for FY '24 and FY '25, will be INR 650 crores and INR 600 crores, respectively. These CapEx cash outflow are intended to be funded through internal accruals, along with the reduction in debt.
With this, I'll now hand over to Prakash to discuss the financials.
Thank you, Rajesh. A very good evening to everyone, and thank you for joining us on Q4 FY '22 quarterly earnings conference call. I would now highlight the company's financial performance during the quarter ended 31st March '22. I would like you to recall that Life Science Ingredient business for Jubilant Pharmova was demerged into Jubilant Ingrevia, effective 1st February 2021. And in previous year FY '21 months, our published results comprised only 2 months of operations in Q4 as well as in full year corresponding previous periods.
To provide proper comparative picture of the operations of the company on a continuing basis in investor presentation, the results for the previous periods have been presented on a pro forma basis by combining the corresponding previous period numbers from the published results of discontinued operation of LSI segment of Jubilant Pharmova Limited. The details in this regard are provided in the investor presentation as well as in Note 5 of our published results, and we will request you to go through the same.
Revenue from operations during Q4 FY '22 increased to INR 1,296 crores as compared with INR 1,078 crores in Q4 last year, with a growth of 20% on a year-on-year basis. Similarly, revenue from operations during financial year 2022 was at INR 4,949 crores as compared with INR 3,491 crores during financial year last year, witnessing a growth of 42%. The EBITDA during the quarter declined to INR 152 crores as compared with INR 203 crores in Q4 FY '21, witnessing a decline of 25% on a year-on basis. The margin stood at 11.7% in Q4 as against 18.8% in Q4. The main reason for the decline was the impact of sharp decline in acetic acid price on inventory, which has already been explained by Rajesh.
EBITDA for FY '22 was at INR 863 crores as compared with INR 627 crores during FY '21, with a growth of 38% as compared to the same period last year. And EBITDA margins were at 17.4% during FY '22. Depreciation and amortization expenses during the quarter was at INR 31 crores. Finance cost during the quarter was significantly lower at INR 6 crores versus INR 12 crores in FY -- Q4 FY '21, a reduction of 49% year-on-year on account of repayment of debt as well as lower interest rates. Tax expenses for Q4 was at INR 46 crores on account of lower profit. The cash tax remains 17.6% during FY '22.
PAT during the quarter was at INR 69 crores as against INR 95 crores in Q4 FY '21, reflecting a decline of 28% year-on-year basis. PAT for FY '22 was INR 477 crores as against INR 316 crores PAT in FY '21, a growth of 51% as compared to the same period last year. The gross debt was reduced by INR 319 crores during FY '22. Gross debt as on 31st March '22 stood at INR 229 crores as against INR 548 crores as on 31st March '21. Similarly, company's net debt stood at INR 181 crores as on 31st March '22, a reduction of INR 251 crores from 31st March '21. Net debt-to-EBITDA ratio further improved to 0.21x from the earlier level of 0.69x as of 31st March '21. The closing blended interest rate for Q4 was 5.73% as against 7.2% in Q4 FY '21.
I'm also delighted to share that CRISIL rating has revised its outlook on the long-term debt of Jubilant Ingrevia to now positive from earlier tables, while we are affirming the rating of CRISIL in May '22. The net working capital percentage to annualized turnover in number of days for working capital on the basis of FY '22 annualized turnover was 16.2 and 39 days, respectively. And the increase in working capital was primarily driven by higher revenue and higher raw material prices. The capital expenditure during the year was INR 235 crores.
With this, I would like to conclude the opening remarks, and we will now be happy to address any questions that you may have.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rahul Veera from Abakkus.
Just wanted a breakup of this INR 1,250 crores incremental investment that we have discussed, what is the breakup of this between CDMO and specific chemicals, part of the intermediates share and ethanol.
Yes, so if you see the slide before the earlier slide, Specialty Chemical is INR 750 crores, Nutrition & Health Solution is INR 200 crores, Chemical Intermediates is INR 300 crores.
