Fairchem Organics Ltd (FAIRCHEMOR) Q3 FY23 Earnings Concall Transcript

Fairchem Organics Ltd (NSE:FAIRCHEMOR) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Nahoosh Jariwala — Chairman and Managing Director

Rajen Jhaveri — Chief Financial Officer

Analysts:

Purvangi Jain — Valorem Advisors

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Bhavesh Chauhan — IDBI Capital — Analyst

Unidentified Participant — — Analyst

Prakash Kapadia — Anived Portfolio Manager — Analyst

Niraj Shah — Accenture Investments — Analyst

Mr. Aashish — InvesQ — Analyst

Seemal — Legion Capital Services — Analyst

Vipul Shah — RW Equity — Analyst

Keshav Kumar — RakSan Investors — Analyst

Pranay Dhelia — Panchatantra Advisors — Analyst

Mr. Amar Maurya — AlfAccurate Advisors Private Limited — Analyst

Nirag Shah — Exemplar Investment — Analyst

Simardeep — Negan Capital Services — Analyst

Simar — Negen Capital Services — Analyst

Chirag Vakharia — Budhrani Finance — Analyst

Shashank — Value Educator — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q3 FY ’23 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. [Operator Instructions] I now hand the conference over to Ms. Purvangi from Valorem Advisors. Thank you, and over to you, ma’am.

Purvangi Jain — Valorem Advisors

Good afternoon, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Fairchem Organics Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings conference call for the third quarter and nine months ended of the financial year 2023.

Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today’s con 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 the management’s beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place 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 in today’s earnings conference call and give it over to them for their opening remarks. We have with us Mr. Nahoosh Jariwala, Managing Director and Chairman; Mr. Rajen Jhaveri, Chief Financial Officer.

I will now hand it over to Mr. Nahoosh Jariwala for his opening remarks. Thank you.

Nahoosh Jariwala — Chairman and Managing Director

Thank you, Purvangi, and good afternoon, everybody. It is a pleasure to welcome you to the earnings conference call for the third quarter of the financial year 2023. Let me start by briefing you on the operational highlights for this quarter. And then our CFO, Mr. Rajen Jhaveri will brief you on the financials.

As you may be aware, the raw materials and the Finnish products, what we are using and manufacturing fall under the oleo chemical stream and the prime products manufactured by us are supplied to paint companies and incomplete. You must be aware at the same time that of lately, you must have seen that there has been a lack of demand from the paint industry, especially in the decorative segment, which our finished products are being sold.

The reason in the fall in volume for our company has been to the tune of around 35%. And this has been the main reason for the decline in revenue for the quarter and probably it has been one of the worst quarter performance after a very long, long time. This fall has substantially eroded the margins in absolute terms. And at the same time, there has been an average fall of around 10% on per unit realization compared to the previous quarter. That was the main reason for which was the continuous fluctuation in the commodity prices, which affected our raw material purchase price also. All this has put an additional pressure on the margin. Otherwise, all the costs have remained under control.

I would like to emphasis one thing, and that is that the fall in the demand is only and only — I mean the fall in sales has been only and only for the reason and that is the lack of demand from our customers in the paint industry and not because of we losing out on any of our customers or the paint companies replacing our products with some other products. That is something which I would like to say it again and again. And we have been seeing in this quarter starting January that demand has started reviving, and we feel fairly confident over the period, we’ll be able to increase our production to the original levels.

Now I hand it over to Mr. Rajen Jhaveri who will brief you on the financial performance.

Rajen Jhaveri — Chief Financial Officer

Thank you, Nahoosh sir, and good afternoon, everyone. Let me brief you on the third quarter and nine months ended financial performance of financial year 2023. For the third quarter, the operational revenue was about INR102 crores EBITDA reported was around INR4 crores, and EBITDA margin stood at 3.61%. Net profit after tax reported was around INR0.6 crores while the PAT margin was 69%. Now coming to the nine months ended of this financial year, operational revenue stood at INR496 crores, EBITDA reported was around INR53 crores and EBITDA margin stood at 10.68% Net profit after tax reported was around INR32 crores, while the PAT margin was 6.37%.

With this, we can now open the floor for the question-and-answer session. And for this, I hand it over to Ms. Purvangi

Questions and Answers:

Operator

Thank you very much. We will now begin with the question-and-answer session. [Operator Instructions] Thank you. We take the first question from the line of Amar Maurya from Alfaccurate Advisors Private Limited. Please go ahead, sir.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Thanks a lot for the opportunity. Sir, couple of questions from my side. If you can briefly give us like what would be in terms of the total revenue degrowth how much would have been because of the volume degrowth and how much would have been because of the pricing growth? That is number one question.

Number two is on a absolute basis, what was the inventory loss which we had seen because of the high cost inventory in the system? That is the second question. And thirdly, if you can give us attempted to sales volume, not the process volume, but the sales volume, how much is the sales volume decline on a sequential basis?

Rajen Jhaveri — Chief Financial Officer

Yeah. So pricing degrowth was the set of 10%, which we have mentioned in our presentation also and the remaining is the volume degrowth. As far as inventory losses are concerned, during this quarter, there was no inventory loss.

By and large, we managed to avoid the inventory loss as far as business concerned. And your last question about the sales volume, we will give you the sales volume. Sales volume for this quarter in terms of metric tonnes was around 9,700 tonnes — these are around 14,800 tonnes in the previous quarter.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Sir, this is process volume or the actual sales volume?

Rajen Jhaveri — Chief Financial Officer

No. You asked for the sales volume, so I gave you the sales volume.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay.

Rajen Jhaveri — Chief Financial Officer

I will give you process volume also and purchase quantity also, so this because your specific question was about sales volume, I gave the sales volume, that 9,700 tonnes all products put together with the sales volume for Q3, INR14,800 was the sales volume for the previous quarter, that is July-September quarter.

