PCBL Ltd (NSE: PCBL) Q1 FY24 Earnings Concall dated Jul. 12, 2023
Corporate Participants:
Raj Kumar Gupta — Chief Financial Officer
Kaushik Roy — Managing Director
Analysts:
Sanjesh Jain — ICICI Securities — Analyst
Aditya Khetan — SMIFS Institutional — Analyst
Jenam Gilani — Swan Investment — Analyst
Vikram Ramalingam — Quantum Advisors — Analyst
Bharat Sheth — Quest Investment Advisors — Analyst
Dhiral Shah — Phillip Capital BCG — Analyst
Radha Agarwalla — B&K Securities — Analyst
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Anupam Agarwal — Lucky Investment Managers — Analyst
Madhav Marda — Fidelity International — Analyst
Vignesh — Crisima Wealth — Analyst
Rahil Shah — Crown Capital — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to PCBL Limited Q1 FY ’24 Earnings Conference Call hosted by ICICI Securities. 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sanjesh Jain from ICICI Securities. Thank you and over to you, Mr. Jain.
Sanjesh Jain — ICICI Securities — Analyst
Thanks, Nirav. Good afternoon, everyone. Thank you for joining for PCBL Limited Q1 FY ’24 Results Conference Call. We have PCBL management on the call represented by Mr. Raj Gupta, CFO; Mr. Shaket Sah, Head, Investor Relations; and Mr. Pankaj Kedia; Vice President, Investor Relations.
I would like to invite Mr. Raj Gupta to initiate the call with his opening remarks. Post which, we will have a Q&A session. Over to you, sir.
Raj Kumar Gupta — Chief Financial Officer
Thank you, Sanjesh. Thank you, Nirav. Good afternoon to all of you who are on the call and thank you for taking your time to join the call. I would like to point that there would be some statements during the call, which may be forward-looking and an appropriate disclaimer to this effect has been included in the investor update which we have shared earlier. Let me start with the highlights of our performance in the first quarter. While during the quarter a part of PCBL Tamil Nadu facility was commissioned, but for sake of easy understanding and comparison, we would discuss the subsidiary performance separately. The year has started on a good note despite ongoing geopolitical and economic challenges. During the quarter, our standalone revenue from operation was INR1,297 crores. The drop in revenue is on account of drop in crude prices from an average of $1.97 to $1.82 year-on-year.
Standalone sales volumes were 1,18,000 tons, up around 8% year-on-year. EBITDA grew by around 4% year-on-year to INR214 crore and EBITDA margins translate into roughly 16.5%. This is highest-ever EBITDA and PBT in our history. As you are aware, the first phase of greenfield facility in Tamil Nadu was commissioned around middle of April. During the quarter, we achieved a production volume of roughly 6,300 ton on this facility and a sales volume of around 5,000 ton. It’s roughly 45% capacity utilization against the first line. We expect to ramp up production from this line further during this quarter with some approvals, which are expected from tire customers during the quarter. We expect TN facility to achieve breakeven at around 45% capacity utilization once all the other remaining lines and co-generation power plants are commissioned. We expect to commission the balance capacity during the quarter.
Consolidated sales volume during the quarter was 1,23,000 tons. This was backed by domestic sales volume of 82,000 tons and international sales volume of 41,000 tons. Moving on to the segmental performance. Tire accounted for roughly 83,000 tons, performance chemicals sales volumes were 28,500 tons, and specialty black volumes were 11,800 tons. We continue to expand our product portfolio and customer base. Consolidated revenue from operation during the quarter was INR1,348 crores. Consolidated EBITDA per MT stood at INR17,550 while consolidated PBT stood at INR156 crores. Power generation also increased during the quarter from 144 million units in same quarter last year to 156 million units this quarter and corresponding sales volume was 98 million units as against 86 million units in the same quarter last year.
PCBL’s average realization from power sales stood at INR3.79 per kilowatt hour. We are pleased to announce commissioning of 20,000 ton per state of brownfield expansion of specialty line at Mundra. Company’s total specialty black capacity now stands at 92,000 ton. The newly commissioned state-of-art capacity would lead to further premiumization of product portfolio and cater to demand of our Indian and overseas customers. Initiatives are being undertaken to progressively ramp up production from this facility. Long-term prospects of specialty black segment looks very positive and we believe there would be adequate business potential to sustain the growth momentum. Considering the changes in global supply chain and consumption patterns, demand and margins in this segment should continue to remain very strong. Structurally, we are increasing resource allocation to this segment.
With regard to market scenario and outlook, domestic market demand is growing with continued strong momentum in OEM segment and replacement market is also doing fairly well. We expect tire demand to remain healthy going forward. In FY ’22 and ’23, Indian tire industry volumes grew by around 10%. Going forward over next couple of years, we expect tire industry growth to settle in high single-digit volume growth. Most of the research agencies also indicated around 9% to 10% kind of growth for this segment. This would help carbon black industry to increase capacity utilization. In terms of near-term outlook, we are little cautious about the global demand momentum. Continuing high inflation in developed economies might be on consumption and we are continuing to work on strengthening our supply chain, improving in our — improvement in our product mix, and also cost optimization initiatives within the company.
Moderation in oil price is also helping our customers to increase margins in their business and it is also helping us release a part of our working capital requirements. In terms of mid to long-term prospects, the changing cost structure in China and sanctions on Russia opened a big door of opportunity for Indian manufacturers which is across industries. Our industry would also benefit from this structural change and we therefore will have to keep adding capacity over next few years. We continue to work on fundamental building blocks of our business to achieve our long-term growth and profitability targets, but at the same time we also remain conscious of volatility of global business environment and would remain judicious about our capex and ROCE.
So gentlemen and ladies, with this, I conclude my opening remarks and I would be happy to take your questions now.
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 Aditya Khetan from SMIFS Institution. Please go ahead.
Aditya Khetan — SMIFS Institutional — Analyst
Yeah. Thank you, sir for the opportunity. Sir, my first question was on the gross spreads. Sir, when we looked at the carbon black prices for the quarter, it has declined so similarly, carbon black feedstock prices have also declined. So generally, sir, in declining price scenario, businesses face inventory loss. But despite this, your spreads have came at an all-time high. So, what is the reason like? Is there — and considering the demand also like into the exports market was not that good. So, what is the reason like for these good numbers of spreads?