Okay. And within this INR 300 crore book we announced, which plant of us will incur that fluorine treatment…
Yes, so that is something which is currently very difficult to estimate. So we are not giving the plant-wise estimation of CapEx investment.
Okay. Okay. And sir, can you just throw some light on the fluorinated derivatives, like what kind of chemistry, because we don't have the CapEx between, in sense we never handled the fluorination chemistry till date, so what is the thought process and revenue source of the raw materials.
So if you recall in the earlier calls also, we have explained that we have a plant of fluorination where we are using HF and we are making the derivatives of fluorinated derivatives, which we want to further expand because the fluorination derivative demand is going up.
The next question is from the line of Siddharth Gadekar from Equirus.
Sir, can you elaborate on the sharp jump in other expenses during the quarter?
Okay. Siddharth, the other expenses in this quarter. So there is one [indiscernible] also in other expenses. So the delta impact if you are comparing it with Q3, the delta impact of one plant is about INR 10 crores. This was earlier sitting in other expenses, which now got shifted to other operating income. So you would find that refunding increase in other income also. Other than that, the other expenses are increased primarily due to the higher freight expenses. And at the year-end, there are certain write-offs also.
Okay. Got it. And secondly, now in terms of acetic acid, given that even acetic acid prices are further down versus 4Q average. So, one, could we see some more inventory lots in the first quarter FY '23. Secondly, given the crude prices have moved, so where do you see acetic acid prices will take a support given that we are very close to the cost co prices currently?
So acetic acid price are more or less similar range as it was closed in the last quarter. There has not been major changes in acetic acid prices in this quarter -- current quarter.
Okay. Sir, and in terms of cost question of acetic acid given that crude prices have gone up, so where do you see that we are near the bottom in terms of acetic acid prices.
No, so acetic acid prices are already at a higher level. So they have adjusted to the cost increase which has happened in the crude and other raw materials.
The next question is from the line of Rohan Gupta from Edelweiss.
Sir, a little bit more about the CapEx plan. So you're talking about another INR 1,200 crores further investment. It seems that we're also seeing a very favorable industry scenario to increase and almost double the CapEx plan during the year after the demerger of the company. So sir, this optimism which you are seeing is basically coming from the client -- coming more aggressively in terms of asking you to increase the supplies or more number of inquiries, which you are seeing in your CDMO projects or also even on a fluorinated derivatives. Just wanted to understand a little bit more about the optimism in the CapEx which you are seeing right now?
Yes. So it is basically a few things. Number one, as we explained earlier, our existing customers are asking us to develop new products and supply them. That is one. Number 2, our existing products, we keep doing value addition in our existing product range. So therefore the investments are required for making those derivatives value-added products. And third, there are new platforms which we have been working on in R&D for many years, almost 3 to 4 years in the past. Those are now being implemented one by one. And of course, that is based on the customer demand. So everything is driven from the customer demand, whether it is value addition of our existing product, our customer requirements or the new place.
Right. And sir, your earlier investment plan was close to INR 950 crores, right? Out of that INR 50 crore you mentioned that INR 800 crores has been invested, how much investment has gone in cash outflow in FY '22?
So FY '22 cash outflow is close to INR 243 crores. And because most of the CapExs have been approved during the year and cash outflow will mainly now start happening in this year. Some of the projects which have been completed.
The Board has approved INR 950 crores CapEx for far now, before today.
No, the Board has approved so far INR 800 crores as we told you. Committed means, it has been approved. And out of INR 800 crores -- Yes, some are still on the way. They are ongoing.
Correct. So out of INR 800 crores, INR 243 crores has been spent in FY '22? And all will be spent in FY '23, balance close to INR 550 crores, right?
Correct. You are very right -- you are very right.
Okay. Now on this additional INR 1,250 crores, you expect INR 650 crores and INR 600 crores in '22 and '23?
No, you are looking at 2 numbers. INR 800 crores and INR 1,250 crores is the investment number and INR 240 crores and INR 550 crores are the cash flow number.
Correct, correct, correct. So what would be the cash flow? When we are talking about another INR 1,250 crores new CapEx which you are looking and which were...
