Sukhjit Starch and Chemicals Ltd

NSE:SUKHJITS

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to The Sukhjit Starch & Chemicals Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aman Setia. Thank you, and over to you, sir.

[Aman Setia, executive]

Good morning, ladies and gentlemen. I am Aman Setia, Vice President, Finance and Company Secretary at The Sukhjit Starch. On behalf of The Sukhjit Group, I would like to extend a warm welcome to all of you for joining us for today's call to discuss our Q1 FY '25 results. We truly value our ongoing support and commitment. We want to assure all of our current and prospective investors that we are dedicated not only to achieve strong operational and financial performance, but also to uphold the high standards of transparency and best practices. I trust, you have reviewed our Q1 FY '25 financial results which are available on the stock exchange as well as on our website.

Today, joining with us from the management team is Mr. Bhavdeep Sardana, the Senior VP and CEO; and Mr. Rakesh Chawla, our new CFO. Mr. Chawla is a senior qualified Chartered Accountant and has been an integral part of our company since 1997. He is a profound professional, having over 30 years of experience in industry, handling varied management functions ranging from finance, commercial to production and HRD. He has successfully handled the commissioning of the new projects of the company and successful operations thereof. He has experience of heading units of the company as profit centers and has been involved in the strategic planning for future growth of the company. Regarding our Q1 FY '25 performance, there are some key highlights. Our revenue from operations stood at INR 389 crores, EBITDA at INR 32 crores, profit before tax at INR 18.21 crores and profit after tax at INR 13.61 crores. For a more detailed overview of our financial performance, I now hand over the call to Mr. Rakesh Chawla.

[Rakesh Chawla, executive]

Thank you, Aman-ji. Good morning, everyone. Operator, am I audible? Thank you. I am pleased to welcome all of our stakeholders to today's call. With over 27 years of service at the company, I'm both honored and excited to continue in my role as CFO. So let me provide a detailed overview of our financial performance for Q1 FY '25. Our revenue from operations stood at INR 389.83 crores reflecting a substantial 21% growth year-on-year. Driven by increased sales volume, this strong revenue growth underscores our ability to capitalize on market opportunities effectively. Our EBITDA stood at INR 31.5 crores, demonstrating a notable increase of 9% year-over-year. Our EBITDA margin stood at 8.07%. This improvement highlights our ongoing efforts to enhance operational efficiency and cost management.

Net profit for the quarter reached INR 13.61 crores with a rise from INR 13.04 crores reported in Q1 FY '24. This represents a 4.4% year-on-year increase showcasing our robust financial health and effective strategic initiatives. In addition, we are thrilled to announce our current expansion project is progressing as scheduled and the results of partial commissioning should start coming in from Q3, strategically positioning us for future growth. Further additionally, we plan to expand our production capacity by 1,000 tonnes over the next 3 years. This expansion will elevate our total production capacity to 3,000 tonnes per day. This strategic move is designed to boost our production capabilities and position us to capture emerging opportunities in the market. The increased capacity will enable us to meet growing demand and drive future growth. Now I hand over to Mr. Bhavdeep Sardana, our CEO, to give a brief about the company. Thank you.

[Bhavdeep Sardana, executive]

Thank you, Mr. Chawla. Ladies and gentlemen, I'm pleased to share that for this quarter, as mentioned, our revenue from operations increased from -- to INR 389.83 crores, reflecting a 21% increase from the same quarter in the previous year. This significant growth is driven by enhanced sales volumes and underscores the effectiveness of our strategic initiatives and operational strategies.

Looking ahead, we are optimistic about continuing this positive trend. Our outlook remains strong, supported by robust demand across key sectors such as packaging, FMCG pharmaceuticals. Additionally, we are witnessing a resurgence in rural demand and promising growth in the paper and textile industries. These factors contribute to our confidence in further revenue and volume improvements. The Indian starch industry is poised for substantial growth driven by several factors. The increasing demand in the food and beverage sector, the expansion of the pharmaceutical industry, growth in the textile sector are key drivers. Currently, per capita starch consumption [Technical Difficulty].

