Fineotex Chemical Limited (NSE: FCL) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Aarti Jhunjhunwala — Head, International Marketing
Arindam Choudhuri — Chief Executive Officer
Sanjay Tibrewala — Chief Financial Officer
Analysts:
Koto Kimdi — Analyst
Kriti Tripathi — Analyst
Karan Kamdar — Analyst
Anupam Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Fineotex Chemical Limited Q2 FY ’25 Earnings Conference Call.
[Operator Instructions] Please note that this conference call is being recorded.
I now hand the conference over to Ms. Aarti Jhunjhunwala, Executive Director from Fineotex. Thank you. And over to you, ma’am.
Aarti Jhunjhunwala — Head, International Marketing
Thank you very much and good afternoon, everyone. Welcome to Q2 FY 2025 earnings conference call of Fineotex Chemical Limited. We have provided the financial statements and the earnings presentation on both the stock exchange and our website, which I trust you had an opportunity to review in detail.
Fineotex has maintained steady progress amidst the complex economic environment, staying focused on growth, innovation and sustainable practices. Our position in the specialty chemicals sector, driven by our dedication to delivering high-performance chemical solutions, enables us to adapt through evolving client requirements while strengthening our presence in both domestic and international markets.
This quarter, we achieved several important milestones in alignment with our strategic road map. Notably, Fineotex participated in the Abu Dhabi International Petroleum Exhibition and Conference ADIPEC 2024. This event provided us with a valuable platform to showcase our extensive product portfolio, engage with industry leaders and reinforce our commitment to expanding Fineotex’s reach in the global market.
The exposure gained through ADIPEC opens our business prospects and opportunities for collaboration in the international arena in the oil and gas industry. Our dedication to ESG principles remains at the heart of our mission. We continue to set industry standards through ethical practices, transparency and operational excellence with our ESG initiatives driving sustainable long-term value creation and enhancing trust with our stakeholders.
In addition to these advancements, we are committed to fostering empowered and engaged workforce. Recently, the Nomination and Remuneration Committee approved the allotment of 25,052 equity shares through the Fineotex Chemical Limited ESOP 2020 with 110 employees now included for ESOP as of September 30. This initiative underscores our focus on attracting, retaining and rewarding talent, ensuring alignment with Fineotex’s growth and organizational goals.
As we move forward, Fineotex is well positioned to leverage these strategic initiatives, driving our mission of value creation, sustainability and industry leadership.
With this, I now invite Arindam ji to provide a deeper insight into our operational performance for this quarter. Thank you so much.
Arindam Choudhuri — Chief Executive Officer
Thank you very much, Aarti Ji. Very warm welcome and good evening to all.
We at Fineotex Chemical Limited quarter two financial year ’25 earning call, Fineotex has continued to pursue a strategic path of diversification, expanding our product portfolio from our initial focus on specialty chemicals for the textile industry into complementary segments such as hygiene, oil and gas, among others. The expansion aligns with our objective to deliver high-value customized solution that enhance our client operations underpinned by the trust they place in our brand and product reliability.
Over the past few quarters, we have intensified our focus on operational agility, a cornerstone of our competitive advantage in today’s fast-paced market. By enhancing efficiency across our production processes, we are able to respond to shifting market demand swiftly, ensuring minimum lead time and optimize delivery for our esteemed clients.
This operation resilience has allowed us to maintain our leadership in the specialty chemical industry. In R&D, our team has made considerable advancement in eco-friendly and sustainable product portfolio in a direction that has not only reinforced our market position but also facilitate our expansion into significant international textile hubs.
We remain dedicated to meeting global standards of sustainability and innovation, a commitment that will continue to shape our growth initiatives. As we move forward, we remain focused on leveraging our capabilities to explore emerging market opportunities, maintaining our commitment to quality and providing unmatched solution for our clients.
I now invite our Executive Director, Mr. Sanjay Tibrewala, to take us through the Company quarterly financial performance and other strategic updates. Over to you, Sanjay Ji. Thank you.
