Fairchem Organics Ltd (NSE: FAIRCHEMOR) Q3 2025 Earnings Call dated Feb. 19, 2025
Corporate Participants:
Rajen Jhaveri — Chief Financial Officer
Analysts:
Purvangi Jain — Analyst
Nirag Shah — Analyst
Unidentified Participant
Chirag — Analyst
Siddharth Purohit — Analyst
Keval Shah — Analyst
Nitin Gandhi — Analyst
Rohit — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 and Nine Months FY ’25 Conference Call of Fairchem Organics 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. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. I now hand the conference over to Ms Jainkunia from Advisors. Thank you, and over to you, ma’am.
Purvangi Jain — Analyst
Thank you. Good afternoon, everyone, and a warm welcome to you all. My name is Jain Kunia from Validum Advisors. We represent the Investor Relations of Organics Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the 3rd-quarter and nine months ended of the financial year 2025. Before we begin, a quick cautionary statement. Some of the statements made in today’s earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated.
Such statements are based on management’s belief as well as assumptions made by and information currently available to them. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings conference call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Now, I would like to introduce you to the management participating with us in today’s earnings call and hand it over to them for their opening remarks. We have with us Mr Naush, MD and Chairman; and Mr Rajan, CFO of the company. Without any further detail delay, I request Mr Rajan to start with his opening remarks on the financial highlights. Thank you, and over to you, sir.
Rajen Jhaveri — Chief Financial Officer
Thank you, Mr and good afternoon, everyone. Welcome to our earnings call for the 3rd-quarter and nine months ended financial year 2025. Let me first start-off by giving you some of the key financial highlights — highlights after the our CMDC Newsway will give you some of the operational highlights. For the 3rd-quarter under review, the revenue From operations stood at INR114 crores, which declined by 23% on a year-on-year basis. EBITDA for the quarter was INR8 crores, which declined by 61% with EBITDA margins reported at 6.87%, net profit was INR3.5 crores. For the nine months ended, the revenue from operations stood at INR417 crores, which declined by 10%, EBITDA was INR38 crores, a decline of 20% with EBITDA margins reported at 9.21% and net profit was approximately INR21 crores. I now request our CMDC to brief you on the operational highlights for the period under review. Good afternoon, everyone. In the 3rd-quarter, our sales of finished goods declined by 23% in terms of volume and around 18% in terms of revenue vis-a-vis the previous quarter. We witnessed a marginal improvement in our EBITDA margins as compared to the previous quarter. However, it remains below normal due to the continued pressure on the raw-material cost as well as the fall in the sales due to lower demand and lower realization. We have encountered lower demand from the paint sector for linolic acid, soya fatty acid, which impacted both our top-line and bottom-line. In September 2024, as we had discussed earlier also, the Indian government had raised custom duty on crude vegetable oils from 5.5% to 27.5%, sharply increasing our dimer production costs as regards to its raw-material. In order to compete with the Chinese suppliers, we had to absorb most of the hike to retain our two-third domestic market-share, which has impacted our bottom-line in a substantial manner. With no import duty change for the fatty acid, we had to cut our raw-material purchases and can only hope and wait for a policy reversal, which would take us back to the good old days. The silver lining, however, is that company continues to be upbeat on its value-added high-value product isosteric acid, which as more-and-more companies have started giving us approval for the product, the company expects to achieve higher volumes of the export of this product in continuously a quarter-to-quarter basis. With that, I open the floor for question-and-answer session
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Nirag Shah from Exemplar Investment. Please go-ahead.
Nirag Shah
Yeah. Thanks for the opportunity. Can we have the Q3 as well as the Nine-Month figure of contribution of each of our major products, legal TSC, Daimer and individually to our revenue?
Rajen Jhaveri
See, we cannot have separate contribution for each of the four main products, but I can tell you one thing, the share of these four main products in terms of — as a percentage of in terms of value during the quarter was nearly 78%. That includes our tofo, minor Toko business, Lynolic business, timer business and the latest one to be added is the isosteric acid. So out of our total sales, share of these four products, prime products was 78% because from a single raw-material or a couple of raw materials, we are making multiple products, there is no separate contribution of each product.
Nirag Shah
Okay. So for Q3, you are talking about 78%, right?
Rajen Jhaveri
And the figures just now I gave you is for October-December quarter.
Nirag Shah
Okay, for nine months?
