Privi Speciality Chemicals Ltd (NSE: PRIVISCL) Q1 2026 Earnings Call dated Aug. 05, 2025
Corporate Participants:
Unidentified Speaker
Mahesh P Babani — Chairman & Managing Director
R.S. Rajan — President
Shrikant Sangani — Group Account Head from Strategic Growth Advisors Private Limited
Shrikant Sangani — Group Account Head from Strategic Growth Advisors Private Limited
Ashwini Saumil Shah — Company Secretary
Ashwini Saumil Shah — Company Secretary
Ashwini Saumil Shah — Company Secretary
Ashwini Saumil Shah — Company Secretary
Ashwini Saumil Shah — Company Secretary
Shrikant Sangani — Group Account Head from Strategic Growth Advisors Private Limited
Shrikant Sangani — Group Account Head from Strategic Growth Advisors Private Limited
Mahesh P Babani — Chairman & Managing Director
Mahesh Babani — Chairman and Managing Director
Narayan S. Iyer — Chief Financial Officer
Analysts:
Unidentified Participant
Gavit Goyal — Analyst
Vivek Gautam — Analyst
Rohit Sinha — Analyst
Shreya Banthia — Analyst
Manan Madlani — Analyst
Vignesh Iyer — Analyst
Dhara Ganatra — Analyst
Kush Shah — Analyst
Nikhil Porwal — Analyst
Vikrant — Analyst
Presentation:
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Sam It.
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Ladies and gentlemen, good day and welcome to the Preview Specialties Chemical Ltd. Q1FY26 earnings conference call. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 this conference call, please signal operator by pressing Star then zero on your touchtone phone.
Please note that this call is being recorded today. From the management side we have with us Mr. Mahesh Babhani, Chairman and Managing Director, Mr. R.S. rajan, President, Mr. Narayan Siyer, Chief Financial Officer, Mr. Sanjeev Patil, Senior Vice President Strategy Ms. Ashwini S. Shah, Company Secretary and SGA Investor Relation Advisor. With this, I now hand the conference over to Mr. Mahesh Bhavani, chairman and Managing Director of Preview Specialty Chemicals. Thank you. And over to you sir.
Mahesh P Babani — Chairman & Managing Director
Thank you. Good evening everyone. We began the year with healthy growth, reaffirming our beliefs what a mind perceives a man can achieve. The mindset drives our innovation, resilience and future readiness. This quarter we are proud to share that PIVI has earned a platinum rating for ecovadders placing us in the top 1% globally for ESG performance. This is indeed a very big thing in this world. I think this was our dream we committed last year. This reflects our deep commitment to sustainability and ethical business practices. Thanks to our team’s effort across sourcing, manufacturing and energy management.
We’ve also proposed a scheme of amalgamation involving clean Fine science and clean biotechnology and clean specialty chemicals with your company. This strategic move will simplify our structure and enhance efficiency and unlock new growth opportunities. This will enable us to achieve our 50001000 vision that is 5000 crores and 1000 crore EBITDA in the next three further efforts of last 10 years. In preview Biotechnology has significantly intellectual property which will also convert into a number of patents in the next couple of months. We hope that this will create a lot of intangible wealth for the company and also pave a way for many more products in the years to come.
Or we could even franchise these technologies worldwide. Our products continue to perform well with strong demand across domestic and global markets, reinforcing our position as a trusted partner to leading fragment houses and FLCG brands. Looking ahead, our strategy remains clear to continue building a world class Aroma Capital company on number one position that grows sustainability and delivers value through innovation and precision technology. Thank you for. Thank you. Thanks to our employees, customers, bankers, shareholders and stakeholders for your continued trust. With that I now invite Mr. Naren to present the financial highlights of the quarter. Thank you Naren please.
Narayan S. Iyer — Chief Financial Officer
Thank you sir. That was a great beginning to this quarter and good evening to all my fellow stakeholders of the company. It’s been a great quarter for us going and rolling over on a great 2425 year where we had an AGM just a couple of days ago and reinforcing our position on a sustained growth journey that we have started and we expect to continue this journey going forward. The quarter gone by has really reinforced our confidence in entire privy with with a steady and sustained growth. With continued operational execution and a favorable product mix, we are confident that Preview is well positioned to sustain healthy growth and deliver robust profit margins going forward in the years to come.
A few recent developments that have happened in the last quarter which we have been sharing with all of you. Our products and demand for the same have been good and all our products are working at an optimal capacity. Our plan to expand our production capabilities which was informed are on track and we expect this expansion to complete by March 2026. Several super specialty aroma chemicals have been developed at the lab and pilot level successfully and which will propel future growth for the company. Post the current capacity expansion of the existing products let me give you a few financial highlights.