Now coming to process quantity, 8,700 tonnes was the raw material process quantity for October-December quarter and INR15,700 was the process quantity for the previous quarter, that is July-September, because as earlier now we said because there was a lack of demand, we remain slow on processing of the quantity.

Now having said this, I will also give you the raw material purchase volume also. During the quarter three, we purchased raw material to the extent of 10,400 tonnes. But we process only 8,700 tonnes only, because there was some carryover inventory. And are there these processing of 8,700 tonnes we managed to sell the contrite of 9,700 tonnes. So effectively, we reduced our quantity as at the end of December.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay. Okay, perfect sir. Thanks a lot.

Operator

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. Should you have a follow-up question, we would request you to rejoin question queue. We take the next question from the line of Bhavesh, IDBI Capital. Please go ahead with your question sir.

Bhavesh Chauhan — IDBI Capital — Analyst

Sir, my question is on sales degrowth. Sir, we have lost or our sales have fallen by 35%. But when I see the paint company’s revenue on a Y-o-Y basis, they are more or less flat. So how do you explain this?

Rajen Jhaveri — Chief Financial Officer

Basically, I said that the finished products what we are selling to the paint company this falls under the reading of decorative paints and decorative paints had seen the, degrowth. Paint companies then manufacture paints for different applications that include automobile paint also.

And so I mean, combined, you won’t be able to — one won’t be able to make out it, because none of the paint companies give a segregation of what is the paint decorative segment or automotive segment and industrial segment.

So I mean, it would be very based on the real, real, I mean, figures of a paint company. But I can say one thing that we haven’t lost any of our customers. We have all around supply material to them. And in January, we have seen the increase in sales also happening.

Nahoosh Jariwala — Chairman and Managing Director

And there could be one more reason Mr. Bhavesh. The paint company, they also might have gone low in purchasing and we have decided to use up their own inventory. So the sales volume, you may be receiving as a flat figure, but you also need to have a look at what was the purchase figure during this quarter, regarding previous quarter, and that information perhaps is not available in the public domain.

Bhavesh Chauhan — IDBI Capital — Analyst

Okay, sir. Got it. And sir, you talked about recovery its witness from January onwards. So are we recording to the extent what we have been reporting in previous quarters?

Nahoosh Jariwala — Chairman and Managing Director

No. I mean — no. I mean, you are also aware, no recovery can happen 100%. I mean — but I can — what is — I’m happy to say that recovery has started. And this quarter also, we’ll see — I mean, like we had seen a drop of around 35% in the sales volumes vis-a-vis compared to the Q2 I mean, which I feel we will be able to recover fairly good thing. But right now, to say, because we are not getting that visibility from the paint companies for long-term. So I mean, it’s very tough for me to really see that. But — I mean, overall, we feel and our team feels confident that we’ll be able to bounce back.

Bhavesh Chauhan — IDBI Capital — Analyst

Okay. Sir, got it. Sir, so do you want to say that the March 22 FY 2022 sales would be maybe recovered in FY 2024? Or maybe can we expect that?

Nahoosh Jariwala — Chairman and Managing Director

Yes, yes, yes. For sure.

Bhavesh Chauhan — IDBI Capital — Analyst

Okay. Great, great. Thanks a lot.

Operator

Thank you. We’ll take the next question from the line of Jagvir Singh from Shade Capital. Please go ahead, sir.

Unidentified Participant — — Analyst

It’s [Indecipherable] for Jagvir. Sir, my question is regarding the capacity expansion, we completed the capacity expansion also. So now there is some kind of demand, so can you guide us say for 2024 and 2025. So when we can get some benefit of the capacity expansion. And so what — I mean, when we can see this kind of demand that we can absorb our — what we did the capacity expansion in last quarter?

Nahoosh Jariwala — Chairman and Managing Director

See, I mean, looking at the growth which we had in the last four, five years, we have gone in for the capacity expansion. But at the same time, what happened in the Q3 made us realize that it would be more prudent to say lot have such a situation in future, we have decided to go in for one additional raw material. Obviously, it is based on the oleochemical stream only, which is our core competency, and we’ll be utilizing the same set of equipments also. And so that’s what we have already started working on and you’ll be able to see the results of that new product addition before end of 2024.

Unidentified Participant — — Analyst

So sir, my next question is regarding — I have attended the last call also. So we were talking about one more product, and we were talking about some exports, we can do the exports also. So what is the status on this?

Nahoosh Jariwala — Chairman and Managing Director

Yes. Yes. So that’s — the export thing what we have been talking about is the forward integration project of one of our current product stream. And that is on stream and we’ll be starting commercial production in April in June quarter.

Unidentified Participant — — Analyst

Calendar year 2023?

Nahoosh Jariwala — Chairman and Managing Director

Yes, yes.

Unidentified Participant — — Analyst

And sir, last question, so we did around INR650 crores, around INR643 crores in the by 2022 — calendar 2022. And so you always talking about 16% to 17%EBITDA margin. So in FY 2024, we can see the revenue of INR650 crores, around INR650 crores with the same EBITDA margin price you have always said sustainable margins at 16% to 17%

Nahoosh Jariwala — Chairman and Managing Director

See this margin in percentage terms is readily — very debatable kind of a percentage. Suppose assuming what happened about nine months back prices of everything went up. So at the same volume, we received higher per unit realization. Now this per unit higher realization only to apply the same percentage margin on that, and that would be a very large number. And that may not necessarily be the case.

So instead of telling that this 16% or because of this nine months cumulative results is what approximately 10%, 11%. So we’ll certainly be improving on debt. That is at the stage that is what we can say. Certainly going forward from this quarter onwards, we will be improving on these. And time and again, we have been saying that our performance ideally should be measured on an annual basis rather than on a Q-to-Q basis.

