Agarwal Industrial Corporation Ltd (AGARIND) Q1 FY23 Earnings Concall Transcript

Agarwal Industrial Corporation Ltd (NSE: AGARIND) Q1 FY23 Earnings Concall dated Aug. 11, 2022

Corporate Participants:

Vipin Agarwal — Chief Financial Officer

Analysts:

Astha Jain — HEM Securities — Analyst

Unidentified Participant — — Analyst

Pritesh Chheda — Lucky Investment Managers — Analyst

Vignesh Iyer — Sequent Investments — Analyst

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Agarwal Industrial Corporation Limited Q1 FY ’23 Earnings Conference Call hosted by HEM Securities Limited. 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. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Astha Jain from HEM Securities. Thank you, and over to you.

Astha Jain — HEM Securities — Analyst

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining the Agarwal Industrial Corporation Limited Q1 FY ’23 earnings conference call. Joining us on the call today is from the management team Mr. Vipin Agarwal, Chief Financial Officer. We will commence the call with opening thoughts from the management team, post which we will open the forum for Q&A session where the management will be glad to respond to any queries that you may have.

At this point, I would like to add that some of the statements made or discussed on the conference call may be forward-looking in nature. The actual results may vary from these forward-looking statements.

I would now like to hand over the call to Mr. Vipin Agarwal to commence by sharing his thoughts on the performance and strategic progress made by the company. Thank you. And over to you, sir.

Vipin Agarwal — Chief Financial Officer

Thank you very much. Good afternoon and a very — good morning and a very welcome to everyone. Who has joined us today, I take the pleasure of welcoming you all to the Q1 FY ’23 earnings conference call of Agarwal Industrial Corporation Limited. Let me start by giving you a brief overview of the Company’s business and we’ll then take you through the financials. We’ll then be happy to take any questions, if you have any.

Agarwal Industrial Corporation is an integrated infra-ancillary company focused on a wide range of innovative bitumen products backed by their world-class logistics infrastructures, which comprises of six large marine vessels having total capacity of 38,000 metric ton, which are used in importing raw materials, raw material bitumen from oil-producing countries. Company has a fleet size of more than 650 LPG tankers and bitumen tankers, seven bulk storage terminal facilities with a total capacity of 30,000 metric ton having direct access to the shipping networks located at Hazira port, Mumbai port, Dighi port, Haldia port, Mangalore port, Karwar and Vadodara is an inland location where we have a storage tank. We, along with our subsidiaries, have six manufacturing plants located at Vadodara, Taloja, Mumbai, Belgaum, Hyderabad, Guwahati and Kochi.

Moving on to the results reported, starting with the consolidated quarter highlights of Q1 FY ’23. The Company revenue has seen a growth of 42% in Q1 FY ’23 at INR583.05 crores as compared to INR409.23 crores in Q1 FY ’22. Company reported EBITDA of INR36 crores in Q1 FY ’23 versus INR25.50 crores in Q1 FY ’22, a growth of 41%. Company’s PAT surged by 56% from INR15.07 crores in Q1 FY ’22 to INR23.46 crores in Q1 FY ’23. Further, I would like to add that the demand trend continues to be in a favorable across the infrastructure industry, which is quite exciting for us. Our customers understands and appreciate the Company’s exhibition abilities, which constantly results in the financial growth of the Company’s market share. We continue to demonstrate profitable performance in long-term through the relentless focus on leveraging our two decades of experience in bitumen and logistics.

With this, I conclude my opening remarks, and I would now request the moderator to open the forum for questions from the participants. Thank you so much.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of [Phonetic]Pranav Jain from HDFC Securities. Please go ahead.

Unidentified Participant — — Analyst

Good morning, sir. So sir, I wanted to ask for the reason for the increase in EBITDA margins in the ship and chartering business and also the EBITDA margins in the petrochemical business is like at seven quarters low. So like what are the reason behind this?

Vipin Agarwal — Chief Financial Officer

Can you just repeat once again, please.

Unidentified Participant — — Analyst

Sir, your EBITDA margins in the shipping and chartering business have increased and in the petrochemical, that is [Indecipherable], that is at a seven quarter low. So like what are the reasons behind it.