The industrial presentation has already been uploaded on the website and available with the stock exchanges. So a synopsis of the performance for the quarter one of the financial year 2526 is as the overall income on a consolidated basis was around 568 crores which is a growth of about 22% on a year on year basis comparing to the Q1 of financial year 2425. The EBITDA numbers have been a very healthy 141 crores which indicates a 45% growth over the previous year. Same quarter EBITDA margins have been an impressive 24.8% for this quarter and we expect to maintain EBITDA margins at these levels going forward in the near future.
This EBITDA margin has also grown substantially as compared to the Q1 of the previous year. Profit after tax on a consolidated basis is about rupees 61 crores as against 32 crores which was delivered and performed in the Q1 of the previous year. Overall our revenue mix continues to be almost on similar lines with exports contributing close to about 70% in this quarter also. So those were a few highlights on the financial gaming. So with this I would like to ask the moderator and open the floor for any questions and answers. Over to you.
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 on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets when asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question comes from the line of Garvit Koel from Envis Analytics Advisory llp. Please go ahead.
Gavit Goyal
Hello, I’m audible.
Mahesh P Babani
Yeah, you are.
Gavit Goyal
Good evening sir and congrats for a decent set of numbers. My question is on the demand outlook itself. Like we are catering to the global demand and looking at the kind of tariff situations we are having. Can you put some color on that? Like how do you see the outlook in the terms of customer delays or anything like that happening in the near to medium term? Do you anticipate anything like that?
Mahesh P Babani
So as we have said on many occasions, you know, about 70% of our business is contracted. So in terms of looking at this financial year, you know, we already have 70% and more of business contracted. And, and the other thing that we always say is that the products that we make are essentially N minus 1 to efficiency products. So to that extent, you know, whatever happens in the overall economy doesn’t really significantly impact our product demand because every day you will at least take a shower, you will wash your clothes, brush your teeth, so all of that.
And therefore, therefore we continue to assume that deep growth prospect for our products are stable. On top of that, the region in which we are operating and the nearby countries also they are going through a whole transformation in terms of consumer demand and demand for efficiency products. So that also we see as a significant factor which will result in sustained growth for your company. So that’s where we see believe that going forward we have sustained demand. And the other aspect is that whatever products we make are consumed by the F and F industry. And within F and F industry we cater to all the customers who are from number one to number 15.
And when we make a new product it has to go to one of these customers only. So to that extent our job is easier and that’s how we continue to grow. And beyond our existing products, beyond the products which are going to come into play, we see that we are going to have demand coming in for a long time to come.
Gavit Goyal
And sir, you just a follow up on extremely positive. Yeah, understood. And follow up on your reply. You mentioned about some regions are going through some transformation in the terms of the consumer demand is what you are witnessing. So can you put some more color on it? Like what is driving that, what kind of transformation it is and how, how, what kind of quantum effect do, do we see? Because, because of this kind of transformation. So that would really help sir, if you put some color on that.
Mahesh P Babani
Sure. So, so you know, as we have said in many of our, you know, presentations in person, you know, long time back, maybe 25, 30, 35 years back, a family would probably have one, one soap. I don’t think there’s any concept of deodorant then and now today we have, you know, probably a soap for every person, for every individual in the family. We have deodorants there. You know, we are just in the process of building quarters for our staff members. You know these are, I would say officer level staff members. I’m just giving an example as to how life is changing.
So one of the requirements that have come about is that every person will.
Gavit Goyal
Have a washing machine.
Mahesh P Babani
Go back 20 years back and having a washing machine was only a dishga’s rugged. So that is what is changing and that’s happening in the fastest growing economy in the world, which is India. And similar things are happening in countries around us and also in China. This is where we see a significant advantage because we have local presence and there will be local manufacturing facilities. So that’s how we see a significant growth here. We believe that the demand for our products globally grew by about GDP plus maybe 1 or 2%. But within India it would grow by between 8 to 10%.
And somewhere there, that’s what we believe. That’s the potential of our products. And as I said, when we introduce new products, the other important thing that you must understand is when we introduce new product, we have to only give them share of value of the same customer. So let’s say we introduced Galax musk about three years back. We were the last one to enter this chemistry. But because of our sustainability practices, because of being very competitive and being very state of the art brand, we are very, very competitive. And that’s how we are now able to get put our plant to almost 85 to 90% usage.
You know, so that that’s the way Preview operates.
Gavit Goyal
And one more thing I want to understand, like you mentioned, because of the necessity, our product demand will always be There irrespective of the tariff situation.
