IG Petrochemicals Limited (IGPL) Q3 FY23 Earnings Concall Transcript

IG Petrochemicals Limited (NSE:IGPL) Q3 FY23 Earnings Concall dated Feb. 03, 2023.

Corporate Participants:

Pramod Bhandari — CFO

Analysts:

Aditya Khetan — SMIFS Institutional — Analyst

Nirav Jimudia — Anvil Research — Analyst

Rajesh Jain — NB Investments — Analyst

Yogesh Tiwary — Arihant Capital — Analyst

Unidentified Participant — — Analyst

Anshul Mittal — Care Portfolio — Analyst

K B Sankara Rao — — Analyst

Chirag Vekaria — Budhrani Finance — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the I G Petrochemicals Limited Q3 and nine months FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements of the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

[Operator Instructions]

I now hand the conference over to Mr. Pramod Bhandari, CFO, I G Petrochemicals Limited. Thank you, and over to you, sir.

Pramod Bhandari — CFO

Thank you. Good evening, everyone. On the behalf of I G Petrochemical, I extend a warm welcome for joining us on the call today. On this call, we have owned by SGA, our Investor Relation Adviser. I hope everyone had an opportunity to go through the financial results and the investor presentation, which has been uploaded on the Investor exchange and or our website.

To begin, I would like to give you a quick overview of resin development in chemical industry, followed by the operational and financial performance of I G Petrochemical. Given the listing advantage of Indian market, many chemical manufacturing in India is reputed reap the benefit of being an LTT supplier to the global market. Although in the same time, the chemical industry has been facing huge cost pressure due to multiple headwinds like stick cord policy in China, policy tightening across the Central Bank, higher energy prices in Europe, other geopolitical incentive, which has basically the overall consumption right from textile to paint in the global market.

Despite multiple headwinds, many organizations players have been able to sell through it and had a nominal impact on their business. Over the last two quarters, overall global freight cost has also normalized, sale has been mirrored in the import parity price of the many imported groups, including phthalic anhydride. Phthalic anhydride is our main product, and we have not only final in India, but also we have imprinted our total leadership in it since our foundation. It is used as a intermediary product, with paint, resin, pigment, PR, and many other specialty chemicals. We produce Phthalic Anhydride, Maleic Anhydride, Benzoic Acid and recently started the production of Advance Plasticizers DEP at our plant at Taloja. We are delighted to say that our PA 5 project, which is the 5th product of Phthalic is under progressing well and we are target to commence the same by March 2024.

In terms of operational highlights, before we move to quarterly result, let me give you a context of recent development in paint and individual industry. We have witnessed a few hiccups in the demand of the paint during the quarter gone by specifically post festive season of Deepawali. Our product find application in more than 20 usage industry, how revenue contribution from paint plasticizer pigments are more than half and these market are facing a subdued demand in the global market, mainly the China has introduced the anti-dumping duty CPC which has resulted domestically the slowdown and the sundown on the few of the CPC players in India which comprised around 15% to 20% of overall customer-base.

On the other hand, US, in October also improved the anti-dumping duty of 400% of the UPR, which has decelerated overall demand of PAN, however the same has been burned down in December. That has increased the stockpile globally. Globally the UPR is an important major market for PAN. During the year-end, we observed that apart from the increasing the stocks for the company, lot of companies are — because the price was declining, were destocking their stocks across the customer segment, especially in UPR and pigment, as same has been echoed in the price and the spread of paint. Despite this, we have registered a resilient performance in overall business. Now we are seeing the uptick in the demand in January-February and going-forward. And destocking is also over now we have seen the good demand across all the segments.

Coming to our operating performance and the financial performance for the Q3 FY ’23. The revenue stood at INR525 crore, a growth of 3%, EBITDA is 55% with a margin of around 10.5%. Overall, margin has been infected primarily due to the 8% to 10% drop in the volume, which has resulted into lower contribution of the bank as well as the realization of PAN. We have made a provision of around INR11 crore on on account of M2M on the forex of the euro. INR8 crore is reflected in the M2M and INR3 crore is a part of financial cost. Lower spread between OS and PAN because of the overall global market is also highlighted few minutes back. Despite lower spread, we are able to register a profit of INR25 crores. Had it not been the forex M2M and the lower of the production, the margin — PAT margin would have been much better.

On nine-month performance, the total revenues stood at around INR17.64 crores, a growth of 29%. Revenue contribution of non-Phthalic business sales at INR129 crore, a growth of around 36%, which include mainly the Maleic Anhydride, Benzoic Acid and the DEP. EBITDA for nine months stood at INR270 crores, operating margin at 15% and profit-after-tax at INR162 crores, a margin of around 9.2%. As on December, Company’s net-debt negative — basically the net-debt negative by INR200 crores, that means we have a higher cash than the debt.