Unidentified Participant — — Analyst

No, I’m talking about the annual basis. So in — so that’s what I’m not talking about the 22%, 23% margin, which

Nahoosh Jariwala — Chairman and Managing Director

Yes, 23%, 24% our top-line will be most likely, we are anticipating to be higher than 2022 and 2023. And bottom-line also, we are anticipating higher than 23%, 24% bottom-line also will be higher than what will be the bottom-line of 2022-2023. Only thing is that this percentage term is a very difficult thing to comment on because if the prices remain at this level stable as well as raw material and finished goods are concern, then it is okay. And it actually was the case from 1996 to — end of 2021 or even up to March 2022. But thereafter, post February 2022 Russia-Ukraine war this instability in the last 12 months, the volatility in the pricing, that has actually ruin this entire thing. And then it is now difficult to categorically say that this would be the EBITDA margin in terms of percentage. In absolute numbers, yes, we are quite hopeful that absolute numbers will keep on rising.

Unidentified Participant — — Analyst

And the last question on some new entrants like Birla’s are coming in this industry, decorative industry, even GSW is also trying. So are we talking about them also about the client?

Nahoosh Jariwala — Chairman and Managing Director

Yes, already our samples are under analysis. Already, in fact, they are under analysis in the last one year.

Unidentified Participant — — Analyst

Okay. Thank you. Other — so who are the other players.

Operator

I’m sorry to interrupt. I am sorry to interrupt. Mr. Jagvir. We request you to join the question queue, sir.

Unidentified Participant — — Analyst

Thank you. Okay. Thanks.

Operator

We take the next question from the line of Prakash Kapadia from Anived Portfolio Manager. Please go ahead, sir.

Prakash Kapadia — Anived Portfolio Manager — Analyst

Yes. Thanks for the opportunity. A couple of questions from my end. You know, last quarter, you had highlighted the demand challenges, and we’ve seen on a sequential basis, sales being down by 39%, EBITDA being down by 35%. So going forward, to understand the business momentum, should we evaluate the business on a sequential basis to get a sense of how quarterly trends are shaping up and how demand is shaping up is that the right metrics to look at? And when does operating leverage come back, say, above 10%, 12% kind of sales volume growth, about 15% growth. And lastly, what — how much is paint industry of our total sales as of now versus say last year or as on FY ’22?

Nahoosh Jariwala — Chairman and Managing Director

See the same industry, how much of our raw material goes as an ingredient in terms of quantity that they are not disclosing to us.

Prakash Kapadia — Anived Portfolio Manager — Analyst

Out of our total sales. So if we did sales of, say, INR500 crores last year, I think it was INR640 crores.

Nahoosh Jariwala — Chairman and Managing Director

’21, ’22 balance sheet, we have already disclosed that 40% of our sales of that year had gone to one company, and that was the same company only in terms of value.

Prakash Kapadia — Anived Portfolio Manager — Analyst

But we supply to other paint companies also now. So

Nahoosh Jariwala — Chairman and Managing Director

But this was to one company only. Overall, we combined value of our two main [indecipherable] in terms of value close to 70% to 75%.

Prakash Kapadia — Anived Portfolio Manager — Analyst

Okay. That is what I was looking out for. Okay. And from the business perspective, at what capacity does operating leverage

Nahoosh Jariwala — Chairman and Managing Director

As in the past, maybe this was not a very good quarter. This and for us the previous one was also, otherwise, since 2010, ’11 our volume growth has never been less than on an average on a 11 years average, it has never been less than 10%, 12%. And we hope to mention this in the years to come also volume growth. Value ultimately will depend on what are the raw material pricing?

Prakash Kapadia — Anived Portfolio Manager — Analyst

In good cost, right.

Nahoosh Jariwala — Chairman and Managing Director

This year, Ukraine because of the Ukraine things going back in Europe, lots of things have I mean overall, the industry has some of the pressure, demand has come under pressure. Except for that, there is no — except for that, there’s no other reason like we’re losing our customer or our finished product being replaced by something else. I mean there’s nothing like that is happening. So I mean that is the reason for the confidence at our side?

Prakash Kapadia — Anived Portfolio Manager — Analyst

Right. Right. And sir, we also supplied in detergent. So how is demand looking from some of the other industries? And is it possible, say, in the medium to long term to derisk ourselves from the paint industry and develop some of ancillary products for some of other business

Nahoosh Jariwala — Chairman and Managing Director

That’s exactly what I said that we are introducing one new raw material. Obviously, part of the oleo chemical stream, so that our dependence on the paint industry goes down, will reduce. It will be altogether new prime product come with new raw materials. And it will cater to entirely new kind of customers.

Prakash Kapadia — Anived Portfolio Manager — Analyst

And that we should see commercialization in ’24?

Nahoosh Jariwala — Chairman and Managing Director

We hope to commercialize these somewhere by December 2023 at the most March 2024.

Prakash Kapadia — Anived Portfolio Manager — Analyst

Okay. Okay. And lastly, sir, on data keeping, in case we have the metric tonne sold, I think nine months, we should be around 39,000. Now the figure for last year nine months year-to-date and Q3 of last year? Do you have it handy?

Rajen Jhaveri — Chief Financial Officer

Last 12 months figure is already bearing one of our earliest presentation. And this year, the raw material process is close to 40,000 in the nine months. And maybe another INR15,000 or so during January, March quarter, we are quite hopeful. Let us see how things unfold in the times to come, but that is what we are targeting. And then it should be anywhere between INR54,000 to INR55,000 during these 12 months. Of course, it will be somewhat less than what was last year, last year and [indecipherable] which was around 59,000 or so.

Nahoosh Jariwala — Chairman and Managing Director

Right, right. Yes, last year was around 59.

Prakash Kapadia — Anived Portfolio Manager — Analyst

Q3 last year, would you have that number, Sir?

Nahoosh Jariwala — Chairman and Managing Director

On a year-on-year basis, this

Rajen Jhaveri — Chief Financial Officer

Last year, really I’m not having that number.

Prakash Kapadia — Anived Portfolio Manager — Analyst

Fine. I’ll take it off. Okay. Thank you.

Nahoosh Jariwala — Chairman and Managing Director

Thank you.