Gavit Goyal
But do you see any likely impact.
Gavit Goyal
On margins because of this?
Mahesh P Babani
Yes.
Mahesh P Babani
So. So one thing is that you know us, our export to us is. Is only about 7% of our. So to that extent, you know, let us say in case of tariff situation also we do not really foresee a significant impact on our margins because it’s only 7% of our overall revenue. And obviously some of the increase would be borne by the customers there. I mean all the economists in the world are talking about that there will be inflation in the us. Some would be borne by our partners and some would be borne by us.
Or impact will be fairly limited.
Gavit Goyal
Got it. The guidance for this year is intact, right? 20% growth.
Mahesh P Babani
Yes, that’s true.
Mahesh P Babani
20% growth has been or passed. And that is how our future will also look. For sure.
Gavit Goyal
Thank you very much sir. And all the best for the future.
Mahesh P Babani
Thank you.
Gavit Goyal
Thank you.
operator
Thank you.
operator
Thank you. The next question comes from the line of Vivek Gautam from GS Investment. Please go ahead.
Vivek Gautam
Yeah, congratulations on good set of numbers. So are we feeling some facing some sort of capacity constraint so that the numbers which we got in the last quarter may not be sustainable in the coming quarters. And same would be the case of peak margin sort of also which we are facing.
Mahesh P Babani
Hi, good evening. Narayan here. No, not at all. It is not that there is any constraint on the production capacities. Historically the first quarter for a company always remains the lowest. And as you go from second quarter, third quarter you will see that the revenue and the quantum also going up. Don’t ask me why, but it has been historically that it is in fact. And we expect that, you know, with all the expansion and the augmentation and that we have taken place, the debottlenecking that we have done, the capacities will keep increasing. As you are aware, we have highlighted that there is an increase in the capacity.
So that is also being taken care of. And you will see both volume as well as revenue going up. Mahesh bhai wants to add something in.
Mahesh P Babani
Short, we’ve converted our plants into continuous plants. And we see capacity augmentation because of that effect. And in fact if you see our margins improvement is also because of that. We want to continue the same plant continues with little augment. You get a lot of augmentation by changing the plant continuous. And you also get automation. So you know, less team, less labor and more production. That’s what we’ve done in the last few months or maybe nine months. And that is seeing the color from last quarter and this quarter will be. I think it will be quite better than the coming.
The past month in the coming quarter.
Vivek Gautam
Okay sir. And sir, can you just highlight the company’s USPS and the differentiating sector versus the competition and which you have evolved and because you have got a very good client list and what has helped you come to that level and how is the potential over there also for further penetration there and the new clients as well. Thank you.
Mahesh P Babani
So it could be a long answer because you know it is actually, you know efforts of Mr. Babhani for last two decades. But to you know give you point wise answer in few snippets. The first and foremost is that we are a sustainable company. So whenever a chemical company which is zero liquid discharge we are large chemical company and we are zero liquid discharge. So in terms of ESG goals as they say we are right there at the top. We have platinum rating in terms of Nicobaldis. Having said these two things. The other thing is that we are in for about 2/3 of our products.
Almost 70% of our products. We are fully backward integrated which make us extremely competitive in terms of cost factor. And we never had any quality failures in the last two decades. In fact from the start of the company that all the products that we make they are also approved by old factory sensors and we have a team which works on that. So we never had any quality failures. So why wouldn’t the customer prefer to buy from us when they are looking to buy significant quantities of products that we make? You know, they always want to have a supplier whom they can depend on and who is competitive.
Doesn’t have to be L1 but he can be L2 or L3. Not the lowest one but one who is very, very dependable. You know. So that’s. That’s what we stand. We honoured all our contracts in Tikal Tin. So that’s what has given a huge amount of edge to privy.
Vivek Gautam
Okay sir. And basically new to complete recently invested. So don’t mind the question. So I was just thinking of Mr. Searching about Mr. Banami. He’s coming from a real estate background and not an engineering background commerce background. Still he has been able to build up this company at such a level. How come and what helped him and how has if you can highlight the investment journey on his and also about the second generation or the next generation who is there because that is also very important for all the investors.
Mahesh P Babani
So we have team of great professionals who are committed to us. In fact I would say I would have the best team in the industry or in this chemical trade. And we have undoubtedly faith in them. And that’s how we could do in a running plant expansion. But they know every nook and corner what safety is converting a company into containers. Production is probably the toughest goal. One can plan a new one very easily but convert the present one into continuous is probably the biggest challenge. Secondly, you said about the succession plan. We have groomed at least 15 new professionals not 15 existing professionals below the age of 40 right now.
