Gandhar Oil Refinery (India) Limited (NSE: GANDHAR) Q2 2025 Earnings Call dated Nov. 07, 2024
Corporate Participants:
Aslesh Parekh — Joint Managing Director
Indrajit Bhattacharyya — Chief Financial Officer
Analysts:
Siddhesh Dharmadhikari — Analyst
Narendra — Analyst
Dakshay Parwani — Analyst
Anoushka Roy — Analyst
Bhavesh Patel — Analyst
Mohammed Farooq — Analyst
Sahil Vora — Analyst
Darshil Shah — Analyst
Yash Dantewadia — Analyst
Manda Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY25 Earnings Conference Call of Gandhar Oil Refinery India Limited. [Operator Instructions]
I now hand the conference over to Mr. Siddhesh Dharmadhikari from Orient Capital. Thank you and over to you, Mr. Siddhesh.
Siddhesh Dharmadhikari — Analyst
Thank you. Good afternoon, ladies and gentlemen. I welcome you to the Q2 and H1 FY25 Earnings Conference Call of Gandhar Oil Refinery India Limited. To discuss the Q2 and H1 FY25 business performance, we have from the management, Mr. Aslesh Parekh, Joint Managing Director; and Mr. Indrajit Bhattacharyya, CFO.
Before we proceed with this call, I would like to mention that some of the statements made in today’s call may be forward-looking in nature and may involve risk and uncertainty. For more details, kindly refer to the investor presentation and other filings that can be found on the company’s website at stock exchanges.
Without further ado, I would like to hand over the call to the management for the opening comments and then we will open the floor for Q&A. Thank you, and over to you, sir.
Aslesh Parekh — Joint Managing Director
Thank you, Siddhesh. Good afternoon, everyone, or in one present on this conference call. I am Aslesh Parekh, Joint Managing Director of Gandhar Oil Refinery India Limited. I am joined by my CFO, Mr. Indrajit Bhattacharyya. We appreciate your time and interest as well — as we review our financial performance for the second quarter and second half year of FY25.
Today, I will provide an overview of our business performance amidst a dynamic economic landscape. During the second quarter of FY25, Gandhar recorded a revenue of INR9,351 million in this quarter. For the half-year ending FY25, our revenue reached INR19,229 million, demonstrating a steady performance despite broader economic challenges.
Our international markets have shown strong and consistent demand, with overseas sales accounting for around 40% of the total sales in Q2 FY25 and half year ended FY25. Our strong presence in international sales and international markets highlights our expanding global footprint and ongoing efforts in market diversification.
At Gandhar Oil, we remain committed to expanding our presence in the White Oil sector, especially within the Personal Care, Healthcare and Performance Oil segments. Our long-term strategy includes diversifying our product portfolio, expanding new markets and enhancing our customer engagement with collectively positioning us for sustainable growth. Although we have encountered short-term challenges such as shipment delays impacting our margins, we view this obstacle as very temporary and expect a gradual improvement in the quarters to come.
While manufacturing volume at a consolidated basis remained stable compared to the previous quarter, our standalone manufacturing volume had increased to 99,172 kilolitre. Our top line — the prime reduction of our top line was due to a reduction in our average selling pricing. The key drivers of this trend include a decrease in crude oil pricing, the softer demand in FMCG and pharma businesses over the past two quarters, and also increase in freight rates because of the issues in the Red Sea and the Iraq — and the Israel war.
Our working capital days remained fairly stable this quarter, a slight increase in debtors and inventory days were offset by a rise in creditor day. Additionally, our current ratio remains very healthy and our debt-to-equity ratio is negligible, reflecting minimal debt at a standalone level. We maintain a strong fixed asset turnover ratio of 13 times, which demonstrates our efficient utilization of resources.
In closing, Gandhar Oil remains committed to delivering value to our shareholders, customers and stakeholders. We are very confident that our focus on innovation, diversification and operational excellence will continue to drive our growth in the years to come. Thank you for your continued trust and support in Gandhar Oil Refinery.
With that, I hand over my call to Mr. Inderjit Bhattacharya, who is the CFO, who will take you through the financials in detail. Thank you once again. Over to you Mr. Indrajit.
Indrajit Bhattacharyya — Chief Financial Officer
Thank you, Aslesh Bhai, and thank you everyone who has joined us on this call. I shall now take you through the financial performance of Gandhar Oil Refinery for the second quarter and the half year ended on — half-year of ’25 — 2024-’25.