Vipin Agarwal — Chief Financial Officer

Thank you so much for the question. First of all, on your first question, we — in the shipping business, we have tried to utilize these vessels on a maximum [Phonetic]size this time. Sometimes there are delays due to the port — waiting at the port for the loading and the unloading day, which we — in this quarter, we have tried to delay — takeover these delays at various ports and discharge the vessel as soon as it reaches our destination port for discharge or at the loading port. So this time, which we have save, has resulted into a better utilization of the vessels that is effectively managing the time at various ports for the vessels.

And coming to your second question on the profitability that you are [Indecipherable] quarter, I think it is in line with the last few quarters. Yes, a few — a point here, 1%, 2% here and there is always acceptable because since we are dealing in a commodity product. So prices of the product keeps moving up and down sometimes, and which results into this slight variation in the margins.

Unidentified Participant — — Analyst

Okay, sir. So what is your volume number for this quarter?

Astha Jain — HEM Securities — Analyst

Volume numbers, we have done close to 120,000 to 123,000 tons in this quarter. Against this, we had done 109,000 to 110,000 — 109,000, 110,000 in the last quarter of the same FY ’21.

Unidentified Participant — — Analyst

Okay. Sir, and one more thing, so our EBITDA margins in quarter four and quarter one are at the lowest end of range. Like when can you expect a turnaround in this? Like, by when can you expect EBITDA margins to increase?

Vipin Agarwal — Chief Financial Officer

If you consider total PAT, I think it is already on the higher side compared to last quarter — fourth quarter of the last year or the same quarter of the last year.

Unidentified Participant — — Analyst

Okay. Sir, one more question, sir. So the expansion at Taloja from 280 metric tons to 4000 metric tons, what is the status of — the current status of that?

Vipin Agarwal — Chief Financial Officer

It’s already complete. I discussed the same in the last con call that we had. It is already official since last year now.

Unidentified Participant — — Analyst

Okay. Okay, sir. Thank you so much.

Vipin Agarwal — Chief Financial Officer

Yeah, thank you so much for the questions.

Operator

Thank you. Next question comes from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yes, sir. Just wanted to check what was the volume in quarter four, which went by?

Vipin Agarwal — Chief Financial Officer

Quarter four volume was about 155,000 tons.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sorry, how much?

Vipin Agarwal — Chief Financial Officer

155,000 — around 155,000 tons in the last quarter of the financial year, the fourth quarter.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. So despite a volume, let’s say, QoQ drop, our EBITDAs are intact, and I was just trying to look at on the standalone basis also. So any comment on the ex of shipping profit, the bitumen spreads that we make or the bitumen EBITDA that we make on import and trading.

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers — Analyst

Any comment there in terms of sustainability in terms of its direction, if you could help us with that. And what is your expected volume for FY ’23? I think we did about 3,80,000, if I’m not wrong, for FY [Phonetic]’22.

Vipin Agarwal — Chief Financial Officer

Roughly 3,85,000.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah.

Vipin Agarwal — Chief Financial Officer

Yeah. So as — thank you for the question, sir. In terms of your concern regarding the margins for the entire year, I think we have always been delivering certain margins over the past few years. If you compare the last fourth quarter of FY ’22 and this year’s first quarter, I think we — last quarter, we — fourth quarter of last year we have done, the PAT was about 3.63 percentage, against which, in the first quarter, we are at about 4.02%. So we are already on the higher side compared to all my previous three quarters.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah. Sir, our numbers are better only. My question is, there is an expansion between quarter four and quarter one, despite lower volumes. So [Indecipherable] standalone basis on 155,000 —

Vipin Agarwal — Chief Financial Officer

Expansion, you mean to say of the six vessels?

Pritesh Chheda — Lucky Investment Managers — Analyst

No, no, sir, expansion in margin — expansion in profitability. We did, let’s say, INR24 crore on 155,000 ton volume on standalone.