Sanjay Tibrewala — Chief Financial Officer
Thank you, Arindam ji and good evening, everyone. I’m pleased to present the financial highlights of quarter two financial year ’25. For quarter two financial year ’25, Fineotex Chemical Limited has reported consolidated revenue of INR1,457 million, reflecting a growth of 3% approximately compared to the quarter one financial year ’25. This growth is driven by stable demand and improvement in operational efficiency across our key business divisions.
Our profit after tax for the quarter has increased to INR321 million, a growth of 10% approximately compared to quarter one financial year ’25, maintaining a PAT margin of 22% which demonstrates our continued focus on driving profitability and maintaining operational excellence.
For H1 financial year ’25 our consolidated revenue from operations stood at INR2,876 million, reflecting a growth of almost 4% Y-o-Y basis. Our PAT for H1 financial year ’25 reached INR612 million, marking a growth of 6.3% compared to H1 financial year ’24 with a PAT margin of 21.3%.
The specialty chemical industry in general remains strong with significant long-term potential. However, the current quarter has seen a slowdown in demand due to seasonal factors and certain market uncertainties over the raw materials. Despite this, we are optimistic about the sector’s future. We anticipate that the demand for specialty chemicals will pick up in the coming quarters as industry activity strengthens and supply chain stabilizes. The industrial fundamentals remain sound and we believe Fineotex is well positioned to capitalize on future growth opportunities.
I would also like to share an exciting update regarding our expansion efforts. The construction activity at our new Ambernath plant is progressing at good speed. The new facility, once operational, will significantly enhance our manufacturing capabilities and allow us to serve better our growing customer base with the highest technological of ability.
We are on track and expect the plant to be operational in the coming year, which will further strengthen our position in the specialty chemicals sector and enable us to meet the increasing demand of our products. We’re also pleased to share that ICRA on 11th November upgraded its credit rating for Fineotex. The long-term fund-based cash credit rating has been upgraded to ICRA A+ with a positive outlook while the long-term and short-term unallocated rating has been reaffirmed at ICRA A+ and ICRA A1+ with a positive outlook. This is a clear indication of the market’s confidence in our financial stability and growth trajectory.
Additionally, we have completed a successful fund raise of INR218 approximate million sorry — a successful fundraise of INR218 crores through preferential allotment of equity shares and commendable convertible [Phonetic] warrants bringing our total fundraise this year to INR342.55 crores. These funds will be strategically deployed to support both organic and inorganic growth, enhancing our capabilities and market position.
Our continued focus on operational efficiency, prudent capital allocation and value creation for stakeholder positions us well for the sustained growth. With these accomplishments, we are optimistic about the future and look forward to the continued support of our investors and team.
With this, we conclude our opening remarks, and we will now open the call for interactive question-and-answer session. Over to you, Siddhant.
Questions and Answers:
Operator
Thank you very much sir. [Operator Instructions] Our first question is from the line of Koto Kimdi [Phonetic] from Axanoun Investments. Please go ahead.
Koto Kimdi
Congratulations, sir, for the good set of numbers. I had a couple of questions. The question being if you could tell us about expenditure in current research and development, either in absolute terms or as a percentage of revenue from operations.
Arindam Choudhuri
Yes. Thank you so much for your message. So as such, our — as I have — we have mentioned in the past, our lab has been accredited by NABL and this is the second time renewal of NABL. Our lab is established in SASMIRA, the application lab, which has been certified by NABL. There are a lot many products which have been certified and a lot of ecological tests and analysis which our Company has been doing.
The percentage earlier, if you compare about two years before, it was a higher percentage as and when the company has been growing in the last two years of almost 40% year-on-year growth, last three years actually. And — so the percentage has been reducing from that point, but the absolute numbers has been increasing. As such, more or less, our outflow of R&D budget is almost INR7 crores to INR8 crores as we speak today.
Koto Kimdi
Okay. Thank you, sir.
Arindam Choudhuri
Thank you so much.
Koto Kimdi
Second question.
Arindam Choudhuri
Yeah please. Go ahead.
