Can you hear me now?

Hello? Thank you.

Good evening, and a very warm welcome to all of you joining us for the Q2 and H1 FY '27 earnings call of Rossari Biotech Limited. We are pleased to have you on this call to discuss our operational and financial performance.

I am joined today by Mr. Sunil Chari, Promoter and Managing Director, and Mr.

Ketan Sablok, Group Chief Financial Officer, and the SGA team, our Investor Relations advisor. I hope you had the opportunity to go through our financial results and investor presentation, which are available on the stock exchanges as well as our company's website.

We concluded the first half of FY '27 on a very strong note. The Q2 FY '27 revenue grew by 19% year-on-year to ₹698 crore and EBITDA grew by 21% year-on-year to ₹87 crore, marking our highest ever quarterly revenue and EBITDA.

The growth was broad-based with all three of our business divisions contributing. The external environment during the quarter continued to remain dynamic.

Raw material prices stayed volatile, the ongoing geopolitical situation in the Middle East kept pressure on freight and logistics, and customers across several end-user industries remain cautious in their buying behavior. Despite these headwinds, we delivered a gross margin of 31.6% and EBITDA margin of 12.5% in Q2 FY '27.

Innovation remains central to our long-term strategy. Our new Rossari Global Research and Innovation Centre at Navi Mumbai is steadily ramping up and is helping us shorten the journey from idea to commercial scale.

Having launched over 70 new products in FY '26, our pipeline continues to strengthen with a sharper focus on intelligent, sustainable, and application-led chemistry, such as biosurfactants, personal care ingredients, pharma excipients, agro formulations, and solutions for the oil and gas industry. Looking ahead, our priorities for the remainder of FY '27 are clear: drive optimum utilization of the capacities we have built, accelerate the commercialization of new products, and further improve operational efficiency.

Supported by strong R&D capabilities and a healthy balance sheet, we remain confident of delivering sustainable and profitable growth in medium to long term. With this, I now invite Mr.

Sunil Chari to share his perspective on the business performance and our strategic priorities.

Thank you, Edward sir, and a warm namaste to everyone. The first half of financial year 2026-27 has been a period of steady execution for Rossari.

In each of the last two quarters, we have delivered revenue of close to ₹700 crores, compared with an average of around ₹565 crores per quarter in the first half of last year. We have achieved this scale up despite raw material volatility, geopolitical uncertainty, and a cautious demand environment, and it reflects the strength of our diversified portfolio, our long-standing customer relationships, and the focused execution by our team.

We remain committed to continuing discussion and engagement with our customers to deliver tailored solutions according to business requirements. During the first half of FY '27, HPPC, textile specialty chemicals, and animal health and nutrition grew by 24%, 24%, and 19% respectively.

This growth has been driven by a higher share of value-added products and by increasing our wallet share with customers across end-user industries. On the export front, we continue to target new customers in both new and existing geographies across Southeast Asia, Bangladesh, Turkey, Latin America, and Africa and increase our wallet share with existing partners.

Our new blending facility in Thailand is ramping up steadily. It is helping us serve customers in Southeast Asia with customized formulations, faster turnaround times, and lower exposure to freight volatility.

I'm pleased to share an important update on our Saudi Arabia initiative. The board has approved the leasing of land to Rossari International Limited Company, our wholly-owned subsidiary, for setting up a greenfield manufacturing facility in the Kingdom of Saudi Arabia.

This builds on the in-principle approval granted by the board earlier and is a key stepping stone in Rossari's international growth journey. The project will improve our access to key raw materials through a strong petrochemical ecosystem and brings us closer to regional and international demand centers, including the specialized opportunities in the Middle East oil and gas sector.

From a long-term perspective, this facility will help us serve and align with emerging industrial requirements in these markets. We'll like to share the key details of the project once they are finalized.

As I mentioned earlier, our margins are yet to reach their full potential and we are actively working on various cost optimization measures to improve them. Our strategic initiatives like monetization of non-core assets, rationalization of lower margin businesses, and improvement in product mix are progressing in the right direction.

We will continue to sharpen our focus on the core B2B business and we expect this initiative to start reflecting in our overall performance over the medium term. Overall, we remain very confident about our prospects.

Our scale, improving capacity utilization, a strong product pipeline, and an expanding international presence are the building blocks of a more scalable and resilient Rossari. Our priorities remain centered on disciplined execution, margin improvement, and stronger returns on our existing asset base.