If you see the total cash flow in the same slide, it is given INR 550 crores, INR 650 crores and INR 600 crores for 3 years.
Okay.
Yes. If you see that all the 3 numbers, that is the cash flow of INR 1250 crores, plus INR 800 crore.
Got it, sir. Sir, on the Specialty Chemicals business you mentioned that the volume growth for the year was closing at 16%. Though the prices has gone up very sharply, but you also mentioned that you will be able to maintain the per kg margin, but because of the price increase maybe percentage margins will look down. So do you see that going forward with a better product mix your percentage margin which was upward of 20%, you will be 22% to -- 22% kind of range you will be able to maintain that range or margins will settle down at a lower level?
No. So once we bring these new capital investments with value-added products, we expect specifically in specialty chemicals our margins to be improving.
In terms of percentage with the current price level wherever they are input prices...
So you are talking about long -- so when you ask a long term, I answered you long term, but sort term you are right, because the current prices are high. So short term there might be impact on margins.
Okay. And you also mentioned that there has been some delays in passing on the input prices in specialty, has affected the current quarter margins?
Exactly.
So are we in a position to pass on the cost increase and expect the margins to improve in the near term in Q1 and Q2?
See, the input cost, which is raw material as well as utility prices are still very high, right? And there is no settling down on the input prices. So definitely the improvement in volume and revenue will happen. But on margins, of course, it will definitely not be increasing because of high input prices.
[Operator Instructions] The next question is from the line of Sunil Kothari from Unique PMS.
Sir, very hearty congratulation for doing whatever you said during last almost 14 months, you're completing your project and you are going ahead with whatever you said. So I'm sure you must -- before this demerger some 6, 12 months back. I'd like to understand from you, sir, within last year, 24 months journey, which is Jubilant Pharma, which are the other segments of focus area or weakness is where you would like to grow and then which are the area where you feel you are becoming stronger. So during the last 24 months whatever you -- the effort you have taken and this company has been emerging, how do you see opportunity over the next 2, 3 years in terms of your capability, improvement, opportunities from external point of view, some larger view would be very helpful.
So if you see Jubilant Ingrevia, fundamentally we are a -- we are a chemistry driven manufacturing organization since the beginning of our business. All the products we have been dealing with have been the global scale products. We have been having market leadership on these products. Of course, the current situation where we are seeing a positive environment towards the demand, specifically coming to India side, we are using our MST capability and manufacturing ability and also the R&D capability to develop quickly the products which are required by our customers and place in the market quickly so that we can capture the opportunity in the market. So you are right, that being -- having a strength in our chemistry and manufacturing, we are in a position to take up the opportunity quickly which are available in the market.
Sir, which are the areas which you feel you have scope to improve productivity, maybe cost reduction and effect of those all adds to a lot in improvement, aspiration margin would be 20%, maybe over a year or 2, combined EBITDA margin?
If you see, let's say, 3 to 4 years of origin, we have shown in our investor presentation also, we are moving towards a higher percentage business of specialty and nutrition health solution, which will definitely and secure our margin situation better than what we are having today because we will be moving more business sale from Specialty and Nutrition segment. We have also explained that in our investor presentation, if you see.
So sir, any area where you feel you require to be yet to improve on in terms of internal efficiency, cost efficient and productivity? Would you like to talk anything on internal your ability.
So there are 2, 3 areas which we are focusing very heavily on. One is definitely the sustainability and safety in our operations. Number 2, ensuring that whatever we are planning it comes on time. We can deliver the projects on time. Of course, number 3, as you have been saying, closely look at the cost and continuous improvement to make sure that we are competitive in the market.
All right. Sir, my last question is a little near term and a very well explained normalized margin this acetic acid related segment, chemical intermediate. Should we expect that normalized margin to be achieved year-on-year by the full year, not on a particular quarter basis. But next year, if we expect around 13%, 14% EBITDA margin from that segment?