In Q2, FY25, our consolidated revenue stood at INR9,351 million compared to INR9,948 million in the previous quarter. For the half-year ended FY25 — ending on FY25, consolidated revenues were INR19,299 million compared with INR20,714 million in HY — FY24 — H1 FY24.
Our overseas sales, as mentioned by Aslesh Bhai, is around Rs.INR7,742 million, which comprises around 40% of total sales, reflecting our continued international presence.
On a consolidated basis, EBITDA for Q2 FY25 stood at INR402 million compared with INR603 million in the prior quarter. Half year — for the half-year ended, EBITDA totaled at INR1005 million [Phonetic].
Consolidated profit after tax for Q2 was INR181 million compared with INR326 million in the previous quarter, with a half-year profit after tax of INR508 million.
Turning to key operational matrices. Net working capital, they remain the same. There is a slight change within the net working capital days and our current ratio remains healthy with a negligible debt-to-equity ratio as there is virtually no debt at the standalone level.
There are slight reduction in the ROCE due to decline in EBITDA, which was affected by lower gross margins on both quarterly and yearly basis.
Return on equity also decreased, reflecting a reduction in net income. Nonetheless, we remain a health — we maintained a healthy fixed asset turnover ratio of 13 times.
Thank you for all your attention. This concludes my summary, and with that, we will open the floor for any questions that you may have.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Narendra from RoboCapital. Please go ahead.
Narendra
Hi, am I audible?
Aslesh Parekh
Yes.
Narendra
Yeah, yeah. Thanks for the opportunity. Sir, first question is regarding your gross margins per kilolitre, right? So what caused the drop in the margins from about 10,000-11,000 leverage to the current 8,500 and when do we expect these to improve to the real levels?
Aslesh Parekh
What do you — you want to ask a couple of questions, right? So, if you can give all your questions together so we can.
Narendra
Yeah, yeah. So, my next question is regarding our UAE plant, right, Texol? So, what are the utilization level? I believe we were aiming to bring it to 70-80 kind of a range this year or maybe next year. So, that is my question. Where are we at?
And also, on the same level, why has it been the way it is? We have started that plant in, I believe, 2019. So, what has caused the delay in ramping up of the production despite Gandhar being a 10% kind of a share player in the international market?
Indrajit Bhattacharyya
So, your first question is on the gross margin. Yes, the gross margins have reduced because of the effect of a few headwinds. First of all is the price of crude which has dropped substantially during this quarter. Second is even the FMCG sector which consumes more or less 50% of — or 47%-48% of our total turnover was not doing — was not performing too well. So, there has been a reduction in the pricing on that account.
Third, on the export front, we have taken a bit of hit because of the increase in the freight rates caused by the Red Sea issue. Freight rates have gone up substantially. This has also impacted freight rates on the import front also. So, these are the main reasons why the gross margin has decreased.
On the Texol capacity utilization, see, currently the Indian plants are practically close to 100%. The Texol plant is currently doing around 70% to 75% capacity utilization. And like we said in the earlier listing, by this year-end, it is expected to reach about 80%-85%. And by next year, we should be around 100%.
Narendra
Okay. So sir, just a follow-up. So do we see the gross margins going up anytime soon?
And also on the Texol plant, so if we aim to reach 100% kind of a utilization, can we expect 500,000 or 550,000 kind of volumes by year-end?
Aslesh Parekh
See, first of all, coming back to your question on the gross margin, we anticipate gross margin will definitely be recovering. We had faced headwind as informed by the CFO in terms of increased freight costs, increased Red Sea issues, and overall large demand in FMCG businesses, which is our core sector. So, we are anticipating a good recovery from the coming quarter onwards. So, we anticipate gross margins to be at the levels which were in the previous phase, to be coming soon for the company.
Coming to your second question on capacity utilization for Texol, although we have been 70% utilized as of this year, we anticipate the volume — current volumes is approximately around…
Indrajit Bhattacharyya
Six total? [Speech Overlap]
Aslesh Parekh
So the total installed capacity is around 235,000 kiloliters in UAE. And annualized, if we do it, we anticipate around 87,000 kiloliters for this year.
Indrajit Bhattacharyya
No, no, what Aslesh Bhai meant is we expect around 2,05,000 KL this year, and the rest of the amount will be picked up by next year.
Aslesh Parekh
Correct.
