Aarti Industries Ltd (NSE: AARTIIND) Q3 2026 Earnings Call dated Feb. 03, 2026
Corporate Participants:
Suyog K. Kotecha — Chief Executive Officer and Executive Director
Analysts:
Nishit Solanki — Analyst
Sumit Dutt — Analyst
Vivek Rajamani — Analyst
Nitin Agarwal — Analyst
Tushar Raghatate — Analyst
Darshita Shah — Analyst
Surya Patra — Analyst
Rohit Nagraj — Analyst
Abhijit Akella — Analyst
Kumar Saumya — Analyst
Aditya Khetan — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Aarti Industries Limited Q3FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star from zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Nishit Solanki from CDR India. Thank you. And over to you, Mr. Solanki.
Nishit Solanki — Analyst
Thank you. Good afternoon everyone and thank you for joining us on RP Industries Q3FY26 earnings conference call. Today. We are joined by senior members of the management team including Mr. Suyo Kotecha, Executive Director and Chief Executive Officer and Mr. Chetan Gandhi, Chief Financial Officer. We will commence the call with opening remarks from Mr. Kotecha followed by a Q and a session where the management will address queries of the participants. Just to share a standard disclaimer, certain statements that may be made in today’s conference call may be forward looking in nature. A disclaimer to this effect has been included in the results presentation that has been shared earlier and uploaded on the stock exchange website.
I would now invite Mr. Kutecha to share his perspective. Thank you. And over to you sir.
Suyog K. Kotecha — Chief Executive Officer and Executive Director
Thank you, Nishit. Good afternoon everyone and thank you for joining us for our Q3 FY26 earnings call. We are pleased to have you all with us today as we discuss our performance and share perspectives on the business environment and the road ahead. The global operating environment during Q3 continued to remain challenging and dynamic. Persistent geopolitical tensions, ongoing trade realignments and uncertainties around global demand have kept volatility at elevated levels across commodity and specialty chemicals value chain. In particular, trade actions and tariff related disruptions in the US had necessitated agility and swift recalibration. Against this backdrop, we believe the company has demonstrated resilience and adaptability.
Our globally balanced portfolio with proactive diversification of the export mix towards US, Europe, Middle east and Africa and other select countries along with a calibrated approach to the US has helped us sustain and grow volumes while managing risk. In the last few weeks we have also observed three major events which will positively impact the chemical sector. First, India recently concluded the India U. EU Free Trade Agreement. While the near term impact of the deal may be limited, this landmark deal is expected to generate large growth opportunities for exports and strategic partnership possibilities in high end specialty chemicals in mid to long term.
The second event that we are closely monitoring is around the anti involution strategy adopted by China. This policy shift aims to curb the hyper competition and the excess capacity that have historically led to the dumping of chemicals at lower prices. As China prioritizes higher quality growth and enforces stricter supply side discipline, we anticipate a more rational global pricing environment for integrated and quality focused players like AI. This transition could serve as a structural catalyst for sustainable margin recovery. And lastly, while we were managing to navigate the US Tariff headwinds, the recently announced US India Trade deal does provide a sigh of relief and is expected to boost the business in the US in coming times.
All these three macro factors point to a structural shift in the global trade that favors India Coming to the financial performance for Q3 was largely in line with previous quarter with incremental upside on the top line. Revenue stood at rupees 2,492 crores, an increase of 11% QoQ driven by volume growth across products such as MMA and tcb. During the quarter, the company, while absorbing part of the US Tariffs had witnessed the resumption of US volumes leading to higher capacity utilization, better operating leverages. As a result, EBITDA surged to rupees 323 crore, making 11% QoQ increase.
The company has provided for a one time impact on account of implementation of the new Labor Code to the extent of Rs. 15 crores as an exceptional expenses for the period. The Company still awaits the State and central government notification to refine its working and hence will take appropriate provisions if needed once further clarity is available. Exports for the period constituted about 65% of the total revenues for the company, the highest both in terms of percentage share and also an absolute basis. Further, the increase in export has resulted in an increase in working capital. As a result, the debt and interest cost have increased marginally despite some increase in finance cost and one time exceptional expenses due to new labor Code.
The profit after tax for the quarter driven by higher operational performance to rupees 133 crores, an increase of 25% QoQ reflecting the robust operating performances supported by the increased contribution from the cost saving initiatives and economics of scale at higher capacity utilization going through sort of business segment reviews. The energy business led by MMA continue to remain a key growth driver. Volumes have been robust supported by strong demand and favorable feedstock spreads, while the US market volumes have resumed and are expected to stabilize. We continue to develop alternate markets with focus on Europe and are confident in our ability to scale volumes in these regions over the medium term.
Our efforts to engage with global majors in this field is expected to start yielding benefits in the forthcoming year. While near term margins continue to be volatile due to evolving market dynamic, the structural strength of the business remains intact. Notably, we have begun to realize operating leverage benefits driven by increased MMI volumes. Given the fast growing business environment for this segment, we have taken steadfast measures to further scale up capacities from about 290/kt to about 360kt and expect the same to be available by end of this fiscal that is end of Q4 FY26. Agrochemicals and pharmaceuticals continue to see stable volumes but pricing remains subdued due to persistent dumping from China.