Rajen Jhaveri
See the figures more — like for the previous quarter, the sales figures were 76% and for the first-quarter, the figures were 75%. So it is averaging around 76% only for nine months also.
Nirag Shah
Okay. And now since we are just one and a half months away from closing this fiscal, so can we have the exact status of the new product and the new raw materials that we are talking about since last 1.5 years for which we have dedicated 2,000 metric ton per year capacity, I think. And when are we expected to commercial — commercialize the project?
Rajen Jhaveri
No, already the pilot plant samples, we have started ascending for pre-approvals to the potential, but it will take some — its own time because again as I’ve explained earlier, this is a product which we are going to make for the first time in India and hardly three or four companies are making in the world. So we will have to move cautiously, keeping in mind its manufacturing cost and yields. Till we get those things absolutely in-line, we won’t be able to move forward. We are working on it.
Nirag Shah
But there is no approximate timeline? Means by FY ’26 and FY ’26, will we seasonalized?
Rajen Jhaveri
Yeah, yeah, it should be, it should be. The way it is going, I feel that it should be.
Nirag Shah
And lastly, I would like to draw attention of the management to page number 30 of the company presentation released on 14 December 2024. In that we had projected a revenue of INR735 crore for FY ’25 and INR979 crore for FY ’26. So current FY ’25 target seems to be possible now. So as far as FY ’26 projection is concerned, is the management still hopeful that by any chance company can achieve even close to say FY ’24
Rajen Jhaveri
And the duty is what we came up that it was something which is not under our control. We didn’t visualize that situation. Whatever the thing what we projected was based on a normal market situation. Right now, in fact, if you will see that our raw materials what we buy attract 27.5% duty and against that, if I want to import the finished product, the import duty is 7.5%. So we are fighting a losing battle that also we had already mentioned that this was the internal projects made by the company and it doesn’t it doesn’t hold good. At the bottom of that, we have already mentioned that it required an entire reworking kind of a thing.
So it doesn’t hold good that is what was mentioned in the presentation itself.
Nirag Shah
No, no, but internally, are we hopefully,
Rajen Jhaveri
It was not long back, internally, it was moving long back before all these duty changes and lack of demand from paint sector, et-cetera came in. So it was no long back.
Nirag Shah
But it was disclosed only last month, I think
Rajen Jhaveri
No, because we made the presentation, we disclosed it.
Nirag Shah
So got I will get back-in the queue.
Operator
Yeah. Thank you. The next question is from the line of Ritesh from Capital. Please go-ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Just to continue on previous question on this internal projection. So about the FY ’26 of 23.8% EBITDA margin, if duty is normalized, then with the isocentric and this new products are we expecting this substantial jump-in the margin and does that hold through things.
Rajen Jhaveri
Yeah, it’s — everything depends on two things. One is that the duty thing with the differential is there, it becomes as before. That is one thing. And second thing is the paint industry is revived. So from last year, the demand from the paint industry would be how much it would be down. So it is down sequentially. It’s down substantially. It’s really down substantially
Nirag Shah
In terms of volume as well as in realization also, realization is holding on.
Rajen Jhaveri
The is in form of volumes only. See, value we don’t talk much because it is a reality, 30% drop-in volume from Q2 to Q3 only. And Q2 again itself was a further drop from Q1. So there was a 30% volume drop between October-December quarter previous quarter only.
Unidentified Participant
Are you losing the market-share in paints with the new players coming in?
Rajen Jhaveri
We haven’t lost any of our buyers. We — I mean any of the big companies whom we are supplying, we have not lost. Similarly the product what we are making, people don’t make any product which is nearing our specifications. They make inferior grade of products.
Unidentified Participant
Perfect. And for this new product also, this custom duty of vegetable oil even that is applicable over there also or is it?
Rajen Jhaveri
Domestic raw-material, it’s a domestic raw-material? Which production about the new product, which is which is under development ? Yes, sir. That is that is — in that it’s 100% domestic material and so it won’t affect it in any way. And the commercialization, can we expect in H1 so basically what I’ve been always explaining, we are the first company in India doing it, third or fourth company in the world doing it. It’s an R&D work. It’s basically an R&D work. It’s not an easy thing really to work on. We have been working on this since last more than three, 3.5 years. So yes, their challenges do come. Many times when you do an R&D, you feel that, okay, you have achieved certain things. But then when you try to scale it up certain issues do crop up. So those are because there is no technology available of this product, otherwise, I can buy the technology and start doing it. But we are very hopeful that we’ll be able to do it in ’26.