Narendra
So, I was asking you on the console level, I believe we could easily do 500,000 to 550,000 kiloliters.
Indrajit Bhattacharyya
So we’ll — on year-end, we expect to do around 4,90,000 to 500,000 KL.
Aslesh Parekh
This year.
Narendra
Okay. Okay. And next year onwards, we should be utilizing the whole capacity.
Aslesh Parekh
Excess of of 5,000.
Indrajit Bhattacharyya
Yeah.
Narendra
Yeah. Yeah. Okay. Thank you. Thank you and all the best. Thanks.
Aslesh Parekh
Thank you so much.
Operator
Thank you very much. The next question is from the line of Dakshay from PwC. Please go ahead.
Dakshay Parwani
Hi. Thank you for the opportunity. I have a couple of questions. The first one will be related to the US FDA observation found in the Taloja plant. So, I believe there were two observations found in form 483, right? I just want to know what is the status of it and how critical are those observations on the day-to-day operation of the business. This will be my first question.
The second one, I want to understand, so, we — I think I’ve gone to the PPT and we are already holding 26% market share in India and around 9% globally. I just want to know what is the market size over here we are talking about. So, I’m more interested in are we a small fish in a big pond or are we already a large fish in a small pond? So, I just want to know the overall market scenario, the overall market size in which we are playing. So, this will be my couple of questions.
Aslesh Parekh
Fair enough. Coming to your first question regarding the US FDA, yes, we received two observations which were minor in nature and there is no monetary impact on this observation to answer your question.
Second thing, the form 483, we have to reply within three weeks. The reply to the US FDA authorities has already been filed and we are awaiting further feedback from the authorities there. So, there is no substantial impact and the sales to the US are still continuing as the way it was. That was — I hope that answers your first question.
Dakshay Parwani
Yes.
Aslesh Parekh
And coming back to your second question regarding the capacity, the market, I’ll just share you the details. I’ll just come back to you if you can, come back. Can we just take this question after the other questions, please? We’ll just open the market share slide and get back to you.
Dakshay Parwani
Okay. And also just follow-on of what is the status on the Silvasa capex going on? So I can see a WIP standing in the balance sheet right now. So I think 18,000 —
Indrajit Bhattacharyya
No, Silvasa capex has been completely done with, okay. We have enhanced capacity by 1 lakh KL and that is done. The other WIP that you see in the balance sheet is minor maintenance and regular WIP, capex to that extent. So, Silvasa capex is complete.
Dakshay Parwani
So, currently, the max capacity will be around 5,97,000, right? So, no more than that. So, this will be a max capacity as of now.
Indrajit Bhattacharyya
Right.
Dakshay Parwani
Okay. So, that is it from my side. I could just appreciate if you could come back on the market size.
Indrajit Bhattacharyya
Yeah. Yeah. We will get back on the market size.
Dakshay Parwani
Thank you.
Operator
Thank you very much. The next question is from the line of Anoushka Roy from Trade Brains. Please go ahead.
Anoushka Roy
Hello, sir. Thank you for the opportunity. So, I would just want to follow up on the opening remarks. You had mentioned that you would want to diversify your products and expand into various markets. So, I think at the beginning of the quarter two, the Texol, a subsidiary of yours got an order from Abu Dhabi National Oil Company. So, are we expecting any such kind of expansion going forward, let’s say in H2 of FY25 or FY26?
Aslesh Parekh
See, obviously, the orders from existing customers are very much on ongoing basis. Yes, we do get, some certain exclusive orders, like the one we got in ADNOC in last year. Similarly, we got a similar order from other customers also throughout this year.
As the financial markets worldwide get closer in December, so, maybe new orders, whatever would be expected only, will be in quarter one. We are almost in the end of financial year for the majority of our overseas customers. So, maybe, we may have some feedback on such substantial orders only by early next year.
Anoushka Roy
All right. Okay. Thank you. That will be all for my side.
Operator
Thank you very much. The next question is from the line of Bhavesh Patel from Patel Investments. Please go ahead.
Bhavesh Patel
Hi. Thanks for the opportunity. And my question is regarding the US FDA observations. I heard that it’s under the filing and we are going to close it. But will that open a new market as well as our ability to sell new products?
And the second question is about the utilization of IPO funds for the capex and when would we expect that contribution to top line as well as bottom line?
