Meghmani Organics Limited (NSE: MOL) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Ankit Patel — Chairman and Managing Director
G.S. Chahal — Chief Financial Officer
Analysts:
Aman Jain — Analyst
Ankit Gupta — Analyst
Rohan Patel — Analyst
Viraj Mehta — Analyst
Keshav Garg — Analyst
Ankur Kumar — Analyst
Rohit Sinha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Meghmani Organics Limited Q2 FY ’25 Earnings Conference Call hosted by Arihant Capital. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Aman Jain from Arihant Capital. Thank you, and over to you, sir.
Aman Jain — Analyst
Yeah. Thank you. Good morning, everyone, and welcome to the Q2 FY ’25 earnings conference call of Megmani Organics. I would like to thank the management for giving us this opportunity. Today, from the management side, we have Mr. Ankit Patel, the Chairman and Managing Director of the company; we have Mr. Gurjant Singh Chahal, Chief Financial Officer; and we also have Mr. Gurjant Singh Chahal, Investor Relations.
So without further ado, I would now like to hand over the call to the management. Thank you.
Ankit Patel — Chairman and Managing Director
Thank you, Aman Ji. Good morning, everyone, and thank you for joining us on our Q2 FY ’25 earnings call. I believe you have got a chance to go through the financial results and investor presentation uploaded on the stock exchanges and the website.
I’m pleased to share that we have achieved a positive growth momentum in this quarter, reflecting in our quarterly performance. This was on the back of healthy volume growth witnessed in both the segments during the quarter. Considering the current market momentum in the demand recovery, we anticipate that pricing should also improve going forward as in the current quarter price realization has remained flattish across the markets.
In quarter two FY ’25, on standalone basis, revenue from operations stood at about INR532 crore, reporting a growth of 42% Y-o-Y and 30% quarter-on-quarter basis. EBITDA for the quarter grew to INR41.2 crore, increasing by 179% year-on-year and 190% on quarter-on-quarter basis. Net profit for the quarter stood at INR8.6 crore against a loss of INR3.6 crore in the corresponding previous year. If I talk about the revenue, revenue mix in the quarter two FY ’25, crop protection constitutes about 75% of the total revenue, while the balance 25% comes from the Pigment segment.
Now let me look at — let me — now let us look at our segment wise performance in quarter two FY ’25. In Crop Protection segment, production stood at about 11,473 metric ton, up by about 38% year-on-year, capacity utilization for the segment stood at about 84%. The segment reported revenue of close to INR397 crores, which is up by 50% year-on-year, and EBITDA of INR43.2 crores, which is up by 75% year-on-year.
For Pigment segment, production stood at about 3,692 metric ton, which is up by 24% year-on-year. Capacity utilization for the segment stood at about 45%. The segment reported the revenue of about INR135 crore, which is up by 23% year-on-year and EBITDA of INR4.2 crore against a negative EBITDA of INR2.5 crore in the corresponding previous year.
In our Crop Nutrition segment, we have been conducting extensive field activities with farmers to showcase the efficacy of Meghmani nano urea on different crops in Gujarat, in Rajasthan, Maharashtra, Madhya Pradesh and other states. As a result of which we are witnessing gradual traction growth on the ground level.
In titanium dioxide, there has been a significant improvement in the product quality, resulting in improved price realization and with the interim anti-dumping duty on TIO2 from China expected in quarter three FY ’25, we anticipate further improvement in price realization going forward. If I talk about the capacity realization, we are currently running the plant at about 40% capacity. It should improve gradually going forward.
To conclude, after a prolonged period, we are now witnessing a gradual recovery in overall demand. And to leverage the current momentum, we have all the enablers given given out our state of the art infrastructure, plant capability, wider product range and geographical product reach. Our long term growth prospect remains intact and we are positive to regain our normal double-digit growth trajectory which we had demonstrated throughout all these years.
With this, I hand over the call to the moderator to open the floor for the questions and answers. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Thanks for the opportunity, and congratulations for the recovery that we have seen in this quarter. My first question was on the Agrochemical segment. So if you — you Ankit bhai, you alluded some confidence about price realization.
Ankit Patel
Ankit bhai, can you be little loud?
Ankit Gupta
Sure, sir. Sure I’ll be more loud. So my first question was on the agrochemical side, so if you can – in your opening commentary you talked about improving price realization of the segment. So if you can talk about, has there been some improvement in pricing in the month of October or what is giving you confidence and visibility that the price realizations are expected to improve?
Ankit Patel
Thank you, Ankit bhai. Still we are not very satisfied with the number though it has been on improvement trend. But I would say there is a long way to go and there will be significant improvement going forward as our strategy whatever we have planned, we are very confident that it will work in that line.
