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Earnings Call Analysis
Q2-2025 Analysis
Privi Speciality Chemicals Ltd
In the recent earnings call, Privi Specialty Chemicals Limited announced a remarkable turnaround, achieving its highest quarterly total income of INR 537 crores, marking a 16% year-on-year growth. This strong performance is further highlighted by an EBITDA of INR 115 crores, translating to a year-on-year increase of 19%. The EBITDA margin stood impressively at 21.3%, reflecting the effectiveness of the company's operational strategies and market demand stabilization.
The first half of the financial year 2024/2025 also showed solid growth, with total income reaching INR 1,004 crores, a 14% increase compared to last year. EBITDA for this period amounted to INR 212 crores, representing a robust 35% growth year-on-year, and a notable EBITDA margin of 21.1% against 17.9% in the previous year. Net profit after tax stood at INR 76 crores, doubling from INR 35 crores in the same period last year, further emphasizing the company's profitable trajectory.
Privi operates within the aroma chemicals sector, with significant contributions from various products. In the latest quarter, PINENE led revenue generation at 55%, followed by specialty chemicals at 23%, citral-based aroma chemicals at 11%, and phenol at 7%. Notably, exports constituted 63% of total revenue, primarily driven by strong demand from European markets. Additionally, total volumes surged to a record 11,504 metric tons compared to 8,643 metric tons from the previous year.
Looking ahead, the company is focused on enhancing production capacity and refining its product mix through strategic investments. This includes a new greenfield project in collaboration with Givaudan SA, designed to manufacture high-value specialty products. The company expects to generate significant revenue from this venture, with projections estimating growth to INR 150 crores, potentially doubling in subsequent periods as capacity expands.
Management expressed optimism regarding future margins, expecting consistent improvements as they continue to augment production efficiencies. They aim to maintain an EBITDA margin exceeding 20%, which is typically considered robust within the chemical manufacturing sector. The ramp-up in newly installed capacity and the introduction of higher-margin products are key elements in this growth strategy.
For the second half of the financial year, management expects stronger performance, traditionally accounting for 55% to 100% of full-year revenues. Given historical trends, the company anticipates better sales dynamics, enhanced pricing power, and an overall positive outlook, with guidance pointing toward EBITDA margins remaining sustainable or improving further.
Looking beyond the immediate future, Privi's leadership forecast continued growth, aiming to sustain a compound annual growth rate (CAGR) of approximately 19%, as seen over the past two decades. They highlight a broader industry trend towards increased consumption in emerging markets, especially from India and Brazil, as factors that will drive demand for their products.
Ladies and gentlemen, good day, and welcome to the Privi Specialty Chemicals Limited Q2 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I will now hand the conference over to the management team for their opening remarks. Thank you, and over to you.
Thank you, dear. Good evening, everyone. I'm Ashvinisha, Company Secretary and Compliance Officer of Privi Specialty Chemicals Limited. Thank you for joining us on the call. On this call, I'm joined by Mr. Mahesh Babani, our Chairman and Managing Director; Mr. [indiscernible], President; Mr. Narayan Iyer, Chief Financial Officer; Mr. Sanjiv Patel, Vice President, Strategy; and SGA, our Investor Relations advisers.
I hope that everyone is able to review the financial results and investor presentation, which were uploaded to the stock exchange and company's website. Mr. Mahesh Babani, our Visionary Chairman, will provide an overview on the company and recent developments and post that Ms. Narayan Iyer, our CFO, will take you through the operational and financial highlights. I would now request Mr. Mahesh Babani to give his opening remarks and an overview on the company. Over to you, sir.
Thank you, Ashvini, and good evening to all. We are delighted to inform you that the company -- your company has registered the best ever quarterly performance, registering a 16% revenue growth on a year-on-year basis, crossing the INR 500 crore mark for the first time. We have also registered our profitability achieved for the quarter in the PAT margins as being INR 45 crores on a consolidated basis. Over the past 6 quarters, our performance has consistently improved, driven by steadily increasing demand, improved operational efficiencies and a better product mix, resulting in 21 plus EBITDA margins.
Key products of our company are at optimal capacity, but we are surely augmenting the capacities further. Augmenting means we are trying to increase capacity within the same infrastructure, a little bit of CapEx and trying to maximize the benefit for the company. Looking ahead we have formulated a robust growth strategy focused on improved product mix, operational efficiencies and setting new products to capture upcoming opportunities. Throughout this journey, our commitment to sustainability remains firm. We also keep in our growth plan, our customers in mind for sure. And visit them regularly to see what growth opportunities are there.