We have more than INR300 crores of cash in the balance sheet right now. We have forward in our market per-capita consumption of many goods and services that find application in the [Indecipherable] quite low. We anticipated good demand of paint and if David will continue to expand it healthy rate. This is because the rising income and ongoing government spending and focused on the infrastructure, which will create a lot of opportunities for — in long-term story of India is still intact and the same has been, most by many global. Phthalic Anhydride is a very essential chemical and fine end application in most of the other chemistries and the down streams.

India still input around 8,000 to 10,000 ton of Phthalic in the domestic market. We are in permanent and perfect manufacture of Phthalic. We are well-positioned to capitalize the upcoming demand. On the other hand, we continue to explore the opportunity in the downstream derivatives segments and committed to diversify our product portfolio. Revenue contribution from non-Phthalic has also been growing at a healthy rate. We believe that we have laid a strong foundation of our future. We will continue to maintain our growth trajectory.

With this, we’ll also open the floor for the question-and-answer. Thank you.

Questions and Answers:

Operator

[Operator Instructions]

The first question is from the line of Aditya Khetan from SMIFS Institutional. Kindly proceed.

Aditya Khetan — SMIFS Institutional — Analyst

Yeah, thank you, sir for the opportunity. Sir, first question into your initial remarks, you mentioned that China has imposed some anti-dumping duty, if you could give more clarification what was that I missed that point.

Pramod Bhandari — CFO

So basically, they have pulled the anti-damping duty on the CPC and the pigment, so lot of players in India, which are generally manufacturing in India selling it to China, they find it very difficult. That plus the one part of the second part of the COVID disturbance in the China that has resulted in lower demand of Phthalic in CPC segment. Most of the CPC — all the players of the CPC are our customers.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. And also similar anti-dumping duty on UPR is imposed in the US that has also led to — [Speech Overlap]

Pramod Bhandari — CFO

That in October-November-December. October, they have imposed 400% duty. On UPR, Indian players are sending their product — final product of UPR to US. They pull the duty in October, and withdrawl in December.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, so how is the demand right now like I mean is missing right now — [Speech Overlap]

Pramod Bhandari — CFO

Right now — Looking at the last quarter and the performance on the demand, the quarter which we are starting right now, the demand is very good. In fact, guys who has done the de-stocking on their product, demand is coming from both sides first, they need to stock. And second, there is demand for the actual products. So what we have seen in last quarter, you can say exceptional cases where the everything happened together. The China, the US overall demand. And now the demand is again get back to the normalcy.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. But the anti-dumping duty in China. so that remain. So now we have to wait or should the demand picks up?

Pramod Bhandari — CFO

That remains. So that why we are seeing the slow pickup in the CPC and pigments.

Aditya Khetan — SMIFS Institutional — Analyst

Okay.

Pramod Bhandari — CFO

But we are not that much worried because we have diversified, we have supplied to almost all the chemical and chemistries. But in that side slightly the growth is — we are able to see the growth, but it’s low compared to the other segment.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. And sir, the volumes for the quarter, you mentioned, they have also decline by 8% to 10%. So, typically we have 52,000 to 53,000. This time, we have around 49,000. Any particular reason, sir?

Pramod Bhandari — CFO

No, no. That is of production and typically we sell 52,000, 51,000 — 56 — 46,000 around.

Aditya Khetan — SMIFS Institutional — Analyst

56,000?

Pramod Bhandari — CFO

46,000.

Aditya Khetan — SMIFS Institutional — Analyst

Around 46. Okay.

Pramod Bhandari — CFO

8% to 9% lower.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. So that has resulted — it was shutdown or is it because [Speech Overlap]

Pramod Bhandari — CFO

It was a shutdown for 25 days for two of the units, so as to hook-up with them and for PFI.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, 25 day shutdown we had taken. Okay, yeah.

Pramod Bhandari — CFO

That is more 10 day for one and 15 days for another day.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. So next quarter definitely there would be volume growth at least we can expect?

Pramod Bhandari — CFO

There will be a volume growth or you can say normalcy in the volume.

Aditya Khetan — SMIFS Institutional — Analyst

Normalcy in the volume. Okay. Sir considering — [Speech Overlap]

Pramod Bhandari — CFO

Between 50,000 to 52,000 per quarter.

Aditya Khetan — SMIFS Institutional — Analyst

Yes, got it. Sir, into the export side, so we had witnessed that in the month of October, November and December, there were huge inventories which has been lined-up and because of that when demand has started to weaken hence we had seen lot of inventory liquidations across the globe. So how is the export market now shaping up?