[Operator]

Sorry to interrupt you, but sir, your voice is not audible. Ladies and gentlemen, the number for the management seems to be disconnected. Please hold while we reconnect. Ladies and gentlemen, thank you for patiently holding. The management with us. Thank you, sir. Please go ahead.

[Bhavdeep Sardana, executive]

Thank you. I apologize for the connectivity issue. So as I was mentioning, there has been a 21% increase in our revenue growth from the same quarter in the previous year. Going ahead, we are optimistic about continuing this positive trend. Our outlook remains strong, supported by robust demand across key sectors such as packaging, FMCG and pharma.

We are witnessing a resurgence in rural demand as alluded to by the FMCG majors and promising growth in the paper and textile sectors as well. The Indian starch industry is poised for good growth driven by several factors. The increasing demand in the food and beverage sector, the expansion of the pharmaceutical industry, growth in textile sectors should be key drivers in the future. Currently, per capita starch consumption in India is lower compared to developing nations or developed nations such as China, highlighting significant growth potential within India. Moreover, market is influenced by import export dynamics with exports playing a crucial role in driving market expansion and profitability.

In conclusion, we are confident in the promising trajectory and future prospects of our company, our dedication to long-term value creation, strategic initiatives and disciplined financial management positions us for -- well for continued growth. With a strong foundation and forward-looking strategy, we are exceptionally positioned to seize emerging opportunities and drive sustainable growth in the coming years. Our commitment to innovation, quality and customer satisfaction remains at the core of our success, ensuring we create lasting value for our stakeholders. We are confident that these initiatives will enable us to navigate the evolving market landscape and achieve our ambitions. Now I welcome questions from the participants.

[Operator]

[Operator Instructions] The first question is from the line of Bhavesh Chauhan from Aditya Birla Money.

[Bhavesh Chauhan, analyst]

Sir, I wanted to ask how -- what is the growth rate this industry, starch industry would be expecting in India?

[Bhavdeep Sardana, executive]

See, it is -- since the -- I can say that it is -- our industry has typically grown in the past at the rate of the GDP -- higher than the rate of the GDP. And going forward, I would assume that minimum GDP growth rate is there for the entire industry or for the verticals we service.

[Bhavesh Chauhan, analyst]

Okay. And sir, historically, we have seen that we have had 1, 2 good years and then 2 years of very single-digit growth. And then again, FY '22 and '23 were very good, again FY '24 was flattish. So sir, why is this pattern where we are not able to do consistent growth? And also one more question, what -- how much sales growth are we expecting in the next 2, 3 years?

[Bhavdeep Sardana, executive]

See, talking about past historical figures. We have been investing and then waiting for the -- our investment to bear fruit before we get into next expansion mode. That is typically how at Sukhjit, we expand our capacities. We are careful about leveraging, et cetera, et cetera. So part of the factor, what you're seeing the top line growth is because of that. FY '24 as compared to FY '23, there was a slight dip, but there was a volume growth, that was because maize prices softened in the -- in Q2 and remained subdued in Q3, till middle of Q3. By that time, the most of the year was nearly over. So that is the reason why the dip was there. For FY '25, we are looking at bare minimum 10% to 15% growth. And going forward with our expanded capacities coming in, we hope that run rate of between -- up to 10% may continue. But one must keep in mind that this is an agro produce, which is our raw material and our top line also will have an impact of the pricing of our raw material.

[Operator]

The next question is from the line of Deep Gandhi from Astute Investments.

[Deep Gandhi, analyst]

Sir, my first question is that you mentioned about some new environmental regulation [Technical Difficulty] if you can talk about that, what are those regulation? And are we seeing any planned shutdowns because of this in China, which can help the export growth?

[Bhavdeep Sardana, executive]

Sir, your first part of the question was not very audible. [Foreign Language]?

[Deep Gandhi, analyst]

Sir, I was mentioning if you can talk about this new environmental regulations, which you have mentioned in the press release for China. And are we seeing any planned shutdowns because of this in China?

[Bhavdeep Sardana, executive]

It is getting stringent, and we have said this in the past that globally, environmental regulations are stringent, and Indian regulators have had a stricter rules and regulations for process industries. And us large manufacturers have been compliant for decades now. So therefore, it is much easier for us to compete as far as ESG norms are concerned because we have been walking the talk for quite a bit now.