Again, it is very difficult to give a number of percentage of margin. Again and again we keep saying, we can assure the tone or per kilo profitability of acetaldehyde products, which we will continue to even do some improvement in that. We can't really make a commitment on EBITDA margin because what is the factor of our price of acetic acid and price of other raw materials. So it's very difficult to give that number. But yes, we can ensure you that we will grow in volume and we will make sure that we get our share of per kilo margin, specifically on chemical intermediates business.
The next question is from the line of Dhaval Shah from Svan Invest.
Sir, good to see the new CapEx announcement from the discussion we had earlier. Sir, a couple of questions. First is, you had mentioned earlier also about this fluorine chemistry now given in the press release. So is it coming out of our -- do we have any sort of more firm commitment from the customers that to down the line or one a down the line, they would be buying this product or you'll be developing first and then showcasing to the customer and then -- so I just want to understand on that front. So yes, that's my first question. Then I will have a second one, yes.
So you are right. We are developing a few products for our international customers, where fluorination chemistry is involved. We have developed in R&D. We are scaling it up. And now because of the demand coming up in commercial scale, we will have to put up the commercial plant of fluorinated derivatives. So yes, you are right. There is a plan, there is a thorough plan starting from R&D, scale up and commercialization. This statement we have not given just for the sake of saying that we will put up a plant and we don't have a product. So we have a full plan for that.
Got it. Now sir, in last 2.5 years many companies have made plans to enter the fluorine chemistry. Now I understand this is a very vast industry and various applications and various same complexity of reaction as well depending on the capability of the company. Now we are a new entrant, but we have a very extensive history of chemistry skill sets. So; A, which part of the chemistry, if you could quantify, are we targeting in terms of the market opportunity; and B, given a lot of new entrants are coming in, and this would -- I assume this is not only in India, but also globally because fluorine is becoming very, very more relevant chemistry of the future. How do you -- what is the right to win and how do you plan to protect your turf and grow in the future?
So basically, good question. So let me tell you that, as you know, we are very strong globally in pyridine derivatives, right? So if you -- we are very -- we have a very large facility of chlorinated pyridine. We have a very big facility of brominated pyridine. Now the customers have been asking us to also double up fluorinated pyridine. So we have developed a couple of products. They have been successful at a small scale. We already have a small scale running SF-based fluorination facility, which has successfully delivered the product at a smaller scale. Now because the customer demand is going up, we will have to bring a commercial scale facility of SF-based fluorination of fluorinated pyridine.
Okay, now this would be in terms of end use and market opportunity size. And also are we the only one or are there any peers in India as well as in Asia?
So we are saying that these are the products which are specifically developed for our international customers. So we can only tell you that, yes, we will be either the single one or one of the couple one or one of the few ones to be supplying these products. These are not the after-sales product. They are very specific CDMO type of projects.
Okay. So from the right -- from the time we start manufacturing, the customer -- for a dedicated customer.
Absolutely, absolutely. And these are from the innovative molecules. They are not from the commercial launch or available molecules. They are more new innovated molecules.
Okay, okay. Got it, got it, sir. And sir, on the innovation molecule which was my other question, now as you've given the next 5-year plan, so this entire innovator led business would be how much of our this specialty chemical business?
So it is difficult to give you numbers in terms of revenue, but let me explain you. Today we have -- today we have one non-GMP intermediate facility for CDMO. We have 2 GMP facilities for CDMO. We are expect -- we are recently expanding one more GMP facility for CDMO. We have a plan. If you read our extension plan, we are going for a greenfield GMP facility for CDMO, and we are also adding 2 multipurpose plants for CDMO. So there are a lot of new plants and facilities we are adding up for our CDMO business. And obviously, you can see that these investments are not committed based on the assumptions. They are done based on the solid demand given by our customers. So you can assume that fairly the growth in our CDMO business is going to be significant increase.
Got it. And sir, last question, this INR 9,000 crore revenue, shall we -- is it comparable to achieve by FY '27?
If you ask me personally, I can tell you yes. But of course, very difficult to commit anything from future of FY '27. But you can assume that when we are saying once we complete this investment, it should be ready by FY '25. And as we have been explaining that we don't take more than 2 years to ramp up the facility. So you have very -- fairly good assumption you are making. So that should be it all.
