Rossari Biotech Ltd
NSE:ROSSARI
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
670.65
942.4
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Rossari Biotech Ltd
Earnings Call Analysis
Q3-2024 Analysis
Rossari Biotech Ltd
The company experienced robust demand for its surfactants, prompting capacity expansions at both Unitop and Tristar facilities. Additionally, recently introduced products like CAPB and cocodiethanolamide are already showing high demand, indicating good future trajectory. New technologies such as biosurfactants and block silicones are also being scaled up due to their successful pilot results.
The Home, Personal Care and Performance Chemicals (HPPC) segment showed impressive volume growth of about 31% due to demand in specialty surfactants and phenoxy series products, signaling strength in both domestic and export markets. Textiles volume has increased even with a revenue drop of 13%, promising momentum in green chemistry with new products like RENEWA. These expansions across categories suggest that new initiatives are expected to contribute more meaningfully by the end of FY 2025, with a full ramp-up expected in FY 2026.
The company is currently using 100% of its ethoxylation capacity, prompting a significant expansion by 20,000 tonnes beyond the existing 36,000 tonnes. This expansion, slated for completion within the next 5 months, indicates strong underlying demand for the company's products and a commitment to meet this demand.
The company maintains guidance for a 15% growth in revenues excluding the effects of ongoing CapEx. The financing mix for these expansions looks to maintain a debt composition of around 70-75% with total CapEx at INR 130 crores for Unitop and about INR 50 crores for Rossari, demonstrating a balanced approach to funding its growth initiatives.
Exports have reached a historical high at roughly 23%, with expectations to grow faster than domestic sales. As the company envisages total growth of 10-12%, exports are expected to grow at 12-14%. This indicates an aggressive strategy to increase international market penetration over the next several years, contributing to the overall growth narrative.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Rossari Biotech Limited's Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, Mr. Poojari.
Thank you. Good evening, everyone, and thank you for joining us on Rossari Biotech Limited's Q3 and 9M FY '24 Earnings Conference Call. We have with us Mr. Edward Menezes, Promoter and Executive Chairman; Mr. Sunil Chari, Promoter and Managing Director; and Mr. Ketan Sablok, Group Chief Financial Officer of the company.
We will begin the call with opening remarks from the management, following which we'll have the forum open for a question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier.
I would now like to invite Mr. Edward Menezes to make his opening remarks.
Thank you, Anoop ji. Good evening, everyone, and thank you for joining us on our Q3 and 9 months FY '24 earnings call. I hope all of you had the opportunity to go through our results presentation, that provides details of our operational and financial performance for the third quarter ended 31st December 2023.
We are delighted to announce another strong quarter for the company, marked by a notable year-on-year growth in both revenues and profits. The performance was primarily fueled by our core HPPC division. While our TSC and AHN divisions faced industry headwinds and seasonal softness, we are optimistic about the recovery in the upcoming quarters.
Notably, while this quarter's revenues were slightly lower compared to Q2, we achieved a new record by surpassing our previous quarter's EBITDA and PAT. Our long-term growth strategy remains focused on expanding across all our business divisions.
Over the years, we have proactively ceded new verticals with our core chemistries laying a solid foundation for future expansion. We believe we are now poised to significantly scale up these ventures. Our emphasis is particularly strong on areas such as specialty surfactants, phenoxy series, institutional cleaning and performance chemicals.
By leveraging our existing and new product lines, we aim to penetrate deeper into new geographies and further increase our wallet share with existing partners. As we have discussed in the past, R&D remains a cornerstone of our growth and innovation strategy. Rossari's position as a premier solutions provider is strengthened by its R&D capabilities enabling us to meet the evolving market needs and solidify our role as a sought-after partner for bespoke solutions in the specialty chemicals sector.
We are dedicated to leveraging our R&D expertise to drive future growth, create value and strengthen our reputation as a leading provider of intelligent and sustainable solutions across various industries. We continue to focus on developing green surfactants that will act as the door openers for the home and personal care industry and also have varied applications from textile to industrial cleaning and oil and gas.
As we look ahead, India is anticipated to emerge as a major hub for global clinical manufacturing in the coming years. In this scenario, with the backing of our robust R&D framework, solid financial base, increasing manufacturing capacities and diverse range of products, we believe we are well positioned to capitalize on growth opportunities in both domestic and international markets across all our business verticals.
With this, I would like to conclude my address and now hand it over to Mr. Chari for his comments.
Thank you, Edward ji. Good evening and a warm namaste to everyone. The third quarter has once again showcased our resilience and capacity for growth, even amidst the challenging external environment for some verticals. We have achieved a consolidated revenue of INR 463.8 crores, a notable increase of 19%. Moreover, our EBITDA has grown by 18% to INR 63.7 crores.