Unidentified Participant
No, sir. Sir, on the new product itself, whatever samples you have sent, according to you, they match the competitor profile or
Rajen Jhaveri
Quality-wise, we are able to match. We have to — at the same time, we have to keep two things in mind, what yields we get and what is our manufacturing cost. So in the cost, we are working on it. From pilot-scale, we are working on it. We feel that it will be — it is on park. We’ll be able to — we’ll be able to manufacture it at a competitive price.
Unidentified Participant
Okay. Yeah. That’s all from my side. Thank you very much, sir.
Operator
The next question is from the line of Chirag from Finance. Please go-ahead. Y
Chirag
Eah, good afternoon, sir.
Rajen Jhaveri
Good afternoon.
Chirag
Sir, in terms of this custom duties, how is the process of — do we make any representation to the government or we’ll just
Rajen Jhaveri
— we have already made the representation. But you know now isolated representation from one company. Yeah. See, we are the only manufacturer of fatty acid. So in that case, it becomes very tough if there is a — like as for example, it’s a steel, I mean, which is a commodity and where there and Daimer doesn’t manufacture that association goes for the representation. In our case, it is not possible. But I mean, we have a feeling that some state things would change. At some state things would change. Government won’t be able to continue like this forever.
Chirag
Okay. Okay. The second thing is, sir, in the paint sector, new players are coming in.
Rajen Jhaveri
So already our material is approved at also and we are selling material to them.
Chirag
Sir, since you said that the volumes are falling, so I’m trying to understand that even from the new players and the old players put together, even yet the volumes are falling.
Rajen Jhaveri
Yes, yes, yes. Yes
Chirag
. Okay, okay. And so the last one, sir, what is the debt and cash on books, sir?
Rajen Jhaveri
There is no long-term debt. There is a working capital against our receivables and the inventory. As of now, the outstanding is against our inventory and receivables of say about INR130 crores plus our drawal — actual drawal is less than INR50 crores as on-date cash on-book, sir? There is no liquid cash on-book. This is the undrawn drawing power is the approximately INR60 crore INR65 crores. That is the amount which we can spend. Okay, sir. We don’t have any liquid surplus cash which we are investing somewhere. No.
Chirag
Okay, sir. Thank you. Thank you.
Operator
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. Next question is from the line of Siddharth Purohit from InvesQ Investments. Please go-ahead.
Siddharth Purohit
Hello. Hi, sir, am I audible? Hello.
Rajen Jhaveri
Yeah.
Siddharth Purohit
Yeah. Sir, now that the entire quarter has already gone and we know the impact of the input duty on the raw-material front, can we say that this is the level of gross margin that is what we’ll probably be comfortable with or there is more to see on the volatility side.
Rajen Jhaveri
As we’ll be able — we will sell more-and-more of our isosteric acid, our EBITDA margins would go up. Okay. So Mr, there are three points in this. One is the adverse impact of the duty. Another is the paint demand. So all these factors put together resulted into this kind of thing. So these two negative factors one-by-one is the reverse accordingly that improvement would be there. And what is talking about is the positive from the isosteric acid, that new product which we have launched about 12 months back.
And that is going reasonably well and we hope further improvement from April 2025 next financial year. So that would if we assume that there are no changes in these two basic assumptions, which have negatively impacted this quarter, that positive impact of acid would be due from Apple — particularly from April 2025 onwards.
Siddharth Purohit
Okay. And sir, in previous call you had mentioned in the acid business, the peak revenue potential at the current capacity is something around INR150 crores, is it correct? Or I mean it is depending upon the scalability that we’ll revise it accordingly. What is the value of raw-material — potential fair-value?
Rajen Jhaveri
Well, yeah, it should be, yeah. Yeah. And who are the other state people who are probably supplying in India and it stands.
Siddharth Purohit
Okay. And who would be the other people who are supplying to like similar product or same product in India and who are we
Rajen Jhaveri
There is no — for isosteric acid, there are — we are the fourth player in the world. Okay. The remaining are in Europe and USA only. Two in Europe, their amount is kind of imported as of now in India.
Yes, yes, 100% and India is a very small market. 90% of our production will go as exports. Utilization in India is very, very, very, very big market. It is mainly for export market in developed countries.