So, exit quarter of '25, you should have entire gross look on in place with entire CapEx?
Yes, that's definitely sure what you are saying. That we have given commitment also here.
The next question is from the line of Bajrang Bafna from Sunidhi Securities.
Sir, if you could tell us the -- as per the most dynamic reports which are coming from the world markets, which are indicating or pointing towards this carbon utilization and movement towards green chemistry and or the sustained chemistry and moving away purely from the crude-based chemistry, which is on the forefront for last, let's say, 30 or 40 years.
And we are seeing a lot of signs where a lot of companies are demanding green chemistry production. You have also started a movement towards that by commercialization of this 25,000 tonnes of acetic acid plant, which is coming from this green route. So if you could elaborate the broad strategy or how you are going to move towards that because there are very few companies who are having this kind of foresight or technology at this stage where they can get this carbon neutrality concept which is getting attraction.
So if you could highlight what percentage of your business is now from green chemistry and maybe in next 3, 4 or 5 years, once your -- this CapEx plan is fully complete, how that proportion will march ahead? So if you could highlight something on that asset will be really helpful, sir.
So honestly speaking, I don't have a number to tell you what is the percentage of our revenue coming from green chemistry. We will estimate, as you have just told us, we will estimate and come back to you later. But we want to inform you that most of our derivatives coming out of our green ethanol which we are consuming. So we are consuming a large volume of green ethanol to make derivatives which are used in our chemical intermediates business, in our pyridine derivative business, also in our nutritional business. So we are saving a large amount of carbon footprint. Product-wise, we have the number, but we will calculate overall as a company and maybe next time we can come back to you.
Okay, okay. Got it. And sir, the new CapEx that you are doing almost INR 2,000 crores. If you could just say as what proportion of it is dependent on the green ethanol or the green chemistry side?
Okay. We will do that. We have not done that.
Okay, because that will be really helpful, sir, because now when we are aware that the -- we have also gone through the kind of projects that Reliance and the Adani's are coming up with the next 3 years down the line, is green hydrogen, which could simply eliminate some of the companies from Indian market, which are completely dependent on this carbon contract or the crude-based chemistry.
I don't know whether you have gone through their plans and projects, but we have done a detailed analysis and very sure that 3 or 4 years down the line few of the companies will not even exist in our country who are totally dependent on crude-based chemistry. So if you could highlight your thought process on that will be really helpful. Maybe next concall once you come up with, you can say, the broader footprint that how we are going to move towards this green chemistry will be really applicated.
And one more aspect is that you are currently sourcing your ethanol totally from outsourced market. Are you planning something to produce ethanol on your own because there are very favorable policies from the government side. So any thought process on that in terms of secure the ethanol supply from a long-term perspective?
So ethanol, we are producing event today. But all those ethanol we are selling through EBP program, right? And also some specialty users of pharmaceutical and agrochemicals. Sometimes we also use our captive ethanol. But yes, our volumes are very large, so we have to import.
Okay. So what proportion we are doing indigenously right now of our total requirement?
Not significant, not significant.
Okay. So in future are we thinking of something in that regard to secure long-term supplies of ethanol?
No, no, security is there. So tomorrow if we want we can use 100% of our captive, what we are making for ourselves, but it makes sense for us to sell the volume at a specialized uses because we make a better quality ethanol. We make ethanol for supplying to pharma and agro. The ethanol which we are consuming is not required for that quality. So actually it makes business sense for us to produce a good -- better quality to sell outside and make better margin and consume some.
The next question is from the line of Rahul Veera from Abakkus.
Sir, what is the volume growth that you're expecting in the Life Sciences segment?
What is the volume growth?
Volume growth that you're expecting in the Life Science segment.
No, I'm not getting the question.
What is the volume growth that is what you're expecting in the Life Science or the Chemical Intermediates segment?
Okay, volume growth in the FY '23, you are asking?
Yes, '23.
Yes, I think it will be in a good double-digit number.