In next couple of years they’ll be groomed. They’ve been sent to the best business schools like International School of Hyderabad, IIM Ahmedabad and several others. Two of my colleagues are also going to Harvard for training. So we are grooming a team which will convert this into a totally professionally managed organization in the next three to five years max. Until then I’m also not going to get old. I’m getting younger but by energy. I don’t know how God gives energy when you, when you plan right. So we are not so worried. We have great set of people managing the business.
Vivek Gautam
And what attracted you such a niche sector? Sir, coming from a basically a commerce background, how come you landed a career?
Mahesh P Babani
You see the risk factor in initial first 10 years I felt always challenge or for the next five years also to a challenge in the last five to seven years I feel there’s no better business than specialty chemicals. There’s no risk factor. We are a company now with all risks set aside. Maybe risk to. You know risk is part of every life. But I’m saying we are on an excellent journey. That’s all I can say in few words.
Vivek Gautam
Thank you sir. Thank you very much. Thank you.
operator
Thank you. The next question comes from the line of Rohit Sinha from Synidi Securities. Please go ahead.
Rohit Sinha
Yeah, thank you for taking my questions.
Rohit Sinha
And congratulations for good set of numbers.
Rohit Sinha
So sir, first question is if you.
Rohit Sinha
Can give a just brief breakup on value and volume growth which we have get in this quarter as I think from last few quarter we have been getting a benefit of price increase which we have taken during contract revisions. So one is on that. And any specific product which has contributed to higher margin in this quarter or it’s just a. I mean raw material benefit gains.
Narayan S. Iyer
Hi, good evening. Well as indicated in our previous couple of quarters we have stopped giving the quantitative information and we continue to do so in order to keep the, you know some of these in house secrets within the company. Second, there has been a growth, definitely a growth in terms of the revenue we have indicated and we Continue to grow broadly. What we have indicated at the beginning of the year is about a 20% growth which is consisting of both volume as well as volume. And this quarter also it is a culmination of both volume as well as value as compared to the the previous year.
Same quarter, first quarter for our company always remains the lowest of all the four quarters. Having said that this quarter there is no such individual product which has contributed more or less. It is a culmination of all the factors together. Because you know, at the end of the day, on a very lighter note, if I was to speak talk about any blend that a perfumer has to make, he can’t isolate one particular product to the other. He will require a basket of all the products. So only if all the basket of products sell finally the aroma chemicals can be sold around and which you and I consume.
Rohit Sinha
So that continues to remain so, sir.
Mahesh P Babani
Lastly, I would also say that you know, the efficiency improvement has been of great use while converting our plants to continuous which is giving the profitability and not the price increase. Price increase. Rather I would say we are lower on price compared to last year but yet better profitability to be honest.
Rohit Sinha
Okay, okay, got it.
Mahesh P Babani
Secondly, on the camper side, we were. Also working on farmer good camper products if I am not wrong. So where we have progressed in that and what’s the outlook there. Camper?
Mahesh P Babani
We are doing extremely well and when there is so much of demand locally, we have no place for any other camper to be sold. So our focus. But as you know, it takes some time when we have to enter into pharma grade. So very shortly things progresses, various studies are going around and I believe that should also click around in fact. But our capacities are doing very well with regard to the entire camper plant.
Rohit Sinha
Okay, okay, great.
Rohit Sinha
And lastly sir, if you can just. Highlight the contribution from the JV side in this quarter and probably the guidance for this year if at all possible. On the joint venture.
Mahesh P Babani
You see it’s like this, that yeah, we are working with the largest FNF company globally and understand that these are extremely specialized proprietary molecules. So the, you know, quality standards are extremely high. Also in terms of logistics, you know, it takes some time between, you know, to do a batch and then you know, getting some approval.
Mahesh P Babani
So it is taking a bit, some.
Mahesh P Babani
Amount of time but it is on course in terms of, in terms of number of products and you know, in the coming time we will see there’s a somewhat, you know, wherein the product gets approved.
Mahesh P Babani
So it takes, it takes some amount.
Mahesh P Babani
Of Time, you know, for products to really move through. But we are, the traction is very good and we will see this year, this quarter actually since it’s in a very nascent stage, it is yet to break even. But in the year to come it will do more than that and there will be growth also. We are also contemplating a bigger growth going forward in the same joint venture.
Narayan S. Iyer
So I’ll tell you, the protocols are very severe to supply to the fine products that we are making because they go into several go into flavor and several go into very high value perfume. So the protocols are very severe. So we hope that this will not hope. We are sure it will become better, but it’s a slow process as a company got this. You know, there are some systems where we have to qualify internally. Also though it may be a joint venture, they treat it as a separate entity. So we have to live with those systems.