Aslesh Parekh
Yes, it’s a very good question, especially the first one. Yes, with US FDA audit and the approval almost in place now, we anticipate, our share of exports for this specific products to the US will definitely be going up in the coming year. We are quite optimistic and very hopeful about it. So, we will definitely see improvement to the exports to the US going up in the coming few years.
Coming back to your second question on IPO utilization of.. Mr. Indrajit will give the feedback.
Indrajit Bhattacharyya
So, the IPO utilization of funds is practically complete except for the capacity — the capex being done at Taloja. There is about INR10 crores-INR12 crores of funds still lying over there because this project is expected to get completed by next year. So, that is the thing. Otherwise, all — and a bit of GC — and a bit of those IPO expenses are yet to be reimbursed. That’s it.
Bhavesh Patel
Okay, that’s great to know. And I’m hoping that the H2 will be much better than H1. And in fact, you will be able to increase the dividend also steadily.
Aslesh Parekh
Yes, Mr. Patel, thank you for your…
Indrajit Bhattacharyya
We are also hoping on the same line, sir.
Bhavesh Patel
Absolutely. So, thank you, Ashlesh bhai as well as Indrajit. Best wishes. Thank you.
Indrajit Bhattacharyya
The gentleman from PwC, can we just answer your question right now on the market size?
Operator
Sure, sir. We have them on the call.
Aslesh Parekh
Okay.
Indrajit Bhattacharyya
The global speciality oil market is $125 billion. The Indian speciality oil market is $7 billion. And out of this, the white oil — global white oil market is $3.3 billion. And Indian white oil market is $0.43 billion.
Aslesh Parekh
And also coming back to your question, whether we are a small fish in a big pond or a big fish in a small pond. See, the idea is this is more of an oligopolistic market. It’s like a big boy’s club. The big gets bigger. So, if you see our revenue also, it has increased substantially over the past four to five financial years.
So, that is how the business has been. With bigger volumes comes — bigger volume discounts from our suppliers, we have better bargaining power from our suppliers as well. Thank you.
Operator
Mr. Dakshay, your line has been unmuted.
Dakshay Parwani
Thank you so much for the response. Can I fairly assume that the price that my realization and my margins will be directly depending on the prices of the crude oil? So, if the crude oil goes up, my margins will go up and vice versa?
Aslesh Parekh
No, no, I don’t think it is an absolute 100% correlation. What Mr. Indrajit, intend to tell you was because of the shipment delays, because of the Red Sea movements, because of this Israel-Iran ongoing tussle going on, there were some delays — some shipment which got delayed because of this. And the product arrived a little bit later than expected. That is why there was a little bit reduction in the margins specifically in this quarter.
So, there is a time lag from moment of crude oil price to our finished product pricing. And we do have some contracts with some of our customers where the pricing is on a price pass-through basis contract as well. So, it is not a safe assumption to be direct correlation of crude oil pricing.
Indrajit Bhattacharyya
Yeah, there is no one-to-one correspondence.
Dakshay Parwani
Okay. And also, I understand that in the last concall, you had mentioned that we have entered into a pass-on contract with the customer. So, any increase in the freight cost and delay and everything would be passed on to the customer, right, so we won’t be….
Aslesh Parekh
Yeah, it is a price pass-through contract. So, the freight price, the raw material pricing are being passed on to the customers as and when the situation arises.
Dakshay Parwani
But still our margins were impacted in this quarter.
Aslesh Parekh
Yes. So, with the price pass, see, the — there are — as I informed earlier during the presentation, I think around 30 to — around 25% to 30% of our business is on price pass-through contract. And balance, these are spot contracts which are priced every 15 days.
Now, as I informed to you, because of the delayed shipment, some shipments arrived little bit later than expected, so that specific sales we could not materialize the sale at that selling price. We have to work as for the market. So, that is why the realization had reduced.
Dakshay Parwani
I understand. Thank you so much for your answers. Wish you a good luck.
Aslesh Parekh
Thank you.
Indrajit Bhattacharyya
Thank you.
Operator
Thank you very much. The next question is from the line of Mohammed Farooq from Pearl Capital. Please go ahead.
Mohammed Farooq
Good evening. Thank you for the opportunity. In your previous forecast, you mentioned an annual sales growth to be 10% to 15%, and the goal to increase capacity and utilization both in Sharjah and the Taloja plants. Could you please, provide an update on where we currently stand in relation to these targets and share any guidance for the remainder of the year, please?
