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Bodal Chemicals Ltd
NSE:BODALCHEM
Bodal Chemicals Ltd
NSE:BODALCHEM
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Ladies and gentlemen, good day, and welcome to the Bodal Chemicals Limited Q4 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Patel, Executive Director. Thank you, and over to you, sir.
Thank you very much. Good evening, everybody. On behalf of Bodal Chemicals Limited, I extend a very warm welcome to everyone joining us on our call today. On this call, we are joined by our CFO, Mr. Mayur Padhya; and SGA, our Investor Relations Advisors. I hope everybody had an opportunity to go through the financial results and investor presentations, which has been uploaded on the stock exchanges and on our company's website.
To begin with, I will give you a quick overview on the recent developments in the chemical industry and our company. And then Mayur Padhya will walk you through the financial performance. If you look at the company overview with over 3 decades of experience, Bodal Chemicals is India's largest integrated manufacturer of Dyestuffs and Dye Intermediates. In today's environment, where Indian suppliers are emerging as preferred partners globally, we have been able to leverage our leadership position.
We have meaningful capacity across various products to solve the demand of end user industries. In the domestic market, our market share stood at 13% for Dyestuff and 20% for Dye Intermediates business. In the global market, our market share stood at 3% for Dyestuff 6% for Dye Intermediates.
We are expanding our product basket and including benzene derivatives and chlor alkali products, which have applications in pharma, agrochemicals, paper and other industries. We are moving forward and adding additional capacity across multiple products across different chemistries.
Performance of FY '22. Total revenue for the FY '22 stood at INR 2,068 crore, which is the highest ever annual performance for the company. This growth was primarily driven by better product mix [Technical Difficulty]
Ladies and gentlemen, we have lost the line for the management. Please stay connected while we connect him back again. Ladies and gentlemen, we have the line for Mr. Ankit Patel connected again. Mr. Patel, you can proceed.
Yes. Sorry about that, I got disconnected. As I was saying, we achieved INR 2,068 crores of turnover, which is the highest ever annual performance. This growth was primarily driven by better product mix and higher price realization.
Also, our Rajpura unit which was acquired in the beginning of the year contributed INR 254 crores annual revenues. Rising end user demand and structural demand shift as a result of global supply chain tightness have also helped Indian manufacturers like us who are highly integrated and operate on a large scale.
We will now touch up on each business vertical and its recent developments. In Dyestuffs, end application industries, including textiles, leather, paper, other Dyestuff consuming industries have been doing well during the last few quarters. The Dyestuff business has grown significantly in FY '22 with revenues of INR 699 crores compared to the INR 399 crores in FY '21.
All key products in the Dyestuff category have performed well. Coming to the Dye Intermediates, we produced 25 Dye Intermediate [indiscernible] and over 40% to 45% of the intermediate capacity is captively consumed, resulting in a significant cost advantage for our Dyestuff products. Given the healthy prospects of Dyestuff [Technical Difficulty]
Ladies and gentlemen, we have lost the connection for Mr. Patel. Please stay connected. We have the line for Mr. Patel connected again. Sir, you can proceed.
Yes, I'm traveling. So I think there is something wrong with my connection. This is the only line possible for me at the moment. Talking about the intermediates, the Q4 FY '22 [indiscernible] H-acid and vinyl sulfone that's about INR 474 for H and INR 288 for vinyl sulfone, respectively. And at the same -- present prices are INR 460 and INR 275 per kg, respectively.
This price has remained volatile during this fourth quarter. This year, Dye intermediate chemicals made a revenue of INR 735 crores for us, an increase of 33% on a year-on-year basis. Many textile SMEs are struggling to keep the businesses up float because of the unprecedented volatility in cotton prices, which have impacted the overall demand of Dye Intermediates.
Although we consume more than 45% of intermediates to produce Dyestuff, we still have significant demand to sell.
In Basic Chemicals, close to half of the Basic Chemicals capacity is captively consumed for Dye Intermediates production. Our overall Basic Chemical segment contributed around 10% of our total revenues during FY '22.
For Chlor Alkali business, our endeavor is to move up the value chain and diversify our business from core Dyestuff and intermediates into the specialty chemical products such as benzene derivatives and chlor alkali stuffs.
Strong tailwinds and high demand [indiscernible] Chlor Alkali business. We purchased Rajpura, Punjab facility in the first quarter of FY '22. The Chlor Alkali business delivered a strong performance with revenues of INR 254 crores in FY '22. We are confident that demand from FMCG, textile, paper industries will be sustainable, and we will be their reliable and preferred partner.
After the technology upgradation program, we expect this unit to generate total revenues of INR [indiscernible] levels in the normal scenario.
Our benzene derivatives and sulfuric acid derivatives, our Saykha Greenfield Project is in progress, and we plan to have it commercialized same by Q1 FY '24. The capacity of sulfuric acid derivatives would be 3,50,000 (sic) [ 3,40,000 ] tonnes per annum, which will include [indiscernible] products like sulfuric acid, Oleum 23%, Oleum 65%, liquid SO3, chlorosulfonic acid, liquid SO2, et cetera.
We will also manufacture a benzene-based downstream products such as MCB; PNCB; ONCB; MNCB; DNCB; PNA; 2,4-DNCB; and MPDSA at the same Saykha location. We should be able to sell these products to our existing clientele and partly will be used for [indiscernible] purposes.
We expect this product -- project to generate additional revenues of around INR 550 crores at optimum levels. 32% of our total business came from exports. And so increase in the freight and transportation costs have increased our other expenses considerably.
And other developments. We do business in over 45 countries and have a product portfolio of over 200 products. So diversification [ requires significant ] resources for managing the inventory of critical raw materials and finished products as well as the [indiscernible]. In the event of supply chain disruption, we prefer to preserve inventories and satisfy our clients' needs in the shorter time frame.
We have formed several trading and marketing subsidiaries to build a stock point and expand into new geographies and markets. Our Turkey subsidiary, Sener Boya sales dispatches have improved meaningfully in the last 1 year. We have acquired the remaining 20% equity stake of Sener Boya to make it a 100% subsidiary.