Thank you once again for your continued support, and I now invite Ketan ji to take you through the financial highlights.

Thank you, Mr. Chari, and good evening, everyone.

Let me take you through the financial highlights for the quarter and for the half year ended 30th September 2026. For the quarter ended FY '27, our revenue from operations stood at ₹697.6 crores, which was a growth of 19% YoY over ₹586.1 crore in Q2 FY '26.

This marks our highest ever quarterly revenue. Gross profit also grew by 19% YoY to ₹220.3 crores and by 6.7% on a quarter-on-quarter basis.

Gross margin stood at 31.6%, in line with the Q2 FY '26 and around 200 basis points higher than 25-- 29.6% reported in quarter one. This sequential improvement was driven by a better product mix.

The EBITDA grew by 21% YoY to ₹87 crores, our highest ever quarterly EBITDA. The EBITDA margin stood at 12.5% compared to 12.3% in Q2 FY '26 and 11.6% in Q1 FY '27, and an improvement of 91 basis points sequentially.

Employee costs grew by 15% YoY and other expenses by 19%, reflecting our continued investment in people, new geographies, the Thailand facility, and our newly set up R&D centre. Profit after tax grew by 5.5% YoY and 11% QoQ to ₹38.9 crores.

The diluted EPS for the quarter was at ₹7.02. Coming to the divisional performance, the HPPC revenue grew by 18% YoY to ₹541.9 crores in Q2 FY '27 and by 20% to ₹1,095.1 crore in H1 FY '27.

The growth was led by value-added products in personal care, agro surfactants, adjuvants, and other oil and gas solutions. On the other hand, constrained ethylene oxide availability continued to limit ethoxylate volumes and cautious customer ordering kept HPPC revenues broadly stable on a sequential basis.

In the textile chemicals side, the revenue grew by 26% YoY to ₹120.8 crores in quarter two FY '27 and by 24% to 20-- ₹226.9 crores in H1 FY '27. Sequentially, textile specialties grew by around 14%.

This was driven by our export markets, including Bangladesh, Southeast Asia, Turkey, and Latin America, and also contributions from our Thailand facility. The new fiber chemical division and a higher share of silicon-based and sustainable auxiliaries added to these higher revenues.

The animal health and nutrition revenue grew by 11% YoY to ₹34.8 crores in Q2 FY '27. For H1 FY '27, AHN grew by 19% to ₹72.8 crores.

The growth was supported by the vitamin premix plant, trace minerals, and our enzyme and probiotic portfolio. On the core B2B and institutional B2C business, excluding the institutional and B2C business, our core B2B business delivered a revenue of ₹619.9 crores in quarter two FY '27, registering a growth of 21% YoY.

The core B2B EBITDA also grew by 15% YoY to ₹87.2 crores and an EBITDA margin of 14.1%, compared to 14.8% in Q2 of FY '26 and 13.5% in Q1 FY '27. The YoY moderation in margin reflects the raw material and freight environment and our ongoing investment in seeding some new businesses and geographies.

Our institutional and B2C business reported a revenue of ₹77.7 crores in quarter two, a growth of 3% YoY. More importantly, profitability improved significantly.

This business reported a positive EBITDA of ₹0.2 crores compared with an EBITDA loss of ₹3.7 crores in Q2 FY '26. This improvement reflects our calibrated steps on portfolio rationalization, product mix, and cost discipline.

We will continue to focus on improving the quality of revenues across these segments. On the balance sheet side, our balance sheet remains healthy with strong liquidity and comfortable leverage.

Gross borrowings reduced by around ₹46 crores during the first half to ₹361.8 crores. Net debt stood at ₹221 crores, compared to ₹248 crores in June '26 and ₹281 crores in March '26.

Our net debt to equity ratio stood at 0.16. Working capital days saw a significant improvement and reached 86 days in Q2 FY '27 from 97 days at the end of FY '26.

Our priorities going forward remain optimum asset utilization, operating leverage, and a better product mix, along with working capital efficiency and strong cash flows. Together with a prudent approach to capital allocation, this should further strengthen the balance sheet.

That's all from my side. We can now open the floor for questions.

Hello. Good afternoon.

Am I audible?

Hello? Yeah.

Just a couple of questions from my side. Firstly, this quarter we've seen exports contributing close to 31%.

This proportion has been increasing quarter-on-quarter. Where do you see the contribution coming from?