Aslesh Parekh
So, capacity utilization, I tell Mr. Bhattacharyya to give you a brief rundown on the capacity utilization once again.
Indrajit Bhattacharyya
So, the capacity utilization of the Indian plants are practically at the 90%-95% levels. The capacity utilization of the Sharjah plant is at 70%. We expect it to reach 80%-85% by this year end and next year we expect it to reach close to 90-odd percent — 90%-95%. So, this is the capacity utilization part of it.
Mohammed Farooq
Okay. Sir, what about the growth targets, 10% to 15% annually?
Indrajit Bhattacharyya
So, we are looking at volume growth between 10% to 12% definitely and we’ve been achieving that also till now. So, we are confident of achieving a 10% to 12% volume growth.
Mohammed Farooq
So, this year you are not going to achieve that — for this year, current year, full year?
Aslesh Parekh
See, we are on course of achieving our volume growth with the volume has increased and normally historically if you see our second half is always better than the first half. So, we are quite hopeful that we will be in a position to cover up the momentum which has been impended because of the global situation.
Mohammed Farooq
Okay. So, now you have given a couple of reasons for the drop in the operating profit margin for this quarter Q2, like shipment delay or drop in oil prices. Yeah. So, do you think that these drop in margin will be offset in the Q3, that you will get benefited in Q3 because the delay in shipment or prices drop in oil price, those things will be reversed in Q3 numbers?
Aslesh Parekh
It will be difficult for me to give you a forward-looking number or a forward-looking statement in terms of whether the margins will increase or decrease. But yes, with the things in better control, we anticipate and we are very hopeful that we will be in a position to achieve better than what we have achieved in quarter two.
Mohammed Farooq
So, finally, what would be your projected EPS for Q3, please?
Indrajit Bhattacharyya
Projected what?
Aslesh Parekh
EPS?
Mohammed Farooq
Yeah
Aslesh Parekh
For Q3.
Mohammed Farooq
Yeah, projected?
Indrajit Bhattacharyya
No, no, no. We’ll — so, it will be better than the present quarter, okay? But — this thing, so, you are talking about projected net profit, and I couldn’t hear your question.
Mohammed Farooq
No, earning per share. Now, you are 1.9….
Aslesh Parekh
Earning per share.
Mohammed Farooq
Yeah. Earning per share is 1.9..
Indrajit Bhattacharyya
Yes, it’s a bit too narrower question to answer as to what will be the EPS.
Mohammed Farooq
Yeah.
Indrajit Bhattacharyya
So, it will be better than definitely what it is this quarter.
Mohammed Farooq
Okay, okay. But full year, compared to like the last year, it is INR16.7 EPS. Last year, full year was INR16.27. What would be your full year EPS?
Aslesh Parekh
[Foreign Speech] If you can just….
Indrajit Bhattacharyya
Speak up a bit louder.
Mohammed Farooq
Yeah, yeah, last year, full year EPS was INR16.27. So, what would be your projected EPS for current year?
Aslesh Parekh
It’s difficult for us to predict the future forecasting. But we are — at company, we are trying our level best to improve our margins, to improve our profitability and thereby improve our EPS, and give valued benefit to our shareholders and stakeholders.
Mohammed Farooq
No, I don’t need the exact number. I just want to say whether it would be same as last year, at least, or more — greater better than last year, EPS.
Aslesh Parekh
Sir, it — normally, we don’t give such guidance. But definitely, as I informed you earlier, it will be — we are definitely working harder to achieve, to have a better quarter for the coming two quarters. And as informed earlier, our second half is always better than the first half. So, we anticipate things will be in a better position for the coming quarters.
Mohammed Farooq
Okay. Thank you. All the best.
Aslesh Parekh
Thank you so much.
Operator
Thank you very much. The next question is from the line of Sahil Vora from M&S Associates. Please go ahead.
Sahil Vora
Hi, good afternoon. I just had one question. So, given the impact of the Red Sea crisis and challenges in the FMCG sector on our margins, along with the measures that we have already taken such as adjusting contracts to cover rising input costs and shifting freight costs to FOB, what are the key risk areas should we consider? And how are these adjustments currently affecting our overall revenue and margin?
Indrajit Bhattacharyya
So, see, things are looking up. I mean, just off the record, yesterday, I read somewhere that with the — with the victory of Mr. Trump as the President of USA, the Red Sea issue should come to a standstill very shortly. It should not be there. I mean, these things are for the future to tell. But there is very high hope that the Red Sea issue should get settled very shortly. So, in that case, our exports are expected to pick up and come back to the previous year’s levels. And the margins will also improve on that account.