The current evolving China anti involution strategic stance is expected to drive margin improvements in these products over the medium term time period the polymer segment had a mixed business environment. PDCB demand saw an uptick driven by PPS growth in the EV segment while the PDA product chains continued to face volume and pricing pressure due to large dependency on the US market. Given the recent India US Trade deal announcements, we anticipate these volumes to improve. We have also started debottlenecking efforts to increase DCB capacity from 120 to 140 kilowatts to capture the incremental growth opportunities in this segment in benzene and toluene based chemistries.
We continue to remain the go to integrated player. Importantly, the customer conversations have evolved from being a product specific to now chemistry laid R and D focused and value driven discussions. We have mastered multiple new chemistries and continue to expand our portfolio with selective high performance chemistries while actively engaging customers on sort of integration LED solutions. Our future growth strategy is now decisively anchored in the advanced material space. We are pivoting from bulk products towards high value application led solutions by leveraging our RND specialized capacity and will capture upcoming opportunities through strategic partnership ensuring higher margins and deeper integration with global technology leaders on operations excellence and AI deployment.
Our cost efficiency programs are now nearing completion. Having established a lean operational baseline to further drive efficiency, we have initiated the deployment of AI and digital transformation tools across our manufacturing plants. By leveraging advanced analytics for real time process control, predictive maintenance and production optimization, we aim to achieve measurable gains in plant up time and reduction in energy consumption. The organizational shift towards data driven decision making and AI led innovation is expected to structurally enhance our productivity ensuring we maintain a sharp cost competitive age globally on upcoming projects. Zone 4 remains a transformational growth platform for the company.
During the current calendar year we expect the upcoming mpp, chlorotolbin and downstream process blocks to be commissioned in a phased manner. Notably, we are commissioning all of these projects using our in house indigenous technology which is a testament to our internal process and engineering. This flexible assets would allow us to commercialize new products in a rapid manner and offer flexibility to make profitability driven decisions on the product selection driven by some of the fast track expansion initiatives for mma, DCB and addition of PEDA capacity amongst few other new initiatives taken up in the year. The capex for the year is estimated to be about Rupees 1100 crores, a tad more than our earlier guided capex of about Rupees 1000 crores.
It may be noted that these incremental capex are expected to drive higher ROCE and hence given the market dynamics the company decided to step up the investment in this project initiative with significantly attractive payback periods. Let us assure you that we continue to maintain our capex discipline are taking all the right steps to improve the CapEx return profile as guided earlier. With Zone 4 getting commercialized in calendar year 26 and that there are no other large projects in the pipeline, we anticipate the CapEx for FY27 to be significantly lower. The joint venture with Superform is progressing well with Commissioning expected in Q1.
FY27 focused on paints and coating application which aligns well with our strategy of moving closer to customer and diversifying application layer. And speaking about the JV with resl, the construction work for setting up the first manufacturing unit have commenced in the previous quarter. The project is progressing well as planned and we anticipate the JV to be ready for commissioning in the first half of FY27. To conclude, despite a challenging external environment, AIL is well positioned for sustainable growth. Our focus on portfolio quality, value chain integration and disciplined capital allocation underpinned by our in house R and D provides a very resilient foundation.
This is further bolstered by structural headwinds from the recently concluded India US Trade deal in the EU FTA and the strategic stance of Chinese anti involution combined with our internal digital and AI driven productivity gains. Together all of these factors reinforce our confidence in AI’s trajectory as an innovation led global chemicals. We remain confident in our long term strategy and thank our employees, partners and shareholders for their continued trust and support. Thank you and we’ll now be happy to take your questions.
Questions and Answers:
operator
Thank you we will now begin the question and answer session. Anyone who wishes to ask a question, maybe STAR and one on a Touchstone telephone. If you wish to remove yourself from the question queue, you may press star on 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Mitesh Dut with Anandrati Institutional Equities. Please go ahead.
Sumit Dutt
Hi. Thank you for the opportunity. So my question is, you know that out of the key products that we sell in US, the highest contribution is from MMA.
You had already resumed sales of MMA in Q3 to US and in fact you did record volumes there in Q3. So was there any tariff applying to MMA or. That is my first question.
Suyog K. Kotecha
Yes, MMA had a full tariff applicability in the last quarter.
Sumit Dutt
Was it not part of the Annex 2? Because maybe I checked it wrong. I think I, I got it in the annex tool list. It was published in November.
Suyog K. Kotecha
It is not part of Annexure 2. It had full tariff applicability.
Sumit Dutt
All right, okay. Second thing is on the PDCB bit, I mean is it like a significant part of your revenues from. From us, or is it like the.
Suyog K. Kotecha
PDCB is one of our major and long standing product to us, I think is the second largest product after, after mma, of course, as part of our total exports to us. PDCB depending on the quarters can vary, but you know, does account for anywhere between 15 to 20% of our total exports to us.
Sumit Dutt
15 to 20% of the total exports to us would be PDCB and MMA would be how much?
Suyog K. Kotecha
I think the. Roughly from a contribution point of view, if you look at it, MMA would constitute somewhere in the range of 50 to 60%. You know, PDCB would vary between 15 to 20, 15 to 25%. And remaining is me.