And we are confident in coming years this will be a great success. In fact, to be honest, they are talking about expansion today. They have done only one. They are talking about 1.1, 1.5 and 2. They have already planned three more expansions where they are wanting to pump in as a debt. So we’ve requested them for a lower price debt and rework the debt. So we are in constant talks with them. Long term prospects are excellent at the moment. We do face challenges because of it’s a huge, huge project and the turnover ratio is pretty low compared to the size of the investment.
Mahesh P Babani
But it’s a great learning process for all our technical team because these are really complex molecules, you know. So okay, so I guess for the year also it would be less than.
Mahesh P Babani
100 crore kind of contribution or less than 50. Yeah.
Rohit Sinha
Yeah.That is from my side.
Rohit Sinha
I’ll come back in June. Thank you and best of luck.
Rohit Sinha
Thank you.
operator
Thank you. The next question comes from the line of Shreya from Oakland Capital Management llp. Please go ahead.
Shreya Banthia
Thank you for the opportunity.
operator
Sorry. Maybe louder please.
Shreya Banthia
Yeah, Am I audible now?
operator
Yes, ma’. Am. Please go ahead.
Shreya Banthia
Yeah, so my question is in line with our long term vision that when you have said that not no single product could contribute 10% of our overall EBITDA by FY29. So could you elaborate on this progress in the current quarter? Specifically how has the contribution from the higher margin products like Galaxmus and other recently commercialized molecules.
Mahesh P Babani
Okay, so we have a favorite phrase in preview. It’s called as teamwork makes DreamWorks. So you know it is not that one product contributes everything, it is all the products together. Is what the story is. And please do not request us to give any further details than these because these are proprietary information. So all the products together do contribute for the growth and don’t get distinct by quarter by one particular quarter. Our dream is and our plans are already in place. I would invite you to come to Bahad. The projects are taking shape and the traction for 5k 1k stori as our chairman just said in the beginning between the next three to four years is in place and the products are identified, the technologies are in place.
We are at the in many products we are at the lab to pilot scale and that’s how we see the growth happening for sure. And in I think almost all the products we already are in constant touch with our customers which is what will lead to commercialization of these products very quickly as what happened in Galaxmus and other products also as soon as we get those into production that’s what it stands.
Shreya Banthia
What are the next sir.
operator
Sorry to interrupt ma’, am, your audio is breaking.
Shreya Banthia
So I’ll just tell on be a directionally on it will be a right assumption.
operator
Sorry, we are not.
operator
It’s not audible. We are not able to hear.
operator
Please come again.
operator
You may join the queue again Ma’. Am, we are on track. We are on track. You can assume that we are on track.
operator
Thank you. The next question comes from the line of Manan Matlani from Kamaya Wealth Management. Please go ahead.
Manan Madlani
Thanks for the opportunity. So my first question is over the years you know our gross margins were in the range of earlier 40 to 45%. Now we are shifting towards 48, 49, 50. So is it safe to assume that we will be in the range of at least 45 to 50% in terms of gross margin for the next two years?
Mahesh P Babani
Manan, what you are talking about is the raw material trend and it is not the gross margin level. So let me correct you here. I understand that certain investors look at RMC and say that is the gross margin. So to answer your question, the RMC fund will remain at these levels. What you are seeing even going forward in the few couple of years as we can see and foresee ourselves and we expect to grow on some of the costs on account of debottlenecking and augmentation and continuous process and some of the savings on the utility cost, whether it is the solar part, better efficiencies and all.
And that’s how the EBITDA margins will continue to improve.
Mahesh P Babani
Our business is based on north of 20 EBITDA margins. I’m not saying that even if RMC may go on go up for some product that we introduce but one north of 20, EBITDA will always be our guideline.
Manan Madlani
Fair enough, fair enough. The second question is on a previous fine line. So earlier if I recall one year ago you mentioned somewhere around 800 crore of capex for two units first unit 300 crore capex second unit 500 in which we’ll get 2x of asset turnover and similar range of EBITDA margin that preview specialty we are having. I can see from the press release 300 crores of roughly the fixture set we are having. So if I do the back calculation like we need 500 crores of capex in the preview fine sign. So could you please throw some color on that like what’s the vision for next two to three years and what’s the potential from that company?
Mahesh P Babani
Like I said in my opening speech that we are confident of making this into a 5000 crore company together that means three and a half, four will be from Philly and about 1000 to 1200 will come from PV Fine Science. We have done a great amount of Capex in fine science already and we have for couple of hundred crores to be added more to capex. Exactly 400 maybe not the number, maybe a little lower. We don’t have the exact but we are currently investing only in our logic plan and will invest further. So in future by end of this year it will be one balance sheet.