[Deep Gandhi, analyst]

Okay. Okay, sir. Sir, my next question is if you can talk about what was the percentage increase in the maize prices for the quarter? And are the finished product pricing also moving similar? Or is there some difference in the raw material pricing and finished product pricing as of now?

[Bhavdeep Sardana, executive]

See, I'll give you the absolute figures. Maize pricing is now hovering in parts of India between INR 25 to about INR 27 per kg. And this was INR 22 to INR 23 a kg going a quarter back. And as far as the lag between our finished good prices and raw material, it takes about 10 to 15 days to pass on, to start passing on effectively. And I think about 3 weeks for a total revision in finished good pricing, subject to -- because we also have certain contracts which are quarterly contracts or monthly contracts. So by and large, we are able to pass it on very effectively.

[Deep Gandhi, analyst]

Sure. And sir, last question before I join back the queue, what was the volume growth in FY '24 for the entire year? It's okay if you can't share the numbers, but just the percentage. And also similarly for Q1, what was the volume growth?

[Bhavdeep Sardana, executive]

I won't be able to share with you the volume growth numbers but -- for Q1, but I will say that in FY '24, we grew by more than 5% in overall volumes.

[Operator]

[Operator Instructions] The next question is from the line of Keshav Garg from Counter Cyclical PMS.

[Keshav Garg, analyst]

Sir, firstly, I'm trying to understand that, sir, what would be the total installed capacity of the domestic maize processing industry?

[Bhavdeep Sardana, executive]

See, it's very difficult to say what the total capacity of the domestic industry is because quite a few players are not listed, and they don't disclose their capacities. One could argue that maize processing is done for around 7 million to 8 million tonnes. Overall, some people say 5 million tonnes. So it's still very relative. The top few manufacturers who are listed, they probably disclose their capacities more. So I can't give you an accurate picture on that.

[Keshav Garg, analyst]

So sir, if we consider ballpark number, take if we have around 10% market share, then that means -- and our capacity is 1,600 TCD or TPD. Sir, so that makes the industry around 16,000 TPD. Then in that case, sir, we are adding 25% capacity this year, now the industry leader is also adding 25% capacity and so are the other smaller listed companies. Sir, so is the -- and you mentioned in your opening remarks that the maize processing industry is growing up by and large, the GDP number, which is, let's say, 10%. I mean, if it's more than the GDP. But sir, still there will be overcapacity. So -- and in that light, sir, where do you see the margins going?

[Bhavdeep Sardana, executive]

So I'll answer your question in 2 parts again. When we say that our market share is 10%, I say it with a disclaimer that it is based on, again, estimates of the listed player capacities whose data they share publicly. Now -- and I also said that if I tout in absolute numbers, I think the starch industry consumes anywhere between 5 million tonnes to about 8 million tonnes of maize per annum of India's total maize output. Now that's a huge variation. Now -- and when you say that if I'm expanding at, say, 25%, I'm -- and let's say, I'm only talking about maize grind, and I'm not talking about the product differentiation downstream, a, not everyone's production cycles come in line.

If you look at 8 million tonnes and you take a GDP growth rate of -- I think our industry has always grown higher than the GDP. Even if you take 1.5x GDP growth, I think if 5 players are expanding in the overall number with the demand growing that gets absorbed, with the export potential and some of our colleagues in the industry who are near the ports are exporting in a very big way. For us going forward, exports is an opportunity. So I don't see that much of a problem going forward. I hope I've been able to give you a gist and lay your concerns on the industry growth versus supply and demand mix.

[Keshav Garg, analyst]

Sir also, if we compare our numbers with the industry leader, we are doing on INR 390 crores revenue with INR 25 crore PBIT, whereas the industry leader did on INR 910 crores revenue, INR 92 crore PBIT. Basically, they are doing 10% margin. We are doing 6% margin. Sir, so why is differential?

[Bhavdeep Sardana, executive]

So again, this is something which we aspire to. This is something which we are looking at. We are, I'm not saying following the leader, but we hope to imbibe the best practices of a large capacity at single location. We have 4 manufacturing units where we are not spreading them well enough and those units have that much more potential to grow. And if we grow our units or create a greenfield capacity of a large major, our costs, et cetera, et cetera, would come down. And that would, of course, give us a better margin. I hope I've been able to answer that.