Operator

Thank you. We take the next question from the line of Niraj Shah from Accenture Investments. Please go ahead, Sir.

Niraj Shah — Accenture Investments — Analyst

Can you shed some more light on the new raw material that we are talking about as to it will be, again, a byproduct from refining or soft edible oil? And what kind of end products we are targeting from that?

Nahoosh Jariwala — Chairman and Managing Director

Yes, it will be a same family. We’ll be utilizing the same set of raw material purchase come through. We will be utilizing the same set of transporters. We will be utilizing the same set of equivalents. Only change is going to be, there we’re using different types of catalysts. And the marketing, what will be happening, won’t be going to the paint industry, but it will be going to the epoxy industry.

Niraj Shah — Accenture Investments — Analyst

Okay. And my other question

Nahoosh Jariwala — Chairman and Managing Director

Beyond this, at this stage, I won’t be able to care.

Niraj Shah — Accenture Investments — Analyst

Yes. It’s fair. And my other question was regarding emerging competition. As I believe Andhra Pradesh, the CF industries has also started manufacturing dimer acid. So do we anticipate any threat to our market share in dimer acid, and do we see any problem in absorbing our interest capacities for this product?

Nahoosh Jariwala — Chairman and Managing Director

No, we don’t see anything. First thing is that dimer acid manufacturing, but we don’t see anything much happening on that front? And second thing is that as such, we are having around 65% of Indian market share, there is 35% is coming from imports.

Niraj Shah — Accenture Investments — Analyst

Yes.

Nahoosh Jariwala — Chairman and Managing Director

What would happen is the 3S would be replacing the imports.

Niraj Shah — Accenture Investments — Analyst

Okay. Got it. And can I have the…

Operator

Sorry to interrupt, Sir. May we request you to join the question queue as we have several participants waiting for their turn?

Niraj Shah — Accenture Investments — Analyst

Okay. I’ll return to the queue.

Operator

A reminder to all the participants, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. We take the next question from the line of Mr. Aashish from InvesQ. Please go ahead, Sir.

Mr. Aashish — InvesQ — Analyst

Yes. So you sounded off regarding this blip in demand from paint companies, I think in November sometime. So if there was an inventory correction that was to take place in the paint industry, I mean nowadays, inventories are managed very tightly by anyone. So wouldn’t that two months gap be enough to kind of bring down the inventory for them and resume the purchases from you, so that your sales now should become normalized some time. So is that a correct understanding?

Nahoosh Jariwala — Chairman and Managing Director

Yes, that’s exactly what I said that in January, we have seen a good revival in sales.

Mr. Aashish — InvesQ — Analyst

Okay. So good means what, Sir? I mean, good means normalized monthly sales, or is it still maybe 20%, 25% down from the paint?

Nahoosh Jariwala — Chairman and Managing Director

See numbers adding would then amount to UPSI and as per the latest Singhan [Phonetic] guidelines, whenever you disclose the UPSI, first of all you should be collecting their income tax file number, then in their notice board you’re siding. So, NAC has — already you might have heard it’s were in this kerosene [Phonetic] market. NAC has already started investigating this top 1,000 companies on market capitalized basis, and we are falling under that. I think is first 300 to 400 companies, we have already investigated whether these actual data base is correctly mentioned or not. So whatever falls because this is an earnings call for October, December. So it will be better if you limit ourselves as far as numbers are concerned for this particular quarter only, we can give a directional kind of a thing as far as future is concerned, but insistence on the number, we request not insist for the same.

Mr. Aashish — InvesQ — Analyst

Okay. No problem. But is it going in the — I mean, are you getting a feeling that this is going to normalize in the next 1 or 2 quarters.

Nahoosh Jariwala — Chairman and Managing Director

We certainly are getting even. Otherwise, this would not have come from our CM base mark

Mr. Aashish — InvesQ — Analyst

Okay. And second question would be a war would have impacted your business also because I can’t connect how — because your raw material comes from somewhere else and…

Nahoosh Jariwala — Chairman and Managing Director

I talked about the volatility in prices war has resulted into. Volatility in Ukraine is between Ukraine and Russia, they are world’s largest manufacturers of sunflower oil.

Mr. Aashish — InvesQ — Analyst

That right.

Nahoosh Jariwala — Chairman and Managing Director

So that’s the reason it’s affecting the overall commodity has become a little bit volatile because of that. So I mean, once — we don’t — we haven’t seen this type of volatility in the last 25 years of service.

Mr. Aashish — InvesQ — Analyst

Right, right. So by the end of

Nahoosh Jariwala — Chairman and Managing Director

Happening — I mean now — I feel once the things stabilize then the work should be — anything based on that.

Mr. Aashish — InvesQ — Analyst

Right. So the feeling that I’m getting from your comments is that by maybe towards the second half of next year, everything should be fine and including the new molecules that we are basically

Nahoosh Jariwala — Chairman and Managing Director

We are hopeful. We are hopeful and we remain astonished [Phonetic] about it. We are hearing — I mean we are — everything is for we are ready to go, whenever the demand arise — I mean it demand comes back, we will be able to start supplying right from Wabco because everything, all the investments in — everything has been done. Everything is in place.

Mr. Aashish — InvesQ — Analyst

And where is the number of paint industry to your sales actually — contribution.

Operator

May we request you to join the question queue, please.

Mr. Aashish — InvesQ — Analyst

Sure.

Operator

Thank you. We take the next question from the line of Mr. Vipul Shah from RW Equity. Please go ahead, sir. Mr. Vipul, your line is in talk mode, sir. You may please go ahead with your question. Mr. Vipul can you hear, sir. as there is no response from the current participant, we move on to the next question. The next question is from the line of Seemal [Phonetic] from Legion Capital Services. Please go ahead. Seemal you may go ahead with your question.

Seemal — Legion Capital Services — Analyst

Hello.

Operator

Yes you repeat.