Koto Kimdi
The price trend of silicone oil and other major raw materials, what according to you is the trend we are seeing in silicone oil and other raw materials used for specialty chemicals?
Arindam Choudhuri
See as such we have like more than 1,400 SKUs, and we are into 450 product categories. The total top 10 products for us is not even contributing more than 28% of our revenue. And similarly, the top 10 raw materials don’t contribute more than 20% of our purchases. So basically, we are quite, I would say — the significance of any raw material on us is not high as such.
Now coming to silicone oil and other chemicals, I just can’t give you a general trend about it. What is happening in the last three months or last two months especially, there has been a lot of fluctuations in the prices of grade coming from China and also there has been pricing variations in the crude oil which also leads to ups and downs in the market, which also is not — it’s so much fluctuating that it’s not easy for any manufacturer to determine the right time to purchase the raw material. So we have seen certain ups in the prices in August. Then again, little down then again going up and things like that. Again speaking so now the dollar has also picked up by 2% more or less. And also the freight cost, as you know, from China and other countries has increased. There is, in fact, shortage of the containers also. So trend is going up as such at the moment.
So I would not be able to comment on specifically silicone oils or anything like that because it is very subjective. There are many kinds of silicone oils. Sometimes some are based on block, some are based on depot, some are based on other PDMS and other things. So it also depends on the supply/demand of that chemistry and also the kind of maintenance things going on in the big manufacturers in China.
So I would not be able to give you a pinpoint answer to that. But generally speaking, the trend of pricing has gone up in the last two, three months.
Koto Kimdi
Right, sir. And the last question being if time permits, if you could show some light more specifically on the funds raised to preferential allotment and equity warrants.
Arindam Choudhuri
Yeah, absolutely. As we have also announced in the past, we have gone for the fundraise and even now like we have discussed. So we have raised almost INR342 crores as such. Out of this, we need — it’s somewhere in the warrants and the promoter myself have also participated up to a tune of INR45 crores. Out of which INR12 crores has been — INR11.5 crores or something approximately has already been paid to the Company. The remaining will be done in the next 18 months from the date, let’s say another 12 months from now.
So out of this INR342 crores, the promoters has contributed INR45 crores. And so yeah, this has been done with the view for the organic and inorganic opportunities which we are very excited about.
Koto Kimdi
Okay sir. That will be all from my side.
Arindam Choudhuri
Thank you.
Operator
Thank you. Our next question is from the line of Kriti Tripathi [Phonetic] from NVS Brokerage. Please go ahead.
Kriti Tripathi
Thanks for the opportunity.
Operator
Sorry to interrupt Mr. Kriti. Can you please switch to handset mode? We are not able to hear you.
Kriti Tripathi
Hello?
Operator
Yeah. Yeah. Please go ahead.
Kriti Tripathi
Hello. Can you hear me?
Arindam Choudhuri
Yeah, perfectly, Mr. Kriti. Please go ahead, Mr. Tripathi.
Kriti Tripathi
Yeah. Thanks for the opportunity. So based on our Q2 and H1 results, can we generally expect H1 to pan out on similar lines or better? So this is the first question. And second question is, any development on the oil and gases segment?
Arindam Choudhuri
So yeah, as such historically always the H2s has been better than the H1s, H1 typically, also has a monsoon season in which there is a little bit lack in demand for the textile chemicals, also for the detergent chemicals and that trend we have always been seeing. H2 has always been better in general purpose.
At the same time to come to your next question, the sector in oil and gas, yes, we have great interesting developments being done on that. In April, we were in OTC Houston where we had exhibited. Last week, we were in ADIPEC also. This was the first time we have been participating in a ADIPEC. This is the biggest exhibition and show. It happens in Abu Dhabi every year for the Middle East and other markets.
Interestingly, we were quite excited to know that the demand is going to flow from China to India for those products, which goes more for the oil and gas. Also the Russian demand is looking at India as a supplier. At the same time, there are a lot of more opportunities coming in. So we are very excited with the kind of developments we have done.