And we are particularly pleased with our PAT, which stands out at INR 34.4 crores, marking a significant [ Y-on-Y ] increase of 34%. These figures highlight our focus on maintaining and enhancing profitability even in a demanding marketing -- market landscape.
In a strategic move towards future readiness, we had announced the expansion of our facility at Dahej in the previous quarter. The expansion is designed to help us foray to new products related to our core HPPC segment. Additionally, in response to the increasing demand in sectors such as agrochemicals, home and personal care, oil and gas and pharmaceuticals, we have also initiated the expansion of ethoxylation capacity at the Dahej facility of Unitop. Work on both these expansion projects at Dahej has begun and is moving forward according to the planned schedule.
The commissioning of these projects is expected to take place in a phased manner with completion targeted by Q3 FY '25. These expansion with a total CapEx of INR 180 crores is poised to be a major driver for Rossari, contributing significantly to our long-term growth trajectory.
To conclude, we believe our journey of improving our revenues at a CAGR of more than 25% between FY '21 and FY '24 is a testament to our emphasis on growth. This significant expansion achieved through a blend of organic and inorganic initiatives, clearly demonstrates our commitment to delivering long-term value to our shareholders. Our focus remains on enhancing this value, supported by our confidence in capitalizing on both current and emerging market opportunities.
We thank you for your continued support and trust in our journey towards sustained growth and success. On this, I would like to now request Ketan ji to share his perspective.
Thank you, Chari sir, and good evening, everyone. Let me quickly provide you with a brief overview of the financial performance for the quarter ended December 31, 2023. We've reported a healthy quarter reflecting the resilience of our business model. Revenues from operations have increased significantly by 19% year-on-year to INR 463.8 crores, up from INR 389.3 crores. This healthy top line growth following a period marked by the volatile raw material situation in the corresponding quarter last year, focuses our strong recovery and focuses on growth.
The robust performance of our HPPC division has been the key driver for this growth, registering a notable 31% Y-o-Y increase. Substantial contributions have come from specialty surfactants, the phenoxy series, institutional cleaning and the performance chemicals, all of which, we believe holds immense potential for further expansion in the future. Additionally, our Animal Health division has demonstrated recovery with a 22% increase compared to the last quarter FY '24.
While our Textile Specialty division faced a slowdown this quarter, largely due to soft demand in the underlying textile industry, we are optimistic about the demand uptick in both domestic and export markets in the next fiscal, which we expect will lead to a positive turnaround for this vertical. The division-wise revenue contribution for this quarter stood at 77% from HPPC, followed by 18% from the textile specialties and 5% from Animal Health.
Our EBITDA for Q3 FY '24 stood at a high of INR 63.7 crores, marking an 18% increase Y-o-Y, with EBITDA margins at 13.7%. This growth in operating profit has been supported by a stable raw material situation combined with our revenue growth. Additionally, our PAT for the quarter improved significantly by 34% to reach INR 34.4 crores on a Y-o-Y basis. Looking forward, we expect to report a continued uptick in profitability backed by improved capacity utilization levels and various growth initiatives undertaken by us.
With a robust balance sheet, as our foundation and a disciplined approach to financial management, we believe we are well positioned to achieve sustained long-term growth in the coming years. Our focus continues to be on adding new products in our chemistry basket, continuously strengthening our R&D capabilities and increasing our customer and geographical presence.
As the macroeconomic environment and the RM situation stabilizes, we remain confident in our capability to deliver healthy performance across all our business segments going forward. Thank you for your continued support and confidence in Rossari. So that's all from my side. Now we will be happy to take any questions that you have -- that you may have. Thank you.
[Operator Instructions] The first question is from the line of Ankur Periwal from Axis Capital.
My first question on the new product launches. Edward you did mention our focus on home, personal care, performance chemicals, et cetera, but you can address slightly deeper into it. The reason I'm asking this is we have been focusing on launching newer products. So how has been the ramp-up of the earlier ones, and what all remains on the pipeline there over the next 2 to 3 years?
Thank you, Ankur ji. Yes, in the capacity expansions that we are taking up with our focus on these surfactants as well as ingredients, we are actually increasing our ethoxylation capacity almost more than doubling the ethoxylation capacity because in the last quarter, we had a very robust demand for our surfactants.
Apart from that, our phenoxy series sales was also very robust. Although capacity is less utilized in Rossari, we had to go for capacity expansion at both Unitop and Tristar. So in TriStar also, we will increase distillation capacity. Some projects in the last quarter that we had discussed where the esters and the ester quats that we manufacture, we will be focusing on these products because we've got good success with the initial introduction of these products, and we intend to increase the capacity manyfold here.
Two new products have been introduced, the CAPB that is the cocamidopropyl betaine as well as cocodiethanolamide. So these 2 products have been introduced, have very good demand and we are planning to expand capacities there. In the silicone blocks -- the block silicones that is a newer technology, in the last 2 quarters, we established a large number of new products. And now we have increased our capacity for the manufacturing of these blocks also.
