India Glycols Ltd (INDIAGLYCO) Q3 FY23 Earnings Concall Transcript

India Glycols Ltd (NSE:INDIAGLYCO) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

Rupark Sarswat — Chief Executive Officer

Anand Singhal — Chief Financial Officer

Ankur Jain — Head Legal and Company Secretary

Analysts:

Sanjesh Jain — ICICI Securities — Analyst

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Balasubramanian — Arihant Capital — Analyst

Nitin Awasthi — InCred Equities — Analyst

Sanjeev Gurwara — President, Marketing

Jay Bharat Trivedi — Centrum Broking Limited — Analyst

Saket Kapoor — Kapoor Co — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the India Glycols Limited Q3 FY’23 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sanjesh Jain from ICICI Securities. Thank you, and over to you, sir.

Sanjesh Jain — ICICI Securities — Analyst

Thanks, Ryan. Good afternoon, everyone. Thank you for joining on India Glycols Limited Q3 and nine months FY’23 results conference call. We are joined on this call with India Glycols Management represented by Mr. Rupark Sarswat, Chief Executive Officer; Mr. Anand Singhal, Chief Financial Officer; Mr. Sanjeev Gurwara, President-Marketing; and Mr. Ankur Jain, Head-Legal and Company Secretary.

I would like to invite Mr. Rupark Sarswat to initiate this proceeding with his opening remarks, post which we will have a Q&A session. Over to you, sir.

Rupark Sarswat — Chief Executive Officer

Yes. Thank you, Sanjesh, and good afternoon each one of you who joined here. A little belated, but a little in advance as far as the financial year is concerned, and wishing you all a very happy New Year.

Now let me take you through few slides that I have put across and the highlights of the last quarter. So as you would have seen, it’s been in some ways a good quarter for us, if I look at the quarterly results. So at a high level, our gross turnover at INR1,524 crores though, is down by 13%, I will comment on it in a moment. Our net turnover at INR554 crores, also down by about 30%. However, our EBITDA at INR76 crore is up by 23.7%. And if you see the EBITDA margin is also up to 13.6%, up 591 basis points. So we’ve seen a good EBITDA recovery on the back of improved cost and product mix. And I’ll comment in a little while on the drop in turnover, mainly because we have discontinued some low margin businesses and I’ll explain that in a little bit.

If you look at on a YTD for the nine months, our gross turnover at INR5,026 crores, is up 1.6%. Our net turnover at INR2,032 crores is down 8.7%, but our EBITDA at INR219 crores is up 13.8% and EBITDA margin at 13.8% is also up 210 basis points. One of the things you would remember, but I will nevertheless repeat is that on a like-to-like basis for the comparative prior year, we also had one quarter of sales for the Specialty Chemicals business, which was made part of the joint venture. Overall, I think, there has been good in terms of recovery of EBITDA across sectors led by Ennature Biopharma, and I think those are important on the fundamentals of the business point of view.

So overall, good recovery for the quarter in terms of EBITDA, EBIT, which is up 32% on a year-on-year basis though, there have been a revenue decline by about 30% in Q3. EBITDA margin is up by 24% for Q3 year-over-year basis. Good recovery for nine months on year-on-year basis with EBITDA up 17% and revenue though down — is down 8.5%, EBITDA margin up 14% on a year-over-year basis.

Now the revenue is down primarily because we discontinued some low margin businesses, partly because we made certain operational changes to scale down production and not having to push volume at low margins. Now what it means is, that for some of our plant, we had to run them at a minimum throughput rate, which are large continued plant. Now given the pressure that we had on feedstock prices and energy prices, etc., etc., it took us some time to make some changes, so that we could actually significantly scale it down. So some of the volumes, if we had to sell at lower margins is no more being done. I think that is one of the reasons why — one — or the most significant reasons why our volumes are down.

And also there is an impact of the business, as I said, for one quarter which was transferred to the joint venture, whose volumes were part of the revenue for Q1 of prior years for comparison. So I can say that, as far as Q3 is concerned, there is excellent margin recovery across sectors. So it is — EBIT is up 22% for Bio-based Specialties and Performance Chemicals. It is up 28% for the Portable Spirits. It is up to 28% for Ennature Biopharma. And for a nine-month period, EBIT is up 7% for BSPC, 8% for PS, which is Portable Spirits and up 27% for Ennature Biopharma.

Now if you look at the PBT — EBIT or the PBT. So PBT, however, is down by 55%, mainly because of the impact of transfer of the Bio-based ethoxylates and select derivatives business to the Clariant-IGL joint venture, which had led to an exceptional income from the slump sale. So that is the reason why the PBT is down. And also we have an impact, which has also been taken into account, which is a gain of INR28 crore from the sale of Kashipur Infrastructure and Freight Terminal Private Limited, which was a non-core asset and had been benefit. For the quarter, however, PAT is up 108% in Q3 to INR50 crores.

And in terms of other highlights, cost pressures in some ways have continued. So if you look at ethanol prices, which is our main feedstock and most of it we were actually — just given one year ago, importing from the U.S. or Brazil, it continues to be at our high price. Those have not really come down. But what has happened is, if you remember, we have been talking about our grain-based ethanol plants being commissioned, which have been commissioned. They are being run up to capacity, which has significantly helped us mitigate the impact of huge feedstock price increases.

Given this, we wanted to do — we are evaluating further expansion, and I think, our objective is to become completely, if I may say, Atmanirbhar and not be dependent on imports of ethanol, which I think is going to secure our margins in many ways. Apart from that, we’ve been working on operational and efficiency improvements and improvement on costs. And there also have the movement in energy prices, which has been softening price. And as you know, there has been a significant reset on international space. We expect that these trends will continue in the quarters to come.