What are the drivers segment that are driving this growth coming in from the export side? Maybe two years from now, how do you see the proportion from this business kind of increasing and ramping up,

then? Thank you, Maitri.

Yes, we've been able to accelerate our export revenues now for the last few quarters. This quarter was specially a very strong quarter for us on the export side.

Primarily, the exports were driven both in the HPPC and in the textile segments. With textiles, we've been talking for some time now of the Thailand facility coming in.

I think that also [played?] played a good role this time for the textile exports to grow.

Within that, we've also looked at a lot of new geographies, specially Southeast Asia, the African continent, and now we've also looked at new areas in the Latin American space. That is helping the textile register a good growth on the export side.

Parallelly, the HPPC continues to show a strong export push. In fact, in this growth that is seen of almost 34% in the export revenue YoY and for almost 35% quarter-on-quarter, the major contributors are HPPC and the textile business.

I think going forward, as you asked, we expect this trend to continue. I cannot really not tell you about this kind of growth coming every quarter, but definitely our target is that exports should slowly become a larger portion of our overall revenue.

We've already hit 27% if you see on a H1 basis. This quarter, we were 31% of our overall revenue.

Our first target I think by the end of this year should be that at least 30 30% plus of our revenue should come from export, and we've been working towards that. I think now the numbers are quite visible in this quarter, at least.

Okay. That is great to hear.

On the HPPC side on the export business, are we seeing growth coming in from more higher-value products, like the oil and gas contributing more? What sort of margin differential you're seeing on the export sales and on the sales in the domestic market, if you can.

Just some color on that.

Hello. This is Sunil Chari.

Good evening. As you see, our export and our B2B EBITDA margins are increasing every quarter now, and this quarter, our EBITDA margin for the B2B business was 14.1%.

The focus has been on a very prudent product mix where higher-margin products are being sold in the export, but also in the domestic market. We have had a rationalization by tail cutting.

Tail cutting means where the bottom 5% of the products where the least margins are cut off from the tail, and we stop producing or selling those products. This focus on product mix optimization has helped us get better gross margins and also EBITDA margins.

I do not have the exact details of what is sold in the last quarter in terms of products, but higher gross margins and higher EBITDA is proof of the same.

Got it. We also mentioned we've taken a lot of portfolio rationalization on the B2C and institutional business, and currently, we're at kind of EBITDA breakeven margins.

Going forward for the next two quarters, do you expect this business to turn a bit EBITDA positive? Also, what plans do we have for the B2C business?

We were planning on kind of having a sale of that business. Just some color on that, as well.

Yeah. Maitri, this quarter, I think after many quarters, we saw this this B2C business breaking even.

I think we've we've done a lot of portfolio rationalization. A lot of the low-margin products, we've not really gone ahead in a in a very big way to to promote.

That's also visible in the fact that the B2C revenue has not grown to a to, a large extent. Our aim now is to make this business profitable.

Even if there, so, two-prong approach we are doing. One, as I said, we're looking at higher-margin products in this, as well as a little some sort of a cost restructuring, cost optimization activities which have also been started internally.

Our aim is that at least in the next two quarters, at least H2 should also be an EBITDA positive H second half for us. Overall, I on a year full-year basis, we should at least break even in this business because the first quarter we had we had a loss.

On our plans for this business, we we still are on that plan of moving out of this B2C business. We'll do that as we had I had said last time also, at an appropriate time and at an appropriate value.

Till that we we reach that point, I think our aim is that we should still run this business on a on a on a on a positive note, and that's what we are doing. Our overall plan still remains to move out of the non-core businesses that we have.

Got it.

Got it. Just lastly, on the oil and gas business that we have in the HPPC segment, any sort of outlook you have?

Where are the sales coming from? Which regions are we targeting?

Are we targeting the US as well? Because I think the oil and gas kind of segment is growing a lot over there right now.

Just some color on the oil and gas business in the specialty chem. Yeah.

As we have been talking about oil and gas business. Primarily, our focus is now the India market and the Middle Eastern market, but also Kazakhstan, Turkmenistan, Uzbekistan, on those belts.

US, we have distributors who sell into the oil and gas industry, but we do not have exact figures on segment-wise on what is they're selling into. Where we sell, it is basically India, Middle East, and the East European part of the world.

Got it. Thank you so much.

I'll join back in the queue.

Thank you.

Yeah. Thanks for taking my question, sir.