Regarding the price realization. First of all, the demand and supply has to play a very important role for the price improvement. And currently what we see, the channel inventory what was there because of the destocking going on, there was less demand and the prices were under a lot of pressure. Now I would say majority of the market for majority of the products, the destocking has already been taken place and gradually the demand has started improving. Though there has been from the supply side a lot of supply, so still there is a pressure on the pricing side. So pricing is still at the lower level, which is not improving. But we feel somewhere from January onwards or from the first quarter onwards in the next financial year there should be gradual improvement in the pricing also, which will not be significant, like which used to be in the holdings, but there will be reasonable price improvement. That is what we feel.
At the same time, the logistic cost which has increased drastically in last few months, that has also started going down a little bit. And again, we feel that it will be at reasonable level in next one quarter.
Ankit Gupta
Sure. And on the demand side, given the low crop prices globally, are you seeing improvement in demand? As you were saying, the channel inventory destocking is over. So any, like if you can talk about key geographies like Latin America, US and Europe, like how is the demand in each of these geography?
Ankit Patel
Yeah. So yes, the agriculture commodity prices have also fallen in last few quarters. So there has been pressure from that point of view as well, which has also impacted little bit consumption. But ultimately there will be demand for sure because the whole world needs to — everyone is looking at the food security, and from that point of view there will be some demand going on and the growth will be there for sure.
And now the destocking has taken place, as I mentioned, for majority of the product in majority of the market. So we see that from fourth quarter onwards or the first quarter in the next financial year, there will be improvement in the demand also.
Ankit Gupta
My second question on the TiO2 segment. So if I look at the performance of the Pigment segment in standalone as well as consolidated. So now in standalone we have done almost INR135 crore sales, and in consolidated we have done around almost of the same sales. So TIO2 sales should be the difference between the consolidated as well as the standalone pigment sales, so I hardly see any sales of the TiO2. So if you can, you know, talk about that, you know, how is the — how much was our revenue in TiO2 in quarter two and compared to quarter one, and like what kind of losses are we incurring there?
G.S. Chahal
Ankit, as far as top line from TIO2 in the consolidation, so during the month of September, on the 16th of September we have capitalized the TiO2 plant.
Ankit Gupta
Okay.
G.S. Chahal
So up to the date of capitalization. So all these entries has been adjusted into preoperative. So that’s why it is not getting reflected. So from next quarter onward you will be able to see the top line added into the consolidated.
Ankit Gupta
Sure, sure. So basically when are we expecting — so let’s say the fixed cost and other costs of the TIO2 will start reflecting in our numbers from quarter three for the entire quarter is what we are saying.
Ankit Patel
Correct.
Ankit Gupta
So like what kind of, you know, fixed costs are there. Our depreciation will also increase there as well as the interest cost for the capex that we have taken — that we have done. So if you can talk about, you know, how much will be the fixed cost depreciation interest on a quarterly basis because of this TiO2 plant? And when do you expect to reach breakeven there?
Ankit Patel
First of all, the anti dumping is expected in the third quarter. So once the anti dumping will be there, entry antidumping, then we see the price realization should start improving which is under pressure globally. And because of China’s heavy dumping globally, there has been antidumping which has come in EU — European market. There has been interim antidumping which has also come into Brazil. Saudi Arabia has also initiated antidumping duty. India, yes, we have also initiated antidumping duty. Japan is initiating now the antidumping duty on China. We can understand there has been significant dumping of TiO2 from Chinese market globally in different, different market which is creating a major pressure. But we see that from — as the price will go up, we will also be able to sell more quantity in the domestic market. The utilization of the plant will also improve. And looking at all the scenarios, the financial number will also start improving in the TiO2 segment.
Ankit Gupta
Sure. And what about fixed cost interest in depreciation on quarterly basis for the TiO2 plant?
Ankit Patel
So I think let it run for one or two quarters. We will be able to give you better idea in next one or two quarters.
Ankit Gupta
And Ankit bhai, last question on TiO2. So if, let’s say, if the antidumping duty comes, and if in both the scenarios if the antidumping duty doesn’t come, when do you expect to breakeven for the TiO2 plant? First of all, we are very confident that the antidumping duty will come. If it doesn’t come, then also we have different plans so that we can come out of this problem as fast as possible. With antidumping duty, the scenario will be better. Without antidumping duty, it’s going to be a little difficult, but we are confident that it will come. Okay. Okay. But at least one or two quarters will take time to ramp up. But technically, you know, it’s a — it’s a challenging plan to operate TIO2. So have we been able to stabilize the plant now?
Ankit Patel
Yes, we have been able to stabilize the plant. The quality has also improved. And because of the quality improvement, the price realization in the market has also started improving. Currently as I mentioned, the plant is running at about 40%. Once the interim antidumping duty comes, the demand in the domestic market will be catered from the domestic suppliers more, rather than material coming from China, which will lead to the demand in the domestic market. And we feel because of that, we should be able to run our plant at the higher capacity.