[Keshav Garg, analyst]

Right. Sir, so basically now if we look at our margin, now we, in the past, we used to do around 12% margin. We have even done 14%, but now it has reduced to 8%. Sir, so now going forward, when do you foresee margins again at least coming to double digits?

[Bhavdeep Sardana, executive]

See, it can happen with larger capacities. If you again talk about -- you mentioned the industry leader twice. So once we increase capacities, we'll at least go where their margins are and achieve better efficiencies of scale, plus if -- there are other factors as well. It's always timing and creating more capacities in certain value-added products, so -- which we are working on.

[Keshav Garg, analyst]

Sir, so basically, sir, if we see the industry leader as well as Sukhjit, sir, the margins when they were 14% in FY '22, so were the corn prices up or down? Basically, I'm trying to understand when the corn prices go up, do we have an inventory gain and that is why our margins went to 14% or thereabouts, or when the corn prices fall dramatically then...?

[Bhavdeep Sardana, executive]

See, I can -- what I will say is when we cover raw material coverage, it's -- for that point in time, it's for those factors at that time. Now of course, there can be raw material-led gain which gives us better margins. We have good coverage this year. And if the maize pricing continues to remain bullish on account of higher ethanol and if there is a disruption in the supply chain of maize, naturally, we will stand to gain, but there's lots of ifs and buts, kharif crop has been sown, monsoon data looks good. So whether there is stability or this thing. So again, all these factors determine if there is a higher than normal profit or you have a normal run rate. Our efforts are to ensure that we don't fall below a set norm or a set standard and there is the gap between us and, let's say, the someone with a more efficient plant, that benchmarking gap doesn't fall, which I think as a company, we are doing pretty well. And we've done well and our intent, I think, going forward with our new expansions, which we are fulfilling that we will start to see both top line growth and finger crossed, bottom line growth as well.

[Keshav Garg, analyst]

Sir, so basically, what I understood is that high maize as prices are good for us. Is that understanding correct?

[Bhavdeep Sardana, executive]

Yes. If I have covered it cheap and maize prices go up, I'm able to pass on to try to get finished good pricing based on the market price. So everyone tries to do that, but you've got to time it every time. So it's not that you will get it. You need to have stock, you need to have read the market. You need to have taken a call at the right time.

[Keshav Garg, analyst]

Sir, and also since in India, GM maize is not allowed, whereas in Western countries it's allowed. So basically, then how over the long term, I don't think exports will be competitive from India because I mean, if your raw material only is expensive, then I mean, obviously, exports will not be competitive. So that being the case I mean, how do you foresee -- I mean I -- my fear is that forget about exports, we should not start importing. I mean, if import start becoming -- coming at a cheaper rate because of GM corn abroad, because in any case, they are -- this industry is like not edible. I mean this is like for the textile paper, et cetera, nonedible usage.

[Bhavdeep Sardana, executive]

No, I'd like to correct you there, Mr. Garg. I'd like to correct you there. A lot of the food companies, which we service in India take a disclaimer from us that we are supplying material made from non-GM corn. So there is a demand for it. While the concerns for GM or non-GM for textile may not be there, it is definitely there for food and pharma. So while that is one can say a higher cost having non-GM, but countries like Argentina and Ukraine and our neighboring Burma produced non-GM corn and those are the corns which have come into India -- maize, which has come into India, if there has been a supply constraint in the domestic markets of that point in time. Right now also, those opportunities are available. But as far as exporting our product is concerned in the domestic markets, the kind of freight incident to say, export from say, China to Middle East or China to Africa or from our Western Coast to Africa I think now India will remain competitive.

And we have remained competitive even though maize pricing was higher last year, whereas the U.S. corn was lower and U.S. corn landed in China or parts of Southeast Asia or other starch producing economies was high and then the resultant starch from there landing in the consumption centers in this typical starch consuming markets. That also did not have that much of an effect on the Indian starch export. So I think there is room for us to grow. And with the Indian maize supply increasing where the government itself is giving subsidies to ensure maize acreage increase, and I believe the government of India's target is to -- and I'm told by the Indian Council of Agricultural Research that from the present base of 35 million tonnes, they are looking to increase to 70 million tonnes. So I think the future for the raw material and sustainability of our raw material supply chain looks very good.