Pramod Bhandari — CFO

Export is good, we sold more than 6,000 ton in export. Exports is doing very well much. Now the domestic demand is also good, so generally we maintain the same of 10% to 15% of our product to be sold in export market, 80% to 85% in domestic market.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. And domestic demand is anyway strong. So there is no big impact considering — [Speech Overlap]

Pramod Bhandari — CFO

Yeah, It is same, now it has come to normalcy. I think there was some disturbance in November and December.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. Sir, if you can share the revenues for — so for DEP business for the quarter?

Pramod Bhandari — CFO

So all the DEP, Maleic, everything was INR15 crores. Around INR15 crores. Because the Maleic prices has gone down, so typically we are expecting INR20 crores to INR25 crores of the revenue from Maleic, but this time since the there was a sundown, the lower production of Maleic and price realization on Maleic was also on lower side, so INR15 crores was the revenue from Maleic.

Aditya Khetan — SMIFS Institutional — Analyst

INR15 crores from Maleic. And sir from Phthalic — sorry. So from DEP?

Pramod Bhandari — CFO

Bit same, INR14 crores to INR15 crores.

Aditya Khetan — SMIFS Institutional — Analyst

Okay.

Pramod Bhandari — CFO

INR7 crores is the other income which is the interest income of the investment.

Aditya Khetan — SMIFS Institutional — Analyst

Got it. Sir on to the spreads part now, so sir we are again back to the historical spreads like when we used to make around $150 to $200 per ton.

Pramod Bhandari — CFO

Yeah, typically it was around 100 for last quarter. Now we are running between 170 to 200. Again, which is historically average.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, so this quarter was around $100 per ton, but current spreads are $170 to $200.

Pramod Bhandari — CFO

Correct.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. And sir, it’s there any impact on one point which I need to highlight?

Pramod Bhandari — CFO

The result was impacted because we have our debt facility for [Indecipherable] in Europe and we have provided INR11 crore rupees on account of M2M charges on the ForEx depreciation of the euro, from INR79 to INR88 against euro versus the rupee in quarter, so we need to provide INR11 crore rupee on M2M ForEx charges. This INR8 crore has been provided in foreign-exchange gain and loss and INR3 crore has been provided into the financial cost.

Aditya Khetan — SMIFS Institutional — Analyst

Got it. Sir, just one last question. Sir, onto the auto rising prices, sir for the — for this quarter we are witnessing that auto rising prices were moving up quite fast. And current trend also they’re at the — you can take around INR95 to INR100 per kilo. How you see the trends are right now, considering the Phthalic Anhydride prices, they are not moving up, but the spreads are declining. So what is your outlook onto the OS prices only?

Pramod Bhandari — CFO

So I think it is very difficult to predict the prices of the crude oil or any of the intermediative product of the petrochemical. I think we are not worried about what is the prices of OS. We are just looking at what is the margin, so even if prices are INR80, INR85, INR90, it doesn’t matter for us, because we have made sufficient banking limit to take care of the raw material requirements. What we are always concentrating on is the margin. Right now margin is fairly between $170 to $200.

Aditya Khetan — SMIFS Institutional — Analyst

Okay. And sir you’re forcing so for the current quarter in terms of demand. So where it can take any impact?

Pramod Bhandari — CFO

I think I would like to avoid the question for the forward-looking. I think for the next quarter, our Board meeting expected in May, we can discuss about that.

Aditya Khetan — SMIFS Institutional — Analyst

Sure, sir. Thank you, sir. That’s it from me.

Pramod Bhandari — CFO

Thank you.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Nirav Jimudia from Anvil Research. Kindly proceed. Excuse me, Mr. Nirav Jimudia.

Nirav Jimudia — Anvil Research — Analyst

Hello.

Operator

Yes, sir. We can hear you now.

Nirav Jimudia — Anvil Research — Analyst

Sir, I think in your opening remarks you mentioned that pigments had an impact in Q3. So if you can just help help us explain that when we started this financial year or probably H1 of FY ’23 and take it on a base of 100, so let’s say the demand was 100 when we started the year or probably in H1, how much the demand has fallen in Q3? And from the Q3 levels, how much it has improved now? So if you can just share.

Pramod Bhandari — CFO

You are talking about only CPC segment?

Nirav Jimudia — Anvil Research — Analyst

Yeah, so pigments, because I think that was the — [Speech Overlap]

Pramod Bhandari — CFO

We typically sell between 10% to 15% of our overall production to the CPC and pigment segment. I think India has four or five plants, out of that three or four plants were shut during the one or two months and now the plant has started, but demand has pick up to 50% to 60%, still we are able — yet to see the full demand pick up in the pigment segment.