Recently, we have — we are under NDA [Phonetic] with certain big oil companies as well with whom we are enhancing our product lines and developing certain tie-ups. We will eventually be able to share more details as we go ahead. But this segment is looking very exciting and the growth in this segment, we have already started doing a lot of exports on this sector, which was never done in the past.
So in this quarter, this was the first quarter that we were able to export our oil and gas specialty chemicals to various countries. And — yeah, so that is an answer to your question, please.
Kriti Tripathi
Yeah. Thank you, sir. Thanks a lot, sir. Yeah.
Arindam Choudhuri
Thank you.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Karan Kamdar from DRChoksey Finserv. Please go ahead.
Karan Kamdar
Hello. Good afternoon, sir. Congrats on a good set of numbers. So I understand it’s been a tough market. Can you just help me understand how has the market been like? How has the macro been like for the chemical industry?
Arindam Choudhuri
Thank you very much, Mr. Kamdar. So like I was also mentioning to the other participants, there has been unprecedented fluctuation in the prices of freight and basic chemicals also and also US dollars in the last quarter. Generally, we don’t see so much fluctuation.
Generally, what happens is there is a trend which continues for six months. If it’s going down, it’s going down for six months. If it’s going up, it’s going up for six months minimum. However, this was the time when we are seeing fluctuations. Like one week you start booking your products and raw materials. By the next week, you will see that they’ve gone up or has gone down. So it’s very hard to predict the right time to do that.
And obviously, the customers in most any markets will always be not ready to accept your — the new prices or higher prices or whatever it is. Luckily, as you know, we are into specialty chemicals. And for the last 54 quarters of being listed, you might have seen our EBITDA have always been at least 18% for any of the quarters from 2011 from the time we have got listed.
And in the last six months — the last six years, there has been enough of ups and downs in the market. And even after that, we have been able to have a gross margins of at least 35% to 40% in this range. So this also depicts what kind of specialty chemicals which we are producing, which has a very high entry and exit barriers. So as such we do not — it doesn’t affect our profitability, these kinds of jumps in the prices to a massive extent. But obviously, it can always be better to have a better, 100 basis point additional EBITDA or 200 basis point additional EBITDA.
But if you also see, we have been able to maintain our EBITDA margins, which is almost 25% even in this quarter. So as such, we have been able to have more better product mix of specialty chemicals, sustainable product lines, which is helping us to add and deliver more value to the customer at the same time helping us to have healthy EBITDA. So this is the trend actually.
From the demand point of view, we have done very well in textiles. There has been growth in the volume in textiles by almost 14% to 15% quarter-on-quarter basis. And in fact, year-on-year basis, there has been impact — further growth of almost, I can say, 17% to 18% in the textile division.
In health and hygiene there has been slightly downfall on that line, about almost 10% to 15% lower volumes and lower realization also because of this trend which is happening in the FMCG. A lot of our customers are rebuilding their portfolios, and there’s a change of the new products have been launched. And then always when there is a change in the product, there is always a period of slackness of changeover of the brands, of change over the recipes and things like that. So a readjustment of product line, which is happening at the customers’ end.
And also generally, monsoons are not a great season for the detergent business as such, because generally the rural markets and the markets at large are not using the detergents a lot. So this is something which we’ll cover it up. So we are very — we are not having any — we are not having any kinds of pessimism on that at all. It will be reviving very quickly.
And what is happening is there are a lot many new products which we have launched, which have great sustainability portion of it, which will be going to the detergents and the textile as well. At the same time, in this quarter we are pleased to inform that we have started exporting our water treatment chemicals also, which is similar to the oil and gas industry as such, but it is going for water applications. We have been able to export it. This is also some breakthrough which we have got in the Middle East. So as such this was one of the quarters where many things started shaping up and obviously once it gets mature, we will be able to see that in good numbers.
Karan Kamdar
Okay. Got it, sir. Sir, I’d like to ask next question. If possible, could you share how has been the update like on the acquisition by when could we see a more detailed update and further guidance?