I have mentioned that the joint venture has had a tough quarter and nine months, mainly because of the increased cost of feedstock. And we’ve also executed, I can tell you an agreement with the Renew Green Private Limited in January 2023 to procure captive wind and solar hybrid power. Now that will start coming to us in the period of two years, by then, deliver — not only will it deliver significant cost savings, but from a green energy perspective and particularly from our end, it will also help us strengthen our sustainability credentials.

We’ve, from time-to-time, talked about our slow and steady movement towards more value-added product. And our first phase of expansion for new specialties is expected to commission between February and May, because it is two different units — within the units, and we hope to start building our new value-added Specialty Chemical business starting in the coming financial year.

Two — kind of recap, I can say that I’ve been asked, we were asked questions about the cost and the fact that we had pressures on costs. And I may kind of maintained that while we are going through very volatile and what appears to be a completely unexpected challenging times from an IGL perspective. If you see, it was very difficult to imagine that ethanol prices is were at INR34, INR35 just above 1.5 years ago, are continue to go over at INR60 plus and it was not easy for us, because we compete with crude alternatives.

And I think, certainly, in terms of high, you too offer an articulated in terms of the BSPC, mitigating the risk in terms of our feedstock, which is what we’ve done by installing significant builders’ capacity. And also our movement towards a better product mix. It appears, whilst slow and steady, but we are heading in the right direction and we expect that, that will continue in the quarters to come.

Now with that, let me quickly give you some highlights for the business segment. So if you look at Bio-based Specialties and Performance Chemicals, for the quarter, EBIT is up by 22.3% compared to prior year, though there has been a significant drop in reported sales, and I had just explained the reason for that. On nine-month basis, EBIT is up 6.5%, though, revenue is down by 17.6% for the reasons that I mentioned and also the factor that’s the one quarter for the prior year in comparison, we also had the [Indecipherable] sales, which were transferred to joint venture.

And you know, we mentioned that we discontinued low margin, high volume business, also held by certain operational changes to scale down production to achieve the same. We managed to get some price increases to cover ethanol and conversion costs. I talked about the in-house grain-based ethanol production, which is helping us improve margins, and the fact that we are looking at further expanding capacities.

Bio-based MEG margins have improved. And the good thing is that despite such a delta, we’ve maintained our profits and — for the Bio-based MEG business. Our business in glycol ethers did not do as well, particularly in exports, because of the pressures that we faced due to the prices of butyl and propyl based alternatives, whose price is came down quite sharply. We hope and also expect that the position will steadily improve on this front as well. I spoke to you about the new specialities Unit and I think it’s very important for us in the next few years to build a new value-added chemicals business.

Now talking about Potable Spirits, for the quarter, EBIT is up 28%, revenue up 7% compared to prior year. For nine months, EBIT is up 8.2%, revenue up 11.3%. Sales have improved, particularly in the Branded Country Liquor segment, and we continue to maintain a leadership position in Uttar Pradesh and Uttarakhand, Delhi. Amazing Vodka is picking up market traction in state of UP, Uttarakhand and Delhi. And cost here as well, partly because of various ethanol that we’re producing is healthy, not only in the chemicals business, but also Potable Spirits business have been reduced and packaging material costs have also been stabilizing. So that’s also a positive, and we are hoping that positive if it all steadily grew in the subsequent quarters.

We’ve had a good year for Ennature Biopharma, with revenues up 27% and EBITDA up 28% for the quarter. And revenue up 24% and EBIT up 27% for nine months for the year so far. So we’ve increased domestic share for Thiocolchicoside by acquiring orders from major cuts, as far as we made changes to the Thiocolchicoside facility to reduce costs and increase output. In the pure nicotine segment, we’ve seen some demand slowdown, that we’ll be focusing on customers, particularly the one which we’ve higher value and pharma-grade nicotine derivatives.

We continue to work on new products and new formulations than more value-added products in Ennature Biopharma as well. So I have essentially completed again to reiterate, I think broadly we are following our strategy of mitigating our cost risk on two fronts. On the feedstock front, on the cost and efficiency front, and also on taking steps to add more value-added products in a diverse portfolio, leveraging our sense in terms of chemistry, product development, our sense in ethanol and also our financials and sustainability.

So with that, I’ll take a pause and I request my colleague, Anand, to give you a brief on financials.

Anand Singhal — Chief Financial Officer

Good afternoon. Just to cover briefly the performance for Q3 and for the nine months, the revenue from operations, net of excise in this current quarter is INR554 crores vis-a-vis INR795 crores in the last quarter — sorry, last year same quarter, corresponding quarter. The EBITDA for the current quarter is INR76 crores vis-a-vis INR62 crores in the last year same quarter. PBT INR53 crores in the current quarter vis-a-vis INR31 crores, and profit-after-tax is INR50 crore vis-a-vis INR24 crores. So EPS for the current quarter is INR16.20 vis-a-vis INR7.80 in the last year corresponding quarter.

To take up the nine months financial performance, the nine months revenue from operations, net of excise is INR2,032 crores vis-a-vis INR2,226 crores in the last year’s nine month. The EBITDA is INR219 crores vis-a-vis INR192 crores in the last year nine month versus nine month period. The PBT is INR119 crores vis-a-vis INR337 crores in the last year nine months. As Rupark has just told that this improves the profitability out of the sale of the EOD business to Clariant, which is around INR226 crores and profit-after-tax is INR101 crores vis-a-vis INR273 crores in the last year — last year nine months. For the current nine months, EPS is INR32.70 for the nine months vis-a-vis INR84.80. So this is what is the brief result of the company.

Now to broadly take you to brief about the segmental results, so net revenue in the chemical operations, Bio-based Specialties and Performance Chemicals, the quarterly — the third quarter performance for the net revenues is INR324 crores, with EBIT of INR30 crores with a percentage of margin is INR9.2 crore, 9.2% vis-a-vis INR587 crores in the last quarter, with EBIT of INR24 crore showing percentage margin is 4.2%. So basically in the current quarter, despite the revenue has come down, the percentage of the EBIT has gone up.