Nirav Jimudia — Anvil Research — Analyst

So sir, let’s say, on a quarterly basis, if our sales volumes is 50,000 tonnes, we typically sell something around 7,000 to 8,000 tons.

Pramod Bhandari — CFO

Yeah, 10% to 15%, correct.

Nirav Jimudia — Anvil Research — Analyst

Yeah, so 7,000 to 8,000 tons. That demand is falling to literally nil or let’s say few 1,000 tons and that has now recovered 50%, so 15% of 7,000 tons, right?

Pramod Bhandari — CFO

Correct. 3,000, 3,500.

Nirav Jimudia — Anvil Research — Analyst

Got it.

Pramod Bhandari — CFO

It’s keep on changing every quarter and every month based on the demand.

Nirav Jimudia — Anvil Research — Analyst

Correct.

Pramod Bhandari — CFO

I think the China duty is one part. Second, there was some challenges in the China because of the COVID, because China has opened up. We are able to see the gradual improvement in the demand.

Nirav Jimudia — Anvil Research — Analyst

Correct. Sir, the second question is on the new Phthalic plant which is going to be commissioned by March. So when we compare across our all Phthalic plants which we have setup? Whenever we have some interaction, you mentioned that every time we used to have some cost advantage over the previous Phthalic plant. So if you can just walk us through the cost advantage in terms of the new Phthalic plant vis a vis the latest plant, which we have commissioned. That would be helpful?

Pramod Bhandari — CFO

So basically Phthalic — every Phthalic plant advantages because the plants has the same location, so all the utilities and infrastructure and land which you need to have for a new plant will not be there, number-one; number second manpower is almost same except some labor lower level management people are recruited where as all management cost will remain more or less same. So overall cost of production, which is typically 120 when we started first plant to 150, it was 100, 220 right now from the conversion cost is $75 to $80 for the new plant, which is the lowest.

Nirav Jimudia — Anvil Research — Analyst

Correct. So safe to assume that whatever — so whenever this new Phthalic plant will come probably the cost would be, again, 15%, 20% lower than this, — [Speech Overlap]

Pramod Bhandari — CFO

Existing set up.

Nirav Jimudia — Anvil Research — Analyst

Correct. Yeah. Okay. So thanks a lot sir and all the best.

Pramod Bhandari — CFO

Thank you.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Rajesh Jain from NB Investments. Kindly proceed.

Rajesh Jain — NB Investments — Analyst

Good evening, sir. Sir, I did not get this non PAN sales, you said INR15 crores or 15 plus 15?

Pramod Bhandari — CFO

So INR15 crores for Maleic, INR15 crores for DEP and INR7 crore for investment — interest in the investments.

Rajesh Jain — NB Investments — Analyst

So totally INR30 crores is the last. Okay, plus INR37 crores. And what is the EBITDA for this segment, sir, for these non-PAN products?

Pramod Bhandari — CFO

It is not possible because Maleic generally, because whatever is the revenues, EBITDA, because there is no other raw-material is required. Maleic, of course, today the prices of the Maleic and the last quarter has gone up around 10% to 20% below. So for us as such there is no challenge because whatever is the revenues, we generally expect between INR20 crores to INR25 crores quarterly basis this time because the production was low and the pricing was low, we were able to realize around INR14 crores to INR15 crores. And there is no specific EBITDA, you can assign because it will be wrong to assign because there’s no raw-material involved. You are realizing that mainly from the wash water Phthalic.

Rajesh Jain — NB Investments — Analyst

Okay, sir, what is the reason for this weakness in the demand for Maleic?

Pramod Bhandari — CFO

I think the key reason was on China, which has set-up a lot of plants for the purpose of using the Maleic for the BDO to PBAT and TBT. Since lot of PBAT, TBT and BDO plant has not started or started and doesn’t have direct demand, so they are trying to sell a lot of BDO to Maleic in international market, which has compressed the margin for Maleic. However, having said that, the pricing was around 800 to 900, now it has improved to around 1100 to 1200 for Maleic.

Rajesh Jain — NB Investments — Analyst

So the way you are saying, it looks like from Q4 things would be back to normal or would be take one more quarter for the Maleic to — [Speech Overlap]

Pramod Bhandari — CFO

I think for Maleic it is improving gradually. I believe that once it is fully improved, we will be able to see the impact in the market. Right now at fully improved level the revenue from the Maleic at full production, we are expecting around INR20 crores to INR25 crores, which will be annualized INR100 crore.

