BLACK ROSE INDUSTRIES LTD (BLACKROSE) Q3 FY23 Earnings Concall Transcript

BLACK ROSE INDUSTRIES LTD (NSE:BLACKROSE) Q3 FY23 Earnings Concall dated Feb. 28, 2023.

Corporate Participants:

Anup Jatia — Executive Director

Ambarish Daga — Joint CFO and Investor Relations Officer

Analysts:

Unidentified Participant — — Analyst

Manish Yadav — — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen, and thank you for attending this virtual meeting. It’s a pleasure to welcome you on behalf of Black Rose Industries Limited and SKP Securities to this Q3 FY22 Financial Results Webinar. We have with us Mr. Anup Jatia, Executive Director along with Mr. Ambarish Daga, Joint CFO and Investor Relations officer.

Kindly note that during this discussion, there may be certain forward-looking statements. And these must be viewed in conjunction with the risks that the Company faces. All participant lines have been kept on mute, and the webinar is being recorded for compliance reasons.

We’ll have the opening remarks from Mr. Anup Jatia followed by a presentation, and we’ll have the Q&A session thereafter. Thank you, and over to you Anup-ji.

Anup Jatia — Executive Director

Thank you, Naveen-ji, and good morning to all. We are now in a world which, as you see in the news regularly, that artificial intelligence is starting to become — play a major role in people’s lives. Today’s presentation will be done by Ambarish and myself using our normal intelligence. Maybe in the future one day we will have some artificial intelligence chatbot doing these webinars. But so far, you have to bear with us. Thank you very much and I’ll hand over to Ambarish.

Ambarish Daga — Joint CFO and Investor Relations Officer

Thank you, Anup-ji. A very warm welcome to everyone. And I’ll just start giving the presentation. Please confirm that the screen is visible to everyone.

Operator

Yes, Ambarish, please go ahead.

Ambarish Daga — Joint CFO and Investor Relations Officer

Just give me a moment while the [Indecipherable]. Okay, so we start with a small disclaimer regarding the forward-looking statements. They carry the risks that the Company faces.

Moving on to the first slide, so as many of you are already aware, Black Rose is primarily into two business segments, one is the Chemical Distribution and the other is Chemical Manufacturing. The Chemical Distribution business is where we import and distribute specialty and performance chemicals from the leading chemical manufacturing companies across the Group. We have direct working relationships with many of the main chemical producers based out of Japan, Germany and Thailand.

The Chemical Manufacturing division was started with the setup of Asia’s first acrylamide liquid plant in 2013. The current installed capacity for the Acrylamide liquid is 32,000 metric tons, out of which 20,000 tons is earmarked for merchant sales and the balance is for our captive consumption.

The next order that the Company started in the same facility was the polyacrylamide liquid which has a current installed capacity of 40,000 metric tons. And currently, our focus in this segment is mainly to cater to the ceramic binder industry at Morbi.

Last year, we started with two new products in the same chemistry. The first was and methanol N-Methylol Acrylamide which we started with a capacity of 2,000 metric tons in February last year. And we are now receiving acceptance and orders from various [Indecipherable] companies who use these materials.

In June last year, we also started producing Acrylamide solid, becoming the only company outside of China to do so. We have an installed capacity of 3,600 metric tons per annum. And this product is sold both locally as well as internationally. Having taken the REACH registration, we expect good volumes from this business segment.

BR Chemicals Company Limited is our 100% subsidiary based in Japan and is engaged locally in the distribution as well as exports of chemicals. The other legacy businesses contribute overall less than 1% of our business.

Now moving on to the performance of the quarter gone by, so this is a snapshot of our profit and loss statement. We see that overall the revenue from operations has grown 43% compared to the previous quarter. With the corresponding quarter, it is marginally down by about 14%.

The short-term loans have been paid out, and so we see that the interest is much lower this time around. The EBITDA was under pressure due to certain market conditions and that will be explained in more detail in the future slides.

Now moving on to the balance sheet snapshot and the highlights, we see that the Company has sold off its inventories — high-cost inventories during this quarter. And that has resulted in a much lower inventory holding at the end of this quarter. This [Technical Issues] has been utilized in paying off the short-term debts which the Company held, which is reflecting in the financial statement.