Ankit Gupta
Sure. Okay, okay. Thank you, and wish you all the best. I’ll come back in the queue.
Operator
Thank you very much. Our next question is from the line of Rohan Patel from Turtle Capital. Please go ahead.
Rohan Patel
Hello.
Ankit Gupta
Yes, Rohan ji.
Rohan Patel
I have two questions regarding TIO2. [Indecipherable] if you can provide for the same. First of all…
Ankit Gupta
Rohan bhai, your voice is not clear. Can you — Can you be a little loud?
Rohan Patel
Is it okay now?
Ankit Gupta
Yeah.
Rohan Patel
[Indecipherable] some challenges in operating the plant, and how are we going to overcome the same situation? And if you can elaborate on this sulfur technology side, like how did we went on and where do we get this technology?
Ankit Gupta
Yeah. So the technology, there are two grades of technology. One is chloride, other is a sulfate. So our technology is a sulfate-based process. And because we purchased the company from NCLT, there was already the plant. Though there has been a lot of changes after acquiring the asset we have made in the plant, we also understand with the help of experts from the other industry and we have taken some technical support from the market which has helped us to improve the technology. And now the plant technology is running very well with the better quality.
Rohan Patel
[Technical Issues] globally there is a trend towards dumping the sulfur technology and going over to chloride technology. What China has done post 2010 till now is they have increased their chloride technology [Technical Issues] increase the chloride technology due to chloride being less environmentally harmful and more they have better operating margins as well. So why have we not chosen a chloride technology considering that one of our group companies is a big chloro-alkali and chlorine chemical players, that could be really helpful for. So why did we all…
Ankit Gupta
Yeah. So, Rohan bhai, both the technologies has got its own pros and cons. So it’s not that the sulphate technology is not good. In certain markets and based on the certain application and based on the certain scenarios, the technologies can be different. At the same time, as I mentioned, we acquired the asset from NCLT. So there was already the ready plant with the sulfate-based technology process.
Now if we want to go for the chloride technology, then we need to completely revamp. It’s all put together, we cannot use anything from this plant. We need to completely revamp and we need to put up a completely new plant. So at this juncture our plan is to first sell — run at the maximum capacity this plant. As we grow, then we can think of in future going for the chloride economy. But not at this point.
Rohan Patel
Thanks for that answer. And another question that I want to ask, what we also need is the margin experienced by TiO2 players in chloride is around, say 18% to 20% or 22%. And what we are also guiding, saying that we are having a sulfur technology is also seen that you also guided for 18% to 20% So does margin differentiate between two technologies and another? What’s the difference between quality of two products, one coming from sulfur and one coming from chloride. Is there any difference between the both?
Ankit Gupta
Yeah, so as I mentioned, depending on the market, because in certain markets certain raw material prices are different. So sulfate process is based on the sulfuric acid. So sulfuric acid prices in the different market based on the logistic cost it can be different. We are located in the hedge. So the cost of sulfuric acid is different.
Chloride process, in India chlorine price is different compared to chlorine price in the various markets. So in most of the countries chlorine price is always positive or more than certain dollars. Whereas in India chlorine prices, we know that it is always in the range of zero or below zero. So depending on the market conditions and depending on the location, the cost can be different.
Rohan Patel
And another question. So can we expect peak utilization of TIO2 to plant? We can do somewhere around INR300 crore, INR350 crore of top line and your guided margin range of 18% to 20%.
Ankit Gupta
So yes. So in the normal scenario we expect that it should generate this kind of revenue and profitability. Currently, as I mentioned, globally China is dumping titanium dioxide in the different market. Because China — if we know that Chinese real estate segment is not doing Good. The majority of the application of TiO2 is in the paint. And because the real estate segment is not doing good, there is less demand of paint in China. And because of that, China is dumping the material globally in different, different markets. So that has created a major problem. So that is why the all the countries have initiated — majority of the countries have initiated the antidumping duty against China only. No other market.
So we can understand that this is the scenario. And going forward this antidumping duty will help. And we hope that the stimulus which is getting announced by the Chinese government for their domestic market, if that improves the real estate in China, then Chinese companies will be able to sell majority of their volume in the domestic market in China, which will also lead to betterment for the supply chain point of view. So all this scenario going forward will help overall for this company.
Rohan Patel
Okay, what I understood from your point is it all depends upon the government bringing the antidumping duty. So you say you are confident enough that antidumping duty will come from quarter three. But what are your plans? If you can elaborate, how will you go on to make sure that even if antidumping duty does not come, so how will you improve the underlying economics of TiO2plant? Because… See, definitely… We cannot be dependent on the government.
