Oriental Aromatics Ltd
NSE:OAL
Oriental Aromatics Ltd
NSE:OAL
Price:
310.19
INR
1.09%
Market Closed
Market Cap:
₹10.4B
Add Note
Add Target
Capture your thoughts and set a target
Decide at what price you'd be comfortable buying and we'll help you stay ready.
Based on
Margin of Safety
0%
10%
20%
30%
40%
50%
Your Price Target
Linked to
current price
· In Buy Zone
Loading
Note attached
Choose the stock you wish to monitor with a price target
Popular Picks
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
Bank of America Corp
NYSE:BAC
|
US |
|
Mastercard Inc
NYSE:MA
|
US |
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
Pfizer Inc
NYSE:PFE
|
US |
|
Nike Inc
NYSE:NKE
|
US |
|
Visa Inc
NYSE:V
|
US |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
Coca-Cola Co
NYSE:KO
|
US |
|
Verizon Communications Inc
NYSE:VZ
|
US |
|
Chevron Corp
NYSE:CVX
|
US |
|
Walt Disney Co
NYSE:DIS
|
US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
Earnings Call Transcript
Other Earnings Calls
Ladies and gentlemen, good day and welcome to Oriental Aromatics Limited Q3 and 9 Months FY '25 Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Ms. Nupur Jainkunia from Valorem Advisors. Thank you and over to you, ma'am.
Thank you. Good afternoon, everyone and a very warm welcome to you all. My name is Nupur Jainkunia from Valorem Advisors. We represent the Investor Relations of Oriental Aromatics Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and 9 months ended of the financial year 2025.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause the actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.
Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for the opening remarks. We have with us today, Mr. Dharmil Bodani, Chairman and Managing Director; Mr. Shyamal Bodani, Executive Director; Mr. Girish Khandelwal, Chief Financial Officer; Mr. Parag Satoskar, Chief Executive Officer; and Ms. Kiranpreet Gill, Company Secretary of the company.
Without any further delay, I request Mr. Dharmil Bodani sir to start with his opening remarks. Thank you and over to you, sir.
Thank you, Nupur. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call to discuss the results of the third quarter of the financial year 2025. Our Executive Director, Mr. Shyamal Bodani, shall be briefing you all on the operational highlights for the past quarter; after which, our CFO, Mr. Girish Khandelwal, will brief you on the financial highlights.
Over to you, Shyamal. Thank you.
Thank you, Dharmil. Good afternoon, everyone. Thank you for joining us for the quarter 3 financial year 2024-25 Earnings Call. I'm pleased to share our operational highlights and business performance for the quarter ended December 31, 2024.
As we move through the fiscal year, it is important to note that the third quarter has historically been a quieter period for us. This trend is primarily driven by the varying levels of impact that the Indian festival season has on all our business divisions. This year has been no exception. Despite the seasonal slowdown, we stay committed to our long-term strategic goals and continue to focus on operational efficiencies, innovations and strengthening our market position. Our ongoing productive initiatives, sharp focus on customer engagement and commitment to customer growth has enabled us to achieve double-digit growth in production, sales and operating EBITDA compared to quarter 3 of 2023-'24. However, when compared to quarter 2 of 2024-'25, production volumes, sales and operating EBITDA margins have remained flat, reflecting the typical seasonality and macroeconomic conditions affecting the industry.
Business division performance. So first, I will begin with the Fragrance & Flavor division. This division has shown robust growth driven by both existing customers and new customer acquisitions. Our performance in this segment further reinforces Oriental Aromatics' position as a preferred and sustainable innovative partner, helping our customers drive growth through innovative solutions. Despite a slowdown in FMCG demand in India, we view this as an opportunity. Our creative teams in the Fragrance & Flavor division are actively collaborating with R&D and product development teams at FMCG companies to develop market winning fragrances and flavors. These fragrances serve as key differentiators in the market, enabling FMCG companies to enhance product appeal and boost customer demand. Our backward integration advantage uniquely positions Oriental Aromatics to deliver these high-impact solutions.