Okay. So is it fair to assume that the EBITDA that we have done in Life Science INR 417 crores this year in FY '22 to also grow in double digits because we are doing the calculation on EBITDA per kg basis.
Yes. But it all depends on the market situation also because last year, if you remember, first quarter, we had some positive scenario on pricing. So obviously, this year the projections are better. But definitely, we can't commit any number in EBITDA of any business right now. But yes, you are right, per kilo we will -- as I said, we will ensure per kilo margin, we will secure.
The next question is from the line of Rohan Gupta from Edelweiss.
Thanks for the follow-up. Sir, once again on this commodity business only though you have in your presentation given explanation of close to INR 54 crores kind of losses in -- because of the high acetic acid prices. So I just wanted to understand, sir, this volatility in quarterly numbers in our Life Science business or commodity business now, is there any way to remove that? And do we have any opportunity to enter into forward contracts or have a raw material price arrangements on a longer-term basis? Or this business is always open to the vagaries of the rising or volatile acetic acid prices?
So we have an opportunity to do a forward contract. But please remember, format contracts are always double test spot, right? -- sometimes it can help you, some time it can harm you. So with so much of experience of last 40 years, we have realized that if we can really manage our inventory very well, which we are doing today, with the kind of volume we are in, I think it is fair to be open and make sure that when there is a volume requirement we capture the volume requirement and make sure that per kilo margins are this quarter. I think that's the best we can do, and we have schemes that, that has paid well. Because this quarterly change which you are finding in last 4 quarters, it's not the regular trend. This is unfortunately because of the changed global scenarios which is happening very frequently for last 2 years. This may not continue for many, many quarters a long time. So I think because it has happened very frequently, we have seen it very bad. But I think overall we will see that keeping it open is making better sense.
Sir, along with the acetic acid price volatility, even if we remove that and your normalized EBITDA, that also has a huge volatility from Q1, almost INR 157 crores to go into Q4, INR 84 crores. Is it because of the lower volume in Q4 and higher volume in Q1 driving the operating leverage? Or why even quarterly on a normalized EBITDA also there is volatility?
I think you have missed out. We have mentioned that in Q1 last year we had a better market situation in the sense that there was a run up the plant which was not operating. And therefore we had a better pricing situation even per kilo, so…
But that happens once in a while and we kept that…
Driven by the better pricing environment, so...
Absolutely, absolutely. So if you knock it off, it will generalize the contribution per kilo.
So would it be fair to assume, I understand that the business will always be volatile. Would it be fair to assume that close to INR 80 crores to INR 100 crores quarterly run rate is fair enough in case of this business irrespective of the volatility in...
Yes, with the kind of volume we are projecting, with the kind of per kilo margin we are talking, your assumption is fairly good.
Okay. Sir, second question is on specialty category...
I'm sorry, sorry, you must remember that we are adding the further volume in this business. So the future, of course, it will improve further. And our new plant will come this year.
Right, sir. Right, right, right. Sir, second question is on our Specialty Chemicals business. You mentioned that the Specialty Chemical business the share of agrochemicals has gone up in specialty chemicals. And I mean, what is the driving factor? And where do you see that the agro and pharma will remain the key driving factor for overall [indiscernible] business or some other applications are also going to drive the growth?
No, I think you are right. Our major business to the event of 65% to 70% is coming from agro and pharma. And off late, we have seen the volume of agrochemical showing a very positive trend. Pharma has been a little softer growth in last 2 to 3 quarters. So these are the 2 key segments for us. Other than this, we are into anti-microbial segments and we are into Cosmetics segments. So those segments are also showing a very positive trend for us. And we are also adding some of the intermediates in these 2 segments also. But still, agrochemicals and pharmaceuticals are going to be the key segments for us for specialty chemical business.
Fine sir. Sir, this is last from my side. On Diketene, the plant which you have commissioned, if you can just discuss that how it is getting acceptance from the customers and how many Diketene derivatives we are manufacturing now, I remember our large plant visit, thanks for that, the 2 Diketene derivatives we were supposed to commission and was supposed to ramp it up in the next 3 to 4 months further. So how many Diketene derivatives you are making? And if you can just give some kind of a revenue potential for them in the second half of the year?