Arindam Choudhuri
See, as such, what’s the maximum information I can give on this platform is something which we have already mentioned on the stock exchange also that we are on a advanced stage of discussion with certain company and a lot of documentations and exchanges and due diligence and legal and finance, as you know, these things have to be well done. And knowing our management by now, we are very much disciplined in deployment of cash, as you have seen. And so we are very much, let’s say, cautious in our approach and we prefer to go step by step and being very sure about the actions which our Company will be taking.
And as we are also in the year-end now and as soon as it touches November, most of the European and American companies are on a little lower level of approaches. So we are hoping to have things up. And as soon as we do it, we will be coming up to the investors via the stock exchange medium to update them.
Karan Kamdar
Got it, sir. Thank you. That’s it from my side.
Arindam Choudhuri
Right now, the best thing I can say is that the funds are ready. And there is a great amount of internal accruals with the Company. This is the strongest quarter financially, I would say, where the Company has super strong war chest funds available for any kind of organic and inorganic expansion.
By the way, our organic expansion, we have already been deploying the funds in the new Ambarnath plant and the new office also which has been set up. So going forward, I think — and also there is a good accumulation, which we will be seeing on cash generated from operations in the coming quarters.
By and large, we are very hopeful about the position where we are today. And this is the right time, when we are looking at more acquisitions right now and which can be immediately grabbed rather than we get the opportunity and then we go for the fundraising. Now the situation is that, we have the funds and we are just trying to get onto that acquisition opportunities quicker.
Karan Kamdar
Got it, sir. Got it. Thank you. That’s it from my side.
Arindam Choudhuri
Thank you Karan ji.
Operator
Thank you. [Operator Instructions] Next is a follow-up question from the line of Koto Kimdi from Axanoun Investments. Please go ahead.
Koto Kimdi
Thank you for the opportunity, sir. One last question from my side. If you could tell us about the situation from international markets. Like in previous earnings calls, you have mentioned that the biggest competitor you have are foreign companies. So what is the current outlook of those companies?
Arindam Choudhuri
Well, I mean, everyone will have the same external and the actual factors. Everyone will have the pain of the Chinese prices, Chinese shortages, container shortages and things and the global geopolitical situation, which we all are watching very much and getting affected on — in all the industries, not only chemicals as such.
So everyone is in the same boat as such. And coming to the point is that we are more stronger at the moment than where we were before which gives us the confidence. The customers are also increasing the number of products with us. We have developed a lot many new solutions and products which are shaping up rapidly. That is the reason you can see a good growth in our textile core specialty businesses.
As this has been going forward, we are very confident that the coming quarters will be much better than where we are. The competitors like BSFs and DAOs in the detergent and cleaning hygiene businesses and in textiles, if you talk about the biggest companies like Archromas and others, these companies are also having — but I mean, they are also being in the same thing like Bangladesh issues and other things.
But as such, like Bangladesh, we had some issues in the — for some — couple of weeks, which has got totally resolved. In fact, we’re increasing our team members more in Bangladesh right now and we are very excited with the kind of opportunities we are getting.
So these things are shaping up. It is getting better and better as we are going ahead. And I mean that’s all about it. There is nothing greatly changed in the last three months in external companies or us.
Koto Kimdi
Okay. Fair enough. Thank you. Thank you very much.
Arindam Choudhuri
Thank you.
Operator
Thank you. Our next question is from the line of Anupam Agarwal from Lucky Investment. Please go ahead.
Anupam Agarwal
Yeah. Hi Sanjay. Good evening and congratulations on good numbers. My first question is on your volume. We’ve done about 33,000, 34,000 tonnes which is largely flattish on the half — H1 over H1. What is your sense — if I see the entire FY ’25 you mentioned in one of your comments that the second half is largely better and higher than H1. What exactly are we looking at in terms of volume given this year?
Arindam Choudhuri
Thanks, Anupam ji for your kind words. So as such, as you have pointed it out, we have already done almost 34,000 — 33,000, 34,000 tonnes this H1. And as you also know about the product mix, there are a lot of products which keeps changing. Like if we are doing more of exports, the point is that we have to give products which have more purity. No, purity means the volumes are same, but we will have to increase the pricing of it to give them and to say, hey, save the freight cost. Now this is again picking up.