Rajesh Jain — NB Investments — Analyst

Okay. Sir, my next question is, if you see this quarter sales, it’s around INR518 crores. And similarly in last year March quarter, we had almost INR517 crores. Now, the net profit made during march was INR73.6 crores. Whereas this time it is INR25.5 crores. No, you had already given me the currency loss of around INR11 crores. So that means whatever the difference is all due to the lower realization in the project. That’s right. Phthalic as well as lower production of Phthalic and Maleic and lower addition of. Okay, lower realization of both the products, as well as the volume also.

Pramod Bhandari — CFO

Correct.

Rajesh Jain — NB Investments — Analyst

Sir my third question is, like we have given our announcement about formation of the subsidiary. If you could give some details about that?

Pramod Bhandari — CFO

So companies exploring various opportunities to look at though excluding the opportunities for the downstream product as well as marketing of the panic product as well as sourcing of [Indecipherable] For that purpose, we thought to setup a subsidiary and maybe we may be setting up of office also on that purpose.

Rajesh Jain — NB Investments — Analyst

Okay. And lastly you have already hired some spare land and looking scouting for new land also regarding for the downstream products. Any latest update on that?

Pramod Bhandari — CFO

I think it is under progress. The once to finalize it, we will be able to inform, it is under process. Land is not that easy transaction to go-ahead with, so a lot of dividends is required that is under process.

Rajesh Jain — NB Investments — Analyst

Okay, sir, this we have been hearing for last few quarters. So what I wanted to ask is, the prefy comes to stream, wiil the management do not want to venture into any other CapEx-related this one.

Pramod Bhandari — CFO

We are simultaneously working on two or three projects. So right now, it will not be fair to share the because it is to be approved by the Board once we finalize it, but there is a lag on the project, it will directly come into the Board and public domain. Till then I would not like to prefer to comment on that.

Rajesh Jain — NB Investments — Analyst

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

Pramod Bhandari — CFO

Thank you.

Operator

Thank you.

[Operator Instructions]

The next question is from the line of Aman Vishwakarma from RoboCapital. Kindly proceed.

Pramod Bhandari — CFO

Hello, Mr. Aman Vishwakarma. Mr. Vishwakarma, can you hear us. There is no response we’ll be move on to the next question. The next question is from the line of Yogesh Tiwary From Arihant Capital. Kindly proceed.

Yogesh Tiwary — Arihant Capital — Analyst

All right. Good afternoon, sir. So sir, my first question is, after the new plant comes up the PFI, what would be your branded cost of production for our company for Phthalic Anhydride approximate?

Pramod Bhandari — CFO

I think slightly 5% to 7% lower than what it is today. Conversion cost today is around $80 to $100, it will be $70 to $75 conversion cost. Apart from that there is a fixed-cost of manpower and all that. You can say 4% to 5% lower than blended compared to what it is today.

Yogesh Tiwary — Arihant Capital — Analyst

Sure, sir. And sir, in terms of the new Phthalic this year pipeline coming, what would be the incremental production we can do for Maleic Anhydride.

Pramod Bhandari — CFO

So for It will be 52, 50,000 tons for Phthalic; and Maleic, we are expected to add around 2,500 to 2,600 tons. Today, we are expecting 7,000, 7500 for Maleic, it will be 10,000 plus minus 2%, 3%.

Yogesh Tiwary — Arihant Capital — Analyst

Sure, and lastly, just on the raw materials. So is there any increase in orthoxylene prices in the current quarters?

Pramod Bhandari — CFO

Orthoxylene prices for the last quarter, which we are talking about has moved from INR95 to say INR80. And right now is hovering around between INR80 to INR85.

Yogesh Tiwary — Arihant Capital — Analyst

Sure. Thank you. That’s all from my side. Thank you, sir.

Operator

Thank you. [Operator Instructions]. The next question is from the line of [Indecipherable]. Kindly proceed.

Unidentified Participant — — Analyst

Hello.

Pramod Bhandari — CFO

Yeah.

Unidentified Participant — — Analyst

Yeah, good evening, sir. I have a couple of question. My first question is, — [Speech Overlap]

Pramod Bhandari — CFO

Your voice is not clear. Can you pickup your handset please.

Operator

Are you using the handset, sir. Can you please use the handset.

Unidentified Participant — — Analyst

Now is it okay?

Pramod Bhandari — CFO

Yeah, it’s fine.

Unidentified Participant — — Analyst

So my first question is, how effective is the anti-damping duty took up the dumping of TA into the country like, have you seen any incentives from the suppliers, there has been some other ways to overcome this duty variance?