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers — Analyst

And this quarter we did, INR20 crore on 110,000 ton volume. So naturally, on even lesser volumes sold, we have a better operating profitability. I just wanted to check on the direction of this profitability. Will it sustain on pure bitumen —

Vipin Agarwal — Chief Financial Officer

No, no, no. So I understood the point. Since we are integrated players, both the sides, the shipping that we have, the vessels that we use for internal purposes for bringing the imports, it is both complementing each other. So not — it’s not that either if we are doing the shipping side on a higher volume, then we have to maintain the margins in terms of what we are importing, so it is complementing both the sides. And yes, the volumes that we have done with the lower volumes, the higher margins that we say, yes, it is definitely because of the volatile market in terms of commodity.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

Maybe in a particular quarter, since this is a lean quarter, it may have some effect. But over the period, the margins that we try to maintain when we are selling a particular volume, we try to keep that intact, that margins that we have in mind, that is resulting in higher — in the first quarter, if you say, it resulted in a higher profitability.

Pritesh Chheda — Lucky Investment Managers — Analyst

That margin is as percentage of sales or that margin is based on absolute volume sold?

Vipin Agarwal — Chief Financial Officer

We usually target a particular number in what we sell, not in absolute percentage, but in absolute numbers. Whenever we are selling our products, we keep a particular figure in mind to sell that product.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay, sir. What would be your volume expectations for FY ’23?

Vipin Agarwal — Chief Financial Officer

As we have always been saying that we always target a growth of about 20% to 25% every year. So if we —

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

— if we were at 385,000 tons last year, we assume or we will always target to increase the volume by, say, at least 20%, which we have always been doing in the last few years. So —

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

Going forward, the target would be around 20%, 25% additional volumes that we have to do.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

That is minimum.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sir, other question on the vessel side. We had five vessels. I wanted to know the internal utilization for that. And the sixth vessel, does it go on time charter or we need the vessel? If it goes on time charter, does it impact our operating profits either beneficially or negatively? If you could help us understand that.

Vipin Agarwal — Chief Financial Officer

Thank you so much. The sixth vessel commenced in this quarter. It was procured in the last quarter, but it has been put in use in the current second quarter. And we always try to give — maximize the benefits from the vessel — shipping business that we have. The sixth vessel will definitely help us overall in getting the desired results that we want, but wherever opportunities come, if we are able to get a higher rate of freight in the market compared to what we would be getting in for using the vessel for our own import, we always take that call of giving a particular voyage to a third-party in terms of revenues that we would be getting and the margins that we would be getting on that.

There are so many other vessels available in the market for importing our product anyway. Suppose, a third-party is wanting to hire the vessel for a particular voyage at a higher rate, we take that call and take that voyage to a third-party since we’ll be earning high and the profitability will be on the freight that will be given to third-party than using it for own construction. So that call we take as and when the opportunity arises.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sir, the question was, let’s say, if you have a 25% volume growth, which means you have a 500,000 ton odd volume for FY ’23. For that 500,000 ton volume, is five vessels enough or you need a sixth vessel? That was the question. If you don’t need the sixth vessel, then it will be on time charter, right?

Vipin Agarwal — Chief Financial Officer

Yeah, we have taken the sixth vessel for this purpose only, so that —

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

— we are not dependent on any one. But going forward, if there are vessels in the market at any given time —

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah, that I understand, sir. That I understand. But as of now —

Vipin Agarwal — Chief Financial Officer

That is a particular call only for a particular voyage, not for entire —

Pritesh Chheda — Lucky Investment Managers — Analyst

Yes.

Vipin Agarwal — Chief Financial Officer

[Indecipherable] you have something like this.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah. Sir, as of now you need the six vessel. Is that —

Vipin Agarwal — Chief Financial Officer

In fact, we require more. To complete the target that we have, we require more vessels in fact.

Pritesh Chheda — Lucky Investment Managers — Analyst

For even 500,000 lakh ton?

Vipin Agarwal — Chief Financial Officer

Yes, yes. See, the vessels turnaround is not — even considering six locations that we have. So we — in hand, we only have about five vessels for a particular entire Indian operations as of now.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And sir, my last question is, this eight million ton bitumen industry for India —

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers — Analyst

— we were just trying to look at some other countries also, the other countries are fairly higher for a same road network. So for this eight million ton bitumen market, at what growth rate do you see this growing? And within that growth rate, what kind of market share gain you would take? So we are at about, let’s say, 385,000 last year, we’ll be about 500,000 this year. Slightly longer for a three, four-year period, if you could give out your thought process on this eight million ton market, your market share, and where do you see yourself in volume [Indecipherable]?