So volumes are one side. Yes, it’s increasing. It will keep on increasing. But there is a product mix which also keeps fluctuating at the same time. So nonetheless, what is more important for us has been our PAT growth and EBITDA growth in absolute numbers. This is the way we have been always looking at things.
The H2 will be definitely much better than the H1. And we are also seeing a lot of positivity in the — all the kind of businesses which we have, whether it’s textile, cleaning and hygiene, detergents, oil and gas and water treatment. This is really looking much excited than the last quarter actually. So the excitement which comes now will be reflected in the coming H2.
You would be able to feel that we will be — so if you see in the last three years, we might have done more than 40% CAGR year-on-year basis. In the last five, six — let’s say, in the last 54 quarters or, let’s say, in the last 13 years of being listed, our CAGR has been 28% broadly. So I would say that we will be — at least be able to have in the coming couple of years, we will be having at least 20% to 30% year-on-year growth. This is what we are looking at.
Anupam Agarwal
Understood. Understood. My second question is if you can broadly give a sense of how the export volume growth has been and how the domestic volume growth has been?
Arindam Choudhuri
So as such, our exports has slightly increased. It is now almost 30% from our earlier was, I think, 25% to 24% or something like that. So this has increased definitely. This is also because of the increase in the textile chemical exports Bangladesh picking up. We are also — we had also participated in Vietnam.
In fact, we have been participating every month in some of the other international shows which you can see on our LinkedIn profile and the various social media things. And like Vietnam was one. Last week we had also in Bangladesh the Biotex [Phonetic], the European company, which is our subsidiary. They had also participated in Bangladesh while we were in ADIPEC in Abu Dhabi. So these things are going on. We are getting very popular. The brand has been — the brand value is well recognized and respected.
At the same time, people — the customers are appreciating the kind of R&D investments we have done, the kind — we are — I would like to probably also say we have the highest number of product under ZDHC and ecological approved product lines under Gauss and ZDHC amongst any other company. Almost, I think we have crossed 250 products in that category itself.
Whereas even if you compare to the likes of the European multinationals, they will not have more than 150 or 200. So this also reinforced in the minds of the customers how techno — how technical company we are and how much we are focused on our R&D and getting better than others, much ahead than others.
So this is shaping up very well. We have increased a lot in geographies, lot many distributors. Our team has — numbers have been increased in marketing. There are a lot of actions which have been done on the ground. And yeah, these things are going to surely be seen in the coming times.
Anupam Agarwal
Right. So just an extension of this. So coming to Eurodye and Fineotex. So what traction are we seeing in terms of global inquiries with regards to tie-up that we have?
Arindam Choudhuri
See what happens, in textiles, as you — we know that there are always trends coming up. Now the new trend which has come up due to the geopolitical situation is that is a big requirement of the technical textile because of the defense. Now India is trying to be a good player in the world for technical textile and defense. The biggest players in the world is Turkey, Bangladesh — sorry, Turkey, Pakistan and Brazil as such.
And as the more and more geopolitical situations and unrest and war situations are ongoing, this means more demand for such kind of fabric. Now companies are not asking for antimicrobial much. People are appreciating, yes, you have the right product and the right quality. But this is not picking up because this is not in the trend. There is no COVID now. And in fact, I think even if COVID comes back, the demand for these chemicals will be coming back surely. But we are not sure how much — up to what level it can reach. It all depends on the brand.
What does Walmart and Target and [Indecipherable] think about it? How would they like to position their brands in the market if there is, again, the beginning of COVID or something which realize.
Right now, the quality is more on the technical textiles, water repellent, blood repellent, moisture management and things like that, where we are very strong in. And this is also going to help us a lot. At the same time, we have been increasing our approach to lock many customers across Bangladesh, Vietnam, India. So that’s helping us.