Siddharth Purohit
Okay. Okay. So clarification. What would be the lended cost of and acid as of now vis-a-visit doesn’t get imported. It doesn’t get imported. Daimer gets in acid, that’s important. So vis-a-vis our cost, what is the imported cost or what is the gap, pricing gap as of now?
Rajen Jhaveri
No, we see whatever the imported price, we have to match the price for sailing. Otherwise, no one would buy from us, people would import, that’s exactly what we have been saying. But that’s exactly what we have been saying because imports are coming under 7.5% duty and we have too much goes and our raw-material comes at 27.5% duty.
Siddharth Purohit
So assuming there is a kind of further slowdown in, let’s say, other economies and there is more dumping happening here, we’ll have to follow it from China, but also.
Rajen Jhaveri
Yeah, it is happening from China.
Siddharth Purohit
Yeah. So that’s what I’m trying to understand that if there is further dumping in our market and there is further pricing pressure on that, we’ll have to take a price cut on that front also.
Rajen Jhaveri
Yes, obviously, what can I do otherwise I have to move the market right. No one see, no one is going to buy at a high-price from me. If they are able to get it at lower-price, we are into B2B segment, so the price has to be competitive in business-to-business deal, the price has to be competitive only. Right. And see, because our government has increased the duty, that doesn’t impact the Chinese cost of production, absolutely.
Siddharth Purohit
So the current like variables that probably will depend or probably improve for the company as a change in duty structure and probably the demand growth in paint sector. These are the two things that is going to probably change the main things. Okay. Sir, one more clarification. In previous call, we had mentioned that out-of-the 1,20,000 tonnes capacity, we have kept 40,000 aside for the new products and all. So when we talk about new products, it is including isotriic acid and other new products, right?
Rajen Jhaveri
No, no, excluding. IHO acid is covered in this 80,000. New products exclusively 40,000 is the new product.
Siddharth Purohit
Okay. So would it be like — can you give a — like in a ballpark phase of what would be the potential market size for the new product that you are talking about that can be addressed? I’m not talking about revenue that you can do, but the potential market-share that you’ll be addressing.
Rajen Jhaveri
So market-share of that new product see, we will be gradually reaching that initially we’ll put up a plant which might be hardly 10% or 15% of world’s market. No, the market size that you can cater in India or maybe from your plant. That also — that also would be more for exports. See, we are gradually shifting from low-value products, high-value products?
Siddharth Purohit
So what basically I was trying to understand is that if we use the entire 40,000 tons that is available with us and meet 100% utilization, hypothetically, what could be the revenue that we can generate from that? That’s what I’m trying to just double right.
Rajen Jhaveri
Sales would be double. But it is again high-value product, high-value product, the sales would be double — practically double. But those are — we said we will be gradually reaching that optimum capacity not in the first year itself.
Siddharth Purohit
So probably FY ’27, ’23 is what — yeah.
Rajen Jhaveri
See, creating a capacity, making a product which is of acceptable quality, but then people also don’t — the other three manufacturers are there in-market. So buyers won’t dump those guys. I mean, you see to enter a market, it is going to be a gradual feature. Overnight, I cannot start functioning at 100% capacity utilization. Like it is a simple assumption that you have to give 1,000 days for any new product to be stabilized in the market. We see some material impact from that segment, it will take another two, three years. Is it the fair assumption that you think? Yes. For sure, for sure.
Siddharth Purohit
Okay, sir. Okay, sir. I’ll come back-in queue. Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star N1 at this time. The next question is from the line of Dia Mehta from Investments. Please go-ahead.
Unidentified Participant
Thank you so much for the opportunity. I just wanted to know-how is the demand from cosmetic and other sectors going?
Rajen Jhaveri
Cosmetic sector is doing fine. Our isosteric acid is finding application in cosmetic. We have started exporting to Europe, US, I mean the two world’s largest cosmetic market. We have started exporting it. We have 90% export in ISO static, right? Practically not even 90%. You can say practically 100%. So there are one or two small buyers in India.
Unidentified Participant
And what would be the application for this apart from cosmetic?