The Company currently has a very robust current ratio of 3.5 and a very good liquidity ratio as well of 1.75. The debt-equity ratio continues to remain very low as the Company doesn’t have any long-term borrowings.

Moving on to the segment-wise distribution of the revenue and EBITDA, the overall financials, we see that the overall revenue has increased by 43% compared to the previous quarter. This has mainly been achieved on the back of the distribution business where the export of specialty monomers added significantly to the Company’s topline as well as the [Indecipherable]. However, in the distribution business, due to the prevailing low pricing, the Company booked losses in the sales of products like acrylonitrile, resorcinol and neopentyl glycol.

On the manufacturing side, the domestic demand rebounded a bit compared to the previous quarter, which resulted in a higher volume of sales. Even though the price realization was lower due to the low raw material prices. At the same time, the polyacrylamide liquid business did much better in terms of revenue as well as margins.

The EU REACH registration has helped the company in gaining market share and being able to export its products into Europe. And this is expected to continue to help in the Company’s growth potential.

Moving on to revenue and geographical mix, as the manufacturing revenue remained largely fragmented [Phonetic] during the previous quarter and there was a growth in the distribution business. So, we see that the overall distribution business contributed to 77% of the Company’s revenue during the previous quarters.

Looking at the export and domestic business, we see there is a significant change where the exports contributed to 40% of the overall sales for the Company during the — Q3. This is mainly because of the high demand in the oil and gas sector in the US as well as the lower freight cost.

Now moving on to the financials for the Distribution segment, we see overall there was a healthy jump of 54% in the total revenue. The sales would have been even higher but for certain supply chain issue in a few of the distribution products. The top five products contributed to about three-fourths of the total revenue and about two-thirds of the total profit for the Company. The exports, as I mentioned earlier, picked up during the quarter significantly because of the high demand in the US oil and gas sector.

Now moving on to the Manufacturing segment, overall we see that the revenue remained largely stable in spite of the higher volumes because the price realization actually reduced. The export volumes for acrylamide liquid reduced by about 16% during this quarter, largely because of the reduced demand from the overseas customer with the year-end inventory regulation by the buyers.

In the polyacrylamide liquid, the sales improved. We reduced the price by about 6% during the quarter, largely because of the competition from the local manufacturing segment and because of lower raw material pricing during the quarter.

Overall, the Chinese — over-supply in the Chinese market led to dumping by the Chinese for acrylamide powder, which also impacted the sales volume as well as the margins in the acrylamide division. We received new orders from customers in the NMA and that promises to be a potential business addition during this coming — forthcoming coming.

Now moving on to the price trend between the raw materials and the finished product for acrylamide, so this chart depicts two of the major indices which are followed by markets overall worldwide, the IHS as well as the ISIS [Phonetic]. And we see that the price was fairly flat to firm during the quarter gone by, where the acrylonitrile prices ended the quarter at about 15, 10 — 15, 20 [Phonetic] levels. The price realization for acrylamide also was lower compared to the previous quarter.

Now, we move on to the outlook for the current quarter and I will request Anup-ji to take it forward from this.

Anup Jatia — Executive Director

Thank you, Ambarish. To now talk about the outlook for the current quarter. We expect in our Chemical Distribution business, as Ambarish mentioned, that the export revenues have been increasing and we expect that to be consistent, even in this quarter as well.

In terms of resorcinol, last quarter we booked losses in the sales of resorcinol due to the sudden and steep price fall which happened in the Indian market, mainly again due to reduction of prices from China. But with the strong support from our principals, we are — in this quarter we expect to boost sales of this product.

The reopening of China, as you know — during the COVID times China was quite isolated, but China reopening up some of the raw material prices, acrylonitrile especially, some of the acrylonitrile prices have started to move up. So, there could be some price support that we may get because of this. However, the currency — the Chinese currency has also weakened again, which had once strengthened back to 6.71 yuan to $1 and now it’s again back to — close to 7 yuan to $1. So, it needs to be seen how much it does really have an effect.

The Performance Chemicals business, which is largely the BRILFLOC range of products, has been doing well. And we expect this business to give us some good revenues as well as some good bottom lines — bottom line this quarter. We continue to have supply constraints in ethanolamines, itamines [Phonetic] and some other products. But recently, we have been seeing some of these supply constraints may ease in the coming month. But as of now, there are still some supply constraints, which will affect the revenue as well.

Okay, now regarding the acrylamide liquid and the solid, the overseas demand has been increasing on acrylamide and we have been receiving repeat orders from new customers, both in Europe as well as in other countries. The freight rates — the fall of the — the fall in freight rates is really supporting our export business, and we see now our acrylamide sales is more than — close to 50% or even more than 50% will be on the export side.

The EU REACH has definitely helped us to open these markets. Customers have appreciated the fact that we have REACH registration and some of the customers who have done the repeats are basically placing the orders to check on the consistency. And then in order to — before they can really start buying very large quantities, they need to ascertain that our product remains consistent throughout the various supplies. As mentioned also in the last webinar, we are in the process of compiling the data for anti-dumping duty. We have already started speaking to lawyers and preparing the documents for the same.

On the PAM liquid side, as you know, the PAM liquid we focus really on the ceramic tile industry as the PAM liquids are sold as ceramic binders. Ceramic binder demand is still relatively weak. The — recently again, propane prices have been increased in Morbi. A lot of companies which had switched to propane are now again feeling the heat due to rising costs. There are very heavy inventories of tiles lying with a lot of the tile manufacturers. So, the demand for binder is still weak in general. Having said that, we have added members to our sales team. Our sales team has been working very hard in Morbi, and we have been able to actually increase our volumes into that market.

Pricing continues to be under pressure. A lot of small manufacturers have popped up recently offering very low prices. As Ambarish mentioned, we did have one round of price reduction done in the last quarter — towards the end the last quarter. As of now, we intend to maintain the prices during this quarter. And our R&D team is, as usual, focused on improving the process, improving the product, so that we can get even more and more customers to convert to our product.

On the NMA side, N-Methylol Acrylamide, this is another specialty monomer that we produce. Things have been looking good in the NMA space. We have received approvals from some of the domestic customers that we were waiting for approvals from. We have received approvals from international MNC client as well. We are in the process of negotiating sales to locations as far as — as far away as the US. And we expect, in this quarter as well as in the coming quarters, sales from NMA to be increasing.

On the polyacrylamide solid, we continued to do our R&D with our technical adviser from Japan. He has helped to boost the development on this side. And as we have mentioned in the past, our capex plans for polyacrylamide solid remain intact. We expect to complete capex by the end of FY24 and to start having revenues from that stream during FY25.

On the polycarboxylic acid, these are basically again dispersants, which are used in the ceramic tile industry. We have been — in the R&D phase, we have completed one version of our product. The product is undergoing testing currently. And once the testing is over, we would be launching it into the market, first to a few of our regular clients and then to the larger client base.

On the — of course, our focus remains on R&D, as mentioned also in the last time. The green chemistries have — this is an area that we are focused on in the future to start looking at different processes to make traditional petrochemical based products using more sustainable raw materials. So, this is something that we work on, our R&D team.

At the same time, we are currently in discussions with one of the principles in our Distribution business, and we are studying the feasibility of setting up a specialty chemical production facility in — at our existing location in Jhagadia. So, this is an ongoing study. When any — when there is any kind of announcements to be made on the same, we will definitely let you know.

This is our capex chart that we share regularly. There is a — what’s the change the change this time, Ambarish? Yeah, what’s the addition? But how much is it — yeah, so there is a small addition in the total capex incurred. And the — yeah, it’s about INR1.5 crores of capex has been additionally incurred. Some of this is in the acrylamide solid and some of this is in the PAM solid areas. So, the total capex incurred so far is about INR58 crores out of the overall outliers you see over here.

Okay, thank you, and back to you, Naveen-ji.

Questions and Answers:

Operator

Thank you, Anup-ji. And we’ll start the — with the question-and-answer session now. Wait for a couple of minutes for some questions to line up. Anyone wishing to ask a question, we request you to please raise your hand. We’ll unmute you and take your question. The first question is from Suresh Kumar [Phonetic]. Suresh, please unmute yourself and go ahead.

Unidentified Participant — — Analyst

Can you hear me?

Operator

Yes, Suresh, loud and clear. Please go ahead.

Unidentified Participant — — Analyst

Good morning. Sir, I have three questions. The first one is, you have mentioned that approvals for NMA has been received. Is it the same two last customers you used to refer in the earlier calls, one is the domestic and the other is the US-based, where their requirement used to be quite huge? So, these approvals are — received from the same customers only?

Anup Jatia — Executive Director

Yes, that’s right.

Unidentified Participant — — Analyst

So, that means we can expect higher capacity utilization of this product?

Anup Jatia — Executive Director

Yes, that is what we’re expecting. We will have to see how soon they — how quickly they switch over their volumes to us and how much of their volumes they switch over to us. But the initial — the main hurdle of getting the approvals has been has been passed.

Unidentified Participant — — Analyst

Okay. Congratulations, sir.

Anup Jatia — Executive Director

Thank you.

Unidentified Participant — — Analyst

So, second is regarding the pan solid. The first question is with what — you have mentioned capex for that is around INR60 crores in the last slide that you showed regarding the capex? So, has hat been finalized?

Anup Jatia — Executive Director

No, the PAM solid, the total outlay that we have allocated in the past was INR60 crores. Some of that capex has already taken place. But the major capex which has to take place, will take place only after the RMB team is complete with their entire process, engineering and other aspects. So, the major capex on that has not started yet. When the major capex will start, that is when we will look at the fund raising on that aspect. But we expect some portion of that to be paid from our internal accruals and some loans and — etc. But the detailed fund raising plan on that particular capex has not been crystallized right now. We have not gone ahead with the detailed discussions on that yet.

Unidentified Participant — — Analyst

Thank you. Sir, at the prevailing prices, how much this 10,000 metric ton of this PAM solid will continue — will generate the revenues?

Anup Jatia — Executive Director

So the PAM solids are again our performance product and the prices range anywhere between INR160 to INR350, depending on which PAM solid — which grades you purchase. So, we typically consider INR250 as let’s say an average pricing for the product. And on that basis, it works out to around INR250 crores.

Unidentified Participant — — Analyst

Fair enough. Sir, my last question is, with the discussions you mentioned you are having with some principals to manufacture the Performance Chemicals, my first question is, is it similar the type of acrylamide family we are manufacturing where but the capex requirement would be less whereas the sales and the margins are on the higher side. Is it somewhat similar to that type of chemicals?

Anup Jatia — Executive Director

No, so the new projects that we are working on the feasibility right now is not for the Performance Chemicals side, it’s for the Specialty Chemicals area. And it is not related to the acrylamide chemistries in anyway. But it is a principle that we have been having. We have relationships with — now close to 20 years. And they are also looking at the possibilities of having overseas manufacturing sites, which can toll their products for them. And because of the relationship we have with this company — with this company for the last two decades, we are in discussions with them to see the possibility of setting up that facility at our site.

So, they would — definitely, there would be a sort of a buyback arrangement as well as — partly a buyback arrangement plus the remaining products we will be selling globally. But it’s too early to give you too many details on this. Let us — once the details are crystallized, once we are — once everything is on — when everything is on track, then we will make the necessary announcements.

Unidentified Participant — — Analyst

No problem, sir. I will not ask anything about that. Only a small question — clarification is, you had mentioned after the PAM solid plant capex, these will not much space at Jhagadia. So, just a small clarification. Do we have space to put this — in case the agreement comes through, enough space to put up a plant there at Jhagadia?

Anup Jatia — Executive Director

Yes, that we have already identified. So yes, there is sufficient space even after the PAM solid is set up to set up this facility.

Unidentified Participant — — Analyst

Thank you very much, sir, and wish you all the best.

Anup Jatia — Executive Director

Yeah, thank you.

Operator

Thank you, Suresh. The next question is from Manish Yadav. Manish, please go ahead. Please unmute, yeah.

Manish Yadav — — Analyst

Hello. Am I audible?

Operator

Yes, Manish, please go ahead.

Manish Yadav — — Analyst

Thank you for the opportunity. So I’ll start with my first question which is about the topline and EBITDA margins. We had our best quarter in March 2022 where we did sales of INR134 crores. And in December quarter — this December quarter for financial year 2023, we did a sales of INR97 crores which is almost done by 72%. And our best. EBITDA margins were 13% in quarter three financial year 2022, December quarter, which was around 13%. And right now we are operating, this previous quarter, at 1.13% of EBITDA margins.

So my question is, when are we going to operate at the same level in terms of revenue and EBITDA margins, like how much time does it — going to cross that INR134 crores mark of the topline and to maintain the EBITDA of INR12 crores to INR13 crores?

Anup Jatia — Executive Director

Okay, that’s a good question. I wish I could answer that question with a lot of certainty, but it’s difficult to be — to give you any certain answers on this. As you know, the markets have not been very great in the chemical sector this past 7 months, 8 months. And the main reason is that there is an over-supply of a lot of products now globally.

During COVID, a lot of companies worldwide have expanded their capacities. Even in China, there has been a lot of capacity expansions for a lot different products. So, what is happening right now is with the weak demand coming out of Europe and coming out of the US, this whole talk of the recession coming up ahead is causing a lot of reduced demand, but at the same time, the over-supply continues.

So, the main issue here right now is the price realizations. There are a lot of companies, globally you will see large MNCs who are also struggling with the same kind of issues right now. So, we really need to see when demand picks up globally, when this additional demand picks up and the existing supply starts to get consumed. This is when we can see — across the board we will start seeing some improvements.

We were all expecting that with the opening up of China, the — especially last year after the COVID restrictions were removed, we all expected that the China factor will start pulling up demand again. China is a huge consumer of chemicals as well as everything else. So — unfortunately, that’s not been seen yet.

And there are a lot of different theories. People say that it’ll start in the second quarter of the financial calendar year. Some people say, it’s probably going to start in the third quarter of the calendar year. So, it really needs to be seen how demand starts to pickup.

Of course, we all know about the war in Ukraine and all of these things as well. So, there are a lot of reasons right now that the demand for chemicals in general are weak across industries and — but we just feel it is really [Technical Issues] we just have to wait and wait for demand to pick up.

In the meantime, we need to start looking at new markets, start going into different regions, and this is exactly why we also took the EU REACH registration and this is why we are expanding our export portfolio. So, these are the things we are doing from our side to at least try to overcome the current slowdowns that we see in the market.

Manish Yadav — — Analyst

Okay. So, that means, still we have some pain left in upcoming quarters?

Anup Jatia — Executive Director

I would see that the — a lot of the pain that happened, especially with the falling prices, the falling prices have now subsided. The — now the prices are stable, but they’re at the low end and this is where the realizations are still on that basis. But as that structure improve we will see improvements.

But I would say, a lot of the pain that have to happen, we have — bit the bullet in the last quarter, so that’s some of the high-cost inventories and all that we disposed of them in the last week to clean out those stores. So, at least what we have now is — we don’t see any losses to be made on any of our sales, especially on the distribution side. We don’t see that happening in this quarter as we saw in the last quarter.

Manish Yadav — — Analyst

Okay. So sir, my second question is about drilled BRILBIND. How much does it contribute to our sales? And why do we have a reduction in price of BRILBIND? And as you mentioned, there is a price cut of 6%. So, just wanted to know about pricing part of our product, that are we able to pass on the input cost pressure to our customers?

Anup Jatia — Executive Director

Yeah, the BRILBIND business is still — is profitable. It’s — the costs have reduced because the major raw material to you — that we use to make buying is two major raw materials, one is acrylamide that we produce ourselves, and acrylic acid. So, these are the two main products that are used to make — two main raw materials that we used to make BRILBIND.

Now, acrylic acid prices have come down sharply in the last few months and acrylamide prices have also come down due to the reduction in the acrylonitrile prices. So, on both these brands [Phonetic], we have had a cost reduction in the BRILBIND. And at the same time, there are a lot of the smaller players — small players who literally will maybe supply 50 tons in a month or maybe maximum 100 tons in a month, which is very small in that market, but they leave behind the price. And these guys have no costs, really they are running small reactors with hardly any costs [Indecipherable].