For the nine months for the same division, the performance — the net revenue is INR1,315 crores vis-a-vis EBIT of INR82 crores, with percentage margin is 6.3% vis-a-vis INR1,597 crores in the last year nine months with INR77 crore EBIT showing margin of 4.8%. So basically the overall for the three months and nine months, the percentage of the profit has gone up.

Regarding the Potable Spirits, net revenue for the current quarter is INR188 crores vis-a-vis INR175 crores in the last year corresponding quarter with EBIT of INR28 crores in the current quarter vis-a-vis INR22 crores in the last year corresponding quarter, showing percentage margin is 14.7% vis-a-vis 12.3% in last year quarter. So again, the Potable Spirit has done good for the company. For the nine months, Potable Spirit INR568 crores turnover, net revenue, vis-a-vis INR510 crores in the last year nine months, with EBIT of INR72 crores vis-a-vis INR67 crore, showing percentage margin is 12.8% vis-a-vis 13.1%.

In respect of the Ennature Biopharma, [Indecipherable] the net revenue is INR42 crores vis-a-vis INR33 crores in the current quarter, with EBIT of INR10 crores vis-a-vis INR8 crores in the last year corresponding quarter showing in percentage margin of 24.8% vis-a-vis 24.6% in the last year corresponding quarter. The nine month results for Ennature Biopharma, the net revenue is INR148 crore vis-a-vis INR119 crore, EBIT is INR37 crore vis-a-vis INR29 crores, showing a percentage margin of 25.1% vis-a-vis 24.6%. We are showing overall better performance vis-a-vis the corresponding quarter last year or the nine months, so overall performance has gone up.

[Technical Issues]

Rupark Sarswat — Chief Executive Officer

Thank you, Anand. So we have now completed our quick overview for the quarter and year so far and happy to take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Hello. Yeah, am I audible?

Rupark Sarswat — Chief Executive Officer

Yes, Rohit.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Yes. Thank you, sir, for taking my question and congratulations for good set of number. Sir, first question from my side is that we permanently discontinued this low margin business? Or is this for this quarter only, and maybe how we’ll see that number going forward also? And if you could also quantify how much was the impact of this on sales? Or maybe in other way, if we could get the Y-on-Y change excluding this low margin business?

Anand Singhal — Chief Financial Officer

Yeah. Rohit, so we could provide those numbers separately. But a significant amount of the decline that we’ve seen in sales is because of that. Now I tried to explain it to you that when we run a continuous plant, they’re designed for a minimum throughput rate. And they cannot be done at rates below that. And what’s happened in the last one or two years was that — really if you go by market demand, let us say, the plant has a capacity of 100, but it has a minimum throughput rate of 60 for it to run optimally or say, 70. Now therefore, for some time, we’re were at kind of post to run at 70, and even though we were producing, we had to sell, let us say the MEG, at relatively lower prices, because we have a — we are producing it or sometimes at low margins, sometimes even at slightly negative margin. Now because we’ve done modifications and we’ve done operational improvement, and significant modifications in the plant to be able to scale down the operation, I believe in the current context, unless drastic changes happen in the marketplace, we’ve kind of done away with a significant part of this low margin business, or I would say very low margin business for the times to come, and it’s not really one quarter phenomenon.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Okay. Okay, sir. And secondly, on the grain-based plant commissioned last quarter, so last quarter also you didn’t mentioned that how much was the contribution. So would it — well in this quarter, to quantify the how much benefit we get from this rate in this grain-based plant, especially on the margin front?

Anand Singhal — Chief Financial Officer

Yeah. I don’t have the numbers calculated with me, but see, it is actually quite straightforward. So now the benefit may not have seen exactly well, but if you look at the real, real benefit, you for yourself can take that the landed price of ethanol from the U.S. here is of the order of INR58 to INR59 to INR60 a liter, whereas the cost of production of our grain-based ethanol is closer to much lower, it’s closer to INR44, INR45 a liter. We would have been in an even more difficult so we had not done that. So we can quantify that, but that does not necessarily translate into a complete profit gain because there is already a challenging market even at INR44 competing with crude.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Okay.

Anand Singhal — Chief Financial Officer

And there is a combination of things, because it has helped us in Potable Spirits. It has helped us in Chemicals, and some amount of it, we have been also started to sell into the Bio-fuel space. But our priority has been largely to meet the in-house requirement, and not import. In fact, for quite some time, we have not been importing ethanol anymore.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Okay, great. And on JV side, last quarter also, there was a lower contribution from JV because of higher cost as well. In this quarter also it has reported actually a loss, so is it only because of higher cost or the sales have also been on the lower side? And any guidance we can get from the JV side for ’23 or ’24?

Anand Singhal — Chief Financial Officer

Yeah. So two or three things, one is that, yes, the end markets like textile, ancillaries etc. have also been slow. Second thing is, the biggest sector has actually been cost of low with derived from ethanol. And obviously, impacted by energy costs and freight cost, because significant part of at least going forward buildup was expected from exports. So that has affected adversely. As I know, I think being also on the Board of the joint venture, I think there is definitely a discussion on how to consider lowering the feedstock costs, which are pegged at a particular value as a part of the contract, and also focus a little bit more on exports. So we hope that as things stabilize and normalize, yearly performance will also improve going forward. [Speech Overlap]

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Hello. Yeah, one more question if I can squeeze in, on the specialty chemical plant side, which is about to commission, I think in first quarter FY’24. So initially, we have indicated for a close to INR50 crore kind of capex in that business. So has been any increase in capex that side or maybe you will see increase in capex or additional capex maybe after commissioning of that plant?

Anand Singhal — Chief Financial Officer

Yeah. So the capex is what we have told you. Look, we are a brownfield site. Okay? So we have significant assets and utilities, etc., which are already available, whether it is cooling water, whether it is electricity, whether it is team, whether it is warehouses, whether it is maintenance staffs of it. So I think this was a capex, which we have for now. Our idea is to first build this business, over the next six months, one year, because it is not an ethanol business or a commodity business, it is a business, which you’ll start to build, after you start to manufacture, you sample it to customers, you get approvals, and then you start. So no future capex plans in immediate future, but depends on how the business will grow, based on that growth, we’ll definitely support this business.