Rajen Jhaveri
It goes in buyers to manufacture lubricants, biodegradable lubricants, okay and in other regular lubricant only biodegradable lubricants
Unidentified Participant
Sure and in Lenonic acid, how was the demand there? And could you help me with the
Rajen Jhaveri
Making of paints and demand is not that good. Okay. You already said that there was on a quarter-to-quarter basis, there was a 30% drop-in volume. Of paints right after it goes into mainly paint only. And Daimer goes in, where does Daimer go? It goes in epoxy. Anything you need to stick, it’s the main raw-material to manufacture aerodite. Dimer, we don’t see any drop. We are not seeing. We are able to maintain the market-share.
In, we are not making money because there is a dumping happening from China and right.
Unidentified Participant
How much market-share you would have in around two-third market-share and who would be our competitor? China, suppliers, Chinese supply will be very good. And this would be a customer for Diamond?
Rajen Jhaveri
Because there have been quite a few customers. You are help me with the first top two sectors or top two players. It would be fair for me to do that okay, but majorly paint companies only. Ohh it goes in paint, it goes in a it goes as a good anything you need to stick it goes
Unidentified Participant
Got it, got it. Okay, thank you for my sir. I’ll get back-in queue for further questions.
Operator
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Chirag from Budrani Finance. Please go-ahead.
Chirag
Sir, just one thing I wanted to understand. This 22% duty that we are talking about, that is on the raw-material that is required to produce Leonic and dimer acid, right?
Rajen Jhaveri
Yes.
Chirag
So there we have an impact of the duty. And on the product side, in the dimer acid, we have the impact of Chinese imports, right? Plus it has 7.5% import duty only.
Rajen Jhaveri
No, no, what we are trying to say is while import raw-material at attract 27.5% duty. After this increase, before that it was 5.5% only. The dimer acid import continues to attract the same duty of 7.5% only. So this import was there previously also — previously also, right? I mean, but previously raw-material was not discoursely now raw-material has — was carrying import duty of 5.5%, then it became 27.5%. So difference of 22% happened.
Chirag
Okay, okay. And on the other product, which is the Leonic acid, there we are seeing demand issues. So that is how —
Rajen Jhaveri
Yes, yes, yes.
Chirag
Okay, sir. Okay. Thank you.
Operator
The next question is from the line of Keval Shah from Investments. Please go-ahead.
Keval Shah
Hello, sir. Thank you for the opportunity. Sir, in our presentation, you mentioned that with no import duty change for fatty acid, we had to cut purchases of one of the raw-material. So-so that for I mean the purchases that we have cut, that we are trying to source it locally now, or how? How are we going about it?
Rajen Jhaveri
No, no, we are to sourcing it locally only, but they in-turn have to import. The duty impact is by them and then it is passed on to us. We are to sourcing locally only. Okay, okay, okay. So they are the — okay, so that is how it is going.
Keval Shah
Okay, understood. And do — is there any price renegotiation that is possible or it’s just not possible because we are operating at some point it is net cost
Rajen Jhaveri
I mean renegotiation of 20% who is going to do? So and if everything is B2B, nothing more renegotiation is possible. So it’s — I mean, you try to fairly at the highest possible price and I mean everyone will do that.
Keval Shah
Right, right, right, right. And sir, second question was that from April onwards, we see sort of meaningful ramp-up in isospheric acids capacity. And every quarter, every quarter we expect increase in sales. More-and-more approvals are coming from different companies.
Rajen Jhaveri
So I mean, quality-wise, everything wise we are stable, we are settled. We have started the — in fact, last week only we had the lots of foreign visitors. We had visitors from five different countries. So I mean, things are going on very smoothly in that. We are not worried. As regards to ISO saving, we are not worried.
Keval Shah
Okay. And sir, the gross margins profile for would be more than double of what we do for and. It is a value-added product.
Rajen Jhaveri
Right. You also that this is a value-added product from one raw-material, we are making multiple products, prime products, other products and from one of the core products also — one of the core products, we are making the further value-added products that again it results into multiple products.
Keval Shah
So right. Yeah. So naturally the margins would be much higher given the higher.
Rajen Jhaveri
And obviously, there are just — we are the food manufacturer in the world. So obviously, the margins are higher. Obviously, the margins are higher should let you should the situation be the same, there is no a revision in the duty and plus, let’s say, lenolic acid demand gets better maybe during the course of the year. And with the with the scale-up of, should margins get back to, 12% 13% levels for next year? Yes, yes, easy, that is what said in the beginning only. That with acid, we are quite hopeful of increasing the margin and that should reflect in FY next year itself from April onwards where I think margins can meaningfully go up even if the revision doesn’t happen till we can like around 20% to 15% EBITDA margin, right?