Fine fragrance has been another key growth driver and continues to be a significant and profitable part of our Fragrance division. The category has seen a surge in demand due to new product launches, social media influence on consumer preferences and a shift in fragrance usage behavior due to global warming. With customers now using fine fragrances as a daily essential rather than just for special occasions, demand has significantly increased. OAL has secured substantial business in this category, both in India and across the globe, solidifying our leadership in this space.
On the Camphene and Terpene Chemicals division, we have powered through camphor segments continued to face a challenging market environment affecting overall performance. However, demand and price realization for other terpene-based products stay strong. With global pinene prices firming up, we expect that camphor powder prices will eventually adjust, leading to improved profitability for this division. On the Specialty Chemicals division, we have delivered a strong quarter, continuing its growth trajectory. As highlighted in our earlier investor call, our newly commissioned multiproduct hydrogenation facility at Vadodara and a single product plant at Mahad has been ramping up production month-over-month, further strengthening our Specialty Chemicals portfolio.
Input cost and market outlook. We foresee a firmer output for input costs across our supply chains and business divisions. While we expect these impacts to be mild to moderate for now, we are closely watching key macroeconomic factors, including the depreciation of the Indian rupee, which could have cost implications in the near term; the recent tariffs imposed by the U.S.A. on certain countries, which may influence global trade dynamics and pricing trends in the upcoming quarter. Regulatory update. U.S. FDA certification secured. On the regulatory front, we are pleased to inform our investors that we have successfully defended our U.S. FDA certification for camphor during a recent concluded U.S. FDA audit at our Bareilly facility. This reaffirms our commitment to maintaining world-class quality standards and regulatory compliances across our operations.
In closing remarks, in the summary, with -- while this quarter has had its challenges, we stay optimistic about our long-term growth trajectory. Our strategic initiatives, market positioning and operational strength continue to drive resilience in growth across all divisions. We thank our investors for their continued trust and look forward to delivering sustained value in the coming quarters.
I would like to now request our CFO, Mr. Girish Khandelwal, to give the financial highlights. Thank you and over to you, Girish.
Thank you very much, Shyamal. I would like to welcome you all to the conference call.
Let me first take you through our consolidated performance for the quarter. The operating revenue for the quarter was INR 223 crores, which increased by approximately 13% on a year-on-year basis. In terms of profitability, EBITDA was reported at INR 23 crores, which increased by 60% year-on-year. Our EBITDA margin stood at 10.15% representing a 301 basis points improvement year-on-year. Net profit was reported at INR 7 crores, which has increased more than 174% on a year-on-year basis with PAT margins at 3.19%. Now coming to the 9 month of FY '25 performance on a consolidated basis. The operating revenue was reported at INR 675 crores, representing an increase of 9% year-on-year. EBITDA stood at INR 73 crores for the period, which has grown more than 181% year-on-year. EBITDA margins for the period stood at 10.86% vis-a-vis 4.19% in corresponding 9-month FY '24. And net profit stood at INR 33 crores vis-a-vis a net loss of INR 1 crore in the corresponding period of the previous year. This PAT margins reported at 4.87%, demonstrating the impact of our efficiency measures and product mix optimization.
From a balance sheet perspective, we continue to maintain financial discipline. Our net debt equity ratio on a consolidated basis stood 0.45x as of December 31, 2024, ensuring a stable financial position to support our growth ambitions. We remain committed to driving operational efficiencies, strengthening our product portfolio and capturing new market opportunities to create long-term value for our stakeholders.
With this, we can now open the floor for the question-and-answer session. Thank you.
[Operator Instructions] The first question is from the line of [ Ankit Gupta from Bamboo Capital ].
So my question is on the volume growth that we have seen and how do you see the volume growth panning out. So in this quarter, we have seen a 6% increase in our volumes on a Y-o-Y basis. So that -- given the industry situation currently and given both the expansion at Vadodara and Mahad that we have done, how do you see the volume growth panning out for us for FY '26?
Ankit, so primarily, when we look at the -- all the divisions, I think we are seeing a substantial growth in terms of value as well as volume for the Fragrance division as well as for the Specialty Aroma Ingredients division. In terms of the new products that have been launched, we are glad to inform you that they have been accepted by customers in India as well as globally. So we are pretty confident assuming that the demand now is more or less stable globally. We will have volume growth in our current set of products as well as the new products that are being launched in the recently commissioned plants.
Got it, sir. Can we expect volume growth to be in double digits, assuming the new products that we are launching from the new plants that we have completed? So at least double-digit growth is what should we be looking at in FY '26.
So I think it would be -- it would not be prudent to really give any guidance, per se. What I can safely say that the products that are being launched are generic in nature. We know that the product has usage globally. I think we have our cost sheets more or less sorted out on these products. And as customers are accepting the products more and more, we always normally go through a transition where we do allocate part of the volumes to us for 2 or 3 cycles before they really give us substantial volumes. So I can guarantee you, I can assure you that we are trying our best to get as much volumes allocated to us and we are pretty confident of achieving it.
Okay. how is the pricing scenario from China currently? Have you seen some stabilization in prices on the Aroma Chemicals and Camphor front, or the situation remains stagnant, the pricing remains a bit challenging?
So I think as we mentioned, as Shyamal mentioned in his opening remarks, the last few quarters have been a situation where the prices have stayed more or less flat except a few materials on the fragrance side of our business. But they have stayed more or less flat. I think the impact of any macroeconomic factors like sanctions or currency depreciation needs to be seen going forward. And whether they would lead to a reduction in prices or increase in prices, it's something that needs to be seen.
But more or less, across the board, we are seeing relative amount of stability in pricing on the input costs, except pinene which has firmed up but not in the form of spikes as we have seen in the past.
Got it, sir. My third and last question before I come back in the queue is on the depreciation and finance cost. So on a consolidated basis, we have seen some jump in both the figures. So can we assume that the figures of INR 6.4 crores on depreciation or -- and INR 6.5 crores on finance cost is including the impact of the CapEx that we have done in Baroda and Mahad and this fully captures the -- and it will be like INR 6.5 crores run rate going forward as well, like this quarter was fully reflective of the CapEx that we have done at both the locations?
Girish, you want to answer it?
Yes, yes. Finance cost includes the finance costs related to the projects also. And depreciation will go up little bit to the tune of INR 7 crores because this quarter, partially depreciation of Mahad CapEx is captured in the [indiscernible]
Okay. So INR 7 crores will be the depreciation on a quarterly basis with both the CapExes depreciation being factored.
[Operator Instructions] The next question is from the line of [ Chetan Doshi from Tulsi Capital ].
I have 2 questions. One is, for the 9 months we have ended roughly around INR 680 crores. So can we expect that by March, we should be able to achieve a milestone of INR 1,000 crores for this financial year? And second question is regarding the finance cost. In the notes, you have mentioned that GST penalty of INR 2.4 crores is there on this. So if that would not have been there, then the profit would have been around INR 12 crores for this quarter.
So Chetan, I'll try to answer the first question and leave the second one to Girish. I mean, we -- as you say in Hindi, [Foreign Language], I mean, the endeavor of the whole team is to ensure that we reach to this milestone as early as possible. However, we also have an objective that we have to reach that milestone in a very sustainable and a profitable way. So just to kind of answer your question, I think all efforts are on to see if we can kind of reach that milestone as early as possible. Whether we do it in the current financial or probably we'll have to wait for 1 more year, it's something which we need to wait and watch.
Sorry to ask, one thing is that after the expansion, what we have done in Baroda and in Mahad and the existing product range what we have, your internal target is to achieve this, or it is not for this financial year? That is the question.