Raj Kumar Gupta — Chief Financial Officer
Okay. So I think there are two questions, Aditya, which you have asked. One, declining crude prices have not resulted into an inventory loss. And second is how we are able to increase our volumes despite market conditions, right? Now answer to your first time is time and again we have said that we don’t speculate on crude prices or inventory levels. So, we only maintain the inventory level for which there is a pass-through in our pricing arrangement with customers. And therefore in changing crude scenario whether it goes up or down, inventory related impact on our business is as such not there unless there is a very steep movement in crude price over a very small period. So like tomorrow suddenly from the current say $78, $80 level, if it drops to $40, would there be an impact on our business? Yes. But if it drops from $80 to say $70, would it also create an impact on business? No. So we do a dynamic calculation of our sales forecast in the proceeding next three months and accordingly, we build up our inventory.
With respect to the overall demand scenario in the market and our volume performance. See while overall global demand scenario I would not say it is most conducive period from that perspective, but supply chain relations are changing globally and Europe is now opening its doors for Indian manufacturers. And historically, Europe was a very small market for India. Now gradually that share is increasing and it’s a big potential, it’s a large market the whole of Western Europe. And we have in last six, seven years invested lot of money on building up and improving our supply chain in these markets and even now it is just the beginning. I mean the real improvement in business in Europe has started happening in just last two years. I think gradually it will unfold more and more in next five years. So, we are seeing Western Europe as a large opportunity for Indian exports for our industry.
Aditya Khetan — SMIFS Institutional — Analyst
Okay. And sir, also on the spreads part, I mean the gross spreads like we have reported highest ever spread. So considering even if the specialty volumes they come up in the coming quarters, but considering weakening of demand, export related uncertainties, can we say that so this is the peak numbers which we have done in this quarter and we could be sliding down from here on?
Raj Kumar Gupta — Chief Financial Officer
I would not say it will go down or move up. See structurally, I mean there are lot of areas upon which we are working since last two years and gradually that is helping us improve margins — blended margins from the business. So that is the structural change that we are trying to bring to business. Now of course in market there would be pockets of opportunity. As and when we see these opportunities or the pocket –windows of opportunity, we try to utilize them. So in some quarters, you might see some jump in the margin over the previous quarter. In other quarters, you might see some softening. But structurally if you look at year-on-year performance, I think there is still a significant scope for us to go up.
Aditya Khetan — SMIFS Institutional — Analyst
Okay. Sir, on to the specialty volumes side. Sir, for the last four, five quarters the numbers has been almost constant at around 11,000 tons to 12,000 tons and we have able to ramp it up. Now we are adding another 40,000 tons capacity. Sir, what is going wrong here? Like is there a demand issue or the weaker exports market is not helping you to ramp up the volumes for the last four, five quarters?
Raj Kumar Gupta — Chief Financial Officer
No. Aditya, four, five quarter numbers have gone up. You may not have noticed. But till last year I mean except for the last quarter, our numbers were in four digits. So we were doing about 9,000 tons, 8,000 tons, those were the numbers and last two quarters we have been doing around 11,000 tons. So, volumes are on an increase. In fact between the same quarter last year and this year, the volumes have gone up by 16%, 17%. Now why we are adding capacity? Our existing capacity can only support production up to maybe 47,000 tons, 48,000 tons annually and we see specialty segment as a large opportunity. Our aspiration is to take our annual volumes to six digits over a period of time in next few years and that would require us to keep on adding capacity. So as per our existing plan, every year we’ll have to keep at least adding one line — one new line in this space. And it is not only capacity addition, there’s a very strong R&D team. Currently we have more than 50% working in that group. They are launching newer and newer grades. Similarly, marketing team is working hard to create larger market of our specialty customers across geographies. So there’s lot of efforts, lot of work which is going on in this area.
Aditya Khetan — SMIFS Institutional — Analyst
Got it. Sir, from the newly expanded line of Chennai, sir, that line was started in April. So considering that two to three months full period for the quarter, the volume number still looks to be very low of around 6,900 tons.
Raj Kumar Gupta — Chief Financial Officer
See this line — Aditya, that line if we were to utilize that line for the full quarter, it would give us roughly around 13,000 tons quarterly. I’m talking about the quarterly volume. And because it was commissioned during middle of April so proportionate volume we could have got 100% utilization level, it would have been around 11,000 ton. That was the total utilization if we were to do, right? Now against that 11,000 tons, we have produced more than 6,000 tons already in that quarter, right, which is more than 50% of production. Now initially when we produce on a new line, then it takes a little time to stabilize the qualities and the grade. Therefore, the approval from major customers takes time to come. So in the first quarter given that 5,000 tons of sales volume and 6,000 tons of production itself is a big feat to achieve. But we are confident that as we step into the current quarter and going forward, the capacity utilization would only increase.
Aditya Khetan — SMIFS Institutional — Analyst
Got it, sir. Sir just one last question from my side. Sir, we are witnessing increase of imports from China and into the carbon black space also for the last few months, we have witnessed increase in imports.
Raj Kumar Gupta — Chief Financial Officer
China at one point of time used to export about 700,000 tons to 800,000 tons in India. Last two, three months their average is 300 tons.
Aditya Khetan — SMIFS Institutional — Analyst
Okay. So which are the countries which are exporting — which are importing to India right now?
Raj Kumar Gupta — Chief Financial Officer
See, overall imports in India have come down from an average of about 2 lakh tons to less than 1 lakh tons in India and part of this import is also because there are some grades which are still not produced in India, primarily in the specialty segment. Also because there are very few carbon black manufacturers in India, for tire companies it’s a business risk. And therefore, they want to keep some relations lubricated from abroad so that if there is some disruption here in the carbon black industry, they still can get supply from overseas manufacturers. So the level of import as such has come down significantly and now India has become exporters. So, India is exporting around 200,000 tons and importing just about 100,000 tons. And among the countries which are exporting to India, it includes some of the Middle East countries like Iran, Saudi Arabia; then there are some Southeast Asian countries like Thailand and South Korea; Russia also is something to India. It’s a host of countries, but small, small quantities. And good part is that the landed price in India at which imports are happening is still higher than the price at which we are selling in India.
Aditya Khetan — SMIFS Institutional — Analyst
Okay. Thank you, sir. I will join back in queue.
Operator
Thank you. The next question is from the line of Jenam Gilani from Swan Investments. Please go ahead.
Jenam Gilani — Swan Investment — Analyst
Hi, sir. Thanks a lot for giving me this opportunity and congratulations for a good set of numbers. Sir, what will be the current spread between ours and the Chinese products?
Raj Kumar Gupta — Chief Financial Officer
Jenam, could you please repeat your question?