On this occasion, I would like to thank you -- thank all my employees and staff members for their grit and commitment shown over the years and achieving this feat. I would like to thank the leadership team as well for pushing a strong foundation and elevating the scale and size to global level. On this forum, I would like to highlight that in today's lifestyle, consumers are increasingly focused on products that bring no value in their day-to-day life. Conscious effort is being made by our customers on a continued basis to ensure that the end customers who use soap, detergents and other units are better all-active experience. About your company, just to reiterate, we are India's largest -- one of the leading manufacturers of Aroma Chemicals and worldwide, serving to the world's largest [indiscernible] and fast moving consumer goods and many MNC.
We have been trusted partner and timely supplies of all bulk Aroma chemicals globally. If you use over 70 aroma chemicals that are branded into fragrances, consumed by us in day to day products. All our customers are in sync with what we are doing on the regular basis. Our manufacturing capabilities include seven state-of-the-art integrated manufacturing units in Mahad, Maharashtra and Gujarat, Jhagadia with a total [indiscernible] capacity of about 50,000 tons almost.
We are fully backward integrated, utilized with generated [indiscernible] mills specifically, CST. We are the only company in the developing world 1 out of the 4 globally that possess this technology and logistical capacity to source these waste products. We have achieved about [indiscernible]. I would like to update you, we have achieved a significant milestone with the commissioning of a new greenfield project in partnership with Givaudan SA to manufacture complex ingredient. We aim to manufacture a broad portfolio of value-added products with a progressive ramp-up in the activities over the next 2 years. This celebration with Givaudan underscores our expertise in delivering high-quality complex products and further strengthens our position in the flavor and fragerance industry.
It also highlights our ability to invest in custom build facilities tailored to make several customer needs. We have also acquired additional particles, land parcels existing to our new sites, which we already own. So make it more safer and better operations. We have continued -- we have outlined several strategies for robust growth over the next 5 years and are ready to implement them confidently in the coming year. These strategies include increasing production in our newly installed capacity, refining our product mix, enhancing operational efficiency. These initiatives not only enhance value for consumers, but also ensure a long-term benefit.
Now I would like to hand over to Narayan for operational and financial highlights.
Narayan, please. Thank you.
Thank you, sir. Thank you, Mahesh bhai, and good evening to all my investors, shareholders, bankers and all attending this call. What a great comeback by Privi should really appreciate the efforts of 1 and all in Privi. And all of you shareholders and all who have been supporting with us.
[Foreign Language]
And I hope it resonates with you, all of you also. So yes, we have created history Mahesh bhai. As you rightly stated, it's a record quarter, a good performance and a comeback, which all in Privi the management whether it's Mahesh bhai, Mr. Rao, Mr. Rajan, myself, Ashvini all have been trying to tell the investors that we are on right track and it's only a matter of time that you will see the true potential what Privi can do.
Giving you the snapshot of the Q2 financial year '24/'25 highlights. We have registered the highest ever total income of INR 537 crores in that quarter with a growth of about 16% on a year-on-year basis. The EBITDA numbers that we have achieved for this quarter is about INR 115 crores, which itself is a growth of about 19% on a year-on-year basis. EBITDA margins stood at 21.3% for this quarter. Our profit after tax for the quarter was about INR 45 crores as against INR 30 crores in last year's same quarter around.
The exports to domestic contribution is 63% and 37%, which is led by predominantly the European Frank. Our total volumes for this quarter once again is a record and a history [indiscernible] at 11,504 metric tons as against previous years, 8,643 metric tons that we had locked about, in fact, and giving a little bit more plays how though already uploaded on the website on our presentation. The segment-wise breakup of our revenue on the key elements PINENE contributed about 55%. [indiscernible] specialty is contributing about 23% of the total revenue. Citral-based aroma Chemicals contribute about 11%. And Phenol is about 7%, with 4% coming from value-added products.
So giving a little bit more highlights with regard to the first 6 months performance, if I had to talk about, the total income achieved by us in the first 6 months is once again a record INR 1,004 crores, which is a 14% growth on a year-on-year basis. EBITDA achieved for the first 6 months is about INR 212 crores, which, once again, a 35% year increase over the previous year margins. Margins stood at 21.1% in this first half as against 17.9% in the previous year. PAT for the period was INR 76 crores as against INR 35 crores in the previous year. Exports contribute about 64%, led by Europe and North America. And of course, India is also the PAT contributor about 36% of our revenue. The total volumes, which we have achieved in the first 6 months is about 22,176 metric tonne as against 16,183 achieved by us in the previous year.