Anupam Agarwal
Sir, because of the exhibition that we take part in and the tie-ups that we have, are we getting inbound interest from global customers with respect to the new category of products we are entering into?
Arindam Choudhuri
Definitely, this helps a lot. There is no doubt about it. So we have many kinds of models. One is we keep increasing our wallet share with existing customers. That is one which helps us a lot with the new product, which we are launching always. And also, we keep increasing our geographies and distributor network which helps us to increase the customers and their attention towards it. So this is what we have been doing and also helping us a lot.
At the same time, we have been giving a lot of accountability and responsibility on our shoulders, which is helping the customers to be more satisfied with us. Like I can give you an example where we have started doing entire package offers. So what we have started doing in the recent past also, I mean, we were doing it in the earlier days, in a couple of quarters before we initiated those times. But now things are picking up, where we go and do the entire guarantee of the fabric for the customer from unfinished to finish in which we can give a basket of a product. We give our own recipes.
What helps us is that, we get the orders of the basket of the product rather than a couple of products. What helps the customer by that is, they are satisfied with the accountability. Otherwise, what used to happen in the market, like if one of the raw materials in the fabric is not working well, the blame will not be taken by the supplier and one will push it to the other shoulders and this and that. But here we will be more accountable, which helps our customers.
And also importantly, the costing is controlled for the customer. So we fix the price for them. This is the price per kilo, rupees per kilo or rupees per meter for them, which helps them to be satisfied that they don’t need to worry on the costing whether the cost goes higher or lower. They only have to pay as much as what we have promised for. It’s like a fixed fare kind of approach instead of by meter like the taximeter, we are doing a fixed fare approach in which they are more satisfied about their cost. This is something which I can give an analogy to you about.
[Indecipherable] At the same time, we have also convinced the customers’ customers like we have approached the brands who are giving their fabrics on jobworks to many textile companies in India. And now as we have got approvals from them, they are insisting their suppliers, that is our customers, to use Fineotex products only so that they can get consistency in their output of the fabric, which we are doing in numerous places in India. So their qualities are more consistent when they export their fabric.
So these are the things which we have been doing a lot. And in fact, I would say, which we are doing a lot and our European co-producers are not able to do, are not interested to do or whatever I [Indecipherable].
Anupam Agarwal
Got it. Got it.
Arindam Choudhuri
[Indecipherable]
Anupam Agarwal
Right. My third question is on the expansion of our Andarnath facility. By when are we looking to commission the plant and what is the ideal volume that we can get to from the plant?
Arindam Choudhuri
So the first step would be to have the phase one, which will be around 18,000 to 20,000 tonnes. That is number one. We — and we are hopeful that by the beginning of the next financial year, it should be up. And as you know about, when the plants have been commissioned, there are so many kinds of approvals being taken from the central, from the state, from the local authorities and everything has to be done in the perfect way.
So the initial commissioning does take time. However, once the phase one is done, after that, the increments — incremental increase in the production will not take so much cost nor time. As you have also seen in our Amarnath 1 plant which was started three years back, we have started with 20,000 tonnes and now it’s 61,000 tonnes. And it is done beautifully within time, within cost parameters. And it has been done in a way where the expenses are very much controlled. So this is what ideally we are looking at to be done.
Anupam Agarwal
So the 20,000 —
Arindam Choudhuri
Also, we’ll be shifting some of the product lines and machines from the Navi Mumbai plants over there, which will help us to also have a better cost of production in the new facility where they’ll be having a faster reaction machining, faster technology to move in and move out the raw materials and the finished goods.
Anupam Agarwal
So Q1 of ’26, we will have 1,24,000 tonnes in the phase one of Andarnath facility.
Arindam Choudhuri
Maybe 122,000 tonnes [Phonetic]. [Speech Overlap]
Anupam Agarwal
Fair enough. 122,000 tonnes, 125,000 tonnes, whatever. Okay. So that’s Q1 of ’26. And by then is when we are looking to even maybe announce the acquisition, either Q4 or ’25 or Q1.