Pramod Bhandari — CFO

So anti-damping duty was in-place for a couple of years back. Than it has been removed, then it has been added for some of the countries for some of the players, it is there, some of the players from the same country is not applicable. In generally, the country-wise. and the player-wise. So right now in some of the places with the anti-dumping duty and that is also nebulized that means it is in some places, it’s basically. 5%, 7%, 8%, the slabs has been given. So anti-dumping duty is generally applicable in case there is just too much dumping happening from outside India. But as you know that India is deficit of one lakh ton. So in any case, 8,000 to 10,000 ton is imported in India. Last quarter, when the demand was low in India. You have seen the overall import in India has also gone down from 25,000, 26,000 tons to 16,000 tons. But so long as the demand is there, more than what is supply in India import has to happen, irrespective of duty. So right now, intensive little impact of duty, because right now what is important in India is the actual requirement which is deficit. And deficit because also we are also exporting 10% to 15%, plus the actual deficit both put together, India has two input deck.

Unidentified Participant — — Analyst

Okay, and another question is Mike, what is the industry so-called off Marcelo candidate Relugolix Mike has seamlessly consolidated amongst your peers or is it fragmented.

Pramod Bhandari — CFO

So. I think in global market overall in the Phthalic side, there is no asset new plant is coming up, because everybody which has a refinery petrochemical, they have a Phthalic, but Phthalic is less than 1% of the overall scheme of when you talking about the big player. And no new production expected to come up to when we see the demand is going into downstream, a lot of new industries like. UPR. Specialty Chemical, agrochemical demand not only the existing players the demand in downstream has gone up, but also the number of industries is catered to has also gone up. So this is a good demand going-forward from the Phthalic and no new excess capacity has been built-up. As you go into various downstream industry. In the various chemistries everywhere intelligent required. We don’t find any problem or challenge in terms of the overall demand.

Unidentified Participant — — Analyst

Yeah, just you talked about the application of PA in Specialty Chemicals. So can you give some specific applications of this PA in Specialty Chemicals segment?

Pramod Bhandari — CFO

So lot of the specialty chemical. I will not give you the exact details, but I can give you the like. Let’s me Deepak Nitrite Deepak Fertilisers make money organic. Lot of specialty chemical companies are buying the Phthalic and it is required in various small chemistry. I don’t have know right now the detail about the individual product. But all almost all the specialty chemicals buy the Phthalic.

Unidentified Participant — — Analyst

Thank you. That’s it from me.

Operator

Thank you. The next question is from the line of Aditya Khetan from SMIFS Institutional. Kindly proceed.

Aditya Khetan — SMIFS Institutional — Analyst

Thank you for the follow. Sir, how are the imports trending. I mean some checking government data for the month of October and November, we are witnessing some increase in imports because of normalization of demand and supply, so. Already, we are witnessing imports on started to increase. How are you looking at this?

Pramod Bhandari — CFO

So important for the last quarter and down from 25,000 26,000 tons to 15000 to 16,000 tons. Import is generally equivalent to what is the deficit demand. That means, if demand is X and production is X minus 10, so 10, it has to be important. So we are seeing right now. in-line with what is the requirement in India, we don’t see the access imports in India.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, so the trend is similar only also for following the month of October — [Speech Overlap]

Pramod Bhandari — CFO

Typically it is 8,000 to 10,000 ton to 10,000 to 12,000 ton every month. But last quarter it was 5000 to 6000. Last month it was 5000 to 6000 or that also 15000 to 16,000 tons lower in terms of the overall lower demand, as I mentioned in my earlier discussion is because of the pigment and UPR segment, slightly. There is a deterioration in-demand in that segment, there was the input was also low and overall domestic sale will also know.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, but sir, if the demand is week, but the supplies are constant rate. No one is exempt.

Pramod Bhandari — CFO

No supply was constrained, but you gave, it was 10,000 ton, input per month. Sorry, it was. 8000 to 9,000 ton important this time it has 4000 to 5,000 and import. We also from typically 3000 to 4,000 tons sold more than 6,000 in export. And so it’s basically every industry need equilibrium. There is a lower demand in domestic market you sell export similarly import volume is also gone down. So it effects both the side — reflected in both. Thanks.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, and apart from our existing expansion into the candidates. So is there any expansion, which has been lined-up into the announced apart from the Maleic Headache which anyways. We’ll be expanding apart from it later. So going into a new downstream chemistry or adding capacities for DP more, is there anything like into the downstream, which we are mainly here.

Pramod Bhandari — CFO

I think we are working on that. I think at appropriate time we will be able to disclose all the intro question, price, some information is under discussion. And once it is approved by the Board. It will be discussed from analyst, investors as sheets.

Aditya Khetan — SMIFS Institutional — Analyst

Okay, sir.

Operator

Any further questions.

Aditya Khetan — SMIFS Institutional — Analyst

No, that’s it.

Operator

Thank you. The next question is from the line of Anshul Mital from Care Portfolio Managers. Kindly proceed.