With this, I would put my numbers at rest and would want the floor to be open for question and answers. All yours moderator.
[Operator Instructions] The first question is from Sunil [Mehra] from Mehra Family Office.
And first of all, I would like to extend my heartly congratulations to the entire Privi team and also within the Chairman Mahesh during the outstanding results. All-time high revenue and EBITDA. Sir, My questions are, we have seen would increase in the EBITDA margin Q-on-Q and Y-on-Y as well. So what are the reasons for improvement in the EBITDA margin? And is it sustainable going forward?
I'm sure this is sustainable in coming years. In fact, it would only improve from here on. The increase is also because we augmented our capacities, our efficiencies and our capacities have been augmented. So this will -- this trend will continue in coming times.
How do you see the second half panning out.
So if you see the near record, our first half is always between 40% to 45% and second half is between 55% to 100%. But our first -- second half is always 20% higher than the first half. So you should expect better results in the second half.
With the sustainable margin, right?
Yes, yes, surely sustainable. And we have our order book position also to reserve that.
Great. Great. And sir, what is a little bit of a longer vision, like say, next financial year as well as next couple of years. How do you see your company growing -- see the levers for growth.
The lever for growth is, of course, we keep on adding new products, new specialties and augmenting our capacity, that's our specialty to how to produce more within the same infrastructure by making continuous plans, the same products are being made on a continuous basis. Second lever of growth is also -- the consumption is increasing substantially now. As now all our customer's demand is much higher than if you see all of our customer's balance sheet, we are 10% higher. All of our customers have increased their turnover by 10%. And that is [surging] on to us because we are one of the key and important suppliers to them. Therefore, I see this trend continues, and I feel this company is here will maintain the -- like you see a CAGR is almost 19% for last 20 years, and we'll be able to maintain this or improve this further in the next few years. That's our -- I mean, that's our way life, to be honest.
And what is the addressable market, if you see that big market is growing at 10%. So what is the addressable market for us worldwide I'm talking.
See, worldwide, Brazil, India is growing significantly. India, if I show you a classic example, the women power has improved so much. Women power has improved so much in India. And actually, the women generally is consuming more perfumes, more cosmetics, more deodorants. So the demand comes from India and Brazil, Indonesia, these are the places where the demand is coming from. And also, incidentally, we are in the notes of Amber and Woody are becoming favorites of the world because they bring value for money to the customer. And in the Middle East also, the demand is increasing. So fortunately, the oriental notes, and woody notes, we have that particular capabilities and products in the company. So that demand is going to continue.
Secondly, also we see in the COVID demand did increase, and it's increasing because people are now getting used to more hygiene things and more cleanliness and like floor washes and that all, everybody has improved their lifestyle. So that's bringing the demand on the table, and it keeps -- indirectly, it comes to us.
Can you put the number to addressable market total size of the market of our products worldwide?
I cannot -- I would say Aroma Chemicals and aroma -- it would be between $6 billion and $8 billion. I think so. I cannot put a number because there's no -- it could be in that range.
And last question from my side. We saw that volume has grown by 33% in Q2 over last year Q2. But our turnover has grown only like 16%, 17%. So are we seeing the pricing pressure in the product? So how do we look at -- how do we analyze that phenomenon?
So I'll tell you, when we took -- what you see is what we did last year. So last year, the markets were -- the raw materials were at all time low. And fortunately, we also took a contract about [indiscernible] and so the prices were probably historically low last year. And this year, it is correcting itself, and I can only tell you few 4 of this year, there will be a much higher prices because we take yearly from that, can we take our raw material also yearly. So that doesn't affect our margins, but because of the lower margins, lower prices of raw materials and lower prices of finished goods, that's why the value was lower. But this has taken a significant change.
So what we do is 60% of our business is about contract, 60%, 65%. We make a conscious effort to do that. 60 to 70 is the max we go. So generally, 60% to 70% is at lower. Today, also 60% to 70% of our business is almost at contract and at lower prices and the balance, 30%, 40% is at maybe 20% higher prices. So all this will culminate to better things in the last quarter and next year onwards. And we see already significant demand. In fact, we also signed with contracts where we [indiscernible] back to back raw materials, we signed contracts for year '25 already with 1 customer, 2 customers, 3 customers, about 33%, 30% of our important products have also we have committed, along it back up of raw material for next year.