Absolutely. So like I said, that the plant that have been recently commissioned in Baroda as well as in Mahad, the objective was to kind of get them commissioned as early as possible. We have had some minor delays in the Mahad commissioning. And because of which, the projections that we had in terms of production and sales stand a bit skewed. Matters get a little complicated because of the cost pressures that we have on the Camphor division as well. Having said that, across the board, if you add up all the divisions, all the divisions seems to be doing pretty well. Therefore, minor these fluctuations we should be very close to the number is what our expectation is. But whether we really cross the line or not, it's something which we need to see.
Yes. I want to answer regarding the finance cost. So that INR 2.5 crores finance cost -- interest costs related to the [indiscernible], it is included in the corresponding December '23 quarter as well as 9 months of the corresponding period, not in the current quarter.
I think the last quarter.
Corresponding quarter, December '23.
And I think last financial year, not the current financial year.
Not in the current financial year, right.
The next question is from the line of Gunit Singh from Counter Cyclical PMS.
Can you please share the price trend for camphor? So what is the current price of camphor? And how have they trended as compared to last quarter and as compared to last year as well?
So did I get your name right, is it Punit?
Gunit. G.
Yes. So primarily, rather than getting into the specific per kilo price because that may vary from customer to customer and supplier to supplier, I think if you look at the overall competitive landscape in the camphor powder business, there seems to be a lot of overcapacity that's there, which is driving a lot of players, current as well as old, to be very, very aggressive in terms of the pricing. And hence, I can summarize by saying that the current selling price of the camphor in the market does not reflect the actual cost of production.
All right, sir. But just in terms of broad range, if you can give a broad range of prices right now and how have they been trending as compared to last year or last quarter, that would be really helpful.
So I think currently, in the current situation, the powdered camphor prices would range anywhere between INR 450 to INR 500. And if you looked at the similar time last year, they were at around INR 380 to INR 420.
Got it. So the situation has been improving. So sir, what is the current capacity utilization on a consolidated basis? And what is the -- I mean, maximum revenue potential with the current capacity? And do we have any further CapEx plans for FY '26? And in case we do, do we plan to raise any debt for the same? So what should be our peak debt in the coming years? That's what I would like to understand.
So if you look at our current capacity utilization for plants which are already existing, I think all of them are running at optimal capacity which, when I say optimal, we are looking at anywhere between 80% to 90%. For the plants that have been recently commissioned, which are plants at Mahad and the multiproduct hydrogenation facility, those have capacity utilization which is relatively less. But no plant currently is running at less than 50% of its planned capacity, point #1. And point #2, we're going to now focus on more on the consolidation of the products that we have currently launched. And if there is any new information about capacities or plants that we would be putting up, we will definitely share it with the investor community.
Got it sir. There are no plants as of now. So sir, what is the revenue potential for [indiscernible]
I am sorry to interrupt, Mr. Gunit, can you please fall back in the queue.
Just a follow-up here. I mean, just a follow-up. I can join back the queue.
Hello?
Yes, sir. So, I mean, what is the maximum revenue potential from the new units? And as of now, as I understand, there are no [indiscernible] program, right?
So what you can do is, Gunit, if you could just send us the -- if you can just reach out to Valorem and send us the question, we will internally discuss about it and we will revert back to you for sure.
The next question is from the line of [ Richa ] from Equitymaster.
Could you just give me a gross block at present, end of December quarter or maybe by the end of this year?
Sorry, I missed the question.
The gross block by the end of FY '25 or by the end of December quarter.
Gross block of the sales.
Gross block, yes. Gross block of the company.
Yes. I will just give you right now.
Sorry?
1 second, 1 second.
If you do not have it, Girish, you could probably reach out and get that number and/or you could give it later.
Yes, yes.
Sure, sir. And sir, my question is also [indiscernible] there seems to be a sharp decline. So is this a normalized run rate for the coming years?
Ma'am, we missed your question in the middle. Can you repeat the question again?
My question is regarding other income, which seems to have declined on a sequential and year-on-year basis. So is this a normalized expectation for the other income? And what is the reason for the decline?
Girish, you want to take this?
Sorry, gross block, I was just checking. So net block is around INR 425 crores. [indiscernible]
Yes, yes, this is net. Okay. Sir, could you also talk about the fall in the other income, the reason for the same and what can we expect going forward?
So see, the drop in other income because this quarter we do not have the foreign -- ForEx gain. So that gain is adjusted against the loss, ForEx loss. So that is why that other income is reduced.
Okay. And sir, in the new plants, Mahad and the hydrogenation plant, by the end of FY '25 and FY '26, what kind of utilization do you expect?
I think we should -- by the end of '25, in the hydrogenation facility, we are already seeing utilization between 60% to 70%. And when it comes to by end of FY '26, we should have -- we should probably be running that plant at optimal levels. And Mahad is less. Mahad is anywhere between, say, 40% to 50% because it's recently commissioned. But I'm sure we will have substantially higher capacity utilization in the coming quarters.
[Operator Instructions] The next question is from the line of [ Saket ], an individual investor.
Yes. So first question would be, Parag bhai, there is a -- or Girish bhai, there is a purchase of stock-in-trade almost INR 7.5 crores that has popped up in this quarter. So what really explains this?
Parag, you can answer regarding the trading division.
So primarily, I mean, we have also initiated one more activity as part of our ongoing business, where we see an opportunity in taking positions on certain generic materials which are used regularly by our fragrance creation division as well as they have a substantially large outlet in the Indian F&F space. And that's where we have taken certain positions on these fragrance raw materials and which we have either imported or bought locally. And we are going to sell it as our trading division materials in the Indian market and/or also consume it in our fragrance division.
Okay. So basically -- and will this be -- so was it profit -- has it already broke even, this trading aspect? Or we are looking to breakeven, say, in the coming quarters?
So I think it's an activity which is ongoing. I'm sure it's definitely profitable and we will see more action happening in this space in the coming quarters.
Okay. Fair enough. Now so in the consol and the -- so the new Mahad facility is part of consol, right? It's not part of stand-alone.
Yes, it's part of consol.
And there was no revenue from Mahad then because there is no difference between the top line?
No.
And we as -- I think numbers in the footnotes -- what we -- incurs around INR 3.5 crores losses in the Mahad facility. So are we -- given the utilization and all so basically -- because it seems there was no utilization at all in Q3. So in Q4, given whatever utilization that Parag bhai is guiding for, do we expect it to breakeven in the Q4 or at least contribute to EBITDA?
So I think, Girish, correct me if I'm wrong because I'm kind of getting into a quasi-financial question, but I think the plant is recently commissioned. We are -- the plant is running at capacity. We are in the process of getting the products right for our customers. Based on the sampling that has been done, from the trial commercial production, the customers are happy. So going forward, it should definitely start contributing towards profitability. Girish, correct me if I'm wrong.
Yes, correct. And we will see the revenue incoming from the June quarter or September quarter. Because September quarter will be the H2 for the [ MNC ], right?
So just to be sure that in Q4, there will be revenue from Mahad plant and it will be margin accretive. Because in Q3, it was not, right, no revenue and no profitability there.
So in Q4, we will definitely have revenues. How significant they will be, et cetera, et cetera. I mean, like Girish said that when we will have the commercial lots which are approved to be sold, the first shipments are going to probably go to our top spot customers. And the actual contracts, et cetera, will start happening in Q1 of next financial year. That's when we go and bid for the H2 contract of 2025 calendar with our global customers. So that's when there will be significant but we are going to use all the Q3 and Q4 of this year to produce and keep it in stock and to start selling it to people who want to buy it in spot.
Okay. Fair enough. And just last question, so Parag bhai, when do we expect to, say, come back to that [indiscernible] and removing the new plants, 14% to 17% and some kind of a long-term EBITDA guidance part because our competitors or peers have already started to go back to those numbers, their normalized margins but ours is still struggling. Is it like there has been some issue with the product or any particular portfolio that is causing this? Or is only camphor-driven? And when do we expect to get back to that normalized margin?
So Saket, primarily, if you look at Oriental's program of growth, the period has to be taken from 2018 to 2025. The whole aroma ingredient piece as well as the backward integration fees with our Fragrance division was conceptualized in 2018. And then from that time onwards, we've been continuously building plants. We've been standardizing the products. We've been achieving growth in those products. And in the meantime, we have had a new plant that was coming in where this whole cycle had to be repeated. That is the reason why if you look at broadly the numbers from a quarter-to-quarter perspective, you have some products which have now seen normalized profit margins contributing to the overall group P&L. But you also have certain products which are just launched. And there, we have to kind of -- because they are generic products, we have to kind of face the market forces and create a space for ourselves. And that is the reason why you see that multiple quarters, we have had a situation where, yes, we are getting normalized profit in the products that are launched a little in the past.
But the new products are still getting streamlined. So -- and then we had 2 years of disruptions because of COVID, et cetera. So I think we still stick to the guidance. We like to undercommit and overdeliver. And we aspire to achieve these normalized numbers, which is what you just mentioned. And we can only talk about ourselves. So that's the overall piece, if you look at our journey from 2018 to 2025. And that's why we are now looking more at consolidation. Because I think that whole program which was charted out has now seen the light of the day. And hopefully, as we go and become more mature in all the products, we should see more normalized margins. But we will stick to the guidance of 10% to 12%.
The next question is from the line of [ Abhinandan ], an individual investor.
Sir, I just wanted to understand your business model a little further. So do you have some kind of, I mean, partnership or some kind of collaboration with the innovators like, [indiscernible], for example, to supply them with the, let's say, the molecules which are under patent or something like that?
So Abhinandan primarily, I think like we have always mentioned that when it comes to our Specialty Aroma ingredients and the camphor and the terpene chemical division, we focus more on the generic materials, point #1. Point #2, I think it's a very clear strategy from Oriental Aromatics that we like the freedom to operate since we are into generics. And so we are more than happy to kind of be a global supplier to all the companies that you just mentioned. And having said that, needless to say that we have a lot of programs where we work with one or many of these companies on individual products, which I will not be able to kind of share it with you on this platform.
Agree. Agree. So basically, what I'm trying to understand here is that there is some kind of, I mean, disruption in Europe. And owing to that, are you seeing some kind of increased inquiries for some of their molecules that they might want to outsource to you people, something on those lines?
Disruption in what exactly?
European, sir, I mean, this European chemical companies, they seem to be struggling a little. So in response to that, are you seeing some kind of increased inquiries there from them?
So I mean, I wouldn't make it as a broad answer. But I would say that generic suppliers from various countries in the world are really challenging the overall cost structure that has been lying in the fragrance and flavor space globally. So we are no different. So I'm sure that -- I mean, a lot of the products that we offer to our European customers, they buy it from us because it's of a sustainable quality and at a very competitive price. I think -- I hope I answered your question.
Yes, sir. Yes, sir. That's helpful. That's pretty helpful. And just one more follow-up. So now looking at your last 3, 4 quarters of gross margin, I think they been fairly stable. And we have seen camphor prices going up and down as well during this period. Given that the raw material prices, they have kind of stabilized, do you expect that your gross margins will continue to be in the range of 40%, 41% that we have been reporting for the last 4 quarters? Is that a fair assumption? Or do you still see some kind of, I mean, volatility there?
So we have always maintained it in multiple investor calls that for this industry, a steady state of business was never achieved for multiple years. I think when we have seen that steady state of business in 2 of our 3 divisions that we operate, we've been able to kind of maneuver between the 3 divisions and get some level of stability in terms of margins. Assuming that this stability remains, we are pretty confident that we will be able to have these sustainable numbers and aspire to make them better.
And sir, is it fair to assume that your gross margins are, if not significantly better, at least slightly better in these aroma chemicals and fragrances compared to camphor, the gross margin part?
For now, yes. Can't be generalized.
The next question is from the line of Madhur Rathi from Counter Cyclical Investments.
Sir, I'm trying to understand what is our camphor total capacity and what is the total installed capacity of camphor in the country? And sir, because I understand that is the weak link in our business, like you mentioned, due to overcapacity, et cetera. So -- and by how much is there overcapacity by like in terms of percentage? And sir, can't we just -- can't the domestic industry export out of this overcapacity?
So I will not be able to give you extremely specific numbers because a lot of the companies who are active in this space are not publicly listed. So I mean, we do not have any which -- any way of getting to those numbers. What I can talk to you about is our capacity. And like we have always mentioned, that our capacity is currently at optimal level. And to answer your second part of the question that, can the industry work its way out of overcapacity by exporting out. Unfortunately, if you look at camphor as a product, apart from nominal medicinal use in Chinese medicine and some global medications, it has very limited usage globally outside these 2 known applications. I mean, the next big usage is in India for religious purposes. And so it's going to be a bit challenging to really export our way out because the Chinese medicine market is fairly saturated with the Chinese camphor suppliers. And if you want to be part of the global medicinal segment of camphor, it's heavily regulated, which makes it as a very key challenge, or an entry barrier.
Right, sir. So basically then, what is the way out, sir? Where is the light at the end of the tunnel as far as Camphor division is concerned? And sir, are we breaking even over there? And what kind of return on capital are we making in that division?
So like I said that we definitely are breaking even in our Camphor division, point #1. Okay? I don't know if we kind of share individually division-wise ROCE number. So if that is a specific question, you can send it to us. If we can, we will respond to it. But I can assure you that we are not only breaking even, camphor also contributes to the overall performance of the group.
So is some improvement expected from this division or the rest of the business, we have hopes and this is possibly, like things will continue as they are?
No, I think this -- like I said, that for us, apart from the camphor piece in the terpene chemical division, we have other materials, where the demand seems to be pretty stable and growing. So we will continue our efforts of kind of putting this whole division together and making it more profitable. I mean, even today, it's still contributing. I mean, it's not that it's kind of pulling the other divisions down. So -- and as a company which is focused on innovation and sustainability, we will look at how we can kind of make that whole division work in a better way.
The next question is from the line of [ Ankit Gupta from Bamboo Capital ].
Sir, if you can please talk about when do you expect the Mahad plant to reach, let's say, optimal capacity utilization of around 70%, 80%? Any time line that you can indicate to us?
So like I had mentioned in one of the previous questions, Ankit, I mean, the product is very generic. The product has extremely large-scale usage globally. We -- the product has been well accepted by the customers when sampling has been done. We've also used it in our internal fragrance division and it's perfectly well. So I think it's a matter of time where, like I said, that we need to take more batches. We need to have inventory. We need to go and have conversations with the customer, with the inventory and a very strong cost sheet. And I think, as we have mentioned in the past that we have this 500- to 600-day transition where people give us first very limited allocation just to test our ability to supply. And then based on our performance, we will have more allocation. So to answer your question, we probably are anywhere between 4 to 6 quarters where we will be able to achieve optimal capacity.
Sure, sure. And any time lines on when we can break even on this plant? Because currently it seems that given we have just started the plant and capacity utilizations are just picking up and we are ramping up our production facilities. So any timing when we expect this plant to break even and start contributing positively on the EBITDA front?
Sure. So I think Girish will answer that but I also want to kind of advise the investor that -- or inform the investors that this is a large greenfield site. And this site, when it was kind of developed, I mean, this is just one plant in this site. So there has been expense that has been done for site development for kind of building the basic infrastructure. And then we have built this plant. So this is the background for this site. And this site is going to take care of our future expansions in the coming years. So everybody should be mindful of that. Having said that, Girish, based on projections, do you have any numbers on breakeven? Or would you want to share it later?
Yes. Parag. I'd say around 60% [Technical Difficulty]
Girish, your voice...
Hello. Can you hear me now?
Yes.
Around -- at 60% of this plant will be at breakeven at the plant perspective.