Yes. So the Diketene derivative plant has been commissioned very well. We have already produced commercially, as you very rightly mentioned, 2 products, 2 more we are going to commercialize very soon. With these 3 or 4 products, we estimate to use our full capacity during the current financial year, which we have been talking in the range of 7,000 to 8,000 tons.
So we will achieve 7,000 to 8,000 tons by end of Q4 this year?
No, no, we will achieve during the year the total volume, not the end of the year.
Okay, okay, okay. And in terms of, sir, revenues, would you like to share the 7,000 tons?
Again, very difficult because what we are focusing on is maximizing the volumes as customer requirement and look at the margin situation of the Diketene products. So we will take the decision based on the customer demand and our profitability. So therefore difficult to give the exact number on revenue. But volume, I can assure you we will complete.
The next question is from the line of [ Jessy Soni ] from Ashika Stock Broking.
This question has been asked before, but I just -- so your other expenses have shot up from around levels of INR 125 crores to INR 163 crores this quarter. Can you just please explain again. I just wanted some clarification regarding why such a sharp jump?
So we explained this earlier also in the call. So why this expenses have gone up in the area. So one was that there was a reclass from an expense to other income. The data impact of that is impacting. The other reason was the increase in the -- in the freight charges. And for this quarter also we had some maintenance, so that maintenance expense has come. And at the year-end whenever there is an year-end, in Q4, we have certain write-offs because you do everything, your physical verification everything. So those expenses are also there. That's the reason why Q4 other expenses are higher.
Sure, sure. And so even in terms of the tax rate, your tax rate is to hover around 30%, 32%. This quarter is pretty high at 40%. So any particular reason for that.
No, our tax rate is around 30%, 31% because we are on the old tax regime. And the reason for that is because we still have unutilized MAT credit. So while our ETR on the P&L is about 31%, our cash has to be only about INR 17.6 crores. This quarter this is a little higher mainly on account of some true-ups that we had to take because of the changes that came in the budget. So -- but other than if you would see for the year as a whole, out ETR has remained 32.8%.
Yes. So in terms of the year as a whole it's around 32.8%, you are right. So you expect it to be the same going forward?
Yes. At least for FY '23, we will continue to be on the old tax regime. So tax ETR in P&L will remain in this range of 32%. From '24 onwards once we move to the new tax regime, the ETR will come down to about 24% to 25%.
Okay. So currently for the FY '23, it will be around 32.8%, okay.
Yes, it will be in the range of 31% to 32%...
And my next question pertains to the CapEx, additional CapEx of INR 1,250 crores, you have mentioned it and you explained it pretty elaborately. But I just wanted to know in terms of when you look at fluorinated derivatives, there are large special players in the Indian industry already. Even in terms of agro actives, you have like [indiscernible] fluorinated derivatives, you must -- you know the name much better than me -- so I just wanted to know in terms of specialty chemistry, they're doing a job a long, long time. So just wanted to know what is the sense of -- are you looking at more volume coming in? Or are you looking at your specialty being better than what they do? Or you think there is enough place for everybody to have a -- because a lot of manufacturing definitely is coming towards India, specialty chemicals, there are pretty large tailwinds, right, with localization and where as the China plus thing going up. So do you think there is enough room or enough space for everybody to eat the pie? Or how do you -- what's your view on this?
I've explained this in the earlier question. I think you have missed it. And we talked about fluorination derivative or agro actives. These are not me-too products. I've explained this earlier. We are already into pyridine derivatives business and this fluorination is of our existing products value addition. So these are not me-too products that everybody is making, so we are also making and that is number one.
Number 2, most of these products we are not talking as to launch as a me-too product. These are required by our innovator international customers, which we have developed specifically for them. Even for agro actives, these are not the general agro actives. These are value added based on our pyridine derivatives, we are developing agro actives and therefore they are going to be specialized products, which are not produced by everyone and each and everyone in the market.