Sir, my question is about capacity ramp-up. Around 50,000 ton of a new ethoxylation, Dahej capacity is now built, sir.

What utilization do you expect in FY '28 and '29, and what peak revenue does that support, or is it a same four times asset turnover still holds, sir? Yeah.

As we had said earlier, that the peak utilization will happen about two years post this asset coming into commissioning. Probably, we'll have the peak utilization target by end of FY '28.

We still stick to that target of 3x of the capex value to be the peak sales revenue.

Sir, is this a constraint in the EO supply or consumer demand for that currently? How much is the additional ethylene oxide that you secure from the Reliance expansion, sir?

Namaste, this is Sunil Chari. In the last quarter, we had a constraint on EO supply from our supplier, which is Reliance.

We are hoping that this quarter we should not have the EO constraints. The new expansion will come up in two, three quarters, and as soon as it comes, we should get a higher allocation than the current ones.

We do not have any confirmation from Reliance on how much quantity will be allotted to us. Right.

Sir,

about the margin mix, sir, if you look at over the next one or two years, what is the share of the revenue do you expect from the value-added product business lines like pharma, oil, gas, personal ingredients versus that commodity ethoxylates, and what are the typical margin premium these carries, these new businesses? See,

as you would have seen the earnings presentation which we have loaded, we have got the EXCiPACT registration for our Unitop plant. This allows our surfactants, which are excipients in the pharma industry, to be exported without any audits from the customers.

This also reduces a lot of audits and costs for the customers, but also for us. The pharma approvals take close to six months to two years, depending on the customer, geography.

We are gradually ramping up the pharma exports. Last quarter last year, it was about ₹50 crores with pharma exports, and this year, we are confident that we'll have a very good growth in the pharma segment.

Our exports in pharma also is picking up every quarter, and we see pharma, food, aroma, as new lines where we want to focus on higher-margin products. Going forward, we would continue to focus on higher gross margin products than lower margins for all new products which we are launching.

Sir,

my final question is about the cash allocation, sir. Over the next two to three years, how much build up free cash will be split between the debt reduction and Saudi Arabia, because becoming debt-free also reduces significant amount of annual interest, so that's something how you want to go with it, sir?

Yeah. Gagan,

our first priority now with the cash flows would be to reduce the debt. That's what we've been doing in the last two quarters.

I think now with most of the capex spend done, we'll have some more spends in this year, but not to the extent that we've already done. Then going forward, our capex spend in India will be significantly low, and most of it will be in KSA, once the project, etc., is finalized.

We also hope that by that time, we will have some of these non-core businesses also sold. We expect that a lot of these cash flows, which will come in both from exiting the non-core business and the cash generated from the current operations,

firstly will go into debt reduction, and parallelly, depending on how the Saudi project timelines come in, we will also put in money there. Of course, Saudi project will have equity and a mix of debt also, but that we will work that out once we have more understanding of the size of the capex and the timelines.

Currently, all cash flows will go into debt reduction.

Yeah. That's from my end, sir.

Thanks for the elaborate answers, sir. Thanks.

Thank you.

Hi, team. Good evening.

My first question is on the core B2B EBITDA margin. That was at about 14.1% versus 14.8% year-on-year, and that's even on a 21% revenue growth.

The 20 bps consol margin improvement came entirely from the institutional or the B2C swing. Without that swing, the consol margin would have been about 11.9% if I'm not wrong.

Could you please give some color on what compressed the core margin year-on-year and how to get back above early 15% there?

Should

we? It's good ask.

No, I have not understood your arithmetic, Nitesh. Can you just repeat your question?

Year-on-year, sir, if we look at the core EBITDA margin, that's at about 14.1% versus 14.8%. Right?

The consol 20 bps improvement that is coming through is largely because of the B2C swing that came about, where you ended positive on your B2C on the institutional business. Without that swing, the consol margin would have been 11.9%.

Am I clear, sir? Hello?

See,

without the B2C business, our EBITDA margins are at 14.1%. Right?

No, I'm talking about the consol margin would have been lower. In any case, the question is that what has compressed the core margin year-on-year, despite the revenue growth that we see?

What steps are we taking or what is our outlook on to get it back above the 15% indicated numbers?

See, I really have not understood your working, maybe we can connect later. On the EBITDA margins, if you see, yeah YoY, we are down from 14.8% to 14.1%.