In the last quarter also, I mentioned about biosurfactants, which is our key focus area, not only for the detergent sector but also for textile as well as oil and gas. So the biosurfactant capacity was at the pilot scale in the last quarter. We're now establishing a 200 tonne plus capacity per annum for these biosurfactants. And in fact, in the silicon surfactants, which we already launched in the last year or in the last season for Agro, we are now in the process of launching a few other silicon surfactants, which will go into industries like cosmetics, in textiles and in paper, et cetera.
In addition to that, we have strengthened our water treatment chemicals range also. We have promoted very aggressively, the ceramic chemicals. And we've also introduced a new range of products for coating of pharma tablets. So these are the new focus areas that we are looking at in the future. NMMO, which is an n-methylmorpholine oxide, which we taste the success in the last quarter. Here again, we are looking at increasing capacity.
Apart from that, although textile has some headwinds in the last quarter, but volume-wise, we've done pretty well in textiles, although we see a 13% drop in revenues but we have grown in volumes. And a fresh focus on spin finishes, we're looking at spin finishes for textile and lubricants for yarn and threat. So we've invested in certain specialty equipment and machinery for the silicone wax lubricants for this large part of the market. The newest initiative in textile is the green chemistry.
So we've introduced a concept called RENEWA, R-E-N-E-W-A, which is focused on renewable energy. And we've introduced a range of products for processing in the towel industry. So all in all, our focus on surfactants as well as polymers is razor sharp. One other product that we are looking at is also PEG in powder form. We used to manufacture the PEG in flake form. We are putting up capacities for making powders from -- for our PEG products. So that too will add 5,000-plus tonne per annum capacity to our Unitop facility.
And lastly, but not the least, the anti-redeposition agents that we so well with and we've cracked for certain multinationals. We are on the cusp of getting approval for another couple of products. And I think in the coming quarters, this product also will give us a lot of traction. And in the oil and gas industry, promotion and product development is -- has begun in earnest. We've got the first orders from ONGC -- first large order from ONGC, and we expect to do well even in this segment.
Sure, sir. Thanks for elaborate answer there, but just a follow-up, if I could broadly break up these product launches and the initiatives in 2 or 3 revenue segments, HPPC, Textile and the Animal Health and Nutrition, what sort of time do you believe it will take for us to see the ramp-up in revenues? For the first 9 months, if I see that we are around 9%, 10% largely led by HPPC, when can we see a double-digit growth? And what could be the magnitude of this growth with these new launches and over what time frame?
I think Ketan sir can answer your question because we have given him the CapEx justification.
So most of the CapEx revenues are going to come up by the end of FY '25. So we'll see some things coming up in the last quarter of the next year. And then the entire ramp-up will happen in the year FY '26. So we see this -- some of the initiatives that Edward sir talked about is going to come up mostly in the last quarter of next year and then the following year.
Sure. And on the product approval cycle, how much time should 1 budget for these products?
No. So I think most of the approval processes will happen through the year because a lot of piloting work for some of these specific molecules, which we are setting up in the CapEx. We will do it through the year before the plants come up. So it's not a very long approval process. So we should be ready with the approvals prior to the plants are getting capitalized.
The next question is from the line of [ Janam Gilani from Swan ] Investments.
Congratulations for a good set of numbers. So basically, I just have 2 or 3 questions. So mainly, we had guided earlier that we would be growing by 10% to 12% in FY '24, but based on the results, do we think we can surpass that and achieve 20%, 25% by any chance?
I think we'll still stick to the guidance that we've given.
Okay. And sir, how much are we spending on the CapEx at Dahej?
Total spend is about INR 140 crores in the CapEx at Unitop and about INR 50 crores -- sorry, it's about INR 130 crores at Unitop, around INR 50 crores at Rossari.
Okay. And sir, are we planning any acquisitions in the textile segment or animal health, nutrition segment?
No, nothing as of now. We have nothing on the table that we would like to discuss.
The next question is from the line of Sanjesh Jain from ICICI Securities.
I got a few of them. First, on the HPPC side, the growth looks phenomenal at 31%. And I believe there was a price decline. So can you help us understand what was the volume growth for the company and HPPC? And another small request, can you give a little more detail in terms of helping us understanding which segment is driving this growth? How much is agri, how much is performance chemicals? What is the growth in the Buzil Rossari? I think these are all various segments we have within the HPPC. Can you help us understand what has been the growth in each of this industry? And what exactly is driving such a strong growth? That would be my first question.
Yes, Sanjesh, the HPPC growth overall, I think most of it is all volume-driven. Y-o-Y, if you see, our volumes have significantly grown by almost 30%, 35% plus. So it's -- basically the growth is coming from the specialty surfactants -- the non-agro surfactants that we manufacturer. So that's where the major growth is coming.