Anshul Mittal — Care Portfolio — Analyst

Hello. Yes sir, actually I so I’m sorry, I missed the first-half of the call. I just wanted to ask, the current spreads off Brian and as Brian noticed sustainable is what I say is between 150 million to 200. But what are the current spreads, how is it brand out last three months or also what are the current Maleic places and demand for.

Pramod Bhandari — CFO

So Last quarter it was 100 and 100 and right now it is between $170 to $200. Maleic prices which has gone down to as low as $800, $900 in last quarter right now, which is between $1100, $1200.

Anshul Mittal — Care Portfolio — Analyst

Okay, okay and, currently, the demand is. It was impacted only because of this pigment and UPS segment, or and how are we planning

Pramod Bhandari — CFO

Mainly these two segments now because the UPR, again it has restored back because the US is kept the pigment segment it is gradually improving, because there was the impact. In China, because of COVID also which is also receding. We are seeing good uptick in that demand also. This is.

Anshul Mittal — Care Portfolio — Analyst

Okay, sir, so what is the custom set of margins, which we’re expecting in FY23…

Pramod Bhandari — CFO

I think I would like to avoid to give any margin guidance, but we expect that margin need to be healthy because there is a good demand in domestic as well as the international market. And that’s very true, limited supply industrial market.

Anshul Mittal — Care Portfolio — Analyst

Okay. And sir last question from my end. So the capex PFI which we’re planning. So has it started.

Pramod Bhandari — CFO

Yes, capex, I think we have spent already one INR150 crore-plus and committed almost 80%, 85%, and we are targeting to complete it before March 2024. I think, construction is also completed more than 50%.

Anshul Mittal — Care Portfolio — Analyst

Okay, because of this inflationary environment, has the capex increased>

Pramod Bhandari — CFO

Not exactly, because most of the capex was tied-up in imported data that was freed at time of time and it’s funded through debt, because it’s a five to seven years debt. There our M2M charges which to provide because of the fluctuation in the exchange rate in this quarter profit would have been INR30 crores to INR33 crores. But we have provided INR11 crores on account of the foreign-exchange M2M charges. Of course, there is no cash outflow, but you need to provide as per the Indian Accounting Standard.

Anshul Mittal — Care Portfolio — Analyst

Okay understood. Thank you.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Nirav Jimudia from Anvil Research. Kindly proceed.

Nirav Jimudia — Anvil Research — Analyst

Yes, sir, thanks for the opportunity again, so. Sir, based on the consumption of Phthalic in India. I was doing some math. So is it safe to assume that the plasticizer demand in India is closer to one million ton. All the three plasticizers put together.

Pramod Bhandari — CFO

I think it is expected to touch, right now I understand the demand is around five to six lakh ton, it is growing at 10% to 15%.

Anshul Mittal — Care Portfolio — Analyst

Okay. Correct, and. We are into the DEP right. So out of that three major plasticizers being produced in India we are into DEP, so rest of the plasticizers are produced by some unorganized players or is it?

Pramod Bhandari — CFO

No in the downstream one or two players are producing and we are also evaluating opportunity regarding getting into the domestic.

Nirav Jimudia — Anvil Research — Analyst

So generally if we understand or if you want to understand the capacities which we may be evaluating or, let’s say, we may be thinking of putting up in the future, what is the asset turnover for this sort of plasticizer if you can just share your thoughts.

Pramod Bhandari — CFO

So I will try to comment on which one.

Nirav Jimudia — Anvil Research — Analyst

I don’t want to understand not, the product in a more specifically the product, but what sort of asset turnover are there?

Pramod Bhandari — CFO

Typically in the plasticizer the raw-material is phthalic like alcohol and all that asset turnover ratio is around five to six times. That means if you spent INR150 crores. Yeah, then you will have a sale of around INR1000 crore to INR1,100 crore. Even at 4% return or 5% return, maybe period is less than three years.

Nirav Jimudia — Anvil Research — Analyst

Got it. Correct. And sir, the second question is on Phthalic. So are we seeing some capacities, building up at the global level, sir, are we hearing something on capacity expansion by the existing players or somebody new?

Pramod Bhandari — CFO

But in India. Yes, under-construction another two players are also looking at, one is looking at expanding capacity, one, which is the customer is also looking at set-up the capacity to fulfill their need. But India is very growing market. I expect India, because. I don’t want to give any forward-looking, but I believe by next 8 to 10 years, say, by 2030, India will be near about one million ton of requirement Phthalic.

Nirav Jimudia — Anvil Research — Analyst

Which is currently 4 lakh tons?

Pramod Bhandari — CFO

2 to 4.5.

Nirav Jimudia — Anvil Research — Analyst

Got it sir, thanks a lot for the opportunity again. And all the best. Thank you.