[Keshav Garg, analyst]

Sir, and lastly, sir, please tell us about the infrastructure division that, sir, is this INR 16 crores or INR 17 crores that we made revenue, is this the rent that we are getting from the Infrastructure division? Or what exactly is this and how is it expected to go going forward? And what kind of CapEx we are thinking of doing over here?

[Bhavdeep Sardana, executive]

See, right now, we're not doing any CapEx on that. So the kind of money which has come in has been a mixture of services provided to the anchor unit and others. It has been certain for running our cold chain infrastructure. Going forward, we hope to increase and we are only -- we still have some infrastructure, yet not fully utilized, which will, once upon utilization, give us a better return and hope to add to our bottom line.

[Operator]

[Operator Instructions] The next question is from the line of [ Aditya from Securities Investment Management ].

[Unknown Analyst]

Sir, we are seeing maize prices increasing quarter-on-quarter. So have you also increased the finished product prices?

[Bhavdeep Sardana, executive]

Yes, we are. We pass on the price increase to the customer if our raw material prices go up.

[Unknown Analyst]

Sir, ideally the margin should improve from next quarter onwards?

[Bhavdeep Sardana, executive]

We are hopeful that we gain in terms of margins, but as they say, a lot can happen between what we expect and what reality happens. So with the disruption, sometimes politically surrounding et cetera, if there's a demand disruption, then that troubles us.

[Unknown Analyst]

Understood, sir. Sir, in the previous quarter, we had mentioned that there were some high-value products, which are seeing lower demand. Sir, if you could just elaborate which were these high-value products and where do these go? And has the demand come back for these products?

[Bhavdeep Sardana, executive]

Yes, you can see from the commentary of not our company, but our clients or clients in the category of Nestle, Dabur, ITC and everyone's talking about rural demand increase. So as the rural spend increases and now the government making all the right noises, the central government that is making the right noises and all state governments trying to increase farmer income, it bodes well for companies such as us because we supply into companies which touch the lives of everyone even in the rural areas. So looking forward to that, and we hope that a renewed demand of our value-add products, whether which goes into recreational choices such as chocolates and say beverages or even oral health care higher and toothpaste, et cetera, et cetera, we hope to see a better demand.

[Unknown Analyst]

Understood, sir. And sir, the next question was on the maize prices. So I have been in this industry for so many years so generally, what we see that when the kharif crop comes in Feb and March, the maize prices tend to drop which we did not see this year. So if you could just elaborate, why was it? And was it majorly because of ethanol policy? If you could just elaborate on that.

[Bhavdeep Sardana, executive]

So rabi crop has just gotten over. And rabi crop came in as expected, it opened lower and soon it dried up as soon as the demand got taken up, the prices started increasing. Kharif now is expected I would say, mid-October onwards. So I'm hopeful that the crop is in abundance. The reports which are coming in, the sowing areas under acreage in key states such as Madhya Pradesh, Maharashtra and Karnataka. Those states are showing an increased area and maize doesn't need that much water. So hopefully, the crop will come in and there will be kind of a stability. But yes, the base price has increased because of the ethanol industry, which you correctly picked up. So we are expecting INR 23 at the farm yard. And that would mean up to INR 25 or INR 26 or INR 24 depending on where you are located and where you're sourcing it for.

[Unknown Analyst]

Understood, sir. And sir, now you mentioned that maize production in India is around 35 million tonnes. So if you can just help us understand how much of it goes into poultry, how much of it goes into reuse and how much is being diverted now to ethanol?

[Bhavdeep Sardana, executive]

See, [ Aditya ], that's your name, right? Yes. So it's -- again, the poultry sector mentions in their -- through their association that they consume about 15 million tonnes to 20 million tonnes they have. They say they rely on certain other coarse grains as well. The ethanol industry, which was 0 about 3 years ago or 4 years ago, is now upwards of 2.5 million, 3 million tonnes. Starch industry is depending upon the data available it's an estimate between 5.5 million to 7.5 million tonnes. So -- and the balance goes into direct for food, whether it is student snacks or certain populations in the country eat maize flour on a daily basis.

So that's about it. India used to export about 2.5 million tonnes. That share got taken by ethanol, and I think that's been the only change as far as the consumption metrics is concerned. Going forward, the share of ethanol is going to increase, share of starch industry is going to increase, and poultry, of course, is also going to increase as we increase our income levels and we become a protein consuming nation. So all that's going to happen, whether it is through poultry feed or to cattle feed for dairy, et cetera.

[Unknown Analyst]

Understood. And so is there any import duty on import of maize...?

[Bhavdeep Sardana, executive]

Pardon?

[Unknown Analyst]

Is there an import duty on import of maize?

[Bhavdeep Sardana, executive]

So there is -- one can import it if -- import is not allowed, first of all. It is -- you can import it through government permissions for a specific quantity for a -- in a specified window in case there's a supply outage. One can't import maize just like that.

[Unknown Analyst]

Understood. Understood. And sir, in our press release, you mentioned that there are some environmental issues in China. But what I understand was this was pre-COVID, this used to happen in 2018 and '19, which -- due to which we became a net importer of starch. So is there any element in between new regulations, which have come in? Or these are old regulations only?

[Bhavdeep Sardana, executive]

What -- so this is -- this element which we want to emphasize is that our Indian starch industry and the top few manufacturers are more compliant and we've been compliant for the last many decades. That gives us the breadth of opportunity to set up plants and operate and comply with the ESG norms and survive and grow ecologically at any site to which the way that Chinese industry or when we say China or any other developed nation or a developing nation has challenges with this level. We have been that far ahead. So it's much easier for us.

[Unknown Analyst]

Understood, sir. And sir, we are planning to expand our capacity by 1,000 TPD. So if you can just elaborate what will be the CapEx cost and this will be in our existing location or we are looking for new greenfield only?

[Bhavdeep Sardana, executive]

So we are stuck in a happy place where we have the opportunity to expand our -- the opportunities to expand our own locations is very good, and we are also looking at greenfield locations. So decision on that will come out very soon. Maybe between 3 to 5 months, we should be able to come out with how we plan to expand and how much we plan to expand by whether it is in one shot or in phases. And the cost will depend on what model we decide. So -- but let's say, if I were to set up a stand-alone plant with a bare minimum number of products, it would be a CapEx of at least INR 125 crores to INR 150 crores bare minimum. It can go up to INR 200 crores, depending on the complexity of products which we set up.

[Unknown Analyst]

Understood, sir. And sir, just one last question. Now if I look at the history of our company, so we have stuck around that 1,000 TPD for around 7 to 8 years. But in the last 3, 4 years, you have doubled our capacity, and now we are looking to expand our capacity further. So just wanted to understand, has something changed in the industry that is making us bullish or there has something changed in the company where we are looking for more growth and increase our profits and revenue? So if you could just elaborate, is it industry or is it internally?

[Bhavdeep Sardana, executive]

So I think it's a multiple number of factors. Number one, obvious one is the compounding effect. When you are at 500, you become 700, 700, you want to become 1,000 so that our base has getting -- been getting stronger. So any expansion certainly looks bigger is because of that, number one. Number two, undoubtedly, the country has been growing in the last many decades, and we've been positioned and we've been working with our customers and our supply chain partners on the sales side. We've been working with them, listening to them and growing our capacities or product capacities incrementally. So -- and as far as the management is concerned, the management has consistently over the last many decades, wanted to grow and as and when we felt it was right without putting the company into any -- without taking any risk as far as leveraging was concerned, we've grown with that.

[Operator]

The next question comes from the line of [ Jayesh Shah from SKB Securities ].

[Unknown Analyst]

Am I audible?

[Bhavdeep Sardana, executive]

Yes. Yes, you are.

[Unknown Analyst]

So my first question is, what specific factors contributed more significantly to the 21% increase in revenue this quarter? And are there any particular products or markets that drove this growth?