Sumit Dutt
All right, sure. Okay. I think that’s all from my. Sir, thank you so much.
operator
Thank you. Next question comes from the line of Vivek Rajman, Morgan Stanley. Please go.
Vivek Rajamani
Hi sir, thank you so much for the opportunity and congratulations on a very strong set of numbers. Sir, on the point of the chat, China anti involution that you highlighted, could you just touch upon, you know, what you’ve been hearing on the ground with respect to, you know, which capacities are being targeted and which would, you know, benefit Aarti.
Suyog K. Kotecha
So I think the stated intent which is, you know, available to everyone is to curb deflationary export pricing and the over capacity situation in China. Right. Which I think is applicable broadly throughout the chemical sector. In terms of specific actions, we have started to see some getting implemented in recent times. I think one of the specific action that they took was to remove the batch subsidy on many of the chemical value chain products. And that impact of that on the pricing in the global market was immediately visible. For example, as part of AIL portfolio, the NCB chain products, including pncb, ONCB and some of the downstream products, the VAT rebate from on exports from China was removed which led to sort of immediate change in pricing environment in the Indian and the global market.
Now this is just the sort of series of actions that we are anticipating in future. Right? And the story that we are hearing is it’s a continuous process, not a one time action. And in that context we remain hopeful that the deflationary export pricing that we have seen over the course of last two, two and a half years should fundamentally get corrected. How it impacts individual products and individual value chains, we will have to of course monitor and observe over the course of next few months and quarters.
Vivek Rajamani
Sure sir, that’s very clear. And just the second very quick question was I think you are once again debottlenecking your mma capacity to360. Just wanted to understand what is the medium term strategy because it’s already a fairly sizable part of the portfolio. I do understand that you are finding new markets and new customers, but just some thought process with respect to, you know, are you comfortable with, you know, this becoming an even more significant part of the portfolio or it’s just a case of, you know, there being demand and you know, you being able to capture it at a fairly low cost.
Just some thought process over there would be very helpful. Thank you.
Suyog K. Kotecha
So I think if you look at the long term strategy, Vivek, that does not change. I think we discussed this in the last conference call. We feel MMA will ultimately settle anywhere between 30 to 40% of our portfolio. Right. If you take a two, three year outlook. And I think we continue to maintain that strategic stance. At the same time, given the nature of the product, we need to have capacities to lay when the swing demand comes into the play. So in that context, and this is a dewater making capex so done very, very efficiently.
But from an overall product portfolio point of view, you will see one or two quarters where the numbers keep going up and down, especially also depending on the other product link bulk shipments, the number sometimes sees, you know, very differently. But on a steady state basis and on a medium term basis, as the Zone 4 also gets commissioned, we feel MMA will settle somewhere between 30 to 40% of our portfolio which, which is sustainable. And also the kind of diversification now we have done with respect to clients as well as geography and more importantly now going forward, even in terms of the application.
Right. And sort of different solutions that we will deploy which will ultimately increase consumption of this type of products, we feel pretty diversified and comfortable in terms of maintaining that range.
Vivek Rajamani
Sure sir, that’s clear. I’ll rejoin the queue and all the very best, thank you. Next question comes from the line of Arun Prasad with Evan Desmart. Please go ahead. Good morning. Thank you for the opportunity sir. Again question is on MMA because it is fully tariffed. Now that the recent announcement, should we expect some kind of a margin uptick on this? Because I think we earlier said that tariff was shared between us and the customer to a certain extent. So what kind of impact we can see on the pricing as well as margins on the mma.
Second, if it would help us if you can understand what part of your overall US exports is coming under the cashful tariff and non tax method. So that quantification will also be very helpful for us to understand their margin upside potential.
Suyog K. Kotecha
I think the answer to the first part of your question is yes, I think it should help. While we have agreed for certain volumes and commercial arrangements with existing set of customers as we go to the next set of negotiations, this tariff reduction will play a role. We will continue to honor all of our existing contracts. But as we get into the conversations for the next wave of contracts, this tariff numbers will definitely play a role and in general, directionally it should lead to better realization compared to what we have seen in the past. Second, in terms of.
Just to be very clear, out of the. I mean we have four large products that we export to us, right? Mma, pdcb, MIA and ncb, out of which the only product which was sort of kind of exempted was mia.
Vivek Rajamani
Right.
Suyog K. Kotecha
Rest all three products had full tariffs. Now each product and each customer had a different level of settlement in terms of who shared what percentage of tariff and where we were able to claim back the tariffs based on the re export potential from us. So it is difficult to comment on every product than every customer in terms of exact tariff impact. But generally as a trend given the reduction at the overall level is going to be quite significant from you know, 50% plus to now 18% plus there will be a margin that will accrue to all players in the value chain.
Vivek Rajamani
Understood. And generally we have been saying of putting up a very large capacity on MMA because obviously it’s a Function of volatility between the gasoline and it has stopped us from investing heavily at one go. This is my understanding. Correct me if I’m wrong. Do we also have a case to, you know, being absolute leader in this space, maybe a swing supplier, where by the virtue of having the largest capacity. Have you looked at the MMA from this angle? To be the ultimate supplier at a global level, would it help us in having a stable margins in this product?