So the -- as you are mentioning, we are not launching these me-too products. They are very specialized. Though they are generally named as agro actives fungicides. So you assume that there are hundreds of companies you are making, but these are very specialized. Our own pyridine derivative-based agro actives and pyridine derivative-based fluorinated derivatives.
Okay. Sure, sir. So that makes sense because you have a strong expertise in the…
We have forward integration, we have the ability, we have global recognition on those derivatives. So now customers wants us to do fluorination also, which we have expertise now. So it's not a me-too product done by everybody.
Sure, sir. And sir, just one question. I wanted to -- so clearly, margins here in the Life Science business are on a full year basis around 15%. You had mentioned earlier in the call that it will be around 13% to 14% base margin, right? So do you -- do you expect the same to go ahead also to 14%, 15% life science as well overall for the annual because quarterly it becomes very difficult to gaze the margin. So I just would want to ask on overall basis, do you think 14%, 15% still hold for life sciences -- life science or chemical [indiscernible]
Yes. I mean, again, you missed it what I have explained earlier on this that if you see the same situation of raw material price, same situation of input price, you are right. But it is very difficult to project those input prices. So that will vary the margin. But per kilo margin we will ensure. And if everything remains same, you are right, it will remain at the same level. But you can't promise that because market changes based on the input prices and raw material prices.
Sure, sir. Sure. And just one last question from myself. In terms of your Diketene derivatives just would want to know, obviously, they will have usage in agrochemicals and pharma as such. Any other industry or anything where you find a lot of growth for Diketene derivatives in terms of end users. I understand that right now 40%, 50% has been imported, and you are catering to the import substitution demand. I just wanted to know in terms of end user industry, Diketene derivatives, where do you find it being employed more and more in India or overseas, both, because it is the…
There are 3 key users. One is the dyes and pigment industry, agrochemicals and pharmaceuticals. There is another industry which is coming up in Diketene is the antimicrobial also, which is a value-added product. So, but you are right, currently we are mostly with agrochemical and pharmaceutical where the growth is projected to be very good because of the new molecules which are growing in agrochemicals. So our most of the volumes will go to agro and pharma and some may be to dyes and pigment. And also we are developing molecules for the second phase of Diketene derivatives, even getting into the other segments of end users.
The next question is from the line of Dhruv Bhimrajka from Monarch AIF.
Sir, congrats on a good set of numbers and the resulting CapEx announcement. Sir, my question is, are there any plans for us to put up a captive asset capacity? I know you have answered the question with respect to forward agreements. So if you can clarify on this also please?
No, we don't have a plan to make the investment on producing acetic acid for capital use because that is not making sense. This acetic acid plant is very specialized food grade as suggested. So therefore this much volume which is actually currently required by market, we have entered into it, but we have no plans to make investment on acetic acid further for captive consumption.
Okay. Sir, one broad question. Sorry for my ignorance. If you can elaborate on how do we plan to take this for pyridine chemistry going forward? What are the risk overall to pyridine chemistry if there is anything which you see, if you can elaborate something on this chemistry point that only great for our understanding.
Pyridine chemistry, as you know, we are the globally largest producer in pyridine and pyridine derivatives. Whatever the bad time one has to see in pyridine chemistry, we have already seen 5 years before. I can only tell you that pyridine chemistry is giving us much, much higher opportunity in future and some of the explanation which I just gave you on agro actives and fluorinated derivatives, these are all coming out of our basic pyridine chemistry capability which we have been working for many years.
So actually, this is giving us much higher opportunity now rather than you are saying that there is a risk to the pyridine chemistry. And we have achieved the situation in the last 30 years to be the cheapest cost producer in the world. And we are even selling to the Chinese market. So for us, as a leaders in pyridine derivatives, we will remain in this business and we will have our opportunities much higher in future as well.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.
We thank you for joining us on this call today. We request you to contact our Invest Investor Relations team for any further clarifications. Good evening, and thank you once again for your interest in Jubilant Ingrevia. Thank you.
Thank you. On behalf of Jubilant Ingrevia Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.