Rupark Sarswat — Chief Executive Officer

Rohit, just to correct, the actual capex value for this is specialized chemical, which we say MSU, is around INR82 crores, not INR50 crore.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Okay, okay. Thank you, sir. That’s it from my side. I will come back in queue. Thank you.

Rupark Sarswat — Chief Executive Officer

Thank you, Rohit.

Operator

Thank you. Our next question comes from the line of Balasubramanian from Arihant Capital. Please go ahead.

Balasubramanian — Arihant Capital — Analyst

Good evening, sir. Thank you so much for taking my question. Sir, in that JV agreement out of INR190 crore, around INR40 crores are expected in H2 FY’23, so when we can expect to receiving that amount?

Rupark Sarswat — Chief Executive Officer

As per the agreement, JV has to give us this money in three years. So till now they have already paid INR55 crores to India Glycols. And the balance amount will come back as per the agreement.

Balasubramanian — Arihant Capital — Analyst

Okay, sir. And sir, my second question regarding that capex part, we’re evaluating per capex. So it comes from the under PLA, like you could throw more light on what kind of plans we have in terms of capex for the medium-term?

Rupark Sarswat — Chief Executive Officer

Your question is not clear.

Balasubramanian — Arihant Capital — Analyst

Sir, like what kind of capex plans we have for grain plants next over two or three years? Because we are evaluating [Technical Issues]

Rupark Sarswat — Chief Executive Officer

Just to update that we have recently completed two grain plant, one is in Kashipur, which is 180 KLPD, the other one is in Gorakhpur, which is 110 KLPD. So now we are exploring to increase the capacity in Kashipur plant from 180 to 360 KLPD keeping in mind the benefit, which company has got in the current quarter. Regarding the Gorakhpur, the capex for 110 KLPD is already completed and we are not rather going for any increase immediately. That may happen sometimes later, but not now. So we are increasing our capacity in Kashipur plant for grain distiller manufacturing.

Balasubramanian — Arihant Capital — Analyst

Okay, sir. Sir, your executed agreement for wind and solar and hybrid power, so like what kind of cost savings makes the [Technical Issues]

Rupark Sarswat — Chief Executive Officer

I can give you a ballpark number. But it’s a good payback. I think the investment is possibly around [Technical Issues] [Speech Overlap] we have payback time to be under three years.

Balasubramanian — Arihant Capital — Analyst

Okay, sir. Okay, got it, sir. I’ll come back in queue.

Rupark Sarswat — Chief Executive Officer

Thank you, sir.

Operator

Thank you. Our next question comes from the line of Nitin Awasthi from InCred Equities. Please go ahead.

Nitin Awasthi — InCred Equities — Analyst

Hello, sir. Few questions on the liquor business, where is the yearly sales? Does the company do any yearly sales in bio-ethanol sales?

Anand Singhal — Chief Financial Officer

Yes. We do significant amount of yearly sales, probably if I’m not wrong we close INR100 crores [Technical Issues] [Speech Overlap] INR120 crores.

Nitin Awasthi — InCred Equities — Analyst

So your yearly sales is the part of the Potable Spirits? Or is it part of the Bio-based Specialties?

Anand Singhal — Chief Financial Officer

It’s a part of the BSPCs — BSPC segments, this is part of chemical division, Bio-based.

Rupark Sarswat — Chief Executive Officer

Because it is B2B.

Anand Singhal — Chief Financial Officer

And this is not a retail product, this is a high concentration.

Nitin Awasthi — InCred Equities — Analyst

So you’re selling E&A which is under the Bio-based Specialties division, which is about INR120 crores for this quarter. How much is your bio-ethanol sales?

Sanjeev Gurwara — President, Marketing

This is our yearly sales.

Nitin Awasthi — InCred Equities — Analyst

Okay, yearly sales. Okay. Okay. Got it. And your bio-ethanol sales to fuel companies, which segment is that under and how much was it for the quarter and for the nine months?

Rupark Sarswat — Chief Executive Officer

See, so far what has happened is, originally intend of the grain-based plants was, where the grain-based plants, we had estimated a significant part of that will go to bio-fuels and some of it will get used for Potable Spirits and Chemicals. But given the very wide gap in terms of imported ethanol as a raw material, we have actually consumed most of our grain-based ethanol production or even molecular ethanol production in in-house. We’ve been meeting right now small sales into the bio-fuel space, so which is of the order of roughly like 15 lakh liters a month and ever since we commissioned our grain-based plant. As we expand our capacities, we hope that that will increase, and if our international imported prices of ethanol come down to pre-COVID level, then, of course, we will be able to sell quite a lot. It’s very difficult for me to give some kind of outlook. It’s so dependent on so many factors.

Nitin Awasthi — InCred Equities — Analyst

I understand. And there is — dynamic and it’s based on the import prices of ethanol, because that becomes more profitable for you. You will rather understand that part. And also coming to the yearly prices, what are the unit prices prevailing in UP and what are the unit price prevailing in Uttarakhand as of now?

Rupark Sarswat — Chief Executive Officer

See, it is very — I honestly, I don’t know the precise E&A number. But we make some decent margin on E&A. It’s not very high, but we make a decent margin there. I don’t know exactly what the E&A prices in UP and Uttarakhand.

Nitin Awasthi — InCred Equities — Analyst

Okay. Okay. And sir [Speech Overlap]

Rupark Sarswat — Chief Executive Officer

And it also very [Speech Overlap] customer to customer. So —

Nitin Awasthi — InCred Equities — Analyst

No, I agree. I agree, it’s a B2B agreement with the customer-base, but there would be a rough ballpark figure, which should be trading at, right?