Arindam Choudhuri
See, I mean the most important thing for an acquisition is that to be very sure about the kind of pricing we are paying, the kind of assets we are getting and to be very sure about the customers’ engagement with them and things like that. And most important thing, the funds to be in place because we cannot have the acquisition first being fixed and then we go to get the funds. I think that’s not the right approach because once the deal is on the table, you cannot go to the bank or the market or whatever it is to line up your funds. It has to be lined up first and then you look for it because then it can — the probabilities of falling off is much higher.
Anupam Agarwal
Right. And what —
Arindam Choudhuri
As such we are very much — sorry. Sorry?
Anupam Agarwal
Yeah. What sort of plants are we looking at? Either it is water, chemical or oil and gas or what exactly are we looking at in terms of [Speech Overlap]?
Arindam Choudhuri
We’re looking at companies which are fungible. It’s not necessary to be only in one sector, something like that, something similar to our ROCs and ROEs, something similar to our EBITDA margins, something similar to the fungibility which we have, where we can produce in the same facilities various kinds of chemical specialties, depending on the kind of the industry we want to get into. So this is what ideally we would love to do.
Anupam Agarwal
These would be plants which are already up and running and doing good enough margins and profits or these are slightly distressed plants that are not able to run properly or what?
Sanjay Tibrewala
No, no, not at all. Good question. Thanks for asking this because I never thought that this could also be one of the point to be clarified. So we would never like to buy distressed assets or anything like that because we are — we believe that we are not of those experience of that. We have done our first maiden acquisition in 2011, as you know.
So in March 2011, when we came up with an IPO, we raised the funds and we deployed the funds within four months of raising, and we invested in this company, which is founded by Europeans producing specialty chemicals in Malaysia called Biotex.
Now the Europeans and the Germans are still 28% shareholder even now of this company and are running it very well. At the same time, our team and directors are well placed there and they are taking care of the top management activities as well.
So we are very sure that we will not be able to accept any distressed assets or something which we have to start from scratch. We are not — we don’t believe in that thing much. Rather we want something which is running up and running where they may have a succession issue in the company. And in chemicals, we do often see a succession issue because the new generation generally are not too inclined to have businesses in specialty chemicals or chemicals for whatever reason. So that is also helping us to give certain opportunities.
And also, we are looking at what kind of cross-selling we can do. Now this is very interesting for us because as you know, we are — in India, we have a lot many chemistries. We are handling a lot many product lines. Now these products can be accepted in their existing customers which can take us to a different level.
So we are considering a lot of things before we do any kind of decisions on it. That’s why it takes time. And we are very much disciplined in our deployment of funds. We have always been cash rich as you might have seen in the last 13 years of being listed. So we would like to go step by step. We are not in a hurry. And it’s better to have the best deal because if some deal in inorganic acquisition doesn’t go well, it’s not only you lose money, but you will use another five years of your important five years of the — how do I say, the specialty chemical cycle, I would say.
Time is also very much important than money. That’s also — so it’s better to be more careful rather getting quickly into something which is — which we regret like some of the other co-producers of our industry. Most of them have repented after doing an acquisition because it was done in a hurry and then at the end of the day, these guys put in a lot of extra valuation to it and then — and then their customers are not going to pay extra value for any extra cost of the company which they are purchasing. So anyway, this is the thought process the management had.
Anupam Agarwal
Right. Perfect. Thank you so much, Sanjay for answering all the questions and wish you all the best and talk to you next quarter.
Sanjay Tibrewala
Thank you so much, Mr. Agarwal ji. Thank you.
Operator
Thank you. Ladies and gentlemen, we’ll take that as our last question. I would now like to hand the conference over to Mr. Sanjay Tibrewala for closing comments.
Sanjay Tibrewala
Thank you very much all the participants for hearing us and being together with the Company. There is a lot of more information which we can always — we are happy to share in our — you can connect our investor relations Churchgate Partners or you can access and visit our portals also to get all the transcripts. We’ll be happy to share maximum information and see you soon. Good evening and have a good weekend. Thank you.
Operator
[Operator Closing Remarks]