Vipin Agarwal — Chief Financial Officer

Thank you so much. Actually, the market share of eight — the total requirement of eight million was, you can say, in 2020 for Indian — the entire Indian bitumen industry. Now, if you compare the last year, it should be around 8.5 million, 8.8 million, and the current year it is already at about 9 million, 9.5 million tons.

Pritesh Chheda — Lucky Investment Managers — Analyst

Current year meaning FY ’23?

Vipin Agarwal — Chief Financial Officer

Yeah.

Pritesh Chheda — Lucky Investment Managers — Analyst

FY ’22 was about 8.5 million, okay.

Vipin Agarwal — Chief Financial Officer

The – as you are aware of the focus in the infrastructure sector by the Government of India, going forward, the capacity of the PSUs is limited to 5 million, 5.5 million tons only. No PSUs in India can increase their production capacity. So the entire demand for the infrastructure side would have to be complemented by only imports. And going forward, the pace at which the infrastructure is growing, the demand in the next three years will be more than 11 million tons in India. And this entire 11 million tons has to be — the additional quantity would definitely be imported. There is no other option than importing bitumen at all.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

And in this side, the additional — if we are considering even two million tons, we can easily target about 20% of this volume.

Pritesh Chheda — Lucky Investment Managers — Analyst

So in a three-year period, you are seeing two million ton addition of volume, between ’23 and ’25?

Vipin Agarwal — Chief Financial Officer

Entire Indian market, I’d say.

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah, Indian market. And in that two million ton, you will take about four lakh ton.

Vipin Agarwal — Chief Financial Officer

Yes, we are targeting about 20% of the total increase every year that is happening in India.

Pritesh Chheda — Lucky Investment Managers — Analyst

So in that four, so basically your volumes can rise from four lakh ton to eight lakh tons in the three few years?

Vipin Agarwal — Chief Financial Officer

Yes, yes, yes, definitely.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

And this is the target that we have in mind, so that at least we are able to sell more than a particular refinery that is producing in Mumbai, right? It is producing about 600,000 tons in a year, which we’ll try to overtake in the coming next two years.

Pritesh Chheda — Lucky Investment Managers — Analyst

So arithmetically, your five vessels has to go to 10 vessels eventually?

Vipin Agarwal — Chief Financial Officer

Yes. Any increasing volume, you require additional sources to bring that product.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. This was very helpful, sir. All the best to you. Thank you very much, sir.

Vipin Agarwal — Chief Financial Officer

Thank you so much. And again, I would like to highlight here once again for all the listeners that we have, the Government of India’s focus on infrastructure is very, very — the vision is very great, and they are increasing the road connectivity for all the sectors and all the states in India. And moreover, even if they are not adding any more roads to the — addition to the existing infrastructure, the infrastructure that we already have in India has to be repaired. Even if we have to repair these roads, it will end up resulting in higher volume.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Thank you very much, sir.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Astha Jain — HEM Securities — Analyst

Thank you. Next question comes from the line of Abhishek Sharda, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Hello. Congratulations, sir, for good set of numbers.

Vipin Agarwal — Chief Financial Officer

Thank you so much,.

Unidentified Participant — — Analyst

Sir, firstly, my question is, what is our plan to expand the ship chartering business?

Vipin Agarwal — Chief Financial Officer

Okay.

Unidentified Participant — — Analyst

And what are the — yes, sir, please continue.

Vipin Agarwal — Chief Financial Officer

You want to add anything more or I’ll go?

Unidentified Participant — — Analyst

Yeah. And what are the sustainable margins in this business? Because we have good margins around 30% EBITDA margins in our ship business. So what are the sustainable margins? And what is our plan to expand business, sir?

Vipin Agarwal — Chief Financial Officer

Yeah, as in the previous question, I had addressed this. For increasing the volumes that we have in the Indian market, we would require additional vessels to cater to that demand in India. We cannot import the entire increase in the volume with the same set of numbers of vessels that we have. So if we have to add more volumes, we have to add certain more vessels or take it from the market that we already — we are doing. So this set of volume that we are doing, we are anyways engaging third-party vessels apart from the own vessels that we have. So any increasing in vessels would definitely help us in increasing the volumes as well as the bottom line because whatever margins that the third-party would earn by engaging their vessels to us would be earning for ourselves when we acquired our own vessels. Hence, there is no sustainable margin as such in this industry because any logistics that we do, there is certain margins that we — that has inbuilt in a logistics business. And since we are an integrated player wherein we are not looking for a third-party to hire our vessels, the vessels are running through the full utilization, automatically your margins will be there.