Rupark Sarswat — Chief Executive Officer

I don’t have the ready number with me as far as in the fee [indecipherable] you can get it from the Internet also. [Speech Overlap] We will respond to you.

Nitin Awasthi — InCred Equities — Analyst

Okay. Got it, got it. Sir, similarly for the right prices, I believe the industry, even the domestic ethanol industry and E&A industry was suffering because of high rice prices, and there seems to be some inflow from the Rabi season, which is starting to come in. So could you throw some light on that? What is the right-sizes roughly we were dealing with? And what are they right now?

Sanjeev Gurwara — President, Marketing

I will give you a broader answer without giving grain prices. I think rice prices vary a little bit, but it is still a profitable business for us to invest. I don’t think the broader strategy as far as investment in grain is concerned is getting impacted.

Nitin Awasthi — InCred Equities — Analyst

Okay. And because all these information was actually giving very nicely in your previous presentation, where you had coal, ethanol, steel and your acetic acid prices, and given quarterly representation of the same. I would just make a humble suggestion, if you could go back to that, then would be questions would become unnecessary and we would actually get a lot of trend analysis from that.

Sanjeev Gurwara — President, Marketing

No. I can provide that to you. That we have even now available with us.

Nitin Awasthi — InCred Equities — Analyst

But similarly you have for the coal prices?

Sanjeev Gurwara — President, Marketing

Yes, yes, we have those. We will — I have just not put that slide, we can — you can write it to us, we can circulate that slide.

Nitin Awasthi — InCred Equities — Analyst

Okay. Okay. Great. Sir, that’s all from my side.

Operator

Thank you. Our next question comes from the line of Sanjesh Jain from ICICI Securities. Please go ahead.

Sanjesh Jain — ICICI Securities — Analyst

Yes, good afternoon, sir.

Rupark Sarswat — Chief Executive Officer

Good afternoon, Sanjesh.

Sanjesh Jain — ICICI Securities — Analyst

A few questions from my side. First, just wanted to understand, I thought this is a very high correlation between the crude price and the ethanol prices. At this time around, there is a quite a disconnect. Can you help us understand what is driving ethanol prices, that’s number one. Number two, some of this discontinuation of the product is also of the result that the crude alternative have becoming so cheap that it’s unprofitable for us to even think about it. That’s my second question, something like MEG as you rightly mentioned, that’s number two. Number three, is there also a impact from the demand side because some of these polymer prices which are falling has a lot of polymer guys have been — they are destocking, so there’s inventory. Is there any postponement of the buying as well in this chemical segment? So these are my three initial questions.

Rupark Sarswat — Chief Executive Officer

So let me try and answer your second question first, which is whether crude based prices of things like MEG have impacted some of our products like — the short answer is, yes. Now if you go back many, many years ago, the competitive advantage for this business wants to produce low-cost MEG using low-cost by feedstock like Molasses.

Sanjesh Jain — ICICI Securities — Analyst

Correct.

Rupark Sarswat — Chief Executive Officer

Now over a period of time, the world has seen value in molasses. And obviously, as there is greater requirement for ethanol, molasses has a price and it is a significant price and therefore, now we are no more in a business where we’re competing with crude on a cost of price basis. But also what has happened is, yes, crude prices has gone down. But more importantly, MEG prices have gone down, and they did not go up when crude prices went up. And this is because, significant capacities have been added in worldwide in pre-COVID, COVID times etc. So despite the crude prices going up, where MEG see the correlation — It did not go up, in fact, it came down. With the China slowdown, there is obviously, as you know, pushing of material to other parts of the world to continue to run their plants. So they take that corrective action, we took some corrective to stop bleeding or to stop supplying material in low-cost. So that is why the crude correlation is concerned.

And your first question was on ethanol, that ethanol doesn’t seem to be following crude. But there were one time when ethanol was not protected to crude at all, then ethanol started to get clubbed with crude, because it’s a source of energy. And then you’re saying it’s not even falling by crude. Now, there are several sectors in one of the previous presentations I had kind of presented and because it could have been a bit of a repeat, I did not do that. The one thing, maybe six months I’ll give an update on ethanol and what’s happening in the ethanol space. Now not only is their requirement of Bio-based ethanol because it is a Green Fuel. The world is working and there is a dynamic around energy security in the world as you know.

Sanjesh Jain — ICICI Securities — Analyst

Correct.

Rupark Sarswat — Chief Executive Officer

Europe takes a lot of energy, crude, gas from Russia. So the world is kind of campaigning to not only reduce cost by — for crude, but also become more secured. So I think that is one sector which has continued to sustain high ethanol prices. The second factor is that, in some cases, if you go back, there has been an impact in terms of the Green energy transition. There are number of countries, Brazil, France, and many others, Europe. They had made significant planned and they were based significant on hydro, wind, etc. I think that the addition was also impacted. They were also impact on see, the corn crop etc. in the U.S.

And if you see another factor which has impacted is that Ukraine is also a big producer of Grain for the world. And that is affected. So all these factors, — and I think it is very difficult to, you know it better than I do, have kind of created a sentiment, which has sustained high ethanol prices.

Sanjeev Gurwara — President, Marketing

And whether it will continue for a long-time, probably for some more time, I think at some point in time, eventually it is going to be some amount of decoupling back to energy, which is things like crude.

Sanjesh Jain — ICICI Securities — Analyst

Correct.

Rupark Sarswat — Chief Executive Officer

That’s my assessment. I’m not saying it is, right, unless some of my colleagues have something more to add. And the one thing that I’ve learned, Sanjesh, is that no matter how confidently I can articulate a point of view, second day and forget about three months in 15 days you could improve and completely wrong.