So the consolidated Capex I think would not be to go to a level has to be worked out but it will be really not a highly leveraged summary. We could see a 5,000 crore revenues in three to four years for sure with at least a thousand crore EBITDA minimum like not 20, it can be 1050, it can be 1100, 1020. That will surely maintain that’s our guidelines we have within our internal committee.
Narayan S. Iyer
And the reason why the merger was done now was that the products that we are working on in Loti as well as what will happen in Gujarat also are at the stage at which they can be capitalized. Some of these products would be made first time by the route that we are making which is a renewable route and they would be game changing kind of products and we have advanced substantially in those areas. So therefore in terms of revenue growth as well as the margins, as Mr. Movani just now said we are on track there.
Narayan S. Iyer
Okay.
Narayan S. Iyer
So sir, this Capex, this will be done through internal accrual plus debt or some level of equity in vision we.
Mahesh P Babani
Might see it will be a base, a mix of everything. You know, equity is expensive and that is the reason. So seeing our cash accruals that we are doing and the internal accruals that we are generating, I believe most likely it will happen on a debt and an internal accrual combination. Because this capex that we are looking at to achieve a 5k 1k number is over the next 2 to 3 years period and we will take the call as it goes around but it’s going to be internal accrual and debt from the banks.
Manan Madlani
Okay.
Manan Madlani
And lastly sir, one suggestion. I understand due to fair reason we are not sharing the volume for individual product. But sir, some, some level of volume data would really help us like at least give us a, you know, commodity. I mean not commodity but our core products of phenol plus pine and second segment you can give like all the other products. It will, it would help us, you know, in, in understanding future growth.
Mahesh P Babani
I request you, since you’re a esteemed shareholder of mine, it’s in your interest not to remain this.
Mahesh P Babani
I thank you for the very good report that you have actually shared around. But honestly speaking I may not be able to share much further details on the quantitative aspect. I’m sorry for that.
Manan Madlani
Okay, thanks. Thanks a lot. That’s it. From my side, I wish you all the best.
Mahesh P Babani
Thank you. Looking forward to meet you.
operator
Yes, thank you. The next question comes from the line of vignesh from Sequent Investment. Please go ahead.
Vignesh Iyer
Congratulations on great set of numbers. Just one question from my side.
Vignesh Iyer
What is the networking capital days for this quarter?
Mahesh P Babani
As a end of this quarter it’s.
Mahesh P Babani
About 140 odd days.
Vignesh Iyer
Okay.
Mahesh P Babani
And we would be maintaining this number. Around this 135, 140 days because for the last two years. We’Ll be bringing it down. Our zeal is to get it down to 128 to 125 days and we’ll work towards it.
Vignesh Iyer
Okay, fair enough. That’s all for my. Thank you.
Mahesh P Babani
Thank you.
operator
Thank you.
operator
The next question comes from the line of Dara Gatra from Value Quiz. Please go ahead.
Dhara Ganatra
Thank you for taking my question. Am I audible?
Mahesh P Babani
Yeah, yeah.
operator
Yes ma’, am, please go ahead.
Dhara Ganatra
So just coming back to the gross margin question. So apart from what you’ve mentioned about capacity augmentation related benefits, what are the other drivers for the gross margin expansion that you’ve seen from almost 44% to 50%. Now.
Mahesh P Babani
Basically, as you are aware a few quarters ago we had stated that we have been manufacturing certain specialty products from the byproduct streams and by products of our some of our products like for instance from Galaxomas, a few such products, then CST byproducts, we have started converting and making value added products like 1 4th senior 18 xeniol terpene for all all this limonent ddto. So these products what used to be sold at a much lower price than the price of a furnace oil or as a byproduct, you know, they have started churning and giving us good margins on this.
So this is one part of the increase on the specialty products using the byproducts and by streams. And secondly as indicated a lot of savings on the utilities and internal churning. And with the production capacity is completely being utilized, your fixed cost gets spread over. And that’s how these margins have been improving. And we expected this in the past and we are working towards it. And with that, as our chairman happened to indicate that with all this debottlenecking that we had done, you are able to see it. And now we are believing that our EBITDA margin will continue to remain at is upwards of 20% which we have demonstrated it over the last 10 quarters.
Thank you.
Dhara Ganatra
I had another question as well which was more on the capex plan that we have. One is investment towards preview pine science and second is increasing the capacity from 48,000 tons to 54,000 tonnes. So if you can help us break the number for the capex that are planned for the next few years, okay.