Seemal — Legion Capital Services — Analyst

Am I audible?

Operator

Yes, sir. Please go ahead.

Seemal — Legion Capital Services — Analyst

All right. Thank you for taking my question. I just wanted to ask you about the Q1 — in the Q1 con call that you had mentioned that the 40% share in paint industry would be declining as well as you mentioned that in the presentation, but what decisions have you taken apart from the addition of the new raw material. I want to ask you, are you looking at the option of exporting of your Linoleic acid — since it does have or pose any competition in the local market.

Nahoosh Jariwala — Chairman and Managing Director

See — the export of Linoleic acid small beginning has been made by us. Both I mean [Indecipherabe] We have started exporting about these products in small quantities and we expect the volumes to go a little bit higher also in coming quarters.

Seemal — Legion Capital Services — Analyst

So about my second question, sir, — could you help me out with the Tocopherol additions which you have added in the forward integration. Could you help me with the top line for the next year and so on? And can you just share some margin profile for that as well, which you are providing to the three Fortune 500 companies?

Nahoosh Jariwala — Chairman and Managing Director

So, it’s the same set of three companies to whom we are supplying our current Tocopherol stream. We are going to supply this subdivided stream to them only. So we are not going to — we are not looking at some new type of customers.

Vipul Shah — RW Equity — Analyst

Sir, could you just share some margin profile or the revenue?

Operator

— to join the question queue, please.

Vipul Shah — RW Equity — Analyst

Just a follow-up question to the same.

Operator

Sir, we have several participants waiting for their —

Vipul Shah — RW Equity — Analyst

All right. Thank you. Thank you, Nahoosh.

Operator

We take the next question from the line of Keshav Kumar from RakSan Investors. Please, go ahead, sir.

Keshav Kumar — RakSan Investors — Analyst

Hi. Sir, what’s the raw material price difference currently compared to pre-COVID?

Nahoosh Jariwala — Chairman and Managing Director

Could you just —

Keshav Kumar — RakSan Investors — Analyst

Pardon, sir?

Nahoosh Jariwala — Chairman and Managing Director

What is the question?

Keshav Kumar — RakSan Investors — Analyst

What’s the difference in raw material prices currently compared to how it was before all sorts of volatility started happening. So basically pre-COVID?

Nahoosh Jariwala — Chairman and Managing Director

See, the raw material prices was — ruling at a particular thing, and then it almost reached 2x, nearly 2x. And then from 2x it again came down to maybe up to 1.3x or so. And now it is hovering around 10%, 15% here and there. And since last few weeks we are seeing that it is first time to settle at a particular level, but it still is somewhat higher than what it used to be prior to February 2022 when the war started.

Keshav Kumar — RakSan Investors — Analyst

Okay. And, sir, when the demand comes back and assuming that the volatility does not again rise up, are internal ROC targets for next two to three years would still be in the line of what the company has done in the past two to three years?

Nahoosh Jariwala — Chairman and Managing Director

That is what in one of my previous replies also. I said that, what we are looking for is — and what we are hoping to achieve is, on a yearly basis, continuous rise in top line and bottom line. Earlier also, in many a times we have said. The only thing is, this year, this 2022-2023, we fell short on that. But this we have been achieving since 2010, 2011, and we hope to achieve the growth in absolute numbers in top line and bottom line in the years to come on a sequential year basis.

Keshav Kumar — RakSan Investors — Analyst

Understood, sir. That’s all for me. Thank you.

Operator

Thank you, sir. We take the next question from the line of Pranay Dhelia from Panchatantra Advisors. Please, go ahead, sir.

Pranay Dhelia — Panchatantra Advisors — Analyst

Sir, good evening. And I sincerely hope as shareholder that the numbers improve. During the call, you mentioned quite a few times that we’ve had a fall in demand from the paint companies. That’s why our top line and bottom line both have been affected.

Two questions regarding — one is looking at the paint company’s numbers. None of them have reported a big downfall in sales, whether it was Asian Paints or for that matter, JSW, if you look to segregated numbers or other companies. So is it that they have started importing more rather than buying from —

Nahoosh Jariwala — Chairman and Managing Director

You joined this call a little late?

Pranay Dhelia — Panchatantra Advisors — Analyst

No, I joined — I got cut off for five minutes, sir.

Nahoosh Jariwala — Chairman and Managing Director

One of the first or second participant only asked this question. Okay, I’ll explain you again. Basically, the fatty acid is what we are selling to paint company is being used by them in decorating paints. At the same time, paint companies, whenever they show their results, they show a consolidated results, which includes the sales in decorative segment, the sales in automobile segment, the sales in industrial segments and others.

So we have seen a drop in sales in decorative segment, and that is where our product goes. But the paint companies may never share their details. And second thing is that paint companies might have decided to reduce their inventory. And in that case, they might have stopped — they might have reduced their purchasing from us and must have decided to use their inventory. So I mean, both the possibilities are there. And that is the only reason why we feel that the drop has happened because since last many months, there has been a talk about global recession coming, coming, so maybe that company might have decided to go slow on inventory buildup.

Pranay Dhelia — Panchatantra Advisors — Analyst

Very well, sir.

Nahoosh Jariwala — Chairman and Managing Director

We haven’t lost any of our customers.

Pranay Dhelia — Panchatantra Advisors — Analyst

That’s very reassuring. Sir, just one more clarification regarding this. With the paint companies, are selling prices determined quarterly? Or are we merely doing an engineering business wherein after the procurement of raw materials, we are over and above that?

Nahoosh Jariwala — Chairman and Managing Director

No, it’s not monthly basis.

Pranay Dhelia — Panchatantra Advisors — Analyst

On a monthly basis. So we are more or less insulated from raw material shocks, if you’re being able to reprice it monthly?

Nahoosh Jariwala — Chairman and Managing Director

It does. I mean we always see one thing that we are not a commodity company. We are a manufacturing company and our core competency is to manufacture goods of the right quality at the acceptable price. And that is — I mean, that’s the reason that we never play around in commodity.

Pranay Dhelia — Panchatantra Advisors — Analyst

Okay. So I’ll share your same optimism for the future, sir, hopefully, we’ll be to recover our losses as shareholders very soon. Thank you so much.

Nahoosh Jariwala — Chairman and Managing Director

We also wish. Thank you.

Operator

Thank you. The next question is from the line of Mr. Amar Maurya from AlfAccurate Advisors Private Limited. Please go ahead, sir.

Mr. Amar Maurya — AlfAccurate Advisors Private Limited — Analyst

Sir, if you can share the nine-month sales volume, not processed volume, sales volume. And what was the nine-month sales volume, let’s say, in ’22? Is it possible?

Nahoosh Jariwala — Chairman and Managing Director

Nine-month sales value is three quarters

Mr. Amar Maurya — AlfAccurate Advisors Private Limited — Analyst

Last quarter, last like you know, nine month.

Nahoosh Jariwala — Chairman and Managing Director

Last three quarters, nine months is not readily available, but these nine months is more than 40,000 tonnes. Last full year was 59,000, so last nine months also would be anywhere between 42,000 to 43,000 vis-a-vis more than 40,000 this year.

Mr. Amar Maurya — AlfAccurate Advisors Private Limited — Analyst

Okay. 42,000 to 43,000 or you are saying last year whole?

Nahoosh Jariwala — Chairman and Managing Director

Should be. Should be. I’m not ready — I’m telling you based on the annual figure of 59,000, that it could be anywhere between 42,000 to 43,000 for the last nine months. This nine months it is more than — a little more than 40,000 tonnes.

Mr. Amar Maurya — AlfAccurate Advisors Private Limited — Analyst

Okay. So — and this is sir, sales volume, right, not the process?

Nahoosh Jariwala — Chairman and Managing Director

That’s sales volume, sales volume.

Mr. Amar Maurya — AlfAccurate Advisors Private Limited — Analyst

Okay, perfect, sir. Perfect. Thank you, sir.

Operator

Thank you. We have a next follow-up question from the line of Nirag Shah from Exemplar Investment. Please go ahead.

Nirag Shah — Exemplar Investment — Analyst

Yes. So what is the status of isosteric and high concentration for Tocopherol and Sterols project? When will it be in the market with the same?

Nahoosh Jariwala — Chairman and Managing Director

Isosteric we’ll be commissioning the plant in April, June quarter.

Nirag Shah — Exemplar Investment — Analyst

And Tocopherol also?

Nahoosh Jariwala — Chairman and Managing Director

Yes.

Nirag Shah — Exemplar Investment — Analyst

Okay. And it will take time in stabilization.

Nahoosh Jariwala — Chairman and Managing Director

It takes time — see, in Tocopherol business, we have been talking — I’ve been talking that we intend to use. I mean we intend to introduce one new sets of raw materials, which in this case, we might put on — I mean, hold our forward integration of Tocopherol projects for some time. And use those types of equipment of this new raw material.

Nirag Shah — Exemplar Investment — Analyst

So Tocopherol project should be for FY ’24, I think, FY ’24 end?

Nahoosh Jariwala — Chairman and Managing Director

So Tocopherol project should be for FY ’24, I think, FY ’24 end?

Nirag Shah — Exemplar Investment — Analyst

But it’s low concentration tocopherol?

Nahoosh Jariwala — Chairman and Managing Director

Yes, there’s low concentration.

Nirag Shah — Exemplar Investment — Analyst

Okay. Okay. Thank you very much.

Operator

Thank you. The next question is from the line of Simardeep [Phonetic] from Negan Capital Services. Please go ahead. Simardeep, you may go ahead with your question. Your line is unmuted.

Simardeep — Negan Capital Services — Analyst

Yes. I just wanted to have a follow-up question with the tocopherol. Could you sort of share some line on the margins as well as have you seen growth in the top line for the same product?

Nahoosh Jariwala — Chairman and Managing Director

Margin in the?

Simardeep — Negan Capital Services — Analyst

Tocopherols?

Nahoosh Jariwala — Chairman and Managing Director

Tocopherol — in terms of value Tocopherol is only 5% of our total sales.

Simardeep — Negan Capital Services — Analyst

Yes, I know, sir, but things have been increasing

Nahoosh Jariwala — Chairman and Managing Director

70%, 75% of the sales value comes from these 2 main products linoleic acid and dimer acid only. But since we are in the — we started our business with tocopherol, and it is our ultimate dream to one day go ahead and make mixed tocopherol pure 100% and ultimately natural Vitamin E we have decided to remain in this business.

Simardeep — Negan Capital Services — Analyst

Okay. So what about your biodiesel plant, which has been operation, can you share some light in terms of the cost benefit that it would be having? And can you share some numbers regarding that as well?

Nahoosh Jariwala — Chairman and Managing Director

That is what we said this tocopherol and sterols plant and biodiesel plant, that entire plant is one only. So now we already paid that, we may decide to remain with the present export team of tocopherol and if possible, we will use these for that other raw material, about which we bought the new set of — new raw material and new finished product for the new set of customers. In that case, we stay put with our patent of our exports team. And before we are not seeing abandoning or canceling before our this Toco upgradation plan.

Simardeep — Negan Capital Services — Analyst

All right. Thank you, Nahoosh bhai. And yeah, thank you. Thank you. Thanks for the time guys.

Operator

[Operator Instructions] The next question from the line of Simar [Phonetic] from Negen Capital Services. Please go ahead. Mr. Simar your line is unmuted. You may please go ahead with your question.

Simar — Negen Capital Services — Analyst

Yeah. You’ve already answered my question. Thank you.

Operator

We take the next question from the line of Chirag Vakharia from Budhrani Finance. Please go ahead.

Chirag Vakharia — Budhrani Finance — Analyst

Hello. Can you hear me?

Operator

Yes.

Nahoosh Jariwala — Chairman and Managing Director

Yes.

Chirag Vakharia — Budhrani Finance — Analyst

Sir, in the last quarter, we had two issues. One was demand, which you’ve clarified and second was high cost inventory. So I want to understand, is all the high cost inventory that we are holding is normalized. And second question, have you taken any cost control measures to sort of compensate for the demand loss that we’re having?

Nahoosh Jariwala — Chairman and Managing Director

As far as high cost inventory core normalized. And as far as cost control is concerned, cost control has always been an ongoing thing in this company ever since April 2010. And if you compare our other cost, except these raw material costs, or power and fuel cost because power and fuel, it is not entirely in our hand. This electricity price and coal price is not entirely in our hands. But if you compare all our costs compared to the volume that we process or the sales value which you achieve, you will always find that it is always an economizing thing only.

So it is an ongoing thing. Whatever this was to be achieved we have nearly achieved the base. Now the only thing that perhaps is on a major front — on a major front is the solar power, which may be, after which achieved all these things one day now we may take the solar power thing also.

Chirag Vakharia — Budhrani Finance — Analyst

Thank you.

Operator

Thank you. We’ll take the next question from the line of Shashank from Value Educator. Please go ahead.

Shashank — Value Educator — Analyst

Am I audible sir?

Rajen Jhaveri — Chief Financial Officer

Yes.

Shashank — Value Educator — Analyst

Yeah. So my question is regarding this Tocopherol only. So what would be the realizing difference between the current mix Tocopherols and the product which we are planning about the 100% concentration and Vitamin E, so what would be the realization difference or the margin difference, if you can share?

Rajen Jhaveri — Chief Financial Officer

As of now, we have targeted, upgraded Tocopherol only. Your Vitamin E is a very far of things.

Shashank — Value Educator — Analyst

Okay.

Rajen Jhaveri — Chief Financial Officer

But we had targeted was upgraded Tocopherol, which we are saying that we are reviewing and we are reconsidering to defer it temporarily, to accommodate that other raw material and other things for.

Shashank — Value Educator — Analyst

Okay. But just I’m asking what the knowledge, but what would be the realization difference between the current and the — which we were planning initially?

Rajen Jhaveri — Chief Financial Officer

The different in absolute amount would be substantial. But then, it will also entail some costs also now to make those standard things.

Shashank — Value Educator — Analyst

Okay. Okay. And sir, like I’ve been observing this project has been delayed multiple times from last many years. So what is the reason? Like, is this technology is very

Rajen Jhaveri — Chief Financial Officer

No. Its INR280 crore delayed for two years because of for two main reasons. One reason was we had corona that affected the thing and it is a very absolutely modern project where lots of instrumentation is also there.

And as everyone is aware, that instrumentation got things got delayed due to non-availability of chips. That was one thing. And second thing was that in our new plant, we were going to use Methanol as the one of the material and Gujarat being a prohibition state getting Methanol permission has been always been a task.

It’s not that our plant was ready, but we were waiting for the permissions. And getting permissions, I mean, once the election everyone — election in last six months and went in election mode, no permissions were given and so that was the reason for the late. It was not because of any other reason like lack of will to invest or anything else. Plant has been released, since practically 95%, 97% work is over since the long.

Shashank — Value Educator — Analyst

Okay. Because I have been tracking another player who is in this side, so they probably started somewhere in 2011 or 2012, and they have substantially grown in Tocopherols — highly concentrated Tocopherols and even in Vitamin E side, while we were in this product much earlier, like at least in the mix side. So are there any technological related challenges to scale up or not?

Rajen Jhaveri — Chief Financial Officer

If you can see we had taken a conscious decision to concentrate more on the fatty asset side because that can give us higher volumes and higher top line and bottom-line. Tocopherol business is a very, very niche business, where you cannot have crazy scales or anything like — I mean the volumes or values what we are having right now, it won’t be possible to has it in Tocopherol business.

And we are already supplying — I mean, low concentrate stream, and we are there in the business. So I mean, it’s not that. So I mean, you must — I mean, technology challenges and everything, that’s not an issue because we have inform our three buyers who are prepared to give us — help us to make the product, which can be of good help to them in manufacturing vitamin-E. So it’s not that. And we are having business relationships with all these three companies since last more than 20 years.

Shashank — Value Educator — Analyst

Right, right, yeah. Thank you very much and all the best.

Operator

Thank you, sir. We take the next question from the line of Amar Maurya from AlfAccurate Advisors Private Limited. Please go ahead, sir.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Sir, two questions. One is that, like in your last presentation, I believe, 20022 presentation we indicated that in Dimer acid the country has imported something around 7,700 metric tons that year. And you basically are 55% to 60% of the market. So is that the right number, sir, 7,700?

Nahoosh Jariwala — Chairman and Managing Director

Yes, yes.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay. Okay. So basically, sir, then how the — how the basically volume is divided. So is it that you are selling more of a linoleic acid than more of the other fatty acid also like Dimer, it is the ratio of let’s say, if I get the ratio —

Nahoosh Jariwala — Chairman and Managing Director

Let me tell you one thing. None of the companies would keep only single source of material — raw material supply.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Correct, correct.

Nahoosh Jariwala — Chairman and Managing Director

Right? So that’s the reason that at the most, we can go reach up to 75% of India’s total market share, if we convince all our customers to buy — I mean, 75% from us and 25% from other customers, other suppliers. So I mean, what typically are the things varies between 62% to 70%, I mean, that’s a two-third, one-third is there a some you can see it.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay, okay. So basically, let’s say, 77,000 and we are like 65% of the market, let’s say, then basically, the total size will be, let’s say, 12,000 metric ton, right — but is that the right number, sir?

Nahoosh Jariwala — Chairman and Managing Director

Yes.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Yeha. So basically, what I’m trying to understand here is that — than in that case out of that, say, the total salable volume the dimer asset volume is basically very less. So is it the linoleic acid is basically the large chunk of our business?