Suyog K. Kotecha
Yeah. So I think if you frankly look at it from a market standpoint. Right. Not from a capacity standpoint. I think from a volume sold in the market, we can confidently say that we are the global leader and we intend to remain a global leader as far as this product is concerned. Our, our investment and our strategy has been sort of understated to ensure that we make this business more consistent in terms of its performance. And for that, all the strategies that we have taken in terms of diversification of customers and geography was the focus going forward.
In addition to that, I think we will also focus on how do we build better integration in the entire chain to make the margins more stable. I think that will be the focus over the course of next one to two years before we take a significant jump in terms of capacity.
Vivek Rajamani
Okay. Actually, what I was trying to understand is what today probably will move towards 350kt plus capacity in MME. What kind of capacity do you think, you know, will absolutely cement our place in this product? Is it close to 1 million tonnes or 2 million tonnes? I mean, a ballpark number. What should be our, what should be our expectation in terms of our capacity in MMA medium to long?
Suyog K. Kotecha
I would, I would hesitate to give you a number specifically. As I said, the potential is immense. Right. We compare this with MTP and where the, you know, it’s in millions of tons.
Vivek Rajamani
Right.
Suyog K. Kotecha
In terms of market that we are trying to target. But I think we have to be also mindful in terms of how we’re going to structure the business, given the value chain operates very different. So at this point in time, we are steadily building up this business. We remain very confident in terms of potential of this business, but we want to do it in a way where it’s more sustainable and sort of stable in terms of margin profiles.
Vivek Rajamani
Okay. My second question is on the Euro 58. While obviously we will have access to the larger Europe market, what is the risk associated with the imports into India from your European competitors into India? Would it negate some of the benefits from the fda? How should we think in this?
Suyog K. Kotecha
At an overall level, we Feel it’s positive because you know, I think though our direct exposure is limited, our indirect exposure through our customer would be decent. Plus it will create a lot of partnership opportunities with companies who ultimately want to serve European market. Because now you have a stable partnership from India to eu. So building out assets in India to supply to EU from a long term basis will get facilitated. Will get facilitated. Right. So in that context, I think the FTA from a mid to long term point of view is usually positive in terms of competing volume coming from Europe to India.
I think it will happen in one or two shapes. But you don’t see a significant negative. Look, I think if we are competing against Chinese players trying to dump volumes in India, I’m sure we can handle European volumes.
Vivek Rajamani
Finally, on the Chinese you spoke about anti involution, especially in terms of that subsidy, what kind of impact you’re talking about? Because if you go by product by product is a unit economics. After removing this subsidy removal, is it very adverse, is it what kind of ballpark we are talking about in terms of pricing upside one can expect.
Suyog K. Kotecha
Look, I think it will change. The only impact where it was immediately visible for us was in NCB chain, right? Where pricing went up within a span of a few days by almost 7, 10%. I think this is a combination of multiple things. We can’t link the entire impact only to their stance of VAT removal. The fact is 13% VAT removal is a significant move, right? It’s not a small move. What we have to see is to which all products it becomes applied going forward and how how many different initiatives they take to implement this overall anti involution strategy.
I think in upstream we are seeing interesting moves in terms of, you know, petrochemical capacity consolidations. We are seeing, you know, phasing out of, you know, some of the older crackers. So as we go more downstream, more specialty, what kind of initiatives are taken by the Chinese government to facilitate this anti involution would be worthwhile to observe. But what we can see is that the intent is visible with few actions already getting implemented on the ground. And we have also started to see real impact in some of our products.
Vivek Rajamani
Shouldn’t we also be doing NCV debottlenecking along with the DCB then if we are seeing some kind of a benefit in the MCB chain, it is, it.
Suyog K. Kotecha
Is currently under active consideration. So far not yet approved, but it is under active consideration.
Vivek Rajamani
Thanks. Thanks for answering all the questions.
operator
Thank you. Next question comes from the line of Nitin Agarwal with DAM Capital. Please go ahead.
Nitin Agarwal
Thanks for taking the questions and congratulations on a pretty solid set of numbers on the, you know, on the Chinese bit that you talked about.
operator
Sorry for interrupting. Can you come a little closer to the mic and speak a little louder?
Nitin Agarwal
Yeah, just give me one sec, Give me one second. Is this better?
operator
I know you, we have lost your voice.
Nitin Agarwal
Hello? Is this better?
operator
Yes, please go back.
Nitin Agarwal
So I was saying on the Chinese Indian revolution pit that you’ve been talking about, I mean is there a way to characterize what proportion of a portfolio over the years has been probably subject to what you call aggressive pricing where some sort of relief potentially can come in over a period of time?
Suyog K. Kotecha
Look, they are the largest player in the chemical sector globally. More than 60, 65% of chemical industry today is China. Right. So it is very difficult to find areas where they don’t compete, to be honest. So in general I think the more important thing to track is in which areas of the chemical industry and in which value chains they take actions which will lead to a different behavior from players. And I think because that we can potentially correlate in terms of impact on Indian companies but that’s how we will track it. If you look at China’s impact on India, I can broadly say that entire chemical sector practically is impacted.
Nitin Agarwal
And it’s been a meaningful negative for our business also over the last two, three years in terms of the.
Suyog K. Kotecha
They are the largest and the most significant, significant player in the global chemical industry especially for players which have significant export exposure where inevitably you end up competing directly with them head on without any protection. They have been a big determinant of profitability levels in the industry.
Nitin Agarwal
And secondly on our unit zone 4 CAPEX scale up, if you can give us some color on how do you see this phasing by what kind of investments have we done in the, in the project and when do you see optimal utilization here?
Suyog K. Kotecha
So in terms of CapEx, the majority of the capex will be done this year. Only small part of it will sort of spill over for the next year. But we are, we are coming towards the end of the CAPEX cycle in that context. And that’s what will also be reflected in the next year’s CAPEX number which we expect to be significantly lower than the current year in terms of ramp up. I think we mentioned last time the calcium chloride and the multi purpose plant are expected to be commissioned within this quarter. The remaining process blocks will get commissioned throughout this calendar year.
As we go towards the first three quarters of the Next financial year the utilization levels will gradually ramp up. Some of the units will ramp up pretty quickly like calcium chlorides and potentially also mpp. But the remaining process blocks where we are doing specialty product which have to go through qualification cycles with the customers there we will see a meaningful ramp up in utilization over the course of two year time frame.
Nitin Agarwal
And what would be total CapEx on Zone 4? By the time we end this year.
Suyog K. Kotecha
The total CapEx on Zone 4 would be in the range of 1600-800 crore. Bulk of that would be deployed by the end of this year. I think hardly, you know 300 to 400 crores would be left for the next year but otherwise the rest of the capex will be fully deployed by the end of this year.
Nitin Agarwal
And what kind of asset turns do you think we can do on this investment at peak?
Suyog K. Kotecha
Look, we mentioned this last time, right? We don’t prefer to give asset turn numbers because our revenues are linked to ultimately crude and BTX pricing. But from a EBITDA point of view we have shown what is it that we are expecting from a growth led sort of capex led growth to be accrued to be accrued to the balance to be accrued to the PNL by FY28 time frame. We still maintain that number.
Nitin Agarwal
Thanks. And last one, if you can give us some color on what kind of you’ve done a few JVs over the last couple of years with various partners. What kind of other incremental partnering conversations you are beginning to have with various players in India and abroad.
Suyog K. Kotecha
So I think there are multiple conversations ongoing and in lot of cases the decision making was stuck because of uncertainty around the global sort of trade realignments and potential geopolitical events. I think with the events of the last four to six weeks we expect many of these conversations now to close. Right. And I think that’s the intent of the management team that we would really like to now narrow down and close some of these growth partnerships to ensure we have a long term funnel getting filled in from a growth point of view.
Nitin Agarwal
Thank you so much. Best luck.
operator
Thank you. Next question comes from the line of Tushar Raghatate Omega Portfolio Advisors. Please go by.
Tushar Raghatate
Thank you for the opportunity for all the planning. What’s your outlook on the thing? Sir, Sorry, you.
Suyog K. Kotecha
You were not very audible. If you can repeat the question it would be super helpful.
operator
Mr. Sorry for interfering.
Tushar Raghatate
I’m audible now.
operator
We cannot hear you. Yes. Can you come a little closer to the mic and speak?
Tushar Raghatate
Yes. So just comparing to all your plants Utilization PDA utilization seems to be less. I just wanted to know your outlook going on the utilization front.
Suyog K. Kotecha
Yeah, so I think as we mentioned in our commentary, it was one of the value chain which was mostly impacted due to US tariffs because two largest customers actually consume this product in US with the settlement of the US India trade deal now, we expect utilizations to improve. So as the deal sort of the detailing comes out, the conversations with customers will already get initiated in a span of few days. So structurally speaking we should see better utilization of this value chain going forward.
Tushar Raghatate
Fair enough sir. Your 14, 15% EBITDA margin range, is it sustainable considering the NMA cycle After the zone four, you know coming into play, do you think that this is the, you know, the sustainable margin from here only the the margin will start improving going forward?
Suyog K. Kotecha
I think it is fair to say that for the non energy different applications, the margin profile ideally should improve going forward. With all the three macro factors that we talked about at the start of the call, I think it would be a safe assumption to make.
Tushar Raghatate
Fair enough sir. I suppose this EU FTA do you see any big supplier contract for any bigger size? Molecular. We being the intermediate provider in few years.
Suyog K. Kotecha
I think we remain in conversations with multiple players and as and when this conversation reached to a certain level of certainty I think we’ll be happy to come back and inform. But at this point in time the only thing we can say is that there is interest from global players for long term strategic partnership projects and the settlement of lot of pending points around. You know US India trade deal and India EU FTA will help us close some of these conversations in near future.
Tushar Raghatate
My last question or bookkeeping one. So what would be your operating cash flow for nine months? Sir.
Suyog K. Kotecha
The operating cash flow for nine months, I mean the EBITDA was around 8:30 and we’ll be in the range of around 500, 500 to 600 crores roughly.
Tushar Raghatate
So any guidance on the FY27 or we stick with the FY28 one?
Suyog K. Kotecha
We’ll stick with the guidance that we have given for the midterm. I think right now we remain very focused on executing all the actions that we have outlined and sort of continue towards that trajectory.
Tushar Raghatate
That was really helpful, thanks.
operator
Thank you. Next question comes from the line of Dashita with DSP Asset manager. Please go ahead. Mr. Please go ahead with the question.
Darshita Shah
Hi, am I audible?
operator
Yes, please go ahead.
Darshita Shah
Yeah, sorry. So, thank you for the opportunity to a previous participants question. You mentioned that there are a few conversations that you will be able to Close. Now, given that we have some clarity on the US tariff, could you provide some more details on this with respect to the funnel? The pipeline, how big is this pipeline? Will this help us with filling up our Zone 4 capacity? Something on those lines?
Suyog K. Kotecha
Look, at any given point in time there are multiple conversations. Like for example, one recent, I think announcement. You would have seen as part of our presentation that with Actilis we announced exclusive distribution arrangement for a pcbtf. Now it’s a very specific molecule, mostly targeted towards coating sector and US market. But that agreement got concluded right, with Actilis being the exclusive partner. So I think many such conversations have been, have been happening over the course of last 12 to 18 months. But in many cases the final decision making was getting hampered for the lack of clarity.
And now with this clarity, we expect that the negotiations to proceed at a much faster pace. And in due course, whenever things get concluded, we will, we will talk more about it.
Darshita Shah
Got it? Okay, that’s all. Thank you.
operator
Thank you. Next question comes on the line of Sudhiya Patra with Philip Capital. Please go ahead.
Surya Patra
Yeah, hi. Thank you for this opportunity. I’m audible.
Suyog K. Kotecha
Yeah.
operator
Mr. Bata, can I speak a little louder? You’re not very audible. Okay, come a little closer to the mic and speak.
Surya Patra
Yeah, yeah, sure. Congratulations for the great setup. Number. So my first question is on the mma. In fact it looked like that in the very limited period of one year only, you have almost like triple the capacity. And in terms of the capex that you would have done, that would be also not much considering the kind of annualizer ended up for more than 2500 crore kind of business that you are. So is it fair to believe that the ROIC what we generate in MMA is much superior compared to the company level roic?
Suyog K. Kotecha
So we won’t comment on our product specific capex or return profiles. I think what we can tell you is that the overall strategy of building an integrated portfolio at our site in Karl where we did lot of upfront capex in terms of infrastructure, in terms of ability to produce large volume products and the storage infrastructure that we have built, supply chain infrastructure that we have built globally, which sometimes is not visible, it does come in the overall CapEx, but many times it’s not visible at a product level, but it starts building operating leverages as we scale up volume.
So it does appear that in a relatively short span of time we are able to increase the capacity dramatically and increase the volume. But we have to admit that lot of the groundwork required in terms of infrastructure, which is beyond core ISBL investment was done over a course of several years.
Surya Patra
Sure. Secondly, even in case of mma, it looks like that the diverse, the customer diversification is like one of the key development over the last few months that we have seen. So given that we would be having a large customer base, but I think ultimately the growth trajectory is in MMA in how sustainable this would be because this is in terms of the octane boosting application. The industry is still in the evolution stage. Given that what trajectory that one can think, although you have guided for capacity expansion though for the short period? No.
Suyog K. Kotecha
So I think, as I said, I think our strategy over the course of last 12 months was more focused on getting to a respectable level of globally leading capacity. At the same time diversifying both geography and customers. I think going forward we are sort of a little bit change in the strategic stance in terms of we will continue to diversify and increase the customer base. Especially we are targeting Europe this time around. I think last year it was more around sort of Middle East, Africa and us. I think Europe is still sort of kind of untouched, not scaled up in terms of consumption.
So we will scale up that as a market. And on top of that now the focus will shift around value chain integration both in terms of developing solutions with complementary products with different blends so that we have wider sort of solution offering to our customers. And at the same time we have to also look at what we can do to manage the raw material exposures. I think that’s what will be the focus for the next one to two years from making this business more stable on a margin profile.
Surya Patra
Okay, so my second question is about this China tariff differential. Now India is 18%, China is around 34%. So given that, what advantage that we can have for which all businesses and what is the sustainability? If you have any sense.
Suyog K. Kotecha
Yeah. If you compare only against China, then PDA is a one chain where there was a sort of straight head on competition, where we should be able to recover volumes, where we should see impact immediately in the next few months, kind of a time frame. But on the other major products like dcb, MIA and mma, I think the affordability of the customer goes up. So in terms of stability and increasing volumes, that will definitely support. In many cases the competition does not necessarily come at the product level itself. It comes at different stages of the value chain.
For example, in my downstream though, we may not have any competition in near, but in near downstream there might be a huge competition in terms of trade flow from China to us. So I think you will see Impact for each of the products at a different scale and at a different time frame. Because exactly where in the value chain China dominates, varies from product to product. But by and large, I think this differential of, you know, 34 versus 18 that you talked about should help us now get better volumes and margins going forward.
Surya Patra
Okay, just last one question from my side. You a couple of times that you have mentioned now or emphasize about the internal technology or indigenous technology and processes and all that, and that is possibly in the context of the zone 4 kind of a capability that you are building up. So how different this approach would be and how meaningful in terms of the value addition, value creation for your portfolio.
Suyog K. Kotecha
I think it is differentiated because it frankly allows us to be, you know, one of the lowest cost producers in many of the molecules in which we operate. And that I think is very critical. I think despite all the macros, we can’t forget the fact that China is a very significant player with a very large capacity. And we have to be ready for the play for the competition if it comes to kind of a last man standing game in some of these products. Having indigenous technology, you know, developed by our own in house RD, where we can optimize the cost sheets for each of these products gives us that ability and license.
And one of the reason why we have been able to increase volumes and I would say maintain our market share over the course of last two years despite significant pricing pressure from China was because of the fact that many of these technologies are developed by us and we have ability to optimize the cost right where we can, we can stand in a very good standing when it comes to global cost curves on many of these products.
Surya Patra
Okay. Okay, sure sir. Thank you. Wish you all the best.
operator
Thank you. Next question comes from the line of Rohit Nagaraj with 361 capital. Please go ahead.
Rohit Nagraj
Thanks for the opportunity and congrats on strong set of numbers. First question is on Zone four. So in terms of our domestic and export mix, how does that stack for Zone four and on the exports front, which in all are the key markets that we will be targeting. Thank you.
Suyog K. Kotecha
So as I said, Zone 4, giving any number would not be doing justice to it given how the entire zone is now constructed. We have, as we mentioned in the earlier call, we have tried to build different chemistry process blocks in the Zone four and we will optimize the product portfolio subject to demand and the margin potential of each of these products. So depending on which product we end up selecting to manufacture this domestic and export will broadly vary quite Significantly so it would be unfair for me to give you percentage, but it is safe to assume that it will not be tilted towards one very significantly.
I think it will be a relatively balanced mix of domestic and exports is the current sense to me.
Rohit Nagraj
And the second question in terms of the CapEx. So given that a part of CAPEX has been preponed to this year, next year probably we are contemplating this CAPEX will come. So to that extent FY27 capex will be lower than what we had anticipated earlier, barring the other comment that you made that you may go ahead with some expansions depending on the board approval.
Suyog K. Kotecha
So I think the increase from a slight increase from 1000 to 1100 crore is not because of preponement of zone 4, it’s because of incrementally approved project around MMA capacity expansions, PEDA project that we announced and the DCB debottlenecking project. So it is not that the Zone 4 CapEx has been preponed in the Zone 4 share of the CAPEX come the next year will remain at somewhat similar level, but still given bulk part of it is getting done this year, I think the next year CAPEX number would be significantly lower.
Rohit Nagraj
Sure. That’s all from my side. Thanks a lot and all the best. Thank you.
operator
Thank you. Next question comes from the line of Abhijit Akela with Kotak Institutional Equities. Please go ahead.
Abhijit Akella
Yeah, good afternoon. Thank you so much. Just a follow up on the MMA question that was asked with regard to the tariffs. Actually this tariff differential between for us now from India versus China on mma, do you see that as a significant advantage in helping us gain more market share? You know, in the us I think.
Suyog K. Kotecha
It would from a long term point of view, Abhijit, it will definitely help. But to be very frank, I think it’s not like we were competing with China in the US market. Right. I think it was more driven by affordability of the end customers for this particular product to ensure that the blending economics works out and that will get unlocked. Right. With respect to, with respect to tariff protection because the final cost of consumption for the customer will become more optimized. So we remain optimistic that it will help us improve both volumes and margins. But yes, from a mid to long term point of view, given there are some Chinese manufacturers for this product that does create a differentiating advantage also for us.
Abhijit Akella
And Suyog, you also spoke about integrating MMA to sort of make it more stable over the next couple of years, including maybe sorting out the feedstock dependence. So would there be Plans to maybe backward integrate in this product or what exactly is the strategy? You’re kind of.
Suyog K. Kotecha
So lot of initiatives currently under considerations. Will not in a position to comment. Exactly. But it was both, you know, backward as well as forward. But we are looking at several initiatives where we can play a more part of the chain and not only the part of the chain where we are playing currently.
Abhijit Akella
Okay, got it. And just one final one from me. After a very good quarter here in terms of an EBITDA recovery run rate, quarterly basis, do you believe that you’ve now sort of stepped up to a higher sustainable run rate on a quarter, on quarter basis, looking ahead over the next 12 months or so?
Suyog K. Kotecha
Look, I would say that as a management team, frankly, we remain focused on our midterm target. I think there are a lot of initiatives that we have taken on our plate to execute to reach that target and I think we remain committed to that journey. There are bumps here and there, but I think by and large, if we are able to implement all of it and if there is no major external event, then we remain committed to sort of achieve our midterm targets.
Abhijit Akella
Thank you so much. Wish you all the best. Thank you.
operator
Thank you. Next question comes from the line of Kumar Somnya with Ambit Capital. Please go.
Kumar Saumya
Good afternoon. So it’s a couple of questions from my side. So firstly, on the MMA contract that you said, the existing contracts are in place, so when are they due for renewal?
Suyog K. Kotecha
It will change from customer to customer. You know, difficult for me to comment, but you know, some, in some cases, you know, they are quarterly, in some cases they are spot, in some cases they are six months. I think it’s difficult for me to answer it on a customer specific basis.
Kumar Saumya
So secondly, on the JV that is going online in 1QFY27, I believe both parties are investing 150 crore each. And so what would be the revenue potential? And if you could just flag off some color on the product, as in how is the competition over there? Who are the other suppliers? That will be helpful. Thank you.
Suyog K. Kotecha
So the revenue potential as we declared when the J was announced was in the range of around 300 to 400 crores or so. The end use application was agrochemical and paints and other stuff. Ultimately, you know, what we will do is we will supply raw material to that JV and JV’s finished products will get converted into a one more final product product and will ultimately get placed into the market. The dominant application is actually paints and coatings and small part of it does Go to agro as well, but it will be mostly India centric product and basically will lead to import substitution of that particular product which is right now being supplied mostly by China and to some extent also by Europe.
Kumar Saumya
Thank you sir. Thank you.
operator
Thank you. Next question comes from the line of Adity Ketan with Smith’s Institutional Equities. Please go ahead.
Aditya Khetan
Thank you sir for the opportunity. I joined the call a bit late, so pardon if I’m asking the same question sir. On the agrochemical side we have witnessed like on quarter, on quarter basis and YY basis there is a dip in our top line as you’d already mentioned, like the pricing pressure still persistent and it has been now for quite a while now. So when you expect like this uptick to take place and as a overall mix, like currently we are standing at 12% of overall top line in agro on a quarterly basis.
When where do we see like if this pricing pressure moves away, can we still go back to that original rate of 20% of overall top line or like MMA only would contribute a larger chunk?
Suyog K. Kotecha
No, we actually think agrochemicals will go up Also if you look at only 1/4 number, it might be misleading because you know, some of the large Akim intermediate that we ship to us, the timing of the bulk shipment sometimes create, you know, quarter on quarter discrepancy. So I would strongly advise to look at sort of nine month number or a full year number to really get a sense of where the application is and it remains at a, you know, 17, 18% odd level and it has all the potential sort of possibility to reach the number that you were targeting around 20 odd percentage.
Especially as the Zone 4 also gets commissioned, it will even potentially cross that number. So we remain actually, you know, margins have been, volumes have been pretty stable, margins have been under pressure. But with the latest stance and some of the changes happening in the global market, we are hoping that part of margin recovery can also be sort of visible over the course of next few months and quarters.
Aditya Khetan
Got it sir. Onto the dichlorobenzene like we are witnessing for since last few quarters that volumes are going up compared to NCB wherein volumes look flattish only. So in BCB is there any some new customer addition or any new product which we have started which is like supporting the volume momentum? What is that which is supporting it?
Suyog K. Kotecha
So I think the significant downstream usage of PDCB happens to manufacture PPS which is one of the high end advanced polymer and that polymer consumption in electric vehicle has increased quite dramatically and that’s what is driving the demand growth and that’s also one of the reason where we have taken a call to increase capacity from 120 to 140 kilo.
Aditya Khetan
So you mentioned which compound PS.
Suyog K. Kotecha
Is a polymer that is manufactured using PDCD as a monomer.
Aditya Khetan
Okay, Such as. One last question. So when we look at the anti knocking agents, so if we exclude the mma any other anti knocking agents like MTBE or Ferro CM like any other anti knocking agents like which is performing well similar to MMA and how you see the distinguishing like if someone is using any other anti knocking agents. So what are the benefits compared to MMA and is there any replacement to this sort of anti knocking agents?
Suyog K. Kotecha
To be fair, I think I would not comment on the other product portfolio in which we are not present. I think what we are very confident of is the value proposition offered by our product is definitely superior and that’s one of the reason why we have been able to push volumes and gain market share and we continue to remain focused on developing products which are new but will offer better value proposition compared to some of the current products list. That’s the overall strategy for the energy of the segment.
Aditya Khetan
Got it sir. Thank you. That’s it from me. Thank you. Next question comes from the line of Ranjit with IIFL Capital. Please go ahead. Yeah, hi, thanks for the opportunity. My first question is on the first dedicated. Sorry for interrupting. Yeah, a little closer to the mic and speak. Yeah, yeah, hi. Thanks for taking my question. My first question is on the the capex that we did for our first dedicated contract which then got terminated. The utilization levels are a bit low and we were seeing a bit of a ramp up last year and then tariff happened.
With the change in tariff, how do you see the ramp up of that particular capacity? Thank you.
Suyog K. Kotecha
So I think overall given the end product it’s sold in us by some of our existing customers in India, we expect their volumes to go up and in that context the utilization level of that asset should improve. We had seen some early indication, you know, before the before the tariff got announced last year. So we’ll observe for the next few months. But yes, I think with some lag we expect the utilization level of that asset can be pushed further with now tariffs settling at much lower levels.
Aditya Khetan
Thank you shlok.
operator
Mr. Rajith, are you done with the question?
Aditya Khetan
Yeah. Hi. Thanks.
operator
Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Suyog K. Kotecha
Thank you. Thank you for your time today and for your ongoing support. While the sector has been undergoing through a difficult cycle and the macros, I think we are seeing some changes in the global macros and our robust strategy helps us navigate this phase to deliver consistent growth. We hope this session was informative. Please feel free to reach out if you have any further questions. Thank you Once again.
operator
Thank you on behalf of RT Industries limited that concludes this conference. Thank you for joining us. You may now disconnect your line. It.