On the FMCG, things are looking up. We’ve had a good monsoon. Rural demand is picking up. We expect margins to also come back. The gross margins and EBITDA per KL also to improve on that account.
Sahil Vora
Understood. Thank you, sir, for the detailed response. I’ll join back the queue if I have further question. Thank you.
Aslesh Parekh
Thanks.
Operator
Thank you very much. The next question is from the line of Darshil Shah from TBC Capital. Please go ahead.
Darshil Shah
Hi, good afternoon. My first question would be, could you share the blended volume growth and the PHPO volume growth for this quarter?
Indrajit Bhattacharyya
Yeah. You can ask your next question till them.
Darshil Shah
I’m sorry.
Indrajit Bhattacharyya
You can ask the next question while we dig out this figure.
Darshil Shah
Okay, sure. My next question is, while I understand the revenue has seen only a marginal decrease, could you also help to clarify the factors that contributed to the significant drop in profit after tax on — quarter-on-quarter basis?
Indrajit Bhattacharyya
Yes. So, the main reason for that is the decrease in the gross margins. See, when my gross margin decreases, it has an impact on EBITDA and PAT both. See, your fixed costs remain fixed to a certain extent. Beyond that, you can’t reduce your fixed costs. So my — although there’s hardly any borrowing in the company, the interest cost is reduced, but the administrative costs, the fixed costs will carry on at the same level.
So, a decrease in the gross margins will lead to a decrease in EBITDA and the PAT.
Aslesh Parekh
Yeah. Coming back to your first question, the PHPO volume has been 57,651 kilolitres in Q1 of ’24-’25, and in Q2, it has been 58,464 kiloliters.
Darshil Shah
Okay. Thank you. Thank you so much.
Operator
Thank you so much. The next question is from the line of Yash Dantewadia from Dante Equity. Please go ahead.
Yash Dantewadia
Yeah, am I audible?
Operator
Yes, Mr. Yash. You are.
Yash Dantewadia
Yeah. I just want to understand a couple of things. Why is our interest cost so high? We have a debt of — borrowings of, I think, INR225 crores, but we are paying an interest out of INR11 crores per quarter approximately, right? And it was even more higher prior to this. It was at INR14 crore-INR15 crore. So, I really don’t understand why the interest rate is that high for us.
Indrajit Bhattacharyya
Okay. So, there is hardly any debt on the standalone level, okay? But there is substantial debt on the subsidiary level at Texol level for which we are financing — for which we are incurring the interest cost.
Yash Dantewadia
Sir, the question is…..
Indrajit Bhattacharyya
In terms of whatever we pay in finance terms — in terms of finance cost, our interest cost for the standalone business, we incur some SOFR plus lending — interest cost on the supplier’s credit and LC discounting. So, that is there. Otherwise, there is no debt in our balance sheet on the standalone level.
Yash Dantewadia
But don’t you think for a… See, the consolidated debt figure that it’s showing in — on my screen right now is INR225 crore. And we are — we have an interest outgo of almost INR50 crore-INR60 crore on INR225 crore. So, I am not able to understand why the cost of interest is that high. Is the INR225 crore wrong then?
Indrajit Bhattacharyya
Is the INR225 crores, sorry?
Yash Dantewadia
Borrowing number that I have, INR225 crores, consolidated number, is that wrong?
Indrajit Bhattacharyya
Let me dig it out. So, 130 plus 27. Yes. So, the debt amount that you are talking about is that only. So, we are not able to understand what is exactly your question. So, the rate of interest you mean to say is high?
Yash Dantewadia
So, my question is, we have a consolidated debt of close to INR225 crore. But our interest outgo per quarter on an average over the last four quarters has been INR50 crore. That comes to an interest rate of 25%. My question is, why is the interest rate on INR225 crores, interest outgo that high?
Indrajit Bhattacharyya
Just a minute. My finance cost is not INR25 crores per month, per quarter.
Yash Dantewadia
It is not INR25 crores per month. I said INR15 crore per quarter, which translates to approximately INR40 crore to INR50 crore per year.
Indrajit Bhattacharyya
It is INR11 crores in the previous quarter. In this currently consolidated quarter, it is INR12 crores in the previous quarter.