The next question is from Deepan [indiscernible] TrustLine Holdings Private Limited.
And congratulations for a great set of numbers. So firstly, from my side, so very happy to see 7% Q-on-Q growth in realization. So how do we see the pricing improving from current level? And also our current realizations are 25% lower than peak realization reported in '22 or '23. So -- and product wise, how is the realization difference yearly.
So I'll request Narayan to answer this because I only keep '25 mine Naren to talk about historic numbers.
Okay. So a good observation, definitely, as Mahesh bhai mentioned earlier to Mr. Sudhir Veda, that we see that there is a slight increase in the spot prices in this quarter, which is what is also the observation that you have done back in this Q2, our realization on a per kg basis has gone up. So that's very correct. Now to specifically answer about the other question that our overall per kg prices have come down as compared to the peak, what we achieved in '22, '23. That was also answered by Mahesh bhai stating that for the yearly contracts, for the year 2024, these contracts were entered somewhere around October, November, December of 2023 because the MNCs the global players they all have the calendar year as their year. So we need to freeze upon the prices at that time at time. So the prices were low then because the raw material prices had come down. And that is why you will see that compared to the previous year, the average realization is low.
And in terms of the utilization, I'd say, overall, this quarter, we are almost reaching around 90%, 95% for the company. And how is the utilization for [indiscernible] and what kind of capacity increase we are looking forward for [Galaxy].
As we mentioned and also put it across on our website, we are almost nearing the optimal capacity. But yes, these are new products where we are close to about 75%, 80%, 85% of the capacities that we have installed, there is scope for improvement here. And there is a continuous augmentation of various processes that we do about, which Mahesh bhai also mentioned, which improves the efficiency, yield and the capacity of output to come about by doing a little bit of modifications to our existing setup. And we feel that this will go [indiscernible]. The coming years, yes, [indiscernible] will be at its peak capacities, and you should see better volumes going ahead in the next couple of quarters also.
Okay. So what kind of CapEx we have planned for this year and next year? And what kind of repayment plan for debt and are we expecting debt to EBITDA to fall below 2x this year.
There are certain CapEx, which we have outlined, long-term, short-term. So immediate short term is, as Mr. Mahesh bhai mentioned in his earlier inaugural address, we are looking at possibly building up capacities of some of our key products on the PINENE space, which is our strength. So we will -- because that is increasing, and we will definitely like to keep pace with the market on the capacity so that we continue to maintain our status of a #1 player on all our [indiscernible], Amber Fleur, the pine oils, and seeing the way that [indiscernible] musk is also performing -- outperforming our expectations in fact.
We may possibly also look at increasing its capacity in due course of time. So this is on a continuous basis of our main products. There are certain long-term CapEx that we are thinking about of introducing new products and all, which we will announce it at the appropriate time when we know that we have the resources and the capabilities exactly to launch such products. We will come back to all the investors stating the exact time when we are expecting it to launch them in fact.
We can put up for CapEx and debt repayment?
Come again, Deepak.
Any specific number really put up for CapEx and debt repayment for [indiscernible].
Debt repayment anyway, the term loan repayment is happening as per it's scheduled, and that goes around because whatever CapEx is we have done using bank money. There are certain repayment obligations. And you would have seen even in our current financials, we have repaid all the bank obligation, broadly about what we are talking about on the overall CapEx required for this increase could be in the next 1 year for all these items about of INR 200 crores, INR 250 crores or so in fact.
[Operator Instructions] The next question is from Mulesh Savla from [indiscernible].
And heartiest congratulations on record quarter performance. Sir, can you throw a little more light on the JV plant that has been started in the recent past, what can be the expected top line how the margin profile will be? And is that plant fungible that we can produce any items or it is restricted to a few specific products only.
Yes. So thank you for that question. The first thing is that we should be proud that as Indian's global Fortune 500 giant has relied on us to be their technology partners with Privi having 51% and they're having 49%. And they have specialty products, which they have been manufacturing for nearly 80 years. They have transferred those products to India and it is going to be manufactured in the JV plant. There are going to be 42 such specialty products, which are going to be manufactured. And as far as the products are concerned, that is going to be exclusively supplied to Givaudan. And in that, we are expecting an EBITDA margin of 24%, which is something which should keep us moving. And they have already before the project was even launched. They have already -- before it rolled out, they have asked for expansion of a land bank, which we have already procured. So we see on our top line, the turnover going from INR 150 crores and doubling up during the coming years with the capacity enhancement and expansion.