So, when these people come in and they start reducing prices, customers expect some kind of a gesture to be made from our side also, because they do know that prices have — costs have come down. So, this is why we have reduced it by INR2, which is basically 6% approximately. So, that’s what we have done. But our reduction in cost is commensurate with that.

Manish Yadav — — Analyst

And how much BRILBIND contributes to our total sales, what part of it, in percentage if you can give?

Anup Jatia — Executive Director

I would not say it is very significant right now. Just give me a second. Yeah, it’s not a very large component, but [Technical Issues] breakup between — in our manufacturing business — because what happens is our customers are also often reading these webinars and we don’t want them to really know the — too much detail about our competitors, I would say. So — launching these webinars and we don’t like to share too much information with our competitors. So, I’m sorry. I won’t be able to answer that question.

Manish Yadav — — Analyst

Sure, no problem, sir. My last question is basically related to trade receivables, like earlier we used to operate in a range of INR28 crores to INR34 crores, if I see for the past 6 years — 5 years to 6 years. But recently we have seen an exponential jump in the trade receivables. For the last March 2022 year closing, it was around INR66 crores and for this year I guess it is going to be the same. So my question is, how are we dealing with this receivables, like, why are they increasing so exponentially?

Anup Jatia — Executive Director

Just a minute. INR88 crores — right now it is at INR46 crores.

Manish Yadav — — Analyst

Yeah. I’m talking about this upcoming quarter, like when we end the year, so a ballpark number is there, right?

Anup Jatia — Executive Director

You are saying when we end FY23?

Manish Yadav — — Analyst

Yeah.

Ambarish Daga — Joint CFO and Investor Relations Officer

Mr. Manish, just one point to clarify earlier. These figures which you see are end of the year on a single-day figures. So, these really are not very indicative of the actual overall debtors’ figures for the entire period. If you look at it on an average, we’ve actually reduced our [Technical Issues] commensurate with our sales and the debtors turnover ratio actually become much healthier during the course of the last quarter.

Anup Jatia — Executive Director

So we have — for example, if you see even our average collection period, if we see on a standalone basis, in the end of FY22 but the — March 2022, our average collection period was above 60 days — 59 days. And today we are at around 53 days, so we have actually reduced it. In fact in the Q2, at the end of September it had gone a little longer. We had about 75 of average collection period. But now that has reduced to 53 days. So, we typically try to keep it within 60 days as a general ballpark.

Manish Yadav — — Analyst

Okay, thank you sir. And the last question is related to distribution to Manufacture revenues, which is the ratio. So, what is going to be the ratio in like going forward, like currently the last quarter is was 3.6 is to one. So, we can assume that the distribution ratio is going to be a decline and we are more into manufacturing, right?

Anup Jatia — Executive Director

I think in this current quarter — I think this current quarter we will still see a larger a larger share in distribution in this quarter. But the share should improve in favor of the manufacturing, but you see, we are into various products. And there are certain times when certain products sell very well and we have large orders for those products. So when that happens, then those — that ends up taking a little bit of our revenue. It starts to get skewed a little bit to that extent.

So even if you see, we have forecasted that in this quarter our merchant export business is going to bring in maybe around INR25 crores during this quarter. So, depending on what our final revenue will be, but. INR25 crores out of that will be part just — again will be added to the distribution revenue. So, we feel that this quarter also we will have a larger distribution percentage as compared to a larger manufacturing percentage.

Manish Yadav — — Analyst

Okay, thank you sir. That’s all from my side. Good luck for the upcoming quarters.

Anup Jatia — Executive Director

Thank you, Manish-ji.

Operator

Thank you, Manish. If there’s anyone with a question, request you to please raise your hand and we’ll unmute you to take your question. Follow-up question from Suresh. Suresh, please go ahead.

Unidentified Participant — — Analyst

Sir, my follow-up question is, if there is any thinking in the Company to de-merge the distribution and manufacturing going ahead in the future?

Anup Jatia — Executive Director

No, we don’t have any such plans right now.

Unidentified Participant — — Analyst

Sir, secondly, post PAM solid capex, what are the future plans for the growth of the company, like any products you have finalized or any capex that you’re thinking of?

Anup Jatia — Executive Director

So, we continue to work very closely with our various principals. As you see in our distribution portfolio, we work with a lot of different largely Japanese companies. And we have regular ongoing discussions with these Japanese principals and we are constantly discussing what type of activities we could expand in India with these companies. So, yes, there — even though the PAM solid is part of our capex, that does not mean that’s where we intend to end.

Our job as a distributor, for example, is to be reliable partners to both our principles and our customers. And even as a manufacturer, we believe in the same philosophy. So, if there are things we can do here on the manufacturing side which helps us provide value to our principals as well as our customers, we would happily engage with them to do that.

Unidentified Participant — — Analyst

Sir, in such cases, the technology will be given by the principals only?

Anup Jatia — Executive Director

It would depend on the product, but largely, yes. In some cases, it could also involve joint development of certain technologies, especially when we’re talking about topics related to the green chemistries or the new technologies which are coming up, because a lot of these new technologies are under development and sometimes these new technologies need partners to work with, because if, for example, those bio-renewable raw materials are, let’s say, available in India but not somewhere else, then it makes sense for such companies to tie up and partner with somebody here to have the proper sourcing capabilities and the application capacities in India. So, there is no one answer I can give for that.

Unidentified Participant — — Analyst

Okay. Sir, my last question is that senior Japanese R&D or some who had joined us some time during May or June, he will be assisting the Company in PAM solid plus this non — renewable sources chemistry only, right?

Anup Jatia — Executive Director

No, he’s current — he would probably be involved to some extent in those areas as well. But as of now, the specialization that he has is more related to the acrylamide-based polymers. So, we are working with him currently more on that — on the acrylamide-based products.

Unidentified Participant — — Analyst

Okay. Sir, my last question is, once these conditions will — stabilizes, the prices, the freight cost, everything, assuming we reach a stabilized state, and after launching our PAM solid product, let’s say, in FY25 or FY26, I don’t know, but I’m just asking, what would be the EBITDA margin that we can expect from the Manufacturing division?

Anup Jatia — Executive Director

It’s a difficult question. I don’t have a number I can just throw on that. But if you see, we have had EBITDA margins in the last 2 years as high as — as close to 30% as well and we have also come down to as low as 10%. So, I believe depending on the market conditions and various things, it would always vary between a certain range. But it is — there are numbers on papers, but what can be actually achieved would really depend on the time and the scenario at the — in the market at the time. But historically, if you see in our Manufacturing, this is the range that we have achieved so-far.

Unidentified Participant — — Analyst

Okay, sir, thank you very much.

Anup Jatia — Executive Director

Thank you.

Operator

Thank you, Suresh. If there’s anyone with a question, I request you to please raise your hand. Anyone with a question, please go ahead. I guess no more questions for the time. Anup-ji, anything else that you’d like to add further to the presentation made by Ambarish?

Anup Jatia — Executive Director

Not much. I think, lot of questions — we’ve had some good questions and I was able to share my views on the market going forward. But yes, I mean thank you to all our investors for being with us, for supporting us. The markets are a little bit dull right now, as I have explained. But we believe these are — all markets are cyclical in nature. And we are expecting — and when we speak to our foreign principals and customers and various people, we are expecting some improvements in the coming quarters. But how soon the improvements come would really depend on a lot of factors, which none of us really have control over.

But we are doing our best to — we are not laying back and saying, this is a market, we can’t help it, let’s just relax. This is not our attitude. We are looking at these times to actually go out, find new customers, new clients, and we’ve been quite successful at that. And this is what we intend to continue to do. We intend to continue to push our products into different markets and to build relationships with customers and principals.

So, thank you for your support again. And look forward to seeing you at the next webinar, which will hopefully be in May, I believe, yes. Thank you so much.

Operator

Thank you, Anup-ji, for your — for the outlook on the Company and the sector overall. On behalf of SKP Securities, thanks a lot to Anup-ji and Ambarish-ji, putting in time to interact with the investors. And we look forward to hosting you again for the Q4 results. Thank you and have a nice day.

Ambarish Daga — Joint CFO and Investor Relations Officer

Thank you.

Anup Jatia — Executive Director

Thank you.