Operator
Sorry to interrupt. Jenam, can I request you to speak through the handset, please?
Jenam Gilani — Swan Investment — Analyst
Can you hear me?
Raj Kumar Gupta — Chief Financial Officer
Yes, it is better now.
Jenam Gilani — Swan Investment — Analyst
Yeah. So what would be the current spread between the — between our products and the Chinese products?
Raj Kumar Gupta — Chief Financial Officer
You’re talking about the raw material side, right, the carbon black oil. So last quarter, the average difference was around $251 and for June, it was $269. CBO being on the higher side.
Jenam Gilani — Swan Investment — Analyst
Okay. And sir, what would be the max capacity utilization we can reach for our specialty black plants?
Raj Kumar Gupta — Chief Financial Officer
So now with this Mundra commissioning, Mundra possibly would give us around 15,000 tons to 16,000 tons of new lines and the existing capacity that we had prior to this can give us around, say, 47,000 tons, 48,000 tons. So in totality, we can go up to maybe 63,000 tons, 64,000 tons against our existing lines. Additionally, one more line currently is under implementation. That should be operational by around this time next year maybe by May, June of FY ’24.
Jenam Gilani — Swan Investment — Analyst
Okay. And we expect mainly demand from Western Europe as you mentioned. So we see that — like if Russia is open — like if Europe accepts products from Russia again in the near future or whenever so that wouldn’t affect our demand much, right, because we’ve started gaining traction from European countries?
Raj Kumar Gupta — Chief Financial Officer
I did not understand your question. Are you saying that once Russia starts reproducing carbon black and whether that would have any impact on our business? Is that question?
Jenam Gilani — Swan Investment — Analyst
Yes.
Raj Kumar Gupta — Chief Financial Officer
Okay. See, Russia is already producing, Jenam. It is not that Russia is not producing. The sanctions on Russia are only from Western countries — Western European countries and USA. But they have been selling in neighboring countries I mean China and other some of the Asian countries. So, that material is finding its way in the market. But the real benefit of this whole thing that we will get is Russia will stop adding capacity because the price at which they would be selling now, they would not be making margin in this business. Their logistics cost would increase plus they will have to sell at a discount to the market price. So on both count, I mean the manufacturers would incur losses and therefore, there is no case for them to invest in further capacity. And Russia prior to this Western Europe issue, they were adding capacity very aggressively. They have their own crude, it is cheaper for them logistically, and therefore, they were adding capacity. Almost 70% of their capacity was available for sale. So, the real advantage we are going to get is because they may be holding on to capacity addition, which is a structural change. So, we don’t see any further disruption from Russia because the material is already there in the market. Have I been able to answer your question, Jenam?
Operator
Sir, the line for the participant dropped. We move on to the next participant. The next question is from the line of Vikram Ramalingam from Quantum Advisors. Please go ahead.
Vikram Ramalingam — Quantum Advisors — Analyst
Yeah. Hi Raj. Congratulations on a good set of numbers. What I wanted to check was last year and even the year before that, the logistic cost was very high because of generally those containers not being available and some new regulations in the shipping industry. Can you give me an update as to what the situation is right now?
Raj Kumar Gupta — Chief Financial Officer
The freight rate — container freight rates have come back to pre-COVID level.
Vikram Ramalingam — Quantum Advisors — Analyst
[Speech Overlap], right?
Raj Kumar Gupta — Chief Financial Officer
No, they have come back to the previous level, pre-COVID level.
Vikram Ramalingam — Quantum Advisors — Analyst
Okay.
Raj Kumar Gupta — Chief Financial Officer
And the contracts that we — under which we supply to our foreign customers — overseas customers are annual contracts, which are typically signed around November, December for the calendar year. So, the recovery also gets reset every year.
Vikram Ramalingam — Quantum Advisors — Analyst
Yeah. Why I asked is because that had impacted our margins on the exports business because we were factoring in or we were taking in the higher freight rates so that’s what I wanted to check with. If we’ve gone back to previous levels, then automatically our margins from export business should have improved, correct?
Raj Kumar Gupta — Chief Financial Officer
Yeah. I think — I mean the impact of freight rates have gone away. It has been more than two, three quarters.
Vikram Ramalingam — Quantum Advisors — Analyst
Okay. Fair enough. My second question is regarding this Tamil Nadu plant. Will we be having a specialty chemical facility over there as well?
Raj Kumar Gupta — Chief Financial Officer
I mean as per our current plans, no. So only in the next phase, we plan any capacity. We still have space there for brownfield expansion. So in next phase of expansion, we might plan. But under the current phase of expansion, no.
Vikram Ramalingam — Quantum Advisors — Analyst
Okay. And we already have capacity in the Palej plant, right? Any scope to increase that as well? Because specialty if things go right, you’re pretty close to again utilizing your full capacity almost I mean give or take a few thousand here and there. So if you want to increase the contribution of specialty to your total volumes to the tune of 25%, then we need to work on the capacity part because the lines are very different.
Raj Kumar Gupta — Chief Financial Officer
The lines are completely different and the process of manufacturing and oil is also different. Now Palej doesn’t have any space available for expansion. But Mundra we still have some space and where we might put in a third specialty line. So Mundra has a scope and thereafter we will have to decide whether we put this capacity in Chennai or we identify a new location completely.
Vikram Ramalingam — Quantum Advisors — Analyst
Okay. Any product specific grade that we are — that is contributing to this higher specialty sales — specialty chemical sales in the sense that we…
Raj Kumar Gupta — Chief Financial Officer
There are grades. See, currently we have about close to 50-odd grades in specialty and all of them are premium grades. Of course I mean some of them like alumina where the realization and margins are very high, but the overall market size for those grades is also not as large. But specialty see, it’s a recent journey for us. We started it just seven, eight years back and there are a number of grades available in the market where the margins and realizations are extremely, extremely high, much higher than the grades that we have in our portfolio. So I think going forward, margin in this segment should improve further I mean as we keep on launching newer solutions in this.
Vikram Ramalingam — Quantum Advisors — Analyst
And this plan to increase exports to Western Europe or rather we believe that that’s where the next wave of demand will be from. What I wanted to check is we’re talking about still the tire carbon black in there. Are we talking about specialty black when you say Western Europe? And — because in the sense I’m not sure whether Western Europe has that kind of tire manufacturers capacity or facility over there so I just wanted to check that.