So ideally, with the existing capacity, we can do turn off around INR 150 crores.
Yes. So they are super specialty products. So it's more on the low volume but high value.
I would also tell you, Mr. [indiscernible] that I -- this is my gut feel that -- this is only a try and test case. There will be many such projects coming up, not only from this customer, other customers who have trust in us. I at least see one or two more tie-ups like this in the next 2, 3 years.
[Operator Instructions] The next question is from Nikhil from Perpetual Capital.
Congrats on a great set of results again. My first question is -- so how are the contracts looking for next year? I think the pricing environment was slightly on the weaker side last year. Now that Mahesh Ji has already mentioned that pricing is improving. Does that also result in higher gross profit per tonne from next year?
Nikhil, this is Narayan here. Yes. So we also expect that gross margin to improve about. It is too early as of now to really mention how the contracts will pan out. There is a major event happening early next month, [indiscernible], which is like a con play all the flavor and fragrance company. I feel we will really come to know how it is going to pan out. But as we really see that prices have already started moving up we expect better times to happen around. -- Yes, Mahesh, you wanted to add.
Yes. I think it will be -- in a few words, it's going to be much better than this year.
So that's what cautiously optimistic. I was trying to say about that. Definitely, it will be a little better than what it has been on the contracts of the previous year.
My next question is also in the last few quarters, you all have been mentioning that the incremental focus is on higher-margin products and value-added products but the gross profit per ton has sort of stabilized around INR 2 lakh per tonne for the last 3, 4 years? How should we look at that incrementally?
Nikhil, a good question. In fact, I had answered it in the previous quarter. The thing is that there have been price vagaries happening in the last few years, where prices have been on the realization of the finish goods have been coming down. So because we did this augmentation, we -- because we went into this value-added products and all our margins at the gross level has improved or sustained -- when you talk about gross margin, you only take the RMC as a trend, whereas when we do about take a complete scenario of the factory expenditure, which gets panned out over a higher volume than we are doing above.
And that is why you have seen in the final EBITDA margin level and at the PAT level, we have really improved what we were about 3 years ago or 4 years ago to what we have been now giving and in this current year, the last 6 quarters, which we had also shared it with you all, we have been 20% plus on the margin trend. So this not having possible had the value-added products not come in. Also, the yield improvements, what we have taken into consideration is also giving a better yield to it and I have Sanjeev our strategyategy here to also want to chip in and add something.
Yes. So what happens is the value-added products, the volume there is a lot because they are high-value products. So therefore, sometimes this volume can be misleading because I may be sharing something which is costing $55. Even if I sell, let's say, 20 tonnes, that is much better than selling something costing around $2, 100 tons of that. So that's how the volume sometimes can be misleading, but what you we see is the gross volume that we make and that's how the high value products add to the margins.
So now with the approval of U.S. FDA for cancer, how should we see your camper business going forward? And what can be the difference in realization for pharma and non-pharma grade?
See, [indiscernible] it's a listing of a product in the U.S. FDA, which means that my camper is not an end [indiscernible], okay? It's only an ingredient, which is -- which can be used in making formulation. Definitely, the realization will be better as compared to what we do on the industrial front. So it is time will talk about because there are certain processes that every pharma company will be taking for evaluation and final orders to come about. Broadly, what we see is that the realization should be anywhere between 25% to 40% higher than what we normally sell in the industry [indiscernible].
Right, right. One question is also any update on the acquisition that was announced a couple of months ago. How is that progressing? And when do you expect to conclude that.
The bankers will inform you at the appropriate time when we are ready for it, I think.
Okay. Okay. Last question for me. So as per my channel checks [indiscernible] yet to take off at a reasonable capacity utilization. I think last -- I asked this question last year as well, I think Rajan jee had mentioned that you are working on a greener process for the product. So how is that taking shape?
We'll ask Rajan to answer that.
Yes, yes. So I'm happy to say that, that process has seen success. So now we are going to, again, augment the capacity. And whatever we are producing is already presold. And the -- as far as the capacity is concerned, it is going to go up for fourfolds to almost 150 tonnes per annum. And we are absolutely on track on this product, which is considered the holy grail of Aroma Chemicals.
Next question is from [indiscernible] from HSBC Asset Management.
Most of the questions, sir, answer, but perhaps some few questions.
Can you speak a little louder please.
What would be the peak production capacity which can be utilized and what could be the revenue potential of that capacity, if I may know.