Unidentified Participant — — Analyst

Okay, sir. That’s helpful. And sir, one more thing, you mentioned in last con calls that whenever our volumes are increasing, we’ll get good operating margins because the fixed cost is same. Am I right?

Vipin Agarwal — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

So sir, if we see in last two quarters, our volumes are good. Like in last quarter, it was around 150,000, and in this quarter, it is around 120,000, 125,000, right?

Vipin Agarwal — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

So our volumes are — I mean, they are one of the best, one of the highest volumes. But if we look at operating margins, they are not improving, operating margins — I’m talking about operating margins. They have been muted from last two quarters. So it — is it majorly due to rising crude prices?

Vipin Agarwal — Chief Financial Officer

You can say some part of it is because of the rising crude prices, which has resulted into higher, say, fuel costs the company — that the company is incurring. The fuel cost in terms of, even in the Indian market, the shipping side, the bunkering, this higher fuel cost has resulted into this — affecting the margins on the operating profit. But yes, now since the crude is coming down, I think this set of questions on the margins on the operating margins should be addressed in the next quarter.

Unidentified Participant — — Analyst

Okay. Okay, sir. Since now like crude prices are easing, so we can expect margins to improve from coming quarters.

Vipin Agarwal — Chief Financial Officer

Yes, the margins have already improved, but yes, the operating margins that we are talking about, this is a result of higher fuel cost.

Unidentified Participant — — Analyst

Okay, okay. And sir, the — in the last quarter, you have given a PAT margin guidance of around like 2.5%, 2.6%. You want to maintain this kind of PAT margin. Is it the same right now?

Vipin Agarwal — Chief Financial Officer

See, I will only address this question by saying, in the past, we always try to maintain the margins that we have or try to have higher margins when we are selling. So keeping in that mind, our — and we are dealing in a commodity product, so in terms of absolute percentage, it should be in and around the past record that we have.

Unidentified Participant — — Analyst

Okay, sir. fine. And sir, would you like to give any revenue guidance for FY ’23?

Vipin Agarwal — Chief Financial Officer

No revenue guidance as such because we are dealing in a commodity product. But if you compare the first quarter numbers that we have, I think we can easily cross the last year’s number.

Unidentified Participant — — Analyst

Right, right. So basically, you have given a volume guidance of 20% over this 385,000 in FY ’22?

Vipin Agarwal — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

Yes, yes. And sir, any capex guidance for this year? Do we have some [Phonetic]capex announcement?

Vipin Agarwal — Chief Financial Officer

Capex guidance is — as and when opportunity is arising to the Company in terms of maybe capex in India or outside India in terms of acquiring more vessels, if there is any good opportunities that comes on the daily business that we do, yes, that will be taken up by the Company.

Unidentified Participant — — Analyst

Okay. Okay, that’s helpful, sir. Fine. Thank you. I’ll come back in the queue.

Vipin Agarwal — Chief Financial Officer

Thank you so much, sir.

Operator

Thank you. [Operator Instructions] Next question comes from the line of Vignesh Iyer from Sequent Investments. Please go ahead.

Vignesh Iyer — Sequent Investments — Analyst

Hello, sir. Thanks for the opportunity. I just wanted to ask, there is a certain player in the market who exclusively deals in modified bitumen, as in to use this crumb rubber to manufacturer bitumen, which is — which has a reduced carbon footprint, if I’m not wrong. So I just wanted to know, have we considered — considering we are a very big — we deal in bigger volume than this certain manufacturer or modified bitumen, but have we ever considered that we could actually go for something like this considering that we in turn reduce carbon footprint as well and the longevity of roads also is seen in such [Indecipherable]?

Vipin Agarwal — Chief Financial Officer

Thank you so much for the question. We are already producing CRMB at all of our units. It’s nothing new in the market, but the demand of CRMB has gone down year-by-year. So there is not a significant demand of CRMB in the road sector as of — as such as of now. The basic requirement of constructing road is about — it’s not CRMB or PMB anymore. It is a particular — only a particular site or a particular road that has a requirement of using these kind of a product, which are value-added products, but in terms of volumes, they are very, very low, which we already producing at all our plants.