Raj Kumar Gupta — Chief Financial Officer
So, the opportunity is in both space, Vikram, in tire as well as in specialty. Europe is a big specialty market. So the scope is across segments and already a good part of our specialty sales is happening in Europe. So we already have…
Vikram Ramalingam — Quantum Advisors — Analyst
Because you R&D center is also in Belgium.
Raj Kumar Gupta — Chief Financial Officer
And that was one of the rationale behind setting the R&D center there. We can also provide technical support to the local customer.
Vikram Ramalingam — Quantum Advisors — Analyst
Okay. Fair enough. Thank you so much, Raj.
Operator
Thank you. Next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.
Bharat Sheth — Quest Investment Advisors — Analyst
Hi. Congratulation Raj and team on good set of numbers. My question is first is on the specialty. Last year we — in annual report, we stated that we introduced a new product under Energia brand, which is for exceptional conductivity, superior disparability So is that — so can you give some color, how big is the market and again whether this product is higher superior among the whole alumina or not? And second thing is this our journey towards these high conductivity area that we were always talking?
Raj Kumar Gupta — Chief Financial Officer
Yeah. We stepped into conductive grades about three, four years back. My voice is echoing. Hello, can you hear me?
Operator
Bharat, may I request you to mute your line from your side, please?
Raj Kumar Gupta — Chief Financial Officer
Yeah, so we entered into the conducting market about — there is some echo still. Okay.
Operator
Sir, go ahead. I unmuted his line.
Raj Kumar Gupta — Chief Financial Officer
So I was talking about the recent initiative of ours, which we started three, four years back. So there was a team of R&D professionals, which has been working on conductive grades and we have been successful in launching some grades in this segment. But having said that, the pure super conductive grades, which will be used in the high end EV battery, those grades are still in the lab. We have had some success — initial success in that space, but we need to improve upon the purity level. And I mean we are hopeful that we will be able to launch it soon and we have success with increasing purity level. The current grade that we have, they are mostly used in the conventional batteries and also in the internal coating of electric wires for better conductivity. But a very strong team is working on super conductive stuff and we are hopeful that you will see these grades being launched in the market.
Bharat Sheth — Quest Investment Advisors — Analyst
So Raj, this Energia brand, what is the potential that we are really looking I mean?
Raj Kumar Gupta — Chief Financial Officer
In the super conductive space, the demand — actually the market just got created and it is expanding exponentially. Like in India two years back, the monthly average sales of electric cars was around 1,000 units and in current year it is about 8,000 units per month. So, that’s the way consumption of electrical vehicles is increasing and we are seeing similar kind of trend in Europe and China. So the market is expanding rapidly and therefore estimating the size of market I think would not be appropriate. It is expanding. It is going to be a really big market and in next I think five or 10 years, this market will continue to expand. So, there is adequate potential in the market for manufacturers to sell their products and market to absorb their volumes.
Bharat Sheth — Quest Investment Advisors — Analyst
This product is more superior, I mean, premium product in our whole category?
Raj Kumar Gupta — Chief Financial Officer
The one that we are working in that — again there is echo. Bharat ji, can you please mute your speaker? So the one that currently we are working on, that is going to be the very high super conductive quality. But the ones that we have already launched under the Energia portfolio, those are mostly semiconductive grades of carbon black.
Bharat Sheth — Quest Investment Advisors — Analyst
And premium wise, I mean…
Raj Kumar Gupta — Chief Financial Officer
Premium, there will be very high premium. I mean some of the grades which gets sold in the market, the average realization is around $20,000 a ton and because we don’t have those grades in our portfolio, we would not exactly know the kind of margins, but the realization itself is a situation that margins will be in a different trajectory altogether.
Bharat Sheth — Quest Investment Advisors — Analyst
And coming to this carbon –I mean tire grade carbon black, the way I mean disruption is happening in China consumption side so is there any probability of even at loss they dump carbon black for tire — tire grade carbon black into India?
Raj Kumar Gupta — Chief Financial Officer
The way we see the current market dynamics, the cost structure has changed significantly in China and it may not make commercial sense for the manufacturers to continue to produce or add capacity. So over next four, five, six years whatever period, there will be further consolidation and because now Russia will have lot of countries in that sanction list so they will not be able to sell there. I think for them it will make sense to sell to China, which is a bordering country for them. And between them if they absorb each other’s capacity, somewhere I think at the global level the market will be undersupplied and which should continue to support the recovery and margin even for the tire grade carbon black.
Bharat Sheth — Quest Investment Advisors — Analyst
Okay. Last question with declining in this raw material price and how do we see now working capital change in absolute, number of days may remain same?
Raj Kumar Gupta — Chief Financial Officer
Working capital has already come down. I mean we don’t report our borrowing numbers quarterly, but borrowings have come down to about INR50 crores in last quarter. So, working capital requirement will go down further.
Bharat Sheth — Quest Investment Advisors — Analyst
Okay. Thank you very much and all the best.
Operator
Thank you. Next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Sanjesh Jain — ICICI Securities — Analyst
Thanks for taking my question. I got few of them. First, talking about the export market. In your opening statement, you cautioned on the demand from the export market. What do you see as a challenge? And we have seen one of your peers has issued a profit warning. Do you think the situation is stabilizing? How do you see the exports market because that’s where we are getting the significant growth factor?
Raj Kumar Gupta — Chief Financial Officer
So Sanjesh, so far we have not witnessed any issue with our ability to sell in those markets. But having said that, we are seeing very high inflation number still coming from those countries and also interest rates continue to rise. So at what level those issues will impact the local demand, it is difficult for us to assess. But as of now, we don’t see any impact. It might have so happened that there — I mean the overall demand of these countries might have gone down, but maybe because they are now purchasing less from other countries and therefore it is not reflecting in our volume. So, our volumes in these markets are still on an increase. We just put in a word of caution that I mean the market volatility is still remaining. I mean it is not that market conditions have become better than what it was couple of quarters back.
Sanjesh Jain — ICICI Securities — Analyst
Second on the export side, incrementally where is our volumes going to? Because I understand last time you said that the largest pie for us was APAC and Europe was 20%. How is this mix changing incrementally with more volumes going in? And is it fair to assume that lot of the Chennai facility initial volumes will be placed in the export market?`
Raj Kumar Gupta — Chief Financial Officer
Till the time we get approval from domestic tire companies, we will be selling a little more in international market, but that will be only interim arrangement. Structurally because Chennai has lot of tire manufacturing facilities so again a good part of the Chennai facility will go towards catering to domestic demand only. I guess for us to increase our overall geographical distribution or export volumes in terms of percentage more, we will require beyond Chennai capacity. I think for export volumes to go significantly beyond that 30%, 35%, Chennai will not be adequate for us to achieve that. Now in terms of geographical distribution outside India, Southeast Asian countries will remain a big market for us — big and important market for us.
There are a number of countries which solely depend on imports, which either doesn’t have any capacity or which have very little capacity to cater to their requirement so the countries like Indonesia or Vietnam. So, these markets will continue to remain important and big for us. Having said that, Europe is assuming importance. Europe at one point in time it was around 4% three, four years back. Last year we could do about 14%, 15% of our international volume. And this year we feel that we should be able to cross 20% of volume coming from this market. So over a long term maybe four, five years Europe possibly will assume more importance, maybe it will become 25% to 30% of our overseas volumes. That’s how we see it. But that will take further capacity addition by us because our existing capacity will not be able to cater to this change.
Sanjesh Jain — ICICI Securities — Analyst
Just wanted to understand the Europe situation better. Russia has certain quota to export close to 7,50,000 metric tonnes this year which will expire in July ’24 and from July ’24, I guess Europe is looking at a complete ban. So there is 7,50,000 metric tonne of additional demand, which we will start seeing. Have you started discussion with any customer or are we looking to evaluate that opportunity where we can get more share out of that and we have Chennai facility to cater that?
Raj Kumar Gupta — Chief Financial Officer
So Sanjesh, the challenge before us is that the local tire manufacturers are also expanding and there is a very high level of interdependence between tire industry and carbon black industry. So, we can’t afford to commit Chennai to — Chennai entirely to or large portion of Chennai to European customers. What we are doing is while in the space of performance grades and specialty we are adding customers, in tire space we are only adding those customers with which we already have relation in other geographies, right? Some of these customers to whom we were supplying in some countries but not in Europe, now we are also supplying to them; but we are only committing a part of Chennai or our overall capacity which we feel confident of continue to supply to them. So, that’s how we are doing it. And like you said that the sanctions on Russia is going to create a massive impact on Europe. Yes, it is right and it has already started happening because most of these customers will not wait till next June or July. They will want to tie up with other manufacturers much in advance and that process has already started.
Sanjesh Jain — ICICI Securities — Analyst
So, are we looking to get some of those customers and stop sales or cut down on lower margin spot sales in India and tie up with this long-term European guy?
Raj Kumar Gupta — Chief Financial Officer
What we are doing is we are shifting part of our spot market volumes to the strategic customers in these geographies. That’s how we are planning it and that’s what we are doing. We have already started doing it, Sanjesh. So I mean we have committed some volumes to customers, but it is more of replacement of spot to the strategic customer. And of course I mean Chennai to some extent of course I mean it will add to the overall volumes, which will go to the overseas market.
Sanjesh Jain — ICICI Securities — Analyst
Do you think you will need to announce another capex very soon?
Raj Kumar Gupta — Chief Financial Officer
Yes, we will.
Sanjesh Jain — ICICI Securities — Analyst
Okay. Last two questions. One on gross profit per kg. We last time highlighted that we will maintain the last year’s gross profit close to INR32 and this quarter we have done better than that. Do you see a reason to change that guidance?
Raj Kumar Gupta — Chief Financial Officer
No, our long-term guidance, we will — we don’t want to change, Sanjesh. And typically like I said that there are always some windows of opportunity in some quarters and wherever we see that, we utilize that. Structurally we continue to work on our own efficiencies and product portfolio area changes, which will provide support to improvement of margin, but we will want to retain our guidance on the margin.
Sanjesh Jain — ICICI Securities — Analyst
And last question on the tax rate, last two quarter tax rate has suddenly gone up to 31% — 29% from sub-20%. Any change in the tax rate? Why there is a sudden jump in the tax rate?
Raj Kumar Gupta — Chief Financial Officer
In fact during last quarter also I mentioned. So, our power business was enjoying tax immunity for 15 years under 80-I of Income Tax — Section 80-I of Income Tax. Now that 15-year period has lapsed. I mean it has got completed and with that now even the power profits have become taxable. So, that puts our company in a 25% tax bracket. And last year initial quarter actually — I mean we were not sure whether the whole of the shield would expire, right, in the fourth quarter. And therefore in the earlier three quarters, it was based on that exemption and therefore the rate was 21% as against the 24%, 25%. So, that impact was taken in the quarter four. So, that quarter the tax rate was unusually high. Now for this year, we estimate our tax rate to be around 25%, 26%. And once Chennai is fully operational, then Chennai will be subject to a 17% tax rate. So then again the blended tax rate on a consolidated basis would come down to around 22% to 23%, but that will take a year’s time. In the interim, the tax rate will remain around 25%, 26%.
Sanjesh Jain — ICICI Securities — Analyst
Okay. Fair enough. Just one question. We said that Chennai facility is more efficient technologically as well. Have we seen any early signs of better yields, low cost, any of those signs?
Raj Kumar Gupta — Chief Financial Officer
Yields we are getting to see that improvement, but it’s still in very early stage, Sanjesh, and it will take us I think at least two to three quarters more to see the real impact of the technology I mean once everything stabilizes. Because when we are running our plant at a lower rating, even that impacts the yields, right, and currently we are operating only at — I mean till last quarter, we had been operating it at about 45% capacity utilization level. So once we cross that maybe 70% level, then we will get to see the real improvement and it will not only be the yield, it will also be the productivity, lower maintenance cost, and host of other things.
Sanjesh Jain — ICICI Securities — Analyst
Got it. That’s it from my side. Thank you for taking all my questions.
Operator
Thank you. Our next question is from the line of Dhiral from PhillipCapital. Please go ahead.
Dhiral Shah — Phillip Capital BCG — Analyst
Hello, good afternoon, sir. Thanks for the opportunity.
Operator
Dhiral, I’m sorry to interrupt you. There is lot of background disturbance from your line.
Dhiral Shah — Phillip Capital BCG — Analyst
Am I audible, sir?
Raj Kumar Gupta — Chief Financial Officer
Yes.
Dhiral Shah — Phillip Capital BCG — Analyst
Sir, what kind of utilization we expect for the Phase 1 Chennai facility for the full-year FY ’24?
Raj Kumar Gupta — Chief Financial Officer
Sorry, what kind of — utilization?
Dhiral Shah — Phillip Capital BCG — Analyst
Yes, we expect for the full year for this Phase 1 of Chennai facility.
Raj Kumar Gupta — Chief Financial Officer
I guess in the first year we should be around 40% to 45% capacity utilization level.
Dhiral Shah — Phillip Capital BCG — Analyst
Okay. Even at the current run rate, we are working at the 45% utilization, right?
Raj Kumar Gupta — Chief Financial Officer
Yes. But current utilization is only against one line and there are two more lines which we are going to add in the current quarter. So when I say 45%, I’m talking about on the full base of the lines.
Dhiral Shah — Phillip Capital BCG — Analyst
Okay. Understood, sir. And sir, on the gross spread side so whatever gross margin per kg that we have delivered in Q1 so with the higher export and the improving specialty sales, do you expect this spread to sustain at least for the full year?
Raj Kumar Gupta — Chief Financial Officer
Dhiral, see like I answered this question couple of times in this call also that one part is the structural change in our own efficiency improvement, efficiency level, and product portfolio which will pull up the margin structurally going forward. And second is the changing market conditions. Past couple of years the changes which have happened in the market on the demand-supply side also on the changing supply chain relation, that is supporting margins. Now that is something which is difficult for us to read. We are agile enough to gain from the pockets of opportunity. Wherever we see, we try to utilize that.
Dhiral Shah — Phillip Capital BCG — Analyst
Okay. And lastly, sir, you are talking about adding capacity with the industrial tailwind that we are seeing right now. So what kind of capacity addition we are looking in coming years, let’s say, FY ’25 or FY ’26?
Raj Kumar Gupta — Chief Financial Officer
Yeah. I believe my own sense is that for our growth to be properly supported, we will have to keep on adding between 80,000 tons to 100,000 tons every year. That’s the kind of run rate internally we are assessing.
Dhiral Shah — Phillip Capital BCG — Analyst
Okay. So probably from next year, we might add around 1 lakh?
Raj Kumar Gupta — Chief Financial Officer
Yeah, 80,000 to 100,000, yeah.
Dhiral Shah — Phillip Capital BCG — Analyst
And sir, what kind of capex this will require if it is a brownfield?
Raj Kumar Gupta — Chief Financial Officer
I mean it will also depend on the metal prices. But typically on a brownfield expansion, we incur about roughly INR50,000 to INR60,000 a ton.
Dhiral Shah — Phillip Capital BCG — Analyst
Okay. Got your point, sir. Thank you so much, sir.
Operator
Thank you. Next question is from the line of Radha from B&K Securities. Please go ahead.
Radha Agarwalla — B&K Securities — Analyst
Hi, sir. Thank you for the opportunity. Good evening. Sir, my first question was you spoke about for the export market you’re committing to customers who you’re already supplying in the tire segment. But could you give some light on the specialty side as we know that Europe is a large market for specialty? So, who would be a top customer in terms of specialty and also if you could give some light on performance chemicals?
Raj Kumar Gupta — Chief Financial Officer
Europe is a big market for specialty. But Europe is not the only market; Middle East is a big market, North America is a big market, and even China is a big market for specialty and we are focusing in all of these markets, Radha. So, it is not only Europe. Europe primarily is getting impacted because of Russia and Russia as such did not have much specialty capacity. So the disruption in the specialty space is not much because of Russia, right, on the supply side. But specialty market itself is very large. It’s more than 1 million ton market and the volumes currently that we are selling is very small portion of this market. Last year we did about 40,000 ton, even our current run rate is about 50,000 tons so it is not much. So there is a very big scope for us to improve just by adding customers across globe wherever we have market.
Radha Agarwalla — B&K Securities — Analyst
And sir, any color on the top customers that we are supplying in the Middle East region or the European region?
Raj Kumar Gupta — Chief Financial Officer
There are a number of them so like Middle East Baruj is our big customer. Europe we have Borealis, we have SABIC, and there is MDI. And these are all big customers as we speak.
Radha Agarwalla — B&K Securities — Analyst
Okay, sir. And sir, you mentioned that this year you will be having a 25% tax rate. Now this year assuming that we are moving to new tax rate from FY ’24 itself, right?
Raj Kumar Gupta — Chief Financial Officer
Yes.
Radha Agarwalla — B&K Securities — Analyst
Okay. And sir, you mentioned that we will be getting the benefit of 17% tax rate for Chennai, but that will kick in from FY ’25. But sir, this year we are expecting 45% utilization so partly we should get the benefit of that as well in this year?
Raj Kumar Gupta — Chief Financial Officer
So Radha, actually at 45% the facility will just about breakeven. So unless the facility has profit, it will not be able to reduce our weighted average tax rate. So only one, the capacity utilization is at a high level and we start generating profit from Tamil Nadu, then only our weighted average tax rate will go down.
Radha Agarwalla — B&K Securities — Analyst
Understood. Thank you, sir.
Operator
Thank you. Next question is from the line of Naushad from Aditya Birla Sun Life Asset Management. Please go ahead.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Hi. Thanks for the opportunity. Few clarifications. Firstly, in terms of your spot business, typically what percentage of volumes comes from our export business currently and how this percentage was three, four years back?
Raj Kumar Gupta — Chief Financial Officer
Currently it’s about 30% volume that we are doing in international market. And going forward structurally we want to strike an equal balance between domestic volumes and international volumes. So maybe over a period of five to six years, we would want 50% of our volumes to come from overseas market. But that’s certainly significant capacity.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Sorry, not export. I’m asking spot business.
Raj Kumar Gupta — Chief Financial Officer
Spot business — okay, sorry. So, spot is also roughly around 30%. I mean for tax, spot will also include. So, let me just give you a breakup of our segment wise volumes. Roughly about 65% of our volumes come from tires, which is kind of a committed volume. I mean there is no hard written contracts, but there is definite understanding with tire customers. About 25% to 26% is what comes from performance segment and balance roughly 9% to 10% is what comes from specialty currently. Now this 25% volumes which comes from performance, out of this almost 90% is spot and against the specialty of 10%, about 2% to 3% is spot.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Okay. Understood. Secondly, in terms of see — we see this Russia ban in Europe market as an opportunity. But if we look at other way, can this thing create a problem for us in the domestic or Asian market because they may start dumping here and there if they don’t have European market to serve?
Raj Kumar Gupta — Chief Financial Officer
Russia’s most of carbon black facilities are in landlocked location and therefore the logistics cost from — supply from Russia to India would be very high. In fact in past when we tried to bring oil from Russia, the thing did not work out because of logistics cost issues. And in last one, 1.5 years since this crisis started while Russian material has started coming in India, but it is not coming at a significant landed price so significantly lower landed price so as to say. So from that perspective, we don’t see as such any issue in India.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Okay. And typically, how much time it takes to build greenfield and brownfield capacity in our industry for commodity grade?
Raj Kumar Gupta — Chief Financial Officer
See, it doesn’t take time. Brownfield takes about a year’s time once the project is started and greenfield assuming that all the clearances and land is available, then it will take around 1.5 years. But since land and taking clearance is a lengthy process, that takes about another 1.5 years.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Okay. So broadly within 1.5 years, our capacity should come in. So, why there is so much gap we are talking about in industry of demand and supply if there is a demand by others or not? Why industry is not able to match up the capacity which is required?
Raj Kumar Gupta — Chief Financial Officer
Naushad, the supply gap has happened primarily because of China and Russia. In China their raw material cost has gone up, right, and because of that there has been significant consolidation in the unorganized space there. Now the capacity that they have vacated is estimated at around 2 million tons, which is big capacity and it will take time for that capacity to be rebuilt elsewhere in the world. But because of that countries have started adding capacity, like in India we have witnessed capacity addition in recent past. Indonesia also added a small capacity. So gradually the capacity will come up so this demand-supply gap certainly will be filled up over a period of time. Our estimate is that it will take at least six to seven years before this gap is filled.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Six to seven years?
Raj Kumar Gupta — Chief Financial Officer
Yes.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
And what percentage of our commodity grade carbon black we export?
Raj Kumar Gupta — Chief Financial Officer
We do about 30% of our volumes in international market.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
And what would be the largest export market for us?
Raj Kumar Gupta — Chief Financial Officer
Southeast Asia, I mean it consists of number of countries. But like Vietnam is a market, Indonesia is a big market, Sri Lanka, Bangladesh, these are big markets. Some countries in Europe gradually are becoming bigger for us.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Okay. So are easing of Russia exports in India because of the logistic cost and here we don’t have much exposure in the Russian or European market maybe because of the logistics cost issue. So even though that whatever Russia exports to European market goes off, we may not be able to fetch the good amount of share from that market because of the logistics cost issue. So the local or nearby player should get the maximum share. Is this understanding correct?
Raj Kumar Gupta — Chief Financial Officer
First of all, there is no nearby or local manufacturers there I’m talking about Western Europe as a whole geography and that’s a supply deficit region. Last 10 years they have not added capacity and primarily they’re dependent on China and Russia to fill the gap. Now the logistics cost between India and Western Europe is not very high. Currently it is about $70 a ton, which converts into roughly INR5,000. Now from our Durgapur facility when we are supplying to our facility in Tamil Nadu, we are incurring almost the same cost INR5,000 a ton, sometimes even more. So in terms of logistics cost, it is not much hurt. Europe is not a very price sensitive market. And from all this perspective, we don’t see any impact on margin when we sell in Europe.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
Okay. One last just in terms of — you have answered this question, but just I wanted to touch this again in terms of your EBITDA per kg. In our business, do we at least get at least two, three quarters visibility in terms of confidence to get X, Y, Z number of EBITDA per kg or is it very difficult for us to at least predict beyond one or two quarters?
Raj Kumar Gupta — Chief Financial Officer
No, we have fairly good visibility around a year’s performance unless something significant happens in the market, which is beyond our company action. On a steady-state scenario, we have good visibility for next three to four quarters.
Naushad Chaudhary — Aditya Birla Sun Life Asset Management. — Analyst
All right. Thank you so much, sir, and all the best.
Operator
Thank you. [Operator Instructions] The next question is from the line of Anupam from Lucky Investment Managers. Please go ahead.
Anupam Agarwal — Lucky Investment Managers — Analyst
Yeah. Thank you for the opportunity and congratulation on good numbers. Firstly Raj, if you could just…
Operator
Anupam, sorry to interrupt you, but the audio is not very clear.
Anupam Agarwal — Lucky Investment Managers — Analyst
Hello. Am I audible now?
Operator
Yes.
Anupam Agarwal — Lucky Investment Managers — Analyst
Yes. Raj, if you can help us understand so we’ve done about 12,000 tons of specialty in the first quarter. Given the run rate of 48,000, are we looking to hit 52,000 tons, 53,000 tons kind of a number for the full year?
Raj Kumar Gupta — Chief Financial Officer
Yes. We are hopeful of achieving that and Mundra’s new line is going to support that volume.
Anupam Agarwal — Lucky Investment Managers — Analyst
So of the 20,000 tons of new line, how much are we looking to hit from that line?
Raj Kumar Gupta — Chief Financial Officer
I think in a couple of quarters’ time, we will be reaching full utilization level. That’s how we see it.
Anupam Agarwal — Lucky Investment Managers — Analyst
By full utilization, you mean 16,000 tons, that will be exit quarter kind of run rate, right?
Raj Kumar Gupta — Chief Financial Officer
Yes. So, roughly I mean we are going to get about 4,000 tons a quarter from the line and it will take some time to stabilize the quality and the grade so maybe couple of quarters from now. It is not that it will not be doing any volume in the interim, but I’m talking about the full utilization, we expect to achieve that towards last quarter of this year.
Anupam Agarwal — Lucky Investment Managers — Analyst
Understood. Couple of years back the difference in EBITDA per kg between our normal grade and specialty grade was about 2.5 times, 3 times. How has that changed in your assessment currently at this kind of demand scenario?
Raj Kumar Gupta — Chief Financial Officer
Around 2x. Currently we are getting about 2x in specialty. Not that specialty contribution has gone down, it is that even the base volumes are yielding better margin.
Anupam Agarwal — Lucky Investment Managers — Analyst
Understood. One question on your current quarter spreads 32, we’ve been able to maintain. Was there some sort of one-off kind of opportunistic gain like we had in the last — same quarter last year?
Raj Kumar Gupta — Chief Financial Officer
There is no specific one-off event in this quarter. Last year same quarter was impacted because of Russia disruption, right? But in this quarter there was nothing of that sort, but market dynamics itself is changing very rapidly. And therefore for all we know, I mean this kind of pricing and margins could be there. But we refrain from commenting on that because we only trust our own doing. But when we give guidance, it is based on what we are doing internally in the company and not on the demand-supply condition per se because that may be very short lasting. Honestly, we don’t have visibility around this thing that how these conditions are going to change. For all we know, these are going to remain as is. But structurally there are lot of things that we’re doing and our margins are going to improve from here.
Kaushik Roy — Managing Director
Anupam, we can only talk about the volumes and how the overall performance could be based on the pricing maybe — that will be speculative.
Anupam Agarwal — Lucky Investment Managers — Analyst
Fair enough. Just wanted to check on the local supply that was coming up by about 0.5 million ton. Has both our peer started production or is there some sort of timeline delay or some sort of…?
Raj Kumar Gupta — Chief Financial Officer
Those lines have been there now for more than a year. So this 0.5 million ton did not come a quarter back. I mean it came over a period of last seven, eight quarters and those lines have been [Indecipherable]
Anupam Agarwal — Lucky Investment Managers — Analyst
And they have been able to ramp it up as quickly as the industry usually does?
Raj Kumar Gupta — Chief Financial Officer
They are in unlisted space and therefore we would not know, we would not have the clear picture. But based on market conditions, it is likely that we are utilizing the capacity.
Anupam Agarwal — Lucky Investment Managers — Analyst
Okay. Lastly, if you can — yeah, go ahead.
Kaushik Roy — Managing Director
See, some of the capacities may be unutilized depending on the quality of the output. That could be one thing. But again export market is a good avenue for most of them.
Anupam Agarwal — Lucky Investment Managers — Analyst
Right. Last question, if you can just call out your net debt number for the quarter?
Raj Kumar Gupta — Chief Financial Officer
Net debt, we don’t report it. So, we don’t report it. So anything that we have not reported to stock exchanges, I can’t mention here. But I can give you an indication the debt has — net debt has gone down by roughly INR50 crores.
Anupam Agarwal — Lucky Investment Managers — Analyst
Okay. And you mentioned INR50,000, INR60,000 per ton if a brownfield capex is announced. I believe in the interim till we exhaust our base in Tamil Nadu and Mundra, we won’t be announcing a new greenfield. Is that a fair understanding?
Raj Kumar Gupta — Chief Financial Officer
No, we’ll have to announce it sooner than that because we can’t wait for the capacity to be exhausted. Then we will be compromising on growth.
Anupam Agarwal — Lucky Investment Managers — Analyst
No, not capacity. I mean space wise. So till we utilize the space that is remaining in Tamil Nadu and Mundra, we will be going ahead with…
Raj Kumar Gupta — Chief Financial Officer
We have space in Tamil Nadu. We also have some space in Mundra.
Anupam Agarwal — Lucky Investment Managers — Analyst
Fair enough. Thank you so much. That’s it from my side and wish you all the best.
Operator
Thank you. The next question is from the line of Madhav from Fidelity International. Please go ahead.
Madhav Marda — Fidelity International — Analyst
Yeah, good evening. Thank you for your time. I just wanted to understand, it seems like there are two things which are changing. One is more of our volumes are becoming more contracted in nature versus selling more on spot. Is that a right understanding for the business that is becoming more contracted?
Raj Kumar Gupta — Chief Financial Officer
Yes, Madhav, you’re right.
Madhav Marda — Fidelity International — Analyst
Which obviously would mean more stability in our pricing and margins versus others?
Raj Kumar Gupta — Chief Financial Officer
In a way, yes. But again I mean the margins also in this segment is good. I mean in the new arrangement when we are selling more to tire customers in new geographies, margins are relatively better comparable with the spot market.
Madhav Marda — Fidelity International — Analyst
Okay. And just the second question from my side was in the specialty black which we are selling, is it fair understanding that the competitive landscape is much better? The number of people who are competing in that market would be very limited globally like maybe like single digits like five, six players or is that like a lot of players who supply this because for us also it’s taken eight years right to ramp up so it’s a long gestation business?
Raj Kumar Gupta — Chief Financial Officer
See, this industry itself has a very consolidated structure. So most of the countries will have only two, three large players. So as such, I mean it is not very highly competitive from that perspective. But Europe, there are some local manufacturers like Orion also there, which are big.
Madhav Marda — Fidelity International — Analyst
Let me ask it this way, like, when we look at our tire blacks versus our specialty black, is the number of players in the specialty black lower versus the number of competitors we have in the regular base?
Raj Kumar Gupta — Chief Financial Officer
No, number of specialty black players are much higher because these are all small, small unorganized facilities. Lot of them.
Madhav Marda — Fidelity International — Analyst
Okay. All right. Thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Anik Mitra from Finrata Research. Please go ahead. Due to no response, we move to the next participant. The next question is from the line of Vignesh from Crisima Wealth [Phonetic]. Please go ahead.
Vignesh — Crisima Wealth — Analyst
Hello. Thanks for the opportunity. Am I audible?
Raj Kumar Gupta — Chief Financial Officer
Yes.
Vignesh — Crisima Wealth — Analyst
Just want to check on the pricing differentials between the performance chemicals segment and the normal black, there’s an number like compared to the…
Raj Kumar Gupta — Chief Financial Officer
Sorry to interrupt. Vignesh, I can’t hear you properly.
Vignesh — Crisima Wealth — Analyst
Is it better now?
Raj Kumar Gupta — Chief Financial Officer
Yes. Please continue. It is slightly better.
Vignesh — Crisima Wealth — Analyst
Okay. Just want to understand the pricing differential between the performance chemical grade and the normal grade?
Raj Kumar Gupta — Chief Financial Officer
Pricing difference is not much. Pricing difference is just about 5%, 6% but typically we make about 20% to 25% more margins in this segment.
Vignesh — Crisima Wealth — Analyst
Okay. And other thing is just want to understand how our volumes will be in the next five to six years going forward, the mix between performance chemicals and specialty black will be compared to now?
Raj Kumar Gupta — Chief Financial Officer
Would you please repeat your question?
Vignesh — Crisima Wealth — Analyst
In the volume mix, as of now we see performance chemicals and specialty black to be around 30%. Going forward down the line five to six years, how would you estimate this figure to be?
Raj Kumar Gupta — Chief Financial Officer
Currently I mean if you look at last year, it was 30%. This quarter it has been around 33%. I think somewhere it will remain around 35%, 36% at least in next two, three years.
Vignesh — Crisima Wealth — Analyst
Okay. Thank you. That’s it from my side.
Operator
Thank you. Next question is from the line of Rahil Shah from Crown Capital. Please go ahead.
Rahil Shah — Crown Capital — Analyst
Hi, sir, good evening. Most of the questions have been answered. Just wanted to have an outlook on overall volumes in FY ’24 over FY ’23 numbers, if you just want to share something about that?
Raj Kumar Gupta — Chief Financial Officer
We expect about 10% to 12% kind of a volume growth this year over last year.
Rahil Shah — Crown Capital — Analyst
10% to 12%. Okay, sir. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.
Raj Kumar Gupta — Chief Financial Officer
Thank you.