So the peak capacity that [indiscernible] is somewhere between 48,000 to 50,000 metric tons, and we can generate a revenue of about close to INR 2,500 crores to INR 2,700 crores.
So what are the capacity utilization, 70% or 80%.
Currently, it is about 80% or so.
Okay. So any future CapEx plan, apart from the JV, which we have recently.
Yes. So just now excited about that for all the existing set of our products, our key bread-and-butter products, we have a CapEx lined out of about INR 200 crores to INR 250-odd crores or so. which will increase the capacities of all our major products, and we also have a long-term plan for introducing a lot of high-end specialty chemicals and green projects and all, for which we are anyway in the process of raising money and go ahead.
So this CapEx plan would be spread over years or like next year itself?
It spreads over in 18 months to 24 months period or so, broadly.
And any guidance for the next -- like not next year or FY '26 revenue guidance and margin guidance. If you can give I know most of the orders -- most.
In few words, outlook is very positive.
Okay. Any margin guidance in the range.
Positive means everything comes in there, [indiscernible] positive outlook.
Next question is from Rohit Nagraj from Centrum Broking.
And congrats on a pretty good set of numbers. So first question is the Givaudan project. It is completely for the Givaudan as a client or a customer. So barring any issue -- what would be the time line for the peak revenue and maybe over a period of 12 months or so? And second question right to that is that we have recently started in the plant and probably we also would have started the commercial activities. So are there any [indiscernible] troubles that we have faced in the last couple of weeks after starting the plant.
The positive point is that we are off to a very good start. And for us to rectify the optimization of these products, which are specialty products, it will take about 2 years. And since Givaudan is one of our big customers, we are indeed grateful and it's a privilege to be trusted by them to do a specialty project with them as a JV. So everything is going in the right direction, and there is no hiccup. It is moving absolutely in the right direction. And everybody, including our JV partners who visited us for the inauguration are very happy with the progress that is being made. Good for -- really good for India, good for all of us.
Sure. Just a live question. The facility is completely dedicated for Givaudan or we will be able to produce product for maybe other customers?
Yes. The entire JV is based on exclusivity, which is being manufactured for them and there is a guaranteed EBITDA margin in that, and we will continue to supply to them on an exclusive basis.
Sure. That's helpful. Sir, my second question is on the R&D front. So Mahesh sir mentioned that similar to what Givaudan has given us in terms of the product and projects. There could be a couple of more projects which also may suffer from a period of time. So are we already working with those clients and what are the capabilities that we are building from an R&D perspective to probably scale up passes and cater to these clients.
That's a very good question. All we can say at this point of time, given the proprietary discussions, it's premature to make any announcements, but I can only tell you since the world has seen the fructification of this JV, definitely, there are possibilities which are very, very positive for the coming future.
Sure. And if you can just elaborate a little bit on the R&D strength or capabilities, it would give us flavor in terms of how it has changed since we started working on the JV.
So we -- I would really boast over here that we have a great R&D team. We have almost 91 people working around the clock. So I think for a company which is INR 2,000 crores, 91 is a very good resource to have and very good teamwork. And we do from -- at any given time, 10 products are being worked on simultaneously. In the lab and at least 5 to 6 on new products on 10 products or 33% of the revenues go for intensification of capacity, 32% of the people is contented on new products and heavy tree for Privi new specialties.
So almost 91 people working around the clock. That's a good resource for that company.
And to add to that, Privi has always been focused on R&D. It's not that it is because Givaudan has come over or given us this. Givaudan gave this 42 products who are seeing our R&D capability and the capability that Privi can deliver right, in fact. As you know, as -- these -- both these and setups are at Mahad more than 20-year old and the one in Navi Mumbai is about 17 years old, both R&D facilities have been recognized by DSIR, so which means that we are having the highest cost standards and it's our visionary Chairman's idea of having a strong, robust R&D, which he nurtures, which he is passionate about and oversees the entire operation. And that's how you have seen Privi really evolve into a company from our 2 product to a 72-plus product with 42 products now for the JV and another 20-odd in the pipeline in fact.
[Operator Instructions] The next question is from the line of Manan Madlani from Kamaya kia Wealth Management.
And congratulations on a good set of number. My first question was regarding the CapEx for September balance sheet recently, there is a number of INR 233 crores of CWIP. So is it related to PINENE CapEx that you mentioned in the follow up year.