Okay. So let's say, around second half of next year is when we can optimistically assume that we would breakeven here?
Should be a fair assessment but we will keep you posted.
Sure, sure. Just my last question on the kind of products that we'll be manufacturing from the Mahad plant as well as the hydrogenation plant at the Baroda facility. So are these products relatively high value -- the realization of these products higher than our existing product basket, or it's the same, let's say, does this -- does the new products that we have introduced from this plant include some of the products which are, let's say, comparatively high -- realizations are much higher compared to our existing product basket?
So I think if you look at Mahad, Mahad is a single product plant. So it's a mid-value product. If you look at the hydrogenation facility, it's again a multiproduct plant, various certain products which are relatively high value, I mean, close to $80, $100. And then you have certain products which are bulk, bulk commodities, which are like $7 to $10. So if you look at the product mix in the hydrogenation, it's a very nice mix of value and volume. Mahad is a single product where it's mid-value and mid-volume, a few hundred tonnes and say 30 [indiscernible]
So the Mahad, let's say, in the second or the third phase, we'll be introducing [ MPPs ] in other larger plants, let's say, in the second or third phase of expansion whenever we do that. Is that [indiscernible]
Absolutely. Absolutely.
Sir, currently, this 1 product which is -- which we are producing from there. And the plant also is designed like that, we can't use it for other product. Is it like that?
So new plant that we design, we start with a single product plant. But eventually we find -- thanks to the technology backbone that we have, we always find some synergies between some processes that we are doing in that plant and we could utilize this. Because unlike hydrogenation, this is not a fixed chemistry plant.
The next question is from the line of [ Richa ] from Equitymaster.
Sir, my question is related to all these protectionist measures that are being taken by the U.S. How do you expect this to play out for our business? Do we get better opportunities in the export market? Or is there a risk of further price erosion if China dumps it in other geographies? Just, if you could just give a qualitative commentary on that.
So I think, Richa, it's a very broad-based question and for me to really kind of comment on it very specifically becomes challenging. I can very safely say that none of our business strategies are designed around any of these macroeconomic factors. That's point #1. Point #2 is, if and when these come into play and you have certain markets where the Indian products might have an advantage and certain markets where you will have an eventuality of the other country dumping the material, I think our cost sheets and our business relationships globally should be more than capable to handle all these situations if and when they arise.
Okay. So on a conservative basis, you are confident of maintaining at least 10% to 12% margin until further -- until the plants get optimally utilized in capacity. Is that a fair assumption?
For now, yes.
Okay. And sir, last question. Are the margins in exports in line with what we have in domestic? Or is there a significant difference?
Again, I mean, because we have 3 different divisions and all of them between them have multiple products, I think we can very broadly say that in most of the products, the export margins are in line with the local margins. Girish, correct me if I'm wrong.
Yes, sir.
The next question is from the line of [ Chetan Doshi from Tulsi Capital ].
Do you expect a onetime sale because of Mahakumbh which is taking place at Prayagraj for camphor sales?
So I mean, Chetan, good question. We have a very substantial presence in the Prayagraj complex, where we have our own booth where we are selling camphor. And we also have some advertising material that's being displayed there. Having said that, I think the learning has been that a lot of the people who've come there, in terms of their purchasing power, we've had massive footfall to the booth. But I think to convert that into actual sales has been a challenge. But from a visibility perspective, I'm sure that when these devotees or pilgrims go back, we will have -- they will have a better understanding of our formulated product.
Okay, okay. So we expect some gains out of this particular event coming place in this quarter?
Yes. I think if you have 40 crore people coming and visiting a place and if you are visible there, I'm sure it will kind of help us garner more eyeballs than what we've had before the event.
Thank you. Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to Mr. Dharmil Bodani for the closing comments.
Thank you all for participating in the earnings conference call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR managers at Valorem Advisors. We are thankful to all our investors who continue to stand by us and have also shown confidence in the company's future growth plans. Thank you very much.
On behalf of Oriental Aromatics Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.