Bodal China and SPS unit have also performed well with significant growth in top line. We are in process to amalgamate the SPS with Bodal. In a medium- to long-term view, these subsidiaries will penetrate the respective regions and will bring meaningful business to our company.
The primary goal of earlier investment has been to bring a long-term sustainable business model without losing the leadership in the legacy business. FY '22 has been good for us, bringing better stability to overall business. We foresee our business would be less volatile and more diversified in the coming years as we would be catering to a broad end-use application market with a wide product basket.
Global protocol and compliance have essentially redirected the demand to organized players like us. Indian chemical companies like us are poised for growth, owing to increasing preference for a sustainable partner. Thank you. And now I hand over the call to Mr. Mayur Padhya who will walk you through the financial performance.
Good evening, everyone. Overall performance of the company has been robust for the Q4 and FY '22. Both of the facilities were operating at the healthy level. This growth is driven by better price and product mix. Our consolidated performance for Q4 FY '22 are as follows: Total revenue stood at INR 600 crore for Q4 FY '22, a growth of 39% year-on-year basis.
EBITDA stood at INR 56 crore for Q4 FY '22, a degrowth of 4% year-on-year basis. Net profit for the quarter stood at INR 29 crores for Q4 FY '22, a growth of 33% on a year-on-year basis. Our consolidated performance for FY '22 are as follows: Total revenue stood at INR 2,068 crore, a growth of 66% on a year-on-year basis. Around 32% of the business is contributed by export and balance 68% from domestic sales. EBITDA stood at INR 237 crore in FY '22 against INR 120 crore for FY '21, a growth of 97.7%.
The Turkish lira has been volatile throughout the year and has affected the annual performance. The impact on full year basis has been incorporated into the consolidated financials. However, we have taken appropriate steps to address the ForEx exchange fluctuation, and the same is reflected in the Q4 FY '22 performance.
Other expenses on a full year basis has also increased primarily due to additional overhead costs from Rajpura unit, coupled with higher hour and logistic cost. Net profit for the FY '22 stood at INR 99 crores, against INR 40 crore of FY '21.
FY '22 top line performance of the key subsidiaries was healthy. SPS posted revenue of INR 159 crore, a growth of 62% on a year-on-year basis. Sener Boya has reported a total income of INR 85 crore, a growth of 16% on a year-on-year basis. Total income from China subsidiary was INR 36 crore, a growth of 124% on a year-on-year basis.
Segment-wise performance on a consolidated basis for the FY '22 are as follows: Dyestuff revenue stood at INR 700 crore, a growth of 75% on a year-on-year basis. Dye Intermediates revenue stood at INR 735 crore, a growth of 32% on a year-on-year basis. Basic Chemical revenue stood at INR 196 crore, a growth of 57%.
Chlor Alkali Division and TCCA revenue stood INR 254 crore and INR 35 crore for the FY '22. Total production volume on a stand-alone basis for the FY '22 are as follows: Dyestuff reported 20,058 metric ton for FY '22 against 14,756 metric ton for FY '21.
Dye Intermediates reported 25,985 metric ton for FY '22 against INR 21,811 metric ton of FY '21. Basic Chemicals stood at 1,92,051 metric ton for FY '22 against 1,56,382 metric ton for FY '21. Chlor Alkali stood at INR 79,773 metric ton, of which caustic soda stood at 57,938 metric ton. TCCA stood at 1,270 metric ton for FY '22 against INR 1,461 metric ton of FY '21.
With this, I conclude the presentation and open the floor for further discussion and question and answer.
[Operator Instructions] Our first question is from the line of [ Surendra Kumar Agarwal ], an investor.
Sir, what are the updates [indiscernible] relating to recovery of INR 13 crore [ bad debt decided ] by the company?
There is still no recovery from that bad debt. The person who was responsible is since out of India, and we are not able to trace him. So till now, there is no recovery from that bad debt.
Sir, second question is -- my second question is when the Rajpura plant we closed our final operation of the [indiscernible].
Rajpura plant upgradation and capacity expansion work is going on. And we are expecting that to complete in Q3 FY '23. So by December '22, we are expecting that to functional with modern technology as well as additional capacity. Presently, that plant is working. And at the time of switching to the new technology, we are required to keep the plant close for a week or so. Otherwise, it will go on working.
Our next question is from the line of [ Devendra Pandey ] with DP Financial.
Sir, my first question is regarding factory closures in Gujarat, which are producing Dye Intermediates. So can you explain what could be the reason behind this, sir?
Sorry, there was a disturbance. Can you repeat your question?
So we have seen many factory closures in Gujarat, which are producing Dye Intermediates, so what would be the reason behind this, sir?
Yes. See, for Dye Intermediate, particularly after March, we are facing some issues, particularly the rise in price of Basic Chemicals and coal prices. Now for Dye Intermediate, the immediate competitor for us is China. And in China, we have experienced that because of COVID, the last 3, 4 months, they were disturbed. And the raw material prices, particularly Basic Chemical prices have not increased to the extent which were -- which are in India.
So there is a disparity as far as cost of production in India and China. If you take like example of caustic soda, which is prevailing at present, INR 60 in India. And in China, it is still traded at about INR 40, INR 45. Like this product, other products like sulfur, caustic soda and even coal, there are some differences, which is because of this temporary disruption because of COVID.
Cost of production is a bit higher compared to China. And that's why some of the units have closed their production. This is the reason. So one is, if there is parity, they will once again start production.
And I would like to just add a little bit on this. Some of our competitors, their model is a little different when they are stand-alone intermediate players. So in a time like this, they shut down the plant. But we have a 45% captive consumption. So at the same time like this, we are comfortably operating the plant, but it is obviously at a lower production level right now. But I think in the past also we experienced similar scenario, I think it is never -- it's not there for a long time.
Understood. Understood. And sir, my second question is on, what is the current market of vinyl sulfone and H-acid? And do we have enough orders to serve this vertical?