Yash Dantewadia
So, for me, I am looking at the figure that is showing, yeah, INR11 crores for the previous quarter, before that it was INR13 crores, before that it was INR14 crores, and before that it was INR16 crores. That gives me an average of INR13 crores per quarter. INR13 into 4 gives me INR52 crores, right, for the last four quarters, while the substantial debt amount has remained approximately that INR225 crores figure. So, on a INR225 crore or INR250 crore debt, why are we paying INR50 crores of interest outgo? That’s what I am trying to understand from you, per year.
Indrajit Bhattacharyya
I will have to get back to you on this. I am not commenting right now. Let me go through this. I will get back to you on this.
Yash Dantewadia
Yeah, Yeah. So, this is my first question. Coming to my second question. Can I also understand your operating leverage in your Sharjah plant, right? You said in your previous call that you are expecting the capacity utilization to go up to 100% in your Sharjah plant by FY26. My question to you is what kind of operating leverage will kick in and what is the capacity utilization and are we expecting a margin expansion because of the operating leverage? Because, like you said to the previous caller that you have fixed costs, right? So, obviously, if the capacity utilization goes to 100%, a lot of operating leverage should kick in which should increase your operating margins. So, could you throw some light on that?
Aslesh Parekh
See, the operating — Texol as we informed earlier, the capacity obviously, the 100% utilization level will be — we expect to reach 100% utilization by FY25 — end of FY25 or early FY26. Once that kicks in, the economies of scale operates in terms of fixed costs, in terms of my tank capacities and so on. So, it will be difficult for me whether what will be the amount — exact quantum of margin expansion that will happen, but definitely yes.
Once the utilization is above 100%, then definitely the fixed cost will come down and there will be a margin expansion. Over and above that there is a loan which has — which also will be repaid from our…
Yash Dantewadia
Can you quantify the margin expansion, sir, please? And what is the present capacity utilization?
Aslesh Parekh
The present capacity utilization is…
Indrajit Bhattacharyya
Around 70%. Okay. And see, the volume discounts will increase. The volume discounts, as we increase the volumes, the size of the discount also increases. It currently is around $10-$12 KL, which will also is expected to increase as our volume offtake increases.
Yash Dantewadia
Right, right. So, basically, is the margin expansion measurable, sizable, anything on that front? You said the discounts are going to increase, but can — is it possible to get a 100 bps-150 bps sort of margin expansion?
Indrajit Bhattacharyya
We also hope that it works out.
Yash Dantewadia
Right. Right. Okay. I have more questions, but I’ll come back in the queue.
Aslesh Parekh
Thank you.
Yash Dantewadia
Thank you.
Operator
Thank you very much. The next question is from the line of Manda Agarwal from AB Associates. Please go ahead. Manda Agarwal, your line has been unmuted. Please proceed.
Manda Agarwal
Hello. Am I audible?
Aslesh Parekh
Yeah, Ms. Manda, you are audible.
Manda Agarwal
Hi, thank you for the opportunity. So, my question is, could you provide some guidance on volume growth for the current year? Specifically, what growth are we targeting for FY25?
And additionally, can we expect any improvement in per liter margin? And regarding our subsidiaries, what level of utilization are we aiming for this year?
Aslesh Parekh
See, as informed earlier, the utilization as of now is around 70% for our Dubai plant. We anticipate to be around 80% by end of this year for our UAE plant.
Now, as far as our growth forecast for FY25 or second half, obviously, historically our second half has been a better-performing half compared to our first half. So, we anticipate the volume growth will be better than the first half growth. Hello? Hello?
Manda Agarwal
Okay, okay. Hello. Thank you.
Aslesh Parekh
Yeah.
Operator
Thank you very much We will take that as the last question. I would now like to hand the conference over to Mr. Siddhesh Dharmadhikari for closing comments. Please go ahead, sir.
Indrajit Bhattacharyya
Ma’am, the gentleman whose question we couldn’t answer, can we have his number, please?
Operator
Sure, sir. We will get back to you with them.
Indrajit Bhattacharyya
Okay. Okay.
Siddhesh Dharmadhikari
Thank you. And I would like to thank the management for taking this time out for this conference call today. And thanks to all the participants. If you have any queries, please feel free to contact us. We are Orient Capital, Investor Relations Advisor to Gandhar Oil Refinery India Limited. Thank you so much.
Operator
[Operator Closing Remarks]