This is Narayan here. The -- basically, it is almost more than 2/3, close to about INR 160 crores of the INR 233 crores that pertains to the [indiscernible] CWIP because it has not been put to you, so that's why it is lying in capital work in progress. The so-called inauguration happened in the month of October and where now the water [indiscernible] and everything is going up. So the major, major amount was on account of bridges. And the balance, what you see is the regular CapEx's and 1 or 2 new products in Privi, which are in the process of getting capitalized in this quarter or so, in fact, which includes [indiscernible] what Rajan talked about and also the Amber, woody extreme.
Okay. What is the capacity utilization for camper and [indiscernible]?
We almost at 80% of the capacities that we are having about just answered the earlier question in fact.
Okay. And even we are at [indiscernible], do you see 20% volume growth for next 15 to 18 months?
Yes, definitely.
Okay. So I think you already answered this, but just to clarify, so gross margin of 49%, that can go beyond that number, let's not put the number, but it can go beyond this.
So what you are saying is the RMC gross margin, Yes, we -- I think it should improve a little bit. Otherwise, we can maintain at this level.
Okay. Got it. And in the earlier con call, you mentioned that the capacity of 48,000 metric ton which we are having currently, it's supposed to grow now 60,000 metric tons. So with this PINENE capacity will we reach to this number?
See, it's a combination of various factors. Last time around also, we mentioned that we will be increasing and bringing in new products. So it's a combination of various things. One, definitely, some of our existing products we are looking at. Two, with the QIP money that we are looking to raise and introduce some new products. With all that is what we had stated that we will reach about 60,000 metric tons or so. So we are in the process. First thing is to augment and improve and increase the capacities of our existing products, and that's what we are focusing currently.
Okay. So is there any time line we said it for [indiscernible]?
We will be in a position to answer through our bankers at the appropriate time.
Fair enough. And in the current quarter, the expense seems to increase you a much higher rate, around 50%. Any particular reason?
If you basically see the volume has increased in this quarter and the other expenses forms the selling and distribution expenses a bit higher volume of sales happening around, we also end up having later of units being exported. So credit expenses has also gone up. And the Israel dispute has also slightly increased the trade expenses, which I believe is a uniform truth universal to all exporters. All other expenses are under control, in fact.
Okay. Can you explain a little bit about the new products like in [indiscernible]?
Yes. Indomeran is one specialty product. It's an sidechain of [indiscernible], where it is a fixed debt reaction and fortunately, for us, we developed it from a very special catalyst, and we had a lot of cost advantages in this. I think in this year, we are in this my -- this year -- within this year, we'll expand this capacity significantly, and we intend becoming one of the largest manufacturers of Indomeran in the world. Probably one of the largest for sure is not the largest. And Indomeran also happens to be one or material for a specialty product, which we are developing, which we have launched in the market for in the last few months. And we are taking some market feedback on that. It's a product of about $300 plus, and we hope to be very successful in this. This is also an oriental note, which goes into products like oud and woody, like I said. So this is very interesting for us. Indomeran is going to be our star product. And we are hoping to be told in short one of the largest.
While Floravone is a lower-value products, Indomeran a range of above $55 a [indiscernible], Indomeran is about $10. It is a side chain from our waste of our product. So this is also very interesting in margins, but value is not so high. And we are also putting up CapEx for this during this year, and we will see the benefit of this in next financial year.
Okay. Perfect. And my last question is regarding your Privi PINENE for Privi like [indiscernible]. So there are 2 units. So what are the gross margins for both the unit [indiscernible].
Similar, similar. All I can say.
Can you quantify that?
You see a previous balance sheet and you quantify that. you don't ask me to make forward-looking statements. It's very sensitive time for us to make statements about something futuristic, but it will be in a similar range of products. Only I can say is we are building a -- like CSC, we are building a new building block called [indiscernible], which is first time in the country.
Okay. And do we expect this merger in next 6 months or so?
Maybe it may take a little longer, maybe next year or maybe it's yet on -- I would not say some premises. We are negotiating with our auditor, maybe this year, maybe next year, maybe year but within next 2, 3 years, for sure.
At the appropriate time, we will be announcing it. As stated, we -- you will come to get the exact views from our bankers [indiscernible] and it's my humble request to all shareholders, all investors and all people wanting to ask question to please currently restrict your questions on to Privi Specialty Chemicals Limited and its subsidiaries only and not to any acquisitions or something because if at all, and as and then the acquisition and take our mergers happen, we will be announcing it. So as a prudent governance policy, I also would expect my investors to restrict the questions towards Privi and its subsidiaries.