Yes, exactly. Exactly. You have got it right.
Keval Shah
Okay, okay. Okay. Thank you, sir. Thank you. That’s it. Thank you.
Operator
Thank you. A reminder to all participants that you may press star N1 to ask a question. You. The next question is from the line of Ria Mehta from Investments. Please go-ahead. Thank you so much
Keval Shah
. How much would be a ForEx gain for this quarter?
Rajen Jhaveri
Forex gain, see, there is no question of any forex gain or loss. It is a hypothetical thing. See, I will tell you in case if you happen to know that is okay otherwise. The government is fixing the rates as far as a shipping bill — shipping bill is to be prepared at what rate shipping bill is to prepared. And whatever is the prevailing rate, the government is fixing the rate well below that prevailing rate because they are periodically revising it.
So generally, suppose, assuming that we have made the shipping bill at INR85, the current rate at that point of time could be INR85 or whatever. And then we are selling on credit term. So by the time we — if rupee continues to depreciate, there will always be a forex gain. If rupee continues to appreciate against the US or there could be a potential forex loss. So in our case, since the rupee is gradually depreciating only, there will be — every quarter there would be a place of some forex gain only.
Keval Shah
Yes, so how much is the forex gain? I just wanted to know the quantum.
Rajen Jhaveri
It will be very insignificant. Out of whatever in the result, whatever we you disclosed, whatever amount is in the other income, some part of that is.
Unidentified Participant
Okay. And this will be majorly iso is acid which we are exporting, right?
Rajen Jhaveri
See, earlier our export was less than less than 10%. For the first time this quarter, again, our export has risen to 14% or 14% plus. And going-forward, it will further improve. So the share of export itself as a percentage of sales was quite minimal earlier till the September quarter. All the previous.
Unidentified Participant
Are you saying that in the export, it is majorly isosteric acid or is there something else also?
Rajen Jhaveri
Majorly isosteric acid? There are other products also, but majorly isosteric acid.
Unidentified Participant
So almost 10 odd percentage of revenue,
Rajen Jhaveri
Out of 14% of our total sales which is export, nearly, nearly 8% to 10% would be. Sorry, 8% to 10% would be iso. Yeah. For this quarter, we are saying that 14% is the exports rail and balance 86% is the domestic sale, I’m telling rounded figure. Against this 14% export figure, 8% to 10% would be from isoceric acid and the balance would be from two other products.
Unidentified Participant
Got it. And for the next year, how much do we expect isosteric to become?
Rajen Jhaveri
This next year would be materially substantially higher than 10%?
Unidentified Participant
Okay, expecting higher than time
Operator
Ladies and gentlemen, if you wish to ask a question you may press star our next question is from the line of Nitin Gandhi from Enoquest Advisors. Please go-ahead
Nitin Gandhi
Yeah, can you hear me?
Rajen Jhaveri
Yeah.
Nitin Gandhi
Yeah. Can you share some thoughts on this acid? How do we plan to ramp it up and next year what would be the utilization and
Rajen Jhaveri
Only we have to work on our marketing and getting product approval. Our capacity has already been installed. We have capacity, which is already installed. So that is no only market. Now it is how fast we get the product approvals from foreign buyers. And you need to understand it goes in making of cosmetics, where people take lots of trials. It’s as nearing as it is similar about what people do clinical trials in pharmaceuticals.
In pharmaceuticals, but it is applied on some, so they take enough care. Okay. So that’s the reason it depends on the company. Yes, we are excited to find a new supplier that also from India. That’s — they are really excited and they are working with us aggressively. But then whatever the pattern they need to follow, they need to follow that Japanese buyers we have been working since one year and still we expect a Six-Month period. It takes long to but once the beauty of this thing is once you get your approvals, then it goes on for long.
Nitin Gandhi
That’s correct. But when they buy also, how much normally are they big enough to take-away almost 40%, 50% of our capacity, what are their requirements? How are its size of the
Rajen Jhaveri
You would be hardly 10% or 15% of world’s market, right, but the buyer whom we are approaching. No, we have a — we are working with more than 50 buyers. We are not going to sell it to one or two, okay. And so-far we have started with how many actual commercial supply we are working with 50.