[Bhavdeep Sardana, executive]

Yes. So like I mentioned that there's a resurgence in the rural demand. So we -- and all sectors which we supply to or we are associated with gave us a good opportunity for growth. And we were able to service them effectively. And I think it was a -- after a long period, it was a good quarter where every sector, there was demand.

[Unknown Analyst]

Okay. My second question would be, can you share more about company's long-term vision and how the current strategies are expected to impact its growth trajectory in the next 3 to 5 years?

[Bhavdeep Sardana, executive]

Pardon, can you repeat that, please?

[Unknown Analyst]

I'm saying can you share more about the company's long-term vision and how the current strategies are expected to impact its growth trajectory in the next 3 to 5 years?

[Bhavdeep Sardana, executive]

So I think as far as our growth is concerned, we are pretty much committed to expanding by 1,000 tonnes after we've completed our ongoing expansion. So that 1,000 tonnes, how it comes will get implemented in maximum about 2 years. We take -- we'll try and shorten that period. But if you look at our fiscal strength and how we are leveraged, our debt-to-equity ratio is if I look at long-term debt is just 0.15. So I think we are pretty good on that. And we will remain conservative. The company is generating enough cash. So we will use our internal accruals and, of course, take on debt as and when needed.

[Unknown Analyst]

Okay. My -- last question from my side would be, can you brief on which international markets we are planning to target for expansion? And what are the growth prospects and strategic considerations for these markets?

[Bhavdeep Sardana, executive]

See, the EMEA market and the world manufacturing in textiles, paper, food. So these markets are well developed as well and very open to receiving material from India. And a lot of our colleagues in the industry are anyway servicing those markets. We also -- and so let's say, in Malaysia and Indonesia are big in paper and paper is growing globally, and they have larger production bases. So we will try and make our mark in those markets as well as African market for food and beverage, which services Southern Europe or parts of the world.

[Operator]

The next question comes from the line of [ Sahil Bora from M&S Associates ].

[Unknown Analyst]

I just had a couple of questions. So my first question is with the ongoing growth in various sectors. When can we expect the capacity expansion to like address this demand?

[Bhavdeep Sardana, executive]

Sir, can you repeat that question, please?

[Unknown Analyst]

Yes. Am I audible?

[Bhavdeep Sardana, executive]

Yes. Can you just speak up a little bit louder?

[Unknown Analyst]

Okay, sure. Sir, with the ongoing growth in various sectors, when can we expect the capacity expansion to address this particular demand?

[Bhavdeep Sardana, executive]

See, we've -- this current expansion, which we've undertaken has been a mixture of value-add products, somewhere overall grinding capacity. So over the next 4 to 6 months, that will all come into line. And I think Q3 onwards, the results should start showing. And hopefully, that will give that positive intention to our margins.

[Unknown Analyst]

Okay. Got it. My follow-up would be, given the planned expansion and the increased capacity, how does the company plan to manage the associated capital expenditures and ensure the overall financial stability of the company?

[Bhavdeep Sardana, executive]

So I mentioned that to the previous caller as well, and I'll again say, so we are looking at a 1,000 tonnes expansion. We are not sure yet whether we will do it at a stand-alone new location or whether we will expand at our own plants. Once we decide what we are going to do, I mean, this is the -- we are spoiled for choice here. So we are in a lucky place that we can think like that because all our capacities, all our locations afford us to scale up our capacities. If you see our debt to equity, in particular, our long-term debt to equity ratio, we are at less than -- I think we were 0.17 last quarter. It should have gone lower or we will be lower than that. So -- and overall level, even with the short-term debt, we are at 0.6 level. So there's sufficient room for us to grow, but the company is generating and we are adding to our reserves and company has liquid investments. So we will do as much of internal accruals contribution and take on debt as and when needed, debt will be important. And -- but I think the same strategy, which we have followed over the last many decades will be followed going forward as well.

[Operator]

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

[Aman Setia, executive]

Thank you. I, on behalf of Sukhjit, would like to express my gratitude to all of you for joining us today and sparing your precious time for us. We hope to see you back in our next con call. If you still have any queries and questions, you may write to our Investor Relations Agency, Orient Capital to Mr. Bhavya Shah. Thank you, ladies and gentlemen, once again, have a good day.

[Operator]

On behalf of Sukhjit Starch & Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.