Ankit Patel
That’s correct. We cannot be dependent on the government. We have to be self sustained. But in this current scenario it has been little difficult. So initially as we thought we would be focusing more on the domestic market only. But now as there is antidumping duty in EU, in other export markets also, and we are very strong in the export market, so we also started looking at the export potential where we can have a better realization because of the antidumping duty on Chinese goods in various other markets. So this — again scenario where we will be working based on the policy of antidumping only. But to fight against China in this current situation, we need to work like this only. So that will lead to the better utilization of the plant, and which will improve the cost position as well as the realization because of antidumping duty either in India or in other markets like Europe, US, Brazil, we’ll focus on that.
Rohan Patel
Thank you for your answers. And that was from my side.
Ankit Patel
Thank you.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Viraj Mehta. Please go ahead.
Viraj Mehta
Yeah. Hi sir. So my question is regarding TiO2 first. If you look at the domestic market, you’re talking about price improvement. But if I look at the channel checks, the price has actually gone down in last few months from INR175 odd what we were hearing for some grades, it has gone to INR165. The quotes are coming even lower. So in such a cutthroat environment, how are we planning to kind of compete If the — I mean, I understand the dumping is necessary, or duty on dumping is necessary. But, I mean, if that doesn’t happen, INR165 just makes our plant non competitive.
Ankit Gupta
First of all, yes, there has been pressure on pricing. But even today, the price realization is varying between INR175 to INR180. We are able to sell in this price range. And definitely as I mentioned, the plan is to work on the government policy where the domestic industry should get the support against the dumping from China. That is what the plan is.
At the same time, you know, we are working on certain other things also. How do we improve? Because we cannot improve beyond certain limit our raw material cost, then only remains the operation cost. So with the current capacity whatever we have, our fixed costs are at certain level. Our manufacturing cost is at certain level. So we are working on in the same plant how do we increase the capacity by doing small, small de-bottle mix. If we do that, then our overall cost should go down in manufacturing.
With the better cost position, we should be able to sell more quantity. So we are working on different strategies. It is difficult time, no doubt about it. But we are very confident that going forward it should improve.
Viraj Mehta
Right? So my second question is on the acquisition of TiO2. Now there has been some time which has passed, post we bid for this plant in NCLT and got this plant and obviously did a lot of capex and we are expected to do a lot more capex in Phase two. Do you think when you actually bid for the plant with the kind of capex and the ROE or the payback you thought and the way the economics are turning out, even if the antidumping duty comes, the payback is actually much longer than the normal payback a Meghmani would expect in their other operations. Isn’t there a vast difference of payback wWhen you look at your agrochem or even your other company [Indecipherable] when they look at payback, the numbers look starkly different, isn’t it?
Ankit Patel
Yes, correct. So Vira Ji, the thing is when we took over the plant, the initiation somewhere we started in 2020, and at that time the TiO2 scenario was completely different. The pricing was much much better. So the calculation, even with the realistic pricing point of view, whatever calculation we did was making perfect sense. But in last one and a half, two years, there not only titanium dioxide, but I would say overall all the chemicals has been facing a lot of pricing related problems. It has reached to the bottom most level majority of the product which has created certain problem. So in this scenario we need to apply different strategies. So over there the antidumping came into picture.
At the same time with the same setup, how do we have a better utilization, how do we increase the capex? Now as initially we mentioned about the Phase two. Now we are working that without doing Phase two how do we increase the capacity maybe little bit. 15%, 20%, 30%. So we are working on different, different scenario where we improve the current plant capacity and bring down our manufacturing costs, at the same time the antidumping should help.
Viraj Mehta
Right. And my last question Ankit Ji is on the overall plant maintenance. If we look at, and I understand that all chemical companies and agrochemical companies do go through some hazard from year-to-year basis sometimes. But the frequency with which we are having incidents is actually quite worrying for a minority shareholder. If you can elaborate what can we do to avoid such frequent accidents and what steps are we taking so that such incidents do not keep reoccurring almost on a regular yearly occurrences?
Ankit Patel
Yeah. First of all, I am really sorry that there has been occurrence of the incident in the plant. But just to clarify more on the last incident which has happened. There was no operation. The plant was under shutdown for maintenance, and the incident took place in one of the isolated scrap area, so which has not impacted any damage on human life which has — no one is even injured, even asset damage is not — It’s also very very low. So you know, it’s that low that we are not even going for the insurance claim because it’s not significant. So it was a very low. But the only thing is the media which has covered the scenario, it has hyped little bit. But in future we’ll take care that media should not create so much problem. We’ll work on our PR.
At the same time from the safety point of view, we have been working significantly in improving our safety scenario. In the chemical industry the process safety is considered to be the most important thing. In majority of our operations we have been trying to convert our operation in automation where any manual error can be taken care by the automated system called DCS. So every plant is slowly gradually getting converted on DCS.