Nitin Gandhi
Okay. Right now we are working
Rajen Jhaveri
With we are working with 50 people. The product is under different approval stages with around 50 buyers, out of which around 7, 8 we have started supply learning.
Nitin Gandhi
So even if we say out of 50, even if 25 30 comes, is it good enough for our full capacity?
Rajen Jhaveri
Very good enough, more than good enough. Much more, much more. Okay. Much more than what we need,
Nitin Gandhi
Right? And are there any plans to take it up — expand further after two first to reach full capacity utilization? Yes, after two or three years is
Rajen Jhaveri
And similarly, we are working on the new product, we do that and afterwards we’ll think, what we forget. So nothing right now. Right. Right and can you name the three other competitors? I saw okay one more okay, and their client size is much bigger than ours, right?
Nitin Gandhi
Okay. Okay. Thank you very much.
Operator
The next question is from the line of Rohit from PMS. Please go-ahead.
Rohit
Hello, good afternoon, sir. Just a few questions. Sorry if these questions are very basic in nature. I’m just looking at the company after a long-time. So, so sir, so of course, this raw-material issue is a big issue for you and as you said, these are things that will take its own sweet course of time. But is it fair to say that from this base, your margins will improve as your isosteric acid contribution goes up. Is that a fair understanding?
Rajen Jhaveri
Yes. Absolutely.
Rohit
Understood. And sir, the other new product which you’ve been talking about, which you said that is 40,000 capacity — 40,000 capacity that you have that you will eventually have so and where your revenues will be twice as what it is right now. So there, when do you start commercializing it? And where are you in that process of
Rajen Jhaveri
Earlier also, we are again the fourth company in the world doing it, breaking in such a new technology where none of the Indian company is doing and hardly another three companies in world are doing. It is not a easy thing. Please understand it is not a easy thing at all. It’s yes, I dre I am dreaming I can do it tomorrow. It’s just or me just saying a timeline that I’ll do it by so-and-so date or so introdate, it’s not really possible.
Rohit
No, of course, sir. No, no, of course. I totally understand it, sir.
Rajen Jhaveri
And you’re clying. In that case, I’m just lying, it’s not that we are — we have already made the product where the quality is on par with whatever is available in the world. But in that process, I have made the product, but then I have to make it, but after at the right price in that is my manufacturing cost has to remain as one part and second is my yields of that particular thing. Those two things are there. We are working on it. I won’t rush in because if I rush in and if I have a wrong yield or anything, there’ll be such a massive cash laws that ratifying that would take time right manufacturing efficiency Is the key we are working on that. See, I mean money is not a problem for us as IT said, I can — we are — there is a zero long-term debt, right. Today I can mean from working capital, I can withdraw INR60 crore INR70 crores, INR75 crores and raise another INR175 crores, put up a INR250 crore. That is not an issue.
Rohit
No, no, sir, I understand. I mean, and I appreciate your candidness and honesty. Very few managements actually say it for what it is. But my — okay, let me ask it in a different way. So once you — let’s say, once you are confident of the product, as you explained, you want — I think there is still some time for you having confidence in terms of the yield and the cost, etc. So let’s say, once you are confident and once you are ready to take it to your customer — to the customers, what is the process then? I mean, do they — how much time does it take?
Rajen Jhaveri
No, then first thing is we have to put up the plant. But we have already plant has been designed, right. What we need to do is place the orders of the equipments. So designing and everything is over, permissions are over, everything is there, money is there, everything is there. We are waiting for the right thing. Once we are absolutely confident about our manufacturing cost and yields, we’ll go about it and then putting up the project is one, one and a half, two years, one and a half years and product approval cycle and everything unless that one and last year.
Okay. I mean by that time in within three years, once we decide to go-ahead, within three years, we will be fully — we’ll be working at full capacity.
Rohit
Understood. Okay. Okay. Got it. It. Yeah, that is it from my side, sir. Thank you. Thank you.
Operator
Thank you. A reminder to all participants that you may press star and 1 to ask a question as there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Rajen Jhaveri
Yeah. Thank you all for participating in this earnings conference call. I hope we were able to answer your questions satisftably and at the same time, offer insight into our business. If you have any further questions or would like to know more about the company, please reach-out to our Investor Relations Managers at Valorem Advisors Mumbai. Thank you.
Operator
Thank you, everyone. Thank you. On behalf of Organics Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines