PCBL Chemical Ltd (NSE: PCBL) Q4 2025 Earnings Call dated Apr. 29, 2025
Corporate Participants:
Unidentified Speaker
Kaushik Roy — Managing Director
Raj Kumar Gupta — Chief Financial Officer
Analysts:
Unidentified Participant
Sanjesh Jain — Analyst
Aditya Khetan — Analyst
Angad Saluja — Analyst
Sanjesh Jain — Analyst
Krishan Parwani — Analyst
Sailesh Raja — Analyst
Siddhant Mayecha — Analyst
Prolin Nandu — Analyst
Sara — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to the PCBL Chemical Ltd. Q4FY25 earnings conference call hosted by ICICI Securities Ltd. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing on a touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjesh Jain. Thank you. And over to you sir.
Sanjesh Jain — Analyst
Thanks ever. Good afternoon everyone. Thank you for joining on for PCBL Chemical Limited Q4FY25 results conference call. We have PCBL Management on the call Represented by Mr. Kaushik Roy, Managing Director Mr. Raj Gupta, Chief Financial Officer Mr. Anand Kumar, Group Head Investor Relations Mr. Pankaj Dharia, Vice President Investor Relations. I will request Kaushik sir to open the call with his initial remark post.
Sanjesh Jain — Analyst
Which we will have a Q and A.
Sanjesh Jain — Analyst
Over to you sir.
Kaushik Roy — Managing Director
Thank you so much. Very good evening to all of you. I would like to extend a very warm welcome to each one of you for joining this call today to discuss Q4 and FY25 of PCBL Chemical Limited. I hope you have already gone through the investor presentation and the financial results which we have already uploaded on the stock exchange. And I’m honestly thankful to all of you for taking your time to join us today in this call. Now coming to this year and this quarter last quarter, I’m happy to inform that as a whole, in the whole year CCBL Chemical has reported its best ever operational performance and highest ever EBITDA highest ever carbon black cells as well as special ed black cells.
And in addition to that power cell volume was also the highest in the history of ecb. And the other milestone which we have achieved is we have achieved in FY25 a revenue of $1 billion plus. As you all know, over the last few years we have diversified beyond carbon chemistry into new fields within the chemical sector. And this growth, both organic and through strategic acquisition and partnership has brought us a pivotal moment. We have broadened our capabilities to pioneer advanced solutions for our customers globally. Our quest to diversify from a pure play carbon black producer led to acquisition of Aquafarm, which you are fully aware of in early 2024.
As you know, Aquafarm is a leading specialty chemicals player focusing on water treatment, detergent and oil and gas chemicals. This particular acquisition provided us access to an export oriented specialty chemical platform. In FY25 was the first full year of operation for aquaform Post integration, FY25 was a bit challenging year for Aquaform. Business environment was not really so strong. They were also sharp. Yeah, can you hear me? Hello? Am I audible?
operator
Yes sir, you’re audible.
Kaushik Roy — Managing Director
Okay. As I said that, as I was saying, FY25 was a bit challenging year for Echo form the business scenario. The business environment was weak. There were some corrections in the yellow phosphorus prices resulted in a soft performance Phosphonates is a huge opportunity given Eco firm’s global leadership position. Raw material prices for phosphonates have now stabilized which would be beneficial for us going forward. We have strengthened management capabilities. There were some gaps in that area and created a revamped organizational structure in ecofom. Now we expect a very strong improvement in both operational and financial performance in Ecopom in this financial year which is FY26.
The steps taken to improve cost and operational efficiency measures, value added product launches and strengthening of sales from sales teams in USA and Europe has set a strong foundation for the next leg of growth in Aquafarm in coming years. In oil and gas chemicals, Aquaform has less than 1% of global share and we are working on strategies to increase our customer base presence in multiple geographies, increasing capacity and supply chain capabilities in the United States. Oil and gas chemical opportunity is large considering Mr. Trump’s new policies focusing more on increased oil production. Keeping all these things in mind, we have also gone ahead with expansion projects which are on track and nearing commissioning.
This would help us to accelerate the sales volume growth in coming years. We are also evaluating Brownfield capex across all manufacturing locations in India as well as in USA within Aquaform. Green Killet is another segment where we see strong growth opportunity with push towards biodegradable chelating agents in USA and Europe as well as in China and India. We are therefore working on expanding the portfolio of green Kilates by using our RND capability. We have already developed MGDA and GLDA liquid and now working on MGDA granules. Now coming to pcbl on the carbon black side, we are in the process to acquire 116 acre of land in Naidu Petta, Andhra Pradesh for our sixth manufacturing unit.
This new facility will primarily focus on rubber black as well as performance and specialty chemicals. This land can eventually accommodate 4 lakh 50,000 metric ton per annum of additional capacity. CAPEX at this site is expected to commence in a year’s time and construction to take 18 months thereafter. The proposed greenfield plant under PCBL Tamil Nadu has significant tax advantage as earnings would be subject to a lower tax rate of 17.2%. We are also participating in a fast growing battery chemicals market through nano based technologies. We intend to manufacture nano silicon which is to be used in anodes of lithium ion batteries.
It brings significant benefit like extended battery range, lower battery life, sorry, longer battery life, faster charging and reduction in CO2 emission. At the same time it is cost effective. The pilot plant currently is under construction in our college plant and should be ready in next few months time. Seawell has also signed technology transfer agreement with the Chinese company for acetylene back capacity which finds application in high voltage cable batteries, semiconductor packaging, conductive plastics, paints and coatings. Global demand for this product Acetylene Black is approximately 70,000 tonnes or 70kt with 90% of supplies coming from China.
We plan to set up an initial capacity of 5000 metric ton per annum by FY27 and at Mundra we are witnessing strong interest from across value chain partners for this. FY25 was the first full year operation for our new greenfield CB facility of 1,47,000 metric ton per annum in Tamil Nadu. We have already announced downfield expansion of 90,000 metric ton in two phases in Chennai, Tamil Nadu. First phase 30,000 metric ton will be commissioned in next a few weeks time and the second phase of 60,000 metric ton along with 12 megawatt green power by FY26 end we aim to cross 1 million tonnes capacity in carbon black by FY28.
ECBL anticipates continuous growth in international market over next few years driven by expansion into new geographies, strategic investments in supply chain capabilities, moving of the value chain and the launch of new specialty grids. The capacity growth in EU and US has been stagnant and Russian SEBI is banned by the European Union. In the process PCB is gaining market share in both EU and us. Air industry growth outlook both in India as well as at global industry level continues to remain positive. With EV penetration rising across two wheelers and passenger vehicles, we expect replacement demand to remain steady and positive.
The demand for specialty grade carbon black continues to be resilient. Since FY 1718 PCBL has increased its focus on developing grades which can be used in these products leading to a corresponding increase in margins. Significant increase in share of specialty black volume from 1% in FY15 to 11% in FY25. PCBL added 20,000 metric ton per annum capacity specialty BLAD capacity in Mundra in FY25 taking the total specialty block capacity to one 12,000 metric ton per annum. We also plan to Set up a thousand metric ton per annum Specialty Black capacity dedicated for superconductive grades where margins are obviously extremely high and is expected to be completed by end of FY26.
Over the last few years the company deepened its research commitment comprising forward looking investment in infrastructure, people and process resulting in empowerment of the company with proven capabilities in product application, process efficiency and product customization. Now I will come to quarterly performance of PCBL Chemicals Ltd. But before that, just to give you a flavor of how we are looking at the business and what is the philosophy of the company Broadly. If you look at PCBL has got three major baskets or verticals of business. One is relating to Rubber Black. The second one is relating to Specialty Black, Specialty chemical along with new initiatives.
And the third one is Aquafarm which is beyond carbon chemistry. When we talk about the Rubber black which is our foundation today we started with Rubber Black in a big way and we are leaders in India and we continue to grow globally. The growth journey continues and therefore as you know that we have already added six plants in Chennai and we are working on the sixth plant in Andhra Pradesh. The focus will remain there. We will keep growing in that area both in India as well as globally. If we come to the second bucket where we are talking about Specialty Black, where the journey started in 2015 or 2014 and today we have reached the position of fourth largest player globally.
Along with specialty we have also started focusing on things like nanovis which you are aware of, Nano silicon technology, Acetylene black. Just now I talked about we are looking at superconductive which will be commissioned very soon. So this is another bucket, this another big bucket for us. And the third one is about Aquaform. Yes, it was the first year of operation, last financial year and we moved from a promoter driven organization to a professionally managed organization. So it was important to create right kind of foundation and we have taken all those actions to ensure the organization structure is in place, proper structure is in place and it will eventually reflect in the performance.
And we are very confident that in this financial year we’ll be seeing substantial improvement in Aquaform performance also. So the focus remains on all the three rubber black related specialty plus new initiatives driven by R and D and innovation. And third one is about Aquaform which is phosphorus based chemistry moving away from carbon chemistry. Let me now talk about the quarterly performance. During the quarter our consolidated sales volume in carbon bag business increased by over 5.3% year on year to 1 50,152 tonnes. This translates into a capacity utilization of over 95% during the quarter consolidated revenue from operations increased by 8.2% to 2,087 crore on the back of higher sales volume and revenue from Aquaform Chemicals consolidated EBITDA reduced by around 4.5% year on year to rupees 317 crore.
PBT stood at 126 crore while PAT stood at 100 crore. EBITDA per metric turn in carbon black business stood at 17,655 rupees of the total carbon black sales volume. Domestic sales volume stood at 86,737 tonnes while international sales volume stood at 63,415 tonnes. Export sales volume registered a strong year on year growth of 16.8% in Q4FY25. Moving on to our segmental Performance Tire accounted for 90,080 tonnes. Performance Chemical reported sales volume of 44,700 tonnes while Specialty sales volume was 15,372 tonnes. We continue to expand our product portfolio and customer base across all segments. Aquafarm Chemicals reported a steady performance during the quarter Q4FY25 revenue stood at 372 crores with an EBITDA of Rupees 51 crore.
The quarterly sales volume stood at 2.4098 metric ton. Coming to the yearly performance, consolidated revenue from operations increased by over 30.9% year on year to rupees 8404 crore from 6420 crore in FY24. Sales volume increased by around 12.1% year on year to 5.96262 metric ton in FY25. The consolidated EBITDA for FY25 was up by 28.8% year on year to rupees 1 crore from rupees 1,074 crore in the previous year. During this time we also achieved the highest ever power generation and cell volume during the year power Generation increased by 10% from 671 million unit in FY24 to 738 million unit during year during during the year with an external sales volume growing by about 7% to 436 million units as against 408 million unit in FY24.
To affirm reported revenue of Rupees14.20 crore and EBITDA of Rupees 193 crore in FY25. Now turning to the macro environment, we are assessing the current development in us. As such the economies are not really doing too great. As all of you know, US is not showing great sign of improvement in economy. Europe is going almost flat, China is also a little bit down. India is the brightest spot at this point of time. So that’s the good news for all of us. But at the same time certain amount of uncertainties have generated got generated recently because of the tariff issue which got created recently.
We are watching out for the situation. We have a belief that, you know, possibly once the dust settles down a bit, things are sorted out, India might be having an advantage over others and hopefully that will reflect on our company as well. India specialty chemical manufacturers may gain some share in USA because of this tariff issue. We are not sure about the basic carbon black, the rubber black, whether that opportunity is there or not but especially for sure there is an opportunity. We might also see some benefit coming to Aquaforms way as we go along.
Currently the carbon bag exposure to US market is about 5% for pcbl CB exports to USA would be exempted from tariff for the portion of raw material which is procured from us which is approximately 75% at PCBL Chemical we continue to work on portfolio expansion and capacity additions across all business verticals and increasing allocation of resources towards strengthening our supply chain, improving the product mix and optimization of costs. The long term prospects of all the business segments remain positive and we are on track to achieve our mid and long term growth targets. All this achievement underscores our strong position within the industry and highlights the progress we have made in global specialty chemical space.
PCBL has successfully set a strong foundation for its growth journey upwards and with this I would like to conclude and floor is open for your questions please. Thank you so much.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one Touchstone telephone. If you wish to remove yourself from the question queue you may press Char and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Adityake from SMIFS Institutional Equities. Please go ahead.
Aditya Khetan
Yeah, thank you sir for the opportunity and for the detailed understanding on the business. So my first question is onto the outlook for the carbon black I believe sir in domestic market in FY26 like most of the auto ems have guided for a muted set of a group Even in the tire segment also the growth would be largely in the lower single digit so demand seems to be muted for carbon black in domestic. In times of this muted demand are we able to compensate the loss in Volumes in domestic, in the export market and how the trend in spreads generally takes up like when the demand is muted.
Any thoughts on this?
Kaushik Roy
Yeah, I mean you are right in a way. Indian demand at this point of time for auto and tire is naturally not very strong as you write it. And therefore the sound black demand in India will not be very strong though there is a decent amount of demand will be there. And what is our plan? That while maintaining the leadership position in India we will be focusing more on the international market and our presence as you will see going forward will grow further. Just to give an example, about 10 years back our international sale was around 80,000 tonnes in a year and already last year we have crossed 242 40,000 tonnes last year we have already crossed.
So we will keep focusing on international market and keep growing further in international market. You are absolutely right. While India might be little soft at this point of time but we will be growing more in the international market.
Aditya Khetan
Got it sir. Onto the international markets. It is rightly understandable that EU and US these are the two markets where we would be witnessing volume growth. Sir, in terms of number if you can put. Although we know that the ban by Europe on Russia has led to a supply glut of almost around 6 lakh to 7 lakh tons of carbon black volume how much of that is compensated by China and India and what is the wallet share like? If you can highlight by Indian players like especially for PC bill, how much we have reached the penetration and how much more room is there?
Kaushik Roy
Sir, you were right. In Asia naturally our wallet share is quite high. But when you look at Europe and USA our wallet share is in single digit and therefore the headroom is quite large for us. And we see that as an opportunity to grow both in EU and US. And to be honest you know we are putting up capacity that is the primary reason. 90,000 tons we are adding in this year in Tamil Nadu and again in parallel almost we are initiating the project activities of Andhra plant. So keeping that in mind we are going ahead.
Aditya Khetan
Got it sir. Onto the equipment this quarter definitely there was a good upturn in terms of volumes and per kilo realizations. Any sort of change like which has happened compared to last quarter and we could see this trend to be materially on the higher side. Any sort of a demand uptick in international markets for cosmonates anything has changed if you can highlight that.
Kaushik Roy
Yeah sure. You know I think I mentioned that there’s lot of opportunity for aquaform to grow in the field of oil and gas, chemical industry which is a very large one and our share is just about a couple of percentage. So there is huge amount of growth opportunity there, huge amount of headroom is there. It is a question of penetrating the market, penetrating the customer and expanding the geography and making right set of products which is technically rich and precisely that is what we are doing. We had issues in terms of lack of skill, lack of leadership which now we have corrected and therefore we have already started seeing in last quarter there is improvement and going forward we will be seeing further improvement in case of ecoform operation there is also a lot of focus on cost management, better cost management, more efficiency in procurement and all other functions as well.
On one side we are focusing on sales, closely working with customers, expanding geographies, expanding product portfolio on the other side we are focusing on operation to improve on cost so the combination of these two have reflected already in last quarter Going forward it will be even more prominent.
Aditya Khetan
Got it. And for the guidance of 15 to 20% volume growth in Aquafarm that will be maintained and secondly on in FY25 the EBITDA was 194 crore for aquaform this includes the other income also, right?
Kaushik Roy
Does.
Aditya Khetan
Okay so sir, how much would be that in in 194 crore EBITDA.
Kaushik Roy
Other income was 11 crore
Aditya Khetan
okay sir. For full fiscal FY25.
Kaushik Roy
Yeah.
Aditya Khetan
Okay sir just one outlook on the debt side so this quarter we had witnessed some decline in the finance cost I believe sir, like we were also doing the capex of around 5,000 to 6,000 crores and the cash flow which we would be generating largely would be used for that expansion Going ahead alongside sir, are we also focusing on reducing the debt? If yes sir, what is the guidance for debt in FY26 and 27?
Kaushik Roy
Absolute debt level may not go down significantly from the current level Unless crude goes down from here we would be generating good cash flow but we also have capex pipeline not 5,6000 crore but next five years we will be spending around 3 and a half thousand crores so on an average about 700 crore every year will be the capex run rate and consequently absolute debt may not go down significantly from the current level. Interest rates have started cooling off and a small reflection of which is there in our quarter four finance cost we believe that next year with more interest rate cuts expected our interest cost would go down.
Aditya Khetan
Got it. Such as one last question onto the.
operator
Carbon like side Mr. Aditya, we may request that you return to the question queue for follow up questions as there are Several participants waiting for the turn.
Aditya Khetan
Okay,
operator
yeah, thank you. The next question is from the line of Angad Saluja from UBS Securities India. Please go ahead.
Angad Saluja
Hi sir, thank you for taking my question. The first one on realizations for the carbon blood business for the quarter. I think we’ve seen a decline now for two consecutive quarters in realizations. And obviously now with crude also being slightly volatile in the last one odd month, how do you see the realization shaping up for the next quarter and the year ahead? What’s your outlook on realization specifically?
Kaushik Roy
So this quarter realization should be mostly flat, a small uptick, small improvement. Because there is a quarter lag between the moment in crude prices and change in our realization.
So first quarter we would see very marginal improvement in realization. But then realization should not be seen as a reflection of change in margins. It is more reflective of the moment in raw material prices, which is into crude. But margin would depend on product portfolio and also demand supply situation, broader demand supply situation in the industry.
Angad Saluja
Got it, got it. And so just going back to that, you said product mix will drive more margins. I think in the quarter we’ve seen that despite specialty black sort of doing better. I think almost 9% YoY growth overall in the full year as well,
Angad Saluja
our margins for Q4 have dipped QoQ as well as YOY.
So you know, any specific reason, any one offs or anything that we should know about?
Kaushik Roy
Specialty Skill is about 10% of our total volume. Right. So while year on year specialty volumes are going up in terms of percentage, its weight on the overall sales volume is still very insignificant or small. Not insignificant, but small. Coming to the reason behind drop in prices, Russia, which earlier used to sell in Europe mostly now because of ban, is pushing more material in Asia and India and they are selling at unrealistically low prices. And consequently with our OCA Fund capacity utilization, we also have to play a bet on pricing which is also reflecting on the drop in margins in the coming quarter.
But with all the work that we are doing on portfolio building on efficiency improvement and also with higher volumes, operating leverage would be favorable for us. We believe that from a four to five year perspective, we would be largely on track with our guidance of the 25,000 rupees of the time.
Angad Saluja
Got it. Thank you.
operator
Thank you. The next question is from the line of Sanjay Jain from ICICI Securities Ltd. Please go ahead.
Sanjesh Jain
Good afternoon and thanks for taking my questions first touching upon the ACPA form this quarter EBITDA. Because if I take 194 for the full year, it appears that we have done only 38 crore for this quarter while the year run rate was 50 Crore. Crore. On a much higher volume, much higher revenue. Anything which has one off or anything which has happened in the EBITDA margin. For this quarter.
Kaushik Roy
For the quarter is 51 crore. I don’t know where you’re getting 38. Crore because you have disclosed 194 crore for the full year.
Sanjesh Jain
Yeah, 194 is for the full year.
Kaushik Roy
In the first nine months what we have disclosed is 156 crore. So 194 minus 196 is 38. The EBITDA 194 crore that we are talking is the reported EBITDA. And in the first three quarters we are mostly talking about the operational ebitda. This year also there are some expenses which are being incurred on consulting side like BCG McKinsey. Right. And when we report numbers those expenses also become part of our operating expenses and consequently our reported EBITDA comes down. So like to like basis fourth quarter is better than the first three quarters. And fourth quarter is still only a small reflection of the improvement which is now happening in the business. A good reflection of it will be from the current year, first quarter itself of the current year.
Sanjesh Jain
Got it, Got it. So that’s on it. But how do we see this 194 going? Because that consulting fee and all will be done in FY25. So from a reported basis where should we see EBITDA for FY26?
Kaushik Roy
The business with its capacity has potential to. It did perform 400 crore plus EBITDA. Sooner is back and we strongly believe that now with more capacity addition and more or more product launches and better portfolio we can further improve from there. It will take couple of years time to maybe cross that 400 crore. But this year itself we believe that we can do 40, 50% better performance.
Sanjesh Jain
Fair enough, fair enough. Now coming back to the carbon like again there is a drop in EBITDA sequentially. Any particular reason you are seeing pressure on the premiums which we were earning or the product mix because specialty mix has remained fairly stable. So what is driving this drop in the EBITDA per kg in the carbon black business?
Kaushik Roy
Fourth quarter was kind of an uncertain quarter from global economic point of view. Post this presidency election in US there was an indication that there would be some tariffs which will be labeled on all trade partners of us and consequently a lot of our customers they wanted to reduce inventory not knowing as to how it is going to impact them. And therefore I Mean market, the demand was sluggish generally. Also Russia last two quarters have started dumping in India and in some of the Asian countries and they are selling it at almost $200 lower prices.
Now we want to keep our capacity utilization high and therefore we still booked some volumes which were not at our usual margin.
Sanjesh Jain
And that Russia dumping continues because I don’t see why it will not. Because they need to somehow place their around 0.7 million of capacity somewhere in the market. And the market opens up with China, India and China. With the larger market which can absorb this, the situation is unlikely to change, right?
Kaushik Roy
Yes. I mean possibly we will continue with this. We’ll have to find new markets and customers, which is precisely what we are focusing.
Sanjesh Jain
So when we say 25 rupees EBITDA per kilogram in next 3, 4 year in such a scenario, can you help us understand the bridge, how we really want to transform this from the 1718 rupees a kg EBITDA to a 25 rupees a kilogram.
Kaushik Roy
The operating leverage itself is going to play a big role. For every 10,000 tons incremental sales volume at current gross margin that we make, it will be adding about 400 rupees per ton to the whole portfolio at. EBITDA level
Sanjesh Jain
, 95% utilization. Right. How are we going to add that volume?
Kaushik Roy
Yeah, but we, we are adding capacity. 90,000 ton capacity is going to come in in a year’s time, 30,000 or which is almost. Right. And then in a year’s time we will have more brownfield and then eventually a greenfield in, in Tamil in Andhra Pradesh.
Sanjesh Jain
Not going to add that much.
Kaushik Roy
No, no. Greenfield will also add because the head office expenses are not duplicated. Right. So they remain more or less stable. Right. Maybe the operating leverage will be little less there, but we will still have operating leverage. And this 400 rupees per turn is at 10,000 ton additional volume. We still have cushion even with the brownfield expansion which is in pipeline to add this 4,000 rupees from operating leverage. But I’m not saying that our operating cost per se would remain same. So maybe half of that, about two and a half thousand rupees is going to come against this 90,000 ton capacity itself.
And then product portfolio is also changing. For every increment and thousand tons of specialty sales, our blended EBITDA improves by about 6070 rupees. And every year we can add between 7 to 10,000 tonnes additional specialty volume. Also in specialty we are moving up the value chain. Our MD Mr. Roy just mentioned About a thousand ton superconductive capacity. Now here the margin profile is likely to be in tens of thousands of dollars as against our current $400 average gross margin. So the margin profile in the new product launches will be very different from the conventional product that we have in the portfolio.
And add to that the work that we have been doing on the yield side with still sufficient cushion. We are not the best manufacturer even now. So when we are talking about 25,000, we are not saying that at that level we will get saturated. That does over next five years. You know, target, maybe we’ll do better.
Sanjesh Jain
But any example, is any operator in the carbon black doing 25 rupees EBITDA per kg?
Kaushik Roy
25 rupees EBITDA will be difficult because different countries have different cost structure. But at gross margin level there are certainly companies who have at least 7,8000 rupees better margins than us.
Sanjesh Jain
Just last question from my side. This acetylene based what we are trying to do, the speciality, the raw material will come from China and the capacity which we are putting the technology is also coming from China. Is that a fair understanding? And how much more profitable is this product from the EBITDA package?
Kaushik Roy
Your understanding is correct with respect to the technology and the raw material and what we are seeing in India. India currently imports about 2000 ton of s and it is sold at around 800 to $1200 a ton. Currently. Sorry, sorry. 4 to $5000 a ton. And with $800 to $1200 kind of.Margin per ton
Sanjesh Jain
which is almost 3x what we do.
Kaushik Roy
Yeah,
Sanjesh Jain
fair enough. Fair enough. That’s it from my side. Thanks for taking all those questions and best of luck for the coming quarter.
Kaushik Roy
Thanks Ajish.
operator
Thank you. The next question is from the line of Krishn Parvani from JM Financials. Please go ahead.
Krishan Parwani
Yeah, sir, thanks for taking my question three from my side. First on the carbon black side, what is the volume growth headroom in FY26? Considering the time taken to bring the capacities on stream.
Kaushik Roy
We should be doing about 650 to 660,000 tonnes which is about 9 to 10% increase over our FY25 volumes.
Krishan Parwani
Okay, so you do have growth headroom from at 90,000 expansion that you are doing at Tamil Nadu. So from there you are expecting an incremental probably of 50, 60,000 tons, is that correct?
Kaushik Roy
We have about 35,000 tons of capacity cushion already. And then one 30,000 ton line is ready for commissioning in Tamil Nadu which is part of 90,000 tons. So that itself would give us this additional 50, 60,000 tons. And then once the larger line of 60,000 tons is commissioned, which will be towards maybe third or fourth quarter of this year, then we will have more capacity available. But we are not counting that in our current numbers. This 50, 60,000 tons.
Krishan Parwani
Okay, and you are fairly confident with the domestic demand? Not very strong I think Kaushik, the earlier commentary. So with the export volumes, with the strong export volumes, we are confident of achieving 650 to 660 kilo, correct?
Kaushik Roy
Yes, we are.
Krishan Parwani
Okay. Okay. Secondly, I don’t know, I mean if you mentioned it earlier, the reason for decline in carbon black sprays this quarter and then probably, you know, what’s your aspiration for let’s say for the next year and a year after that.
Kaushik Roy
See the market remains extremely volatile and therefore it may not be very linear kind of improvement in our, in our margins. So like in past you have seen that in some years our margin jumped by 2,500 rupees also. And similarly in some years it tend to remain flat. So while on long term basis, maybe three to four years basis, we are fairly confident that with our initiatives, with change in portfolio. Right. And with operating leverage playing its toll, we will be moving towards the targeted number. But immediately, in one year, two years, there are a lot of things which are changing very rapidly.
Like the sarif thing itself, this year’s tariff thing. How is this going to impact the entire ecosystem of auto industry across globe? That is yet to be assessed. So I would say that this is little early for us to comment on how margins are going to be this year. But we believe that we should be able to maintain our margins.
Krishan Parwani
Okay, maintain it probably 1820 rupees, is that correct?
Kaushik Roy
Our current year’s average EBITDA margin is around 20,000 rupees per ton.
Krishan Parwani
Yeah, okay. Yeah, 1820, that’s, that’s a range. Yeah. Okay. So and lastly on Equafarm, just one or two clarification. So our 4 KFR 25 EBITDA is 51 crores while our EBIT is 19 crores. So I think depreciation is closer to 32 crores. So just wanted to understand why is the depreciation so high for largely depreciated assets that you are required.
Kaushik Roy
We acquired this company at around 4,000 crore and as per accounting regulations in India, the difference between the value of physical assets and the acquisition value that becomes intangible assets which are available for amortization and which also carries tax benefits. So a good portion of this depreciation and amortization is on account of amortization of intangible assets. The quarterly run rate is 23 crore.
Krishan Parwani
Okay, so 20 crores. And then what explains the difference between the 32? Is it other income 9 crore or was it What?
Kaushik Roy
What is it? The balance is the physical asset depreciation.
Krishan Parwani
Oh yeah, you mentioned. Okay, okay, fair enough. You’re saying that the Physical asset depreciation is 9 crore quarterly and then the intangible is. Okay, fair enough.
Kaushik Roy
Intangible amortization is also entitling us for a tax shield. It is going to be used almost around 500 crore and which kind of makes profit of India business exempt from tax for next 78 years. That’s the kind of shield that we are going to get out of it.
Krishan Parwani
Okay, fair enough. So got it. And I think you know just one last bit on the equiform EBITDA side. I think you were till about last guiding that. You know by the end of FY25 exit run rate of should be EBITDA should be about 7080 crores. So how far are we from that Exit run rate of 7080 crores quarterly.
Kaushik Roy
In Equaform 7080 crore guidance was for FY26. Fourth quarter is what we said we will be reaching and we are clearly confident that we would reach our God willing cross that number.
Krishan Parwani
Okay, okay. Okay, fair enough. Sir. Thank you for picking.
Raj Kumar Gupta
If I can add on the Echo Firm 5C the green shoots are visible from last quarter onwards both on our top two categories of business which is the oil and gas, chemicals and the detergent site. On both these businesses we see a very good growth opportunity this year. And the fact that we have a local manufacturing facility in US and Texas. I mean with this whole trade tariff thing happening today there are a lot of uncertainties. But we see a very clear advantageous situation emerging in the next few weeks and months. So hopefully when we come back to you by the end of the second quarter of this year we should be able to come and tell you about the significant growth prospects on the Aquafarm side.
So overall we are still talking about almost a 50% kind of EBITDA growth coming in Aquafarm this financial year. So that kind of a number visibility we think we should be able to deliver.
Krishan Parwani
Okay, that’s great. That’s great sir. So I think if I may, I missed one question if I may squeeze in here. Yeah. On in terms of the capacity expansion in Equafarm 38,000. I think it was supposed to come on stream in March 25. So is that. Is there a delay of one or two months or when it. When will that come on stream?
Kaushik Roy
45.
Kaushik Roy
Some capacities have been commissioned before March and rest is in process of getting commissions.
Aditya Khetan
It is already kind of ready at this point of time. And it is just commissioned two, three days back. That has already happened. There’s a slight delay. Not exactly delay. From the point of view of completing the activity. Took some time to get clearance from local government. What you call is consent to operate. That took little longer than expected. And that is why this delay. But it has already happened now.
Krishan Parwani
Understood? Understood. Thank you so much for patiently answering my question. Wish you all the best.
Kaushik Roy
Thank you so much.
operator
Thank you. The next question is from the line of Silesh Raja from BNK Securities. Please go ahead.
Sailesh Raja
Thanks for the opportunity. Sir. We are planning to set up the Manovich facility in college. And also within 10,000 tons capacity for acetylene black tumor. So why are we not considering my. Depit for these two projects? Are these two products not eligible for 17% concessional tax rate in Mydobi?
Kaushik Roy
Actually our RD team operates out of college plan. And these products, I mean these lines will be like. Would require a lot of technical support and R D support. And therefore we are planning to set it also and will take time. And even getting that MOEF approval etc will take at least a year’s time. We can’t afford to delay our projects. So you want to add sir.
Sailesh Raja
My. Second question on the input output ratio trend which has been enough behind the improvement in our document over the last five years. Currently our approximate input output ratio stands at 1.8 is to 1 in standard and performance part of that. So based on my estimate as a. 10 bits improvement in ratio translated to saving of 150 crore which my understanding is right. What is our target input ratio over the next two, three years?
Kaushik Roy
So you may not be able to calculate it based on the raw material consumed and the overall production level. Because the portfolio itself is changing. And not all grades have the same input output ratio. Right. But internally we have the benchmarks for each of the grade that we produce. And for 1% improvement in yield it’s almost like 100 odd crores. 100. 150 odd. I mean it will also have a relevance to crude prices.
At current crude prices about 1% yield improvement is about roughly 13, 1400 rupees. A bit of return for us. Alex, are you there?
operator
Thank you. The next question is from the line of Siddhant from Tusk please go ahead.
Siddhant Mayecha
Yeah. Am I audible? Yes, sir. I just wanted a little clarity on the nano based technology. So what is the progress so far and what the update Are we looking to commercialize the plant in FY27?
Kaushik Roy
Yeah. So NanoViz, currently we are working on the pilot plant. All orders have been placed and on the ground activity will start very soon once the supply starts. And we are expecting by end of this financial year, end of this calendar year, which is October to December. During that quarter we should be able to commission that plant. And in parallel, we have already started discussion with prospective customers both in, both in battery side as well as anode side and in addition to that also with some of the leading automobile manufacturers. So both activities are going on in parallel and once we get approval from them based on the pilot plant samples, we’ll immediately start the commercial plan thereafter.
Siddhant Mayecha
But in terms of technology, we have already established like credibility, right?
Kaushik Roy
Oh yes, absolutely. Absolutely. Absolutely.
Siddhant Mayecha
Okay. And so regarding FY27, we are looking to commercialize the plant, right?
Kaushik Roy
No, we are looking at FY28 need to commercialize the plant. The pilot plant will be ready by end of this calendar year. Okay. After that you will need to give some time for approvals and to put up the new capacity, the commercial capacity, which will take roughly about little more than a year.
Siddhant Mayecha
Right. And just to understand the technology. So basically we are replacing the graphite part in the anode with silica, right?
Kaushik Roy
No, not really. We are, we are mixing nano silicon with graphite at certain percentage. We are not. Okay, so replacing.
Siddhant Mayecha
Okay. Both are combined together to increase the life cycle.
Kaushik Roy
It’s a hybrid thing. It will increase the life cycle of the battery. The charging between two charging point, charging interval, it will be much higher. Life of battery will be much longer. And at the same time the. The emission level will come down substantially. So combination of all three and additionally cost overall we go up over a period of time. The cost will go up, go up.
Siddhant Mayecha
Right. And in terms of technology, in terms of this technology, is there anyone like any competitor who is also looking to explore this or are we the only ones having this technology?
Kaushik Roy
Right now you can say in a way that nano silicon, the kind of technology we are exploring, we are one of its kind in this area. There are other players, but it is so far not commercially viable or cost effective.
Siddhant Mayecha
Okay, so the first move, word advantage will remain with us.
Kaushik Roy
Absolutely, absolutely. That’s what the expectation is.
Siddhant Mayecha
And the per like the cost, the revenue price will be hundred dollars. We are still sticking to that number that was an assumption.
Kaushik Roy
That was an assumption that we took which is a very conservative assumption. Obviously if it is selling at a higher price in market there would be some discount to it that we will offer. But it may be higher than $100 also for all we know it’s little early for that. That was for our internal conservative calculation of profitability.
Siddhant Mayecha
Thank you so much sir. That will be it from me.
operator
Thank you. The next question is from the line of rolling Nandu from Adelvis Public and Alternatives. Please go ahead.
Prolin Nandu
Yeah. Hi team, thank you for taking my question. I just want to understand our philosophy on this capex, right? See even that in domestic market we don’t know by when this Russia dumping will end. Now on the export market also there’s uncertainty on tariff side. But at the same time you mentioned that you can’t wait for approval to come in Tamil Nadu where we have a probably a favorable tax regime there, right? In some sense and hence we are expanding our facility. So just wanted to understand that you know, given that the demand outlook is not very encouraging at least for the near term, why is there an urgency to put CapEx?
Kaushik Roy
Well, we are already operating at about 90% capacity.
That’s number one. Number two, the lines that Telesh was talking about were more on the specialty grades of carbon blackside for which we would require to provide lot of technical and R and D support which currently is not available in our Tamil Nadu plant. And consequently we’ll have to keep these capacities stationed near to the RD center which is Palija Mundra. So that’s the reason. And third, the demand outlook, even when the demand outlook in India is not good, right. Globally still demand will grow by a certain percentage. Last 10 years CAGR has been around 3.5% industry growth rate which adds about 500,000 tons of incremental demand every year.
And that’s on the regular carbon dioxide, not specialty. Specialty is a different market dynamics altogether. So there is sufficient cushion in market. And all said and done we are just about 4% of the overall market size currently. Who stops us from taking this 4% to maybe 8% or 12% going forward over a period of time?
Prolin Nandu
Sure, understood. So this, I mean this Andhra Capex that you have announced, right? Is this going to be only for specialty or it’s going to be the mix, Right? Because you mentioned that the talent is available nearby so for the specialty line.
So what could be the probable breakup that we are looking at between carbon black and specialty here?
Kaushik Roy
I guess you misunderstood. I said our R D and Technical team are in Gujarat, not in Andhra. But having said that in Andhra in the first phase we will be putting up regular black line and then maybe based on requirement availability of feedstock and maybe availability of talent, we might also decide to add specialty capacity there. But as of now we are planning to put up 150,000 tons of carbon black capacity which will be rubber grade capacity mostly in the first phase of capacity in Andhra.
Prolin Nandu
Sure. And just to double click large question from my side to double click on this capacity utilization right question that you mentioned. Could you help us understand what is the capacity utilization for specialty carbon black?
Kaushik Roy
Vishuddhi, we are almost at 100%. Last year which is FY25 we added a 20,000 ton line and where we have about 7,8000 tons of capacity available which we hope to utilize this year. So immediately we’ll have to add one more line of specialty.
Prolin Nandu
And when will that come? The new line of specialty
Kaushik Roy
next 12 to 15 months time.
Prolin Nandu
Okay. Okay.
So till that time we are that constrained on the specialty mix, right? Is that understanding correct?
Kaushik Roy
Not constrained. Because this year we already have capacity cushion. So the capacity which came up in FY25 is largely available for this year’s growth. And by the end of this year we will have that line almost ready. The new line.
Prolin Nandu
Okay, that’s it from my side. Thank you team.
operator
Thank you. The next question is from the line of Romel Jain from Electrum PMS. Please go ahead Mr. Omil. Excuse me Mr. Omil, am I audible to you? Mr. Omil, your line has been unmuted. Please go ahead with your questions as there is no response from the line of the current participant. Our next question is from the line of Sara from UVR Fund Advisory. Please go ahead.
Prolin Nandu
Hi. Thank you. Thank you for this opportunity. So my questions are related to Aquafarm. In Aquafarm, what is the current logistics costs and what are the plans to optimize these costs?
Kaushik Roy
Excuse me, in terms of percentage.
Sara
No sir, absolutely.
Kaushik Roy
Currently it could be very different. So Aquafarm has manufacturing facilities in three geographies. Us, India and Saudi Arabia. And from there it caters to different markets. So there will not be any uniform logistics costs. Typically I mean if you want to look at the containerized waste dates like from India to Middle east or Southeast Asia it will be about 20, $25 a ton. For Western Europe it would be about close to $100 a ton. And from India to US it will be around $150 a ton. These are the rates.
Sara
And what are the Plan okay, in Aquafarm, 85% of sales come from US and Europe. What is the outlook on demand and pricing in these key regions? And what is the target addressable market in US and Europe? And how much of the current market is catered by China?
Kaushik Roy
Well, the US market is the strongest for Aquaform from the point of view of demand as well as from the point of view of margin. So that is the best possible market. What we have. Europe is decent market, but obviously not as good as usa. So therefore as an organization, our trust and focus right now is to increase our sale in USA as much as we can. So that is going forward will be our strategy as we go along while maintaining the presence in Europe because there are players like, for example PNG. We are the largest supplier to PNG and mostly it is supplied in Europe.
So it remains. But at the same time, lot of focus will be there in USA market. This I am talking about products which are sent or manufactured in India. Echo from India.
Sara
Okay, so do we have any demand size in numbers? Do we have a demand size for the same for US and Europe?
Kaushik Roy
In US the demand is strong because. Because you know, oil production is going at full swing in USA and with Mr. Trump coming in that will increase further then you want to increase further. So US side is pretty strong. Europe is little soft or I’ll say it is a bit muted and as I said, therefore more focus is there USA right now for us.
Sara
I wanted some numbers like if you.
Kaushik Roy
Could give on demand, on demand side, USA economic economy wise it is growing roughly about 1.7% this, this particular financial year. That is the projected growth around 2% 1.72 whereas for Europe it is almost flat. It is just about 0.5 to 0.6%. So that is what the growth looks like in Europe anyway. This is the largest economy, so almost 2% growth is not that bad. But it has definitely come down from the earlier numbers.
Sara
Sir, at what prices are China dumping and how competitive is Aquafarm’s pricing as compared to the prices that China is.
Kaushik Roy
Dumping right now China is not able to dump in USA because of the current tariff which is 145% they’re not in a position to dump. But yes, earlier China used to dump a lot of material and because of that at places we used to, you know, kind of compete with China and therefore it used to be a problem for us, but right now a bit of an advantage for us I would say, particularly from US perspective with 145% duty.
Sara
One last question. In the total debt that we have. How much is Indian debt and how much exposure to the half of foreign debt?
Kaushik Roy
It is entirely rupee denominated debt.
Sara
Okay. All right. That’s it. Thank you.
Kaushik Roy
Thank you.
operator
Thank you. Ladies and gentlemen, this was the last question for the day. On behalf of ICICI securities limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines. 60.