Nahoosh Jariwala — Chairman and Managing Director

Acid is a high price item.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Which dimer is a high price item?

Nahoosh Jariwala — Chairman and Managing Director

Yeah.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

But Dimer, sir, if I check like with a lot of other buyers, like I get to know that it’s a $2 a $2.5 item, right?

Rajen Jhaveri — Chief Financial Officer

Yes. Compared to linoleic sell price.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

But linoleic is high price, right? Linolic would be —

Rajen Jhaveri — Chief Financial Officer

No, no, no, compared to Dimer, linolic is not higher price. Compared to Dimer, it’s low price.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay. So dimer would — then linolic could be at less than $2?

Rajen Jhaveri — Chief Financial Officer

Yes.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay. Okay. Then there, I think I got a wrong figure. Fine, sir. And secondly, sir, as you indicated that you will be processing, let’s say, approximately 14,000 metric ton of process volume. So, is it like something around the sales volume would be around going by the same ratio is around INR16,300 would be the sales volume for next quarter?

Rajen Jhaveri — Chief Financial Officer

No, no, no. I told you in one of the other credit response, I told you nine months volume is 40,000 tons — higher than 40,000 tons.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Yeah.

Rajen Jhaveri — Chief Financial Officer

So, you have to add 13,000, 14,000 in there because whatever process of labor quantity, which will be derived will be approximately 95% to 96%. There would be a 4% to 5% of process loss in terms of moisture, handling loss [Indecipherable] that type.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

But sir, in this quarter, if I see, you said that process volume was INR8,200, but your sales volume was INR9,700

Nahoosh Jariwala — Chairman and Managing Director

Because we used the earlier — the previous quarters inventory.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay. And even in the last quarter also, you said that process volume was INR12,700 and the sales volume was INR14,800 in September quarter also.

Nahoosh Jariwala — Chairman and Managing Director

Last quarter.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

September quarter also your sales volumes was

Nahoosh Jariwala — Chairman and Managing Director

Yes. Sales volume was 40,800 — yeah.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

And

Nahoosh Jariwala — Chairman and Managing Director

And raw material was also 15,000 — 17,000

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

INR12,700. So I’m just going by that number I’m saying, you know, you must be having some inventory, right?

Nahoosh Jariwala — Chairman and Managing Director

Yes. That is what we use to now in the Q3. Q3 is reverse than Q2. I hope you are not mixing up the two things. In Q2, the process volume was higher and in Q3 the sales volume was higher vis-a-vis the process volume.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

No, sir. In Q3 — Q2, what was the process volume?

Nahoosh Jariwala — Chairman and Managing Director

INR16,700

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

15,700, okay

Nahoosh Jariwala — Chairman and Managing Director

16 — 1-6

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Acha, 16,700, I got it. I got it. I got it. So basically 13,000, 14,000, you are saying 90% of that. Got that. I got it, sir. Got it, sir. So then also, basically, there would be sequential growth, but year-over-year, there will be volume degrowth.

Nahoosh Jariwala — Chairman and Managing Director

Yes. That is what I earlier said also in reply to questions from one of the participants that there could be some marginal degrowth in terms of volume, though in terms of value it may not it may not be that much.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

And sir, the price that 14% decline, which you have seen in this particular quarter, the price also recovered now?

Nahoosh Jariwala — Chairman and Managing Director

Which price?

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Realization, you said that this quarter ratio was down 7%.

Nahoosh Jariwala — Chairman and Managing Director

Average price realization depends on the entire product mix. So different products have different value. And as I said, Dimer acid is a high-priced product. So if there is a more dimer sale or more demand and more dimer sale than average would tend to be on the higher side. Suppose if there is less demand from dimmer acid and more demand for another fatty acid, Linoleic acid which is a relatively low price, then again the per unit realization would be different. So it is a product mix. We are not in the same like cement that we are making the one particular product only. Our products command different rising. And that is a substantial gap between one time product and another time product.

Amar Maurya — Alfaccurate Advisors Private Limited — Analyst

Okay. Okay. Got that, sir. Fine. Thank you, sir.

Operator

Thank you. We take the next question from the line of Niraj Shah from Exemplar Investment. Please go ahead.

Niraj Shah — Accenture Investments — Analyst

Yes. Thanks for the follow-up. We are delaying that high concentration tocopherol plant for the new product that you talked about,

Nahoosh Jariwala — Chairman and Managing Director

Yes, we are reviewing — we are exploring whether to do that or not.

Niraj Shah — Accenture Investments — Analyst

Yes. No, I was just asking that the new product is to be commissioned built on existing paint segment, customers’ demand so that we are going to get ready market. So that’s why we are doing like that way or is it something else?

Nahoosh Jariwala — Chairman and Managing Director

It is something else.

Niraj Shah — Accenture Investments — Analyst

Okay. And can I have Linoleic and Dimer acid figure for nine months therefore percentage contribution?

Nahoosh Jariwala — Chairman and Managing Director

In terms of quantity?

Niraj Shah — Accenture Investments — Analyst

Quantity or value also it’s okay.

Nahoosh Jariwala — Chairman and Managing Director

Value, yes, the Dimer acid value for nine months was INR130 crores, and for Linoleic acid value for the nine months was INR234 crores.

Niraj Shah — Accenture Investments — Analyst

INR234 crores. Okay. Thank you very much. It was very helpful. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management from Fairchem Organics Limited for closing comments. Thank you, and over to you, sir.

Nahoosh Jariwala — Chairman and Managing Director

Thank you all for participating in this earnings con call. I hope we were able to answer your questions satisfactorily, and at the same time, offer insight into our business. If you have any further questions or would you like to know more about the company, please reach out to our Investor Relations Manager at Valorem Advisors. Thanks a lot.

Rajen Jhaveri — Chief Financial Officer

Thank you, everybody.

Operator

Thank you very much. Ladies and gentlemen, on behalf of Fairchem Organics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.