See, the expenses on freight have significantly impacted in the current year. Even though our exports have grown significantly, the freight cost has almost doubled, tripled over what they were in the first half of last year or Q2 of last year.

That has significantly impacted our EBITDA margins. I think as we start, and also apart from this, raw material prices, specially prices of some of our core raw materials like phenol and all, have gone up significantly over what they were last year.

While we've been able to pass on most of these increases, the freight element still remains a challenge for us, and not all customers are really ready to absorb the entire freight increase. There is an understanding how much we'll absorb, how much we are able to pass on.

Overall, we are I think still working on this freight element. Otherwise, I think the business in terms of growth, in terms of volumes, has shown a significant improvement over what we had done last year.

Does that answer your question, Nitesh?

Yeah. Okay.

Sir, can you also help us with the volume growth for Q2 segment-wise?

See, we don't give this split specifically, but most of the growth that you have seen has all come out of volume because a lot of the prices have kind of softened. With the raw material prices in the early part of Q2 had come down, we had to also reduce prices of some of our products.

This growth that we have seen in the second quarter is most of it is a volume-driven growth.

All right. Sir, just one last small on the AHN bit.

There, the growth rates has come off. Is it a seasonal or a customer-specific thing, or if you could just help clarify that?

That is true. Generally, the second quarter is the weakest for the AHN division.

The third and fourth quarters will peak. Even with this low season, we have done pretty well, clocking about 27 odd crores.

The next two quarters are going to be the peak season for Animal Health. Okay.

Okay. Sir, just one last if I may, sorry.

Can you help us with the blended utilization numbers on the total capacity, and specifically for Dahej Part 2 and Unitop Phase 1 to ethoxylation?

On a blended level, the capacity utilizations are at about close to 60%. The new ethoxylation facility that has come up earlier this year or late last year, I would say, is currently at about 30% utilization.

We're slowly ramping that up. Hopefully, we expect by the next year with the Reliance capacities also coming in and the flows of EO also increasing, by probably Q2 or Q3 of next year, we should have a healthy utilization of the new ethoxylation facility also.

All right, sir. Thank you so much, and wish you the best for the coming quarters.

Hello, sir. Thank you for taking my question.

My first question was regarding the new plant, upcoming plant in Saudi Arabia. Is there any timeline that the management is targeting that by this particular financial year, we are targeting to start commercial operations, or we are still in the outline phase, there is no set timeline for this?

For the KSA project, if you see, we are taking a step-by-step approach. We had first taken an approval from the board to start exploring the initiatives of Saudi.

We did that for last 8, 12 months, and we've zeroed down on the strategy for Saudi in terms of the land, the area, the potential feedstock suppliers, etc. We've been talking to all the relevant authorities there in terms of the process, approval, and how we can take the project forward.

Now in this quarter, we have taken again, an in-principle approval from the board for leasing out land in KSA for the project. Right?

There, currently, a piece of parcel of land was offered to us, and we've decided to go ahead and lease it, and probably we'll do some initial activities like fencing, boundary wall, etc., in the next few months. Parallelly, we are, as I said, in discussions with potential suppliers of feedstocks, and parallelly internally working also on the overall product, the capex, the market size, both domestic marketing KSA and the export markets in GCC, Europe, etc.

Those activities are parallelly going on. Once we have the entire blueprint on paper and the financial for the project done, we will go back to the board to seek approval for the next step to go ahead.

That's when we'll be able to give you a little more color and light in terms of the timelines, the cost, and what exactly we are going to do in KSA. As of now, whatever we've done, we've talked about it, the land, etc.

The next steps, once they get firmed up, we'll come back and talk about that.

Okay.

Hopefully, all of these developments will happen over the next 8 to 12 months.

Understood, sir. Thank you.

Sir, next question was regarding the core B2B business. We have seen steady margins of around 14% for this business for last, I would say, two, two and a half years now.

In the earlier call also, you mentioned that the aroma business and pharma business you are targeting and ramping up as they offer higher gross margins for you. In the core B2B business, what kind of margins are you expecting going forward, like in FY '27, or FY '28 and '29?

Yeah.

I think as we have talked about in this quarter, the initiative of pharma we are now taking that up, taking it forward. We had this audit which we have cleared.

Now these things, especially these businesses in pharma, etc., as Mr. Chari said, takes a little time in terms of approval and all.

We are in that process. Hopefully, we will get the approvals now going over the next couple of quarters.

Then, yes, as I said, as these segments like pharma, aroma start becoming a significant part of the overall business, we should see steady gross margin improvement going forward. I think we are still a couple of quarters away from seeing some significant contributions from these businesses, but yeah, we are already online to expand the scope that we have in both pharma and the aroma space.

Sir, you talked about audits, were these audits customer-related or certifications from regulatory bodies?

Regulatory, we explained that EXCiPACT, we already have the approval, the registration, which does not require frequent customer audits. Customer do stability studies in pharma, and in overseas customers, the time taken is more.

Also in MNC customers in India, the time taken is more for stability studies. For example, if it is a cough syrup where polyethylene glycol 400 will go, or a laxative where polyethylene glycol 3350 will go, they will make samples, do stability studies, do some trials, and then go slowly.

Ramp-up in pharma is always slow, but it is steady and doesn't go back. Once you get into the customer, the customer does not throw you out fast.

Price and all are not the key criteria for changeover in a pharma kind of excipient.

Understood, sir. Safe to assume that pharma and basically, the capacity expansion of ethoxylate are the two growth drivers until the KSA plant comes, right?

Yes.

Okay. Thank you, thank you so much.

Thanks for the opportunity and congrats on good set of numbers. Sir, first question is, probably, I missed the comment on ethylene oxide.

How are we placed in terms of incremental ethylene oxide availability? When is it that they how likely to

Hello? Am I audible now?

Thanks. Sir, first question is in terms of EO availability for our incremental ethoxylation capacity.

How are we placed for that, and what is the latest timeline that is suggested by Reliance in terms of the new project commissioning from their side? Thank you.

Hello?

Hello?

Ha, Rohit ji, awaaz aa raha hai?

Yes, sir. Yes, I can hear you.

Yeah. We are expecting in the first quarter of financial year next financial year for the Reliance expansion to kick in, and we should get higher amount of EO allocation from the from the first quarter.

Thank you.

Yeah. Till that time, how are we secured in terms of the incremental availability of EO for our volume growth?

At this moment, there is no confirmation on what is the incremental quantities, and hopefully, in the next couple of months, we should get a confirmation.

Got it, sir. Second question is on the exports front.

Which particular user segments we have seen that the growth on the HPPC part is coming, and is it only driven from HPPC or there is textile chemical which has also taken some part in terms of the exports growth? Thank you.

We saw a broad-based growth in the export side. Within the HPPC, I think personal care was one of the key drivers if you compare with on a YoY basis.

Then also some of the new segments like oil and gas also saw some traction in this quarter. It was not only HPPC.

The export numbers in textiles was also pretty strong in this quarter. YoY if you see, the textile export revenue grew by about 50 odd percent.

Which was quite heartening because these were the efforts we've been taking over the last few quarters in terms of seeding some of these new geographies like Latin America and Southeast Asia, some of the African countries, also. Some traction we saw in this quarter.

Also, the Thailand setup which we have put, that has also started playing a role in moving up these exports in especially in textiles. Majorly, HPPC, which continues to be the main driver, but also textiles has shown a significant improvement on the export side.

Sure, thanks. I'll just squeeze in last one.

In terms of the current capex projects which are in CWIP and in progress, what are the projects and when these projects are likely to get completed? The context is that once, I think, these projects are completed, our focus will shift to the KSA investment.

From that context, just wanted to know how much capex is remaining, which is currently under progress, and across what verticals? Thank you.

I think most of these projects will close by the end of this year. That's what the current plan is.

Going forward, I think over the next year, at least we will not have any significant capex spend. Then, we'll, of course, look at KSA, which will be the new area.

On this capex side, some of the spends will happen on the pharma business, the aroma In both these spaces, we've done some piloting, we'll start now setting up some more higher capacity setups. That'll some of that are in CWIP and some more spends will happen.

Also, we are doing some new initiatives on the hydrogenation side, so that will also come up during this year. Yeah.

These are basically some of the new initiatives that are going to come up. Hopefully, most of these will happen during this year itself.

We should not have any major spillover going into the next year.

Sure. Thanks for answering all the questions and all the best, sir.

Thank you.

Thank you.

Yes, sir. Namaskar, sir.

Thank you for the opportunity. Hope I'm audible.

Hello?

Yeah. Thank you.

Sir,

yeah sir, just in continuation to the earlier participant, the capital work in progress is, I think so, closer to ₹150 crore. What kind of capacity augmentation would be penciling in post the commissioning of the same or the captalization of the same towards the end of the year?

I think we'll have another about between 50 to 70 ₹75 crores of spend that will happen in the second half. Then, I think nothing beyond that.

Sir my question was we have the closing balance of closer to 1 I think so ₹150 crore as on 30th September. ₹156 crore.

Post commissioning or the capitalization of the same, what would be the additional capacity added or where are we going to add the capacity? Then, as you mentioned that we will be spending another 75.

We will be having closer to 225 for this year as a whole, or please correct me there on the numbers.

Yeah. It will be only spend side, it will be about ₹50 crores.

Yeah. Total capitalization will be to that extent.

These are, as I said, some of these new initiatives that we are doing. We'll have spends on the pharma side, on the aroma chemicals, there is a projects we're doing on hydrogenation, and there are some expansions which we're doing in the biosurfactant space, also.

That's a new initiative that we spent good amount last year also and we've seen some good results. We are now again planning to do an expansion on that front, also.

Those will happen across all these segments.

That point is correct, sir. Can you give a number on the volume side or any understanding on the same, sir?

No, currently, I will not be able to give you any volumes. Let these projects come on-stream, then we'll share these numbers.

Okay. Sir, when we look at our H1 EBITDA, I think that comes to ₹167 crore and the top line at 1,400.

That 20% growth over the last year. Taking into account the initiatives and the type of inroads that we have in terms of the newer products or the higher-margin products getting the higher share, what should be likelihood of H2 shaping up in terms of the EBITDA margin trajectory, sir?

Any color you can share with us?

Yeah. I think this year, we will be at similar kind of EBITDAs of around 12% plus minus.

That is what for this year is our take. As I said, some of these initiatives are still work in progress.

We're getting approvals, audits, etc. We are seeding the market, talking to customers.

Much of this is a future expectations. Probably next year, we should start seeing improvements in the EBITDA percentage.

This year, I think we will still stick to our 12% around that EBITDA for the year end.

On the revenue growth, sir? This 20% way?

Yeah.

Yeah. Revenue, see, when we started of the year, we had said that we'll do about similar to the run rate we had done last year.

We've done much better than that. Given the current geopolitical situation, the significant issues we are seeing in terms of market demand and the logistics, etc., I think it's very difficult for me to hazard a guess what's going to happen the second half, but I think our initial assessment of 12%, 14%, I think we should do a mid-teen between mid-teen to a little high-teen numbers for the year end.

Okay. What H1 was in terms of previous H1, that kind of growth looks susceptible for the H2.

That understanding is correct, taking into account the current scenarios.

Hopefully.

Right, sir. Sir, one small observation, when we represent our results, they are in the millions and whereas when we put forward our investor presentation, they're in crores.

We can opt for one of the same for displaying the same. I think so, that would suffice and understanding also, because of the same, having two different ways of expressing the same numbers.

Sir, secondly, yeah,

yeah.

You can see that sir, in millions we are reporting in results and in crores we are doing in presentation. Kindly opt for one that would give this similarity.

Sir, when we read your commentary and the thought process, it is quite evident that the strategic levers which you have given about margin expansion that is, firstly, the portfolio rationalization, then shifting to the high-margin part, and asset sweating with the calibrated capex, this should all gather steam going ahead also. Means although the environment may be dicey and quite susceptible because of the RM issue, I think so we are on a strong track to at least replicate what we did in terms of the revenue profile for H1.

Even that understanding is correct going ahead for us? Sir, we

see we are working hard and we are very, very happy if you see our positive cash flow, ₹131 crores in the first half, reduction in debtor days, reduction in stock,

and

also reduction in net debt from ₹280 crores to ₹220 crores, making the BRPL business positive. We are working very hard, and we're very happy with the last two quarters' results.

What is happening is in the global market, the situation is changing so rapidly. We're not able to know whether we will be able to ship our shipments to Bab-el-Mandeb or through Hormuz or the insurance and the freights are going up.

The containers are not available, the ISO tanks are not available, customers are very very much worried. The global situation is now the Middle East is in a bigger turmoil.

All this when you see to it, we are not able to hazard a guess because of so much uncertainty. In our internal budgets, we are very positive and very bullish, but we do not want to hazard any guess, give anything which after six months, the investors will say tumne bola tha aur tumne kiya nahi karke.

There's so many things beyond our control, and we will do our best as we have done in the past.

Right, sir. Lastly sir, for the plant visit, can investors or the analyst community look forward to visit our facility and get some further understanding going ahead?

Is that a feasible

Yeah, yeah. Group SGA will organize.

I am already in discussions with them. We'll do that pretty soon.

Sir. I'll join the queue, and congratulations sir for the very steady and improved set of numbers.

I think so, the numbers speak for themselves. Only a small pointer, as you told about the reduction in debt, what is the current maturities that is needed to be repaid or what should be the likelihood to exit the year in terms of our closing debt number?

Any color you can share on that scale? No,

these are all mostly working capital debts. This will be a moving number, but I had said that all the working capital debts, probably by mid of next year, we should become debt-free on that.

As of now, I still hold on to that number of mine.

The long-term borrowing, sir?

Long-term borrowing will take its trajectory. If we have good cash flows, we'll pay off earlier also, but on the other debts, probably by next year, mid of next year, we should be debt-free.

Hello?

No. My question is already asked.

Sir, thank you for the opportunity. Sir, I wanted to understand the working capital improvement that we have seen here in this quarter, this H1.

Is this sustainable or was it more driven by customers giving us better priority in a raw material shortage scenario?

No, no, this was, I think, through sustained efforts which we have done during this year in terms of rationalizing inventory, improving our collection cycle. That result of this 10-day improvement that you're seeing in the net working capital position.

I think this is a good position we have. I have always said that our aim is to be in that 90-day kind of a net working capital position, I think we are pretty much on that.

Even lower than that, we are at about 87 days in September. Hopefully, in March also, we will be within this range of 87 to 90 days.

Got it. Now sir, coming out to our ROCE, sir, our ROCE used to be upwards of 20%, 25% few years back, but that has moved to low teens right now.

We've spoken about that we've moved into value-added products, we have acquired Unitop in the meantime, moved to value-added products, but still our gross margin profile hasn't changed and our ROCE profile has declined. How should we look at this metric going forward?

Sir, a sub-question would be, we will be doing a greenfield capex in Saudi Arabia, what kind of ROCE or payback profile do we expect for this or any capex that we will be doing going forward?

Yeah. ROCE, I think you will see ROCE start improving once all the capex spends that we have done in the last two years, the capacity utilizations start improving in that.

We've always maintained that the initial spend that has happened, for couple of years, we'll see a little bit of a suppressed number in the ROCE. As these plants start delivering products and the products we start selling, these are all good-margin products, we'll see the ROCE improvements coming in.

Improvement of working capital, reduction of debt, these are all part of that whole process of ROCE improvement, we are on track on that. Hopefully, we'll see this playing out in the ROCE numbers probably in the next year.

You'll see the upward trajectory. In terms of our spends in KSA, as I said earlier, we will come back to you with all the details of the capex, the returns, the products, etc.

at a suitable time when we have internally finalized the entire project plan. Currently, it's only the land that we have taken on lease.

Sir, though I understand that operating leverage will help us improve the ROCE profile, but, sir, our gross margin profile has stayed the same even with us acquiring Unitop in the meantime, moving to value-added products, but still our gross margin profile is stagnant. Why is this not reflecting in gross margin profile at least?

See, when we acquired Unitop, the gross margins of Unitop was always much lower than gross margin of Rossari. The expenses in Unitop were lower, and that is why the EBITDA also of Unitop when we acquired was in the range of 12%, 13% and EBITDA of Tristar was in the range of 10%, 11%.

We've been able to improve these businesses. When we acquired the business, we were not doing any ethoxylation in-house, we were buying ethoxylates at credit of 90 days.

Now, we have to buy all the raw materials for ethoxylation in advance, like for example, EO is purchased in advance, hydrophobes like lauryl alcohol, nonylphenol, phenol, tridecyl alcohol, cetostearyl alcohol, these are all coming from the oleo route or the petrochemical route, and these are advance. That is why, our working capital cycle increased.

Now, with our focus, the working capital size is now being compressed, and as Ketan sir said that we below 90 days hopefully even in this current second half. When we combined 2021 figures of gross margins of Unitop, Tristar, and Rossari, we are much better than what we were at the end of 2021.

Got it. Sir, that is from my end.

Thank you so much and all the best.

Thank you everyone for joining the call today. I hope we have been able to answer all your questions.

For any further queries, you can get in touch with our team or Strategic Growth Advisors, our advisor relations investor relations advisors. Thank you once again for taking the time to join us on this call and have a good day.