So vinyl sulfone overall is in a better position. H-acid is where the pressure has been created because there's a lot of coal consumption there. There's a lot of caustic consumption there. And like Mayur bhai was explaining, there's a little difference in the cost at which India is buying and China is buying.
So that is hurting a little bit in H-acid, but -- so for that, we have lowered down our production levels, but we are catering to our captive consumption. And at the same time, it may be -- it may go on for maybe a month or 2 like this.
But I mean, like I said in the past, this has happened and then it comes back to routine. And H-acid, I mean, contributes around 10% to 15% of our total revenues. So we are not concerned that big. I mean it may affect our revenues, but similar things happen all the time when you are working in 3, 4 different sectors. At the same time, a couple of our other sectors are doing very well. So they are operating at 100% available capacity and the margins are good.
So in general, this is how the combination of our business goes [indiscernible] at times 1 or 2 sectors are little dull, and then they come back to routine.
Our next question is from the line of [ Pankaj Jain ] with [indiscernible] Investment.
Sir, my first question is related -- if you can throw some light on Chlor Alkali business, sir?
The Chlor Alkali business, we acquired the capacity at Punjab and then -- because it was an old plant, they are operating with the older technology where the consumption of the power is more, which results in higher cost. So we have immediately placed the orders and we have, in fact, received the main technology, machinery in the recent last few days only.
And by Diwali, we are planning to upgrade the technology, which will bring down our cost annually around INR 25 crore, INR 30 crore. Also, at the same time, we are increasing the capacity a little bit. So our capacity will also go up to 100,000 tonnes per year, which in FY '22, we did about 55,000 tonnes.
So also, the consumption areas of caustic are doing very well right now. That is why the prices of caustic has been historically high, and they are sustaining since last 3, 4 months. And going ahead also, June still looks very strong because there are regular exports that are happening from the western part of India, that is helping these higher [ societies ] in India to sustain.
So I see at least a few more months where the prices of our caustic to sustain. I mean the current level is around INR 50, INR 55, even a price of INR 45, INR 50 is very good. Even if it comes -- that starts coming down and it takes about 3, 4, 5 months to normalize, I think that period will also be very good.
Sure, sir. That was helpful. Sir, secondly, if I recollect correctly, earlier, you are targeting an annual revenue of approximately INR 300 crores from our Punjab plant. So if I say this inflationary cost pressure. So any revised guidance of revenue from that front?
So we had given a guidance of around INR 300 crores. At current levels, obviously, it would probably cross INR 400 crores. But if I talk about some average prices in the last 10 years, then it should do about INR 325 crores.
Okay. So not a major jump over. Sir, lastly, what would be the -- as you mentioned that the Rajpura plant will be operational by December or so. So what would be the opportunity that the revenue potential from the Rajpura plant?
Yes. So Rajpura plant is the chlor alkali plant only. So that is where the -- we had a INR 255 crores of revenue in FY '22, which will go up to about INR 325 from -- from Diwali onwards, it will run at an annual basis of about INR 325 crores.
Got it. Got it. And the demand scenario is robust, right?
Yes, yes, absolutely.
[Operator Instructions] Our next question is from the line of Aditya Khetan with SMIFS Limited.
Sir, my first query was on the caustic soda. So what is the caustic soda volume figure for FY '22?
Mayur bhai, can you just say the exact number?
Yes, yes. Sure, sure, sure.
It is around 50,000 plus. It's around 50,000, 55,000 tonnes.
50,000 metric tons. Okay. And sir, second on -- so when we talk about the annual volume figure for Dyestuff for FY '22 so that is around 20,058 tonnes, so this includes the captive consumption, or it excludes it?
In Dyestuff, we don't have any captive consumption. We sell it to direct...
Sorry, Dye Intermediates.
Yes. Dye Intermediate, whatever production figure that includes captive consumption. And your earlier question, caustic soda, last year's production was 57,938 metric ton.
Okay. Sir, now question on the Dyestuff front. Sir, from post March, what we are witnessing that the cotton prices are shooted to a record level, and that has led to some sort of unstability into the textile production. So most of the textile players are out of the market as of now so because of the lack of cotton. So how does this impact our Dyestuff business? Because almost 60% of the dependency of Dyestuff business is on the textile side. So how do you see this thing to shape up? And will this impact our Q1 FY '23 revenues considerably?
So in -- you are right about the cotton prices being very volatile. But if I share my knowledge about last few days or few weeks, it is a -- it's not very volatile anymore and prices have been correcting [indiscernible] it will be settling, which will give an opportunity for the textile players to stabilize the business and maybe pass on whatever the increase in the raw material prices are.
So I think, yes, it did have a few months of volatility, but I think we are going towards stability now. And I think cotton is definitely one of the reasons why there was some disturbance in the overall textile demand that led to some lower demand of Dyestuff, that again led to some lower demand of Dye Intermediates, which is the reason why there is some slowdown at the moment in the Dye Intermediate production capacities also.
One another thing is, see, when we [ produce ] Dyestuff, it's almost 70% we export. So over there, there is not big disturbance, what we feel in India. At the same time, Dyestuff, we do have some long-term order. So we are comfortable as far as Dyestuff division is concerned. It's not that it's booming, but yes, to some extent, we are better positioned compared to other players.
Okay. Okay. Sir, on the caustic soda side, I -- so just I made some calculations. So the average selling price for caustic soda in this year FY '22 was INR 48 a kilo, means considering we had acquired the plant on a slump sale basis, the quality of the plant was not good. Still, we are able to get some sort of high realization. So what is the difference of -- so what makes the case for upgradation of the technology into the caustic soda side when the existing plant only yielding some sort of INR 48 to INR 50 a kilo caustic soda realization?
No, so when we acquired the asset, at that time, the prices were very low. In fact, we had a -- at a net profit level, we had some small losses also in the first couple of months because the prices were under pressure at that time. The scenario changed about 6 months ago, yes.
That is why the average -- the current prices -- the prices went up to INR 70. That's why the average price looks very strong. But if I look at the last 10 years' price, including even a couple of extraordinary times like this, it won't be more than INR 35. So to operate in that INR 35 business, if I look at the next 5 or 10 or 20 years, we have to be competitive.
So the main reason was to upgrade the technology, we got the asset at a very attractive price. And immediately after the acquisition, we placed the orders for the technology upgradation, which I already earlier mentioned, that it will save around INR 30 crore for us annually. So again, to be competitive in the market against the competitors and also to save this INR 30 crores on an annual basis. Now that is the key. Even at INR 48 -- sorry, INR 60 or INR 30 selling price that INR 30 -- INR 30 crores annually will be saved for sure because it is in the cost side, it will save our power unit consumption.
Okay. Okay. Got it. Sir, just one last question. Sir, you have said that to an earlier participant that there's a disconnect in the prices, when we look at caustic soda or any other sort of raw materials. So considering if there is a shutdown considerably because of COVID in China, so the vinyl sulfone and H-acid prices should have been skyrocketed.
So concentrating we are the largest manufacturer. Still, we are not witnessing that sort of a trend on to the prices globally. So what is the possible reason you foresee? So still there is supply in the market considering there is another near so country which is supplying good amount of H-acid or vinyl sulfone?
No. I mean I think what happened was China, yes, I mean it was shut down, but not the entire country was shut down. I mean in part, especially in the manufacturing hubs are usually away from the cities where COVID waves or COVID spreads are not as bad as in the cities.
But being in the city, having been affected by COVID, spreading very, very high, I think they had maybe certain quantities available, which are -- which usually aren't. So there, what I would take this as is that their demand was a little disturbed where maybe the supply of the raw material or intermediates was not disturbed that much.
And another reason is, it's not that a lot of the material is coming from China, but the cost is a little lower because their coal prices are much lower at the moment. The coal prices have been controlled by the central government from Beijing. Wherein India, the coal prices are higher. Also, a couple of the key raw materials are also much lower in China for a few reasons. So that is why their cost only in H-acid at the moment is coming a little lower. So when the cost is coming lower, they are able to offer to Indian buyers at a lower price. So that's why there is some pressure here. But I think once COVID scene normalizes there, then their consumption of the H-acid will be normalized.
I think then there won't be much materials available. Also, there are a lot of volatilities in terms of logistics, in terms of coal, a lot of the raw materials, basic chemicals, basic components. So these -- this is also affecting the cost of -- in some products, India may be cheaper at the moment. In some products, China may be cheaper. So I think this is just a little extraordinary time, which we are witnessing. But I think if the COVID stays away, I think things should be normal, where Indian supply should be able to meet the Indian demand well and there shouldn't be much disturbance from Chinese supply.
Okay. Sir, just a follow-up on this. So I suppose -- if the sort of disparity in prices continue for the next 2 months. So do you foresee any substantial impact on the business because considering -- so considering the situation today, so China is offering at a steep discount. So definitely like there -- so there would be a good amount of pressure if the situation continues for the next 2 months also?
No. I mean even if it continues for, let's say, even a quarter or 2, I think it doesn't affect us in a big way because I mentioned earlier, the revenues from H-acid we get is around 10% to 15%. So even if, let's say, we are able to [ offer ] only 50%, then it -- I mean the top line may only be affected by 5%, 6%. And at the same time, we are also into many other sectors and other businesses where we are seeing improvement.
So I don't think it's a big setback for us at all. I mean this can happen again, if the caustic price goes down, let's say, to INR 40, then again, it may have a hit of 5% on the normal -- on annual revenue side. So I think it is very much -- I mean, we go through cycles, I think manufacturing business goes through cycles [ that we have ] all the time.
Now we are into 5 or 6 different product lines where 1 or 2 at any given time, maybe under little pressure. I think this is very, very common. If we depend, let's say, 30%, 40%, 50% on H-acid and if my plant is only at 50%, but if my plant, I have to shut down, yes, then it's a big setback. It can affect the annual numbers, it can affect the quarterly numbers. But I think it's a very small portion for us now, H-acid business.
[Operator Instructions] Our next question is from the line of Saket Kapoor with Kapoor & Co.
Sir, just to take the point forward, which you mentioned currently. Sir, currently, the caustic soda prices are in the visibility of, I think so, $700 in the international market. So just trying to get the sense of the disparity which you are explaining in terms of Chinese prices being much, much lower than what the other geographies are hoping, sir. You could clarify on this, sir?
So Chinese domestic prices are around INR 45 where, again, if they want to export to India, but which is not available because again, the logistics part is very high. Also, their own demand, I think, is pretty much high. So the domestic production goes towards the local demand. So -- but I think the -- they are the largest producer of caustic.
They are at around 45%, 50% of the installed capacities of the world. And their lower buying of coal is also supporting them and keeping their caustic cost down. So I think India and China are not directly connected or related in the caustic business, where there are no imports coming from China. I mean if you look at the Western region, where the chemical hubs are, then there is hardly any consignment that comes from China even in the last 5 or 10 years.
So the India and China both work in different regions. I think the caustic prices, there is a difference. It affects us in our intermediate business, but in our Chlor Alkali business, it makes no difference. And like you said, $700 yes, for June, Indian companies have got orders for $720 and around, I think $740 for the June shipments. So that's a very good realization again and this has been happening in the last few months. So that is a big support that the Gujarat players are getting. That is why across India, the prices are remaining very, very high.
So you've put a number that the next month deliverables are at $740 for caustic soda export?
Yes. There are already orders -- the Gujarat, a couple of companies, 3 companies, in fact, have already got orders of caustic exports for the month of June at average around $730.
So sir, then this relevance of China quoting lower, is it only a misnomer or is there a different geography, different work altogether? What should we draw conclusion from the prices trading lower at the Chinese market?
No, so, when we say INR 45, that is a local price in the chemical hubs. If China wants to export, then from the chemical hub, they have to go to the port. There is a packaging cost. There's a big freight cost, which is very high at the moment.
So if you -- let's say, if you want to buy that INR 45 material in Gujarat, it will not cost you less than, let's say, INR 55, INR 60. And at a such high price, shipping time is high, shipping cost is high. So at the same time, there are no imports here at all because there is a -- from western part of India, there's a demand, which caters to, let's say, Africa or Middle East, that's where the Indian companies are able to export.
But China is mostly consuming the materials in-house, I mean, within the country and whatever export opportunity -- because it is a low-value product, you have to sell to the closest buyer. But for China, it is -- they will realize more money if they sell it to, let's say, South Korea or Taiwan or Vietnam or Malaysia, countries like that, even into Western United States.
So that's why we both -- India and China, we both work in different regions, being a smaller value product. If it is a INR 200, INR 300, INR 400 product per kg, then logistic costs, extra logistic costs can be absorbed. Then the products can be probably exported from India to maybe even Europe or U.S. That happens in the intermediates and Dyestuff and all that.
Correct, sir. Sir, if you could give us some more color on the current business environment for the entire value chain for us. And what was it at March end? And how are things shaping up to execution for dynamic in continuation to the basket which we operate.
So overall, our -- there's a good development in the TCCA, where there was an issue about exporting the material to U.S. being a hazardous product and there's so much of demand of containers to U.S., most of the shipping lines were not taking the hazardous material. But now since last 1.5, 2 months, we are able to regularly export.
So I can say the planned manufacturing of the plant and the exports have regularized for us, which is a good sign. Then caustic is definitely doing very, very well. The prices are sustaining easily around INR 60. So that is definitely making good money for us. Basic Chemicals, where there is an issue with the higher input cost where sulfur is the main raw material, which is around INR 40 right now per kg, which is around 4x than the last 10-year average.
So that is -- still we are able to pass on the increase and we're still able to make some normal margins. Our thionyl chloride business is doing very well, [ somewhere ] it is running at more than 100% capacity. And the margins are sustaining there also. Our Dyestuff, because we have some good orders, I think our dyestuff quantities are doing very, very well, where we are able to consume our intermediates about 45%, 50%.
In intermediates, which is, again, about 30% of our revenues, yes, there are some issues right now at the moment because some of the raw material costs are very, very high. And in H-acid, like we talked about earlier, there's a cost advantage, I think China has a little bit right now. So that is affecting us just a little bit. So overall, compared to this Q4 FY '22 versus Q1 FY '23, there may be a little slowdown in terms of volumes or numbers, yes. But I think it's not a very, very concerning numbers.
Right. Right, sir. When we look at your consolidated numbers on a Q-on-Q basis, also the subsidiaries are making losses. So what are the key reasons that we are seeing losses from Sener Boya and I think so -- Sener Boya and especially SPS in particular, reporting losses for the -- for financial year 2022, sir? And what steps are we taking, whether it is the lower utilization levels or if you could clarify on the same, sir?
So SPS was definitely hurt by this H-acid because SPS only has an H-acid plant. Recently, we've started our vinyl sulfone production also there, which is now stabilizing. It will take some time. But H-acid is being the key product there because of the cost being higher, especially the manufacturing unit is in North India.
So it has a little bit of a higher cost compared to the Gujarat units also. So I think that is what hurt us in this last quarter, H-acid production in SPS, I think that's where the -- I think some big loss has come from. But what -- the steps we are taking for SPS is, we've already started the vinyl sulfone production there, which works in a good synergy, and which brings down the cost overall. And both together create a good margin.
So that is what we are doing right now. I think within a few months, both should be operating at a healthy utilization and that should -- we should not be able to -- we should not be making losses there and maybe create some decent margins also there.
In Sener Boya, I think it was a good move, but the COVID affected us big time. So right -- in 2019, we acquired 80% stake. But then immediately, we had a -- we had these issues of COVID, so it has been a difficult and challenging ride for us.
In the Q3 FY '22, we had an issue because of the ForEx because of the Lira being depreciated big time. I think we made some losses there. But we have taken the right steps, our financial team has done the right thing. We have converted all our exposure into the local loans, et cetera, in Turkey, so which removes the risk that we face, and we had to book some losses one time.
So there also, we are moving from exposing the loans from Indian parent companies to Turkey. And we have stopped doing that, and we are taking local currency loans, which doesn't affect us in terms of the currency. Maybe Mayur bhai can explain a little bit better about what we are doing in Turkey, Sener Boya.
And sir, but we also -- just to -- sorry, to interrupt you, but we took another 20% -- acquired another 20% stake, so what valuation did we paid for it earlier and what have been the valuation currently, sir, for Sener Boya and the reason for acquiring, sir?
See, earlier, we have paid about INR 32 crore when we acquire 80%. At that time, the company's volume was about 100 metric ton per month because it's a trading company, so its volume is important. And even though there is a COVID last 2 years, we have reached to more than 250 metric ton per month. So it has a very good potential to grow further. And considering all these things, we paid about INR 31 crore for balance INR 20 crore -- 20%. So we have acquired by this way 100% stake in this company. And as mentioned by Ankit bhai, since there was a COVID, we could not perform fully. So without COVID, we will be able to perform better and it can grow further. So this is one area.
Your second question regarding the steps taken by us in Sener Boya. So earlier, there was a payable as far as trade credit as well as foreign currency loan in Sener Boya, which was to the tune of about $8 million when we include the quarter of December '21. So that was the main area which has affected, or which has created a loss for the company because the Lira depreciated heavily and having loan in U.S. dollar, there was a huge loss for us.
But now we have paid off all the loan, which was there in foreign currency. For that, we have acquired some local currency loan and some funding we have done from here to there. So whatever loan we have given to Sener Boya that also we have [ converted ]. So at present, there is no U.S. dollar borrowing or payable by way of loan. So at the same time, there is some receivable in U.S. dollar because of we export about 30% of our volume to Uzbekistan. So there is a positive position as far as Sener is concerned.
So if there is a further depreciation, we will earn something from ForEx area rather than we pay or we lose something as far as [indiscernible] is concerned. So we have taken enough steps and there is no possibility that we can face further loss and all the experts are saying that Lira can depreciate further, but there is no regular or further appreciation is visible.
Our next question is from the line of [ Anik Mitra ] with [indiscernible] PMS.
Am I audible?
Yes. Please.
Sir, my first question is regarding capacity utilization. Can you give numbers of capacity utilization in Dye Intermediate and Dyestuff?
Yes. Dye Intermediate capacity utilization was very good, almost 95% in Q4 FY '22. And the Dyestuff, it was a bit lower. For Q4, it was about 50%. But for the full year, it was about 57%. And for Basic Chemical, it was more than 100% -- was 106%, Thionyl Chloride also 109%. These were the utilization. And caustic soda also whatever was possible. So we were running with the older technology. So we have cleared earlier also that we will be able to operate at about 70%, and we were operating even more than 70%.
Sir, regarding Dyestuff capacity utilization, like what is the outlook going forward is like how do you foresee the utilization going forward in another -- let say, in another few quarters, especially in this FY '22?
So for FY '22, we did about 57% utilization, I think, which is not bad because Dyestuff has a wide range of products where we have to switch from product to product having different shades. So I think the peak utilization is around 70%. So we did about 57%, which is not a bad number.
I think going ahead, we do have many long-term orders and our order book looks very strong right now. So even in the coming quarters, I think Dyestuff business should be quite stable.
Okay. Sir, is there any -- do you see any impact of Ukraine war in your business?
No. So far, we've not seen a direct impact of Ukraine war in our business, but there are, I think, some indirect effects, I think, mainly being in Chlor Alkali business where Ukraine -- I mean, Russia supplies this gas to almost all the countries in Europe, where there are some disturbances because of which in the chlor alkali plants in Europe, most of them are based on gas.
So because of that, and again, Europe has about 20% of global capacity in chlor alkali industry. So that, I think there are some difficulties of productions and there are some utilizations have gone down. I think in that sense, that is helping the global -- that is probably creating some supply constraints, global constraints, and that is probably helping the manufacturers globally to sustain a high price that has been happening in the last few months.
Okay. Sir, like you are referring higher prices of cotton, which like keeps lots of textile players out of the business. Sir, you rightly told like cotton price is settling down, but sir, still it is elevated. Sir, like let's say -- we don't know. Like no one knows like what will happen going forward in another couple of months, in another 3, 4 months, whether it will finally settle down or again, it will make a new high? Because it happened this time also, like after cooling off, again, it took a surge.
So sir, in case cotton price goes up, like what measure have you taken like in case cotton price keeps on rising? Because your 60% of business is very much dependent on textile players.
Yes. So our Dyestuff sales are around 30%, out of which 60% depends on the textile. So overall -- if I look at the overall top line, then it is not that significant number. But at the same time, if the logistic is playing a key part because even cotton, this a global market, global supply and demand internally in different regions. So if you look at logistics or if you look at basic cost, I mean most of the things had reached a peak where now either they are slowing down or either they are settled in those levels.
So going ahead, I don't feel that [indiscernible] prices can be even higher than the certain levels. But I see maybe in coming 2, 3 quarters, them actually going -- correcting a little bit and maybe settling where the textile players are able to absorb the cost and pass it on to the selling prices where the consumers also absorb the increase in the price.
So sir, have you taken any price hike in last couple of quarters?
Yes, absolutely. So depending on our cost increase, we definitely on a day-to-day basis are applying the cost increase to our selling prices, where we talked about H-acid today, where it is difficult to pass it on. But all our [ products ] are able to absorb all the increase very comfortably.
Okay. Okay. And sir, regarding margin, like as all of us know that freight cost is higher, coal prices are also very much elevated. So what do you assess like regarding margins?
Coal prices have been higher for more than 6 months now, I think. So what we can say is that that has already been absorbed, even all our major raw materials, the prices have been very, very -- on a higher side for the last 2, 3 quarters now.
So there has already been absorbed. So even the number -- if you look at our Q4 numbers, that -- even Q3 numbers that include most of the raw materials being on a higher side. So that shows that we are able to pass it on and we are still able to do some decent margins.
Okay. That was from my side.
Yes. One thing I would like to add for your earlier question, when you mentioned that the Dyestuff business, 60% we are dependent on textile business. See, we do have Dyestuff factories, which is not dedicated for textile dyes only. It's a fungible capacity. We can produce leather dyes as well as paper dyes in the same complex to some extent. So there is a possibility we can switch over and do additional production for leather dyes or something like that. This is just I want to add.
Our next question is from the line of [ Ayushi Shah ], an investor.
Sir, my first question was regarding the committee that we made for exploring inorganic growth opportunity. Sir, do we have any idea about like what exact field are we looking at? Like is it is Basic Chemicals, Dye Intermediates, Dyestuff like where are we looking at, like which sector are we looking at for inorganic growth opportunities?
So if I talk about the history of the organization, where my father has done a lot of acquisitions, but obviously, they were very small back in the day. But that has definitely helped us to create a good growth path and that is the reason why we've reached a certain level in the manufacturing numbers and top lines and all that. What we felt is that we were not formally active in the M&A space.
We were not formally active in the market where I think we needed to be -- so until now, other than the Punjab acquisitions, everything has come down -- come to us on a local network. But we were never in the market at a, let's say, India level or international level where we look for opportunities. So that is why we have taken a formal organized step where we have created a committee, which will meet on a regular basis and explore, we'll obviously be more aggressively active in the networks, in the M&A communities. So just to explore these opportunities in a more serious manner, we have done this.
We are not clear what kind of acquisitions we are looking for. The Punjab acquisition has been fruitful for us. But we definitely would look for specialty chemicals or some value-added products. Obviously, nothing of our commodity nature and all that. But that is not -- the strategy is not very clear at the moment. We just want to activate ourselves into that space, which can bring in more and more opportunities and we can probably encash on that.
Okay, sir. Sir, and my next question was about -- like what is the breakup of the revenue, like just to understand in terms of like what is organic and like what has contributed from like increase in prices? And sir, like if you could give me the guidance for the next year, like revenue levels and if it would have been [ segmentized ] then that would be great?
Yes, so our intermediate business in last couple of quarters, the prices have not been very high. That is why maybe [indiscernible] are a little less. So there, which is around INR 700 crores, INR 800 crores, I think it can be about flat going into the next year also. Dyestuff, again, I can say that it can be about flat because it is directly linked to the raw materials of Dye Intermediates.
Chlor alkali, where we did about INR 250 crores, which prices may correct, but again, we are adding more capacity. So maybe that can also -- in fact, will increase. It will have a higher top line. It should be from 255 to around maybe 300-plus levels. Other areas like Trion Chemicals, where we had about INR 35 crores, there we are now doing much better than the last few quarters. So that also can add a little bit more revenues.
And SPS, we have started the VS production there, so that can also add a little bit of more revenues. So overall, I think we can have a flat year as far as this current business is. We are also adding -- we will be starting our Saykha production around May 2023, so that will also -- so that will be impacted in the next year.
But for this current ongoing year, I think we can have a flat year, but I think a little bit more. So maybe INR 100 crores or INR 200 crores of more revenues in the current financial year.
Okay. Sir, so basically, like the flat growth that you expect in like the next quarter and like the next 2 or 3 quarters is expected to like go on for the entire year, right?
Yes, yes. But then again, FY '24, we should definitely have a jump of around INR 300 crores, INR 400 crores. And again, FY '25, when we have a fully utilization of our Saykha Greenfield Project, there we are forecasting around INR 2,700 crores and INR 2,800 crores the top line.
So within next 2 years, it can go from around [ INR 2,000 crores ] to about INR 2,800 crores.
Okay, sir. Sir, and like in the last conference call, you had given a guidance that we'll be increasing our debt by around like INR 350 crores or something like that. Sir, do we plan -- like we already have increased like our debt by around INR 200 crores in this quarter. So like what is like the plan going ahead? And like where will this debt majorly be used?
Yes, there is another part...
We have 2 areas where we are using -- yes, Mayur bhai, you can explain. You can [indiscernible].
Yes. See, as far as [indiscernible] is concerned, we are raising debt for this Saykha project as well as this modernization at Punjab unit. So at present [indiscernible] in the balance sheet is about INR 213 crore. And during current year, it may get added by about INR 300 crore, considering the growth in the project.
So that will be a kind of 500 plus/minus, say, [indiscernible] crore should be there at March '23. And as far as working capital is concerned, we are really focusing to reduce from this level because in last 2 quarters itself, there has been a jump in prices of Basic Chemical, which has increased our blockage in working capital, particularly trade receivable as well as inventory. So we are doing a conscious effort to reduce debt and to reduce even utilization of working capital from the current level.
Our next question is from the line of Saket Kapoor from Kapoor & Co.
Coming to this debt part only. Sir, currently, what is our [indiscernible] what is your cost of funds currently for the long-term debt that we have tied up?
Yes. For long-term debt, it is about 6.7%. In some of the cases, it's about 7%. So on an average, it's about 6.8%. But since the RBI has increased the repo rate that can increase to that extent going ahead.
And sir our -- yes, sir, please [Foreign Language]
But our working capital is at much lower because we are using about INR 125 crore of foreign currency loan, where the cost is about 2.5%, up to 2.2%, 2.5%. And whatever rupee loan we used for working capital, that is around 5%. So blended, we can say it's about 4.5% to 5% at present.
Okay. That is stated to go up only, sir?
Sorry?
That is stated to go up only because of now the increase environment has changed.
Yes, yes.
Sir, on an absolute number, sir, this was INR 29 crores, sir, for this financial year. So this number should increase only since we'll be drawing more funds for this year end?
Yes, interest cost will definitely increase because RBI has given a clear signal that it can have another round of repo rate increase. And at the same time, Fed is also increasing [indiscernible]. So as far as so far is concerned, that is also at the increasing trend.
Sir, I would like to have some more understanding on Slide #29 and 30 of your presentation. If you could just give me just a second, sir.
Sure.
Yes. Yes. Sir, herein, you have mentioned about the next level of growth -- CapEx to drive next level of growth. If you could explain to us, sir, what are we currently exactly eyeing in this moving up the value chain with new chemistries? So these 2 aspects if -- if you could dwell more on this term, explaining what are we eyeing currently, sir?
Sure, sure. See, there are 2 areas where we are doing growth. There is one at Punjab site and another is Saykha, South Gujarat site. As far as Punjab site, we have already acquired a running unit of Mawana Sugar for chlor alkali. So it is a running unit, it is contributing to our revenue as well as bottom line. And over there, we are doing modernization kind of things. So upgraded technology we are installing. So that process, as mentioned by Ankit bhai by Diwali or by December, that process will over. So that will have a production of about 1 lakh metric ton per annum. So that is there. And that will have a CapEx of about INR 270 crore as far as Punjab is concerned. This is one area. So this is a new line of activity we have started. Earlier, we were not into Chlor Alkali business. So this is one.
Another Saykha site, we are going to have 2 plants. One is sulfuric acid plant that will be capacity addition for the company. We already have 500 metric ton per day plant for sulfuric acid at our Padra site and another about 1,000-plus per metric ton per day plant we will have at our Saykha site that will also have sulfuric acid as well as its derivative, like chlorosulfonic acid [indiscernible] Oleum 23%, Oleum 65%, all these things.
At the same site, we will also have benzene downstream product. When we say benzene downstream product, so benzene will be our raw material and from benzene, we will produce MCB. So MCB will be fully captively consumed and from MCB, we will produce PNCB, ONCB, MNCB, DNCB kind of products. So out of that, PNCB will have a further consumption as well as sales in the market. And from that, we will produce PNA as well as 2,4-DNCB. At the same time, from 2,4-DNCB, we will produce MPDSA. So there will be 3, 4 stage of integration and basket of 6 to 8 products that we will start manufacturing. And that is a new line for us in a way. Though out of this product, PNA and MPDSA, we are producing at our Padra site, but in a lower quantum.
So this sulfuric acid and benzene, both put together will add about INR 550 crore of revenue for the company, and this will be operational in Q1 FY '24. Hope I have covered all your questions?
Sir, just to come to the derivative part of benzene, the code word, abbreviations which you have used, its application finds in which sector, sir. I missed the -- from the benzene derivative chain which you have mentioned, the products will be catering to which segment?
And then for this H-acid prices, what have been the price trend, sir? In your business highlights, you mentioned about H-acid price as INR 474 kg -- per kg. So what has been the price trend for last year, if you could give some color on that?
Yes. During last year also, H-acid price was more or less similar in the range. It was ranging between INR 450 to INR 500 in that range, it was there. As far as further downstream -- utilization of benzene downstream, I think Ankit bhai will better make you understand. Ankit bhai, over to you.
Yes. So in benzene derivatives, there is a lot of import that happens since many years. So what we are trying to do is we are trying to substitute the imports that come into India. That is the main -- one of the main reasons.
And second is that out of all the products that we are going to produce, there are 3 products that we consume captively in our intermediate space. So we also want to synergize some of our raw material needs. And another reason is that like the areas you asked for, where it is used, I think pharma is one of the main spaces, paracetamol is where PNCB is used in a major way.
Agrochemicals is another space where it is consumed in a big way. And then again, Dye Intermediate, and there's also some export opportunities as well. So again, we are getting into a business where it goes into multiple sectors. We don't want to depend ourselves where we expose ourselves to a limited or 1 or 2 sectors only. We want to be producing specialty products, which has [indiscernible] applications, not only in India, but across the world.
Right. And sir, just to take things offline, we need to approach SGA for any one-to-one conversation going forward? If I could not cover every point here, and I have something else to ask post the call...?
Yes, it is fine. You can contact them and Shrikantji or anybody who's here from SGA, please let us know. We can do -- we can set up a quality time or we can do an in-person meeting also anytime.
Yes, sir. And sir, lastly, sir, just to derive some merit, if you could provide the numbers in lakhs and crores? If you look at your -- you also conducting the call wherein you are using terminologies of lakhs and crores, but in the presentation, it is all about millions. So if it is not for any other purpose, if we could convert it into this lakh and crore that would be more familiar for people in the investing community. Just a suggestion on my front, if that would be looked into it. If anyway [indiscernible] have mentioned -- yes.
Yes, it makes sense. But in the past, you had international investors. Also -- we also, at the moment, have international investors. So that is the reason why we moved to million where we can have maybe a common numbers where everybody can understand. But Mayur bhai, we can maybe consider this and maybe move to crores?
Yes, we can look into it.
Right. Sir, but you -- sir, sorry to -- just dwell one more point. And for H-acid you were mentioning something that there was some price disparity or some fluctuations that resulted in lower profit. So [indiscernible] told that the prices were averaging only from INR 450 to INR 500, the mention of the same, sir, I could not follow the point.
So at the moment, the input cost of -- to manufacture H-acid is very high. The product -- the finished goods price of H-acid is around the same level. But the input cost, some of the raw materials are very, very high. So -- and we are not able to pass on the increase in the cost in H-acid because there is some quantities available from China, where their input cost is a little less.
So especially last about 20, 30 days, this has happened in the industry where the Indian manufacturers of H-acid have not able to make decent margins in H-acid. So there is some disturbances in that space. So the primary reason is things like coal, caustic, some of other raw materials are a little bit higher compared to how much they are available at -- in local Chinese market.
So I think it is a temporary thing. And so it may have some impact temporarily.
Right, sir. And last point, just to conclude, for the 20% stake for Sener Boya, so the seller was a local person from -- how many parties were there from whom we purchased the 20% and...
Yes, please go ahead.
Yes, sir. And was there any clause in which we had to buy back this? Because we paid a big [indiscernible] and this Sener Boya is only a trading company or do we have a manufacturing facility also there, correct me, sir.
So there is a value addition facility there, but it is not a complete manufacturing setup. So Sener Boya was our first buyer in Turkey, which is, again, one of the largest textile markets in the world, textile processing in the world. So them being our regular buyers since the beginning days, they had a very, very strong position in Turkey and surrounding country markets.
So we were actually planning to set up our own subsidiary company and start from scratch, which wouldn't have given us the quantities that we have already achieved. So the idea was to take over this trading -- majority trading company where they have a position in all these, not only Turkey but surrounding countries also. So for us to grow in dye sector, we have to start selling more to these strong areas where they consume lot of dyes.
So if I -- if we would have started it from scratch, it would have taken us a lot of time. We may not have even reached this level even after 5 or 10 years. So that is the reason why we bought this stake [indiscernible] was a ready-made structure where they already had a good-sized market. And we are able to already more than double what they used to do because of the support that we give from Indian, our own Dyestuff. So there was no clause or anything. But I think we wanted to -- it's better off to do things independently. We wanted to wait to buy the remaining stake just to keep them active in the company. And they are definitely local, the Turkish people. We wanted to keep them active in the business until we are confident, and we'll learn about the business.
And then at this point, we are satisfied with the growth that we've done in terms of volumes. And we have appointed people from India and local Turkish people also. So I think we reached a point where we were confident about the growth that we have forecasted. That is why we had gone ahead and bought the remaining stake.
Ladies and gentlemen, due to time concern, there will be no further questions. I would now like to hand the call back to Mr. Ankit Patel for closing remarks.
Thank you very much, everybody present on the call. Thank you, SGA. We are definitely, me -- and myself and Mayur bhai are available if anybody needs to connect to us one-on-one or via e-mail or on a call or anything, please contact SGA, and we can schedule a call or even a personal meeting at our office in Ahmedabad. Thank you very much.
Thank you. On behalf of Bodal Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.