Vignesh Iyer — Sequent Investments — Analyst

Okay. So what would be, let’s say, out of the 3.95 lakh, what percentage would be that as in — if you could just like —

Vipin Agarwal — Chief Financial Officer

At least 2,000, 3,000 tons because CRMB is not required in any of the road projects as such.

Vignesh Iyer — Sequent Investments — Analyst

Okay, fine. Fine. That’s all from my side.

Vipin Agarwal — Chief Financial Officer

[Indecipherable] road or a particular project that would be having certain requirements but —

Vignesh Iyer — Sequent Investments — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

— entire Indian volume, if you take, 8 million, 9 million tons, it is hardly about 10,000 tons I think CRMB.

Vignesh Iyer — Sequent Investments — Analyst

Okay, fine. Fine.

Vipin Agarwal — Chief Financial Officer

So very, very low, very, very low. There is no demand of CRMB as such in the current contract that the government is having apart from a few here and there particular — specific requirement and a particular reason maybe.

Vignesh Iyer — Sequent Investments — Analyst

So if I can just add on to this, like the carbon footprint part of it, the government has been serious to reduce the carbon footprint.

Vipin Agarwal — Chief Financial Officer

Yes, yes, yes. Even we are proposing on something wherein we can help the Indian economy doing this, but it all depends. But as such, with the CRMB production, you will not have a major impact of reducing the carbon footprint.

Vignesh Iyer — Sequent Investments — Analyst

Okay, fine. Fine. Thank you, sir. Thank you, sir. That’s all from my side.

Operator

Thank you. Next question comes from the line of [Phonetic]Zain Banihali from Odyssey Capital Management. Please go ahead.

Unidentified Participant — — Analyst

Thank you so much. Sir, I have a couple of questions. One is on the crude front. So considering, let’s say, in year, year-and-a-half, we would say [Indecipherable] around 80, 85, what would be our profit margin in that range?

Vipin Agarwal — Chief Financial Officer

So see, as I said, if the crude prices are going down and it has any effect on the fuel cost, it will definitely add up in the profitability of the Company because anyways, the expenses are remaining the same apart from the fuel cost, which is very high. So any decrease in the crude price, and subsequently, decrease in the fuel cost, it will help in the profitability of the Company.

Unidentified Participant — — Analyst

So if crude is around 80, we could see at least 100, 200 bps increase in the margins, right?

Vipin Agarwal — Chief Financial Officer

Definitely, yes.

Unidentified Participant — — Analyst

Sir, another question is, I believe most of the contracts that we do, it would be on long-term price basis, right?

Vipin Agarwal — Chief Financial Officer

Long-term contracts in terms of?

Unidentified Participant — — Analyst

So how do we sell to our customers? I mean, how do we decide the price? Because see, there are price vagaries in the commodity market. So are we able to justify that? I mean, are we able to —

Vipin Agarwal — Chief Financial Officer

Yeah, there is nothing called a long-term contract in the sector that we are. Every fortnight, the PSUs changes they prices. So all the sales that we do in the Indian market is based on the prices of the refineries, which changes every fortnight, it goes up, it may go down. So this is where the commodity prices are benchmark for selling any product. And if the prices are going up, we always try to keep a higher inventory. If the prices are going low, we tried to keep the lowest inventory.

Unidentified Participant — — Analyst

Okay, understand. And my last question is, sir, what is our major area of operation, I mean north, south, east?

Vipin Agarwal — Chief Financial Officer

We are dealing in west, south and east.

Unidentified Participant — — Analyst

West, south and east?

Vipin Agarwal — Chief Financial Officer

Yeah, north till Rajasthan we are doing, but above towards the entire north, we are still focusing on the market to penetrate fully.

Unidentified Participant — — Analyst

Okay. And sir, our best quarters would be, say — the best time for our business would be between December or October to December, is that correct?

Vipin Agarwal — Chief Financial Officer

Yeah, our good time seasonal because since we are dealing with the bitumen and other like product, which is due to the monsoon which — in the four months, we don’t have so much of sales, but the peak quarters would be about the fourth quarter and the first quarter are usually the peak side. Starting from, say, November — mid-November or end of November, depending upon the monsoons, going of the monsoons. So sometimes, yes, in the first week of November also we have started, but if the monsoons are prolonged, it may start in the last week of November or maybe December.