Mahesh P Babani
In order to achieve a vision of 5k 1k broadly as indicated in our last call. Also there is an overall capex of about 1100 crores. We expect the first phase we have started with a CAPEX amount of about close to 280 to 300 crores. So that is on. And this is what we have also indicated in our presentation which has been uploaded and I believe you would have seen that also. So this is on track and some of the expansions have started giving results or will start giving the results from the second quarter, the next couple of months and more so from the third, the entire phase one should be completed by this year end which will enable us to maintain that 20% growth even in the next couple of years.
And meanwhile as we keep talking about, you know, with regard to various new products that we have talked about on the phase two, phase three, we have already made applications for the EC I.e. environment clearances, etc. Wherever it is applicable because these are new products and that will take some time. So parallel what we have done as you Are aware that in India sometimes EC permissions and all may take some time. So we have gone with the first phase of expansion parallel looking at the expansion of the phase two somewhere around from second third quarter of this year get those permissions which will enable our company, your company to maintain the 20% plus growth for the next three to five years for us to work and achieve the 5K bucket vision.
Dhara Ganatra
Sure sir. And the last one that I had is most on PD Fine sciences pipeline. If you could throw some more light on what kind of products are we looking at there.
Mahesh P Babani
So one of the key products that we are working on is called a Cyclopentenone which is currently available in the market from petroleum source. We will be making it from renewable source from almost the west and that is a huge product. It has applications in aroma chemicals as well as applications into pharma industries plus also application in the electronic chip industry. So that’s a major product that we are working on. We are also working on other products at Lotte facility. Lotte facilities. So that’s what we have done wherein we make flavors which are used in making toothpaste and all that.
So those are the kind of products that we have. So that’s the. To give you some color about these products which have been planned for the next three years.
Dhara Ganatra
Sure. Thank you so much.
operator
Thank you. Before we move to the next participant, a reminder to all participants. You may press star and one to ask a question. Thank you. The next question comes from the line of Kusha from Nivishai Investment advisory. Please go ahead.
Kush Shah
Hi, my first question would be that you had mentioned earlier in IBM that you will manufacturing the product for Colgate. So can you provide us the details that what would be the additional capacity, what would be the revenue and the margins after catering to the Colgate?
Mahesh P Babani
Could you repeat which product you talked about because there was some sound behind you and it got completely subsided.
Kush Shah
Sorry to interrupt so there is some background noise. May I request you to move to some quite.
Mahesh P Babani
Hello.
Mahesh P Babani
Now.
Kush Shah
Now I am audible. So earlier you had mentioned in AGM that you will be manufacturing a product for Colgate. So can you provide us in detail that how much would be the additional capacity and what would be the revenue and margin further after catering to Colgate?
Mahesh P Babani
Well, I’m not going to talk about as to how much is going to be the quantity and all that is the said product that Sanjeev just now stated to the question asked the Sahana with regard to, you know, the product manufactured in pfspl. So one of the Products is going is a product known as Anithol which is being used in various toothpaste etc. So that definitely we are on track and we should be selling it, you know, going forward very shortly.
Kush Shah
Okay, thank you. And my second question would be you had also mentioned that in upcoming three to four years we will be doing 5000 crore revenue and around 1000 crore EBITDA which would be imply around 20% margin for the company, for our company. And now roughly we are doing a 450EBITDA. So it’s around 22%. So is it the margin would be sustainable in the coming three to four years, 20 to 22% around.
Mahesh P Babani
Yes, we have been, we have been stating that and indicating and yes we also heard our chairman mention that we expect to maintain and manage these so called margins that we have achieved.
Narayan S. Iyer
We are committed to it. Of course world goes really do better. But if there are challenges, we come back to you. I don’t think so. There are challenges. We don’t see no challenges.
Kush Shah
Okay, one more question. Last question would be the camp for us.
operator
Sorry to interrupt sir, you are sounding very low.
Kush Shah
Hello. I am audible now.
operator
Now it’s better. Sir, please go ahead.
Kush Shah
My last question would be around camper us FPS. I said which guys are you selling to, whom you are selling and what would be the major players.
Mahesh P Babani
I think I already answered it to an earlier question. There is so much of demand domestically that you know, our plates are full. You’re not being able to cater to the overseas thing. However, the feasibility studies are on as and when it finishes and I believe we will, you know we should be in a position to start catering to the overseas market.
Kush Shah
Okay. Okay. Thank you so much. Thank you so much. That’s so much.
operator
Thank you. Thank you. The next question comes from the line of Nikhil from Perpetual Capital. Please go ahead.
Nikhil Porwal
Yeah.
Nikhil Porwal
Hi.