[Operator Instructions] The next question is from Puneet Sanish Kabra from Omo Advisors.
Congratulation on your numbers. The first question I had is we got the approval on camper for USFDA. So 2 questions here. One is domestically, do we have any competition in terms of [indiscernible] being USD approved for Camper. And second is over our key competitors be in this space. Would it be China? Would it be any other geography that serve this need right now.
Yes. [indiscernible] there are a few Indian companies who have also registered as a key pharma ingredient in the U.S. FDA space. And we also -- we are the latest to join on the bandwagon. And China, of late have been competing with all the -- India is the largest camper manufacturing manufacturers, in fact. So China seeing the demand that India can generate and camper has also in the last few years, been really putting in a lot of [camper]. And post-COVID, innovations have also led in the camper to be used in various other ways. So that's why you see a surge in the camper production inside and demand.
Okay. Can you share some outlook on camper prices specifically? Because when you look at the -- at least the data that I look at, the prices seem to be trending up. So what are the main factors or one should be considering when it comes to camper prices in terms of demand, supply, something that in [indiscernible].
I only can tell you that we are confident of supplying camper to this region of the world of India. And we are confident it's a huge market. We are confident of the capacities that we have. We have some customers who take all these quantities. And balance, when we are talking about USFD, we are talking about several important customers who have asked us to do that because they need this for their operations in the pharma sector. So about 33% of our capacity is going to be exported. Balance the -- I think in Maharashtra, Gujarat, MP, we can sell it. So the overall market, I don't know maybe 20,000 to 30,000 tonnes. And [indiscernible] market is in India. So that's all I can comment. It doesn't -- it is an important product for us because we have some other things which we'll announce based on camper in the coming years, which is under development, so I cannot make commitment on that.
Any view that you can share on camper price outlook for the next couple of quarters or the.
Honestly speaking, I it's -- I'm going items months, sometimes we're high, sometimes is low, sometimes high season, low season. So every time, it's a price, I cannot -- I don't know, maybe for the piece and find it from [indiscernible], we fortunately have a secured raw material for this -- so I don't monitor it so closely.
Okay. Okay. The next question I had was on the Givaudan JV. I think we said that we will be able to grow about 24% EBITDA margin so is that part of the contractual agreement as in it's more like a cost-plus kind of a model where we are secured for EBITDA margin.
We will -- I'm getting it's confidential. At the moment, it's confidential because we are only -- we have a visibility of next year's time, which is INR 100 crores. And this is our reading on the -- in between the lines. It can be increased or decreased. That's in the sometimes dollars, sometimes the raw materials. It will be in the range of, I would say, in the range. Our expectation is our dream to have. And we so far has always acted dreaming right. So it will be in this range, plus/minus 2%, 3% here there. But anything north of 20% is a great EBITDA margin for a chemical company. Let me tell you that anything great of anything north of 20% EBITDA margin is very good for the -- any manufacturing company. And we'll always maintain that in coming times.
And you also should appreciate to the fact that Givaudan is our large customer, having a strategy [indiscernible] JV to manufacture for them is also a great -- it's a great initiative, a great step to take about so that we maintain on the main company's business also with them and in a position to manufacture the so-called high specialized chemicals for them also in fact. So it's a 2-in-1 win win situation for all of us in Privi, and for the country to [indiscernible].
Third question was, I heard Babani sir talk about this JV one as people see it working can lead to more opportunities with other customers. does that not create a conflict of interest?
No, no, not at all because we will not necessarily have a JV, but we'll have a strategic alliance to that effect on a different side not necessarily in JV. But it will be more our experiences, we also have a strategic alliance not necessarily JV but similar arrangements.
There also there will be exclusivity. There will be confidentiality agreements, all that sort of stuff. So it's not that it's going to be open.
Due to time constraints, we'll have to take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Thank you, everyone, for joining this call today. As you walk and lead to reach the Aromas from Privi touch your life with fragrance that create memories and bring back nostalgia. We maintain our pace without compromising on our values and constantly challenge ourselves, serve our partners and customers. Thank you, everyone, for joining us in this earnings call. We appreciate your time and interest shown in our company. In case of queries, you can get in touch with [indiscernible] or SGA, our Investor Relations advisers. We look forward to meeting all of you over the next call. I wish you all Happy Diwali and prosperous New Year from Privi Family. Thank you.
God Bless.
Thank you.
Thank you very much. On behalf of Privi Speciality Chemicals Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.