Sanjesh Jain — ICICI Securities — Analyst

No. I agree. I agree. No, I’m just taking because you would be in a much better position to assess this versus —

Rupark Sarswat — Chief Executive Officer

So for example, the freight prices. If you’ve been tracking freight prices which went up for some routes, five times, six times, unthinkable. And if you track some of the profitability of these big shipping company. And then they are nearly back to not exactly there, but they’ve kind of drops again three to four times in many areas, which is good for us. I think, because even though it does not increase our variable-cost in the sense of raw-materials, but our end cost to customers for exports, we’re also getting impacted because of that. I not even predicted that fall in my mind, suddenly not that rapidly.

Sanjesh Jain — ICICI Securities — Analyst

Got it. Just one follow-up here. In certain scenario, is it fair for us to not use ethanol for the blending purpose and use it more internally. So at least we can protect the business, right?

Rupark Sarswat — Chief Executive Officer

So that’s what we are doing, Sanjesh. That’s what I said, let’s supposing — if supposing, ethanol prices were to come back to 35 levels, which equals 1.5, two years ago. I think it’s great for us, because we start importing ethanol completely for Chemicals. If you remember, I continue to say three by three, and all the ethanol that we are produce in grain-based start to go for biofuels, all of that can be sort —

Sanjesh Jain — ICICI Securities — Analyst

But is it allowed for us to dynamically switch between the blending and for the internal purpose. I’m just trying to send the government policy. Have we have not availed for the subsidy at also we can do the allocation as for our requirement.

Rupark Sarswat — Chief Executive Officer

You are right. Anand, you can —

Anand Singhal — Chief Financial Officer

We have not availed the submissions. And that’s why we are not committed for 75% of the production for blending.

Sanjesh Jain — ICICI Securities — Analyst

Okay, okay. That gives us a complete freedom on the allocation of the —

Anand Singhal — Chief Financial Officer

Yes, we have complete freedom.

Sanjesh Jain — ICICI Securities — Analyst

Got it, got it. One follow-up question on the MSU. We did mention that we are investing INR82 crores there. What will be the potential asset turn and the product portfolio?

Rupark Sarswat — Chief Executive Officer

Sanjesh, we need to get that. It’s not ready top of the mind. What for the product portfolio, do you wanted to know?

Sanjesh Jain — ICICI Securities — Analyst

In the MSU, what are the products we are initially aiming at?

Rupark Sarswat — Chief Executive Officer

Yes. So we have spoken about it before, and if required, maybe in another next quarter we can spend some more time on that. So we have identified several product ranges, which includes some ethoxylates, particularly carbon smart ethoxylates. Some products for the oilfield segment, where we are already in the process of signing some contracts with certain global player. We are looking at some Bio-EO based [Indecipherable]. We are looking at some esters like plasticizers and also similar products which go into cosmetics. So we are looking at some green solvents. So this is the broad portfolio. And as you know, Specialties is something which we will kind of build brick-by-brick, it’s not like any ethanol plant that we have the capacity and we start selling. We start sampling and building the business.

Sanjesh Jain — ICICI Securities — Analyst

Fair enough, sir. Fair enough. One last on the Potable side. Are we getting the pass through for the high ethanol prices in our key markets? Where are we in that entire process?

Rupark Sarswat — Chief Executive Officer

So, Sanjesh, this is Deepak here. We have got a kind of a price range when it comes to the country liquor thing. On that front, the prices have — are — the policy is yet to come out and same is the case with the Delhi market. So the price range is there in the UP market. That’s a good news for us in the Potable side.

Sanjesh Jain — ICICI Securities — Analyst

Also Delhi market was, okay, that’s where the hampering is. So when are we anticipating Delhi thing to come?

Sanjeev Gurwara — President, Marketing

Right now, as per the presentation made by CIBC in into the Delhi government, the policy is expected anytime on the month of April.

Sanjesh Jain — ICICI Securities — Analyst

Got it, got it. That’s it from my side. Thank you, gentlemen for answering all my questions. And best of luck for the upcoming quarters.

Rupark Sarswat — Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Jay Bharat Trivedi from Centrum Broking Limited. Please go ahead.

Jay Bharat Trivedi — Centrum Broking Limited — Analyst

Hello, thank you so much for the opportunity, sir. Am I audible?

Rupark Sarswat — Chief Executive Officer

Yes, yes, please.

Jay Bharat Trivedi — Centrum Broking Limited — Analyst

Sir, just wanted to know on the Ennature Biopharma business segment. Is it — Is there any seasonality in that business or is it week in Q3 and Q4? Because even last year, the sales dipped during the second half of the year, and even the same trend is seen in current quarter as well as compared to last quarter.

Rupark Sarswat — Chief Executive Officer

So I don’t think there is much of seasonality, but there has been some kind of business analysts, which I can talk about. I think one is that last year, we got impacted by some regulation and duty related and subsidiary related in some of the market on Thiocolchicoside price. That is one factor. The second thing is that, our — then Thiocolchicoside price was the major product, but somewhere around last year, there has been a significant ramping-up of nicotine for therapeutic purposes also.

So it is just kind of combination and shift of product portfolios and some of the market dynamic. For [Indecipherable] like muscle relaxant, there is not much of seasonality. Thiocolchicoside, just to let you know, exactly something that goes into muscle relaxant. And nicotine that we manufacture is for again, therapeutic use. So from an end-market perspective, it’s not seasonality, but there are dynamics based on what happening in the COVID environment, what’s happening in Turkey, various economic situation. So some of the subsidies, what kind of restructure. So those kinds of dynamics. It’s not seasonality.

Jay Bharat Trivedi — Centrum Broking Limited — Analyst

Okay. So any specific reason in current quarter? Hello?

Rupark Sarswat — Chief Executive Officer

What is the specific you’re asking for?

Jay Bharat Trivedi — Centrum Broking Limited — Analyst

Sir, any specific reason because of which our quarterly sales were down in the Ennature Biopharma business.

Rupark Sarswat — Chief Executive Officer

Yes. So in some — with some customer, we had, I mean, these are regular things like contracts and price negotiations, particularly for nicotine, some of those contracts have been slower to come through, or actually — some have actually also gone by. We let that business go.