Second, again, on the phenoxy series products, we have seen a phenomenal uptake in these entire series so both in domestic and majorly in the export market. We've been able to ramp up these products quite significantly.
And the other areas of growth have been the performance additive business, which, again -- though it's a smaller base, but it is seeing a fantastic growth in the overall product basket of ours. And of course, as you rightly said, the other is the institutional chemicals. So these -- institutional chemical has also seen almost doubling of revenues compared to the last year same quarter. So these 4 -- about 4 business segments within HPPC has seen the growth, driving this to the 31% growth that we are seeing. And most of it is all volume growth.
Got it. But within these, which are the segments which is growing above average of HPPC, it is -- volume is growing faster? I can understand there's a low base as far as the performance, a little bit concerned, but from an absolute growth perspective, which segment is driving a higher incremental revenue for us?
So I think the -- if you see it in terms of percentage, I think our institutional chemical business has grown the fastest followed by the surfactants, non-agro. Non-agro specialty surfactants have really picked up a lot. I think that was evident even in the last quarter and we were almost peaked in our capacities for -- in non-agro surfactants. So that's what going to drive the growth. And we are seeing that growth coming from the ethoxylate. That's why we expand.
Sanjesh ji, chemistry is ethoxylates, which has grown very, very well. So that is why the expansion both at Tristar and Unitop. Practically, we are using 100% capacity in ethoxylation.
So when we say specialty surfactants or non-agro surfactants, what exactly the product are we talking? Is this the [ anti-redeposition ] are we talking about?
No, surfactant is going to home care, personal care. So there could be a different kind of surfactants, which are like alcohol surfactants, castor oil surfactants and there would be phenol surfactants...
The application we talking here, is it home and personal care, we talking here?
Yes. The home and personal care, coatings, inks, agro, paints, so all these are the areas where they have grown.
So no, no, sir. Can you help us understand more the specialty surfactant. In HPPC category, it's the private label where probably we were using a lot of surfactants, and then I can understand paints where we were trying to expand in the performance. Apart from this, where exactly the surfactant -- is these 2 the key areas? Because I think rest of the application was largely driven by acrylic polymer, right?
There are a lot of customers in private label who could -- were not our customers then has become our customers now. So these are various industries, which ethoxylates our teams have been able to cross-sell and get more volumes for the ethoxylates. If you remember during the IPO, ethoxylation was supposed to be put up in Rossari, and then we got the acquisition done, and then we did not put up. So -- and we were already using a lot of ethoxylates in-house for which we are all consuming now.
Exports also Sanjesh ji has done quite well, as exports is now nearly 23%, which is the highest ever in our history. And this is in spite of prices going down -- finished goods prices going down because of raw material pricing. And export again, one segment was in the U.S. market, was food processing. We had surfactants for food processing, we did well. But also, I think home, personal care and agro would be top.
No, I'm still not able to get what exactly is specialty surfactant, and what is driving that growth, but I will take that off-line with you, sir. Second, on the Unitop and Tristar, can you help us what was the growth in this quarter for Unitop and Tristar?
So this quarter, Unitop Y-o-Y was almost 25% growth. Tristar was about 5% growth year-on-year.
But we said that [indiscernible] is doing well. It's -- because of the pricing decline, the growth is lower in Tristar.
Yes, the volumes have gone up, but there are pricing pressures. And of course, as I said, there is a capacity constraint also. Last quarter -- and we've completely utilized capacity. Now also the capacities are completely utilized. So there is a little bit of stagnation in terms of growth. So a lot of the -- some of the products, we are now shifting into Unitop facilities to manufacture. That's why Unitop is seeing almost 20%, 25% kind of growth. While prices are being a smaller ethoxylate capacity, it's almost full now.
So what is the capacity utilization for us in the ethoxylation? Are we completely run out of the capacity in ethoxylates?
Yes. This last -- this quarter and the last quarter, we have almost used -- last year quarter, of course, we were 90% plus utilization. This quarter, we are at about 85% plus utilization.
Sanjesh ji also in Tristar, phenol is a key raw material for phenoxy series and all other than ethylene oxide. Phenol prices have come to all-time low. [Foreign Language], but volume it has been doing well.
No, that's good. So when is our next ethoxylation facility is going to come? Else, we would be capped in terms of growth because of ethoxylates not having the capacity? So when is the ethoxylation plant is expected to commission?
Yes. For ethoxylation facility, we are going into stages. For the first, I think in the next 5 months, we should have the first ramp up happening now. We are also adding the distillation capacity for Tristar. So that also should take in 4, 5 months.
So the next ethoxylation capacity is coming in 5 months and how much is that capacity?
20,000 tonnes.
On the base of what? What is the current capacity for ethoxylation?
About 36,000 tonnes.
So we'll be expanding close to or probably more than 50%.
Yes.
Got it. Next one sir, overall capacity utilization, where will it be today for us at the Dahej facility?
Sorry?
What will be our capacity utilization at Dahej?
Dahej currently on the ethoxylation side at Unitop, we are completely utilized. In our facility, we would be above 55% to 60% utilization because some of the formulation capacity, we still have headroom to work on that.
And Sanjesh ji, I want to add here, October, we were the highest ethylene oxide consumer for Reliance in India, which is a proud moment -- proud month for us.
Great sir. Congratulations on that. I thought the Rossari last quarter itself, we were at what 55%, 60%. And this quarter, it seems that we have grown volume significantly. The utilization sequentially is -- the volumes have not grown so much. Is that the right understanding?
Yes, because if you see a lot of, as I said, the growth, that has come, has come from specialty surfactants, phenoxy series. So these -- in these -- the capacities are more utilized at the Unitop facility and at Tristar.
Sanjesh ji growth also has come from the institutional hygiene, cleaning and disinfection sites. This is growing at the Buzil Rossari business, which is growing at a very good speed too.
Sorry, sir, I have a request to Ketan sir as well. We would appreciate if you can give a little bit more detail on the HPPC side on, say, performance chemical, agrochemical, specialty surfactant that will really help us understand the business better because for us now to visualize this HPPC growth has become slightly more complicated because there are so many businesses within the HPPC, right? for us to really appreciate that performance, I would really request for you to re-look at the disclosure and if you can get a little bit more granularity in HPPC, I think we would really appreciate that.
So we will look at it. We actually want the businesses to reach a certain size and then probably we would be able to give more granular, but I point well taken. I think we are reaching quite significantly. And we will look in to Sanjesh, that's a point well taken.
The next question is from the line of Aditya Chheda from InCred Asset Management.
Congrats on a good set of numbers. My first question is on the gross margins. We've improved sequentially. Do you think there is an element of positive surprise, which is still possible on gross margins going ahead?
So I think this quarter, we should be similar in terms of the performance. We should be able to maintain the [indiscernible].
Got it. Next was on growth, excluding of CapEx. So you have highlighted that over the next 5 months, and then there will be CapEx, which will come up in a phased manner. But growth ex of CapEx, so you mentioned the plant is operating at 60% utilization. So would you want to sort of reiterate what sort of growth number you are anticipating for the next financial year on the top line?
So exponentially, we said that we should do a mid-teen kind of growth. So we are aiming at 15% kind of growth on the top line.
Sure. And for your CapEx, you mentioned that you will take some debt. So can you share some guidance on what kind of debt and interest costs you're looking for going forward? What will be the mix of debt and internal accruals within the number you shared for CapEx?
Yes. So we are still working with the banks, but we will do for debt that should be about 70 -- 30, 75, 25, that's the kind of mix we are looking at for debt.
We have the next question from the line of Archit Joshi from B&K Securities.
Sir a bit inquisitive on some of the newer projects or newer product launches that you are speaking of earlier. Again, a part of disclosures, maybe even qualitatively, could you categorically kind of mention what is the kind of potential of those industries you are targeting and maybe biosurfactants or the silicone that you spoke of or the water treatment chemical initiatives that you are taking?
And is there a potential synergies from existing customers? What is the profiling on that front? What is the kind of value addition we can do? So some qualitative information so that we can understand a bit better on the growth journey that we are depending upon, so that would be really helpful.
So like I explained or I narrated some of these products that we have planning to introduce, some are at pilot stage and some are already introduced kind of products. So just to give you an example of biosurfactant, which you mentioned. So biosurfactant market potential is in different industries.
At the current moment, we are targeting the agro business -- we'll be targeting the agro business. And also, we will be targeting our own textile business because in textile, there is a good big need for -- from the ESG point of view for the carbon -- of carbon footprint as well as the biodegradability.
So at the current moment, in the biosurfactant, we stand at about 3 tonnes per month, and we plan to expand it at least 10x. So that is the plan. and that's the CapEx that we are planning to introduce -- utilize. If I look at the silicone surfactant, that has primarily been forced on the agro market at the current moment, and we are tripling that capacity basically. So we feel that there is a good potential -- more than 1,000 tonne per annum potential in the silicone surfactant market for agro. So we aim to take a share from that market.
And in addition, we are already ready with products for the other industries. In the silicone surfactant, you just change the molecular weight or you change the ethoxylation and you get products for different other industries. So those industries are cosmetics, the textiles. They will be -- they will go in coating, et cetera, et cetera.
Interestingly, also, CAPB and CDEA are 2 big products that we are aiming at, where the quality of the product is very important for the home and personal care industry, especially the color of the product and the smell of the product.
So our R&D has done a great job, and we have cracked that issue. And I think this product can also give us 1,000 tonne plus sale in this year itself. The other esters that I'm talking about, which are the sorbitan esters. These, we were actually buying from outside, and they were used for captive consumption in our agro industry. Now that we successfully done manufactured this at Rossari, we will go for a 10x increase in these esters, which we will stop buying from outside and start producing in-house.
Similarly, ester quats, they are called as softeners, which go into laundry, and they're going to commercial laundry - sorry, commercial as well as retail laundry, mainly into retail laundry, which is a large product for us, and it's a great candidate for export.
So this product also is targeted. We have targeted many countries with the ester quats for -- as a softener in retail products. So likewise, there are a number of projects, one of them is phenoxypropanol.
So the -- at the present moment, we do large quantities of phenoxyethanol, and we have started -- started hitting the market with phenoxypropanol because we have the propoxylation facility at Unitop, and now we've already put up the propoxylation facility at Tristar. So this product will also -- it's a next-generation antimicrobial, which is used in personal care. So that product will also go in a big way in the future. So -- I mean, these are some of the examples.
Another big example could be the PEG powders. PEG powder that is polythene that was powdered. The target -- we will be targeting these products for the pharma industry. There is a high CapEx that we plan for that. And maybe 6 months down the line, we'll be ready with these products -- with this product -- the PEG powder. The PEG, we already manufacture both in liquid as well as in flake form. But in powder form, this will be the first time that we'll attempt it, and it requires some special machinery for the same.
So I hope that answers, in short, qualitatively, exactly what we're trying to do.
Sir, definitely. I'll probably have some pointed questions, maybe I can take them offline. But another question that I had, while you were speaking of ethoxylation as a chemistry and the kind of significance that it holds for us. I just wanted to understand the number of products that we manufacture, what is the extent of value addition we do given that ethylene oxide is something that we buy close to between $1, $1.5 per kg and -- because we are a host to multiple products towards multiple industries. As an application area, I do understand that this treatment basically makes other chemicals a bit more -- a bit lesser in terms of their harshness.
But in the value chain, what exactly do we do from ethylene oxide from -- on $1, $1.5 kg of raw material? What is the extent to which we have our offerings in terms of our product profile? If you can explain a bit from the chemistry angle also and a bit more on the commercial aspect also.
So as you know, that ethylene oxide is 1 of the components for [indiscernible] , which could be various different alcohols or fatty assays, et cetera. Now the most common ethylene oxide surfactants are made from alcohol. And they are actually from very commodity alcohol, like lauryl alcohol or tridecyl alcohol. So that is what most people do.
But when we use these products in formulations, then we use special alcohols. We don't use the same commodity alcohols there. And that actually adds at least 20% to 30% in value. To give you an example would be -- instead of lauryl alcohol you do ethoxylation with a secondary alcohol or you do ethoxylation with [ dodecyl ] alcohol. So there are different types of alcohol, different types of brands alcohols, different types of secondary alcohols as well as other alcohols, which I cannot discuss here. That is 1 part of it.
And the other part of it because Unitop has the facility for both ethoxylation and propoxylation, then we make some special products where the hydrophobic ethoxylated as well as propoxylated.
And when you do an ethoxylation and proproxylation then the properties of the surfactants are enhanced tremendously. And the cost or rather the value addition is also excellent. Apart from doing only ethoxylation and proproxylation, we do [indiscernible] after the ethoxylation is produced. Again, that adds 20%, 30% to the value. Then we do sulfonation.
We do -- we make the product [ capped ] alcohol. And we also have -- sorry, [ capped ] ethoxylate. And we also have EO/PO block copolymer. So we could have an EO/PO block copolymer or we could have a EO/PO/EO block copolymer. So these are all the special surfactants that are produced here, which go for -- as adjuvants in agro, in textiles, in paper, in coating as well as in paper, cosmetics, et cetera. So that's where the value addition comes from.
The run of the mill products, ethoxylates, most ethoxylaters make. But all these different kinds of additions is what we are doing. One of the latest 1 is, as I said, silicone surfactant, which very few people do because the reaction is quite a tough reaction, and it contains [indiscernible], which is also a very controlled kind of reaction. So therefore, after we do the silicone surfactant, we also do -- at the present moment, we do silicone blocks but we can now produce the silicone epoxies because we have the EO/PO facility with us.
So there are various things that we are working on, various things we have already introduced into the market and various things that we are using in-house for agro as well as textiles. So it's not that we just make the simple ethoxylate and sell. It took some time. It took a year or 2 before we could use the facility properly. And now we are poised to do a proper value addition, and that's where you see the growth coming from.
Right, sir. Just to sum it up, with the run of the mill kind of ethoxylates that you spoke of, if I -- even if I sort of discard that from our -- not discard just for the sake of calculation I meant, we can add close to 30-odd percent of value. So if you are buying, let's say, ethylene oxide at $1.50, maybe we can we can sell the final product at close to $2, maybe $2.2 or something.
Absolutely, you're right.
The next question is from the line of Ranvir Singh from Nuvama.
On margin side, our subsequent quarter gross margin, we are likely to maintain. Any comment on EBITDA margin? And in the opening remarks, you mentioned that profitability will improve. So that I wanted to understand what is the sustainable level of EBITDA margin and where actually this improvement will come from?
So this year, I think we should -- the Q4, we should be at similar levels in terms of the EBITDA margins what we reported in the quarter 3. Going forward, I think we should see the EBITDA margins to be anyway between 13.67 to 14.12. So around that range. The growth, as I said, in the revenue will be about mid-teens. We expect the EBITDA also to -- the absolute EBITDA also grow by around the same number as the top line.
Okay. And secondly, sir, we have been talking about new chemical -- new vertical of chemistry. So is it silicone -- silicone may be one, but can you give more about the new vertical, what we are talking about, considering next 2, 3 years down the line?
I don't think we've spoken of any new verticals. These are the 4 chemistries that we work on. I think we will stick to those. And within those 4 chemistries, we may keep adding new products and new molecules, but our core chemistry and the 4 areas, which is ingrained in our understanding, we'll be sticking to that.
Okay. So this is within 4 verticals, the new products will be introduced. And last one, on CapEx side, INR 50 crores CapEx, which was at Rossari that is fully spent now...
No, none of CapEx has been fully spent. All of them are work in progress. They will come on stream in a phased manner over the next -- over this year.
Okay. So how much has been spent so far on Rossari?
We've just started. We announced it in the last quarter. Just the initial work that has started -- the project work has started. Some advances have been paid. So it's not very significant to currently talk about. We'll have the major spend now happening in this quarter and the quarter 1.
Okay. And what kind of asset turn we are looking at both at Unitop and Rossari for the new CapEx?
Asset turn will be in line with our current. So we will be at between 4 to 5 depending on the molecule, but average will be around 4 to 5.
The next question is from the line of Rohit Nagraj from Centrum Broking Limited.
And congrats on a good set of numbers. So first question is on the export front. So you mentioned that exports are about 23%. I hope it's for the first 9 months. If you can just give us what could be the breakup of the exports in terms of HPPC, TSC and AHN? And over the next maybe 3 to 4 years, how do we look at the exports opportunity from, say, 23% to maybe 30%, 35%, 40%? And which are the segments which will drive those exports?
We talked about the breakup of exports. I think it's quite evenly spread amongst all the 3 verticals, but it's about 23%, 24% in HPPC. Textile is about 16%, 17%. And AHN is also about 20%. So that's how in the 9 months -- of its turn around. So that's how the average comes to about 23%.
Right, right. And how do we look at the overall exports in terms of maybe 3 to 5 years come 23%? And which in all segments that will drive this growth?
We believe that the export turnover should grow by a higher percentage than the domestic turnover. So if we are talking about the total turnover of 10% to 12%, then exports should go at 12% to 14% and domestic should go at 10%. That is what is our forecast in that, Rohit.
Sure. The second question is in terms of any write-offs that we have taken during the last 9 months. The reason for asking the question is that on TSC front, we have multiple numbers of SKUs even in HPPC. And since the demand has been a lackluster, there could be expiry for those products, which are more than 2 years, 2.5 years. So any write-offs that we have taken during the first 9 months? And any write-offs that we may expect in this quarter or in the near future?
Rohit ji, there is no write-off on -- with respect to expiry of goods. Even in textile, our volumes have been intact. The raw material prices have fallen and the good prices have fallen. We do not have a slackening of demand in textile compared to previous quarters. We remain steady. And we emphasize again, there is no write-off on expiry. This is not the case normally in specialty chemicals. It will be in pharma, but not in specialty chemicals.
The next question is from the line of Ajay Surya from Niveshaay.
Congrats on a good set of numbers. My question is regarding...
Sorry to interrupt, your line is not very clear. I request you to please use the handset.
Is it better now?
Slightly better, sir, please go ahead.
So sir, we have struggled with our textile division performance. So can you just throw some light on to what has been the challenges that we are facing? Is it the imports that are rising or is it the domestic competition that has been played its part? Maybe you can just throw some light on that. Is it just the demand or the imports or the domestic competition?
Textile chemicals, we don't see any big imports coming into India. The demand is not so strong. What had happened is in COVID, there was a big demand because American consumers have given extra money by the government. And the focus was on hygiene and hence, there was a lot of disposable taking place every month.
And they were buying a lot of towels and bed sheets and linens. Now that has slackened off. And because of supply chain, '21 -- in the year '21, '22, there was few overstocking. And this overstocking is now gradually coming online. We see some demand flattening and that is why the outlook is not very, very bullish, but our aggression maintains our volumes. In exports, we feel it could grow, especially in Bangladesh and other areas.
So sir, you mean to say that in the textile chemicals, imports is not a major portion. Is that correct?
Yes. I reiterate there is no big textile chemicals imports coming in.
Sir, my next question is again on the textile chemicals. So sir, if I look at the textile chemicals value chain between pretreatment, dying or even the finishing chemicals? Sir, where is Rossari dominantly present? Is it more on the pretreatment side? Or is it on the finishing chemical side?
And if you can just also provide information on what sort of realization and margin difference do we see across each of them? Like would a pretreatment be anywhere between 10%, 12% kind of margin or like even better? Or in the finishing chemicals, what sort of margins can we gather from the market?
Traditionally, for us, finishing has been the strongest area because we are backward integrated into silicone raw materials because we manufacture the silicone fluids, the silicone blocks ourselves. We have traditionally focused. But now with the coming of Unitop, where we manufacture only ethoxylates, this year, it has been the focus to grow also the pretreatment and the dying segment. We do not calculate margins segment-wise, but we feel there would be evenly -- the same gross margins would be there across all the subsegments in textiles as well.
Got that. And sir, my last question is like, are we expanding on the textile chemical front? And how is the U.K. FDA going to benefit the overall textile chemical market. This is the last question on this?
See, in the textile market, like in the opening question, I replied that we are refocusing on these few areas. One of them is spin finishes. The spin finishes are products which go into the textile before it is spun into a yarn or after it is -- before it is spun into a fabric or woven into a fabric. Similarly, we have taken up development of lubricants, both for yarn as well as threats. When I mean lubricants means these are silicone plus wax lubricates. These are special products, which require high value equipment. We have earmarked some CapEx for this equipment in this year. Pilot batches have been successful. And I think in the next 3 to 4 months, this product line should be launched in the country.
Apart from this, we've also introduced the full quoting range for technical textiles. So in technical textiles, you require a lot of different kinds of acrylic coating, soft-coating, medium-hard coating or hard coating for various applications in technical textiles, geotextiles, et cetera. So this coating, with our expertise in acrylic chemistry, we've launched this product range.
One new idea that we are trying to get into the textile is waterless dye that means using less water for dying, looking at the ESG and environment. So we've been trying to focus on this concept. And finally, as I said, RENEWA -- that's -- RENEWA is for renewable energy. So we are focusing on processing sequence or a processing method to process towel or terry towel specifically with a completely green chemistry that means from the pretreatment, which will not be with surfactants, but it will be with enzymes, which we call as bioscouring and desizing. Then we will be using sequestrants, which are bio-sequestrants. Apart from that, we will be using biosurfactants for vetting and scouring in all these operations.
The softer will be based on -- I mean a carbon -- biocarbon which is greater than 25% as well as with very low cyclic -- I mean D4 and D5 so that's siloxanes. And we're also going to use vegetable oil softeners for this process. So textiles to focus -- very strong focus on textile. And the ester quat that we launched that is not from animal origin, it is from vegetable origin. And this can be a large product for Rossari, not only in India, in the retail market, but also worldwide. We've got very good success in some countries. And we are pushing hard with the ester quat, which is a vegetable based.
The next question is from the line of Parth Mehta from Vallum Capital.
First of all, congratulations on good set of numbers. So I just have 1 question on the utilization. So what would be our total utilization all capacities included?
Localization in the sense. Utilization?
Capacity utilization.
Sorry, I'm not clear...
All capacity utilization.
Overall -- as we said, our overall ethoxylation capacities are completely utilized now. So last quarter, we were at 90...
Ethoxylation would be -- what would be the -- in terms of tonnage, what would be the capacity of ethoxylation?
It's 36,000 tonnes.
Okay. And the balance -- so what I wanted to know in terms of Unitop and Tristar and the Dahej [indiscernible].
Can you come back again. Your voice is not clear.
Sorry, your voice is breaking up -- yes.
Yes, I wanted to know on a total capacity of [indiscernible] what will be our utilization? Or if you can help me with volume numbers, either of it would be fine?
So on the overall capacity utilization, as I said, is about 55-odd percent. But capacity consists of formulation capacity, ethoxylation capacity. So the ethoxylation capacities are fully utilized. Formulation capacities, generally will always be in the range of 60% to 70% kind of utilization. They will never go beyond that. And then there are some reaction capacities also, which are there.
Okay. So right now, on a total basis, we will be around 50% to 60%. And how much -- what would be the peak utilization as you can go on total business?
As I said, ethoxylation, we are fully utilized. Formulation, we can go up to 60% to 70%. So if you take an average, we will -- our max utilization would come to about 65%, 70% at a peak level.
Okay. Peak level would be 60%. Then we were almost near to our peak.
Yes.
Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Okay. Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about our company, please feel free to contact our team or CDR India. Thank you once again for taking the time to join us on this call, and have a great day.
Thank you. On behalf of Rossari Biotech Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.