Unidentified Participant — — Analyst

Thank you so much, sir, and all the best.

Vipin Agarwal — Chief Financial Officer

Thank you.

Operator

Thank you. Next question comes from the line of Tushar Raghatate from KamayaKya Wealth Management Private Limited. Please go ahead.

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

Yeah, good morning, sir.

Vipin Agarwal — Chief Financial Officer

Good morning.

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

And congratulations for your good set of number. Sir, my question was on the storage terminals, so you have seven storage terminals. So what would be the average inventory for the month [Phonetic]to hold next month inventory average?

Vipin Agarwal — Chief Financial Officer

See, in the — thank you for the question, in the six months that we — the peak months that we have, we usually sell about 45,000 to 50,000 tons in a month, and we usually have 13 to 15 days inventory, depending upon the sales of a particular region. And in the monsoons, we try to keep the inventory at a lowest level, since there is no demand and prices are fluctuating.

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

Fair enough. But in the private sales, what was your market share?

Vipin Agarwal — Chief Financial Officer

In the private sales, we have about 20% to 25% margin — the market share. Whereas today, if we are — the next company that is there, it is about 60% of the volume that we are doing.

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

Okay. And sir, what would be that name of that company, if you can?

Vipin Agarwal — Chief Financial Officer

I would not like to name any company here. But it is all there in the public domain, if you can.

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

Okay, fine.

Vipin Agarwal — Chief Financial Officer

Naming any company, first of all, is not a good sign. We can only talk about ourself.

Tushar Raghatate — KamayaKya Wealth Management Private Limited — Analyst

Fine, sir. Fair enough. Thank you, sir.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Operator

Thank you. Next question comes from the line of Madan Jain, an individual investor. Please go ahead.

Vipin Agarwal — Chief Financial Officer

Hello? Good morning.

Unidentified Participant — — Analyst

Good morning, sir. Congratulations. Good set of numbers.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Unidentified Participant — — Analyst

Sir, my question was, sir, what is the current market share in private bitumen industry?

Vipin Agarwal — Chief Financial Officer

Thank you so much. I just addressed that very question in the last that we had. We are at the first provision in terms of selling in terms of market share, and we are having about the import market share that is in India. We are still getting to 20%, 22% of the bulk market share that is being imported.

Unidentified Participant — — Analyst

Okay, sir. And sir, my second question was, sir, can you please explain the business under different segments like ancillary infra, ship operations and catering, petroleum products and all?

Vipin Agarwal — Chief Financial Officer

Yeah, thank you so much. See, we are an integrated players wherein we provide end-to-end solutions for any road infrastructure company. We — from the sourcing of the product till the supply to their sites, we have everything in-house and one-point solution. We procure our own product from the source of origin. We transport in our own vessels. We store in India at our own storage locations. We have our own set of logistics to supply that product from there to our units or from our units to their plant.

Unidentified Participant — — Analyst

Okay, sir. Okay.

Vipin Agarwal — Chief Financial Officer

The entire chain helps us in contributing and each segment individually is complementing to each other.

Unidentified Participant — — Analyst

Okay, okay.

Vipin Agarwal — Chief Financial Officer

And there is no company in the Indian market, which is providing one point solutions for their customers in terms of supply.

Unidentified Participant — — Analyst

Okay, sir. Okay. And sir, in terms of logistical ship chartering business, sir, do we lend it for third-parties also or we use it solely for ourselves?

Vipin Agarwal — Chief Financial Officer

We do lend it for third-parties because if you see the current quarter, since the demand in India is very low, we are doing the third-party freight revenues.

Unidentified Participant — — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

You’ll be able to see in the results that we have after the second quarter ends.

Unidentified Participant — — Analyst

Okay. Sir, can you just quantify the percent share like how much business are we getting from the third -party?

Vipin Agarwal — Chief Financial Officer

In terms of percentage, it should not be very great because, ultimately, all our vessels are giving it to — given to third-party.

Unidentified Participant — — Analyst

Okay, sir. Okay.

Vipin Agarwal — Chief Financial Officer

All of our vessels are anyways given to a third-party, but yes, the third-party may sometimes give the product to us in India or to some other party outside India.