Jay Bharat Trivedi — Centrum Broking Limited — Analyst

Okay. Okay. Thank you so much, sir. And that’s it from my side, and all the very best.

Operator

Thank you. Next question comes from the line of Saket Kapoor from Kapoor Co. Please go ahead.

Sanjesh Jain — ICICI Securities — Analyst

Saket, please go ahead with your question. Saket, please go ahead with your question. If you have muted from your line, please unmute.

Saket Kapoor — Kapoor Co — Analyst

Yes. Sir, firstly, sir I missed the capex number. So how much have we spent for the nine months and what are we going to spend for FY ’23 and ’24 in totality?

Rupark Sarswat — Chief Executive Officer

So now, Saket, all of the capex is which I have already explained. The total capex, which we are in the process is about INR600 crores, out of INR242 crores capex is has been completed, and above INR350 crore capex is in pipeline. These capex include the boiler and the turbine, which is related to the grain distillery, NSU, and the boiler and turbine plus chakkara pack machine in Gorakhpur, and there is some expansion in [Indecipherable] Dehradun. So all these three plants are having some capex, and about, I’ll say, INR400 crore capex is are in pipeline in the blue IP.

Saket Kapoor — Kapoor Co — Analyst

Sir, in the presentation it was mentioned that we are done with the distillery capex. So this is further capacity augmentation that we are going through?

Rupark Sarswat — Chief Executive Officer

Actually, distillery has three parts. One was the grain distillery, the other one is boiler, the third one is turbine had been commissioned. But related to that, boiler and turbine is still in process, for Kashipur, the same thing is for Gorakhpur also.

Sanjeev Gurwara — President, Marketing

So I would just add to that, Saket. You know what happened there, as you know, we are quite an integrated site. So you may ask that a bit part of distillery, why have we permitted it as business of distillery, is for a simple thing that given our volumes at other things, we had adequate capacity for steam and power in our existing infrastructure. So we could [Indecipherable].

Saket Kapoor — Kapoor Co — Analyst

Okay. So going ahead with these commissioning, sir, what kind of margin accretion we’ll take that in. Currently, sir, the distillery is contributing to the top-line and bottom-line for this quarter at optimal level?

Rupark Sarswat — Chief Executive Officer

Your question whether we can do better, the answer is yes. So as I said, we are doing two things. We believe that we could possibly add more capacity at relatively lower instrumental tool swap, which is something that we are evaluating as soon as that is something which is decided and very clearly being executed, we will inform you. So that’s as far as that is the — you have another parts of that question, which I kind of missed.

Saket Kapoor — Kapoor Co — Analyst

Sir, I was just trying to understand that, when this two part of boiler and turbines are not integrated, whether the purpose of grain distillery is serving the purpose of top-line and bottom-line or not, since these two — yeah.

Rupark Sarswat — Chief Executive Officer

I don’t not know what you meant by they are not integrated, it only means, why do we need a boiler. We need boiler because we need steam we need a turbine because we need power. Now, if we can integrate it into our existing equipment and setup because there was less lower, there was adequate capacity, we could differ it. That is one.

And then you’re saying, whether it’s contributing to our bottom-line and top-line, I think so far, it has contributed more to the bottom line, because we kind of replaced expensive imported ethanol. But going forward, it will [Technical Issues] to the bottom line, but whether it will — how much it will contribute to the topline depends on several factors. Cost of imported ethanol — and as we add more and more capacity, everything that we have been producing more than what we regarding now will be sold in biofuels. So that top-line is very difficult to kind of project, but any capacity we had is definitely going to contribute to the bottom-line.

Saket Kapoor — Kapoor Co — Analyst

Two small questions. Firstly, on the cost of fund and that net-debt number. And then one question on Ennature pharma.

Rupark Sarswat — Chief Executive Officer

Cost of fund has gone up slightly because of the increase in the some interest rate by all the banks. Although, we are closely monitoring and checking, but yes, I will pay this cost of fund has gone up. [Speech Overlap]

Saket Kapoor — Kapoor Co — Analyst

What is the cost of fund in percentage terms, sir, currently?

Anand Singhal — Chief Financial Officer

Several cost has reached to above 9.1% right now. We can close the term loan as well as the working capital.

Saket Kapoor — Kapoor Co — Analyst

Right. And net debt number?

Anand Singhal — Chief Financial Officer

Regarding the debt, we are hopeful that the debt, including the EPVT as on 31st March ’23 will be about INR800 crores plus working capital.

Saket Kapoor — Kapoor Co — Analyst

Sir, the figure come again?

Anand Singhal — Chief Financial Officer

INR800 crores some loan in EPVT as on 31st March ’23, plus working capital fund way is CNN INR50 crore, also non-fund way is INR850 crores.

Saket Kapoor — Kapoor Co — Analyst

Okay. This 800 includes the long-term borrowing also?

Anand Singhal — Chief Financial Officer

This include — this is only for the long-term borrowing and EPVT.

Saket Kapoor — Kapoor Co — Analyst

EPVT, yes. And sir, now coming to the Ennature pharma segment, sir. Sir, currently, what is the potential from this segment that we are looking forward, say, two to three years down the line, and what kind of the steps are we taking to explore the opportunities, sir, from the segment, as the margins are significantly higher, sir?

Rupark Sarswat — Chief Executive Officer

Yes, so we are taking a few steps. First of all, look, when you have an exciting market like this, many people enter that market, you have to continue to deal with competition. The steps we are taking is that we have firstly diversifying our portfolio. The first step was to move from Thiocolchicoside to nicotine for therapeutic use, and some other product as well.

The other steps that we’re taking is for sales into say, Europe are all more developed market. There is the long process of getting approvals, meeting certain standard requirement. So those are things that we’re doing. So that we can sell to have more higher value-added market. So, step — you know, access to the developed markets by getting regulation standards etcetera, broadening our portfolio in terms of plant-based sector and also looking at some more value-added formulations and products.