Operator

Thank you. [Operator Instructions]

The next question from the line of K B Sankara Rao, Individual Investor. Kindly proceed.

K B Sankara Rao — — Analyst

Mr. Pramod, just trying to understand the comparison between last quarter and this quarter. [Technical Issues] Just on the conversation so-far I’ve understood three different reasons, one is demand drops, from about fifty-fifty two to around 46. That’s one reason. Secondly is provision of INR11 crores that were made in this quarter three. That is second reason. Third is the price drop-in phthalic, correct. These are three reasons. Right.

Pramod Bhandari — CFO

Yes.

K B Sankara Rao — — Analyst

Possibiility to split the INR30 crore drop between the three reasons, just to help us to understand.

Pramod Bhandari — CFO

So basically. You can say INR10 crore each. 10 for Phthalic, 10 for Maleic, 10 for impairment and 10 for others.

K B Sankara Rao — — Analyst

Okay, okay thanks a lot.

Operator

[Operator Instructions]

The next question is from the line of Chirag Vekaria from Budhrani Finance. Kindly proceed.

Chirag Vekaria — Budhrani Finance — Analyst

Sir, just wanted to understand from you during this Q3, where you are saying the spreads strong, what was the worst spread, the lowest spread that you saw in Q3?

Pramod Bhandari — CFO

Lowest spread, it’s about 100. I think US means you can talk about for — the spread for a one day-in one day suppositories, even 60, 70 what selling generally on the, last 15 days average. So, wondered if the and mega. So ultimately, it was around 100, sometime it is 97, 510, 20, sometimes, 80 but we have never seen the spread going below 80 because whenever would go 88 and then come back to 100, because 100, 220 is the conversion cost for most of the players in the world. Actually if you look at Europe and conversion cost is 120 to 150. If we said, is below 150 that we are making losses. Okay. So that is the reason is, Frank, go down, it come back very quickly.

Chirag Vekaria — Budhrani Finance — Analyst

So you are saying that if it goes below 100, then the cost of production is also $100 of other players will start making loss, you are saying, right.

Pramod Bhandari — CFO

Correct.

Chirag Vekaria — Budhrani Finance — Analyst

Okay, okay, sir, 100 has to sustain. And, sir, if that is the case, I mean. For for IGPL, if we are at spread, where we don’t make any money, then from EMEA everything comes to gross profit rate. From there we are making money right?

Pramod Bhandari — CFO

Yeah,. As well as our operational efficiency in terms of current year and all all put together will make.

Chirag Vekaria — Budhrani Finance — Analyst

Sir, just I missed that one number, this INR524 crore of topline, you said non non-telecom how much sir from INR524 crores.

Pramod Bhandari — CFO

INR15 crore for DP, 15 crore for Maelic, and seven crores for the interest on investments in activity projects.

Chirag Vekaria — Budhrani Finance — Analyst

Okay, thank you sir.

Operator

[Operator Instructions]

The next question is from the line of K B Shankar Rao, Individual Investor. Can we proceed.

K B Sankara Rao — — Analyst

Mr. Pramod, Shankar Rao again. You mentioned three reasons for the drop from quarter two to quarter three. Mr. Pramod. And with the demand drop.

Pramod Bhandari — CFO

It’s not demand drop, basically. The other way around you need to look at overall volume drop basically.

K B Sankara Rao — — Analyst

Yeah, volume drop it is corrected in Q4 is my understanding,?

Pramod Bhandari — CFO

Yeah.

K B Sankara Rao — — Analyst

Second is price also is corrected, that also has improved from $100 to $170 to $200 right?

Pramod Bhandari — CFO

Yeah.

K B Sankara Rao — — Analyst

Will there be any in Q4, any possibility?

Pramod Bhandari — CFO

Provision for M2M for forex, I will not be able to mentioned provision is based on 89 rupee euro rate which is speak up till now. So I would not like to predict the rate. Euro is 89 today and I believe it will go down from 89, you will see M2M gain some gain has to be there, let’s see, because it’s very difficult to predict. But possibilities. Having M2M provision is very remote on, maybe some gain over the period of next year because the loan is for six-seven years, but you need to provide every quarter as per accounting standard.

Chirag Vekaria — Budhrani Finance — Analyst

Got it. Thanks a lot.

Operator

Thank you.

[Operator Instructions]

As there are no further questions. I would now like to hand the conference over to Mr. Pramod Bhandari for closing comments.

Pramod Bhandari — CFO

Okay, thank you very much friends. I would like to conclude this call. If you have any query, please get-in touch with SGA, our investor relations advisor or send us a mail. Thank you everyone for joining this call, bye.

Operator

[Operator Closing Remarks]