Unidentified Participant — — Analyst

Okay. Got it, sir. Thank you, sir. Thank you once again so much.

Operator

Thank you. [Operator Instructions] The last question comes from the line of [Phonetic]Bhowmik Shah, an individual investor. Please go ahead.

Unidentified Participant — — Analyst

Hello.

Vipin Agarwal — Chief Financial Officer

Hey, good morning.

Unidentified Participant — — Analyst

Yeah, hi, good morning.

Vipin Agarwal — Chief Financial Officer

Good morning, sir. Good morning.

Unidentified Participant — — Analyst

I just wanted to check with you, actually the major business, which is our bitumen business. So I just wanted to ask you, what percentage of roads in India will be of bituminous road?

Vipin Agarwal — Chief Financial Officer

I think if you compare the entire kilometers that we have in terms of percentage, it should be about more — anything more than 90%, 95%.

Unidentified Participant — — Analyst

Okay, okay.

Vipin Agarwal — Chief Financial Officer

Basically, bitumen roads are the preferred mode of transport in comparison with the concrete roads that we had sometime about five years back, the focus of government which was on the concrete, but concrete roads are not advisable for any highways.

Unidentified Participant — — Analyst

Okay, okay.

Vipin Agarwal — Chief Financial Officer

So this has resulted into only bitumen roads in all the newly constructed roads in India with maybe addition of some modification in terms of making the road, but main component for laying the road would be bitumen.

Unidentified Participant — — Analyst

Okay. So you mean to say that you are not seeing any threat for our business in the coming years as well actually, because —

Vipin Agarwal — Chief Financial Officer

Not at all. In the next 10 years or 15 years, I think there is no other option than bitumen to build any roads or even if road — the government is not focusing on infrastructure anymore, but the existing network that we have in India would require repairing.

Unidentified Participant — — Analyst

Okay. Okay, understood, understood. One more thing — one more question. So as you are saying that we are targeting about 20% volume growth year-on-year.

Vipin Agarwal — Chief Financial Officer

Yes, sir.

Unidentified Participant — — Analyst

So that 20% volume growth translates to what percentage in our PAT and EBITDA percentages? If we are, let’s say, growing at 20% year-on-year, that’s what we are targeting in terms of volume growth.

Vipin Agarwal — Chief Financial Officer

Yeah.

Unidentified Participant — — Analyst

So that gives what percentage of growth in profit margins in top line and bottom lines?

Vipin Agarwal — Chief Financial Officer

To address this question, we — as informed earlier, it was anything percentage wise to be very precise in terms of percentage would be very difficult, but we will try to maintain the percentage of margins or higher margins than what we are at.

Unidentified Participant — — Analyst

Understood. I understand that since it’s a commodity, so it’s highly fluctuating the prices and all, that I understand actually. Still on a —

Vipin Agarwal — Chief Financial Officer

If we are selling at, say, about INR40,000 with 1% margin.

Unidentified Participant — — Analyst

Okay.

Vipin Agarwal — Chief Financial Officer

And if the same commodity is going to say INR50,000 and the margin is [Phonetic]INR10,000, in terms of absolute percentage, it will come down in fact.

Unidentified Participant — — Analyst

Okay, okay, okay.

Vipin Agarwal — Chief Financial Officer

In the commodity products when the prices are at INR50,000 and you’re selling at INR1,000, it remains the same as when you’re selling at INR40,000 — the product at INR40,000 and incurring INR1,000 profit. In terms of percentage, that keeps changing because of the prices of product that changes. But we try to keep the absolute number in terms of selling it constantly.

Unidentified Participant — — Analyst

Okay, okay. Okay, understood. Thank you so much.

Vipin Agarwal — Chief Financial Officer

Thank you so much.

Operator

Thank you. As there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to Ms. Astha Jain for closing comments.

Astha Jain — HEM Securities — Analyst

Thank you. On behalf of HEM Securities Limited, I thank Agarwal Industrial Corporation Limited team for giving us a detailed insight on the results and the time they spend on this call. I would also like to thank all the participants for joining this call. It was an extremely fruitful discussion. Thank you all for being on the the call. I would like to hand over the call to the moderator.

Operator

Thank you. On behalf of HEM Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Vipin Agarwal — Chief Financial Officer

Thank you so much, everyone.