Saket Kapoor — Kapoor Co — Analyst

Sir, then how should one look at this segment, sir? I mean, last year we did a topline of 156, this year we are already in nine months closer to 148. And just to understand the size of the addressable market going ahead, what can we look forward and that is what the idea is? And other than that, sir, other facilities, what is the current utilization level, sir? You did spoke about some lowering of demand in this segment and we switching from the low-margin product. So what are we emphasizing in the current quarter in terms of the demand outlook, sir? If you could throw some more light on —

Rupark Sarswat — Chief Executive Officer

If you talk about what, Ennature Biopharma?

Saket Kapoor — Kapoor Co — Analyst

Sir, first, Ennature Biopharma, I want to understand the opportunity, the addressable market and how — what are we eyeing in terms of the growth in terms of revenue and profitability? And then secondly, coming to the other business vertical, where you mentioned about that there is a softening of demand because of the external factors, how is the current market shaping up, and these are the[Technical Issues]

Rupark Sarswat — Chief Executive Officer

So, I think there are several things which have got mixed up. One is, Ennature Biopharma. You can see how the growth is for this year. I think those chance we expect to continue. As far as market size is concerned, the plant extract, market is so complex and it has so many areas. I don’t have any numbers what I can say in market size, what is our market that we are participating in and so on, but it’s overall a significant market and a growing market, because there is greater than greater preference for people at the right price points, of course, to have more nature based ingredients, and there is — So that’s one.

The second thing is, as far softening of demand is concerned, I think more of that — my comment in particularly was with respect to the JV performance.

Saket Kapoor — Kapoor Co — Analyst

Okay, sir. And sir, this JV is currently the Clariant is can be the same Heubach India Limited or is there different entity? The Clariant Chemical and I think renamed at Heubach India. So are the same — is the same listed entity or the big difference there?

Sanjeev Gurwara — President, Marketing

So look, I think Clariant had first of all two different entities in India. Second thing is, I’m not completely aware, but one of their business is I think [Indecipherable]

Rupark Sarswat — Chief Executive Officer

This is non-listed.

Anand Singhal — Chief Financial Officer

One of the Masterbatches or Pigments business was acquired by Heubach. This is not that business. This is the Consumer and Specialties business [Technical Issues] it has got nothing to do with Heubach.

Saket Kapoor — Kapoor Co — Analyst

Correct. And just taking into account, the current business sentiment. How is the current quarter is shaping up. I think the inflationary trends have repeated considerably. So that type of margin expansion we have seen Q-on-Q. So those factors would be adding to the margins going ahead. Is there a likelihood of improvements?

Rupark Sarswat — Chief Executive Officer

So you can expect. I would not like to give a forecast or prediction, but I think I had already mentioned is, that some of these gains which are because of cost reductions on account of feedstock, operational improvement and softening of feedstock as you can, yourself see — are expect it to continue in this quarter as well, in the coming quarter.

And the other factor, which we’ll kick in a few months later, is that I think, we hope that we will — we are evaluating, as I’ve said, putting up more bio-based facilities, which will be if we do it and if our calculations are right, which will be another bit of a step-up, say, in five or six months or two quarters down the line.

Saket Kapoor — Kapoor Co — Analyst

Correct, sir. And non-core assets, sir, are we done with the same or anything more in the — what are the other non-core assets on block?

Ankur Jain — Head Legal and Company Secretary

We have one company called Shakumbari Sugar. So that is also in process, but nothing yet has been finalized. While KIFC, you are already aware that we are done with that.

Saket Kapoor — Kapoor Co — Analyst

Correct, sir. And this quarter also, sir, we did reversed some ICD also for Shakumbari Sugar. So going ahead, any further, the amortization is required or we are done with this entity?

Rupark Sarswat — Chief Executive Officer

We are done with the whatever is in shortfall. And we don’t see any further write-off out of the Shakumbari exposure.

Saket Kapoor — Kapoor Co — Analyst

Thank you, sir. And hope for better time. Thank you.

Rupark Sarswat — Chief Executive Officer

Saket, you owe me a treat for asking so many questions.

Saket Kapoor — Kapoor Co — Analyst

Yes, sir. Come again, sir.

Rupark Sarswat — Chief Executive Officer

I said you owe me a treat for asking so many questions.

Saket Kapoor — Kapoor Co — Analyst

Okay, sir. Down at the heels.

Rupark Sarswat — Chief Executive Officer

Okay.

Saket Kapoor — Kapoor Co — Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Yes. So just one thing on this Infrastructure Nutrition business side. Since we have good exposure in Turkey, so any update we should get more considering the demonstrating good there. How it could be —

Sanjeev Gurwara — President, Marketing

I think, Rohit, we’re still pulling out bodies, I’m sure I’m on a lighter note. Look, it is a — it is something that goes into pharmaceutical applications. And the reason we see in Turkey is because Turkey is also seen as for some of the categories as a gateway to Europe. Okay? So I would imagine, there may be some disruption depends on how it impacts Turkey economy, but it’s not only about Turkey, even though it may be in Turkey. Some of it is there. Too early for me to comment what would be the impact. I don’t see an immediate and significant impact happening in the quarter.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Okay. That’s it from my side. Thank you.

Rupark Sarswat — Chief Executive Officer

Now you also owe me a treat since you asked me.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Any time, sir. Any time.

Rupark Sarswat — Chief Executive Officer

Rohit, any time. Whenever you’re coming we will meet, yes.

Rohit Sinha — Sunidhi Securities & Finance — Analyst

Sure, sir.

Operator

Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing remarks.

Rupark Sarswat — Chief Executive Officer

Thank you, gentlemen for patiently listening to us answers and asking your question, spending the time. Have a good day and a good year ahead.

Operator

[Operator Closing Remarks]