In our Agro division, we have worked extensively on improvement and because of that only we got the responsible care certificate initially for first year, then again after the audit, after one year we got it extended for another three years. So the same thing we are doing for the pigment division. We have started working on responsible care where we are improving our plant operations significantly. And responsible care certificate is very difficult to get where the audit by the ICC team members done for extensively for at least three to five days. And after they get satisfied, then and then only the certificate is given for one year. And again after one year they do the auditing and if they get satisfied again, then they extend it for three years. So, like we did it in our Agro division, we are also working for the pigment division.
And I would say the EHS is a continuous improvement. We cannot just mention that we have improved and we stopped. We need to keep on improving it. And as a management, we are very much concerned about EHS and we are working extensively on EHS, and we hope that in future we keep on improving and such kind of incident doesn’t take place.
Viraj Mehta
Right. Just last follow up on this. When we kind of are expanding our divisions except pigments across the company, especially in agrochemicals. And as an outsourcing partner of some of the large companies and even companies which are looking to do longer term tie ups with us, such small incidents, do you think it will hamper our ability or capability to get some of the larger European or other clients doing a slightly longer tie up with us?
Ankit Patel
Definitely yes, it affects. But in the case of, as I mentioned, when we communicate properly that it has happened in the pigment division, in the Agro division, normally whenever we sign any agreement, any business, this kind of big companies they come, their team comes and they do the detail auditing. And when they find everything proper as per their standard, then and then only such kind of contract is being signed. So in the case of agrochemical division, as I mentioned, we have improved drastically in last three to five years time. The same initiation has started in the pigment division. In the pigment division we don’t have any much long term contract. We have few, rather, because the segment is not significantly growing, so over there we don’t have much long term contracts, but we are working for certain long term contracts in agrochemical division with few companies.
Viraj Mehta
Right. And the last question is bookkeeping on finance cost. Our finance cost seems to have more than doubled this quarter. And there was one note which was written. I mean, I didn’t really understand it too much. Can our CFO please clarify what exactly in a layman language does it mean?
G.S. Chahal
Actually, if you see in finance cost in standalone basis we have more than 80% exposed and our borrowings remain in foreign currency. So we have seen at the end of September there was a sudden volatility into the currency. So euro got depreciated significantly, it touched above 94 [Phonetic]. So there was a MTM during this quarter around INR15 crore. And on YTD basis also it was INR14 crore. That reflects in the finance cost. But if you see the overall foreign currency gain or loss, so there is a roughly INR14 crore gain in that other income, and there is a INR16 crore loss into the finance cost. So net net there is a INR2 crore impact on the foreign currency. But due to accounting it has to be differentiated between other income and the finance cost.
Viraj Mehta
But sir, if I look at our other — you’re saying INR12 crores. Okay, okay. So this is more like one off rather than one-off rather than, because our has also not gone up, right? So which is why I was wondering why your finance cost has gone up so much.
G.S. Chahal
No, no. Borrowing cost has not gone up. In general also if you see, so overall on currency level will be always net gain because our currency is deprecating.
Viraj Mehta
Right. And okay. Thank you so much sir, and best of luck.
Ankit Patel
Thank you.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Keshav Garg from Counter Cyclical PMS. Please go ahead.
Keshav Garg
Sir, I am trying to understand that how come on standalone basis on a quarter-on-quarter basis our segment volumes have declined marginally and so have the revenues, and the EBITDA has also gone down significantly, it is like more than half, sir. So basically whereas if we look at other pigment layers, there has been a significant improvement on a quarter-on-quarter basis. So what is the reason for the same?
Ankit Patel
Yeah, Keshav Ji, in the case of the pigment division, in last one quarter certain raw material prices have increased drastically, like [Indecipherable] prices went up drastically. So because of that, you know, normally we have got contract. We sign the agreement for one quarter or two quarters. So we cannot change the pricing model immediately with our customers.
Now based on the current pricing model, now we will be — we are passing on in the next quarter. So which has started improving. So because of one quarter where certain raw material prices increased drastically, that has created a pressure on the margin.
Keshav Garg
Sir, for how long is this expected to continue? And sir, the same should, I mean the raw material price increase should impact the whole sector. I mean then why is it that only we seem to have got impacted?
Ankit Patel
See certain raw materials like urea. I cannot comment about the other companies. But pigment is the industry where there are lot of irregular, I would say small scale companies are also there. So this small players, irregular players, they do certain things which we as a corporate we cannot do. So because of that our cost remains little high. We need to use the industrial grade area which is of very high cost. Whereas certain small companies, I cannot comment about them, but they have ways and means of keeping it low.
Keshav Garg
Sir, but — sir, so is urea a raw material for the pigment division?
Ankit Patel
Yes the urea is one of the key raw material for the for the pigment.
Keshav Garg
Sir, but like for example, we are making blue pigment. And sir, similarly Asahi Songwon, if you see, it’s a significant and basically reputed player. So their quarter-on-quarter revenues have increased from INR108 crore to INR117 crore and EBITDA has increased from INR8 crore to INR10 crore. So, I mean, shouldn’t this be the same for everybody, the input price increase?
Ankit Patel
That’s correct. So they have shown good numbers, Asahi Songwon. So I think in the coming quarters also as I mentioned now, normally there is a lag of one or two quarters to pass on the price. Asahi Songwon was able to do it as Meghmani, we will be able to do it in coming quarters. So it will improve.
Keshav Garg
Sure, sir. Right. So now that China has imposed antidumping duty on this green and blue pigment. Sir, soo what percentage of our revenues were coming from exports to China?
Ankit Patel
Now earlier it was little more, but now there is not any significant revenue which is coming from China. It is relatively low. We have been exporting to other markets now. I would say it would be probably 8% to 10%.
Keshav Garg
Sir, it is still 8% to 10% of total pigment revenues as of now?
Ankit Patel
Yes.
Keshav Garg
Okay. Sir, so basically I’m trying to understand that what percentage of the total green and blue pigment market of phycocyanin was being exported to China, on overall basis I’m trying to understand. Sir, because the point is that all that supply has to, whether we were supplying or someone else was supplying, now all that supply has to be diverted. Sir, so it will take that that much more time for our utilization to increase. Sir, so in that context I’m trying to understand that how do you foresee the utilization picking up, how much time you think it will take for the utilization to reach optimal level.
Ankit Patel
So as I mentioned Keshav Ji, there has been competition in pigment division from unorganized players also. And in the case of, because of antidumping duty in China on Indian pigment manufacture, there has been — there is again a pressure on Indian companies. And so as a Meghmani, we are not expanding. We are not doing expansion in pigment green and blue as a strategy. So we will try to do some sell in other markets where we will have a better realization. But as a growth point of view, this segment, we are not looking at significant growth point of view.
Keshav Garg
Sir, and are our CPC blue realizations similar to Asahi Songwon or superior or we sell at a discount?
Ankit Patel
I think not, because this becomes more of a B2B industrial product. So on an average if you look at it, then everyone is selling more or less at the same price.
Keshav Garg
Sir, and since we are the largest in the world, sir are we the largest CPC blue in the world?
Ankit Patel
We are — in India, in globally we are second or third.
Keshav Garg
And sir, how does our cost of production compare with the other? Let’s say the market leader.
Ankit Patel
Definitely, our cost for the manufacturing remains low but as compared to other companies we are relatively little bigger organization. So overall as a corporate, our cost will be little high. At the same time as I mentioned, we are regulated players There are also small, small unorganized players Their cost will be lower than Meghmani.
Keshav Garg
Sir, are there any synergies between our Agrochem and pigment division or they are totally separate?
Ankit Patel
They are totally separate. In terms of chemistry, it’s an organic chemistry. So yes, just similarity, but otherwise it’s completely — the plant are separate manufacturing team is separate, sales team is separate. Only the common areas like HR, finance, accounts, that remains common.
Keshav Garg
Sir, what percentage of our Agrochem is coming from B2C products, under our own brand?
Ankit Patel
In Agrochem, it would be, I would say less than 10% in our own brand is the revenue for the B2C segment. We do formulation in export, but that is not in our own brand, that is our customers brand, but there is a value addition. So in terms of formulation there is a volume of close to 25% plus revenue comes from the formulation.
Keshav Garg
Sir, since there is no synergy between our pigment and Agrochem, sir so at a future date sir once pigment division stabilizes, you think sir it makes sense to just hive off two separate, sir because the valuations of both sectors are different, so maybe it will unlock significant value, I mean in the midterm I’m talking about.
Ankit Patel
I think Keshav Ji, bhaiya, probably we may think that’s a good suggestion. So I think going forward that can be, once market stabilizes, once the segment is better, then we can think of it.
Keshav Garg
Sir, and as far as the titanium dioxide is concerned sir, though I appreciate that we bought this from NCLT, so generally buying things from bankruptcy generally turns out to be good. Sir, but now the concern is that sir, INR600 crore capex we have incurred and sir, on this sir, I’m sure there will be some additional working capital also over and above this INR600 crore. Now, sir, even if we consider the best case scenario of INR350 crore top line and 20% margin, so that is sir basically around INR70 crore. So it is like roughly 10% EBITDA level. So at a post tax level it will be in single-digit return. Sir, so then — and this we are talking about once the antidumping comes and once ramp up happens. So as things stand even in the best case scenario it doesn’t seem that this investment is turning out to be beneficial for us.
Ankit Patel
Yes. So when we acquired the asset from NCLT, we also realized this was our first acquisition, and normally you know, the operations if the chemical plant in running condition then the scenario is different. But in this case what happened, the plant was in the shutdown for more than three years. So when any chemical plant remains under shutdown for more than three years, then there has to be more and more maintenance required, the equipment, plant gets damaged because it remains in acidic environment in shutdown condition for quite a long time.
So this was the realization we had it after we acquired it and lot of changes required after acquisition of the plant, so which has led to increase in the capex. So this is one of the fact which has created an issue. But as I mentioned, we are applying different, different strategies to improve the operation, to improve the revenue and profitability.
Keshav Garg
Sir, and since our raw material feed stock is basically…
Operator
May we request that you to come to the question queue for follow-up.
Keshav Garg
Okay, ma’am, so let me just ask the last question. Si, I’m trying to understand that is our input for titanium dioxide synthetic [Indecipherable] I’m sorry, can you repeat your question? Is our raw material for titanium dioxide synthetic rutile that DCW is manufacturing?
Ankit Patel
Raw material is not synthetic rutile. We start from [Indecipherable]
Keshav Garg
Ans sir is that imported [Indecipherable] or is available domestically?
Ankit Patel
So it is imported also, it is available locally also. So currently our volume is not that significant so we are buying it from the Indian rare earth.
Keshav Garg
Thank you very much, and best of luck.
Ankit Patel
Thank you.
Operator
Thank you very much. Our next question is from the line of Mr. Ankur Kumar from Alpha Capital. Please go ahead.
Ankur Kumar
Hello sir. Thank you for taking my questions.
Ankit Patel
Yes, Ankur.
Ankur Kumar
I wanted to — as in your press release and now also you’re saying the agri side we are seeing an improvement which will help us in better margin. So can we comment, and historically we have done quite much better margins, so can we comment how much improvement are we expecting over the coming time?
Ankit Patel
So Ankur Ji, I think in the next financial year as I mentioned, there will be improvement in terms of demand and so the top line will also grow better. At the same time, bottom line will also grow better. In terms of the profitability EBITDA margin, you have seen that in the past we have done significantly well, but those scenarios were completely different. So it is difficult to reach at those levels. So first target somewhere for the agrochemical division, we target to reach at 15% EBITDA margin. That is the first target. Once we reach at that level, then we will think of taking it to the next level.
Ankur Kumar
So this 15%. Sir, can we see in second half or that will be like next year?
Ankit Patel
So next year. Second half looks little difficult.
Ankur Kumar
Got it, sir. And, sir, on pigment side there are a lot of questions. So we are still seeing loss. Can you comment how can it be done?
Ankit Patel
So in the Pigment segment also, first of all our target is to reach at about 10% EBITDA level.
Ankur Kumar
Can we say move to black in the next half also?
Ankit Patel
Yes. Got it, sir. Thank you and all the best.
Operator
Thank you so much. Our next question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.
Rohit Sinha
Yeah, thank you for taking my question, sir, and congratulations for a good set of number. So sorry if my question is repeating because I missed out in between. So basically on the agrochemical side we see strong growth in terms of revenue as well as the margin side also. So how much this is, we can say sustainable for the coming quarter as well as? Or is there any volume which was showing a lag effect from the Q1 number?
Ankit Gupta
So, Rohit Ji, from the volume point of view we tried to — for the agrochemical division we plan to run our plants at more than 80% capacity. In this quarter we have run at about 84%. So our plan is to run in the range of 80% to 90% utilization level going forward. And so that will drive the growth. At the same time a lot of new product has been introduced in last two years. So, but global market scenario was not doing good. So those new products have not started performing well. But now we see those new products will also be give good growth. And we are expecting lot of new. Hello?
Rohit Sinha
Yeah, yeah.
Ankit Patel
Yeah. So we are expecting some registrations in different, different markets for this new products which will lead the growth going forward. These are relatively high value, high profitability product.
Rohit Sinha
Okay, okay. And just — just to separate for our earlier agrochemical business and the new MPP side. So how has been the attraction for the this MPP segment and what we should see the better opportunity coming ahead for this segment?
Ankit Patel
So you are mentioning about multipurpose plant? Yeah, yeah. So yeah, the multi product — multipurpose plant over there, as I mentioned, we have introduced a lot of new products. So as a Meghmani, we completed for the crop protection division we completed about 25 years in 2020. So we had a vision that whatever products we have in the basket, same number of products we need to introduce over a period of next five to seven years. So whatever we have done in 25 years, we plan to do it in next seven years. So that is the vision. Somewhere in this strategy, the global scenario which has created a problem in ’23 and ’24. But we are still very, very bullish about the new product, what we have introduced. So in the multi product, multi purpose plant, the second plant operation we also started. So the product, which I’ll give you the idea, a lot of new products like Flubendiamide, Ethiprole, cyfluthrin, Betacyfuthrin, Dinotefuran, Spiromesifen, so lot of new product we have introduced. So these are the product either being manufactured by one company or two companies in India, or for few products we are the only company manufacturing in India. So this products are relatively niche product which has not been focused by many other players. So we have selected this kind of product which will lead the growth going forward.