Nikhil Porwal
Thank you for the opportunity. So again congrats to the whole team for a great set of performance. I just have one question. Most of them have been answered. So the gross margin expansion roughly year.
Nikhil Porwal
On year is around 7% while we’ve. Seen only 3% of that convert to EBITDA margin expansion. So some light on how do we. Look at other expenses as a percentage. Of sales going forward.
Mahesh P Babani
See it all depends on the overall product mix that we do. So for that if you break it up into quarterly you may see one to the other happening around. Otherwise prima facie over the last two years our gross margin, that is the RMC trend that we are trying to talk about. Has been in that level of about 55% or 55 to 57% or so which with various augmentation and process evaluation we have been able to bring it to between 53 and so this I expect the momentum to be continued and will remain at these levels going forward.
Also with regard to some of the other expenses that have happened around, you are aware there has been a savings on account of various utility expenses which has also led to a 100 basis to 200 basis point on the overall EBITDA margin. Last year there was an increase in the selling and distribution expenses pharma facie because of various stoppages on the US ports whereby we had to ship quite a few quantity. And this was also addressed by us in some of our investor calls and more so specifically in our March call. And this led to an increase in the selling and distribution expenses.
So we broadly expect that expenses over a larger base will come down going forward also.
Nikhil Porwal
Okay.
Nikhil Porwal
And second two is a particular product prime yield. Anything on how has that scaled up since you started the plant three years ago and how do you look at the demand for the product given you have a competition that is coming up.
Mahesh P Babani
With a plant for the similar product.
Mahesh P Babani
So we have a.
Mahesh P Babani
First and foremost we have a unique process because you know, it’s a green process as compared to what other other you know, fellow manufacturers are doing. So we are in many process in doing that number one. Number two, we also, we also.
Mahesh P Babani
You.
Mahesh P Babani
Know have because of scale in terms of being located within Mahad and resulting in lower cost. That’s how we see that we will be able to send the competition also excellent. And last and most important thing is the quality that we make is also among the best or I would say rather the very best in the industry which is what is helping us in some surviving there and also thriving. That’s how we expanded the capacity of branding.
Narayan S. Iyer
Yeah, that’s. That’s right. So Nikhil, we are on track. We have increased the capacity also to answer your very first phase of the question.
Nikhil Porwal
Okay. Okay, good to hear back. Thank you and all the best. Thank you.
Mahesh P Babani
Thank you. Nickel.
operator
Thank you. The next follow up question comes from the line of Garvit Koel from Invest analytics and Advisory llp. Please go ahead.
Gavit Goyal
Hi. My question is already answered. Thank you.
operator
Thank you. The next question comes from the line of Vikram, an individual investor. Please go ahead.
Vikrant
Good afternoon and thank you for the opportunity. I just had a couple of questions. One is with regard to the float in terms of do you think it’s A good idea to look at a split or some other way to increase liquidity given the promoter share being as high as it is and the float being so low. And the second question, also related to equity is I see disclosures that the promoters have sold some shares recently. Just wanted to understand the rationale and if there’s anything else coming down the line.
Mahesh P Babani
Thank you.
Mahesh P Babani
So to answer the first question, it’s a good idea and we are, you know, thinking about it because we want overall participation from almost every individual and to benefit from previous growth. That’s about the first question. The second question, you know, Mr. Rao is now over 80 and at some other time in life, one has to, you know, capitalize on whatever he has. All the effort that he has put in, so that’s where it stands. And all that he has sold is only a fraction of what he owns. It’s about three and a half to 4%.
So that’s where he stands, you know, when he is that age. Commitment to children, family and all of that. So that’s where he stands.
Mahesh P Babani
But we usually look at a split like you suggested. But you know, we are currently. There is a lot of requests come from. We also want to consider this maybe in coming times.
Vikrant
Got it.
Vikrant
Thank you.
operator
Thank you, ladies and gentlemen. Due to time constraints, we’ll take this as the last question for today. I would now like to hand the conference over to the management Closing comments.
Mahesh P Babani
Thank you and thank you every one of you for joining this earnings call of Previous Specialty Chemicals Limited. It’s always great to address to you, to speak to you, to be amongst you and we definitely appreciate your time and show and the interest shown in our company. For any further queries that you have or any additional questions that you want to. You can always get in touch with us at the Preview team or the SGA team and from the management side and from all the senior management side here on behalf of Preview team, we thank you and look forward to meet all of you over the next call.
Thank you very much.
Mahesh P Babani
Thank you.
operator
Thank you. On behalf of Preview Specialty Chemicals Ltd. That concludes this conference. Thank you all for joining us. And you may now disconnect your lines. It.