Rohit Sinha
Okay, okay. So this MPP growth will be largely driven by the domestic side or export market is also lucrative for us?
Ankit Patel
It will be in both the segment. We have, as I mentioned, about 80% revenue coming from the export. See from the volume point of view, we need to have export market. If we just focus on the domestic market, then the kind of investment whatever we have done, we cannot run our plant for 12 months. We just required one or two months. That kind of volume is sufficient for the domestic market. Now to run the plant at higher capacity, to keep the cost at lower level, we need to also focus on the export market. So we are doing export to Europe — sorry, US, Brazil, Latin American country, Africa, Asia. Apart from Europe, we are focusing on all other continents, and the major growth is coming from Latin America, mainly from the Brazil market and from the US market.
Rohit Sinha
Okay, okay. And just on the capex and the debt side, what would be the annual capex we would be expecting for FY’25 and debt level by the end of FY’25?
Ankit Patel
So I think we did the capex — significant capex in the year of ’21, ’22 and we were ready with all the elements, but somehow the market was not supportive. So now with the improvement, we should be able to utilize — we should be able to sweat this new asset in a better way. So I think for agrochemical division and the pigment division, we don’t need to do any significant capex or a period of next one or two years time. So we will be rather repaying the debt and we’ll bring down our cost of finance, and we’ll maintain relatively low level debt in the company.
Rohit Sinha
Okay, kay. That’s it for my side, sir. Thank you, and best of luck.
Ankit Patel
Thank you.
Operator
Thank you very much. Our next question is from the line of Mr. Aman Jain from Arihant Capital. Please go ahead.
Aman Jain
Yeah, thank you for the opportunity. Sir. So just wanted to get the status on our — so we were planning to set up a facility in sorry, subsidiary in Brazil. So if you could share some. What is the status on that?
Ankit Patel
Sure. So the subsidiary for which we are planning to generate — create in Brazil, it is going on. It is at the final stage of approval from different government authorities, mainly from RBI, and we should be soon announcing about it. This subsidiary which we are creating — the subsidiary which we are creating is mainly from the registration point of view. We are doing a lot of new product registration and we would like to hold it by ourselves.
So normally what used to happen, we were working on with one customer, with one customer we were registering the product and then we were able to sell only to one customer. But Brazil is the biggest market for the crop protection products. So with our own registration we can work with various customers in Brazil, we don’t need to work with just one or two customers. So that will open up the market significantly.
At the same time, Brazil is highly anti barrier oriented because the cost of the registration is high. At the same time, the time of getting the registration is also significantly high. It takes nearly five years to get the registration. So we started focusing on the Brazil market somewhere after 2015, and there we have received few registration — we have received so far few registration and lot of new registrations are in pipeline. So over a period of next two to three years we’ll be getting many, many new registration.
Aman Jain
Okay. Yeah, sure sir. Sir, and just also just wanted to — so what are the product launches that we have done in this quarter?
Ankit Patel
So from the product launch point of view, not just this quarter, I would say overall in last two years. So in last one quarter we have started manufacturing of particularly three products. We started manufacturing of Dinotefuran, we started manufacturing of Ethiprole, we started manufacturing of Flonicamid. So three product — commercial production we have started in last one quarter. But I would say not just one quarter, in last two years or rather than last one year we have introduced a lot of new products. We have started Flubendiamide, we have started Cyfluthrin, we have started Betacyfuthrin, we have started Spiromesifen, apart from the three products which I mentioned just now.
Aman Jain
Understood, understood, sir. Okay, sir just one last question. So if you could tell us what was the volume growth in this quarter for agrochemicals and pigments?
Ankit Patel
So volume growth for the crop protection division is about 38%. About — year-on-year basis is about more than 50%. And for the pigment is more than 20%.
Aman Jain
Okay, sir. Thank you.
Operator
Thank you very much. I would now like to hand the conference over to the management for closing comments.
Ankit Patel
On behalf of the management, we thank you for joining us today. We appreciate your trust and support on us. With this, we hope that we have been able to address most of your queries. In case of further queries, you may reach out to Mr. G.S. Chahal, and Mr. Nishant Vyas, and they will connect with you offline. Wish you all a very happy Diwali and a prosperous New Year. Thank you very much.
Operator
[Operator Closing Remarks]